And thats all I have to say about that..... lol....
Here is what I was trying to post :)
Hey Gang,
Interesting day today. Here is a discussion we had in the room. Also, this thread seems to be drifting a bit with not much input from many of the experienced traders :( I started this thread so we can all share and discuss techniques, so we ALL can learn. I am as interested in your thoughts and techniques as you are in mine. Is there no longer any interest in this thread?
Good Luck
Ken
www.mtrader.com
MTrader Class - 10/02/98 (C) Copyright 1998 The Momentum Trader
[12:30] <mtrader> KWolff 9:30:54 OK... TIME FOR CLASS...
[12:30] <Bob2112> I feel safer in here
[12:30] <KenWolff> 9:31:35 I would like to discuss the pre open
preperation ...
[12:30] <Nesi> To join class, please type: /join #mtclass (must type / and
the space before #mtrader; Please type /join #mtrader to return to the
trading room)
[12:31] <KenWolff> 9:31:47 what are we doing with our preperation?????
[12:31] <Nesi> Please, Double Click on Nesi to send questions for Ken.
[12:31] <Nesi> 4 questions holding..
[12:31] <KenWolff> 9:32:02 We are attempting to measure the "MARKET PULSE"
[12:31] <KenWolff> 9:32:29 WHY??? Because we wish to place upon our
trading heads the proper hat...
[12:31] <KenWolff> 9:32:40 are we shorters or buyers???
[12:32] <KenWolff> 9:33:10 1. First a measure of the market is done by
looking at the gapping on all momentum stocks from the previous day...
[12:33] <KenWolff> 9:33:49 both dumpers (stocks that are down by 20%) and
gainers (stocks that have shown strength in a negative market)
[12:33] <KenWolff> 9:34:14 for example I wanted to jump on CBTSY yesterday
based on the double dump and the previous negative market...
[12:34] <KenWolff> 9:34:49 the reason was the overreaction potential was
tremendous with a negative day and a negative stock and a negative open...
[12:34] <KenWolff> 9:35:20 so the downward pressure on CBTSY was like a
coiled spring and that is why we bought at 7 dollars....
[12:35] <KenWolff> 9:36:05 Now if you look at the stocks prior to the open
and consider both the negative and positive pressures... you should be able
to put 2+2 together and place on the proper hat...
[12:35] <KenWolff> 9:36:17 For example today:
[12:36] <KenWolff> 9:36:44 we had 2 days of big negative downdrafting ....
[12:36] <KenWolff> 9:36:58 so the market was winding the coil downward...
[12:36] <KenWolff> 9:37:29 our pre-market pulse was taken and we saw the
coiled stocks beginning to unwind...as they were gapping up...
[12:37] <KenWolff> 9:38:00 so our expectation was not really sure on the
amount of the selling so all we could do is buy the first upticks!!!
[12:38] <KenWolff> 9:38:58 as we saw AMZN ran well, YHOO did very well
also , so you began to pick off the trades that offerred themselves as the
stocks uncoiled and ran up...
[12:38] <KenWolff> 9:39:29 You could have picked on quite a few trades as
the stock rally was really sector led...
[12:38] <KenWolff> 9:39:36 Internets being in front....
[12:39] <KenWolff> 9:40:06 You should have noticed as I pointed out... the
box makers were not nearly as good, AAPL,ORCL,ADBE,DELL....
[12:39] <KenWolff> 9:40:22 they actually sold off more and did not
participate early on the first buying..
[12:40] <KenWolff> 9:41:16 OK.. I like to also look at the S&P futures
too... but it is really not necessary because the gapping will allow you to
see everything you need to see..
[12:41] <KenWolff> 9:41:52 Now... once we get the uncoiling of the first
tidal surge in the market what would we expect?????
[12:41] <KenWolff> 9:42:12 "A RECOILING"
[12:41] <KenWolff> 9:42:36 so I suggested you enter shorts at the highs as
YHOO, AMZN and others hit the tops..
[12:42] <KenWolff> 9:43:34 and indeed they did recoil several dollars...
but the general timing of such a play is really tough unless you have the
experience to focus on the opportunity and I was busy tracking PSFT for us..
[12:43] <KenWolff> 9:44:09 I think I saw someone short YHOO and XCIt...but
I forget who did it...
[12:44] <KenWolff> 9:44:50 after the "RECOIL" I then once again will
expect a good upside surge as long as the upside potential is well worth
over a buck...
[12:45] <KenWolff> 9:46:02 so the last surge upward was indeed worth the
play as the stocks once again traveled up and actually exceeded the previous
highs which surprised me and cause a stop loss on the YHOO short at 120 1/2
[12:46] <KenWolff> 9:47:11 Now I am once again expecting the stocks to get
sold and to retreat off these highs... our problem is that the longer the
market surges the more unpredictable it becomes..
[12:47] <KenWolff> 9:48:23 and I think YHOO would be stopped again at 121
1/2 as it climbed over 122... so the trade must be worth the eventual
downside and you MUST agree with me and feel as I do the market will get
selling ... because two stops should cost an experienced trader about 1/2
pt...
[12:48] <KenWolff> 9:48:56 but the downside on YHOO should be worth 3 or 4
bucks unless the buyers really get worked up in a frenzy .... which would
surprise me..
[12:49] <KenWolff> 9:49:56 so the market mood is really assessed by the
historical evidence presented in the last few days and we consider the
market as a coil then individual stocks as coils...
[12:49] <KenWolff> 9:50:39 the tighter the market coil and the tighter the
stock coil... provides the exceptional momentum we have experienced in the
last two days..
[12:50] <KenWolff> 9:51:11 and again I like to track the dumpers... and
gainers...
[12:50] <KenWolff> 9:51:40 two groups of coiling stocks that should
provide predictable patterns sufficient for good profits...ALWAYS!!!!!!
[12:51] <KenWolff> 9:52:15 Ok.. do we have any questions??
[12:51] <Nesi> ok
[12:51] <Nesi> <Vtrader> Ken, can you explain why MTRS was so dangerous
again? Thanks.
[12:52] <KenWolff> 9:53:25 because MTRS spread was changing unpredictably
and you would have to set a stop loss of about 1/2 pt..
[12:53] <KenWolff> 9:53:56 an experienced trader would normally set a
limit buy order about 1/8 or 1/4 above the bid and try to enter the trade...
[12:53] <KenWolff> 9:54:20 Imagine it getting 5 bottoms which I think it
did... and losing 1/2 pt per bottom..
[12:53] <KenWolff> 9:54:41 2 1/2 pts would be quite a loss for a small
time trader...
[12:54] <KenWolff> 9:55:12 and by the time you lost 2 1/2 pts you would be
done with the trade and then have to sit and suffer as it climbs from 22 to
29 bucks..
[12:55] <KenWolff> 9:55:52 I personally would have entered a buy off the
5th bottom and HELD THE TRADE... MUCH LIKE WE DID WHEN I suggested in with
PSFT...
[12:55] <KenWolff> 9:56:03 22 1/4 I felt was worth the buy and hold..
[12:56] <KenWolff> 9:57:15 remember... this is important: "EACH TRADE YOU
DO MUST BE MEASURED ON YOUR ABILITY TO KEEP A REASONABLE STOP!!!" ....
NOTHING ELSE..
[12:57] <KenWolff> 9:57:47 If you lack the ability to keep a close and
reasonable stop... you are trading over your head ....
[12:57] <KenWolff> 9:58:16 sometimes you will not know it until you are in
the trade...so in those cases... get out as soon as possible..
[12:58] <KenWolff> 9:58:53 that is why 200 shares are important to begin
with... even a buck loss will only cost you 200 bucks...plus commission...
but it is not terminal..
[12:58] <KenWolff> 9:59:23 You should not be caring about the money with
200 shares... only the ability to "KEEP A STOP LOSS!!!!"
[12:58] <KenWolff> 9:59:39 "PRACTICE YOUR TRADING SKILLS"
[12:59] <KenWolff> 10:00:13 Next question??
[12:59] <Nesi> <_Daytrader> Ken you talked about perceived value yesterday,
can you please help me understand how I can determine the perceived value of
a stock ?
[12:59] <KenWolff> 10:00:42 WOW .. market is running....!!!
[13:00] <KenWolff> 10:00:54 LOL.. you gotta love it...
[13:00] <H-Man> hit +130 and stalled a bit
[13:00] <KenWolff> 10:01:25 You determine the perceived value by the
action of the market and the individual stock...
[13:00] <KenWolff> 10:01:34 You are considering this:
[13:01] <KenWolff> 10:01:47 1. the pace of trading...
[13:01] <KenWolff> 10:02:07 this shows the action and how many traders are
hot on the trail of the trade..
[13:01] <KenWolff> 10:02:28 it is measured by how many trades you see per
second...
[13:02] <KenWolff> 10:02:50 for example.. look at SPLS and YHOO ... and
compare the trades per second..
[13:02] <_Daytrader> where do you get this info? level 2?
[13:02] <KenWolff> 10:03:18 hey no brainer... there are more hound dogs on
YHOO than SPLS...
[13:02] <KenWolff> 10:03:28 simple quote screen daytrader..
[13:03] <KenWolff> 10:03:44 so what does this tell you... ??????
[13:03] <KenWolff> 10:04:04 the more hound dogs that are running and
baying the hotter the trail!!!!
[13:04] <KenWolff> 10:04:50 so because of the trading interest and pace
YHOO is "perceived" as a hotter stock than SPLS and will swing wider and
present more opportunity...
[13:04] <KenWolff> 10:05:25 do you think anyone is considering the
underlying value on YHOO... ??? Maybe... but I doubt it...
[13:05] <KenWolff> 10:05:53 traders are "perceiving" value based on who
know what... who cares...
[13:05] <KenWolff> 10:06:04 I certainly do not care...
[13:05] <KenWolff> 10:06:17 all I care about is: "PERCEIVED VALUE"
[13:06] <KenWolff> 10:06:44 So in considering perceived value we must look
at very short term goals... and price swings..
[13:06] <KenWolff> 10:07:33 for example... If YHOO goes up to 130 in under
5 minutes... what do you feel will be the action on the trade as it pauses
at 129 7/8 x 130 ...????
[13:07] <KenWolff> 10:07:46 SELLING!!
[13:07] <KenWolff> 10:08:13 and I would guarantee it at a price increase
of 20% ... 95% of the time in this type of market..
[13:07] <KenWolff> 10:08:36 which would occur at about 137 dollars..
[13:08] <KenWolff> 10:09:02 but based on a quick climb to 130 and a
pause... the value is now.... DOWN , LOWER, CHEAPER ..
[13:08] <KenWolff> 10:09:18 Selling should occur 90% of the time at this
time of day in this type of market...
[13:08] <KenWolff> 10:09:34 so what then becomes our "perceived value" on
YHOO...
[13:09] <KenWolff> 10:10:05 again we consider the market, the pace of
trading and when possible the brother and sister stocks in the sector..
[13:09] <KenWolff> 10:10:34 and we go short setting a downward target that
would be consistent with the mood of the market...
[13:10] <KenWolff> 10:10:54 In a running type of market I will not attempt
shorting...
[13:10] <KenWolff> 10:11:02 In a bull market I will ..
[13:10] <Nesi> 4 questions holding..
[13:10] <KenWolff> 10:11:11 In a nervous and correcting market... Yes...
[13:10] <KenWolff> 10:11:20 today is a correcting market..
[13:11] <H-Man> correcting 2 day selloff ?
[13:11] <KenWolff> 10:11:47 In a negative and nervous market I will hit
the highs short in a heart beat..
[13:11] <KenWolff> 10:12:03 Yes H-man... we are going up off of 2 days of
wild downticking..
[13:12] <KenWolff> 10:13:02 remember a trade that we did a couple weeks
ago... it was an IPO .. (EBAY I believe) it opened at 55 ... and I said I
would not buy it until it hit 45???
[13:12] <KenWolff> 10:13:19 and I said I expected 47 ...
[13:12] <KenWolff> 10:13:36 so 2 dollars off the bottom approx... a few
hours before it hit 45 ..
(Continued) |
