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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Hands Off who wrote (1266)	6/23/1999 3:06:00 AM
From: Bilow	Read Replies (1) \| Respond to of 18137

Hi Marshall Dix; Your catharsis is common to all (intelligent and sane) beginning traders. It is probably the realization that you do not have an edge. The old saw about not knowing who the sucker at the poker table is does not apply to the stock market as a whole. But if you don't know more why you are going to make a profit, it is a great idea to not trade. (That said, I agree with the Phantom that every trade should be assumed to be a bad trade when entered.) When you have this condition, if I understand it correctly, you need to spend more time watching the market. Look for patterns that repeat. As an example, I have noticed that when MSFT was in a long trading range last year, the action each day tended to be similar to the action from the previous day, but advanced by 30 minutes. Hmmmm. Maybe stocks follow lunar time. They do, after all, claim that madmen are affected by the moon more than most. That would explain the current internet valuations as well... After making your observation, try paper trading it for a while. Does it repeat? What is the average gain/loss? If you are mathematically inclined, calculate the variance, and see if you can reject the null hypothesis. (The null hypothesis is that the trading technique doesn't make any money.) Does the edge make enough to pay commissions? What is the worst case the trade can go to? My suggestion about repetition on a daily rate is not a trading technique, as it is missing stop losses &c. It's just an idea, and the reason for the idea is to get you thinking about patterns. -- Carl