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

To: Tai Jin who wrote (1955)	7/18/1999 5:47:00 PM
From: TheKelster	Read Replies (1) \| Respond to of 18137

KUDOS TIA. Very good follow up on your thought patterns. We have in this exchange with each other given life to the art of TA. I agree 100% with ID's thoughts on the learning process. One thing I find severely missing in the teachings of trading is the intimate access to the FULL thought process a winning trader goes through. As a matter of fact most explanations are far too shallow even when intentions are good. Pick up any book and you find stories like "Michael Marcus, who turned a $30,000 account into $80 million! (Market Wizards). When you have finished his story you are inspired. You are determined to be disciplined. But you ain't any closer to turning your $5,000 into $6,000 than you were when you started. You "challenged" my postings and I re-posted (a gentleman's game :-)) with a fuller examination. You responded yet again. This additional development showed your mental position carries a greater power than a beginner normally contemplates. Your treatment is very persuasive and with merit. I would have to believe the odds of a breakout are slightly in favor of taking a position in this stock, if the entry is timed correctly. I used the words "odds of a breakout" in the previous paragraph. For those not clear on using probabilities and odds I must point out that my prior posting only covered odds of a profit or loss after establishing a position. You cannot use these methods to determine the actual odds that a stock will move in a particular direction. Determining "odds of a breakout" is a much more subjective process. Your entry point analyses brings to light a question (or a point) that I wondered if anyone would pose. What happens to all those fancy figures on odds if the stock breaks out, pulls back, but finds support just above the 4.00 range? You re-compute them. If you look at the chart you see a number of bodies end right at 4.00. A few of them have hair (shadows) up to the 4.37 level. If you set your mental buy point at 4 1/6 and no higher than 4 ¼ you will set this buy up as a premium hand. Still using a sell target of 5.25 and now using a stop of 3 15/16. At 4 1/6 you have 19 favorable points and only 2 unfavorable points if you set you stop out just under 4. 19/21=90.4% which is your probability of making a profit. 19/2=9.5 odds of a profit that are 9.5 to 1. Extremely high. You could place these bets all day long as fast as you can find them and you will be immensely profitable. Worst case scenario buy in at 4.25. 15/21=71.4% probability for profits. 15/4=3.75 odds of a profitable outcome 3.75 to 1. I would make this buy with a small lot to help stabilize my risk. Again these are odds of making a profit once you have established your position. These have nothing to do with the odds that the stock will move in any given direction. However, for those of you wondering how to survive the early period and those of you wondering how to begin to increase your speed of capital accumulation - knowing these simple odds every time you place a trade will change your life. One edge they give you is the ability to determine in a rational way when to bet big and when to bet small. Take all your trades and start filtering them through the "odds filter" (you will get quick at it) and you will begin to discover that your money has been slipping out the back door. Quit making good money bets on bad odds positions. Take a lesson from "Rounders" "Get your money in when you have the best of it and the rest of the time protect it – don't give nothing away". Tia, (male or female) You are truly a gentleman and a scholar, Thanks! KK