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

To: Apakhabar who wrote (10973)	12/16/2000 2:50:08 PM
From: Threei	Read Replies (1) \| Respond to of 18137

Apakhabar, my take on scalping part of your post in regard of danger for newer traders. Trader should not start learning scalping before he/she understands underlying reasons for stock movements. I am talking about support/resistance read by any of methods (chart formations or tape reading). When one understands how reading is done one is free to elect any time frame one is comfortable with, or any style of taking profit/loss one's risk tolerance leads him into. What Alan refers to (I guess), and I am totally agree with it: leading newbies to scalping without any understanding of stock movement, to attempts to profit from very superficial things that are served as highest trading wisdom. I faced this disgusting approach recently. About two months ago guy came to my office to watch for a day. His background was: zero of trading experience, 2 or 3 weeks of courses provided by his broker. I was looking at stock that slid slowly to the level where plenty of participants were bidding the stock while just 1 was offering it at inside. I commented: I am waiting for fast selling that would take stock down under this support to enter long on reversal. Guy said: huh?? Level 2 shows it goes up from here, what are you talking about?? 15 players are bidding, just one is offering! And that was the training he paid couple thousands for! Indeed stock broke support, went down about 3/8 and paused, giving me an enter with fast 1/2 bounce. His reaction was: "OK, now I am confused more than ever... I would have entered it above support and stopped out where you bought." His brain was also totally littered with scalping techniques 5 years old, SOES bandits times... I was shocked to learn that some still teach this and serve it as highly sophisticated approach, condemning unsuspecting neophytes to imminent failure. Vadym

To: Apakhabar who wrote (10973)	12/16/2000 3:28:42 PM
From: LemonFlavor	Respond to of 18137

Apakhabar, you stated opinions that I completely agree with much more eloquently and tactfully than I did. Thanks.

To: Apakhabar who wrote (10973)	12/16/2000 6:11:22 PM
From: TraderAlan	Read Replies (2) \| Respond to of 18137

Ap, I want to trade with the wind at my back at all times. I never look at an individual stock pattern in a vacuum. I use the broader cycles to support my position. The problem with the last month or two is that the major indices have been in a very oversold condition. This fuels many of the short squeezes. I'm content to trade less dangerous conditions (ie the sloppy middle) from the short side. Absolutely I believe that swing trading can be done intraday. When Taylor discussed his method, it was impossible to trade anything but the daily chart. But I believe that time frame is a non-issue. 5-minute charts produce clean trends. But, system noise increases as holding period shortens. For example, trying to buy a clean 62% retracement on a 5-minute chart doesn't yield good results because a single tick or two can carry a stock 10-15% in either direction. Mathematics just isn't that exact in the intraday environment. Naz has been a PIA because natural stop levels are being blown out on almost every common pattern. I can adjust to that with an understanding of how stocks can violate these points but not change their trends. But frankly it's exhausting and I'd rather move on to easier opportunities. I have nothing to prove and just want to be an opportunist. NYSE allows me to do that. I hate the crowd and their love of tech stocks. This tells me to play where the herd isn't playing. Squeezes have very different characteristics than pullbacks off of bull moves. Fear generates a different price chart than greed. I have entered shorts at the end of squeezes but, again, I find the manic environment distasteful and the volatility undermines my risk considerations. Of course scalping is highly dangerous to beginners. Market swings and their nature is one of the most complicated forms of knowledge. Newbies don't understand the nature of price movement without a long period of observation and commitment of their own funds. That's why I say it is "advanced". The ebb and flow of price movement is highly deceptive. As we noted with Dustin, some folks have a natural talent to understand this. The unwashed masses do not. The statistics support my view. The failure rate for scalping is well over 90%. Not a pretty picture. You raise a good point as to why scalping is so difficult. Most traders, including new ones, cannot manage the reward:risk equation. Scalping requires mastery of this equation due to the limited reward. A few bad moves or mental lapses places the scalper quickly into a losing position. Alan