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Strategies & Market Trends : Strictly Buy and Sell Set Ups -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (7472)	1/26/2006 10:33:25 PM
From: Chuckles_Bee	Respond to of 13449

Handling success....."Once you expend psychological energy, you need rest". Nice to hear that. Sometimes I just need to own nothing and take a week off. Thought maybe I was just a stock trading "sissy", but seems I'm actually doing a good thing! Regards, Chuck.

To: chowder who wrote (7472)	1/29/2006 4:16:10 PM
From: chowder	Read Replies (1) \| Respond to of 13449

Kryptonite ..... January 27, 2006 ....................................... One of the most challenging questions asked during many job interviews is, "what are some of your weaknesses?" Some job candidates answer, "I have none". But let's face it, we all have weaknesses. In fact, "I have none" is a lousy answer. It shows that the candidate does not evaluate himself often enough. He appears to be unaware of his mistakes. The only people who don't make mistakes are those who don't risk a thing (perhaps that's the biggest mistake of all). This article is titled Kryptonite because we are going to discuss the strengths and weaknesses of various systems. Is there such thing as a system that takes no losses? There isn't, unless you're talking about a system that only trades once a year, once a decade, or perhaps once a century. Such systems are useless. There is no perfect system, but some systems are better than others. Stick to the good ones. Trade Offs Two prevalent systems that we will discuss are trend following and counter trending. Trend following is exactly what is sounds like- entering short trades after the stock has already fell for a while, while counter trending would sell short when the stock has begun a more recent decent following an upswing. The systems act the same for long trades as well. For instance stochastics is an indicator that uses counter-trending while, the momentum indicator is typically used for trend-following. Some of the strengths and weaknesses of both types of systems are shown below: ttrader.com In the emotional game of trading, it is monumentally important to understand advantages and drawbacks of various systems. The reason trend following tends to have smaller losses is that traders following trends usually exit their positions soon if there is no confirmation of their initial suspicions. Thus, they are wrong more often than they are right, but when they are right, winning trades tend to be larger than losing trades. Trend reversals typically show the opposite results. These traders usually allow for more risk as a trade-off for more frequent wins. The inherent weakness is that losing trades tend to be larger than winning trades even though the losers are less frequent. Both systems and virtually all trading systems can be tested and quantified using software such as Tradestation or Trade Navigator. These programs will test a systems and spit out results for the system over a given time period for a given security (or securities) including: ... percentage of trades profitable ... size of average winner compared to size of average loser ... percentage in the market Software should be used whenever possible to save time. Knowledge of weaknesses is critical. The Perfect System Many traders have visions in their heads of perfect systems that will lead them inevitably to the pot of gold at the end of the rainbow. Such a system is quite elusive. However, it's a sure thing that some systems are better than others and thus there is such a thing as extremely good and extremely bad systems. Here is what you need to be wary of when searching for an outstanding system. When you push in one place, you are likely pulling in another. For example, when you want winners to be bigger than losers, then losers will come more often than winners. If you want smaller losses, you will have them more frequently. Virtually every system is subject to these phenomena. The key is be like the strong job interviewer who knows his weaknesses and does not carelessly ignore them. Be disciplined- and trade well! BigTrends.com (This message is linked to previous articles.)

To: chowder who wrote (7472)	1/31/2006 12:06:43 PM
From: chowder	Read Replies (2) \| Respond to of 13449

The Future Is Never Certain .......................... When trading the markets, uncertainty is often a fact of life. Consider the plight of Jack who tried to add as much certainty into his trading as possible. He decided to invest in a solid retailer. Consumer confidence was high and sales had been high at the retail stores for the past two years. He looked closely at the five-year chart and noticed a clear, upward trend. When the price did temporarily drop, the most it had ever fallen in the past five years was about $3. It was currently trading at $40. He decided to buy 2000 shares and protected himself by placing a stop at $37. He reasoned that the past five years would be a good indicator of what might happen in the next year: the stock price should continue to rise and should only fall by $3 at the most. There was something psychologically pleasing about studying the fundamentals of the company and its past stock performance. He felt assured. Even though his risk was almost 8% of his trading capital, he decided the risk was worth it. Unfortunately, history only repeats itself when it does. A month after entering the trade, the stock price fell to $35. Jack couldn't believe what happened. He thought, "How could I have been so wrong? I had considered all possibilities." Many novice traders think like Jack. They seek out a level of consistency in the financial markets that just does not exist. They believe that the markets follow natural laws and falsely believe that there are some magical mathematical principles that underlie it all. Big time institutional investors may be able to forecast the market action in the long term, but they have mountains of capital and can attempt to hedge risk, and even they have great difficulty merely matching the yearly increases of the indexes. For the smaller investor or trader, there are no secret mathematical formulae. The past is the past, and what happened in the past may not forecast the future. Don't falsely think that you can forecast market action with the same precision a physicist can program a satellite to reach Mars. The markets don't follow natural laws. There are many unknown factors that underlie the price action. The best you can do is study all available information and make an educated guess. As long as you manage risk, you can make trade after trade and get the odds to work in your favor. You won't be right all the time, but you'll be right enough of the time to make a profit. It may be pleasing to think that you can add certainty to trading, but you can't. You'll feel better in the long run and trade more profitably if you accept the fact that the future is uncertain. Innerworth.com (This message is linked to previous articles.)