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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade -- Ignore unavailable to you. Want to Upgrade?

To: Ken Wolff who wrote (1519)	9/15/1998 12:10:00 AM
From: Ken Wolff	Read Replies (4) \| Respond to of 2120

Hey Gang, Here is an interesting discussion we had today concerning trading philosophy... Good Luck Ken www.mtrader.com MTrader Class - 09/14/98 (C) Copyright 1998 The Momentum Trader [12:34] <KenWolff> 9:34:22 Lets discuss an important subject we will forever be impressing into your consciouness... and hopefully it will get into you sub consciousness.. [12:34] <KenWolff> 9:34:47 I was DCC'd by a young trader who chose to buy TLAB at 49 1/8 ... [12:34] <KenWolff> 9:35:14 TLAB was a gainer that was on a pullback... first fact was that it was unusual in the beginning because why??? [12:35] <KenWolff> 9:35:35 any guesses?? [12:35] <Player25> please, to send question to KEN double click on player25, thnx... [12:35] <altaaboy> pullback [12:35] <KenWolff> 9:35:51 was any other gainers pulling back??? [12:35] <Riverdog> Nope. [12:35] <Riverdog> Correction: AMZN [12:35] <KenWolff> 9:36:19 OK.. 2nd fact... what was the pace of trading and spread changing like???? [12:36] <Riverdog> Bouncy and erratic. [12:36] <KenWolff> 9:36:53 Yes.. AMZN was also selling down.. but it was again the only one.. along with TLAB.. [12:36] <KenWolff> 9:37:05 so we had an unusual opportunity.. first fact.. [12:36] <KenWolff> 9:37:11 it was still an opportunity.. [12:37] <KenWolff> 9:37:38 Yes river.. bouncey and very erratic.. I for one could not see the buying until after the bounce.. [12:38] <KenWolff> 9:38:26 Was the Pace of trading: 1. VERY FAST 2. MODERATLEY FAST 3. EVENLY PACED 4. SLOWER PACED.....?????? [12:38] <_philaguy> 1 [12:39] <Riverdog> Very fast - it was the most actively traded stock of the morning. [12:39] <KenWolff> 9:39:40 YES... so our young trader should have entered with: 1. Extreme Caution 2. Caution 3. Mildly aggressive 4. aggressive... ???? [12:39] <Sneezy> not at all? [12:39] <gainer> lol [12:39] <Janine> 5. short [12:39] <KenWolff> 9:40:07 LOL.. EXACTLY sneezy... [12:39] <_H-man> none of the abov [12:39] <Sneezy> <beaming> exactly what I did! [12:40] <KenWolff> 9:40:26 I was waiting for #5.... [12:40] <_Alpine> So fast RT quotes were behind for some [12:40] <KenWolff> 9:41:03 OK... so the young trader DCC'd me feeling sick cause they exited from 49 1/8 at 48 1/2 ... [12:40] <KenWolff> 9:41:10 for a loss of 5/8 of a point.. [12:41] <Riverdog> Good thing it wasn't 10 points. [12:41] <KenWolff> 9:41:35 OK... they wanted to know if they should try 47 now???? [12:41] <KenWolff> 9:41:50 What would be your advice???? [12:41] <gainer> no way [12:41] <KenWolff> 9:42:00 It was bottoming at 47 .. [12:41] <Sneezy> only if the trader is masochistic [12:41] <KenWolff> 9:42:07 why gainer??? [12:41] <gainer> lol [12:41] <_Poetus> tie hands to chair [12:42] <gainer> burned once..enough [12:42] <KenWolff> 9:42:31 right... [12:42] <KenWolff> 9:42:45 the rule is: "TRY TO KEEP A CLOSE AND REASONABLE STOP!!' [12:42] <Riverdog> If he knew he could keep a quarter point stop, based on the percent down it would be reasonable. But the pacing was so jumpy I don't think he reasonbly ccould expect that. [12:43] <KenWolff> 9:43:50 How do we do that...??? By assessing our own abilities in light of the: 1. Trading pace 2. spread action 3. knowledge of the execution system we are using 4. experience 5. Market we are in.. [12:43] <KenWolff> 9:44:01 very true River.. [12:44] <Player25> 2 questions holding... [12:44] <KenWolff> 9:45:09 Once you lose 5/8 of a point... what does that tell you???? 1. unlucky 2. Bad MMs 3. Poor Market 4. bad trade....????? [12:45] <Putter> #5....If you can't keep stop #1, there is a good chance stop #2 WILL BE BLOWN if tested. [12:45] <KenWolff> 9:45:37 answer: "You are not able to keep a close stop" FOR WHATEVER REASON.. [12:45] <gainer> all of the above [12:45] <KenWolff> 9:46:19 So based on 5/8 of a point stop losses... how many times can you afford to be stopped on ONE trade?????? [12:46] <gainer> once [12:46] <KenWolff> 9:46:31 answer: NOT MANY!!!!!!! [12:46] <KenWolff> 9:46:40 exactly... Only Once.. [12:46] <KenWolff> 9:46:54 so I advised the student... "You cannot play the stock again" [12:46] <KenWolff> 9:47:06 they were sick and wanted to make that money back... [12:47] <Riverdog> Revenge trades usually end up costing you even more. [12:47] <KenWolff> 9:47:45 but when it hit 44... then 42... then 40 ... then 38 ... they were not so sad anymore.. [12:47] <KenWolff> 9:48:15 and the 2 1/2 dollar bounce would not have made up for the early losses... [12:48] <KenWolff> 9:48:52 They were still feeling like a loser.... they said to me: "BUT IT IS REAL MONEY!!! NOT A GAME!!" [12:48] <gainer> lol [12:48] <Janine> speaking of TLAB it's at 38 7/8 [12:49] <KenWolff> 9:49:26 I said to them: If you think of it as "MONEY".. You are destined to lose.. [12:49] <KenWolff> 9:49:34 why is that??? [12:49] <_H-man> you freeze ? [12:49] <Janine> because then you get emotionally attached to the stock? [12:49] <KenWolff> 9:50:07 We are so engrained with thinking of trading as making MONEY.. or LOSING MONEY... [12:49] <BillyD> you are not focusing on the trade [12:49] <gainer> too much fear [12:50] <Riverdog> Can't be mechanical about keeping stops. [12:50] <KenWolff> 9:50:24 Let me ask you this: [12:50] <_Poetus> well isn't that a big part of trading? [12:51] <KenWolff> 9:51:39 "Does your gardner think of wearing out his shovel everyday??" , "does your local seamstress think about wearing out the sewing machine each day??" , "does your local cook think about losing his stove each day??" [12:51] <Threei> you have to do your job. Money will come if you do it right. Impossible to trade if you think of money instead of trading [12:51] <KenWolff> 9:51:54 NO... [12:51] <KenWolff> 9:52:19 If they did they would not do a lot of work... would they...they would only think about the "LOSS" of equipment.. [12:52] <_Poetus> i thoughtt the job of trading was to make $ [12:52] <KenWolff> 9:52:40 NO poetus..."THAT IS NOT YOUR JOB!!!" [12:52] <KenWolff> 9:52:54 So then what is your job???? [12:52] <_Alpine> preserve capital [12:52] <_Poetus> uh oh i'm just a newbie brrrrr [12:52] <Sneezy> I see... so think of a stop loss as depreciation on equipment... [12:52] <KenWolff> 9:53:09 and what is the tools necessary to accomplish it??? [12:52] <KenWolff> 9:53:21 are the tools... bad grammer.. [12:53] <Rusty> Trade well [12:53] <Riverdog> Learning how to recognize buying and selling and learning how to execute appropriate stop losses. [12:53] <SteveB> stops [12:53] <Janine> good riverdog [12:53] <KenWolff> 9:53:54 "THE GAME, THE RULES, THE GAME, THE RULES, THE GAME, THE RULES, THE GAME, THE RULES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!" [12:53] <Threei> Our job is to assess momentum, right side of the market and exercise good timing... [12:54] <KenWolff> 9:54:29 Many traders are like chess players that "HATE" to lose those cute little pawns... [12:54] <Janine> TLAB at 38 1/2 [12:54] <KenWolff> 9:55:15 The best chess player I have ever played against offerred me their queen early in the game and check mated me soon after.. [12:55] <KenWolff> 9:55:51 So he was willing to lose what he considered a reasonable loss to accept the winning of the game.. [12:55] <KenWolff> 9:56:03 that is what we do here... [12:55] <KenWolff> 9:56:20 We play a very serious, tough and trying and emotional game... [12:56] <KenWolff> 9:56:44 we play by the rules and try to assess the risk, the players, the variable and the potentiall... [12:56] <KenWolff> 9:56:51 we are not here to make money... [12:56] <KenWolff> 9:57:19 I congratulated the student and said how proud I was of them... keeping a stop at a loss of 5/8 was smart... [12:56] <_Poetus> okay, but what if you came to daytrading to make money; ;can u still change your mindset? [12:57] <KenWolff> 9:58:03 and I did it when TLAB was bouncing up and looking like it was going over 49 .. [12:58] <KenWolff> 9:59:00 I told them that was the game... and I would rather see a loss at 5/8 than them making 5 bucks on a bounce off 47 up to 54 dollars.. [12:59] <KenWolff> 9:59:30 If you do not poetus ... I am afraid you are doomed... [12:59] <_Poetus> ok [12:59] <KenWolff> 9:59:38 it is a very fragile nuance with trading.. [12:59] <KenWolff> 10:00:16 You must look at money as a tool only... do not focus on it... [13:00] <KenWolff> 10:00:31 If you play the game properly... let the money take care of itself.. [13:00] <_bear> KEN what you are saying is you must play by the rules and that, will eventually earn you money [13:00] <KenWolff> 10:01:03 Just consider STOPS, SHARES , AND POINTS ... enter and exits.. [13:00] <KenWolff> 10:01:18 Yes bear... [13:01] <KenWolff> 10:02:00 Figuring it as money will only cause hesitation as you attempt to see how much money you won or lost.. [13:01] <KenWolff> 10:02:17 and it is really a matter of time and percentages... [13:02] <KenWolff> 10:02:45 your portfolio will climb and drop and climb and drop and hopefully over a period of time... climb!!! [13:02] <KenWolff> 10:03:17 but I want you to be on auto pilot...doing what is necessary for your ultimate success... [13:03] <KenWolff> 10:03:44 Just thinking of trades, percentages, potential, buying.. selling.. enter and exit... [13:03] <KenWolff> 10:03:54 and especially STOPS.. [13:03] <KenWolff> 10:04:16 So based on reasonable trading.. our young trader had no business in TLAB in the first place... [13:04] <gainer> lol bird [13:04] <KenWolff> 10:04:50 and if they had needed "MONEY" then would probably jump on it... but according to the "RULES" of the game.... NOT ACCEPTABLE TRADE.. [13:05] <KenWolff> 10:05:58 If you have a wife or husband or friend that asks you how much money you made today... refuse to answer... only anser this way: "I PLAYED THE MARKET VERY WISELY TODAY AND PROPERLY AND DID THE BEST I COULD HAVE POSSIBLY DONE!!!" [13:06] <KenWolff> 10:06:27 that is the only thing that really matters in trading... [13:06] <KenWolff> 10:06:38 "DID YOU PLAY THE MARKET WISELY??" [13:06] <_H-man> lol, the wife would never go for it !, but agree with the sentiment [13:06] <KenWolff> 10:07:06 You can play it Luckily but will that really be a long term strategy for you???? [13:07 ] <KenWolff> 10:07:40 Hey.. I have had a few fights.. but I refuse to be lured into a making money mentality when trading.. [13:07] <KenWolff> 10:08:06 It can only do you harm... I see no good in it.. [13:08] <KenWolff> 10:08:49 You desperately need: "PATIENCE, PRUDENCE,TIMING,A HEALTHY MENTAL ATTITUDE" [13:08] <KenWolff> 10:09:20 You do not need : "PRESSURE, OUTSIDE FORCES THAT DO NOT KNOW ANYTHING ABOUT WHAT YOU DO!!!" [13:10] <KenWolff> 10:10:31 If your spouse asks what you did today... you say.. "I learned a bunch and expect to be rick some day!!!" [13:10] <KenWolff> 10:10:40 rick=rich [13:10] <Sneezy> (spouse phoned 1/2 hour ago: "did you make any trades today??" I hung up) [13:10] <gainer> lol [13:10] <_Alpine> It's seems too hard to keep money making mentality out of your head when you are a professional, or this is your bread and butter (retired or something). [13:11] <KenWolff> 10:11:28 It is very hard Alpine.. [13:11] <Magic> my wife always asks how I did (I think she is getting ready to go shopping Big Time) [13:11] <Magic> agree with Alpine [13:11] <KenWolff> 10:12:07 but I will keep at you until you focus on "GREAT STOPS" , "GREAT HIGH PERCENTAGE TRADE" , "EXCELLENT EXECUTION" [13:11] <Magic> but learning from Ken [13:11] <KenWolff> 10:12:17 I really do not care how much money you make.. [13:12] <KenWolff> 10:12:34 SMART TRADING ... [13:12] <Sneezy> I am a CPA, former CFO... profit making thoughts are in my blood [13:12] <KenWolff> 10:13:02 Because sometimes the market is taking heads... and we do not want to be fighting the market... 'THE MARKET ALWAYS WINS' [13:13] <KenWolff> 10:13:31 I know sneezy.. mine too... I know exactly how much 1/16 will make me on 1K shares...LOL [13:13] <Sneezy> ( have a chart taped to my monitor.. $63.. should I tip it off??) [13:13] <Sneezy> tip = rip [13:13] <_Alpine> lol, me too [13:13] <bishop> looks like alsi could have made us 3 bucks today, no one has mentioned it much though, opinion [13:13] <KenWolff> 10:14:18 But our goals are a bit different.. smart enter, smart exit.. sometimes 2 bucks will be smart... sometimes 1/16 will be smart... [13:13] <bishop> for ken [13:14] <Janine> ken TLAB down to 37 3/4 [13:14] <KenWolff> 10:14:56 LOL.. [13:15] <KenWolff> 10:15:30 Ok.. I think you get the point... that is the reason for me being here... [13:15] <KenWolff> 10:15:44 I am not trying to be a smart A__ ..... [13:15] <Sneezy> they are not dollars.. they are just POINTS.. [13:15] <KenWolff> 10:16:09 I will forever be pointing out the percentages and hazards of every trade...that is my job.. [13:15] <KenWolff> 10:16:18 as best I can... [13:16] <Player25> 3 questions holding... [13:16] <runner> That is great KEN . [13:16] <KenWolff> 10:16:57 so If I tell you the trade is not a good one... it is not because I am a big ego personality.. I will attempt to point out percentage only.. [13:17] <italiano> test [13:17] <KenWolff> 10:17:42 I hope you have the luck of 1000 Irishmen... but I would rather you have the Mentality and skills of a good chess player.. [13:18] <KenWolff> 10:18:27 If you shorted TLAB at 52 bucks and covered at 38 ... YOU ARE LUCKY.. [13:18] <KenWolff> 10:18:46 If you shorted TLAB at 52 bucks and covered at 50 ... YOU ARE SMART.. [13:18] <KenWolff> 10:19:15 You played the proper percentage and got out expecting a run to the upside... smart play.. [13:19] <KenWolff> 10:19:48 hindsight makes the 38 cover look good... it is luck... which I do not mind... [13:19] <KenWolff> 10:19:53 but luck will run out... [13:19] <KenWolff> 10:20:00 SMARTS WILL NEVER RUN OUT.. [13:19] <KenWolff> 10:20:14 questions??? [13:20] <Janine> is TLAB at bottom 37 1/2? [13:20] <KenWolff> 10:20:57 GOSH janine there you go.. wanting money.... [13:20] <KenWolff> 10:20:58 LOL.. [13:20] <KenWolff> 10:21:08 sorry... My quotes are froze.. [13:20] <KenWolff> 10:21:10 LOL.. [13:20] <gainer> lol [13:21] <KenWolff> 10:21:49 Just a sec.. [13:21] <SteveB> some complaints of MBT down..mine okay [13:21] <KenWolff> 10:22:05 seems like we missed 36 5/8 low janine....dang it.. [13:21] <KenWolff> 10:22:20 No problem I have back up quotes.. [13:22] <KenWolff> 10:22:27 MBT is back up.. [13:22] <KenWolff> 10:22:48 should hit 39 1/2 though janine.. [13:22] <KenWolff> 10:23:20 but it can very well fall to 36 7/8 again.. [13:23] <Janine> OH great [13:23] <KenWolff> 10:23:37 If it does.. lets buy it.. [13:23] <SteveB> cnbc CIEN rehash....here [13:23] <KenWolff> 10:23:49 for the experienced traders.. [13:23] <KenWolff> 10:23:56 can we ask the questions later...?? [13:23] <KenWolff> 10:24:12 Lets go back to trading...see if we can getsome action...?? OK..