Sunday, December 17, 2006

Where I've Been

I know I've dissappeared recently, at least as far as this blog is concerned. I've been reflecting. I've also been making plans. But first, I think you should know on what I've been reflecting. As a few estitute readers have mentioned, I can be a little hard on myself from time to time. I have quite a lot of drive and desire to be the best, yet I know I'm new to trading and therefore am the worst I will ever be. That's the good news. The bad part is that it can be a bit frustrating & discouraging.

I have not been placing trades (not even virtual) for the past couple weeks. Why not? Good question. It's not that I'm that discouraged, it's just a matter of me wanting a better trade journaling platform in order to get quantifyable, objective results. I was using Trade Tracker Online ( to journal my trades, but the free 30 day period expired. I was introduced to TTO by Jordan Stokes. It's a decent trade journaling/tracking program and I was excited to use it because I haven't found any other worthwhile pieces of software or services out there for trade journaling.

As you know from reading my previous posts, keeping a trade journal is an essential habbit of a professional trader. I started with free-form text & chart captures (in Microsoft Word) but now find it too limiting because it lacks an easy way to quantify the trades. I can also maintain a spreadsheet with my entry & exit numbers and get some basic metrics of my success rate. Unfortunately that means entering the data twice. I don't know about you, but I hate double data entry, not to mention the fact that this still only offers a very broad indication of the results of your trades. Trade Tracker Online does a much better job by offering a platform which helps you evaluate a trade and record entry, stop adjustments, profit taking & exit. This avoids double data entry, and gives you the benefit of looking through your journal for you best & worst trades helping you to fine-tune your trading rules and trading style.

As you may recall, I'm a computer programmer and naturally I'd already been mentally designing a trade journal database. Initially when I saw Trade Tracker Online I thought: Cool! A solution that I can put to use today, rather than having to spend the time to develop my own. After all, my goal is to be a professional trader, not a computer programmer or database designer. I've been programming professionally since the turn of the century and I'm a little bored of it. Trading is more interesting to me, not to mention that the income from trading is scalable based on the amount of money you have in your trading account, not on the amount of hours you can sell of yourself in a given day (assuming you're an employee or contractor, of course).

As nice as Trade Tracker Online is, it doesn't offer the level of insight that I'd like to see. I have some very specific ideas of how to create a better trade journaling platform and have assembled a team of programmers to help me create my vision. I don't want to give away too much about what we're developing before it's ready for public release, but it will provide a trader with far more insight than anything else out there that I've seen. I'm very excited to be creating this solution and can't wait to tell you more about it. Until it's finished with the phase 1 release I won't have time to be trading. It is a related discipline though, and I won't be far from the markets.

Sunday, December 03, 2006

Recommended Reading

It's near that time of year again, when you're scrambling for that perfect gift (or at least one that passes) for people in your life. I've assembled the following list of recommended books. These have been recommended by some of the traders I've been in contact with as well as my own personal picks.

The Complete List is available on my Amazon astore

There's another benefit from you clicking through from this page. I have an associates account at Amazon and your purchases through the above links give me a small kick-back. This is the only money I make from this blog. Consider it a way to donate to me for my time and effort being your inside man giving you the low-down on becoming a professional trader from a new trader's perspective. I'm happy to bring you my personal experience with Teach Me To Trade/EduTrades Inc. and what it actually takes to be a successful trader without hype and inflated claims.

I hope my experience helps you evaluate your own path to success and if trading is something suitable for you.

Thursday, November 23, 2006

Merry Thanksgiving & Happy Black Friday!

In the spirit of Thanksgiving I want to thank you for your continued interest and support. I have some wonderful readers; your comments recently have really lifted my spirits. Combined with a rejuvenating visit with my family for Turkey, now that the Tryptophan has worn off a bit, I'm feeling great. I've quietly been getting my way back into the markets this week, maintaining my watchlists and looking for setups to put my plan into action. I just need to get back into the practice of writing things up for your reading pleasure.

I began this post last night, hence the title, and was going to make a smart remark about whether or not the markets would see the same black balance as retailers today or if they’d be marked down to red tag sale prices. The new questions are now: will today’s shortened and lightly traded day see a follow-thru day in the red on Monday? Will traders and investors go on another buying binge, or will they need to close some positions to pay for the door buster deals they bought this morning? The trend does not seem to be in Jeopardy, so I don’t have to state my answer in the form of a question, but hey I've already gone this far: What is profit-taking? Alex? Judges?

Before I go further with the Jeopardy parody, let’s take a look at the (paper) trades I opened this morning: GT $17.89, ACN $34.32, AGR $17.86, and BAC $54.56. As I’m sure you recall, my goal is 25 flawless trades with 10 in a row before I go back to live, real money trades. I’m off to a pretty good start; however I need to refine one aspect in order to have a clearer policy on managing entry on a stock that gaps down. I watched these develop during the first couple hours at market open and decided to make entry based on the 5 minute intra-day chart. I haven’t nailed down my exact trading policy for such entries, and will review the materials, knowledge base and TMTT resources in order to nail down this gray area of my trading plan.

Thursday, November 16, 2006

Feeling Pavlovian

Dear readers, as you know I've been having a difficult time of things lately. I haven't been secretive about it, but I have been keeping the full magnitude of the recent events out of my blog. I've been in a period of introspection. I do try to bring you the unvarnished truth behind my personal journey here, not only for you to understand what Teach Me To Trade/EduTrades teaches, but also for you to understand my perspective of the journey to becoming a professional trader. I'm attempting to bring you the trials, tribulations, joys, sorrows, successes, failures, mental & emotional adjustments to name a few. So it would be wrong of me to withhold the negative experiences along the way, wouldn't it?

Of course I want to be able to report all the things I'm proud of here, all the happy news of my successes, and no, I don't enjoy bringing bad news to you. I'm sure there will be better news to report to you in the future, the near future, certainly, but you must know just how trying the last few weeks have been on me personally. Not everything is directly related to the market and my pursuit of becoming a professional trader, but since putting in the time takes away from other activities that I'd like to partake in, the personal aspects are inextricably linked. I consider the time spent trading as a short-term sacrifice for a long-term goal. As I become able to live off of my trading profits time will become less of an issue considering that I won't need to devide it up between 2 jobs. It's an investment, but this time commitment has created a terribly difficult strain on me personally.

As you know from reading previous posts, I finally became ill about a month ago. The time burden of the schedule was certainly a large contributing factor. This then led from one thing to another, including a break-up with a girl that I loved very dearly. Yes, even though that relationship started a mere couple months back I really loved her. Why does that break-up have anything to do with the Trading? Simply put, I created a situation that she could not have in her life because of my commitment to trading. I put the market and trading ahead of her and her interests (at least in the short-term) and I don't blame her for deciding to end things based on that. Now, that is a much simplified version of how things ended, but it's at the core.

You must also understand that my actions were actually a consideration of the future with her and that I wanted to be a successful trader in order to provide for both of us. It stung even more to have the market destroy the relationship I was hoping to provide for via the market. So the very actions I was taking for the long-term destroyed part of the reason I wanted to be a success. Is it odd to link the two together? Maybe, but it's the truth of the matter for me personally. Call me traditional, but I still hold to the ideal that I should be the primary provider in a family and I have a strong desire to be able to provide financially, as I know that I already have much to give personally. It would appear that I prematurely invested too much of my emotions in a future with her. The fact that she was unable to forgive me for the single failure on my part, which is really as simple as an adjustment of priorities, is a clear indication that she's not the right person for me. I can't be held to perfection, that's too much pressure for me, and I already have enough pressure from my own expectations of myself. Not to mention that holding someone to perfection isn't something that a loving partner does. I recognize my shortcomings and failures and strive to do better, but in the end must forgive myself of my faults. I do the same for everyone else on the planet, and especially for those I love. I need the same understanding and forgiveness from a loving partner.

It seems that, at least for the near-term future, romance & relationships are not possible. Between work, music and the time it takes to become a successful trader, I don't have time for such pursuits, not to mention the pain and emotional trauma brought on by this most recent experience.

The worst part is simply the timing of it all. I finally, after several months of diligent study and practice, including time with Coach Rob and Mentor Jordan, enter real money trades and get a series of losers immediately followed by my girlfriend dumping me. Talk about a low point, and of course it's become a Pavlovian response for me to simply avoid the markets for the past couple weeks. Think about it, at the moment, the markets have brought me very little more than pain. Pain financially and emotionally. Rationally and logically I realize that I'm letting my emotions get in the way of my success, and of course that realization makes me feel worse because I want to be able to put all of that aside and just do what I need to do. I will.

I have no change of plans for my future and I am, at my core, a resilient optimist. I will be a successful trader, and these events will simply add to my experience to make me better at what I do. I appreciate your interest in my journey and hope that you continue to find my trading blog interesting and compelling enough to be worth your time. We will get back to our regularly scheduled broadcast after this week. I've been working full time and rehearsing & performing everyday this week, accounting for approximately 15 hours of each day (including the commute time), leaving very little time for anything else.

Friday, November 10, 2006

Re: Thanks for the blog

On 11/9/06, CV wrote:
I’m also a TMTT student. As of now we (wife also) just started and completed the master trader on demand and will go next to covered calls. We are also taking a trip to UT in Dec and spend back to back weekends for the master trader and covered calls. We are also reading a lot to try to keep just above water with all the information the academy has. We have a mortgage and 2 kids, so time is in short supply every day. We took the package with 6 classes and extra mentor days (don’t remember but may have been the elite package). We to have signed up for the coaching and additional class and mentor time. We did put a lot of money in, but as for education…they have a ton of stuff to become proficient in trading. Although thinking of the money we let go still gives me a tightening felling in my head and chest; my wife and I have come to a crossroad. We have to be proactive in our future, it’s just a little scary when all you life you grow up thinking that if you just work till you retire (so far it’s 75 they way I’ve calculated it) you will be just fine. I have to consider what I need to do for the future in terms of cash flow, not to mention having 2 kids and how much that will cost in college alone.

I think I’m rambling on so, fell free to contact me. I sit in front of the computer all day long (yes my dreaded J.O.B.). We’ll it’s not really bad here but I really don’t see them planning for MY future as much as they plan it for the executives. So I’m on my own….

South San Francisco

I hear you loud an clear CV. I have enough trouble keeping my head above water between work, markets & music, and the money spent on training certainly feels like a lot today. I look forward to the day it seems like pennies. The folks at Teach Me To Trade are as dedicated as you are to your success, you really are not alone. Granted, they're not there to suggest trades or advise you on a specific trade. No, they're there for something far more powerful: to teach you to trade in order for you to be able to take control and be a success.

I've needed a break from everything market related for the last couple weeks, and knowing my schedule will put me at a severe time disadvantage for getting back in. I've already learned the lesson to not jump back in after a break (see: Discipline, Patience & Timing). I have rehearsals and performances starting yesterday for 11 days straight. I have much to say and do with the markets and will be posting in updates and clearing out the blog-webs (think cob-webs... I know my blog has been attracting dust & lint lately). I need to find some way to balance it all out... I feel like I binge on one thing and then another, when I really need to find a way to balance out each week (and probably each day).

In other news, I purchased: (nothing there yet) which I plan to put a discussion board for others that are interested (amongst other pursuits relative to trading). I'm looking forward to having more of an open discussion rather than the one-sided leaning blog.

Thanks for saying hi, I look forward to hearing from you again soon.


Tuesday, November 07, 2006

Moving to TradeStation, too

Hi Mark,

Sorry to read about your tribulations. Hang in there.

I went to my mentor last week. Sam showed me Fibonacci and gap strategies. He showed me several stocks he thought would go down and a few bullish ones. I played several. I didn't play CMI (coulda made a bundle) and I did play GS and MRO. So far, they don't look good, especially after today's rally. I'm ahead in more spreads than I am behind in but GS and MRO have me in the red.


I sent a check to Interactive Brokers a day before I saw your post about TradeStation. I looked at the TS web site and liked it. IB returned my check because it had my old address. I felt so happy about the returned check that I knew I really wanted to try TS. Did you know there are third party plug-ins that you can use to automate your trading? All I would need is a computer and a Doberman. I would feed the dog and the dog would keep me from touching the computer. Anyway, I'll fund the account after my options expire on 11/17, if I have any cash left. -- GG

He who has injured thee was either stronger or weaker than thee.
If weaker, spare him; if stronger, spare thyself. --Seneca

GG, thank you for your support. I'm making a comeback from the recent emotional and trading lows. I just needed a little time to mourn. I can't afford any more mourning, so it's time to move on. That's over and aside from having an over-extended schedule, I'll be back in the markets soon enough (later this week for paper trading at least).

It seems like we'll be on the same timeline for funding our TradeStation accounts. I'm looking to TS to leverage my time a bit better. From my understanding you can program in automatic trading without 3rd party tools by simply using EasyLanguage. As a programmer, this should be fairly natural for me to write out my trading rules and then I won't mis-manage nor micro-manage my trades.

Of course the thought comes to mind that there is no "black-box" trading system that will work, which puzzles me a little, I must say. Since, logically, if you are strictly trading by your rules, you are essentially being your own black-box system. I imagine my entry rules will be pretty simple, but my exit rules will be a bit more interesting when I get around to programming them into TradeStation. It's all very interesting and I don't know exactly what to make of it. I'm most certainly going to be more involved in choosing which trades to enter, but even that will be honed down to a strict set of explicit rules that should be able to be described in TradeStation's EasyLanguage. It's a head-scratcher for now.

Aside from EasyLanguage, TradeStation's charts are top-notch and, along with a 22" ViewSonic widescreen display that I recently purchased, ought to save me some time in evaluating any given chart. Yes, that's right, I'm beginning my equipment upgrades with a rather large second flat-panel display. Eventually I'm sure I'll have about 4 or more displays working for me, but 2 will have to do for now.


Tuesday, October 31, 2006

Tough Times

Hi all. There are a number of things going wrong in my personal, professional and trading life at the moment. Much of it is related to the aftermath of the illness I suffered from a couple weeks ago. I've been falling behind on pretty much everything and on a highly personal note, my heart has been broken.

This blog is not about such matters, but please bear with me while I regroup. I have already written up the blog postings about my time with Mentor Jordan and the final call from Coach Rob, so come back soon. I should publish them tonight after I review for content, spelling & grammar.

Wednesday, October 25, 2006

Back to the Drawing Board

Although this week's trading has been better, I've been making mistakes and they're costing me money. I still have 4 open positions (long on USB, UARM, CVA and short on FDG) that could earn some money to offset the losses, but if you looked at my trading journal you'd think that I was addicted to giving the market my money. Granted, the bulk of the losses came last week primarily from bad entry strategy, but I'm still seeing flaws in the entry and management of my trades, so it's time I take a step back and test my trading rules in the sandbox again. This decision is primarily based on my failure to consistently apply my rules, not because I've incurred losses on the trades. Losses on trades are going to happen, but without consistently, flawlessly applying my trading rules, I have no way to know how successful my rules are and therefore I don't know how to systematically improve my results. The reason behind my failure to do so is because my trading rules are not explicit enough; they have too much gray area that's open to interpretation which makes it difficult to apply them. It's disappointing and I know you, my father and everyone who has helped me along the way are all interested in hearing of great success from me, but such is the current status of things. I'm implementing the following plan of action to get me back into live trades:
  1. Finish my business plan.
    • Includes my very specific, explicit trading rules. These are an adaptation of both Coach Rob's and Mentor Jordan teachings & thoughts on trading. It's an amalgamation of the two that I find appropriate for my risk tolerance, and burgeoning trading style.
  2. Trade 25 flawless paper trades with 10 in a row flawless before going back to real money.
    • Flawless only means I don't make any mistakes according to my trading rules.
    • I will evaluate my rules after 25 trades to see what rule changes could net me a better return.
    • If, after 25 flawless paper trades, I'm not seeing a net positive, I will apply some changes to my rules and retest on the next block of 25 trades and will repeat the process until I'm getting a net positive result.
  3. Set up an account with TradeStation.
    • TradeStation comes with very sophisticated tools for programming and evaluating rule-based trading including back-testing a strategy against up to 20 years of intra-day historical market data. I'm looking to TradeStation instead of Interactive Brokers because of these advanced features which should help with consistency and aid in reducing the time trading will require, making it more scalable and manageable on my time budget. I'm deciding to take this action now because it's the direction I'm planing to go, and while I'm tabling my money I may as well make the transition concurrently. TradeStation has great appeal to me because I'm a programmer and this sort of logical evaluation of a trade strategy based on my custom rules is pretty much a fantasy come true.
So there you have it. I'm putting myself back into the sandbox so I can play without further harming my account balance. You're probably thinking: Haven't you been paper trading and haven't you already seen success there? Answer: Yes, I have, but I made the mistake to not have more explicit trading rules and it was without the goal of flawless application of trade rules as I described above. I need to prove that I can consistently put in trades that follow my rules before I can go back into the market with real money. It's a bit of 2 steps forward 1 step back, but that's better than 1 step forward and 2 steps back. Who knows, maybe it is 2 steps backward, but they are much needed steps to take. Hang in there with me, it may take more time than I originally anticipated but I'm going to be a successful professional trader that will make a living trading the markets.

Saturday, October 21, 2006

Real Trades Week 1

Yes, there are some posts that I owe you, but I thought you might be interested in how trading went my first week. In short: Ouch! I entered and exited 6 straight losers! Yes, you heard that right, after all the practice, all the effort you know I put in, last week cost me some money.

Bad news, I know; trust me, I felt that. I have found that most of the trades could have been avoided, but they weren't an embarrassment, they just were less than ideal. I entered pretty much all of these on the day of using an hourly intraday chart. It's a good tactic to reduce risk & increase reward, but I was getting better trades from the more pure daily entry model so I'm going to be a bit more judicious when entering these sorts of positions on the intraday. It's not as if I was chasing these stocks, the entry wasn't bad, the setups weren't bad (save for a couple described below), but the trades, never-the-less did not work for me.

It's an odds based business and there's no reason to micro-manage each individual trade. These hurt, but they're part of the game. So I'm feeling slightly discouraged today, but that's no reason to abandon my trading plan, nor ignore or deny the skills I've been working so hard to acquire over the past 5 months. I am looking forward to breaking this perfect streak next week.

Here's the quick list of what happened:
Stock, Long/Short, Entry Date, Entry Price, Exit Date, Exit Price, Comments
  • NYX, L, 10/17, $74.01, 10/17, $73.12, This could have been avoided by waiting for upward movement. There was a gap up, in the desired direction, but that's not a good reason to jump in. I now have a rule to wait for a Higher Swing Low if I see a similar gap. This could have been avoided based on this simple rule.
  • PEG, S, 10/17, $60.70, 10/18, $60.98, Put in a Lower Swing High, and I jumped in on the intraday (hourly) and initially it looked good. Here's where the daily entry would have kept me out of this loss.
  • UNT, S, 10/18, $45.19, 10/19, $45.80, Jumped in on another Lower Swing High on the intraday (hourly) but it faked me out and found support where it found it before.
  • GRP, S, 10/18, $37.33, 10/19, $38.14, Entry was another intraday Lower Swing High (hourly), which initially looked good. Honestly this wasn't a bad entry, but I don't particularly like the range of the trading days relative to the direction. Looking at it now makes me think: I don't like the way this chart is looking at me.
  • LYO, L, 10/19, $26.08, 10/19, $25.94, Took the gap down entry, which initially looked brilliant, but very soon after fell enough to trigger my stop. Not a bad idea, just didn't go this time. Good news is the stop kept me from losing more as it's still trading lower today.
  • ABT, S, 10/19, $47.82, 10/19, $47.83, I was looking for entry on the reversal pattern, but didn't see it happen. My entry was aggressive based on the up-gap. Once again, not a bad idea, however being more judicious about the intraday entry, especially on a potentially new direction seems appropriate.
Did I say that would be a quick list? The great thing about trades that don't work is you get to learn something from them almost every time. Of course hindsight is 20/20, and what may seem obvious today certainly wasn't as obvious then; based on the available information & charts at time of entry there are a couple that I could have avoided. You may have noticed that I was favoring the bear side of the market, and that's against the general market direction. It's not that I didn't factor that in, it's just that these individual stocks looked like good opportunities on the short side. I'm making some small adjustments and next week will be better.

Yes, you're right, I'm going to have to learn how to be brief if I'm going to have time for this blog!

Wednesday, October 18, 2006


Ack... cough... sputter... I've got a cold that's really beginning to hurt... I have much to tell you so come back soon for my account of my 2 days with Mentor Jordan Stokes and the final wrap up call from Coach Rob Craig. I Promise I will post when I've got the time & energy, but for tonight I'm going to run my scans and manage my positions. I'm trading real money now, watch out!

Thursday, October 12, 2006

A Lesson in Liquidity & Execution

I have to share this with you. If you've been paying attention to my current position updates you knew that I entered a short position on SVN on Monday. You may have also noticed Trader Charlie's question about volume on his comment and read my response to his comment (check out the comments on: Re: Mark I like your BLOG! - Trade Seeker Question...). Good, I'm glad you're paying attention.

Aside the scant volume SVN sees, I followed my trading rules. I got stopped out today and bought back the short sale (sold for $6.73 on 10/9) for $6.708. You must be wondering why I'm excited about getting a mere 0.18% gain (after Cost of Trade). Take a look at this single-day 2-minute interval chart on SVN for today:

The black line is where my stop was located at $6.70 (3 cents better than break-even). And, yes I could have been justified in lowering my stop a couple more pennies based on this intraday chart and bailed once it violated the previous high after all that consolidation/no movement. I actually put some limit orders in to scale out of the position yesterday and today, but I was a little too optimistic and set the price too low to execute. There's a ton of what-ifs. I chose to set my stop at $6.70 and was waiting until I saw today's closing price to adjust from there. Anyway, let's move on...

Notice the volume, it is appalling. I did say I may live to regret this trade because of the thin volume. Given the complete lack of volume when the stock crossed the black line (my stop) I was convinced my order would be filled for a loss and I'd be buying back the stock at the blue line for ~$6.80. However, when I pulled up my Interactive Brokers account, I could see that IB filled my order for an average price of $6.708 (it executed across 3 exchanges, one at $6.70, and two at $6.71) which turned what I was certain was a loss into a gain.

Once again, I'm asking myself: What have I learned? ... Liquidity is good, learn to love it and don't be sucked in my a low volume stock just because it has a few higher-volume days under it's belt. Turn up the volume! The other thing I learned is that Interactive Brokers has terrific execution. Any questions?

Wednesday, October 11, 2006

Stoked About Upcoming Mentoring

Monday & Tuesday of next week will be spent in Las Vegas with my father and TMTT Mentor Jordan Stokes. I'm going to be sitting down with a professional trader, during market hours and let me tell you, I'm getting very excited about it! I'll blog about the experience, so be sure to check back next week. In the meantime check out Coaching Call Week 15; it's new! It's quite a read (so much for my new short-post policy) and is only back-dated for timeline consistency.

Here's the quick list of my current open positions:
SVN - opened on 10/9 for $6.73; unrealized gain: +2.6%
CRDN - opened on 10/10 for $41.75; unrealized gain: +0.7%
MO - opened on 10/10 for $77.97; unrealized gain: -1.1%
The Altria (MO) trade is a bit experimental and one I'm playing with only for paper trade study. This isn't one that I'd enter with my live account quite yet. Some justification seems in order, no? Well I was interpreting an Island reversal pattern with a bit of a head-and-shoulders thrown in. My read of reversal patterns isn't really strong yet, so I'm using this trade as a study, hence why I'd only do this with my paper trading account until I have reasonable results over the long-term for similar plays. The good news is that I did nail the initial direction and just didn't see enough of a gain to adjust my stop and lock in the profits from yesterday's decline. I'm not out of this trade yet, though I did scale out half of my position as a way to reduce the possible loss. Tomorrow will tell if today's gains can be erased and I can possibly see some profit. These aggressive bulls need to rest sometime!

ALL - opened on 10/11 for $62.52; unrealized gain: -0.35%
JNJ - opened on 10/11 for $65.09; unrealized gain: 0%

Tuesday, October 10, 2006

Re: Mark I like your BLOG! - Trade Seeker Question

On 10/7/06, TG wrote:
Hi Mark,
It looks like we are all learning the same way, through a bit of study and trial & error. I really enjoy your posts!
I recently took the TMTT 3 day class and learned about the use of technical indicators and TMTT philosophy of not making a trade until 3+ "high probability indicators" signal getting into a position. In looking at some of your trades, I am not sure I have been able to discern your signals to get in or out based on the technicals, but I do see you using the technicals to set up your stops. Do you use the 3+ high probability indicator approach?
Also on that note, do you use the "Trade Seeker" software? Is it worth the purchase price or can i get as much using say's scans?
Just would ejoy another enthusiast's thoughts!
Hey, keep on having fun and best of luck in your trading!

Hi, thank you for your compliments on my blog, I'm glad you're finding it interesting. It seems that all indicators are almost always lagging and give the signal late. I focus heavily on the source of those indicators: the price action. I look at what institutions are doing and volume characteristics for confirmation. I also prefer to see the Stochastics hitting stronger peaks or valleys on the previous swing highs or lows. I glance at Chaikin Money Flow, but it generally only reflects the price action and doesn't offer much actual insight into where the stock is going. I look at the broad market charts to help me determine if I should be selling, because the market is at retail price, or buying because it's at wholesale price. The broad market charts factor in heavily to individual stock price movement. I also look at where the stock is on it's weekly chart (retail or wholesale) as that time-frame also helps determine how likely the expected move may be.

There are various strategies and approaches to trading. The one thing that I completely understand at this point is that you must have a trading plan and you must trade the plan. Having a system will give you consistent results. If the results are consistently bad, then the system must be tuned. Emotions are a battle, one that I think I'm gaining control of. Even though my trades have been virtual trades, I'm mentally coming from a position of "that's my money!" and although I don't think the pain on the losses is quite the same on paper trades, it is with the intention of using real money that I practice systematic trading.

All systems must be evaluated based on current market conditions and this is where black-box systems will all eventually fail. The hard part is that just about when you think you've found a really great system to rely on, the market changes enough to cause your system to no longer be as valid. I know, it seems like a contradiction in and of itself, but one thing in your system must incorporate is the idea that "anything can happen" and you should be prepared for anything. Playing both sides of the market, keeping your cool when others are panicking (read: systematic approach) and having the patience to enter the trade you want -- not feeling the urgency to place trades just for the thrill of doing so. Patience, discipline, and a consistently calm approach with a plan will do wonders.

With all that said: part of the reason you've been having trouble figuring out what system I've been using is that I've been a bit inconsistent. My exits are based on price-action. If the trade has made the initially anticipated move, then I'm likely to put a reasonably tight trailing-stop. I'll definitely do this if I think I'm seeing an exhaustion gap. Also, on extended range candles I'll look for some sort of intraday support or resistance to set my stop. Exiting is something that I let the market do for me, when the trade is showing signs of weakness.

Now, for your question about Trade Seeker. I don't know what scans are available on I just now took a quick glance to not have to speak to something I know nothing about :-P. I find Trade Seeker to be very easy to use, especially in combination with The Trade Center, since it flows the symbols over into The Trade Center software and I find it very easy to sort, scan and otherwise go through a list of thousands of charts a week (> 100 every night and more on the weekends). I'll probably end up settling down on my watchlist maintenance routines eventually as I get better at everything. It seems has some good things going and I think the custom scans could probably be used to emulate Trade Seeker's built-in facilities. I really do like Trade Seeker, and it is the source of my watchlist (of course I filter it down from the original scans).

Monday, October 09, 2006

Coaching Hotline Call Re: Short Sale

Curtis from the TMTT called me back today after I left a message on the coaching hotline. The question I left on the hotline was essentially: I've received the following message: "XYZ stock is not available for short sale." What's up with that? (BTW the two that I've received this message for are: NURO & NTES).

The answer is in the error message, thems the rules. Apparently there can be a variety of reasons and I should talk to my brokerage firm about finding a way to display the status of whether or not the stock is available for short sale. Curtis also clued me in that there are some stocks that only allow certain amounts or percentage of margin, with some stocks that can't be traded using margin at all.

With that answer we kind of flowed into a couple other questions that have been on my mind. One was about stocks gaping at opening, how and when do I know if a stock is going to gap at opening? The answer is simple enough. If the Bid & Ask straddle the last price, there's no gap at open. The question about when is a bit more difficult. There's both post- and pre-market trading that can affect the opening price based on news reports, etc... Because of pre-market trading, the only time you can really know is just before market open. I'm interested in managing open positions that gap against me, not in playing gaps at this point in time. I am aware of some gap based strategies, but primarily I'm wanting to see if I can reduce my losses by managing the gap by hand instead of just being stopped out for maximum loss. Gaps do often fill, but not always. Let's take a long position, for example. If I'm going to be stopped out because of a down-gap, what's the harm in setting a new stop just below the opening price? If the gap just continues down then I loose a bit more, but if it begins to fill the gap I can manage the trade by following the swing lows and adjusting my stop to follow the gap being filled in until it shows weakness and goes against me, possibly turning a loser into a winner, or at least take less of a loss. Granted this is a more active management strategy and means I'll need to be in front of the market for such management decisions, but it's a likely management tactic that I will employ when possible.

I then asked about Curtis' trading style and asked how he managed trades. He manages his trades based on the daily chart. Other strategies take more time. Curtis also shared with me that he doesn't really worry about gaps. They're going to happen and they'll either work for him or not. First, they're not that common and it's just part of trading. It's an odds based business and even though those occasional losses may hurt, they won't take you out of the game if you're managing your money properly.

Curtis was also able to field a question I've had about determining the number of option contracts. This has everything to do with money management. His answer is he purchases the number of contracts that will only lose him the amount he's willing to give up. So if he's able to take a $500 loss on any given trade he calculates the number of options that will give him a $500 loss based on the initial stop with the cost of the spread (which is 5 to 20 cents) factored in. That's smart money management. You only risk what you can afford to lose, which could mean that you'll only be trading a handful of option contracts on any given trade.

So we had about a 1/2 hour long conversation which was quite pleasant and I'll be calling the coaching hotline when more questions arise.

Bulls Poor In Money

Buried in my last posting was "... I'm not underestimating the bulls optimism as they've been pushing the market up ..." And how! Although I'm a bit perplexed I'm not going to argue with this trend. I am going to use my money wisely. With the markets sitting pretty at retail pricing, I'm more interested in stocks that I can sell short for retail and then buy back at wholesale. Fortunately, my diligence in maintaining my watchlist is serving me well and I have several down trending stocks that are setting up nicely. I'm sitting on the sidelines and am waiting for them to show signs of weakness for me to profit from their decline as the markets finally find a point to pullback and see some profit taking. With the markets putting in narrow-range candles that are showing some resistance, today could be that changing of the guard and we can reasonably expect some profit-taking at least.

Currently I have 2 open positions: long on MET and short on SVN.

I'm known for monstrously long postings. I'm thinking about changing that up a little in order to bring you more frequent content. Now that classes and coaching calls are nearly complete, with only one more scheduled coaching call this Wednesday, I'll be posting mostly about my experience in the rough-and-tumble markets. I'll do what I can to keep it entertaining, even if only for you to find amusement in my folly.

... and yes, the title of this posting is a pun, I hope you don't mind ;-)

Wednesday, October 04, 2006

Coaching Call Week 15

Just before Rob's weekly call I opened a position on MET. This was a classic swing entry following all of my rules and I triggered the entry manually by watching the intraday chart. It just happens that I caught a pullback that was 1 cent above the previous day's high. There was a deeper pullback later, but I was complimented on this being a good trade that followed my trading rules. In general, coach Rob was pleased with what he was hearing as I described the few open positions and trades that executed over the past week.

I was stopped out of my short position on TTI in a weird way. It seems I entered a bad stop-loss and bought it back for a very nice ~7% gain. I'm not really complaining, because that's a killer return in 2 days, but I would have squeezed nearly a percent more if I didn't accidentally violate my own management rules. We reviewed what happened there followed by other open positions and how they closed out.

I expressed some regret about not entering a trade yesterday on LNC, which had a very nice pullback and at this time it was going up very nicely. Coach Rob wasn't pleased with the emotion I was expressing on missing this trade on LNC. I can appreciate this, since there will always be missed trades and there's just no reason to be bothered by missed opportunities. The reason I didn't enter that position is that I was totally exhausted on Monday night. In retrospect I think I did the right thing by not trying to make such judgements when I'm unable to focus because of lack of sleep. I saw the direction, realized it was probably a good trade to enter and I was right. Cool. The fact that I didn't risk the entry under such a weakened mental state is probably a good thing. This is akin to not shopping or playing poker online after having a few drinks, no?

As pleased as Rob was with my progress, he remarked that that I was showing him the trades I wanted to show him. I quickly offered to show him the ones that went against me, started to pull up OSI & CEI, and he had a little chuckle.

After this run-thru of my current positions, coach Rob spent some time talking about Options. As you probably know from my previous posts, Rob is very knowledgeable with trading Options. The primary reason I'm focused on stocks is to reduce the complexity and practice all the good habits of a Professional Trader without having to deal with the additional complexities involved with Options. Options offer a lot of leverage, and good trading practices are essential in order to not have your account decimated by that very same leverage. Remember, the Bid-Ask spread insight I've offered in the past? When your trades come with a 5%-15% built-in loss, you better have your timing and discipline well honed.

Coach Rob covered how a Trader can leg out of an Option Spread depending on your outlook for a particular stock. He also went on to describe a way to aid in timing entry and exit based on the behavior of the Bid & Ask on a specific Option Contract. I'd describe it to you here, but why not sign up for coaching with Rob and get it directly from him? Tell him Mark sent ya! ;-) I can tell you that all such strategies are judgement calls and this is just another source of information to help you determine timing.

Before wrapping up this post I want to give credit where credit is due. Rob Craig has been a tremendous help in bridging the gap between the theory of trading taught in the classes to the actual practical application of that knowledge. My rapid progress is due in large part to the personal attention and feedback. If any of you are entering the Teach Me To Trade or Star Trader coaching program, I highly recommend asking specifically for Rob Craig. I inadvertently stole (or maybe borrowed) Rob's saying and titled a post last month based on it: Discipline, Patience & Timing! This was something that Rob ingrained in me right from the beginning and I didn't even realize I was quoting him when I titled my post as I did. Most of the practices and habits that I've formed have been forged out of Rob's guidance and I'm confident that if I consistently put all these practices together, I will be a successful professional trader.

Monday, October 02, 2006

Market Study for 2006-10-02

Happy Monday to all! You may be wondering: why would Mark consider this to be a happy Monday with the market selling off today? I'm happy because I closed out most of my long positions for some reasonable profits last week and have since opened 3 short positions that seem to be developing nicely (virtual trades still, mind you). I've also been holding a long position on GM (bought @ $31.20 on 9/26 : +7.35%) and reentered a position on AT&T that isn't moving my direction yet (bought @ $32.45 on 9/26, current gains: -0.75%), but still looks good and it doesn't seem to be overly likely that I'll get stopped out.

The short positions I opened today (10/02) are: OII ($30.26 : -0.55%), JOYG ($36.86 : +0.96%), TTI ($23.82 : +3.2%). We'll see how these develop soon enough...

Bad News: lost ~2% on both OSI and CEI which leads me to a new idea of not entering long positions on 3 letter stocks that end in I. I'm pretty sure that will keep me out of trouble in the future ;-). OSI faked me out and CEI had great Institutional buy-in interest, but the price just wouldn't budge up. It dropped low enough today to trigger my entry stop-loss and well, I'm out of the trade. At this point CEI looks like it's not going anywhere for a little while anyway.

Good News: gained enough on LNC, T, NAV and AMAT to be net positive, even after those drawdowns. Of course GM should contribute to that net positive when I'm ready to close it out. Isn't that how trading is supposed to work?

I've been predicting doom & gloom for the markets for the past 3 trading days. Well, maybe not doom & gloom, but it seemed like the market was due for a pullback. If you read my blog last week you'd know that I was a couple days early to the punch. As expected, the markets have seen a correction for the last couple days, but I'm not underestimating the bulls optimism as they've been pushing the market up until the bears finally held their ground on Friday and exerted some downward pressure today. There is a great deal of market optimism, but it seems to be a bit too shallow to support the last buying frenzy.

I've been keeping a keen eye for good bearish trades and had a plethora to choose from last night. I saw about a dozen Reward:Risk ratios of > 3:1 in my bears watchlist last night and cut it down to 5 that I flipped a coin on and decided to attempt entry today. As described earlier, 3 filled (the two that didn't were CMC &GGB, I'll reevaluate those two tonight). Two that I didn't attempt entry on, but made a very nice move down today are: HES and HP.

This post is titled Market Study for today so let's go on with the show, shall we?

The S&P 500 seems straight-forward enough, it looks likely to pullback to near the previous high or at least consolidate near it's closing value today.

The Dow-Jones Industrial Average seems to have been a bit more practical in it's last swing high, but still looks like it could close below it's previous high for the next couple days.

Everybody loves the NASDAQ right? There's plenty of optimism and fresh money that can be thrown into technology stocks to drive the NASDAQ up. Why do I say this? CNBC watchers have been told that money is being pulled out of energy stocks and is being put into the technology stocks. Of course that begs the question: are people so easily herded? Possibly, but of course, like any entity forecasting market direction, it's done with the other side presenting an equally convoluted case for why the market could likely go the other way. It's a fun game of semantics and opinion. So rather than speculating based on sentiment, let's read the story that the price-action (aka: mass-psychology) is telling. Considering the previous price-action that I've highlighted, we could certainly see some consolidation and volatility as it stumbles it's way up.

As always, form your own opinions and have a good laugh at me for sticking my neck out there and actually favoring a direction. Please remember that I'm an aspiring professional and I still consider my technical analysis skills in their infancy. I think we're in for some volatility more than direction for a while which is pretty good news for playing both sides of the market at the same time, although that does mean that you can get burned either way, right?

Thank you for your continued interest in my blog! Don't take what I write too seriously, I've been wrong before and I'll be wrong again!

Coaching Call Week 14

I greeted coach Rob (as I've taken to referring to him in my blog) with the statement: Rob, I have a problem... Oh? ... Yes, I have several trades that are working for me! Granted this is a very good problem to have, but it is a problem none-the-less. I had 5 trades going my way and 1 that was just doing so-so, which was probably going to go against me for a loss. Of course this is the kind of problem you want to have, but I don't have much experience with. We looked at how to manage these positions which for the most part was to just relax and update my stop position when the trades had moved enough to warrant it.

We got to narrow our focus in on a couple trades. First I wanted his feedback on my short-sale of ROK, which I was kicked out of yesterday. Basically what I did wasn't wrong, though I could have tightened a little or even bought back half of my position as the stock came very close to the move that I wanted, but aside from some institutional buying at the end of the day on Monday and a speculatively positive news item, there wasn't much that could have been done to make this trade much better.

We watched T fall down to my stop and see me get kicked out of the trade. This was fine, though once again I could see the trend on the daily chart and probably could have just closed the position earlier to realize a better gain. This was educational though as I could see the value of Technical Analysis on a different time scale.

That's one great argument for Technical Analysis. Since it's a study of mass psychology and sentiment, you can make judgements based on what the chart tells you no matter the time frame nor the underlying security (though I don't plan to trade futures nor commodities anytime soon). We could both see that T was in a downtrend on the intraday chart and I really should have exited my long position earlier and just taken the my profits. I'm not upset about it, but it does bring to light that the trade management rules need to be as mechanical as the entry rules. This has been easy enough when I was dealing with losses, but on these trades that actually went my way, I realize I need to have a consistent method for managing the trade.

Tuesday, September 26, 2006

ROK Changed It's Mind

So, I think it was yesterday that I said I don't think ROK was strong enough to sustain itself above $55... And then it closed at $55.13 and I was stopped out of my position when it breached my stop that was set at the 2 days ago prior high. Of course today ROK gained 2% and I bought my short sale ($57.57) back for $55.60. A 3.3% gain (adjusted for Cost of Trade) over 7 trading days. I'm not one to argue with the market, and I'll happily take my 3.3% gain and say thank you, however...

I could have got more like a 5% gain if I interpreted the news headline: "Rockwell Automation to Present at Prudential Conference" as positive news that other traders and investors would want to buy ROK based on the results of that conference presentation. Combine that with the narrow range candle (almost a Doji) on Friday that could have been interpreted as an exhaustion gap (the % distance of the gap wasn't quite enough for me to jump ship) and I could have exited earlier. I stuck to my trading rules though because none of that had quite enough certainty. Based on the information I had, I decided that I'd leave it some wiggle room to hopefully let the trade develop a little further before tightening up my stop. I do want to review this with coach Rob and see what he thinks of how I handled it and accept any criticism offered.

In other news, I have a problem of my open trades working for me. It's a good problem to have, but I don't have quite as much experience managing the trades when they're working for me! I have 6 open positions (LNC +1.5%, T +5.4%, AMAT +2.3%, NAV +3.54%, GM +0.7%, OSI -0.4%). As you can see, this is a very good problem to have, but knowing that the markets are a bit overbought and we're more likely to see some profit taking than not tomorrow has me a little twitchy on these long positions. I'm going to follow the rules in managing these, but may tighten and get out on early signs of sell-off in order to actually lock in those profits. Stay tuned, it's just beginning to get interesting!

Monday, September 25, 2006

Current Positions Update 2006-09-25

It seems I must have dumped my AT&T Option early. it's now worth $1.70 (240% return) which is way more than a mere 150% return. Does this bother me? Not really, I'm only dabbling with Options at the moment. I still have the stock and it's gained over 6% for me (in 4 days). Stocks are my primary focus for now.

Every position that I have is working for me at the moment (long: LNC +0.95%, NAV 0%, AMAT +0.85%, T +6.43% & short: ROK +5.01%). So, despite my early sell-off of option on T, I'm in good spirits and am feeling pretty good about these trades. I was very close to putting live money into the market on the setups I saw coming today, but alas decided to stay my hand for a bit longer. It will happen very soon, quite likely on the next clear market setup (such as today's broad market setup). Combine that with a nice setup on an individual stock and I'll be placing real trades. Of course the current percentage returns are only if I actually locked in my profits today, I could easily end up with more or less...

Currently ROK is has my attention most of that list, since it's the only one working against the general market direction. It even breached over $55, but has since pulled back. I don't think it's strong enough to maintain above 55. Earlier today I saw some institutions showing sell intentions and the buy-in volume isn't really anything to be overly concerned with so far today. It wasn't a huge surprise to see some buy-in at it's low today ( 53.85 so far), given that the previous swing low closed at 53.90. ROK's sinking could be weakening or it could just be the general market pressure falsely holding this particular stock up (or preventing it from plummeting). I'll keep a watchful eye, but at the moment I'm still happy to be short on ROK.

Friday, September 22, 2006

T - NOV32.5C

Slightly ahead of coach Rob talking to me about options, I bought the AT&T Nov32.5 call option for $0.50 on Wednesday morning at the same time as I purchased the stock for $31.60. I only bought one contract for $50 and sold it this morning for $125. Most people can do that math in their head: 150% in just over 2 days.

Of course any one trade can make you money, and options can certainly get you triple-digit percentage returns. That's very exciting, however one thing that coach Rob did not have to tell me about options is that the difference between the Bid-Ask spread is a hugely significant percentage (5-10% typically), compared to the percentage of the difference between the Bid-Ask of a stock. This means that any buying and selling of options comes with a 5-10% loss built-in. With slippage like that, you really need to have a solid win-loss ratio.

Consider the option trade I described above: Sure I made 150%, however I could have easily lost 15-30% and sold the contract back for $45-$35 had the stock gone the other direction. Although the reward:risk may be justified at ~3.5:1 there's no such thing as a completely certain trade, and when you're losing 5-10% built-in, you've really got to be trading well to not get eaten alive!

Thursday, September 21, 2006

Discipline, Patience & TIMING!

Hi all. Yes, it's been a while since I've had my regular postings. It's because life outside the markets has been taking up so much of my time. No regrets on this and truthfully it's been a learning experience. I was just getting reasonably good with reading the markets and opening & managing positions. I was beginning to see some consistency and feel far less clueless than when I began paper trading over a month ago. I began to devote less time to analysis of the markets and my watchlists started to go stale. Even though there are plenty of stocks out there that had setups, I just didn't have them in my watchlists and it left me a little frustrated and impatient.

My impatience has cost me more than the previous gains when I was trading well. The difference? All three of the words in the subject line of this posting: Discipline, Patience & Timing! Yeah, it sucks, and it makes my track record look worse than I feel my skills & knowledge should reflect. Unlike my earlier bad trades, I definitely had the direction read correct, but my timing was bad. I got impatient because I wanted to have some open positions to talk about with coach Rob. Instead of being able to be proud of my trading prowess Rob immediately questioned why on earth I'd enter the trade when I did. Actually he said that with a bit more care... something more like "So you just wanted to tie a noose around your neck and hang yourself, eh?" ... ok, maybe that wasn't that gentle ;-).

Fortunately these are Paper Trades! My ego may be bruised a little, but at least my pocket book is not harmed. The natural question, at least for my analytical mind, is: How did I get here? Several factors play into these bad trades:
  1. I haven't had my regular ~2 hours a day in front of the market. I have been watching the S&P, DJIA, COMPQ, and have only been quickly going through my watchlist.
  2. I haven't been keeping up with the news.
  3. I didn't follow my own trading rules.
  4. My watchlists became stale and I missed opportunities on a number of stocks that are now in my watchlists that would likely have been there before, had I been more vigilant in maintaining them. The time investment in improving my watchlists beginning with the end of last week has resulted in me having better trading opportunities this week.
  5. I postponed my weekly coaching call with Rob because I wasn't prepared on Wednesday, and quite honestly have not been getting quite enough sleep.
  6. I got impatient and wanted to have a few open positions to discuss with Rob, which only turned out to be an embarrassment.
Basically it comes down to time budgeting. Life just got real interesting and unfortunately my pursuits as a Professional Trader got tabled for a brief bit. What I've learned from the experience: If I'm away from actively studying the market for a couple weeks, I can expect that I'll need some ramp-up time to get back in. This ramp-up time may eventually be reduced as my knowledge and experience increase, but it's something to treat with caution, either way.

The silver lining that has me optimistic: I nailed entry on HOG on 9/8 for ~$58.60, but had my limit too tight to my stop trigger (I put in a 5 cent window, which should have been 10 cents on a stock of that price range) and didn't get filled. I'd still be in HOG today with an adjustment to my exit stop set to $60.43 (two days ago's low) as of close of market today. I also mentally nailed CSCO with an entry on 9/11 for ~$21.95, but didn't have the time to do the further in-depth analysis that I'd like to have before entering a trade. I stayed out of it rather than haphazardly entering. I would have been kicked out on 9/19 for ~$22.55, but that is ~2.7% gain in 7 trading days, and you know what: I'll take that every time.

Beyond those specific mental-only trades I have been getting better reads on the broad market indexes and haven't really been surprised by the general market movement. As a matter of fact, I've been quite keen on general market direction recently and am getting better at applying that knowledge to help weight individual positions. I'm currently long on T (AT&T), with an aggressive entry of $31.60 on 9/21. One of my bad trades was an entry on Friday for LNC (bad timing, but it still has the potential of closing positive for me). I made a nice swing trade entry by shorting ROK on 9/18 for $57.57 which is shaping up nicely and I expect will spend tomorrow below it's close today at $55; in the meantime I'll adjust my stop to $57.06 (two days ago's low) which, barring any crazy up-gaping, should lock in a small profit at the very least.

I've made my share of mistakes recently, but am learning from them. I'll be back-dating posts to cover my weekly coaching calls, so look for them below. Thanks for checking up on me and I'll be keeping the content fresh as my life reaches a more sane pace!

Wednesday, September 20, 2006

Coaching Call Week 13

Now that we've completed the formal training manual, I get to pick Rob's brain and get some feedback on my trades. After a great deal of diligence on my part to get better stocks into my watchlists, I found some decent swing setups and opened a couple trades. Rob and I looked at how I entered a long position on T earlier that day. I was complimented on this being a nice swing entry and there wasn't much more to say about it. Likewise, I had entered a short position on ROK on Monday. This was a classic swing entry and was developing nicely. Once again I was complimented on my entry and we spent only a moment talking about managing this trade. I just followed the rules and this was a far better week of trades. You learn much more from your mistakes, so we went on to talk about other things.

Rob primarily trades Options and he wanted to talk a little about how options work and the Reward:Risk ratio that option trading involves. With Options, you're talking higher leverage trades and timing is even more critical. You can lose 20% or gain 80% (or more). Does that sound like a reasonable Reward:Risk? Sure does. Eventually I'm certain to trade options including spread trading (especially the strategies taught in the Trading PIT classes), but not until I have achieved a mastery of stock trading first. Rob's thinking behind this is that I'll benefit most from actually mastering on trading system in the realm of stocks. A master of one rather than being so-so with many. I'm quite new to trading and his guidance has helped me stay on track and given me some feedback that has been very useful in developing the discipline of being a trader. I think this approach is a great way to go about learning this profession.

Friday, September 15, 2006

Coaching Call Week 12

Today's call was rescheduled from my usual Wednesday morning time-slot because I was feeling a bit too ill and unprepared for the regular Wednesday morning call. Life has become very interesting recently and sleep, Trading and Music pursuits have all sacrificed a little. Since we finished the formal calls today's was free-form where we looked through my current open positions.

I suppose now is a good time to interject a little background to help set the scene. This posting is coming out of order, I'm actually writing this on 9/26 but am back-dating the post to 9/15 to keep the coaching calls in the order they actually happened rather than the order in which I finally get around to writing up my experience -- please forgive this minor inconsistency but I didn't find time to write up blog posts while all this was happening. As I've mentioned in a couple other postings I met a very special lady and well... those first couple weeks I put nearly everything on hold... Can you blame me?

So, in a hurried, impatient manner, and ignoring my normal good practices in finding a stock with a nice 2:1 (or better) Reward:Risk ratio and basically ignoring all my trading rules, experience and knowledge I opened 3 long positions while the markets and the individual stocks still had much more pulling back to do before it was time. I didn't have any open positions for the previous ~7 days and didn't want to have a coaching call with no open positions to discuss with coach Rob.

As you can imagine, at first glance Rob was bewildered by why I'd do such a thing. I believe the question was: "So you just wanted to tie a noose around your neck and hang yourself, yes?" I fessed up that I will not defend my positions and that impatience and wanting to have some open trades led me to entering these positions. Fair enough right?

I've already covered all this in another posting entitled: Discipline, Patience & TIMING! which is my confessional about all the sins I committed with those trades. I don't feel the need to rehash here, that would be far too much self-abasement for my taste and would be about as useful as actually beating myself up. Hey, I made some mistakes, and have that experience to draw from to not make them again. The great thing about making these mistakes is that I've been able to learn some lessons at no cost to my trading account. These are not mistakes that I'll soon repeat.

Thursday, September 14, 2006

More Blog Updates Soon!

Hi everyone, I've been taking a vacation from my regular postings, but haven't stopped watching the markets and looking for good trading opportunities. I have much that I want to post, but just haven't had the time to put my thoughts into words to share with you. In addition to a position change at work (now I'm full-time, which means I'll have more $s to seed my trading account), I've met someone remarkable (yes, a lady :-)) . This blog isn't about my personal life and I'm not one to be overly public about such personal matters, but just know that my head and heart (my top, most trusted analysts) are advising a "Strong Buy."

So now you know the reason behind the absence of postings, but I'm still here and am still progressing in my knowledge and skills related to trading. I can tell you that I've been getting better and better at reading the market and my daily forecasts on the broad market indexes and individual stocks has improved tremendously, however I've been having some difficulty finding good setups on the stocks in my watchlists. Because of this, I've realized that I must be more vigilant in maintaining my watchlists. Just another lesson on my path to being a successful trader.

More to come...

Tuesday, September 12, 2006

RE: up and down

A couple days ago my father asked me about two stocks. My response is offered below.
Sent: Sunday, September 10, 2006 11:19
Subject: up and down

Mark here are a couple. I would like to know what you think?
2 weeks for a up CRL
2 weeks for a down IDCC
CRL seems to be a decent stock for a long position. Of course we’ve seen some confirmation for that since you sent this message (so congratulations on a good pick), but unfortunately we don’t have a good entry point. The entry point would have been on Thursday of last week however the reward:risk didn’t look good, not to mention the fact that it failed to put in a higher peak and consolidated around $41 (which I’d have looked at as a possible weakening trend, and why not just find a better stock?). CRL has confirmed it’s uptrend and now looks like it’s going to push through up to it’s previous range before gapping down back in mid-May. We’ll probably see it stall out at around the $45 mark, assuming it can break through the $42.50 mark that it hovered around in October & December of last year. This is one that I’ll keep looking for a good entry point in order to capture some of that movement

As far as IDCC... hmmm... Honestly, the 1 year direction is up, and the most recent movement has been up (after some major selloff). I wouldn’t be trading against the trend. Again, you looked at it few days ago and I don’t think you’re wrong to have thought we could see a reversal and downturn on Monday... However, it continued it’s uptrend yesterday and today. The fact that it can’t seem to sustain a price up above the $35 mark means it may be at the end of it’s uptrend and the previous couple days moved up as it followed the general markets more than it having individual strength. We could see a downturn, but this is trading against the trend and the trend is your friend. It’s just more risky to make that kind of a trade than to trade with the trend.

Wednesday, September 06, 2006

Coaching Call Week 11

Today was the last formal coaching call that covers a chapter of the manual. The chapter title is "Trading Systems: Pulling It All Together." As the chapter title implies, this covers the ideas of daily routines, money management, trading rules, etc...

Rob started out of the manual by asking me the question: "What is the first thing you do each day?" I initially started with "Look through your hotwatch stocks..." but paused and interrupted myself, feeling that I was slightly off. Rob then followed up with "If you were going sailing, what would be the first thing you need to..." I cut him off: "Of course, check the broad market indexes, which I am already in the habit of doing, I just skipped that step and got ahead of myself." These weekly calls are in the AM, and have I mentioned that I'm not really a morning person? ... Chalk the initial answer up to the caffeine not having quite hit the bloodstream yet.

The start of my daily routine is an analysis of the broad market sectors (S&P, DJI, COMPQ) followed by a look at what's in the news and any events that may be coming up that will affect the markets (economic announcements, etc...). Follow this up with a dash of analysts opinions, set the oven for 350 and let your dough rise. Along with the typical sources of news, Rob pointed me to the following free resources, and Both can be useful as they can supply you with another trader's opinion of market conditions.

After knowing pertinent market information and pending news it's time to manage our current open positions. Knowing the general market conditions can help evaluate the viability of each open trade. Some time should also be taken to look at news items affecting a given stock and sector. A look through the intraday charts with a keen eye on volume spikes can help offer some clues as to the strength or weakness of your position. Often times it's as simple as deciding how to adjust our stop-loss.

Finally, it's time to look through watchlists for trades that will likely match the current market setup. If you're expecting the general market sectors are about to go up because a recent round of profit-taking, you can look for bullish positions. Or if you're seeing an imminent round of profit taking or the early signs of a bearish market reversal, you can give a little more weight to your bears watchlist when looking for good setups as a general market pullback may be enough to send one of your bears plummeting.

What began as a bleary-eyed, stumbling, stammering start ended up being a very enjoyable call that really does help pull it all together.

Wednesday, August 30, 2006

Coaching Call Week 10

Today Rob and I went through Chapter 3 "Fundamental Analysis" of the coaching manual. This approach to fundamental analysis is based on scoring various aspects of the company's fundamental information, giving 1-20 points per item, with 100 being the highest possible score. Anything above 80 is a pretty good indication of a fundamentally strong company.

The potential value for each bit of fundamental information is added up based on certain thresholds and industry comparisons. For example if the Sales % is > 25%, 5 points are awarded; 5 points are also awarded if the EPS (Earnings Per Share) % is > 25%; if the EPS % is > the Sales % 10 points are awarded. Different aspects of the fundamentals get weighted with higher or lower possible points. Simply adding them up gives you a reasonably complete evaluation of the fundamental picture.

It's a fairly easy-to-follow system. Unfortunately, some of the directions in the printed coaching manual no longer match the software exactly. Some of the fundamental analysis information needed to be collected from Yahoo instead of in the area described in the print. This is the first worthwhile flaw I've found in the materials, but it doesn't invalidate the system, it just makes the evaluation process require a trifle more time & energy to perform.

More than just blindly filling in the worksheet with the above scores, this chapter explained how some fundamental aspects relate to others and what that can say about the company. Looking at earnings vs revenue could reveal that the company is having to cut back in order to continue the facade of a rosy general financial picture. I think one of the more powerful aspects of fundamental analysis for a trader is the ability to compare these aspects of a company's fundamentals in order to sense a strengthening fundamental picture versus a weakening fundamental picture.

As a trader, I don't know that I'll really ever spend a lot of time evaluating the fundamentals, but I do recognize that it is a worthwhile study in particular for longer term position trades. The big trouble with any kind of fundamental analysis is timing. And timing is everything. You may have the right analysis of the fundamentals of a company, but you must use technical analysis to ascertain when to enter and when to exit.

Email: Looking forward to new TMTT posts

On 8/30/06, RJ wrote:

Hope all is OK, I've not seen any new posts since 8/23, and I've gotten kind of hooked on checking your updates and progress. Hope you're just busy or vacationing.

Looking forward to more info and to your success. R.J. in Chicago

Thank you for your continued interest RJ (aka Jim*, right?)... Mostly I've been busy. Work (the dreaded j.o.b.) has become pretty intense lately and burning the candle at both ends caught up to me on the weekend. I do try to post regularly and am currently behind by about 3 posts! It's just a matter of prioritizing my time and the blog is lower on the priority than my other activities including trading, journalizing my trades, reading/learning more about trading, teaching music, rehearsing, performing, training for triathlons, etc... Oh, and attempting an occasional date now and then.

Unfortunately I spent a lot of time this weekend trying to find some software to help me ascertain my current gains. It's unfortunate because I ended up spending so much time searching only to create my own Access database. I've kind of known that I was positive over the last few trades, but I didn't know the specific numbers. After plugging in all my paper trades YTD I'm at -12%. Horrible I know, but the news does get better :).

Since learning from my past mistakes and using a trade formula calculator (excel spreadsheet) that gives me # of shares, entry, and initial stop-loss adjustment target, I've done considerably better. Excluding the first trades from about a month ago (see: Paper Trade Update 2 Post-Mortem) that are a blight on my record, I'm up 9% on my trades (the past 7). This calculates to 2% on $5k in 3 weeks which extrapolates to 33% annual. Of course this is a short time sampling and my current open positions could easily affect that percent either beneficially or not.

I also spent some time over the weekend on my trading journal. I will post a good, bad & ugly with charts, my comments at the entry and exit, etc... very soon. It's just a matter of converting them to a bloggable format (I'm not even sure if bloggable is a word, but you know what I mean, right?).

Thanks for the interest and encouragement. I am alive and well, but have been using my time selfishly and privately. Not to worry though, more updates to come!

*I initially changed RJ to Jim on his first email that I posted to my blog (see: Soon-To-Be TMTT Student Email). I never did find out if he liked being called Jim temporarily or not. Care to comment RJ?

Wednesday, August 23, 2006

Coaching Call Week 9

In today's coaching call we decided to postpone chapter 3 about fundamental analysis for next weeks call, instead we favored doing a check in on my progress. This was perfect timing as I wanted to solicit Rob's feedback on several trades. It also flowed into my trading journal very nicely too and gave me an idea of what to write and track in said journal.

We looked over several of my trades to see how I was managing entry and exit. The main trade we looked at was a trade I placed on ABI. This went against me, which is why I was particularly interested in what Rob had to say about it. Let's file this one under "The Bad" (as in The Good, The Bad and The Ugly). Here's the closing chart showing where I entered and where I was stopped out for a loss:

With the information available to me on 8/14 (entry, marked by the green line), you can see that the stock was in an uptrend (black line), but had a deeper pullback than previous pullbacks and had violated it's trendline. Also, you can pretty clearly see that the uptrend showed some signs of weakening before I entered the trade. The previous 2 swing highs were not as high as they should have been for a strong uptrend, and it even retested the peak. It was looking suspiciously as if the peak became resistance and that it was forming a reversal pattern as the stock crossed the 50 day moving average. The volume charateristics weren't ideal, but they weren't too bad. The CMF was negative and the Stochastics were showing some divergence (highlighted in yellow). All of what I've writen so far is me evaluating the stock today after having discussed it with Rob. Hindsight is 20/20 right? So instead, let's look back into what I wrote in my trading journal upon entry:

ABI pulled back a little deeper than I’d like to see and volume on the selloff was higher than I’d like to see, however the Institutional Intent shows a buying pattern during the last week. Stochastic is setting up nicely and I’m expecting a return to at least retest the previous swing high.
Upon exit (8/23) I wrote the following:
Lost all of what I risked. Most likely it’s just a trade that I should not have entered. I entered when the stock dropped below the 50, near where it found support before. This was definitely a sign of a weakening trend. Additionally there was some divergence on the Stochastic. Note the previous dip and failure for a swing high in early July. Could it have gone up? Yes, of course, but I could have found a better stock to trade.
The basic mistake I made on this stock is that I did not reevaluated my outlook as the stock started to show signs of weakening. I decided I wanted the stock to go up because I thought it would go up 3 days before entry and since I wasn’t filled I would just get in for a better reward:risk. I think this is known as trying to argue with the market. My mistake, market, you are correct, I will listen to what you have to say and never attempt to tell you what to do again.
That's it, that's all I wrote, and that's all I saw at the time. Of course my knowledge and skills are growing and becoming more refined, and part of that has to do with reading, studying, coach Rob's calls, but quite important to this learning process has been my self evaluation and trading journal. The mistakes are great because they provide such a learning experience. I've gone into a bit more depth in this blog posting, and this is far more reflective of how I journal today, and I'm sure how I journal will evolve over time also.

Email Question: Am I Making Any Money?

On 8/18/06, Jane* wrote:
I recently attended a 3 day seminar on tmtt as the guest of someone who had paid. I thought it was quite interesting but I'm well aware of the sales tactics used and am skeptical. I saw some negatives on line about the company as well. Jane*

I'm pretty sure I've seen most of the negative posts or "reviews" online. The vast majority of the negative reviews are not from actual students but from people who have very limited first-hand experience with Teach Me To Trade/EduTrades. Since starting my blog, a few TMTT students have come forward to report that it is working for them and to wish me all the best. I believe these are honest, real people taking a moment to say hi and encourage me. You can see some of their comments on my blog and a few more have emailed me directly.

I've been rather diligent to seek other sources of information on trading and, if you've been reading my blog recently, you're probably aware of some of the books I've been recommending. TMTT isn't teaching something strange or magical. Similar concepts, tactics and practices can be found in many reputable books. TMTT does distill down the information to its essence and highlights and teaches the most successful of the tactics, including easy-to-follow guidelines and rules. Their marketing may be a bit over-the-top (which I personally think is what has garnered the negative "reviews"), but they teach best practices and responsibly. That's not going to stop some people from going out and donating their money to the market on haphazard trades. I have heard of some people losing a lot of money after jumping into the market -- sometimes only based on the 3-day seminar! They walk away thinking they're going to be market genius overnight! The people that have lost big-time didn't even follow the guidelines, yet they want to blame someone!

Sorry, I'm beginning to rant... how 'bout I just answer your question:

No, I have not made any money yet. The more in-depth answer is: Yes, I'm beginning to make profitable paper trades. I have not yet placed a live trade with actual money, so it's not possible for me to make money yet (it's also not possible for me to lose money yet). I will be placing live trades very soon, but am still refining my system/style and learning from some mistakes in my paper trading account. It's far cheaper to learn on a virtual account, but I'm actually a slightly positive for the last couple weeks. I've been keeping a trading journal starting from last week and I'll share some entries demonstrating the good the bad and the ugly here in my blog.

The good news is that I am getting better at entering and managing my trades. I'm also getting more consistent about my analysis. I'm more thorough and am getting a better feel for the market. I'm putting it all together and will be making trades soon, stay tuned!

*Name changed to protect the presumed innocent.

Tuesday, August 22, 2006

2nd Follow-Up Email ...

On 8/21/06, Name Blanked Out To Protect the Innocent ;-) wrote:

Thanks again for your reply, its much appreciated. When you say you would like to have over 25k in your account to avoid the pattern day trading restrictions, im not sure what that means if you could explain a little more. Also about the hits class requiring 200k not clear on that either. Just wondered where you got that information if your coach told you or you ask tmtt about it. Sorry if my questions are repetitive and bothering you, im just 20 years old and I am trying to soak up as much of this information as possible I know im not going to have the financial abilities as some people older than me however I believe I have time on my side also though. Also how did you purchase more days with your mentor do you call and ask for that or do they offer it to you, I haven’t heard anything about that. Also I heard that a mentor has to have a million dollars in his/her trading account before they can become a mentor just wondered if you heard that also. Thanks again for your time, Name Blanked Out To Protect the Innocent ;-)

After many amateurs lost their money day-trading a few years ago the U.S. Securities & Exchange Commission decided to help protect you from yourself. In general, I'm not a fan of this sort of legislation, but I digress. They now require anyone who shows signs of pattern day trading to have a minimum of $25k in their account. You can read more on the SEC's website: The Security and Exchange Commissions Pattern Day Trading Answers. Also, you can see how Interactive Brokers handles this issue by reading this web page: Pattern Day Traders Criteria and Restrictions. Day trading is not an activity that you want to engage in unless you're well capitalized anyway, so it's probably not a bad restriction. You need over $200k in your account to take advantage of TMTT's Hedging & Institutional Tactics & Strategies (HITS) class, because in order to control the number of stocks and behave like an institution does, you'll need a lot of money.

I don't know about the > $1 million requirement for a TMTT Mentor. That's likely enough to be true, but it's not something I have any particular knowledge of. If you're eager to soak up more knowledge about trading check out the books I'm recommending in the other posts on my blog. So far I've found 3 that I think will are very helpful.

I'm 30 years old and while I wish I could have started trading sooner, I recognize that I have a far greater chance of success now. I may not have been ready for the emotional stresses and been able to contain my impulsiveness when I was younger. I don't mean to discourage you, quite the opposite, but realize that trading has inherent risk and the market is not a place to work out your personal issues. You should not be trying to prove something in the market, nor should you be rebelling against society, your father, childhood, etc... Trading requires a level-headed approach to be in it for the long haul. Putting too much of your account at risk in a given trade or trying to trade your way out of a loosing streak will likely have disastrous effects. Your goals should be to preserve your capital first, achieve steady growth second and third: make a ton of money. It should be a cold, calculated discipline. One where you are constantly reevaluating the market and how you trade to take advantage of any particular market condition.


Another New TMTT Student

On 8/20/06, Bob* wrote:

Howdy, just signed up for the classes on Saturday for TMTT. One thing I don't here about is people that have completed a couple classes complaining about how bad they were. The people that are doing most of the complaining are the ones that did not move forward. I did find a person that after a couple of years after TMTT she quit her job. Some girl in Indiana.

I actually feel pretty good about this.


Hi Bob*,

There are some people that are upset with TMTT because they want their money back. You can read more about it on and I'll be posting something about it sometime soon too. Honestly, I don't know what people expect sometimes. If you blindly listen to the sales-pitch only, without critical assessment of what's being offered and a healthy skepticism of the claims being made, you probably don't have the capacity to think independently and succeed as a trader. The marketing of TMTT is quite aggressive, and there are probably many people that buy their educational materials that really shouldn't. However, if you're serious about trading, TMTT can certainly help you. As you noted, I and many others do like the classes. At the time I bought their classes there wasn't any positive reviews of the company nor programs, just a bunch of shallow arguments about how it's a scam without any first-hand knowledge. Their courses are expensive... VERY EXPENSIVE, and they do promise a lot, but what they teach brings the most important information and tactics within reach of even the inexperienced. I see trading as the something I'm going to do for the rest of my life. 20 years from now I'll still be trading. I'm going to be smart about my money management and make every effort to trade well.

I decided to put together the blog because it's something I'd like to have seen at the time I signed up. A real, in-depth, honest assessment of what I would be getting in to. That, and the blog does help keep me honest :-P. Also, I figured that if it was a scam, I would provide a first-hand account of the scam to help prevent others from getting ripped off. If you're disciplined about learning and applying what they teach, you should do well. Definitely look for a cheap brokerage firm... Slippage and commissions can kill you as a trader. I wish you the best and will be starting a discussion board for fellow TMTT students. I already have the server and look forward to collaborating with other traders :). Best of luck to you!


On 8/22/06, Bob* wrote:

Thanks Mark. My wife and I are moving ahead we believe in what they are trying to teach people and we in it for the long haul. I will keep you up to date to our progress and knowledge and we can look at some charts together to help our progression to professional traders.


I highly recommend The Complete Trading for a Living by Dr. Alexander Elder as a good place to start, even before TMTT classes (and it's only $40, including the study guide in a leather bound edition, I bought the study guide separately and spent more!). Add what's commonly known as the Technical Analysis and Options "Bibles": Technical Analysis of the Financial Markets by John J. Murphy and Options as a Strategic Investment by Lawrence G. McMillan, and you'll have a head start on trading and be even more prepared for what TMTT will teach you.

If you check my blog, you'll see that I recycled the above statements from another email response... These books are really terrific. You can read more reviews and such on Amazon, but I can't stress enough just how useful I find these books. I haven't spent a lot of time with the Options book, but know that I'll refer to it in the future again. For the moment, I'm concentrating on mastering my technical analysis and trend spotting skills. I'll increase my leverage with Options when I'm more consistent with stocks.

I look forward to collaborating with you and others about stocks and options and will get a discussion board up very soon to facilitate the information exchange.


*Name has been changed to protect the presumed innocent.