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 stockcharts.com's scans?
Just would ejoy another enthusiast's thoughts!
Hey, keep on having fun and best of luck in your trading!
Regards,
T

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 StockCharts.com. 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 StockCharts.com 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).

2 comments:

Trader Charlie said...

My response to T's post:
Trading is an art, so Mark's right about making adjustments to the market. There is always something to learn. Trying to trade only with what they teach you in the 3-day class might get you killed. Mark is generous to share with you what he has learned, especially since he paid a high price tag for his knowledge!

stockcharts.com's scans look pretty nice, but in the end you still have to know how to trade. People often go looking for "magic signals" (been there, learned the hard way) and that's not how trading works. In fact stockcharts.com might give me some trade ideas, so thanks for the tip!

TradeSeeker is just one of the tools that you can use and as Mark says, makes it easy for you to use with TC/ST. It's also part of the way they teach you, so if you're not learning under TMTT/ST, you don't really need it. It is a big time saver though. Familiarity with stocks you follow on a regular basis can be more powerful than simply scanning.

I like the TradeCenter/StarTrader software itself as a tool because none of the freebie tools I've tried let me navigate through my stocks and charts the way it does. Especially the fact that it helps me go through stocks a lot more quickly.

Trading is a process, and you can try to do it by yourself, but you'd need a lot of self-confidence, intestinal fortitude, a bit of stoicism, and unwavering discipline. The benefit of education is that it helps you figure out the above in less time. I lacked in some departments of the above, so I decided to invest in education. Another aspect is learning from someone who has actually had success doing it. I've read several books about trading prior to enrolling in Star Trader/TMTT, but I needed a live human being to help me put it together. And so far in the training program, I've had a lot of light bulbs go off that I don't think I would have achieved had I gone about it myself.

My story is similar to Mark: reaching a certain stage of life, seeing that corporate life is a handcuff, etc. I've been working on my trading handicaps and so far I'm slightly profitable this month, though trading on smaller shares because I'm still a little tentative in my techniques.

FYI: I've taken Master Trader, The Trading PIT, a mentorship and now am working with a coach. I went through the Star Trader branch, so there's a bit of more focus on options.

Mark:
I'm puzzled about your trade on SVN. Doesn't it violate a couple of guidelines like volume?

Trader Taocode said...

Wow Trader Charlie, I didn't realize I had such knowledgeable readers watching my progress. I'm feeling a bit self-conscious now ;-).

About SVN: yes, the volume is very much on the thin side. It does have its higher volume days, but the lower volume days are too often and too low. As for the price, it's also low, lower than I normally trade but I don't have a set floor for price (at least not yet). Aside from a decent technical setup that confirms on the weekly time frame (at retail), you're right: it's a trade that violates my rules. I'll probably regret this trade sooner rather than later. I think I turned a blind eye to the lower-than-average volume which could be symptomatic of the fact that I analyzed it on my laptop which has far less screen space for me to get a bigger picture of the chart. I'll be more cautious of this in the future.

Your comments about getting personal attention are dead-on. Coming from a music background, private lessons are fairly standard. When I talk to a potential student, I tell them that private lessons are the short-cut that will get them where they want to go quicker than any other way. There's nothing that beats personal attention and mentorship from someone who is successful to speed the learning process. They're there to help steer you back on track when you go awry, to help give you a voice to bounce ideas off, and help show you what they do and what they think is important keys to their success. Group classes and books rarely have quite the same effect.

I may be giving up a bit too much useful information for free, especially, as you remarked about how much I've paid for the education. Those that understand what I'm referring to (such as yourself), probably find the information more useful than those that aren't as knowledgeable. I've almost always kept some specifics out, especially those specifics that TMTT teaches as they are not mine to give out. You're now beginning to see me adopt those ideas and take my own interpretations. To all my readers: I'm an aspiring professional trader. Not yet a successful professional trader. Take my experience/knowledge/advice as marginally as possible and please don't even consider blaming me for any bad trades you put in based on something I've said/taught or mistakenly taken as advised! You've been warned! :-)