Teach Talk Trade Day Trading & Technical Analysis

Traders love to talk about their trading.

It’s much more comfortable for most traders to talk about what COULD BE rather than WHAT IS.

They love to talk about some chart setting up, their view of the political situation surrounding the stock or market…. whatever.

We all know that talk is cheap.

Intellectually, we know that the chart says everything we need to know, but as emotional beings, we are always looking for the “insight” or the “intuition” to put us a step ahead of everybody else who are all looking at the same charts we are.

If we don’t have the “eye to the future”, maybe a trading friend has it.

Sometimes all you have to do is call up a trading buddy and say, “Hi, how are you today?” What you’ll get in return will be, “Boy, have you seen the ’so-and-so’ chart today?

If that breaks the XY level, it’s going to really take off!” He continues, “And with that unstable political situation, this could really be a big trade.”

Why should we care?

We shouldn’t.

I guess we could take a look at the suggested chart and apply our trading parameters to it….. and if it passes scrutiny, well, that would be alright to trade, right? Yeah, OK.

You have to watch yourself, though. You see, you can have a tendency to want to MAKE a trade fit.

After hearing all about the great fundamentals, you can (subconsciously) view the chart with “I wanna buy” eyes, meaning that you can tell yourself that an almost-confirmation is close enough (with all those fundamentals going for it!).

That’s the danger.

It’s always best, I think, to come across a trade yourself. You see a price falling….. and falling….. gosh, when will it bottom? Your system says, “Don’t guess, be patient”.

Here’s one of my favorite expressions:

“I’d rather be out of a market (or stock) wishing I was in, than in a market wishing I was out.”

So, the market has a nice reversal day…. new low during the day with a higher close. Getting close to a buy, but not yet. The price goes higher for a few days and then starts to come back down.

It’s looking good.

The low holds, the market breaks the rally high and BOOM, we pull the trigger and we are in.

The system rules.

THAT’S the way to take a trade.

Every trader (you, included) has his or her own agenda. Only you know what works for you, system-wise and emotion-wise.

Trust in your tested trading system. It will serve you if you stick to it.

People think I’m crazy when they hear me talking to myself.

My close friends know that I’m just getting good trading advice!

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

Mechanical Trading Systems and You, Trade your Plan

Traders love to talk about their trading. The love to talk about what could be than rather what is.Intellectually, we know that the chart says everything we need to know, but as emotional beings, we are always looking for the “insight” or the “intuition” to put us a step ahead of everybody else who are all looking at the same charts we are.

Sometimes all you have to do is call up a trading buddy and say, “Hi, how are you today?” What you’ll get in return will be, “Boy, have you seen the ’so-and-so’ chart today?If that breaks the XY level, it’s going to really take off!” He continues, “And with that unstable political situation, this could really be a big trade.” Why should you care? You shouldn’t.

I guess we could take a look at the suggested chart and apply our trading parameters to it….. and if it passes scrutiny, well, that would be alright to trade, right? Yeah, OK.You have to watch yourself, though. You see, you can have a tendency to want to MAKE a trade fit.After hearing all about the great fundamentals, you can (subconsciously) view the chart with “I wanna buy” eyes, meaning that you can tell yourself that an almost-confirmation is close enough (with all those fundamentals going for it!).

That’s the danger.It’s always best, I think, to come across a trade yourself. You see a price falling….. and falling…..

gosh, when will it bottom? Your system says, “Don’t guess, be patient”. So, the market has a nice reversal day…. new low during the day with a higher close. Getting close to a buy, but not yet. The price goes higher for a few days and then starts to come back down.It’s looking good. The low holds, the market breaks the rally high and BOOM, we pull the trigger and we are in.

The system rules. THAT’S the way to take a trade.Every trader (you, included) has his or her own agenda. Only you know what works for you, system-wise and emotion-wise. Trust in your tested trading system. It will serve you if you stick to it.

Please take advantage of the FREE 7 DAY TRIAL to title=”The Morning Call”>The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & title=”Mechanical Monkey”>The Mechanical Monkey where we discuss our mechanical trades.
 

The Blame Game–

“I have an friend. He’s an investor. He manages not only his own rather, but also those of some of his family, a responsibility which he takes very seriously. We share investment ideas, and some of the ideas he uses come from my recommendations, in The Morning Call and the Mechanical Monkey, among other sources. All in the family, right? Sometimes, one of those investment ideas goes south, and I feel compelled to send off an apology to my friend. Invariably, he responds in this manner – ‘Hey, don’t worry! I went into that one with my head up, did my own research and made my own choice. That makes it my responsibility, not yours…

‘ In this ‘victim society’ of ours, blaming someone else for our own mistakes teaches us! absolutely nothing. It’s a matter of personal choice and individual responsibility. Your recommendations offer value to me for one simple reason. They narrow the fields of my own research. I am not a professional, and I do not have enough time in a day to start from scratch. Your recommendations point me down roads which otherwise might not have been taken, and for that you have my gratitude. For what happens thereafter, or does not, I will take personal responsibility.”
Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

DOW Directions 01-04-08 (Friday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Uneventful day could lead to market turn around.

The DOW was up  +12.76 points on Thursday. The NASDAQ was down slightly and the S&P closed unchanged.  After a strong down day on Wednesday, the markets posted supply and demand pictures that imply a turn or at least a pause while it ponders the situation. 

The StoRSI, our momentum oscillator,  closed under it’s trigger level at +7.38.  This low reading signals an end to the downside momentum.  Price could rally from this area, due to the oversold condition of the market (which has caused momentum to indicate the extreme oversold conditions).  

The T8 which was flat for the majority of last week is now accelerating to the downside. There is plenty of room between price and the downtrending T8.  The market could easily rally back to the T8 before it encounters further resistance.  The T8 is our preferred exponential moving average and it dictates our thoughts on the direction of the trend. 

The candlestick formation posted  on Thursday was a “harami”.  The body of Thurday’s candle was inside the body of Wednesday’s candle.  Many times, this formation leads to a reversal in trend.  Confirmation must take place on Friday, but the extension of the wicks to the downside gives us another hint that the market could begin to move up.   

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

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Online trading can be a lonely experience for the beginning trader. You will be searching for knowledge and will feel isolated. You will soon have the feeling that you just might have no ideas what you are doing. Online trading can be addictive also. You find yourself glued to the screen for 8 hours or more. Try this for a few weeks and you will see that it is draining. If you end up like most people, they will gravitate to an online community for companionship and education. In the future, the Teach Talk Trade Live Trading Room will let you interact with other experienced traders. We have the whole array of traders in our community, from beginner to advanced trader. We are all their to learn and to give support. You will find that being in a trading room like this one, you learn a great deal by watching and listening to experienced traders as well as asking questions and interacting. You will get to see the different styles of trading , thus being able to decide on which style may fit your personality. You should be exposed and explore the different methods of online trading - swing trading, position trading, day trading ect… Loneliness will rear its ugly head especially when you are experiencing losing trades. Boredom can also cause a lack of focus as well as overtrading. That is when many start to abandoned parts of their trading plan which begets more fear and losing trades. Your emotions start to take over your rational trading plan based upon probabilities and you start gambling trying to make up the losses. Teach Talk Trade can help you will all these issues.Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

DOW Directions 12-31-07 (Monday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Happy New Year!

The DOW suddenly stopped its upward momentum on Thursday and on Friday chopped in a narrow range.  The market closed up six points on the day. After moving up four consecutive days, the DOW succumbed to its overbought conditions on Thursday and then did little or nothing on Friday.

The StoRSI, our momentum oscillator, reached overbought trigger levels on Wednesday and abruptly reacted on Thursday and Friday with a sweeping reaction to the downside.  We are now halfway down heading to the lower trigger level and the odds favor further downside to start this week and the new trading year.  Usually, the market will continue down until the oscillator hits its lower trigger. This could take a couple sessions to accomplish.

The T8 has flattened and the trend has become anything but a trend. The flat T8 gives us little hints as to the overall direction of the market. As soon as the T8, our preferred exponential moving average, decides to take on a positive or negative direction, we will have a much clearer undertanding of how to position ourselves in the coming new year.

The candlestick formation, posted over the last three or four days,  gives us very little clues as to what is currently happening.  We will wait until we see a significant candle posting to position ourselves in this market.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

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Thursday, 27-Dec-2007

Friday, 28-Dec-2007

Here I will talk about risk management in developing an online trading plan.  One area is position sizing.  Yes position sizing, do you hear me POSITION SIZING!  You have heard in real estate, location, location, location, well one mantra in online trading is position sizing.  In working your online trading plan, you will back into this area.  If you plan is realistic in its overall scope, your position size will be determined by  the plan and not some size out of your head.  When your position size is too large relative to your account size, you will engage on an emotional roller coaster.  Your online trading plan will crumble fast.  By limiting your  position size so that you are risking only a small fraction of your online trading portfolio on each trade, you are managing the emotional impact of profit and losses as well as managing your risk.  This is a part of money management also.  Many online traders are under capitalized and trade sizes that are too large for their portfolios.  They do this to generate income, their trading plan is most likely not thought out.  The emotional ups and downs will eat the trader alive, thus causing poor risk management which leads to lossesPlease take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

What do you suggest for the beginner or someone who is still searching for the Holy Grail?

I would suggest that this person take a hard look at themselves.  Get some education, and not the fluff that is peddled out there.  You need sound approaches starting from the basics.  Read, read, and read.  Keep current with the areas of the market that interest you.  As part of your education, you need to research the tools you will need that will help you get an edge, become more productive/profitable.  If you were a builder, would you go to work with only finish nails and one hammer in your toolbox?  This would make the process of framing a house difficult, it would be much easier if you could pull out your framing hammer and 10 or 12 penny nails, or better yet a nail gun to frame the house.  Consider participating in online trading rooms and setting yourself up like a business would, get the tools. Teach Talk Trade helps you build a solid foundation, from education, to chart room, a morning call and a live trading room.  We also have an Accelerated Educational Discount Package which is a complete package, a full toolbox, that will catapult you ahead of most traders.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

We get a lot of questions about various complex money management (MM) formulas and our preferences. We don’t comment on this subject very often because money management is such a personal issue that it would be impossible to give any universal advice that would be specific enough to have value. Everyone seems to have different goals and tolerances for risk, not to mention varying amounts of capital for trading. However we do have some basic thoughts and opinions that might be helpful in picking a suitable MM strategy that will help you to become a winner.

Be careful about trying to use formulas that are designed to optimize the returns. In my experience I have found that the most successful traders, over the long run, are not seeking to maximize their returns. The best traders are always seeking to carefully control their risks and to achieve as much consistency as possible. They look for methods to achieve consistent returns with low drawdowns and they are willing to accept smaller returns in the process. My policy has always been to worry about the risk and the consistency first and then to accept whatever returns that prudent approach will allow. I’m sure I will never win any trading contests and I have never bothered to enter one. In my opinion, no one should ever trade like the winner of a trading contest. I apologize for getting off on a different subject here. Lets get back on track and talk about trading in the only contest that matters - the trading that you do every day.

In recent years the strategy of risking a small percentage of capital on each trade has become quite popular and deservedly so. This MM strategy, often referred to as fixed fractional trading, reduces our dollar amount of risk as we experience losses and increases our risk level as we earn profits. The possibility of ever going to zero with such a strategy is virtually nonexistent. However this strategy has an inherent weakness that tends to constantly work against us. If we assume an equal number of winners or losers in a sequence this popular strategy produces net losses if the winners are not larger than the losers. To keep things very simple lets just look at a series of five wins followed by five losses with the wins being equal to the amount we risk. Lets also keep the math really simple and begin with starting capital of 100 and risk 5% of our current capital on each trade. I think that most traders would assume that if they had five losers followed by five winners they would be even. Unfortunately that is not the case.
Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.