Wednesday, December 23, 2009

Positive Experiences

One of the keys to developing as a trader is to remember what works and reapply those experiences.

Two investments I made recently, BOLT and ENDP were made after researching their value and deciding they were cheap.

I bought both and they turned into losses.  However, after several days, both started to rebound and are now green.  Many times I have bought cheap names and then sold them even lower... instead of giving these value swing trades time to swing back around.

My best wins have been holding value names for a very long time -- 4 - 6 months.  And sometimes even longer.

 Next year I plan to be very slow to act, make fewer trades, and make more by doing less.

 What has failed has been attempting to daytrade, focusing on short term plays, lottery type picks.  I will do less of these.  I will do none - how's that?

Tuesday, December 8, 2009

slow play

a few winners emerged like YUII and NEP

I have correctly charted a pullback -- indicated by the dollar breaking its downward trend.  Still, many China microcaps continue pushing forward.  Value stocks almost always win in the end.

 Not trading is the hard thing.  Most traders seem to always want to play something to kill the boredom.  I have started a position in ENDP which is tanking based on valuation.  It received several downgrades but I think the long term outweighs the short term problems.

Still, I notice all my 'original ideas' are doing pretty badly and all the China picks from the people I follow tend to do much better.   But right now the market is consolidating so very few ideas are working.

Taking it easy... being patient.  Keeping the size small.  Waiting for clear patterns to emerge is working.

Thursday, December 3, 2009

daytrading mistakes:

I think one of my weaknesses is daytrading.  I lose money consistently trying to make money intraday.  The largest gains have been made through multi-week /month holdings.  This is why my IRA outperforms my "trading" portfolio.

 I lost money trading BKS which was weak today.  I set a stop, lowered it, and lost more money while I bought the same stock in my IRA at a lower price, and held it.  I know BKS will be a winner, but I fear holding stocks in my "trading" portfolio because I'll get stuck with it.

I would likely outperform by treating my trading portfolio for now on as a swing portfolio.  If I feel the need to set a tight stop, I would do best to avoid that trade.

 I have adjusted how I use charts now (using no indicators) and it has helped me 'see' the markets better.

In general, I have picked many winners but still sell them far too early, even when I know they are going up... seeming to sabotage my own longer term timeframe when I make the purchase.

 The trading style that best suits me is a lot more boring.  Daytrading provides a great deal of excitement when I enter a trade.  I need to forego the excitement of trading.  Excitement equals losses.  Trading emotionally after a loss tends to result in bad decisions as well.  Once I determine a stock has support and is rising.  I can enter and exit if the support level fails.  But my timeframe needs to be longer and I need to be willing to leave a trade alone once I've determined it is suitable and meets all my criteria.

 Keeping the size small makes it easier to leave it.   To improve:

1) make fewer, better trades
2) keep trades on until support fails -- do not take quick profits or change spontaneously
3) lower position size.

Tuesday, December 1, 2009

back to basics:

another terrible day so I'm choosing to wipe it away.

I am 60% cash now and not planning to make any big moves for the rest of the year.

I am simply observing charts and seeing the cracks in the market appear.  The push up is almost 100% stimulus and printing.  There are a few bright spots like AMZN but the valuation is ridiculous.

The cracks I see now are a flat  JNK etf.

Investors seem to no longer pay up for debt.  Leaders in finance: axp, jpm and aig have peaked.  GS, BAC, and C also seem to have faded.

Utilities is one of the strongest sectors now.  Natural gas is in a glut.

The only question really is how long this can keep up?  Is there a bottom to the dollar?  And even if there isn't, can risk trade go on indefinitely with few signs of improvement?

Obviously, the charts will show the way.  Goldman peaked almost 2 months ago:

 However, it is not ready to collapse.

 The retail index RTH is almost at the peak of the collapse in the summer of 2008.  What a run for retail. Do people really want to be new buyers now?  Really?

  Just how long can this market keep doing this?  I don't know, but there are a few warning signs now.  This is all about stimulus... but eventually, it becomes about valuation and fear and reality too.