StockFetcher Forums · General Discussion · Time Can Change Nothing<< 1 2 >>Post Follow-up
TheRumpledOne
6,358 posts
msg #39303
Ignore TheRumpledOne
12/3/2005 2:24:00 PM

Time Can Change Nothing
Stockscores.com Perspectives for the week ending December 2, 2005

I was having dinner at a restaurant tonight and watched a classic boxing match between Rocky Marciano and Roland LaStarza. This fight occurred in 1953 but despite the effects of time, did not look much different than a match of today. Admittedly, I know very little about boxing, but it seemed that it was simply a contest between two pugilists bent on hurting the other just as Mike Tyson might aspire to do to an opponent today. The more things change, the more they stay the same.

Many might suggest that the stock market is very different today than it was 50 years ago but I would argue that it is much like boxing. The basic principle is the same.

It would not be hard to see that this boxing match was fought in a different time than we find ourselves today. You only needed to look at the crowd and how every man in the audience wore a hat to notice that it was not fought at Caesars Palace recently. The stock market today has many things that are different than in prior times, the most notable being the effect of technology on how transactions are made and information is disseminated.

But one thing that is absolutely the same today as it was fifty years ago, and I expect, will continue to be the same in fifty more years, is the underlying motivation of the stock market.

That one consistent fact is human emotion.

In my opinion, the best book ever written about the stock market was written in 1923 by Edwin Lefevre. Reminiscences of a Stock Operator is a fictional story about a real person who was a market trader and how he rose to extreme success and failure a number of times in his life. This book is such an essential read for traders because of its focus on human emotion and discipline and their role in stock market trading success.

We may be able to always find a fundamental reason for a stock to move, but have you ever noticed how good news does not always move a stock up and bad news does not always drive it lower? It is the mindset of the market that is so important in how information is judged that the information is often not that important. Crowd behavior and the predictability of it are more important than any news release can be.

The point I want to make is that becoming a successful trader requires a focus on what has always been and what will always be. There are countless books about stock trading that miss the point. To be successful in the market, you have to understand how humans behave. To beat the market, you have to be one step ahead of the crowd.

Stop trying to understand the difference between a stochastic and an RSI, or a Quick Ratio and a Current Ratio. Instead, focus on what motivates us to respond with fear and greed. Look inward to understand why you sell when you do, and why you are no different from the average investor out there. To beat the market, you have to be different than average. If you are a normal human being, you are destined to fail as a trader.



rrrbbbggguo
29 posts
msg #39307
Ignore rrrbbbggguo
12/3/2005 2:53:54 PM

That is always easy to say than to do


Koronbock
201 posts
msg #39312
Ignore Koronbock
12/3/2005 4:57:27 PM

Well, good THEORETICAL point. How about some practical examples how YOU are doing it in the real market place?

Thanks.


TheRumpledOne
6,358 posts
msg #39346
Ignore TheRumpledOne
12/4/2005 1:02:25 PM

I "MILK THE COWS" EVERY MORNING.

The top producers in the herd are GOOG, AAPL, RIMM and SHLD.

If you trade at/near the open, at/near the open price you will make money.

Long or short, doesn't matter. These stocks have massive volume and are volatile.

If they move a dime in either direction, they will move .50 over 80% of the time. Try to find those odds in Vegas!

Why would I post my "secret"? Because human nature causes most people to ask, "Well if it is that simple/easy why isn't everyone doing it?" and they won't take action leaving plenty of milk for me.

Only a few people on the planet will take advantage of this fact of the market.... THE HIGH OF THE DAY IS USUALLY HIGHER THAN THE OPEN AND THE LOW, LOWER. That fact is so simple that it is lost on the majority of traders. They want magic filters, the latest indicator and/or the hot stock of the day. Meanwhile, the herd just gives milk every morning.

You may wonder why I use filters at all if I have a "herd". I use filters (rsi(2) < 1) to tell me which stocks in the herd may be ready to produce lots of milk.

MAY ALL YOUR FILLS BE COMPLETE.


Way2Late
37 posts
msg #39355
Ignore Way2Late
12/4/2005 2:41:57 PM

Thanks to TRO's statement "GOOG is a cash cow that should be milked daily" I too have been trading GOOG daily. It easily moves $1 in a few minutes (or less at the open). I look for crossovers in a couple of indicators or volume breakouts/breakdowns. It trades 8 million shares a day so my measly 100 shares are nothing. The secret to trading lies in Mark Douglas's book "Trading in the Zone", Read it, do the exercise at the end, read it again, believe it, do the exercise at the end again and again until you get it. Then keep it on your desk to refer to.

It really is that simple. But it is very difficult to do until you "get it".

I'm not there yet, but I'm making progress.




TheRumpledOne
6,358 posts
msg #39359
Ignore TheRumpledOne
12/4/2005 3:12:03 PM

Way2Late:

If you are trading GOOG and have real time indicators, use VWAP. When GOOG crosses above, go long and when it crosses below, go short.

Institutions have automated programs set to trade based on VWAP.

You are right, your 100 shares don't mean a thing except to you...
MILK THE GOOG COW!

MAY ALL YOUR FILLS BE COMPLETE.

P.S. post the exercize you mentioned.




Way2Late
37 posts
msg #39367
Ignore Way2Late
12/4/2005 8:09:24 PM

VWAP, can't find in on any of my charts, real time or otherwise. Where do you get it?

Does it stand for Volume Weighted Average Price, I know I can place an order for a large number of shares and ask for VWAP and I think that's what it means.

Are there parameters for it? If so what parameters do you use?

TIA



Koronbock
201 posts
msg #39373
Ignore Koronbock
12/5/2005 4:45:00 AM

Rump,
thanks for letting us know this technique of yours. You are one of the few here who are always following through with substance and not only words.
I've been with SF from the beginning but have not learnt more from anyone else than from you. Good work!




TheRumpledOne
6,358 posts
msg #39378
Ignore TheRumpledOne
12/5/2005 9:42:58 AM

Yes VWAP - volume weighted average price.

I have TradeStation and it is available there in real time.

You're welcome, K.


EWZuber
1,373 posts
msg #39380
Ignore EWZuber
12/5/2005 11:08:53 AM

TRO,just wanted to point out that your system is only practical if one has more than $25K to trade with.
Below that level is a whole different world.


StockFetcher Forums · General Discussion · Time Can Change Nothing<< 1 2 >>Post Follow-up

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