When everything falls into place, some are done in 15 minutes (or less). If you are not Stopped Out and the Close is near, then exit the trade. If you carry it overnight, it is no longer a Gap trade setup. There is a trader who specializes in trading Opening Gap setups. The Gap Guy Master the Gap He has a <i>freebie</i> update that you should signup for. Not as detailed as his subscription service, but still quite useful.
This is a point that is important to many people who may be curious but hesitant. What you guys are talking about is Time Frame. For what ever reason, many believe TA can only be applicable in a "daytrading" or short term time frame. This simply is not true. Whether it is Long term, Medium term, Short term, Ultra short term(daytrade), the time frame is irrelevant. TA is simply a different way of looking at(and trading) the markets. I am sure long term "investors" would have been equally grateful to have a process that could prevent them from buying the 1220 May high. I will get into WHY we use this particular process when I talk more about what exactly TA is. The gist: it is the ONLY way one can eventually start trading with leverage and size, because in order to do that, one has to be able to quantify risk. (The only other way to trade with leverage is arbitrage. I run a few of these strategies that I can eventually get into if people are interested. The barriers of entry is obviously high.) There is no minimum starting point. As long as you are interested in the Markets, be it Equities, Bonds, Commodities, Forex, Tulips, whatever it is, this method can help you in some way. I am simply teaching a Philosophy and a Technique, what you do with it is up to the individual. I highly recommend NOT to use options and NOT to even trade live at first. Trade on paper to begin with until you are comfortable. Just like in basketball we have some scorers and defensive players and rebounders and point forwards. Then we have simply Basketball Players. In trading there are plenty of strategies, and more than enough indicators to overwhelm most people. There are swing traders, day traders, scalpers, long term investors, arbs, quants, people who only play the open, people who only play the close etc etc. I do not classify myself or limit myself to any particular brand of trading. I simply try to trade every time frame, while encompassing and incorporating every strategy that I know of. Trying to be simply a Trader. The same philosophy holds true for my view of different indicators. No indicator is perfect, or accurate at all times. The more you use them, the more you figure out when which indicator is applicable in which situation. In the end I do not use any singular indicator, but rather play them off eachother, or let them paint a bigger picture. Here is what I use most in no order: Chart pattern Bollinger band Stochastic- divergence Candlestick Fibonacci- 1. Price Retracement 2. Time count Price levels- Gap, Pivot Elliot wave- nothing crazy, some rudimentary ABC waves Intermarket analysis Cycles, Seasonality I will try to go through each individually, and maybe more, for the learning process here. But I cannot emphasize enough, trading has NOTHING to do with these indicators, and everything to do with how you use them. Stockcharts.com For those who requested book suggestions in general: General- Technical Analysis of the Financial Markets by John Murphy Intermarket Analysis by John Murphy Psychology- Trading to Win: The Psychology of Mastering the Markets by Ari Kiev Addictive Thinking by Abraham Twerski (Not specifically about trading, but a great book on psychology that is very applicable) Cycles- Merriman on Market Cycles by Raymond Merriman Basic Principles of Geocosmic Studies for Financial Timing by Raymond Merriman ( I do not recommend these two books until you have absolutely mastered every other aspect of Technical trading) Just for fun- Reminiscences of a Stock Operator by Edwin Lefevre (mandatory reading for anyone remotely interested in the stock market. I still re-read it every few years) Market Wizards: Interview with Top Traders by Jack Schwager (One of my favorites, also my mentor was one of the traders interviewed) -------------------------------------------------------------------- Hope this was helpful. I'd gladly take any more questions, and I think you guys will get a lot more answers once I start explaining my trading methodology. There is a lot of information to cover, so this may be a long drawn out process. Please bear with me, and hopefully this will be a rewarding journey for all.
I am reading Technical Analysis of the Financial Markets by John Murphy and it is great. Great beginner book that explains the fundamentals and will point you in the direction of more advanced tactics. It explains most of the technical indicators that CB talks about it. I highly recommend it.
depends how you trade them and how liquid they are. i agree 100% on illiquid huge spread contracts. also, when you are close to options ex there can be some interesting opportunities by either going long the calls or puts that give you less risk than actually buying or shorting the stock. you can get long the straddle/strangle as well. but in this situation i do somewhat agree with what you are saying. it would have been better off to buy the ATM strikes if possible. i rarely see a situation where it is better to buy stuff a few strikes out of the money.
Thanks for the recommendations on those books CXBBY. I will check some of those out in the library this weekend
would be a pretty random rally if we did. no reason for us to bounce. man i am unhappy with myself for covering my short too soon. after the fed announcement we had the rip down, bounce back to the trend, rip down, then rip to highs. that last rip up past resistance on the day made me think we might rally a bit into the russell rebalancing, so i covered. that's what i get for not sticking to my plan anyhow, keep an eye on random small cap (even some big caps) stocks tomorrow. there will be some insane moves for the russell rebal.
Yeah Robbie I sold half my QID position before the Fed and sold the rest on the initial drop this morning. Wish I would've kept the whole thing. Anywho, I established a 25% long position this morning @ S&P 1079. But boy oh boy, my stop is ultra tight. Overall, I still think we have a ways to go down.
It looks like it's do or die for Barry 10/30 year Bonds. My charts say the 10-year is going to 4.240%. I'm long the TBT as of today with a target of 51.81. King Dollar looks particularly weak also. My target is 22.21 on the UUP. As I said before, I think GLD will rise rather quickly. I'm interested in hearing anyones thoughts on these positions.
I can't argue against the TBT, but what kind of timeline are you expecting for that 51.81 target? Even with SPX in the Red, TBT is Green and that is somewhat different. Wednesday, oil majors such as XOM, CVX and COP were sold hard while the financial majors such as JPM, BAC and WFC are getting sold today. AAPL is still hanging near its highs, so perhaps we move higher after these selling rotations are finished.
Mango, that's the problem with my system. I haven't figured out how to calculate the damn time horizon!!! LOL!!! It just will give me a target number and then I buy the dips or sell the rips (depending if I'm long or short). Just like this particular move right now in the S&P; I calculated my long target at 1135. But, 1119 was my high target for this leg in the cycle (which we have already met and dropped). So even though I think we rally to 1135, I think we will drop again like a rock once we get there. Ultimately, I think this is where the ***** hits the fan. Rising interest rates, falling dollar, rising commodities, housing double dip and the printing press in hyperdrive. I'm not an economist, but this it what the charts are telling me. Your boy, Bernanke seems like his back is into a corner and he's facing 30 lions with only a whip, a chair and a Indiana Jones hat.
i can say with near certainty that tbt will not hit that 51.81 any time soon...if ever again. even if TLT hits those june '07 lows then TBT theoretically wouldn't be at 50 bucks. it will take a massive fast collapse for TBT to get to that point. further, what would be the catalyst to drive that kind of massive drop in the treasuries? you mentioned a potential double dip, but that would not cause rates to rise. further, the fed hasn't even thought about changing their stance on leaving rates exceptionally low. the market and economy need to be strong, or at least inflating, for rates to rise. all that being said i think the trade can work, but it i think 44 bucks is a best case scenario for an upside target. just offering some constructive criticism and also try to remember to avoid fighting the trend.
Think I might close out my shorts (mostly energy sector) in a bit here...what a fan-freaking-tastic week.
For months, I have been trying to not think of a <i>Greece</i> scenario, sadly the idea keeps coming back.
I'm not sure who posted the seasonality map for June a few weeks ago, but that thing has been amazingly accurate this month. I'll be curious to see how it does over time - if it works and you can predict market biases a month out, it really blows up any remaining notion of an efficient market.
Norm Fosback had done research in this area several decades ago. Norman Fosback's Performance? There is a new seasonality map out for July: Seasonality Map for July Some of the basic premises are: 1. If there is a Federal Reserve meeting that month, the day of the announcement (usually Wednesday) will have a Bullish bias. Volatility - movement will likely be increased after the announcement and the Close will often be influenced by the wording in the Federal Reserve statement. 2. The Tuesday - Wednesday timeframe in the week prior to OPEX week could see a low that will hold through OPEX Friday. 3. The Friday of OPEX will often see the High of the Day near the Open and then perhaps a slight downward bias and decreased volatility - movement as key stocks are <i>pinned</i>. 2010 Expiration Calendar 4. Post OPEX, the <i>pinning</i> action that was put into place is released and there could be some large moves. If there was a Bullish trend leading into OPEX Friday, then the normal expectation will be for the following Monday to have a Bearish trend. There have been times that the Market will continue Upward and the <i>pinning </i> won't be released until the end of the month. 5. The Wednesday Post OPEX is often <i>whippy</i> with wider moves. 6. The days leading into earnings announcements can be Bullish. Those are general rules of thumb and the exceptions that happen can also have meaning.
