Everybody’s A Freakin’ Critic

It is my job as the writer to communicate whatever it is I want to say. In my previous post, I did not communicate well to some readers. My apologies to the readers who stopped by and read the post out of context of my previous writing.

So let me start by saying…it’s a blog! It is a form of entertainment. As the author, I am putting on a show for you the reader. And that’s it. If what I say is entertaining to you, great; if you learn something about yourself, even better. If it helps you trade better, whoot whoot!

I will not spend the energy to defend myself against incorrect assumptions made in the comments section of my …Swingers…post. I would rather spend my time finding the next great set-up or enjoying my family. I must learn to ignore critical comments as taking them to task only distracts me from the work I should to be doing.  There will always be critics. If readers follow my posts regularly (and especially if they follow my work in the 12631 chat room) those readers will have a better view of my intent. There is no point in responding to criticism but I am happy to answer direct questions.

In response to SPYderCrusher’s questions:

Q. Why were you BUYING stocks in a DOWNTREND for the last 6 of 7 weeks?

I would counter that while it WAS trending down, it did so with significant chop…bouncing up and down through support levels, which gave mixed signals to me and other traders. I chat with other traders throughout the day; we share ideas. The first week was easy…decidedly down and I played good defense.

The next three weeks in May were deceitful. They weren’t decidedly down and they showed bullish signs repeatedly bouncing off of various support levels. It was hard to tell which direction we were going. I wasn’t comfortable swinging short or long. When I accepted the chop and started taking profits earlier, it worked. I adapted to my environment. This was not much of a change from what I normally do. I always lock in profits early in a trade, but unless it is a day trade, I will usually give the set-up a few days to develop. But momentum trades (long or short) were failing in the chop within a day or less. All things being equal, if I take 10 trades with good probable set-ups and I stop out of 7 of them for 5% each and I make 10% on each of the other 3, I am still down 5%. It is my observation that this has been a common occurrence in the chop for some traders.

Q.  What SETUP are you using? WHAT CONSTRUCT guided your decisions to do anything?

I look for stocks with good basing or bull flag charts on the dailies that have some decent volume. I might look for those patterns, put in a bookmark, then buy more when the green volume kicks in….not all breakouts are created equally. I analyze each chart for both upside and downside potential. I want to have an idea of how much I can get out of the stock before I enter the trade and I want to have an idea as to how far it will drop if it goes the wrong way. I set my stops at support levels that I determine usually from previous lows, moving averages or some combination. I don’t want to enter a stock that has a lot of downside risk. I have learned from that mistake already. :~)

If I want a second opinion, I ask Chess or RC, or any one of the other talented traders that I chat with. The best calls are the ones that are not extended and have a clear stop. I use Worden StockFinder to scan charts for volume and other parameters but I have not mastered a good break out “compression” scan using Worden. I am very interested in learning how you create those compression break out screens, Danny. If you would impart your parameters for your scans on Worden, I would be ever so grateful. I will also get many ideas from various PPT screens and chart those.

Q. There are several variations of questions that all surround the idea of me changing my trading style.

I never intended to communicate that I had changed my style, merely adapted it to the current conditions. There is a difference between completely changing your style and changing up a few plays. The mistakes I made when trading with “Bill” were a direct result of me not sticking to my style. Taking profits earlier in a choppy market, was just changing a few plays specific to the team I was playing against. I didn’t go from playing quarterback to playing safety; I had enough of that with “Bill”.

Q. Did  your last strategy stop working, or did you try and force it?

Well, to be honest, I probably forced it. I need to figure out how to bench myself when the environment warrants it. Perhaps if I take a closer look at Danny’s work, I will find some answers. After all, “delayed gains are better than losses.” G.S. Seldon

I think that answers most of the questions in Danny’s comment.

Live and learn. ;~)

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