Average person with a full time job and interest of the market. Prefer reading trading blogs over trading books. Grew up near Rochester, MN & now live near Gettysburg, PA.
For more information visit http://redman59.com/
About a week ago I received a newsletter from a well-known trader that has won the World Cup Trading Championship 7x. I am not writing this to bash Chuck Hughes himself as he currently has and has accumulated more money through trading than I ever will. I am writing this for the newer trader to be skeptical of receiving information via mail or email of stats like these. In high school and to this day I always liked Diogenes. He was a Greek philosopher known to be a cynic that went through the streets of Athens with a lamp during the day in search for an honest man. Why many people may consider cynicism a fault, I believe it is a good trait especially in the military or law as you it will always allow you to keep your guard up. While this applies to the job fields above, it also applies to trading.
Again, I am not here to bash Chuck Hughes himself as I have received mail coupled with email from other traders alike. The problem I have is that these tend to target newer traders that are probably not starting with 100k but instead are starting with 5k. There is one thing I learned through trading, allow yourself enough capital to be wrong more often and hone your skills.
Below is a copy of the stock recommendation I received today in an email I have setup specifically for those “enter your email here to receive” type sites and I received this approximately 20-page newsletter in the mail about a week ago:
Below is an hourly chart going back 2 weeks showing the price action and probable run-up off this recommendation:
Now this type of analysis is not my thing and I leave this to other traders that specialize in pump & dumps. My problem is that well-known traders (with successful records) come in and push out these recommendations to lure in honest folk that are trying to learn the game. These traders probably have not learned yet that this game is not easy and a lucky trade or two will probably end in loss in the long run.
My recommendation to newer traders is that if it looks too good to be true and a system is selling for the great price of $99 (arbitrary but you get the point) then you are probably getting what you paid for. I have learned through subscribing that the best services are the ones that do not market or much at all. These are the men/women that pump out information on the stream and may throw a link in there here or there, but on an irregular basis to where you would most likely miss it.
When it comes to trading services, be skeptical! Be leery of stock recommendations you receive in the mail or those emails with volatile font size and highlights no matter who it is from.
It has been longer than I had hoped since I have written a post. Since I wrote this blog post I have been more inactive than I had hoped. The inability to monitor the market on a consistent basis is more than I have anticipated. I have definitely missed much on the social media front as well as I have more miles on the road than I have in minutes watching/studying the market. If you have referenced anything I have written or sent me a message and I have not responded, my apologies and and if it were a question please ask again as I know I have missed some stuff. I must give thanks to @CashRocket @TwoSmuth @Rhino_Cap for references in blog posts and on the social stream.
Since that blog post I have closed the VSI-GNC pairs trade and got into a POT-MON pairs trade. I exited the POT long side on the 29th as I did not want to hold into earnings even though other Ag names have acted well on earnings. Then today I exited the MON short trade on early weakness. Then today I put in orders for two trades. The first was a WLT-KOL pairs trade as I like the WLT chart but due to possible market volatility and inability to constantly monitor the market/social stream, I wanted to short something as well. With that I chose the Coal ETF. Anyway I put in the order for a fill at 11.35 (for the pair) hoping to get hit on some later weakness but never got the fill.
I also put in a limit order for AMZN. Looking at the chart I chose the next weeks expiration cycle (Feb’2) and put on a 255/265/270 Call Butterfly that was filled in the afternoon on weakness. Looking at the weekly chart I believe the 260 level will act favorably as 260-263 was a key break out area and I expect this to hold. Also this is an area where the 10 week SMA comes into play. Even though I have a short term trade on I expect this to be a big level, so my trade looks to capture the 260-270 range while leaving some profit on anything above 270. Below is the weekly chart:
And below is the risk profile based on a 1-lot position:
One of the most difficult things as a trader, parent, and having a full-time job is creating that balance between them all. As of late I have had the most difficult time balancing all three. More recently trading has come to the least priority of those three. I am grateful in that I have a full-time job that lets me have a comfortable life that allows me to trade. But recently assignments have come to where I must let that full-time job override trade priorities.
If you have been a reader of my blog you know that I love options. Unfortunately many of the strategies I use require intra-day monitoring or intra-day adjustments. With recent life demands, I haven’t been able to monitor these intra-day moves as much, thus creating slippage beyond what I deem comfortable.
Sure you may say that alerts can negate these demands, but also at times I may not be able to see these alerts from 2 hours minimum to maybe EOD. Not exactly what I like. So with this I have created a trade strategy adjustment instead of taking myself out of the game.
Right now I am concentrating more on pairs trading more than anything else. What I love about pairs trading is that it can be very beneficial during times of volatility and be beneficial when you can’t monitor the market that much. I believe in a a rising tide lifts all boats, and if you pick a leader over a laggard you can benefit (even thought the rate of pace not be as high); or if the market falls then your position should be neutral or leading.
Recently I posted on the stream a trade I took in a pairs trade. In this trade I went long Vitamin Shoppe (VSI) and shorted GNC Holdings (GNC). These two stocks are within the same industry and below is the chart I was looking at focusing on oversold signals in RSI and %R aligning with a support point:
This trade was posted Jan 12th on Twitter, taken by me on Jan 11th at a cost basis of 19.79, so a trader could have entered at a lower price. I posted this trade on the 12th as shown below in my tweet that was retweeted by @Rhino_Cap (thanks!):
These were some patterns I noticed that also aligned with my current trading monitoring and strategy. With these I will look at them more on of EOD basis while setting profitable stops instead of stop losses. Call me a skeptic but HFT and other market hunting phenomena has me leery of sell stops and that is what I love about the options market as your stops will not be sought/hit.
As a trader you have to know when to adjust your overall strategies as I am quite picky with my entries when looking at those intra-day option strategies as cents can make a difference. So when other factors come into play that make me sacrifice those cents then I must adjust my plan. As of right now I must say that pairs trading (no options) is my strategy. This requires less monitoring and less position volatility. Hopefully I can return to a more active stance on market monitoring, blogging, and stream posting; unfortunately for now it will be more haphazard.
Here are some charts are I put out last night. My goal here is to chart some more of the quiet stocks that don’t get much attention on the social stream. There is one exception and that is the ETF of the iShares Emerging Markets (EEM). The chart looks great and what you want to see in a risk-on environment. Below you will find the symbol with FinViz link and the notes that were put out with the chart:
1) EEM – like the flagging action here, like to see this in the risk markets
2) NTRS – regional financial, like the volume on this move up w/low volume pullback, earnings soon
3) FET – oil & gas name trading cheap xFwd #’s, holding & like the CwH retest here on recent downgrade
4) GPI – like the FA value w/10.3 days to cover, y’day action favorable on high volume w/follow thru today
5) KNX – broke the down TL on >avg volume, basing below resistance/200sma w/earnings coming
6) NFP – insurance broker, like the pattern w/17 & 50sma support, 12+ days to cover
I was absent for the most part of trading today. Reason being for an orthodontic appointment for my 9 year old son. If any of you are familiar with major dentistry fixes (crowns, bridges, etc.) or are familiar with orthodontics you will know that they don’t come cheap. Now if you have a high-end insurance, yes maybe, but for the frequency of these procedures and what you pay for the insurance that cost can be argued. Anyway, I took my son to the dentist about 1.5 months ago and he recommended that he be seen by an orthodontist.
This did not surprise me as I had messed up teeth when I was younger and had to get 4 teeth extracted just to get braces (crowding). So looking at my sons teeth through the years I knew this call was coming. Needless to say it is not a cheap procedure and I remember taking the monthly check to the orthodontist when I was younger.
But here is the problem. Even though I notice that his teeth are a little messed up, he notices it too. He tells me that he does not like to smile because of his teeth. Now as a parent, how could this not crush you? I could not imagine any parent out there that would not be upset by this thought as any parent loves to see their kid smile. With the thoughts from my kid and advice from the orthodontist needless to say he will be getting braces.
When I researched the cost of braces and what my father paid 15 years ago, the damn price has not changed that much. I couldn’t really imagine the price being the same but upon research it depends upon region and competition. Right now I do live in a non-competitive region but this also is similar to the area where I got them 15 years ago. But hell you would think through the years they may become cheaper. In the end it is an “oh-well” decision and I just want to see my kid have that confidence to smile. Also I was told that the braces would not be put on for at least 2-3 years (as permanent teeth still need to come in) so if I could not save that money then that is my fault as I know the demand right now.
So how is this trading related? During the process I asked the orthodontist if I could lock in a price now with a agreed down payment and cost. He laughed and said sorry I can’t do that at the time as they may become cheaper or more expensive. Understandable from a business perspective, but I was just trying to make a trade. As an options trader you know what I was getting at and this is exactly what options are applying to real life. So was this trade unrecoverable in a monetaty sense…yes, but in a parents perspective it is priceless.
I am using this to kind of create a quick reference archive for myself and maybe any followers. I am not always around during the day, hence my posts within time blocks during market hours. So I decided to create a category of stocks/charts I find during the market hours and those I find after market hours which can all be found in my Twitter timeline as well. Like I said this is more of a reference for but hope it may help others as well.
For these charts that I find during market hours they happen throughout the day so those I post first below happened first during the day (I will post in chronological order) and the action thereafter may look different. I will post the chart (usually with FinViz link in the ticker) and the notes I made on Twitter along with it. Also remember your time frame as these will alternate.
Today during market hours consisted of four charts:
1) SYK – 52wk hi & cup w/handle b/o sticking, Jan 57.5 calls trade; prev industry notes by @OptionsHawk @hertcapital
2) SWKS – like the pattern here, Feb 22 calls active this AM, note CES going on this week
3) VMW – like it here at high volume node coming into 50sma, ITM Feb 90 calls bot 30min ago
4) ANN – nearing trendline break, Jan 34 calls active w biggest block on ask, volume 33% >50day avg
One of my favorite scans to run in The PPT is daily hybrid movers with an accompanying higher than average volume score. @RaginCajun does a fine job throughout the day charting hybrid movers and linking them to FinViz. I like to look at hybrid movers and also add the volume element. With this screen my goal is to find some more of the under-followed names. With this I believe they may be starting to get accumulated by funds and being relatively unknown, aren’t far in the move that they may take. That is my opinion anyway and this doesn’t always mean they they will have they will have that upside move I am looking for. But, it should be noted that they were a top hybrid mover with volume. I then like to look at the technicals to see how the chart structure looks and filter the best candidates for an upside move.
Below are some of the highlighted stocks on Friday that I posted to Twitter and with notes and FinViz link in company name:
It was hard not to get caught up in the euphoria of the market yesterday and the day before if you were long positions already There were many comments on the stream yesterday and today about chasing and I would agree. That comment can also be broken down into size as well. Sure it is unwise to put on a full long position at these levels but if you were to initiate a 33% or 25% position (depending on your scale model) then you may have a great trade. As for me I have no long positions at this moment but initiated a 1/2 size short position yesterday on the Russell 2000 (RUT). I believed things became a bit overextended and I was watching two metrics I like to pay attention to:
percent above the 10 EMA (1st indicator pane) looking for a 3% extension
points above the 20 SMA (2nd indicator pane) looking at the 30pt mark for warning and 40pt mark for an extreme
I like to look at these two indicators for times like this when the chase is on. Also when they breach the points it is a warning and a possible time to initiate a position for a trade in the opposite direction. We all know that overbought or oversold can become overbought-er or oversold-er (please appreciate the humor) so the time in where I will add to the trade is when the RUT trades back under those points. Below is a 1 year chart with blue highlighted boxes of where the RUT first breached these points and then traded back under (notes on chart):
The option trade that I chose was the Feb/Jan1 850 Put Calendar for a 13.08 debit. First here is a chart of the RVX (Russell 2000 VIX) with notes:
With that I was looking for a pullback option strategy that took advantage of a pop in volatility and the strategy that came to mind was the Put Calendar as this took advantage of a pullback and was positive vega. I did screw up in putting this position on in that I sold the Jan1 option (not much time or benefit) instead of selling the next week Jan2 option. I only collected 0.15c on that Jan1 option instead of the near 2.00 I could have collected for the Jan2 option. A mistake on my part. I do believe that it can be recoverable and I do not have a full position on either so the dent to my account is manageable. But this is a good lesson in taking the time to slow down and actually confirm the order when that pop-up window asks you.
One of my favorite things to look into when trading is the psychology behind the trade. This is where technical analysis can emerge as one looks at the psychology behind a candlestick or why support and resistance works. Also when a trader transitions from a paper account to a real account they can see paper profits not transition to real profits and it can be attributed to the psychology of the trade.
While I have a passion for trading, I also have a passion for fitness. My passion for fitness came first. When I started to trade I could see the relationship. When people come from an out-of-shape profile they work hard right off the bat but also expect results right away…but that won’t happen. This also applies to traders as they read so many books and take courses but also expect results right away but this don’t happen either. While the weak will give up, it is the psychology of both that puts them over the edge and creates success.
With the new year upon us I read in the January 2013 edition of Muscle & Fitness the following stats:
10% of resolutions are to exercise more
19% of resolutions are to lose weight
80% of people who join a gym in January quit by February (yes 1 month!)
I have to say I was a bit astonished by the last bullet. When I saw this, the stat of successful traders comes to mind. With this I think of a post by @smbcapital. I suggest you read this post but it basically states that a person has a 90% chance of failing when getting into trading in a prop firm. I find this highly applicable as we as a society become more of a quick get rich people more than a slow and steady wins the race people. Needless to say I have read many other stats on the success of a trader and they all stated that the failure rate is high right up there with a restaurant.
How do I connect this with fitness. Well I believe they have the same psychology behind the goal. As the New Year resolutions are upon us, many of the people with those resolutions believe that if they are working hard they should see results right away (within 2 weeks). While the results may be small at first they will not live up to the expectations. Achieving trading and fitness goals require understanding and expectattions of the words: 1) failure, 2) tenacity, & 3) patience. Know that you will probably experience all.
Failure:
Know that you have a high chance of failure in both endeavors. It is easy to become discouraged after several bad trades. You get the screw this attitude and give up. Much like a person that has that fitness goal in mind. You work your ass off for 2 weeks (which seems like eternity). Give it another 2 weeks and then look in the mirror and I guarantee if you followed a fitness plan (with diet) you will see results. I guarantee it and if you want to call me out then come near Gettysburg, PA and I will prove otherwise or you have a disgraceful trainer.
Tenacity:
I love this word. In both endeavors you have to have it to push forward. You have to have that inner strength to overcome trading losses and learn how to mitigate them. In fitness you have to have the ability to look at yourself and say while I might not see any gains on my goal they will come. You also need the ability to fight through the workout and say I will persevere. Then you also need to say I will not indulge in a lot of junk food because I worked out but will stick to a healthy diet but allow yourself some cheat diets as well as to keep that part of the brain happy.
Patience:
So important in both. When I started trading I blew up several accounts. I then went back and learned what I was doing wrong. I learned that I risked too much straightforward and did not have a scaling methodology. I also learned that I became obsessed with gamma and did not let time work for me. Option traders can relate as I became more of a rolling/theta guy through time with averaging in via price points instead of looking for the quick swing. I will say though that I still love trading liquid options (look at pennys/weeklys) for those quick swings. But this all came with patience.
Much like fitness you have to have patience. In reading that last bullet in that 80% quit within the month the one thing that comes to mind is patience. Yes you may be working their ass off but you have to realize that it may be several months or years of damage you are trying to overcome. You have to give it time and stay true to yourself in exercise and diet (with cheat days!). If you do have that plan of staying fit or losing weight please stick to a reasonable diet and high rate exercise equal to or in excess of 30 minutes and you will results.
Conclusion:
In conclusion it is all about those three components and do you have what it takes? I always hated people telling me I could not do something as that drove me more. I hope that readers have the same mindset as I am saying you don’t have what it takes…and that is not an insult but motivation!
Below is a video from music by Staind and training by Jay Cutler. While there are many criticisms about bodybuilder enhancement use (which I can agree) I dismiss it from a psychological standpoint and look at their dedication to training from nutrition to workouts, and this is still a favorite video scene:
Average person with a full time job and interest of the market. Prefer reading trading blogs over trading books. Grew up near Rochester, MN & now live near Gettysburg, PA.
For more information visit http://redman59.com/
About a week ago I received a newsletter from a well-known trader that has won the World Cup Trading Championship 7x. I am not writing this to bash Chuck Hughes himself as he currently has and has accumulated more money through trading than I ever will. I am writing this for the newer trader to be skeptical of receiving information via mail or email of stats like these. In high school and to this day I always liked Diogenes. He was a Greek philosopher known to be a cynic that went through the streets of Athens with a lamp during the day in search for an honest man. Why many people may consider cynicism a fault, I believe it is a good trait especially in the military or law as you it will always allow you to keep your guard up. While this applies to the job fields above, it also applies to trading.
Again, I am not here to bash Chuck Hughes himself as I have received mail coupled with email from other traders alike. The problem I have is that these tend to target newer traders that are probably not starting with 100k but instead are starting with 5k. There is one thing I learned through trading, allow yourself enough capital to be wrong more often and hone your skills.
Below is a copy of the stock recommendation I received today in an email I have setup specifically for those “enter your email here to receive” type sites and I received this approximately 20-page newsletter in the mail about a week ago:
Below is an hourly chart going back 2 weeks showing the price action and probable run-up off this recommendation:
Now this type of analysis is not my thing and I leave this to other traders that specialize in pump & dumps. My problem is that well-known traders (with successful records) come in and push out these recommendations to lure in honest folk that are trying to learn the game. These traders probably have not learned yet that this game is not easy and a lucky trade or two will probably end in loss in the long run.
My recommendation to newer traders is that if it looks too good to be true and a system is selling for the great price of $99 (arbitrary but you get the point) then you are probably getting what you paid for. I have learned through subscribing that the best services are the ones that do not market or much at all. These are the men/women that pump out information on the stream and may throw a link in there here or there, but on an irregular basis to where you would most likely miss it.
When it comes to trading services, be skeptical! Be leery of stock recommendations you receive in the mail or those emails with volatile font size and highlights no matter who it is from.
It has been longer than I had hoped since I have written a post. Since I wrote this blog post I have been more inactive than I had hoped. The inability to monitor the market on a consistent basis is more than I have anticipated. I have definitely missed much on the social media front as well as I have more miles on the road than I have in minutes watching/studying the market. If you have referenced anything I have written or sent me a message and I have not responded, my apologies and and if it were a question please ask again as I know I have missed some stuff. I must give thanks to @CashRocket @TwoSmuth @Rhino_Cap for references in blog posts and on the social stream.
Since that blog post I have closed the VSI-GNC pairs trade and got into a POT-MON pairs trade. I exited the POT long side on the 29th as I did not want to hold into earnings even though other Ag names have acted well on earnings. Then today I exited the MON short trade on early weakness. Then today I put in orders for two trades. The first was a WLT-KOL pairs trade as I like the WLT chart but due to possible market volatility and inability to constantly monitor the market/social stream, I wanted to short something as well. With that I chose the Coal ETF. Anyway I put in the order for a fill at 11.35 (for the pair) hoping to get hit on some later weakness but never got the fill.
I also put in a limit order for AMZN. Looking at the chart I chose the next weeks expiration cycle (Feb’2) and put on a 255/265/270 Call Butterfly that was filled in the afternoon on weakness. Looking at the weekly chart I believe the 260 level will act favorably as 260-263 was a key break out area and I expect this to hold. Also this is an area where the 10 week SMA comes into play. Even though I have a short term trade on I expect this to be a big level, so my trade looks to capture the 260-270 range while leaving some profit on anything above 270. Below is the weekly chart:
And below is the risk profile based on a 1-lot position:
One of the most difficult things as a trader, parent, and having a full-time job is creating that balance between them all. As of late I have had the most difficult time balancing all three. More recently trading has come to the least priority of those three. I am grateful in that I have a full-time job that lets me have a comfortable life that allows me to trade. But recently assignments have come to where I must let that full-time job override trade priorities.
If you have been a reader of my blog you know that I love options. Unfortunately many of the strategies I use require intra-day monitoring or intra-day adjustments. With recent life demands, I haven’t been able to monitor these intra-day moves as much, thus creating slippage beyond what I deem comfortable.
Sure you may say that alerts can negate these demands, but also at times I may not be able to see these alerts from 2 hours minimum to maybe EOD. Not exactly what I like. So with this I have created a trade strategy adjustment instead of taking myself out of the game.
Right now I am concentrating more on pairs trading more than anything else. What I love about pairs trading is that it can be very beneficial during times of volatility and be beneficial when you can’t monitor the market that much. I believe in a a rising tide lifts all boats, and if you pick a leader over a laggard you can benefit (even thought the rate of pace not be as high); or if the market falls then your position should be neutral or leading.
Recently I posted on the stream a trade I took in a pairs trade. In this trade I went long Vitamin Shoppe (VSI) and shorted GNC Holdings (GNC). These two stocks are within the same industry and below is the chart I was looking at focusing on oversold signals in RSI and %R aligning with a support point:
This trade was posted Jan 12th on Twitter, taken by me on Jan 11th at a cost basis of 19.79, so a trader could have entered at a lower price. I posted this trade on the 12th as shown below in my tweet that was retweeted by @Rhino_Cap (thanks!):
These were some patterns I noticed that also aligned with my current trading monitoring and strategy. With these I will look at them more on of EOD basis while setting profitable stops instead of stop losses. Call me a skeptic but HFT and other market hunting phenomena has me leery of sell stops and that is what I love about the options market as your stops will not be sought/hit.
As a trader you have to know when to adjust your overall strategies as I am quite picky with my entries when looking at those intra-day option strategies as cents can make a difference. So when other factors come into play that make me sacrifice those cents then I must adjust my plan. As of right now I must say that pairs trading (no options) is my strategy. This requires less monitoring and less position volatility. Hopefully I can return to a more active stance on market monitoring, blogging, and stream posting; unfortunately for now it will be more haphazard.
Here are some charts are I put out last night. My goal here is to chart some more of the quiet stocks that don’t get much attention on the social stream. There is one exception and that is the ETF of the iShares Emerging Markets (EEM). The chart looks great and what you want to see in a risk-on environment. Below you will find the symbol with FinViz link and the notes that were put out with the chart:
1) EEM – like the flagging action here, like to see this in the risk markets
2) NTRS – regional financial, like the volume on this move up w/low volume pullback, earnings soon
3) FET – oil & gas name trading cheap xFwd #’s, holding & like the CwH retest here on recent downgrade
4) GPI – like the FA value w/10.3 days to cover, y’day action favorable on high volume w/follow thru today
5) KNX – broke the down TL on >avg volume, basing below resistance/200sma w/earnings coming
6) NFP – insurance broker, like the pattern w/17 & 50sma support, 12+ days to cover
I was absent for the most part of trading today. Reason being for an orthodontic appointment for my 9 year old son. If any of you are familiar with major dentistry fixes (crowns, bridges, etc.) or are familiar with orthodontics you will know that they don’t come cheap. Now if you have a high-end insurance, yes maybe, but for the frequency of these procedures and what you pay for the insurance that cost can be argued. Anyway, I took my son to the dentist about 1.5 months ago and he recommended that he be seen by an orthodontist.
This did not surprise me as I had messed up teeth when I was younger and had to get 4 teeth extracted just to get braces (crowding). So looking at my sons teeth through the years I knew this call was coming. Needless to say it is not a cheap procedure and I remember taking the monthly check to the orthodontist when I was younger.
But here is the problem. Even though I notice that his teeth are a little messed up, he notices it too. He tells me that he does not like to smile because of his teeth. Now as a parent, how could this not crush you? I could not imagine any parent out there that would not be upset by this thought as any parent loves to see their kid smile. With the thoughts from my kid and advice from the orthodontist needless to say he will be getting braces.
When I researched the cost of braces and what my father paid 15 years ago, the damn price has not changed that much. I couldn’t really imagine the price being the same but upon research it depends upon region and competition. Right now I do live in a non-competitive region but this also is similar to the area where I got them 15 years ago. But hell you would think through the years they may become cheaper. In the end it is an “oh-well” decision and I just want to see my kid have that confidence to smile. Also I was told that the braces would not be put on for at least 2-3 years (as permanent teeth still need to come in) so if I could not save that money then that is my fault as I know the demand right now.
So how is this trading related? During the process I asked the orthodontist if I could lock in a price now with a agreed down payment and cost. He laughed and said sorry I can’t do that at the time as they may become cheaper or more expensive. Understandable from a business perspective, but I was just trying to make a trade. As an options trader you know what I was getting at and this is exactly what options are applying to real life. So was this trade unrecoverable in a monetaty sense…yes, but in a parents perspective it is priceless.
I am using this to kind of create a quick reference archive for myself and maybe any followers. I am not always around during the day, hence my posts within time blocks during market hours. So I decided to create a category of stocks/charts I find during the market hours and those I find after market hours which can all be found in my Twitter timeline as well. Like I said this is more of a reference for but hope it may help others as well.
For these charts that I find during market hours they happen throughout the day so those I post first below happened first during the day (I will post in chronological order) and the action thereafter may look different. I will post the chart (usually with FinViz link in the ticker) and the notes I made on Twitter along with it. Also remember your time frame as these will alternate.
Today during market hours consisted of four charts:
1) SYK – 52wk hi & cup w/handle b/o sticking, Jan 57.5 calls trade; prev industry notes by @OptionsHawk @hertcapital
2) SWKS – like the pattern here, Feb 22 calls active this AM, note CES going on this week
3) VMW – like it here at high volume node coming into 50sma, ITM Feb 90 calls bot 30min ago
4) ANN – nearing trendline break, Jan 34 calls active w biggest block on ask, volume 33% >50day avg
One of my favorite scans to run in The PPT is daily hybrid movers with an accompanying higher than average volume score. @RaginCajun does a fine job throughout the day charting hybrid movers and linking them to FinViz. I like to look at hybrid movers and also add the volume element. With this screen my goal is to find some more of the under-followed names. With this I believe they may be starting to get accumulated by funds and being relatively unknown, aren’t far in the move that they may take. That is my opinion anyway and this doesn’t always mean they they will have they will have that upside move I am looking for. But, it should be noted that they were a top hybrid mover with volume. I then like to look at the technicals to see how the chart structure looks and filter the best candidates for an upside move.
Below are some of the highlighted stocks on Friday that I posted to Twitter and with notes and FinViz link in company name:
It was hard not to get caught up in the euphoria of the market yesterday and the day before if you were long positions already There were many comments on the stream yesterday and today about chasing and I would agree. That comment can also be broken down into size as well. Sure it is unwise to put on a full long position at these levels but if you were to initiate a 33% or 25% position (depending on your scale model) then you may have a great trade. As for me I have no long positions at this moment but initiated a 1/2 size short position yesterday on the Russell 2000 (RUT). I believed things became a bit overextended and I was watching two metrics I like to pay attention to:
percent above the 10 EMA (1st indicator pane) looking for a 3% extension
points above the 20 SMA (2nd indicator pane) looking at the 30pt mark for warning and 40pt mark for an extreme
I like to look at these two indicators for times like this when the chase is on. Also when they breach the points it is a warning and a possible time to initiate a position for a trade in the opposite direction. We all know that overbought or oversold can become overbought-er or oversold-er (please appreciate the humor) so the time in where I will add to the trade is when the RUT trades back under those points. Below is a 1 year chart with blue highlighted boxes of where the RUT first breached these points and then traded back under (notes on chart):
The option trade that I chose was the Feb/Jan1 850 Put Calendar for a 13.08 debit. First here is a chart of the RVX (Russell 2000 VIX) with notes:
With that I was looking for a pullback option strategy that took advantage of a pop in volatility and the strategy that came to mind was the Put Calendar as this took advantage of a pullback and was positive vega. I did screw up in putting this position on in that I sold the Jan1 option (not much time or benefit) instead of selling the next week Jan2 option. I only collected 0.15c on that Jan1 option instead of the near 2.00 I could have collected for the Jan2 option. A mistake on my part. I do believe that it can be recoverable and I do not have a full position on either so the dent to my account is manageable. But this is a good lesson in taking the time to slow down and actually confirm the order when that pop-up window asks you.
One of my favorite things to look into when trading is the psychology behind the trade. This is where technical analysis can emerge as one looks at the psychology behind a candlestick or why support and resistance works. Also when a trader transitions from a paper account to a real account they can see paper profits not transition to real profits and it can be attributed to the psychology of the trade.
While I have a passion for trading, I also have a passion for fitness. My passion for fitness came first. When I started to trade I could see the relationship. When people come from an out-of-shape profile they work hard right off the bat but also expect results right away…but that won’t happen. This also applies to traders as they read so many books and take courses but also expect results right away but this don’t happen either. While the weak will give up, it is the psychology of both that puts them over the edge and creates success.
With the new year upon us I read in the January 2013 edition of Muscle & Fitness the following stats:
10% of resolutions are to exercise more
19% of resolutions are to lose weight
80% of people who join a gym in January quit by February (yes 1 month!)
I have to say I was a bit astonished by the last bullet. When I saw this, the stat of successful traders comes to mind. With this I think of a post by @smbcapital. I suggest you read this post but it basically states that a person has a 90% chance of failing when getting into trading in a prop firm. I find this highly applicable as we as a society become more of a quick get rich people more than a slow and steady wins the race people. Needless to say I have read many other stats on the success of a trader and they all stated that the failure rate is high right up there with a restaurant.
How do I connect this with fitness. Well I believe they have the same psychology behind the goal. As the New Year resolutions are upon us, many of the people with those resolutions believe that if they are working hard they should see results right away (within 2 weeks). While the results may be small at first they will not live up to the expectations. Achieving trading and fitness goals require understanding and expectattions of the words: 1) failure, 2) tenacity, & 3) patience. Know that you will probably experience all.
Failure:
Know that you have a high chance of failure in both endeavors. It is easy to become discouraged after several bad trades. You get the screw this attitude and give up. Much like a person that has that fitness goal in mind. You work your ass off for 2 weeks (which seems like eternity). Give it another 2 weeks and then look in the mirror and I guarantee if you followed a fitness plan (with diet) you will see results. I guarantee it and if you want to call me out then come near Gettysburg, PA and I will prove otherwise or you have a disgraceful trainer.
Tenacity:
I love this word. In both endeavors you have to have it to push forward. You have to have that inner strength to overcome trading losses and learn how to mitigate them. In fitness you have to have the ability to look at yourself and say while I might not see any gains on my goal they will come. You also need the ability to fight through the workout and say I will persevere. Then you also need to say I will not indulge in a lot of junk food because I worked out but will stick to a healthy diet but allow yourself some cheat diets as well as to keep that part of the brain happy.
Patience:
So important in both. When I started trading I blew up several accounts. I then went back and learned what I was doing wrong. I learned that I risked too much straightforward and did not have a scaling methodology. I also learned that I became obsessed with gamma and did not let time work for me. Option traders can relate as I became more of a rolling/theta guy through time with averaging in via price points instead of looking for the quick swing. I will say though that I still love trading liquid options (look at pennys/weeklys) for those quick swings. But this all came with patience.
Much like fitness you have to have patience. In reading that last bullet in that 80% quit within the month the one thing that comes to mind is patience. Yes you may be working their ass off but you have to realize that it may be several months or years of damage you are trying to overcome. You have to give it time and stay true to yourself in exercise and diet (with cheat days!). If you do have that plan of staying fit or losing weight please stick to a reasonable diet and high rate exercise equal to or in excess of 30 minutes and you will results.
Conclusion:
In conclusion it is all about those three components and do you have what it takes? I always hated people telling me I could not do something as that drove me more. I hope that readers have the same mindset as I am saying you don’t have what it takes…and that is not an insult but motivation!
Below is a video from music by Staind and training by Jay Cutler. While there are many criticisms about bodybuilder enhancement use (which I can agree) I dismiss it from a psychological standpoint and look at their dedication to training from nutrition to workouts, and this is still a favorite video scene:
