November 2004 Archives

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me. I may have to buy MaoXian another gift (but since his Amazon wishlist has disappeared...) for dropping the knowledge in his trading for dummies lessons. Back in the day I probably would have let this go but now that I'm an educated 'dummy' I know how to catch these things. Here's the intraday chart (15 minute candles) followed by the daily:

The Nasdaq is testing 2100 again and the SOX is approaching its 200-day moving average (or is the average approaching the SOX?). It'll be interesting to see if sellers step in here again. Also, it looks like some of the online shopping plays are finally starting to move. I was able to jump on two of them today, SHOP & ECST. I've gotta go run some errands, so I'm putting in automated trailing stops on both. Maybe I'll be pleasantly surprised when I return.

I don't know if I'll be posting again tonight so I'll say Happy Thanksgiving to everyone now. Be safe on the roads, especially if you're in this wacky weather we're having here in the south. We've had strong thunderstorms two days in a row here in Atlanta. Very strange for this time of year...

Here's my answer to the following question which was posted in my comments yesterday by Gary:

I've signed up for an evaluation of TC2000, which I was previously unaware of. However, after studying Worden's videos and Help Contents on individual indicators, I've tried to find out if they would recommend where I could find info on how to interpret the combined indicators in regards to buy or sell points. Their reply was that they had none. Could you point out some of the useful indicator combinations that you've found to be reasonably accurate for determining buy/sell points?

For information about how to use indicators to determine buy/sell points it's probably best to read some books on technical trading. A great place to start is Alan Farley's 'The Master Swing Trader'. He gives many good examples of how to build a system using different indicators and/or patterns. There's also a lot of good info in 'Trading for a Living', 'Trade Your Way to Financial Freedom' and 'Japanese Candlestick Charting Techniques'. Finding a set of indicators is one of those things that you just have to test for yourself to see what works for you, and more importantly, what you're comfortable with. Having said that I'll answer your question now...

I'm a big fan of visual indicators. They make it very easy to get a quick read on a chart. I can rule out charts very quickly using the combination of indicators that I use. They are: Japanese candlesticks, Daryl Guppy's 'multiple moving averages', Bollinger Bands, stochastic, on balance volume (OBV) and volume.

Probably 90% of the stocks that make my trading candidates list caught my attention because of some candlestick pattern. For example, I might be looking at the results of my scan for hammer patterns. I can quickly scan through the stocks that made hammers and see if any of the other indicators confirm a bullish reversal. The very first thing I do is look at the moving averages. If they're not sloping higher I just hit the space bar and move to the next stock. (I'd do the opposite if I were looking at my shooting star scan to find shorts.) Things that I'd want to see would be a buy signal on the stochastic, the hammer printing on one or more moving averages or coinciding with the middle or lower Bollinger band. If some of those conditions were met then I'd look at OBV and volume to make sure they weren't diverging.

Here are a few other scans that I run to find trading candidates -- I sort my universe of stocks by %b and then look for signs of a reversal (by looking at the candles and the other indicators) near one of the bands. I do that by looking at stocks that are near the upper band (%b of 1 and higher), middle band (%b of .45 to .55) and near the lower band (%b around 0 and lower). I go through the same process with a scan that filters out stocks that have retraced a certain amount over the last month. I also look at stocks that are making new highs and those that have made new highs in the last 10 days. I'll usually just put a note on them and watch them each day to see if they give an attractive entry point. Narrowest Range in 5 days (NR5) and NR7 scans often give good candidates too although I've usually seen them on one of the candlestick scans by the time I get to that scan. Some of the other scans that I find useful are what I call 'swing high' and 'swing low' scans. I have 3 of each of those scans -- Swing High 1, 2 and 3 and Swing Low 1, 2 and 3. For example, 'swing high 3' finds stocks that made a 21 day high 3 days ago, and subsequently made lower highs each of the next three days.

Once stocks make it to my candidates list my entries are typically above yesterday's high for longs and below yesterday's low for shorts. Those entry points may vary but the idea is that I want the stock to start moving in my anticipated direction before I get in. I think I basically covered how I exit positions in my 'breaking it down' post. The one big difference is that now I use trailing stops a lot more than I used to. I've found that exiting at an expected number, % gain or on a band tag often leaves a lot of money on the table.

Hopefully you have a better idea of the indicators that I use. Please keep in mind that those are just what works for me. If you ask 100 traders you'll probably get 101 different responses. I do think it's important not to get too caught up in finding a perfect set of indicators. In my opinion time is better spent working on exits, expectancy, position sizing, etc. I read somewhere (maybe one of Gary B. Smiths articles) that technical analysis just gives traders the confidence to 'pull the trigger'. I think that's very true. Any set of indicators is just going to (hopefully) give you a slight edge. But it's your money management that's going to make or break you.

Not surprisingly, yesterday's action created a lot of bearish candlesticks. I saw a lot of hanging men, bearish engulfings, doji and shooting stars in the charts. I'll be watching to see if many of those patterns are confirmed by closing below yesterday's lows.

Currently holding:

I just finished going through my BlogLines feeds and thought I'd pass these articles along:

All That's Wrong with Mainstream Financial Reporting - An excellent piece that contains a lot more than the title suggests. I think it's a must-read.

There's lots of talk about Gold these days:

• Gold is Not American - Bill Cara makes a bullish case for gold. He has more gold commentary on the previous article.
  


• Investing: Gold price could fall - Despite the title, this article looks at the bull and bear sides.

Silver ETF - Shock & Awe

Random Roger talks about what's working now in the markets.

"Illiquid" makes a confession on his blog. You've gotta appreciate his honesty. And he cites a great reason for keeping some kind of journal -- blog or otherwise:

Whatever tone some of these posts may take, please be aware that more often than not, I am preaching to myself from an alter-ego standpoint, in a voice which I am striving to make my own but is right now still quite some distance removed. This blog is basically my attempt to help stamp certain ideas down in my brain by externalizing them into a reference of sorts, so please don't get the idea that I'm preaching at you from a hilltop.

And here are some more articles from 'Sound Money Tips'. I've just pulled out some of the markets related ones, but there's a lot more worth reading over there:

• Investment tip: Include some emerging market stocks in your portfolio


• Investing tip: mutual fund ratings can be useless


• Investing: The 7 advantages of exchange-traded funds over index mutual funds


• Why high-end brokers are often a lousy deal


• Investing: A one page primer about exchange-traded fund

And of course check out this week's Carnival of the Capitalists.

While I'm waiting for the 10:00 reversal...

I just happened to check my site stats a while ago and noticed I had an unusually high amount of traffic this morning. Over the last couple of weeks I've gotten a ton of hits from people searching for "Trader Monthly Magazine". That's also the reason today but this time the vast majority of searches are from Germany. I always wonder why these big crushes of searches happen. I think it's usually because of a TV mention... apparently without a URL mention. Whatever's causing it, that magazine has certainly gotten very popular in Germany today. Here are some graphs of my traffic:

The other day I received a question from a new reader, Mortimer, asking:

How did you identify SIR as a short candidate? And having done so, how do you determine your entry point?

The answer is that it first popped up on one of my scans. Unfortunately I'm not sure which scan it was, but it looks like it was either my Fibonacci retracement scan of the bearish harami scan. Once a stock shows up on a bearish scan the first thing I do is check where the stock is relative to its Multiple Moving Averages (hmm, I guess I need to go back and fix some old pages that don't display very well with my new layout). If it's above the averages, meaning the trend is up, I just move on to the next stock. If it's below the averages, then I'll look at some other indicators (Bollinger Bands, On Balance Volume) to decide whether or not to put it on the list. Actually, that's an over-simplification. It could be above the short-term group but below the long-term group and be a great short candidate. But I'll keep this answer simple.

Entry for all of my trades, long or short, is upon confirmation that the stock is moving in my anticipated direction. I determine that by the stock trading below the previous day's low for shorts, and above the previous day's high for longs.

First, congratulations to Bill Cara at TraderWizard, for his mention in Barron's over the weekend. Barron's seems to be the only major financial media outlet that knows about all the financial blogging going on. I wonder why that is...

We're set for one of those gap-up openings that I rarely trust. I would be looking to sell into it if my longs had bigger profits. But since that's not the case I'll just push my stops up a bit and wait to if the gap holds.

Currently holding:

I really wish they'd close the markets on the day after Thanksgiving. This half-day stuff is just silly. Not only is it a waste of people's time to go in to work today but the low volume bars mess up the charts. Oh well...

I doubt that I'll initiate any positions today unless some attractive day trade pops up.

Currently holding:

This has to be one of the most ignorant things I've ever read:

This new magazine just launched.

From a review:

Trader Monthly is the only magazine specifically designed for the exciting, fast-paced life of the professional trader.

In each issue we'll bring you news, strategy, and profiles of successful traders from around the globe, along with the latest in high-end sports cars, dream real estate, deluxe timepieces, fantastic vacations and much more.

Let us show you how to See It, Make It, Spend It.

The first issue features a story headlined "Will My Heart Palpitations Kill Me?"

It addresses one of the downsides of trading, aside from the fact you can lose your shirt with a poorly-timed trade; the reality is that many, if not most, traders exist on poor diets, little sleep, and too much stress.

I can't imagine anything more unpleasant than being a trader.

The thing that is most off-putting to me is the need to be aware of markets 24/7.

Traders sleep with their computer terminals; they get up every couple hours to check their positions and make adjustments accordingly.

What a nightmare.

I think the author of that article (he goes by 'bookofjoe' but I'll call him Joe) has been watching too many movies. Normally if I'd read something as dumb as that I'd just shake my head and wonder how such ignorance is possible. But since Joe went to the trouble of linking to me and pinging me I assume he wants a response. So here goes...

First of all I find it incredibly ironic that Joe is advertising a book about day trading along with his post. For those that don't know, BlogCritics members are required to find a (relevant) product from Amazon to include with each article. So Joe, in his infinite wisdom, chose that day trading book. Apparently Joe doesn't know that day traders, by definition, close out all of their positions at the close of the trading day. So just by adding that book to his post he invalidated his whole theory.

I won't even bother with the nonsense about "losing your shirt with a poorly timed trade" because trying to explain risk management and/or position sizing to Joe would be futile.

Next Joe says that traders "get up every couple hours to check their positions and make adjustments accordingly." The last time I got up in the middle of the night to check on my portfolio was, um... let me think... never!!! Even if I wanted to I couldn't "make adjustments" until the stock market opened in the morning. Sure there are people who trade in markets that are open 24 hours per day but I doubt that many of them 'sleep with their computers'. See Joe, there are these things call computers that people use for other things besides displaying their ignorance on the internet. Traders actually use them to automate their trading. Imagine that.

Yes Joe, your ignorance is a nightmare.

ECST was definitely the trade of the day and week for me.