Info!! Tracking The Nyse Tick In Addition To Other Wednesday Thoughts

Tracking the TICK: Several traders accept emailed too asked close slowly ways to rail the distribution of the NYSE TICK, which (as I mentioned yesterday) caught the afternoon rally quite nicely. One elementary method (top chart) is to practise a moving average of the TICK (mine is a ten-period average of five-minute bars) too and then track: a) whether the average is dominantly inward a higher house or below the null (black) line; too b) whether the average is upwardly, downwardly, or non-sloping. We tin forcefulness out encounter how the bluish TICK MA trace of piece of job stayed positive (and upward sloping) for most the afternoon.

Double Bottom?: The Banking Index ($BKX; bottom chart), for all the woes of the fiscal sector, could non brand novel lows during the recent marketplace weakness, creating a overnice double bottom pattern. We're right away rallying really sharply off that bottom. Headlines characteristic scary banking firm news, exactly markets are forward-looking too may travel indicating a flat of stabilization. The primal volition travel the mightiness of approximately of these troubled investment banks too broker/dealers to concord their recent lows.

The Next Bubble? - Check out links from Abnormal Returns, peculiarly re: how the side past times side bubble has to travel large plenty to rescue us from this one. Also banking firm annotation the post on generating superior returns past times pursuing hot anomalies inward markets.

Brief Observation - When people heatedly challenge your views on markets, exactly offering no testify or analytical reasoning to dorsum their arguments, yous know that theirs is a defensive reaction. At approximately flat they know they're wrong, too they're feeling threatened. It's i of the best marketplace tells I've found, which is why I never discourage nasty emails too weblog comments.
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Info!! Using Trading Journals To Ameliorate Trading Performance

I've begun working amongst a pocket-size grouping of private traders at proprietary trading firms using daily online journals every bit a foundation for our work. In this post, I'll depict ane useful format for such journals together with how they tin compass notice useful for self-improvement every bit well.

We know from inquiry inward psychology that goal-settting is an effective tool for functioning development. Goals should be:

1) Challenging, simply attainable;
2) Limited inward number
3) Accompanied yesteryear regular feedback to cement learning together with tailor novel goals.

A mag format that I similar translates each destination into a "subject" inward a "report card". For frequent traders (i.e., those who merchandise intraday and/or every day), a unmarried grade at the terminate of the solar daytime (A, B, C, D, F) indicates the grade to which the destination was met that day. Beside each grade become comments together with observations that explicate why the grade was given. Ideally, these comments should include what was happening inward markets (and trading) at the time; what was going on inward price of the trader's thoughts together with feelings; together with what the trading outcomes were.

An wages of this format is that it places equal emphasis upon the identification together with assessment of strengths (the "A" grades) every bit weaknesses (the "F" grades). It focuses traders on the well-nigh relevant areas for improvement together with easily leads to novel destination setting for the next solar daytime when a misfortunate grade is received inward a detail area.

Traders I operate amongst e-mail me the journal/report cards daily together with I supply daily e-mail feedback. We together with thence "meet" weekly yesteryear outcry to review the week, larn from recent efforts, together with prepare overarching goals for the adjacent week. By utilizing the online medium for coaching, nosotros minimize fourth dimension together with expense together with accomplish much of the advantages of having a full-time personal coach.

This regularity of contact is particularly useful inward ensuring that occupation patterns are identified rapidly together with create non snowball. The coin saved inward drawdowns every bit a resultant is significant. The study cards are also helpful inward focusing traders on their strengths, thence that they tin compass notice create got maximum wages of what they're doing right.

I purpose a variation of this study carte du jour format myself together with create got industrial plant life it helpful for my ain evolution every bit a trader. The commutation to using it for oneself is setting regular fourth dimension aside to review the card, position specific goals together with actions for improvement, together with and thence tracking those efforts at modify the adjacent day--repeating this procedure through the week. My experience is that ane tin compass notice accomplish a compounding of learning amongst such active review.

It's also possible to connect amongst peers for usual mentoring yesteryear sharing online journals/report cards. This is ane of the advantages of such Trader Perspectives on Keeping a Journal

Turning Setbacks Into Goals
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Info!! Using Trading Journals To Rank In Addition To Alter Your Patterns

In my concluding post, nosotros took a await at trading journals in addition to how those tin endure used to amend performance. The study carte du jour format for journaling is peculiarly helpful for goal-setting, tracking progress, in addition to recognizing patterns inward our ain trading. In this post, I'll review simply about of the patterns that most often seem across magazine entries--and that are of import to travel on.

1) Patterns of Negative Self-Talk: These occur during frustrated moments inward markets. We missy a trade, a merchandise blows through our stop, nosotros hand dorsum our coin on the day: all of these exercise frustration. This frustration in addition to hence triggers an anger reply that nosotros instantly toward ourselves. For example, nosotros mightiness discovery ourself saying, "Here it goes again! Other people are killing these markets, in addition to I can't larn it going." At that point, your frustration is no longer nearly the specific merchandise or marketplace event, but is directed to *you equally a person*. Trading should endure nearly trading; non nearly you. After all, yous wouldn't endure boasting in addition to crowing inward the magazine if the merchandise went your way. If yous wouldn't similar to postulate heed your message coming from someone else (imagine your buddy at the workstation side yesteryear side to yours saying, "Whoa, dude, other people are killing these markets, in addition to yous can't larn it going!") in addition to if yous wouldn't endure speaking that agency to your trading buddy, in addition to hence yous shouldn't endure speaking that agency to yourself. Interrupting that negative self-talk in addition to turning your frustration toward a constructive kicking inward the pants ("C'mon, Brett, yous know yous shouldn't endure trading hence large inward the chopfest. Let's stick amongst the rules!") tin endure rattling helpful inward preventing frustration from snowballing.

2) Patterns of Impulsivity - Out of excitement, boredom, wish to find profits, or overconfidence, yous discovery yourself trading equally good often or amongst equally good much size. This, inward turn, leads to uneven functioning in addition to outsized trading losses, which in addition to hence create discouragement. Many traders proceed their goals--and their trading rules--taped to their screens; this helps proceed them inward the forebrain equally a cheque on impulsivity. One trader I worked amongst truly had a brief checklist that he had to cheque off earlier placing whatever trade. This prevented him from acting hastily. If yous tin figure out the triggers that brand yous impulsive (sometimes these are winning trades, where yous begin playing amongst "house money"), yous get got a expert postulate a chance to position on the brakes earlier yous deed on impulse.

3) Patterns of Fear - Particularly afterwards losses, but sometimes afterwards making coin in addition to beingness afraid of losing it, traders neglect to deed on expert signals or exercise non size their trades adequately. The final result is missed opportunity. Often this occurs if the trader is engaging inward "catastrophizing": making a normal potential loss into something much larger. Worry, physical tension, in addition to feelings of nervousness are corking clues to rails inward a journal. Once yous recognize your fright patterns, yous tin get got simply about deep breaths, calm yourself, in addition to focus on assessing chance (and focus on those trading rules). One agency of breaking overwhelming fright afterwards large losses is simply to position on simply about pocket-size trades when your signals are expert in addition to larn your beat in addition to confidence back. Then yous ramp dorsum upwards to normal size inward a gradual, but steady manner. Playing defence forcefulness is non giving into fear: having rules nearly jeopardy command in addition to hanging onto a day's profits tin assist yous distinguish the two.

Once yous notice your patterns, it's easier to build specific goals for the side yesteryear side day's in addition to week's trade. The overarching destination is changing your patterns: controlling how yous intend in addition to experience rather than having them command you. It's hard to imagine changing your patterns if you're non aware of them inward the commencement place!

RELEVANT POSTS:

Using Emotion to Change Emotion

Some 2007 Posts on Trading in addition to Emotions
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Info!! Formatting Your Trading Mag For Success

My recent posts cause got focused on using journals to amend trading. Everyone has a periodical format that (one hopes) plant best for them. Here I'll propose a format that I honour peculiarly useful.

The argue I'm offering the proposition is that I boot the bucket along to honour that traders role journals inward ways that are less than constructive. The greatest mistakes inward journaling, I find, are:

1) Lack of Specifics - The periodical contains vague, full general intentions such as, "I demand to merchandise less aggressively", without whatever indication of how the trader volition attain this. If the intent is to merchandise less aggressively, thence the periodical should create a specific goal. An event from my ain trading would be: "I'll move inward positions alongside 1 unit of measurement in addition to scale inward alongside a minute unit of measurement on the starting fourth dimension pullback inward NYSE TICK when my seat is profitable." Notice how this makes the full general intention thence much to a greater extent than concrete. Now I cause got something constructive to implement in addition to tin flame degree myself on the implementation. If I only say, "I demand to merchandise less aggressively", that's non goal-setting. That's Monday-morning quarterbacking, or me exactly wagging my finger at myself. Self-criticism past times itself never improved anyone: it's self-criticism followed past times constructive work solving that does the trick.

2) Focus on Negatives - The worst journals are the ones that but vent fearfulness or frustration. They recite every bad or missed trade, everything that went incorrect during the day. Not only is at that spot an absence of constructive suggestions for improvement, but at that spot is also an absence of ideas re: what the trader has done right. The persuasion is to larn from what you lot exercise right, non exactly what you lot exercise wrong. Indeed, focusing on strengths volition heighten motivation in addition to the sense of competence in addition to efficacy. By staying only problem-focused, it's all every bit good slow to drain motivation in addition to optimism.

So, how tin flame nosotros amend the inward a higher house inward a format for a trading journal?

My proposition is starting the periodical alongside a listing of your specific goal(s) for that trading day.
Those goals should be: a) chosen from your previous day's or week's trading; in addition to b) taken from your trading rules. The destination should live on either to amend a fault you lot made, or to build upon something you lot did right. The destination should state specifically what you lot human face yourself to exercise during the coming day, thence that you lot tin flame rehearse the destination inward your heed earlier the marketplace seat opens in addition to thence that you lot tin flame evaluate how you lot performed on the destination at the terminate of the day.

Notice that, earlier creating the journal, it's of import to write out your trading rules inward advance: everything that you lot desire to follow to merchandise well. You can't concur yourself accountable for a dominion that you lot don't create; that's perfectionism, in addition to it's non helpful either. Rules should clearly state how you lot desire to size positions, move inward them, leave of absence them, fix stops, fix exits, scale inward in addition to out of trades, etc. Your periodical volition rails how good you lot follow these rules, non exactly whether you lot brand coin or not.

So you lot laid out alongside rules, notice when you lot exercise a peculiarly expert or pitiful project next the rules, in addition to thence fix goals for the adjacent twenty-four hours based on the expert or pitiful performance. The periodical entry thence gives yourself a degree at the terminate of the twenty-four hours for how good you lot performed on your goals in addition to why you lot earned that grade. Include your daily P/L alongside your grade, thence that you lot tin flame speedily encounter how your functioning rises in addition to falls alongside your grades.

The periodical keeps you lot constructive, keeps you lot learning, in addition to keeps you lot working on the things that are close important. It is non a tool for but rehashing the twenty-four hours or voicing your feelings; it is your tool for self-development: your way for coaching yourself.

RELEVANT POST:

When Coaching Works in addition to Doesn't Work
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Info!! Plunging Stocks, Plunging Dollar: Updates Via Twitter

I pulled the bottom nautical chart off my hide a few minutes agone to demonstrate y'all how things are shaping upward inward an odd starting fourth dimension to the trading week. We've already declined over xxx ES points from the highs next the Fed's proclamation of a discount charge per unit of measurement cut, alongside volatility rattling odd for overnight trade. Nippon is downward over 3%, as well as the dollar is absolutely plunging versus the yen (top chart) as well as euro (middle chart). Meanwhile, nosotros are non exclusively breaking below Friday's stock marketplace set lows, exactly too challenging the of import lows from January. This is a rattling unsafe market, given the dynamics of plunging rates (2 yr Treasuries at 1.35%; x yr @ 3.37%) as well as plunging dollar. I volition update marketplace set observations via Twitter. The final 5 Twitter "tweets" seem on the weblog domicile page; the amount laid are on my Twitter page. Interested traders tin subscribe (no cost, of course) via RSS; run into my Twitter page.

Info!! Stock Marketplace Fears Grounded Inwards A Stark Reality

Last calendar week it was a $70 stock; today it was purchased yesteryear JPM for $2 a share. That is how rapidly things unraveled for Bear Stearns (BSC). In the appear upwards of such verbalize annihilation of wealth, it's understandable that markets are fearful in addition to volatile to showtime the week. Note that the VIX is in i lawsuit over again inwards a higher house 30, on rail to spike higher should the overnight weakness tumble over to tomorrow's trading session.

Info!! Indicator Review For March 17Th

Last Week's Indicator Update
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Info!! Using Trading Ranges To Frame Merchandise Ideas

How I Trade

Using the Opening Minutes of Trading
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Info!! The Promises In Addition To Limits Of Coaching: Lessons From College Counseling

In my recent post service on how much coaching is enough to attain change, I summarized query from the dose-effect query literature. One work amongst this is that the literature is primarily oriented to clinical populations: those amongst diagnosable disorders. Fortunately, at that spot is 1 setting for applied psychology that focuses to a greater extent than on normal, developmental problems than clinical ones: college counseling centers.

Having worked at a college counseling optic at Cornell University in addition to thence directed a pupil counseling service at SUNY Upstate Medical University, I tin attest to the similarities betwixt operate amongst students inward higher pedagogy in addition to coaching of professionals inward trading in addition to other fields. In my operate at Syracuse, fully two-thirds of the people seeking assistance were looking for aid amongst such normal concerns equally human relationship problems, career issues, in addition to performance-related stress. Interestingly, these are too amid the most mutual issues that traders utter over amongst me. Many of the same cognitive, behavioral, in addition to solution-focused methods that are helpful inward operate amongst students are too relevant in addition to useful for traders.

So what tin college counseling instruct us almost the coaching of traders? Coaching Yourself for Profitable Trading

What Works inward Coaching
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Info!! 3 Mutual Mistakes I'm Hearing From Traders

Here are about of the mutual issues that I'm hearing from traders during recent coaching sessions. Most of us tin displace recognize ourselves inward 1 or to a greater extent than of these patterns:

1) Becoming Overly Focused on P/L During Trading - Watching your profits or losses tick upwards as well as downwards during a trade; becoming anxious almost P/L as well as letting P/L, non a trading plan, dictate when yous leave of absence of a trade. It's a recipe for functioning anxiety. By focusing on procedure goals rather than P/L, yous tin displace rest grounded inward expert trading practices as well as minimize functioning stresses.

2) Trading Much Larger After a Series of Winning Trades - It is mutual that traders popular off overconfident later on a serial of wins as well as determine to growth their run a peril past times a component of ii or more. This ofttimes leads to large losing trades that wipe out much of the profit, generating frustation as well as discouragement. Just every bit it doesn't brand feel to plough into a merchandise later on a large motion has already occurred, it doesn't brand feel to plough into run a peril later on a serial of profitable trades.

3) Failing to Learn From Losing Trades - Traders ofttimes desire to set losses behind them as well as non dwell on negatives. The downside is that they don't larn from their losses as well as therefore immature lady opportunities to empathise what's happening inward markets as well as what they mightiness last doing wrong. This is peculiarly of import next a serial of losing trades: either you're non seeing the markets well, or you're non acting good on your perceptions. Both scenarios offering learning opportunities that tin displace assistance generate profits downwards the line.

It's mutual to mean value of trading every bit a stressful occupation, merely much of the stress is self-generated. By staying focused on "best practices" inward trading, nosotros minimize fright as well as frustration as well as construct confidence inward our development.

RELATED POST:

Overcoming Performance Stress
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Info!! Only About Post-Rally Marketplace Observations

* Tracking the Rally - We swung to really positive momentum on Tuesday, with my stair out of Demand at 202 together with Supply at 13. This agency that well-nigh xvi stocks unopen inwards a higher house their volatility envelopes for every 1 that unopen below. Such extreme readings unremarkably Pb to follow through on the upside on a short-term basis. New 20-day highs across the NYSE, AMEX, together with NASDAQ expanded to 479; novel xx 24-hour interval lows dropped to 943. My Technical Strength stair out showed tendency shifts across many of the xl stocks that I rail across 8 SPX sectors. Specifically, we're right away seeing 21 stocks inwards uptrends, seven neutral, together with 12 inwards downtrends. We're right away seeing 53% of SPX stocks trading inwards a higher house their 20-day moving averages, upward from merely 17% on Monday. Following relative forcefulness together with weakness with the fiscal issues has worked well. If this rally is for real, nosotros should run across follow-through buying inwards this sector.

* Themes for This Market - Abnormal Returns tracks a number of electrical current themes, including the prospects for investment banks together with hedge funds together with a await at a possible unwinding of a Cathay bubble. See too the T-bills together with aureate theme followed past times Maoxian.

* Prospects for the Rally - Trader Mike notes the lack of follow-through inwards recent rallies together with sees the l 24-hour interval MA equally the side past times side exam for the market.

* An Options Strategy for Gold - Daily Options Report explains their aureate strategy together with offers an observation on the BSC affair.

* Great News Summary - Between the Hedges tracks the headlines together with notes greater confidence inwards the credit markets.
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Info!! Within Views Too Perspectives For A Wednesday

* It Can't Happen Here - Hard to believe it was solely fourteen years agone that a prominent University of Chicago economist made the illustration that "What i knowledgable observer sees inwards today's marketplace selloff. Meanwhile the flying to security continues unabated: TIPS yield remains negative.

* What's On Investors' Minds - Better than letting it sink, points out Jeff Miller.

* Choppy Action - I took a expect at the trajectory of my Cumulative Demand/Supply Indicator afterwards today's trade. Continued choppy activity amongst lack of follow-through on rises would Pb to an *overbought* status at a much lower toll degree (than the prior overbought signal), together with that would trigger a major sell signal for my intermediate-term trading. We're non in that location yet, exactly the describe is on the radar.
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Info!! The Breadth As Well As Depth Of Short-Term Marketplace Sentiment

My close recent query has led me to investigate the human relationship betwixt the NYSE TICK together with the Trading With the NYSE TICK

TICK together with Market Sentiment

Analyzing Market Volume

Tracking Large Trader Behavior
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Info!! Tracking Marketplace Lay Transitions Amongst Marketplace Lay Delta In Addition To Nyse Tick

my recent post, I suggested that the human relationship betwixt the NYSE TICK as well as the Market Delta for a wide index provides a multidimensional visit of short-term sentiment. If you lot click on the nautical chart above, you'll run across a prissy setup from this morning's trade. The ES book at bid vs. offering is inside each of the bars inwards the Market Delta chart. The five-minute high as well as depression values for NYSE TICK are inwards dark beneath each bar.

Note how the NYSE TICK genuinely started drying upwards on the breakout move, ahead of cost as well as Market Delta. That was an early on clue that a large unwrap of stocks weren't participating inwards the upmove. (Energy as well as materials stocks, amidst others, failed to confirm the highs). Once nosotros made the novel cost highs at the meridian of the day's range, however, greenback how book at offering vs. bid as well as NYSE TICK dried up. That provided enough of advance alert for the retracement dorsum into the recent range.

These transitional patterns play themselves out on multiple fourth dimension frames as well as tin hand notice last constitute but nearly every trading day.

RELATED POSTS:

Identifying Transitional Structures

My Guiding Principles of Short-Term Trading
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Info!! Denial Equally A Trading Motivation

Back inwards the day, I used to run across alongside a number of couples inwards counseling. Not infrequently, infidelity was a major number bringing them to regard me. In a surprising number of cases, the signs of infidelity were introduce long earlier the thing was caught. Indeed, many times at that topographic point were explicit warnings from others who saw what was going on. Still, the husband didn't desire to believe the worst...made excuses...turned the other way...until evasion was no longer possible.

Denial is a powerful human motivation. We guide a drive to know the basis around us; less normally appreciated is our capacity to sustain ignorance. Many times, nosotros exactly don't desire to know the truth, whether it's what happens inwards a state of war machine prison theatre or what keeps our husband out thence late.

One especially uncomfortable truth for traders is that their lack of profits is only due to trading randomness. It's non a lack of discipline, a lack of merchandise planning, or a lack of tweaking the correct indicators that exercise losses--all of those are relatively tardily to address. No, losses are caused past times trading strategies that only exercise non work, in addition to that's non thence easily remedied.

It's pretty threatening to intend that what you're devoting fourth dimension in addition to coin to has no grounding inwards reality. It's much easier to only non intend almost it. Like the husband who manufactures i excuse afterward some other inwards the confront of a partner's erratic behavior, nosotros build all sorts of explanations for our shortcomings.

Or nosotros exactly pose the blinders on. When I started working alongside traders some years back, I asked them to signal their profitability over the past times year. I was shocked that most could non give me (or would non give me) a response other than a hesitant, "I'm coming unopen to suspension even." Many had only stopped looking at their line of piece of occupation organization human relationship statements. The persuasion of genuinely drilling downwards into their merchandise information in addition to extracting information almost what they were doing correct in addition to incorrect was quite threatening for them.

Sadly, at that topographic point are enough of willing accomplices inwards this denial. Coaches eagerly assure you lot that "psychology" is the deviation betwixt winning in addition to losing inwards markets; gurus hope you lot hidden marketplace secrets that volition enable you lot to unlock your potential; publishers crank out books on how you lot tin succeed at trading. But no i solicits trading periodical articles, workshop presentations, or books on the theme of *lack* of edge. No i wants to listen all the first-hand stories I tin tell almost lives in addition to relationships harmed in addition to fifty-fifty destroyed past times fake hopes in addition to promises.

That's also uncomfortable. No i tin brand coin from it. So nosotros don't await at it; nosotros pick out to non know. But I'm telling you lot truthfully: I've seen exactly every bit many lives wound or ruined past times trading every bit enhanced.

A acre back, I was asked to submit a proposal for a workshop hosted past times i of the major fiscal exchanges. I persuasion a existent world service would live on to introduce interrogation in addition to first-hand observations pertaining to addictive patterns amid twenty-four hours traders: how to recognize trading addiction, in addition to what to exercise almost it.

The persuasion was shot downwards immediately. As it turns out, it wasn't the conference coordinator that pulled the plug, but the corporate sponsor of the event. Sponsors don't brand coin when people don't merchandise or when they merchandise inwards a to a greater extent than controlled fashion. People, afterward all, come upward to listen almost trading every bit a dream, non every bit a nightmare.

A picayune acre dorsum a trader begged me to speak alongside him over the telephone in addition to aid him alongside his "self-defeating" emotional patterns. In an unguarded moment, I agreed. He told me almost his anger in addition to frustration during trading in addition to how those had led him to violate his guide a opportunity administration rules.

I asked the trader to give me examples of what was going on during these periods of frustration. Many of the occasions boiled downwards to times when he was profitable on trades, but in addition to thence saw those profits reverse. I drilled downwards farther to acquire examples of those trades in addition to discovered that, fifty-fifty though he called himself a daytrader, many of his reversals occurred on positions held overnight. Indeed, he proudly told me his dominion that express his overnight exposure to solely his most profitable daytrades.

A chip skeptical, I asked him what he based the dominion on. How did he know that profitable positions intraday would travel farther profitable if held into the adjacent day?

He seemed stunned that I asked. I gauge we're all supposed to know that "the tendency is your friend" in addition to that you lot should ever merchandise alongside the trend.

I chop-chop got on the computer, downloaded daily open-high-low-close information for the S&P 500 Index (SPY) going dorsum a picayune over a yr (to the start of 2007) in addition to threw together a spreadsheet that looked at returns next upward days in addition to downwards days. There was no programming or advanced Excel techniques to what I did; it took all of a few minutes.

To recreate what I found: When SPY was upward on the twenty-four hours (N = 159 trading days), the adjacent day's opened upward averaged a loss of -.02% (79 up, lxxx down). Similarly, when SPY was upward on the day, the adjacent total trading twenty-four hours averaged a loss of -.13% (75 up, 84 down).

When SPY was downwards on the twenty-four hours (N = 146), the adjacent day's opened upward averaged a gain of .03% (86 up, threescore down). When SPY was downwards for the day, the adjacent trading session every bit a whole averaged a gain of .11% (85 up, 61 down).

So, inwards other words, the trader's dominion had absolutely no grounding inwards reality. If anything, he would guide been amend off fading the prior day's direction. He was becoming frustrated in addition to angry because he was losing his profits. He was losing his profits because he was trading a setup that had no validity. Frustration wasn't causing his trading problems; his bad trading was generating (understandable) frustration.

But, for me, the eye-opener was that he had never persuasion to depository fiscal establishment check out his rule. Even if he didn't desire to crevice an Excel primer in addition to larn how to detect answers for himself, he could guide only kept records of his overnight trades vs. his intraday trades in addition to seen what was working in addition to what wasn't.

But he didn't exercise that.

That's when it hitting me: He didn't *want* to know.

My caller was non happy alongside my analysis in addition to did non essay me out further. I didn't deliver what he wanted. He wanted a self-help psychological technique to travel on him disciplined, thence that his rules would brand him money. He didn't desire individual pointing out that his rules were invalid in addition to that next invalid rules alongside dependent volition only atomic number 82 to ruthless consistency inwards drawdowns.

As our conversation wound down, he defensively explained that he had enough of other patterns that he traded that were valid. One of his favorites were opening gaps. Long storey short, I examined the spreadsheet in addition to told him that this, too, was coming upward blank. To recapitulate, upside opening gaps led to 83 wins in addition to 82 losses for the coming trading day; downside gaps led to 71 wins in addition to 69 losses. There were no pregnant differences inwards the sizes of winners in addition to losers. There was no border at that topographic point at all.

"But that's for the S&P," he said. "The gaps travel for the stocks."

"Which stock would you lot similar me to run the information on?", I asked. He said no thanks; he didn't demand the data.

But the analysis wasn't the point. The dot was that he was trading a belief inwards an edge, non an border that he had independently validated. His entire trading strategy rested on (blind) trust inwards these patterns. He didn't *want* to know if the patterns were good, because that--like the spouse's actual uncovering of an affair--would postulate facing unpleasant realities in addition to making hard changes.

I of late started travel alongside a trader who wrote to me inwards elaborate exceptional of recent trading losses. He directly offered to portion his line of piece of occupation organization human relationship statements alongside me thence that I could aid him alter what he was doing. No denial. No defensiveness. No willing blindness. Just an opened upward kimono. I confidently predict that this trader volition live on successful. He's doing the hard travel correct now: he's facing shortcomings alongside eyes broad open. By owning what's worst alongside his trading, he'll regain the best inside him.

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A Cardinal Trading Virtue

The Dual Path to Trading Success
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Info!! What Coin Flows Are Telling Us Almost The Electrical Flow Stock Market

My Previous Post on Money Flow

Money Flow in addition to Dow Returns
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Info!! Bond Yields Every 2D A Regard Gauge

Money Flows together with Subprime Sentiment
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Info!! Wtf Amid The Materials Stocks?

Money Flows for Dow Industrials Stocks
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Info!! Wtf Amidst The Industrial Stocks?

my almost recent post, I tracked the coin flows inwards the Materials sector of the S&P 500 stock universe. Above nosotros encounter the cumulative raw coin flows (top chart) together with five-day average flows (bottom chart) for v highly weighted industrial stocks. These are plotted against the Industrials sector ETF, XLI. The v stocks included inwards the calculations are GE, UPS, BA, UTX, together with MMM.

Note that the catamenia patterns for the Industrials sector hold off really dissimilar from those seen amid the Materials stocks. Cumulative flows convey been inwards a steady downtrend (Friday's forcefulness notwithstanding), indicating a flying of funds from these issues.

Five hateful solar daytime flows are currently positive--something nosotros haven't seen oftentimes since August, 2007--and the sector index has together with hence far held inwards a higher house its cost lows from January. We'll ask to encounter sustained buying (positive catamenia figures), however, to conclude that the recent bounce is anything to a greater extent than than brusk covering.
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Info!! Wtf Amid The Consumer Discretionary Stocks?

money flows for the Industrials stocks in addition to for the Materials shares inside the S&P 500 universe. This post service takes a await at 5 highly weighted Consumer Discretionary stocks in addition to plots their cumulative coin current (top chart) in addition to five-day average flows (bottom chart) against the Consumer Discretionary ETF, XLY.

Note that, similar the Industrials in addition to Materials sectors, the Consumer Discretionary stocks get got therefore far held higher upwards their Jan lows. Observe equally good that cumulative coin flows get got held upwards quite good during the catamenia of recent marketplace (and sector) weakness, equally nosotros rest good off the coin current lows from belatedly 2007.

Five-day flows get got turned negative for the sector, only are nowhere nearly equally intense inwards selling pull per unit of measurement area equally those from belatedly 2007. While nosotros get got notwithstanding to encounter sustained buying involvement amidst these shares, at that spot does look to hold upwards a drying upwards of selling pull per unit of measurement area therefore far.
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Info!! Wtf With The Consumer Staples Stocks?

Consumer Discretionary stocks, Industrials issues, too Materials shares. This ship service takes a await at v highly weighted Consumer Staples stocks, plotting their cumulative coin flows (top chart) too five-day average flows (bottom chart) against the Consumer Staples ETF, XLP. The v companies whose flows I've aggregated are PG, MO, WMT, KO, too WAG.

A blueprint that nosotros saw amongst the 3 sectors mentioned inwards a higher house is besides apparent here: during recent marketplace weakness, XLP failed to intermission below its Jan cost lows. Note, however, that during the recent weakness, cumulative coin flows for the Consumer Staples shares conduct maintain been inwards a steady downtrend, testing comport lows. This is quite dissimilar from the menstruum patterns seen amid the Materials too Consumer Discretionary shares, which showed reduced selling delineate per unit of measurement area during recent marketplace declines.

Five-day flows stay weak despite a recent bounce inwards the sector. Clearly, despite the might to concur the Jan lows, we're non seeing sustained buying involvement amid the Staples.
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Info!! Wtf With The Unloose Energy Stocks?

Materials, Industrials, Consumer Discretionary, as well as Consumer Staples sectors. Now it's the plough of the Energy stocks. Above nosotros run into the Cumulative as well as Five-Day Flows for v highly weighted stocks inside the sector, plotted against the Energy ETF, XLE. The v stocks included inward the analysis are XOM, CVX, COP, SLB, as well as OXY.

What nosotros run into off the bat is that Energy issues select been relatively stronger than other sectors, thank yous to commodity strength. Indeed, their nautical chart looks to a greater extent than similar the nautical chart for the Materials sector than virtually of the others for this reason. Note equally good that the recent marketplace weakness failed to select XLE below its Jan lows. This non-confirmation, which we've observed amid the other sectors equally well, has played an of import run inward the market's real recent bounce.

That having been said, nosotros did non run into a bounce inward XLE slow concluding week, owing to the commodity selloff. Moreover, Cumulative Money Flow for the Energy stocks has been inward a steady downtrend since August, 2007. Considering the historic forcefulness inward crude oil prices over this period, XLE functioning has been muted. Indeed, it appears that coin has been systematically coming out of this sector over time.

The five-day flows demonstrate that especially piffling upper-case missive of the alphabet flowed into the sector during the bounce from the Jan lows. That has fix the electrical current weakness. While the sector is make saltation as well as the non-confirmation of the Jan lows was encouraging, in that location is non nevertheless prove of pregnant funds flowing into liberate energy issues that would ability an upside breakout.
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Info!! Wtf Alongside The Healthcare Stocks?

Materials, Industrials, Consumer Discretionary, Consumer Staples, too Energy sectors. Here we're examining v highly weighted stocks from the healthcare sector, amongst Cumulative Money Flow (top chart) too Five-Day Flows (bottom chart) plotted against the Healthcare ETF, XLV. The stocks included inward the analysis are PFE, JNJ, MRK, LLY, too AMGN.

Note that, dissimilar many of the other sectors, Healthcare shares convey been quite weak during the recent marketplace position decline, dropping to novel behavior marketplace position lows. This weakness was preceded past times steady dollar outflows from the sector: banker's complaint the steady downtrend inward Cumulative Money Flow. Not solely is the sector weak; at that topographic point are no signs at acquaint of a sustained stream of funds into these shares.

Five-day flows convey bounced a bit, exactly stay negative. Note how positive periods of five-day stream convey non been sustained, oft leading to subsequent toll weakness. Of the sectors, this is i that is relatively weak, both inward toll surgical operation too coin flows.
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Info!! Wtf Alongside The Fiscal Stocks?

Materials, Industrials, Consumer Discretionary, Consumer Staples, Energy, together with Healthcare sectors. This postal service examines 5 highly weighted issues inside the Financial stock sector, tracking Cumulative Money Flow (top chart) together with Five-Day average flows (bottom chart) against the XLF (Financial) ETF. The stocks included inwards the calculations are C, AIG, BAC, WFC, together with JPM.

Like the Healthcare issues, Financials convey shown recent weakness, breaking below their Jan lows during the latest marketplace leg down. Observe, however, that nosotros did non encounter a novel depression inwards Cumulative Money Flow, suggesting a possible drying upwards of selling pressure.

We've since bounced nicely off the latest lows on word of Fed intervention, simply Federal Reserve notation that five-day coin flows convey stayed weak on the bounce. Much of marketplace skittishness concerns the troubled fiscal sector; sustained dollar inflows would propose a renewal of confidence amid investors. Thus far, however, though nosotros convey seen less intense selling describe per unit of measurement area on declines, we're non yet seeing sustained buying involvement on bounces. I volition live on watching flows inwards this sector peculiarly closely given this dynamic.
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Info!! Wtf Alongside The Applied Scientific Discipline Stocks?

Materials, Industrials, Consumer Discretionary, Consumer Staples, Energy, Healthcare, too Financial stocks. Here we're examining v highly weighted Technology issues, amongst Cumulative Money Flow (top chart) too Five-Day Average Flows (bottom chart) plotted against the XLK (Technology) ETF. The v stocks included inwards the calculations are MSFT, INTC, IBM, CSCO, too VZ.

We tin meet that the Technology sector, similar Financials too Healthcare, has shown recent relative weakness, breaking below its Jan cost lows. Nevertheless, nosotros haven't seen novel lows inwards Cumulative Money Flow, suggesting to a greater extent than or less drying upwards of selling during the recent decline.

The lessened selling, however, has non translated into aggressive buying. We are exclusively modestly off the recent cost lows, too five-day coin flows convey remained negative. As amongst too then many of the other sectors, we've yet to meet sustained buying involvement that would Pb us to hold off a major modify of trend.
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Info!! Indicator Review For March 24Th

Back on March 7th, I began noticing a drying upward of stocks making fresh comport marketplace lows relative to January, noting some cracks inwards the foundation of the comport market. These divergences were too apparent in my finally indicator review, which was waiting for stabilization amid the fiscal stocks earlier aggressively taking the long side. The marketplace did give us fresh toll lows on Mon of this past times week, precisely in 1 lawsuit once to a greater extent than the divergences relative to Jan were present. With increasing Fed activism, those fiscal stocks rallied for the residue of the week, posting a three-week closing high inwards the banking index ($BKX). Moreover, the same is truthful of the housing sector index ($HGX), which managed to concord inwards a higher house its toll lows from January. As I write, the ES futures are knocking on the door of of import three-week resistance closed to 1345 inwards the June contract. Are those financials leading the wide marketplace higher?

Let's come across what the indicators are saying:

New Highs/Lows - We tin come across from the pinnacle nautical chart that, despite vigorous buying inwards the sectors hitting hardest past times the recent selling, novel 20-day highs maintain to lag novel lows. Indeed, fifty-fifty amongst Thursday's toll strength, nosotros had 608 stocks across the NYSE, NASDAQ, in addition to ASE brand fresh 20-day novel highs against 1391 novel lows. This suggests that, at to the lowest degree in addition to hence far, the buying is selective in addition to non lifting the wide listing of stocks significantly. We volition need to come across expanded novel high strength--and for certain greatly diminished novel lows--before nosotros tin conclude that the recent bounce is anything to a greater extent than than brusk covering. With eighteen novel 52-week highs in addition to 73 novel lows amid NYSE mutual stocks on Thursday, nosotros too saw an expansion of novel lows, precisely nosotros are good off the 300+ novel lows registered on Monday.

Composite Money Flow - In the bottom chart, I combined the raw coin flows across the xl stocks from the 8 S&P 500 sectors that I reviewed, in addition to hence that nosotros could come across how amount five-day coin flows convey been running vis a vis SPY. What nosotros tin come across is that amount coin menstruation has been running below the nix draw of piece of occupation for the nearly utilisation in addition to is negative at present. This supports what we're seeing amongst the novel high/low data: despite the recent toll bounce, we're non all the same seeing large influxes of funds into equities. I volition hold out watching this indicator, along amongst the novel highs/lows, on whatever examination of the above-mentioned multi-week resistance inwards ES to handicap the odds of upside breakout vs. reversal. That's an consequence that has of import implications for the comport marketplace in addition to its longevity.

Advance-Decline Lines - The Advance-Decline Lines specific to the NYSE mutual stocks, SPX stocks, S&P 600 little caps, in addition to NASDAQ 100 issues all made novel lows finally calendar week in addition to are alone modestly hovering inwards a higher house those lows. The AD Lines specific to the 8 S&P 500 sectors reviewed this past times weekend for coin flows too are nigh their comport lows; none is all the same showing sustained strength.

I volition post service a variety analysis of the Cumulative NYSE TICK subsequently this week. Suffice it to enjoin that the TICK supports the findings from the iii sets of indicators above: alone tepid forcefulness coming off the recent toll lows. I need to come across greater testify of sustained buying involvement earlier terminal that we've seen a plow inwards the recent comport market.
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Info!! Making The Practiced Trade: The Importance Of Preparation

per the recent post), it suggested to me that: a) nosotros would examination that resistance; together with b) nosotros had a proficient shot at breaking it.

Reading these patterns of short-term buying together with selling involvement early on inward the session tin assistance yous frame hypotheses regarding marketplace activity that assort the footing for enterprise trading ideas. Had I non been real familiar alongside TICK patterns inside the showtime v minutes of trading, however, the thought together with the merchandise would non accept been possible. This is where hide fourth dimension together with the internalization of those marketplace patterns croak all-important. No sum of trading psychology tin substitute for that form of preparation.
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Info!! Quick Stock Marketplace Update

NYSE TICK) in addition to really positive coin flows accompanying a multi-week upside breakout inwards cost (see nautical chart above). The context for this was ready when nosotros made the novel acquit marketplace cost lows concluding week, alongside significantly fewer NYSE mutual stocks making fresh 52-week lows than inwards January.

We bespeak to remain to a higher house the breakout business order to sustain the intermediate-term uptrend. Given that, the side past times side really of import exam of resistance would live on the Feb cost highs.
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Info!! Serenity Hear Together With Expanded Vision: Reflections On The Day's Trade

Underconfidence, Overconfidence, as well as Emotion inward Trading
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Info!! Themes As Well As Ideas For A Tuesday Morning

an splendid summary of the themes out there from Abnormal Returns, including problems inwards the commercial newspaper marketplace as well as a really thoughtful post close debt, external default, as well as inflation. This is the sort of cloth that's worth reading if you're looking to *understand* markets as well as their interconnections. See too or as well as then juicy links from Chris Perruna, including a really interesting (and accurate, IMO) await at what kinds of trading returns are impressive over a menses of time.

* Great Advice - Insightful post from Influenza A virus subtype H5N1 Dash of Insight highlights the importance of figuring out what markets (and regulators) are *going* to do, non getting caught upwards inwards your opinions of what they *should* do. So much of what you lot read out at that spot are editorials, non marketplace analyses.
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Info!! Using The Dow Tick ($Ticki) To Rails Plan Trading

Dow TICK as well as Program Trading
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Info!! Command Your Encephalon Past Times Controlling Your Risk

I received an eloquent e-mail from an fantabulous trader who marveled that he trades really good when he trades moderate (but even thence significant) size, but thence trades quite poorly when he trades his maximum size. His bird of risk-taking, he finds, affects his emotional sense inwards trading. Yesterday, when he traded moderate jeopardy through the day, he traded consistently as well as made pregnant profits. Last week, when he maximized his risk, he violated a publish of his trading rules as well as lost pregnant money.

Same trader, same trading methods--only jeopardy levels altered his emotions, his decision-making, as well as his performance.

Research suggests that the thrill of jeopardy as well as prospect of vantage "hijack" the vantage centers of the brain, peculiarly the dopamine system. This inquiry emphasizes that gambling affects the portions of the encephalon associated alongside "planning as well as forming strategies". Is it whatever wonder that traders written report "losing discipline" every bit a mutual psychological concern?

There is a really of import lesson to last learned from the trader who wrote to me: By controlling our exposure to jeopardy as well as reward, nosotros command the grade to which our brains exceed away hijacked. Trading 100% of our jeopardy turns planned trading into gambling; cutting jeopardy dorsum moderates the reactivity of our dopamine systems.

There is likewise roughly other sobering conclusion: failing to moderate our risk--day afterwards day, calendar week afterwards week--can brand permanent changes inwards the brain. The Brain as well as Handling Volatile Markets

Trading as well as the Brain

Trading Performance as well as the Brain
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Info!! Trading Addiction Linkfest

My recent post reviewed query that suggests a link betwixt risk-taking together with addictive behavior. It's non only that an "addictive personality" volition withdraw keep undue risks; inwards addition, repeated large opportunity taking alters the construction together with component of the encephalon then equally to sustain addictive behavior. Many traders I've worked amongst never had champaign of written report problems or out-of-control behaviors until they began frequent daytrading. When you lot intend of traders at only about firms placing 100 or to a greater extent than trades a day--basically 1 every 4 minutes--it's hard to imagine that such frequent together with unremitting risk/reward swings *wouldn't* impact the workings of heed together with brain.

What's more, as doc Bruce Hong notes, is that exhausting frustration tolerance together with willpower on 1 gear upward of tasks appears to brand us less disciplined on subsequent ones. That is how bad trading oftentimes leads to farther bad trading, but likewise tin atomic number 82 to pitiful decision-making inwards other facets of life.

One of my kickoff clues that a trader powerfulness travel out of command is that he/she can't withdraw keep a interruption from trading when he/she is losing coin together with can't cut back his/her opportunity afterward a serial of losing days. This is really similar to the drinker who cannot terminal imbibing alcohol fifty-fifty afterward the indicate of consequences.

If you lot are losing coin together with cannot terminal yourself from trading--during a unmarried trading twenty-four hours or afterward days of loss--I encourage you lot to withdraw keep the hard expect inwards the mirror at what you lot powerfulness travel doing to your trading account, your emotions, your brain, your relationships, together with your life.

Here are only about posts regarding trading addiction that shed useful light--and offering helpful suggestions--regarding this painful together with sensitive topic:

* When Trading Gets Out of Control

* Addictive Trading together with Getting Your Life Back

* Craving Trading Highs

* Warning Signs of Trading Addiction
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Info!! Trading Rangebound Days In Addition To Other Resources For Friday

excellent summary of his trading rules, consummate alongside illustrations. Formulating rules inwards a structured agency is a fantastic aid inwards controlling the trading process, rather than letting markets command you. Globetrader is i of the bloggers who real gets it, when it comes to both trading methods together with trading psychology.

* Testing Trading Assumptions - Influenza A virus subtype H5N1 marketplace pullback on lite book is bullish, right? Well, Rob Hanna tests ideas similar this together with breaks a few myths. Here was his await at marketplace history anticipating the electrical flow pullback. Great stuff. I too similar his newsletter, which pulls together his diverse historical studies.

* Risk Management together with Position Sizing - Ray Barros has been on a tear, alongside excellent posts on these topics. Great ideas from an experienced trader together with mentor of traders.

* Tracking Market Research - The Research Recap site offers to a greater extent than or less overnice integration of perspectives. Here's a recent overview of the airline industry together with here's a await at credit carte du jour delinquencies together with their human relationship to unemployment.

* Bear Market Investing - FOLIOfn has developed some interesting products, enabling investors to purchase together with sell entire portfolios alongside a unmarried order. Their recent production allows for behaviour marketplace portfolio investing. The hit of folios together with markets covered are impressive.
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Info!! 4 Indicators I'll Hold Out Tracking Via Twitter

At the asking of several readers, I'll hold upward using morning time Twitter posts to update several marketplace indicators that I bring constitute useful inwards assessing marketplace forcefulness in addition to trend. These volition include:

* New Highs/Lows - I especially similar to come across if nosotros bring expanding or contracting novel highs or lows next a menstruation of marketplace forcefulness or weakness. This frequently signals reversal. Similarly, bursts of novel highs or lows assist confirm breakouts from ranges. The recent pullback inwards novel highs was an fantabulous heads upward for the marketplace weakness this by week.

* % of Stocks Above Moving Average - I similar this equally a longer-term momentum stair out in addition to a agency to assess whether stocks are gaining or losing momentum twenty-four hours over day. When I come across divergences, I'll banknote the % of stocks higher upward their MA for dissimilar indexes, such equally modest caps in addition to NASDAQ issues vs. SPX stocks. This is helpful inwards identifying leading in addition to lagging sectors equally well.

* Demand/Supply - This is my shorter-term proprietary stair out of momentum, tracking the number of stocks closing higher upward vs. below the volatility envelopes surrounding their short-term moving averages. All NYSE, NASDAQ, in addition to ASE issues become into this calculation. Once again, I similar to come across if nosotros larn around momentum twenty-four hours over day. The Cumulative Demand/Supply numbers render fantabulous overbought/oversold readings in addition to bring done a fine chore of tracking intermediate-term highs in addition to lows inwards the by twelvemonth or two.

* Technical Strength - I rail xl S&P 500 stocks that are highly weighted inside viii sectors; at that spot are 5 stocks per sector. The Technical Strength stair out is a quantification of trending demeanour inwards those stocks. I categorize these numbers into uptrends, neutral trends, in addition to downtrends in addition to examine shifts inwards tendency twenty-four hours over day.

In improver to next these indicators on a daily basis, I'll likewise hold upward assembling my commons weekly review of indicators on the weblog over the weekends. This is a larger moving-picture demo persuasion of the markets that guides my basic strategy for the week.

For those interested inwards the daily review of indicators, the concluding 5 Twitter posts look on the weblog homepage. The consummate laid upward of "tweets" tin dismiss hold upward constitute on my Twitter page; gratis subscription via RSS is available at that spot equally well. I'll snuff it on to post service links of of import marketplace themes via Twitter equally good equally occasional marketplace comments in addition to a morning time review of economical reports due out in addition to how overseas markets are trading. Thanks for your continued interest.