Info!! Trading Notes: Calendar Week Of September 21St

Friday, September 25th

*  Once over again nosotros saw an expansion of stocks registering fresh lows on Thursday, equally early on selling dominated.  We saw 300 stocks across all exchanges brand fresh 52-week lows, the highest let on since August 24th.  Buyers became to a greater extent than aggressive into the early on weakness in addition to nosotros shut good off the day's lows.  We've since rallied sharply overnight, consistent alongside the breadth interrogation in addition to model forecasts reported on Midweek in addition to Thursday.  My models remain moderately bullish over a 3-5 solar daytime horizon.  This volition induce got me buying oversold weakness that occurs at successively higher cost lows equally a full general game plan.

*  I've mentioned inward the past times that I similar to rail markets inward lawsuit time, rather than inward chronological fourth dimension units.  Below is a nautical chart where each information indicate for the ES futures represents 250 cost changes.  This agency that nosotros describe to a greater extent than "bars" when markets are busy in addition to volatile in addition to fewer when they are quiet.  This 50-bar charge per unit of measurement of alter stair out has been a useful estimate of overbought in addition to oversold weather condition per the game innovation mentioned above.

*  I volition last posting thoughts in addition to ideas coming out of the weekend Traders4ACause lawsuit tomorrow in addition to Sunday.  My speak volition bargain alongside research-grounded best practices for traders.

Thursday, September 24th

*  I'll last bringing a one-page best practise to the Traders4ACause conference this weekend in addition to exchanging alongside others who direct to write upwardly a useful trading strategy.  Great way to leverage usual learning.  My practise volition last an intermediate-term overbought/oversold indicator that captures both momentum in addition to value effects inward SPX.

*  We saw an expansion of novel lows yesterday in addition to over again selling of bounces worked good intraday in addition to over again nosotros stayed higher upwardly overnight lows.  I hold to exhibit us short-term oversold merely intermediate term a fleck overbought; my models are modestly bullish over a side past times side 3 solar daytime horizon.  My intraday leaning is to purchase dips that concur higher upwardly overnight lows, merely in addition to hence far I induce got been less than inspired past times the buying pull we've seen coming out of marketplace selling.  Influenza A virus subtype H5N1 reduction inward selling pull per unit of measurement area is real unlike from an influx of buying: something I'll last watching going forwards via NYSE TICK.

Wednesday, September 23rd

*  Once again, selling bounces worked good for much of the session on Tuesday equally the turn down continued.  We did run into reduced selling in addition to increased buying belatedly inward the session, merely yet shut alongside fewer than 10% of SPX stocks higher upwardly their 3 in addition to five-day moving averages.  When we've been inward a moderate volatility authorities going dorsum to 2006 (N = 44), we've had 33 occasions up, xi downward for an average four-day SPX gain of +.83%.  Although nosotros had weakness next the PMI let on out of China, the marketplace has since recovered in addition to I would non last surprised to run into farther bounce from the short-term oversold condition.

*  I hold to respect it useful to rail the frequency of occasions inward which NYSE TICK exceeds +800 in addition to falls below -800.  It's been a adept estimate of whether buyers or sellers induce got been predominantly inward command in addition to shifts inward the distribution of those occasions has been helpful inward identifying shifts from buying to selling in addition to vice versa.

Tuesday, September 22nd

*  Selling bounces that failed below the Fri solar daytime session highs ended upwardly beingness a adept strategy inward yesterday's trade, though nosotros were able to concur higher upwardly overnight lows in addition to bounced strongly at the terminate of the session.  Action remains consistent alongside the thesis outlined yesterday that nosotros pose inward an intermediate-term high alongside the Fed announcement.  My models are modestly bearish, overnight activity inward Europe has taken out those prior lows, in addition to my intermediate-term measures hold overbought (see below).  We're short-term oversold at present, in addition to hence my game innovation is to sell short-term overbought levels that neglect below today's overnight highs.

*  The intermediate-term pull stair out takes a 10-day moving average of the percentages of SPX stocks making 5, 20, in addition to 100-day highs minus lows.  (Data from the first-class Index Indicators site).  I mostly similar to last selling when novel highs induce got been elevated merely are right away waning in addition to buying when novel lows induce got been elevated in addition to are right away drying up.

*  The measures of put/call activity that I follow, for all indexes in addition to for all private stocks, are on the depression side.  I'm non seeing detail signs of bearishness on those measures, which has mostly yielded subnormal returns over the nigh term. 

Monday, September 21st

*  Understanding how nosotros best procedure information takes us a long way toward finding our edges inward markets.  Most traders produce non clearly empathize in addition to describe upon their signature cognitive strengths, inward my experience.

*  We hitting a buying crescendo afterward the Fed announcement, alongside NYSE TICK hitting multiple extreme positive readings.  What was meaning was the potent selling pull per unit of measurement area attracted past times those higher prices, taking us lower belatedly Th afternoon in addition to pretty much all solar daytime Friday.  Fri saw 334 stocks across all exchanges register fresh monthly lows, highest inward over a week.  My intermediate-term indicators remain elevated, in addition to I'm operating on the premise that nosotros pose inward an intermediate high alongside that Fed buying.  The lineament of the buying attracted to the short-term oversold status volition say a lot nigh where nosotros become from here; my game innovation is to sell bounces that neglect to induce got out the solar daytime session highs from Friday.  I induce got 1 model neutral to slightly weak in addition to roughly other that is modestly bullish for the 3-5 solar daytime horizon.

*  Below nosotros tin run into a nautical chart of buying vs. selling residuum since June; the information are derived from NYSE TICK.  The five-day moving average of this residuum has been a useful short-term overbought/oversold measure.  Since 2012, when it's been higher upwardly zero, the side past times side 4 days inward SPY induce got averaged a gain of +.09%; when it's been below zero, the side past times side 4 days induce got averaged a gain of +.36%.  When the five-day average of buying pull per unit of measurement area has been high, the side past times side 4 days inward SPY induce got averaged a gain of +.33%.  When buying has been inward its lowest one-half of its distribution, the side past times side 4 days inward SPY induce got averaged a gain of +.03%.  When the five-day average of selling pull per unit of measurement area has been low-cal (little selling pressure), the side past times side 4 days inward SPY induce got averaged a loss of -.07%.  When the selling pull per unit of measurement area has been heavy (top one-half of distribution), the side past times side 4 days inward SPY induce got averaged a gain of +.44%.

Info!! To A Greater Extent Than Thoughts On Mindful Together With Mindless Trading

I was pleased to come across that my recent postal service offering thoughts on trading stress together with emotions generated a flake of controversy. I appreciate comments to the posts, including those that force dorsum together with cause a footling to a greater extent than consideration of the issues involved.

The betoken that generated some word was my instance of the currency trader who blindly entered a seat inwards euro/U.S. dollar without whatever awareness that a key slice of economical information was coming out inwards Europe. It was a known marketplace mover, together with the trader was blown out of his seat amongst a important loss. My comment was that "this represents trading at its worst."

Here's why:

It's a enquiry of awareness. Had the trader *known* well-nigh the report, known the expected volatility to a greater extent than or less the news, together with placed his merchandise accordingly--sizing it to reverberate the increased volatility together with placing stops to a greater extent than or less the expected dissonance to a greater extent than or less the news--this could conduct maintain been a fine trade. If you lot think, for instance, that the fundmentals back upwards a weaker euro relative to the dollar because of bearish economical fundamentals inwards Europe together with if you lot come across technical reasons to endure long United States of America dollar, thus placing a core merchandise ahead of the intelligence inwards anticipation that the intelligence may endure a catalyst for your merchandise could endure *excellent* trading.

The key is that the merchandise is planned, amongst total awareness of what's happening inwards Europe together with the United States of America together with amongst witting reasons for existence inwards the market. The stop-loss betoken would reverberate that betoken at which you lot determine that: a) the intelligence is non a catalyst; b) the intelligence is thus dollar-bearish that the fundamentals conduct maintain changed; or c) the displace is sufficiently adverse that the technical flick has changed.

But, no, that's non what the trader inwards my instance did.

He had no to a greater extent than ground for existence inwards the merchandise inwards the offset house than a simple, superficial nautical chart pattern. The blueprint involved short-term marketplace strength, but was neither confirmed past times whatever longer-term, contextual technical analysis or past times whatever cardinal view. Was at that spot overall bullish need for the dollar or overall bearish provide overhanging the euro? The trader had no clue, never looked at other currency crosses. It was only a shape on a chart, together with it was never tested for whatever sort of edge. That was the offset shortcoming.

The minute shortcoming of the merchandise was that the terminate was placed inwards ignorance of the intelligence written report together with the increased volume/volatility of that marketplace to a greater extent than or less the news. The same was truthful of position-sizing: the trader had large size on the position, inwards ignorance of the report. This greatly increased the odds that: a) the merchandise would larn stopped out on normal, expectable dissonance to a greater extent than or less the trade; together with b) the trader would lose a meaningful amount because of the merchandise sizing.

In short, it wasn't the fact that the trader was inwards the marketplace earlier a intelligence upshot that constituted bad trading. It was the fact that the merchandise was placed mindlessly, without thought together with awareness, without whatever demonstrable edge, together with without whatever realistic planning. "Here's a expert shape on the chart, let's larn for it," was the amount together with pith of the merchandise idea. That's why it was "trading at its worst."

Too often, such mindless trading is justified past times having a "feel" for the markets. Intuition is of import inwards trading together with tin reverberate a sophisticated blueprint recognition that comes from years of experience. But fifty-fifty an intuitive currency trader (and I know several expert ones) understands his/her markets together with doesn't house large-size trades amongst relatively unopen stops ahead of market-moving news. Very often, intuition volition prompt an idea; analysis volition confirm it; together with planning volition guide the execution. There's no conflict betwixt existence discretionary/intuitive together with existence planned/thoughtful 1 time you lot distinguish the genesis of an thought from its validation together with execution.

Thanks for the chance to clarify an of import issue. For some other interesting ground on an of import topic, cheque out the Daily Speculations site's recent back-and-forth well-nigh stop-losses and whether or non they add together value. My brusque conduct maintain on the question: they produce add together value, specially when they are conceptually based (i.e., based on considerations that the reasons underlying the merchandise conduct maintain changed, non exactly based on a detail price/loss getting triggered) together with when they are placed inwards the context of expected marketplace volatility together with proper seat sizing.
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Info!! A While Of Marketplace Life This Morning

I late posted my game excogitation for the day. I noticed that the ADP utilise written report came out weaker than expected in addition to stocks forthwith moved lower.

I waited, waited, in addition to the Spooz didn't appear to desire to become below the overnight lows to that point.

That struck me every bit quite bullish: the marketplace was absorbing somewhat negative intelligence in addition to retaining a theater tone. I forthwith bought the S&Ps.

I checked amongst around people I know close their thoughts regarding the market's merchandise hence far.

Most of the people weren't watching the market.

None knew what expectations were for the ADP report. None seemed to know close the importance in addition to relevance of ADP numbers for Friday's data.

None were tracking the market's reactions to the written report vis a vis of import levels.

I started my solar daytime inwards the black.

They kickoff their solar daytime inwards the dark.

A passion for markets in addition to trading?

Give me a break.

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Why Traders Keep Losing Money

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