Thursday, November 18, 2004

Thursday night, November 18, 2004

OK, this is how a day-trader prepares for the next day's trading, or at least how this day-trader prepares: We went out for Thai food. Ginger chicken and Thai fried rice. "Why no chart's," you ask? We don't need no stinkin' charts. For twenty years I slaved over charts, night after night, looking at everything from neural nets to oscillators to Elliott Waves and back again. It's like going to Hebrew school as a kid in Detroit. You did it because you were "Jewish." So if you fancy yourself a "Trader," you look at charts at night. If you go to a place like stockcharts.com, you see hundreds of charts analyzed by well-meaning individuals who still believe that there is some predictive power in chart analysis. I did it dutifully for years and years until it occured to me in the depths of the 2000-2002 bear market that all I had been doing right was buying stocks in a bull market, the mother of all bull markets. A rising tide lifts all wannabe traders. It wasn't the charts at all.

So what works?

In eighteen months of real time real money trading, I have found that day-trading works, That prediciting the next 2% move in a stock in much easier then predicting the next six months of price movement. There are clear, objective triggers that move stocks a little bit over a very short period of time. Put them all together and you are making a half dozen trades a day, making 2-4% per trade and returning to 100% cash at night. Thus, a relaxing evening of fine dining replaces struggling over the great bull versus bear debates raging on Internet stock forums.

Tomorrow is Friday and there will be a half dozen or so great trading opportunities, little pops, clearly predictable and tradable. It is with that knowledge and comfort that I retire early this evening, to savor some of the finer pursuits, ripe, seductive, compelling and I am mush.

7 comments:

rlw said...

Allen,
I have been following Gilder through his technology report, and like many others, took a bath on tech stocks when things crashed. I hope to do better this time around and believe that we will see a second and even bigger tech boom that will become apparent very soon. I have always been intrigued by day trading, but no nothing about successful techniques and for the most part, have heard about negative results. In your blog, you made the comment, "There are clear, objective triggers that move stocks a little bit over a very short period of time. Put them all together and you are making a half dozen trades a day, making 2-4% per trade and returning to 100% cash at night." Would you be generous enough to share some of these "objective triggers" that you look for? Any insights are appreciated, and I will be checking in with you on a regular basis to see how you're doing. Best wishes. Robert

Allan said...

Hi Robert, Thanks for checking in with me and showing some interest in these musings. It's not my intention to teach or give away my trading methods here, although I'm still not quite sure what this is all about and it may very well end up being one incredible revealation of some holy grail of trading. Plus, not only do I trade for myself, but I also trade for a small fund that would probably not appreciate my giving away the keys to the vault. But since you were kind enough to write, I'll throw something your way and you can do what you want with it.

I bought a stock today (that shall remain unidentified) because the CEO bought over 27,000 shares of his company's stock over the past three days, about $64K worth of stock on the open market. This sort of stuff goes on every day, CEO's buying their own company's stock on the open market. Not every one of these stocks goes up after insider open market purchases, but some do. Actually, a lot do, maybe even most of them do. These purchases are posted for all to see and there are some subscription services that even collect and organize it for you. Imagine what you can do with this sort of information and a fast trading platform. Now take that imagination and turn it into something. Best regards.

rlw said...

Allen,
I appreciate your reply and thanks for the tip on insider trading. You said that there are some subscription services that collect and organize this kind of data. Would you be kind enough to point me in the right direction to find such a service? Count me in as a regular reader, and have fun with your blog. -- Robert

Allan said...

Insiderscoop.com
Freeedgaronlinepro.com
SECAnalytics.com
Insidercow.com
Realtimeinsider.com
Insidersightings.com
Insiderbuying.com

rlw said...

Allen, Thanks once again. Robert

vicn1 said...

there is a better one, a free one: http://www.netsteering.com

vicn1 said...

can I do a link? Try this:

http://www.netsteering.com