Friday, May 23, 2008

A Conversation Between Two Master Stock Traders

Stock bloggers kick ass because you could (in theory) learn good stuff. Fuck CNBC and their idiots. This right here is the future.

Here's a brief excerpt of a conversation I had with Jamie over on his site. As you know, I'm attempting to become more like him. He takes the same trades I do, yet he makes more money doing it. This doesn't mean he's smarter, and it doesn't mean Canada isn't pure evil...

(Note that I put his quote in a pretty shade of pink (mine is a masculine shit brown color). Sure he makes money, but that doesn't mean I won't try to emasculate him and ruin his self confidence. Stock trading is a zero sum game... and as far as I'm concerned, Jamie is my enemy.)

I said:

Nice trade in V... I mean, I had your entry, but you kicked my ass with the exit.

I noticed that you use 15-minute graphs to explain your trades. Do you use them as well when you're making your entries? I figure you have to use a smaller timeframe intraday, right?

I still need loads of work with my exits and I'm wondering if I should be focusing more on longer time frame graphs once I get my entry... because I tend to jump on profits... perhaps the longer timeframe would help me stick out the trades.

Have a nice long weekend.

-DT

Jamie said...

Yeah that V setup was a gift.

I use 4 timeframes daily, 1, (3 or 5), and 15 min. If the trade sets up nicely on all 3 intraday timeframes and has room to move on the daily, I take the trade. If I have a lot of confidence in the setup, once it gets going, I manage the trade on 15 minute. If I'm scalping, I manage on 1 or 3 minute chart. Most of my gapper trades are executed on the 15 minute.

If you're trading to win based on a setup you have confidence in, you might want to let your profits run, or partial out after 3 WRBs or obvious S/R levels. If the setup is less than perfect, or the markets are choppy, then, I sometimes use the trade not to lose strategy. After the initial BO I tighten stop after each new high. So on a three minute chart, my stop is just one or two bars behind the current price bar. This strategy usually insures a win unless the BO is a complete head fake, but if the stock really takes off, you want to give it more room, otherwise you'll get stopped out on the first pullback. This last strategy works best with highly liquid stocks.

1 comment:

Dogwood said...

I use five minute and 15 minute charts. The longer chart eliminates a lot of noise, while the five-minute helps with entries.

When I trade off five minute charts, I get too jumpy and nervous because the scale is different and the slightest move looks like a major event.

Also, by using a EMA 21 on the 15 minute chart, I generally stay on the right side of the market/trade.

15-minute charts = serenity now!