Wednesday, May 6, 2009

Trader A Guest Post

 So here goes…

I couldn’t think of any particular topic to write about, so I figured I would just dictate this post as a written recording of my stream of consciousness.  Initially, I planned to write a view paragraphs based on how I trade, but then I realized that there is nothing I could tell you that you haven’t heard before.  During my time talking with, and observing, other discretionary intraday traders, I’ve found that there are only two main strategies… you’re either a trend-follower or mean-reversion trader (I don’t know anyone who has figured out how to make pair-trading work intraday).  For you to make money as a day trader, the price of the market has to change, there is no other way around that… we’re not making markets here… Now that isn’t to say that every once in a while a trader that specializing in mean-reversion won’t buy into a strong market, or a momentum trader won’t sell a blade-up, but in general, every trader makes the bulk of his money in the strategy that he/she specializes in.  As I think back, Trader D and Trader B both had all their best days ever on days where the market had a large reversal.  My best days (as a trend-follower) all occurred when the market opened weak and finished weaker, or opened strong, and finished stronger.  I am a momentum junkie, and there is nothing I love more than buying something going straight up, or selling something going straight down.  It is what comes naturally to me.

              Of more interest, may be how I came to this point.  Just as many behavioral tendencies and subconscious habits can be traced to childhood experiences/influences, I believe my market directional trading bias has its links to the beginning of my trading career.

            To briefly summarize my beginnings, I got my Series 7 in winter 2006, and promptly proceeded to lose money from the last couple weeks in December, through March of 2007.  I smoked myself for the entire 3k deposit amount and then some. At the end of March, I wired in the last bit of money I had to bring my negative account into the green, but by then I had already pretty much figured I was done.  Then April 2007 came.  This marked the first earnings season that I was aware of.  I managed to make a good amount of money buying earnings stocks making highs, pyramiding into more as they ripped.  April 2007 was my first positive month.  I made around 4k (which was huge to me), about enough to cover my losses up until that point.  Buying into momentum was my first very positive reinforcement by the market, and I think that was so ingrained into me that I start to feel very uncomfortable whenever I’m fading or in a retracement trade. 

Over time, I’ve made adjustments to execution details such as entry/exit timing, trading vehicles, profit targets, etc, but at its core, I am nothing more than a trend follower.  I know my strengths and weaknesses.  All the traders I know, that make a killing, are the best at what they do.  I can’t make more money than Trader Z trading his style.  If I’m doing my job right, no one will make more money than me, trading my style.  And that’s what it comes down to, acknowledging and accentuating your strengths, and minimizing your weaknesses.  If there is one point I would stress in this rambling post, it is the value of become more self-aware professionally, understand your tendencies and proficiencies, then to develop a strategy to maximize on that.  One of my favorite quotes comes from market wizard Mark Minervini,

"Concentrate on mastering one style that suits your personality, which is a lifetime process.  Most people just cannot weather the learning curve.  As soon as it gets difficult, and their approach isn't working up to their expectations, they begin to look for something else.  As a result, they become slightly efficient in many areas without ever becoming very good in any single methodology.  The reality is that it takes a very long time to develop a superior approach, and along the way, you are going to go through periods when you do poorly.  Ironically, those are the periods that give you the most valuable information."

So there you have it… stick to what you’re good at, and most passionate about, because that is what you’ll be best at.  Don’t let the money drive you crazy because this shit will mean nothing in 100 years.  Maintain perspective, love your family, live fearless

26 comments:

Anonymous said...

Top to Bottom...One hell of a great post. Thank you Trader A and thank you DT.

Anonymous said...

Good post A. When i first started @ Assent ( andover then ) i would trade 1 stock everyday, day in, day out. Back then it was under the symbol CPQ. I would momentum trade that shit to death and made way more money trading 1 stock then dudes trading several.

Anonymous said...

Excellent post DT. I've followed your blog for some time now and feel this is your best post ever.

Keep up the good work, trade em hard, and hit a few waves for a Texan far from the coast.

Bill

Dinosaur Trader said...

Great post, Whisp.

Thanks,

-DT

Vel Pillai said...

Wow, that was an awesome read worth reading many times over.

Thank you DT for posting this gem!
-Vel

Anonymous said...

very well said and truly inspiring post,

Thanks both TraderA and DT for posting!



-Michael

HPT said...

Good Post...Indeed.

Anonymous said...

Thanks for the insight - it's greatly appreciated.

Chris

NQJ said...

Thanks Dinosaur Trader and Trader A for the post.

sage08 said...

Well said! Thks Trader A and DT. Btw, DT, hope you get back to green soon.

Superman said...

oooooohh wowwwwwwwwwww

I haven´t got word , only Excellent!!

i want to thank for your real words.

It was very useful!!

THE BEST POST EVER!!!

TRader said...

Ok. i must admit my arch-nemesis Whispo aka trader A(-hole) wrote a very interesting post. My criticisms/comments are as follows:
1. if its all about doing what is suited to your personality, in your case trend following, how the heck did u make all that dough this morning fading the pop? is this merely a rare case of doing well on some other shit, or am i missing something?
2. though u make a good point when u state "Initially, I planned to write a view paragraphs based on how I trade, but then I realized that there is nothing I could tell you that you haven’t heard before", In fact I am sure that specifics about how you trade, considering your success, would be very interesting and enlightening. Specifically, information about what out there in the public domain that you are fucking with would be very useful. If you balk at revealing specific indicators for fear of repercussions in the market, please say so.

In conclusion, I loved the post, and am left hungry for more. I propose to end our one way beef in return for a more thorough follow-up or 2.

Trader D

ps sorry for calling u "Trader A(-hole)", i know u mad sensitive.

loanme5 said...

Wow, mad love for you, homey.

Thank you,

Again, this is why this is my favorite freakin' blog!!!
Some of you motha-fuckas just can't appreciate quality.

Peace

FX said...

Great post, thanks for it !!

Markus said...

EXCELLENT post, thanks for writing that up !

OONR7 said...

what an awesome last line. Thanks for convincing him DT.

StockHunter said...

great post, I loved it! I also find it cool that we both started trading at about the same time (I started in jan 07 earnings and swing trading) :).

Denarii said...

DT this was a great simple - one pager mind dump. You should get more of your crew to do the same.

Ilya and Nicole said...

great post whisp. judging from the response you have a good future as stock blogger in the unlikely event that trading doesnt work out

Superman said...

I would like to know if TRADER A is a basket trader.

Thank you

Jared said...

Very good post indeed, yes we find pair trading intraday not to be as effective as pair trading overnight, holding for several days in this best, and most of our traders succeed in this area.

mike said...

Hi Trader A,

As I remember one of DT's comments were that you are scalper, but in your post you mentioned of pyramiding.
Could you please comment on it, thanks.

Mike

Trader A said...

@ Trader D
I accept your apology ;-)
The only technical indicator I have on my charts is an exponential moving average. I think its set to 13p. You probably remember last year I hired Divergence Software (the company that makes ScanExpert) to program a proprietary indicator that was based on Directional Movement (ADX D+/D-), MACD, and the internals (Whisper Momentum Index), but I stopped using that because of the eSignal bug that fucks up the high/low flashes whenever an .efs file is loaded on a chart.
I'm bearish on indicators... price & volume is where its at.

@ Superman
I am not a basket trader, although I definitely see the merit of basket trading. Recently. I have been trading SPY a lot, as I see myself gravitating towards being a e-mini trader in the future.


@ mike
DT was being facetious when he made the comment regarding me being a scalper. I am on the opposite end of the spectrum.

Anonymous said...

Trader "A"

I was wondering if you only trade listed (NYSE) stocks or nasdaq also?

Thanks,

-Guru

Stewie said...

that is one of the best posts i have ever read!

Thanks TraderA and DT!

Superman said...

Hi trader A

thank you for your ask my question.

Yes , i was a basket trader and now i trade spy ,dia .

i have some questions

How much stop and target do you use for spy? how many shares?How many trades for day? do you average down when you think that you are in the correct direction?

thank you
best regards