Swing trading... lessons learned...

[B.J]

I've been swing trading since April, and thought it would be a good idea if I started a collabaration of the things I've learned, and mistakes I've made, since starting out. The idea is for myself and others to post their experiences, and hopefully Spike, Runner, Newborn and others can offer their advice and critiques.

I'll start with my random equity curve. From the beginning of April until today, here are my numbers (sorry for not posting the graphs... somehow the calculator didn't let me do "properties"):

W/L = 1.682, WP = .385: Gives me a 63 to 149 range. Pretty crappy. I'm a little over break even in actuality, but I know I have to improve this stat over the long term.

I've found pretty glaring mistakes in a host of my losers which would have resulted in a W/L = 4.214, and thus, my curve would have been more like 95-654.

The encouraging thing is, the mistakes I've made have been pretty basic and easily corrected. In general, I have been bad about keeping my losses tight, but most of the time, I find that is exacerbated by buying late, or above support. I now see why Spike is so picky about his entries.

This morning I sold VDSI for a loss (just days after being significantly up) as it broke a lower channel. When it rebounded, I began to question the merits of tight stops. Sold VDSI for a 2.7% loss, but the real problem was:



I let a gain turn into a loss. I did take a little off the table at 10, but I should really have taken it all off, per the upper channel profit taking at 10.48. The rollercoaster I rode just proceeded to piss me off, and I started questioning stops (ie, throwing the blame around). If I had taken the profit before and was swooping in for a second time (there was a valid channel long was yesterday), I wouldn't have boiled so much. I'm calm now, and better off for the eduacation.

I'll post more as time dictates. I've made some good ones, but this thread will be reserved for my bad ones, as I am still new at this and need to be critiqued.

Happy trading all.

[Runner]

BJ, nice thread I think we all screw up today I messed up on ELN, it took my .5 cents and I was done. I planned to trade with E.T.S. Or entry, target and stop. The trade went against me. Once my stop was hit I dumped it with out question. Yes you will question your stops and watch some rocket up after taking your money, but for me stops are part of my discipline. I know for me the target use to be the most difficult thing to do. I say this because with out a target I would let greed kick in and many trades would turn into a Big Fat L. I’m learning to relax and plan the trade. It really does not take much time to plan it out.

Another thing I’ve been doing is once my target gets hit I will take some off the table. Then I ride the rest with a tighter stop. Not sure if others do this, but has worked for me lately. I’ve got a little system down and I’m always trying to improve on it. Another example of one of my signals was ELN, as soon as I saw the evening star candle I’m gone. I will close that position out in a heartbeat.

I think we all need to find what works with us and study our trades and once our hit rate improves try to duplicate it over and over again. I think I’d mess people up if I tried to explain my methods, but if finding a certain pattern set up works for you just stick with that set up for awhile..

As for my chart indicators I view the STO as the engine and the SMA as the road map. I use to have 45,000 indicators running all over my screen and it was a mess. Find a few indicators and learn how they oscillate up and down. Learn how the price moves with the indicators.

BJ, plan it out and then execute it and you’ll feel better about yourself, even when they turn against you!!!

Best trading

[skiracer]

Once you have a plan or strategy for a trade and go with it according to your intrepretation of the chart things will start to feel better. Whether the plan is successful or not is important but staying with the strategy in entry, stops, targets, an exits is what counts. Once you can stay with what you plan out beforehand either way it goes is the primary objective. You're never going to feel good about a losing trade but to put it behind you and knowing that you stayed with your plan will pan out over time and the more you do that the greater the chances of being successful and the better you'll feel about yourself and what you're doing.

Try to stay away from becoming neurotic about anything. Sometimes you will not adhere to your plan because of any number of reasons. Maybe a gut feeling or something. It's only being human. After all we're not all Vulcans. If it goes wrong then learn from the experience but never limit yourself to just one strategy. There are hundreds of reasons that will propel a stock up or down. Learn to know what they look like and how they set up. The more you do of it the better an easier it will become.

[Runner]

Excuse my grammar and typing!!LO

[Runner]

These indicators are all I use for trading. If I’m in a swing trade I’ll not pay much attention to the noise.

[spikefader]

B.J great stuff. I love reading this kind of reflection. It's a great exercise for you, and others can pick up a few tangible things and can probably relate to the emotions you describe about stops and frustrating lost profits.

You describe the errors as easily corrected, and that's a great attitude to have. Modify your future behaviour based on the experiences you've had recently. Modify your trading rules so that your plan covers those eventualities in the future. Frustration is always going to want to raise its ugly head. Resist the temptation to get down about trades that shine momentarily and then turn and die. You can only do so much; and you can only take what the market gives. Some months will be better than others. As long as you protect capital, and stay picky about entries, and wisely choose intraday support to enter, and if you do chase a stock, do it in a conservative fashion, with very strict rules. Search for great risk reward, for it doesn't matter about strike rate/win rate. What matters is finding those great trades that reward and far outweight all the frustrating stop outs. And if the r/r isn't there (say the stop location is too far down from entry) just pass on the trade and patiently stalk. There will forever be people saying, nah, it's not too late, look I just made 6% on it in a day by chasing it...... That's not the point. The thing that matters is timing a trade well; ignoring the temptation to get emotional with a stock, ignoring the temptation to trade based off that emotion and chase....for chasing and emotional trading is just opening a window of opportunity for the trading Devil He's the one that is out to steal your capital and make you feel dumb for taking an ignorant entry lol

I got a little frustrated today. I scalped YM futures 6 times today. Ended the day break even after a poor start, and missed a profitable trade that would have made the difference. Why did I miss it?? Well, price didn't come back for me. I am very pleased with my discipline, and feel satisfied. Sure, didn't make any money, but I feel like a legend for not breaking my rules about chasing price.

Interested to read more from you about your swings. Post them charts at entry and exit. The accountability will likely help you stay detached.

[MikeB]

I look forward to reading more of what you've learned!

I'm still in the 'learning prior to trading' phase. I've lost enough in the past that I'm sitting on the sidelines until I can succussfully paper trade for a satisfactory amount of time.

Reitterating somethings Skiiracer said....
One thing I keep reminding myself is that my primary goal is to have a system that I can successfully work. The secondary goal is to make money. Sounds a little backwards, I know. But the point is that if you're breaking your trading rules to 'make a little more this time', you're not trading your system... your trading some other system and who knows if it works. If you think you should have stayed in the trade, examine your rules/system and make adjustments for future trades... but don't allow yourself to make the rules up as you go. Once you have a system that you can work successfully, the making money part should take care of itself.

Bottom line... it's more important to do the correct thing on a consistent basis than it is to make a little money this one time. You'll come out better in the long run.

[B.J]

Welcome, Mike B! Hope to see you here a lot. I agree 100% that the discipline is the priority, not making the money. That is what the gang here has been drilling into my head, and it's sinking in.

[Websman]

B.J.
I thought I read that you subscribed to Poorman's website. If you do, have you traded any of his picks? If you have, what kind of success have you had?
I haven't subscribed, but I am curious.

Webs...

[B.J]

Poorman has a "stock model" of about 10 or so stocks, kind of like a mini mutual fund. I don't like to keep any more than six or seven at a time, so I take the best of Poorman's, MM's, whatever ideas I see on here, or my own idea.

He suggested FORD when it was 6.50 or so, also CKCM in that range. Other winners in the past included NGPS (he had this one before I returned to ind. stock buying) that he bought for about 15 or so (before running up to 50). He finds a lot of good ones before most people do.

Some of his latest: MCZ, ERS, CMT.

$250 a year. A lot of $$$, but an extra set of eyes is generally worth my while. It's actually less than .5% of my IRA size, so relatively speaking, not a huge dent.

One thing about Poorman... he's more of a holder and less of a trader. Keep that in mind, because if you're a trader, you'll generally have to make your own decisions when deciding to sell.

[Websman]

Some of his latest: MCZ, ERS, CMT.

Those stocks have had quite a run up. I hope you bought some.

[B.J]

I bought ERS, but a bit after its HUGE run of a week ago. Bruce thinks it has tremendous potential as long as it stays above the 7.4-7.5 region. I'm actually about even on it now, but it's forming a flag, and should make a run soon. He usually looks for stocks like this AFTER they make their huge run on earnings, so that he knows how the market is receiving it (considers it safer that way).

Didn't buy CMT, but did buy MCZ. One stock that's really done well for his model is EZEN. I didn't get that one either, because the market stunk at the time he bought it. It's up over 50% now. I gotta stop chickening out

[B.J]

Webs, also, Poorman told me about ANTP when it was 11. I DID buy that one

[Websman]

Webs, also, Poorman told me about ANTP when it was 11. I DID buy that one

Sounds good.

I checked his sight and he offers a monthly subscription. I think I'll try it for a month or two and see if his it pays for itself.

I also think it would be fun to run some of his picks by everyone here to get their opinions and analysis. It could prove to be quite interesting and educational.

[skiracer]

This is a professional trader and hedge fund owner's thoughts on having a trading plan.
Pretty successful guy and trader.