Monday, February 13, 2012

6th anniversary and Sitting on my hands

Happy Sixth Anniversary for this blog. Cheers. I have learned so much from doing these public updates. I highly recommend the process of trade journaling. Really, it would be near my #1 tip for novice traders. Having a public trade journal makes me that much more accountable. A private one is fine enough, especially for those starting out.

As for the other subject, I remember someone teaching a kid how to play chess, and he told the kid to "sit on his hands." This physically reduced the temptation to make a quick move. It increased the chance that the kid would think before moving. I did the same thing today, sat and thought.

I've been spending some time this past week in the ThinkorSwim seminar archives, watching some of the recorded webinars from the past year or two about various technical indicators. John Carter's TTM based indicators, Pearson Pivots, and Bollinger Bands were each the subject of an hour long presentation. Some I found useful, some I did not. As I often write, something that works for me, may not work for you, and vice-versa. That's why I am big on process, not recommendations, not specific indicators, because every trader is a bit different.

Long time readers know that I have tended to favor simple charts. My old favorite was a 2-year candle chart with a 50 day and 200 day simple moving average, and volume and Momentum on the lower. That's it. Compared to most technicians that is a simple setup. I am looking at some of the indicators that I learned about. The temptation is to jump right in and start using them like I know how to use them. That's like the kid learning chess, just because I know how the pieces move, doesn't mean I know much more than that.

I was tempted, but will look for better entry points. PCLN was a rocket launch today, and it moved too quick for me. I wanted to take a bullish position via selling a vertical put spread. Readers know that I tend to be a slow moving position trader (vs. a fast reacting day trader) and that I tend not to do well in fast moving markets.

Today's market rally saw a slaughter of the bears. Big bold bears that have been shorting market leaders such as AAPL have been demolished by the up move and the decline in volatility. At some point the bears will cry uncle and it will be a good time to actually short. The cover of Barrons "Enter the Bull, Dow 15000" does flash a caution flag, but by itself isn't a sell signal.

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