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Stocks Trading wiki pages!My missionHere you'll find all the notes I keep in my process of learning to be a stock trader. WarningBe warned though: I am not a financial analyst, CPA, or any kind of other talking head who pretends to know what you should do with your money, so if you follow any advice here, on you be the rewards and the losses! What I am: I am someone who has lost money in the market over the last 5 months prior to April 2009. That makes me really unique, one of how many millios? However, I am also a reasonably intelligent guy, a computer programmer, someone who in high school was ranked 6th in my state, and 243rd in the nation, in mathematics (on the MAA and Ohio Math Leagues), someone with a basic grasp of statistics and probabilities, someone who can count cards to make money playing blackjack, and someone with a drive to succeed and an insatiable curiosity about how to make money in the stock market. My CreedI believe that the stock market presents a fantastic opportunity to make money if I combine my various talents, such as being able to read books and digest them, synthesize the information in new ways, understand complex concepts, and apply computer programming as a tool to answer questions. Well, it also takes a big dose of discipline, which isn't necessarily a big talent, but it is something that can be developed. With discipline, education, and perseverance, it is possible to learn to make money in the market. What to do?My biggest question is this: What will really work in the market? If I want 51/49 odds, I can go and play blackjack, and spend all day long counting cards and making minimum bets, waiting for the 3 or 4 times in a whole day when I can bet the table maximum and win 2 out of 3 of those bets. It's a fun way to make $400 to pay for a vacation, but boring in the long haul (not to mention the health risk of casinos such as cigarette smoke, bad posture, lack of exercise, and overly rich food at the buffet.) So I want to learn what methods have better odds than 60/40 or even 70/30. I've read enough books, and listened to enough courses, to understand having some losses are part of the game. (I call it a game, because it's supposed to be fun.) But if you're placing trades with less than 60% chance of winning, you're just gambling, and with less than 50% you're probably just foolish. So how do we figure out what works? One way is through computer programming to study what has happened. I'll share with you the questions I am trying to answer, and the process I am going through to find the answers including what books am I reading, what computer programs am I writing, etc. More importantly though is risk management, and good money management rules..... Become your own trading historianOne way is through your trading history. You do have a Trading Diary, right? And a Business Plan For Stock Trading? Well, I don't really, them, but I've been working on them. "If you lose the money, don't lose the lesson." In this space I'll document my lessons, for my own benefit. If you look over my shoulder and learn something, great! Sometimes I see questioins in forums that I know the right answer to, even if I don't follow the rules myself. So I keep track of my posts, such as How to avoid getting stopped out too soon. Enough already...Yeah, I got some real work to do now. Like a blog article to write about my new trading focus..... FeedbackPlease do post your feedback as comments to these pages. Your comments will really help me tailor this information to be of benefit to everyone. Stop back and visit from time to time. Index of Stock Trading Pages
Full list of topics, last updated 4/26/2009:
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Stock market bloghttp://www.fool.com/investing/general/2010/02/20/daytraders-arent-stupid-theyre-insane.aspx According to a recent study published by researchers at the University of Pisa, gamblers often suffer from "impulsive, compulsive, addictive behaviours." Using 20 patients undergoing treatment for pathological gambling disorder at an Italian clinic as their sample, the scientists tested patients' ability to modify their behavior in response to changed circumstances. Patients were asked to play a "card-matching" game under one set of rules initially. But "after 10 cards have been selected correctly in one category, the interviewer changes the category without informing the subject and from that moment on, answers which would have been correct for the previous category are considered wrong. The subjects have to change the principles according to which they pair off the cards in order to discover the new category chosen by the interviewer." So how do you think these compulsive gamblers fared under these changed circumstances? Did they roll with the punches, figure out the new "angle," and keep on winning? Sadly, no. They couldn't hack it. Gamblers who exhibited "normal intellectual, linguistic and visual-spatial abilities" in all other respects were found to:
As a result, they proved incapable of learning how to play the game once the rules changed. They stuck to the pattern they knew, regardless of the consequences. Fool member Jeff Nazdek agreed to share with us his experiences as a "professional" day trader:
5-21-2008 Backup\Dennis\Drumm101\Drummond Package - Drummond Geometry systems, Drummond Indicators, lessons 1-30 Software
Still need to go through Give-Away-Computer-Data
Notes:
Forex trading hints:
Best scanning: TC2000. eSignal also good.
I just completed the Online Trading Acadamey (OTA) Professional Trader Course, parts 1 I just completed the Online Trading Acadamey (OTA) Professional Trader Course, parts 1 and 2. I will have more information here in the near future about the course. 4/28/2009 - I am sitting here in the jury waiting room waiting to see how much time I will get to spend in this wonderful Frank Lloyd Wright designed building. Might as well make use fo the time to update some blog entries. Online Trading Academy - Professional Trader Course, Part 1 and 2How I learned about Online Trading academyI probably first learned about the Online Trading Academy via an online advertisement on one of the stock market related websites I visit. They had an upcoming half day free seminar on stock trading. I signed up for the course after the free seminar. The half day stock trading seminar gave a taste of the techniques they would be teaching, and included lunch, so I invited a friend of mine to join me. Towards the end of the half day, we expected a salesman to put the squeeze on us, and sure enough the peopel started being called out of class one by one to meet with an "Education counsellor". Just when that moment arrived for us, the fellow giving the free presentation was covering an interestiung technical analysis technique. I relented, and went ahead to talk to my counsellor, who happened to be the owner of the San Jose office of Online Trading Academy. They seem to be a franchise type operations with over a dozen offices in several different countries, including Singapore. They started as a trading floor for traders, but morphed into a teaching organization. The real course, an intensive seven day class in stock market trading, had a price in the range of $5000. Knowing the vagaries of human memory, and also being a very self-motivated learner, I am not usually a big fan of going to classes, one forgets a lot in just a few days after a class. I can read and study a book with very good recall, and I have something tangible to review as needed. However, I already have a stack of stock trading books 6 feet tall, and hundreds more in electronic version, and I am still losing money, so maybe I do need something more. So I was an easy sell. I asked if they had a video course that I could study at home. At first my counsellor did not seem to want to tell me about the video course. But I had seen someone come back into the class carrying some kind of package of disks. The counsellor showed me the http://www.tradingacademy.com website store, but the video disk course, on 32 DVD disks, cost more than the class. They also had a 16 CDROM disk set of Adobe Flash based stock trading classes covering things such as key trading times of the day, technical analysis, treating trading as a business. The teacher continued telling me that I needed to come to the class to get the latest information, as those other materials are currently a few years old. Finally the counsellor asked me if I would be interested if he sold me the videos for "Cost". Now he had my interest. I decided to signup for the April class. First day of classThe first day of class was last Saturday before last at 9am. I thought it started earlier, which was a good way to get myself there on time. They had us sign in, and gave us a thick spiral bound notebook with a printout of all the power point slides that the instructor would use on the facing side of the pages, and ruled lines for notes on the trailing pages. About two dozen students were in the class. The instructor, Russ Allen, introduced himself, and told us that he makes a living trading stocks from his home on Mount Shashta. His wife is also a trader, but her style is different than his. He is a short term swing trader, doing trades typically for a few hours to a few days, although recent market volatility makes him very shy of keeping any positions overnight. She does very short term momentum trades, sometimes for just 15 seconds per trade. Russ used to run a software business involved in consulting about the Y2K problem, and dabbled in trading stocks. After the Y2K crisis passed, he found himself making better money from stocks than from software, so he went into full time trading, and then promptly lost 40% of his account. He took a class from Online Trading Academy in 2003, and has been successful with his trading ever since. Apparently his wife also joined him in taking a class, after she was frustrated at his failure to follow his trading rules and he replied "It just isn't that easy, maybe you should try it" and she took him up on his challenge. He had the entire class introduce ourselves to each other. He asked us to tell our names, our experience level, and what we intend to get from the class. As I did at the free seminar, I introduced myself in a monotone voice as "Hi, my name is Garnet. I'm an over-active trader." The teacher immediately got my reference to an AA meeting (Alcoholics Anonymous), and immediately responded with "Hi Garnet", as several other people laughed and also got the reference. I told the class how I started trading in 2000, got bored very quickly with losing money, went on to teach myself blackjack card counting, but realized that the smoke and liquor of a casino, to sit in this for hours counting cards, is not the best work environment. So I am back to the stock market to try to learn how to successfully trade.
I have been focused on the book Quantitative Trading Strategies. It seems like the best book I have, detailing a lot of basic strategies, and some special strategies of the author. The charts of performance are impressive. Unfortunately, I'm finding the results from the book to be very difficult to replicate. You can see my comments on the simplest strategy Channel Breakout Strategy Including Shares According To Volatility. Hopefully, I can eventually confirm broad brush profitability, or number of years profitable out of 10. It's very disappointing to find that I can't really trust the numbers in the book and will probably have to spend a lot more time re-evaluating the strategies than I had planned. Still, I guess it is a good exercise to debunk these trading books. I am still amazed at what a lie, or at least a good job of not stating all the facts, was done with the book Book Notes - Contrarian Ripple Trading. And my losses from over-optimizing RSI lengths for the RSI strategy in Book Notes - Building Winning Trading Systems With Tradestation - Wiley was also a good lesson in the evils of optimization. For the upcoming Online Trading Academy course I'll be taking, at least I should be better prepared to back test their suggested strategies. I've already found that the basic TRIN and TICK levels advised when used as trade filters weren't enough to improve the channel breakout strategy. Of course testing other things the course recommends could be more difficult, since having a computer recognize technical analysis patterns on a graph is not childs play, it is certainly more difficult than candlesticks. Perhaps the next book I should focus on is Book Notes - Money-Making Candlestick Patterns. What doesn't kill our trading account hopefully makes us smarter traders.... I've been focusing on the book Book Notes - Quantitative Trading Strategies. I've read the first 90 pages today. Wrote some new EasyLanguage strategies to implement ideas in the book:
On two stocks I am trading recently, GS and MET, the Channel Breakout Strategy has a dismal record when applied to one minute chart. OTA rules to help limit the losses, but they don't make it profitable. Also wrote routines to analyze the occurrences of runs of consecutive ups and downs, Stock Trend Run Length. Am still working on a variation that will show the results for several consecutive time periods, for example 1000 days broken into 100 day segments. I also went through the ACM portal looking for scholarly papers on stock market trading strategies. I found several papers on trading simulated markets, several on ecommerce trading strategies, and a few directly related to the stock market, and included their abstracts in the wiki. As I get time to read them and study them, I'll add more notes here. Today I decided I've had enough of losing money in the stock market. Have I given up? Take a read here: Enough is enough, I have had it, time for a new strategy |
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