Saturday, December 26, 2009

Indicator and Trading Pattern Posts - Volume Four

This is the final 2009 archive post covering indicators and trading methods. It covers November and December posts; see the separate archives for August, September, and October:

* When intermarket themes and intraday sentiment are in gear;

* Recognizing range markets by tracking sector behavior;

* Tracking NYSE TICK and range markets;

* Following sentiment with the equity put/call ratio; see also intraday put/call ratio;

* Volume and market consolidation;

* Nice tool for tracking ETF performance;

* A look at volume and VWAP during range trade; see also this post;

* Using volume information *within* bars on a chart;

* Characteristics of a downside market break;

* Advantages of volume bar charting;

* A way of tracking traders' risk appetite;

* Sentiment and the cumulative NYSE TICK line;

* Tracking non-confirmations across markets;

* What moves markets; here's the follow-up post;

* Using a basket of stocks to track market trending;

* Intraday volume and market opportunity; see also post on when volume becomes low;

* An intraday measure of money flow;

* Tracking market demand with cumulative Delta;

* Using Dow TICK ($TICKI) to assess short-term sentiment; see also this post on cumulative TICKI;

* Tracking short-term trending with various indicators;

* Resources for tracking sector and market behavior;

* Transition pattern in currency futures market;

* The importance of *what* you trade;

* Fading moves that lack broad participation;

* Gauging market strength with a basket of stocks and their VWAP levels;

* Reversal moves back to VWAP;

* Transition pattern on a swing time frame;
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Indicator and Trading Pattern Posts - Volume Three

This is the third installment in a set of archived posts that focus on trading indicators and methods. These posts come from October, 2009; see the prior archives for August and September:

* Using NYSE TICK and Market Delta to identify intraday sentiment and trend;

* Gauging intraday strength via sentiment and intermarket themes;

* Identifying range markets; using sectors and a basket of stocks to identify range conditions;

* Catching market divergences;

* Extreme NYSE TICK values--and their absence--as a trend/range indicator; also see this post;

* The behavior of large traders during breakout moves;

* Nice relative volume tool;

* Weekly price targets and swing trading; see also this post on weekly targets;

* $TICKI (Dow TICK) and short-term stock market sentiment;

* Watching price levels to gauge market breakouts;

* Nice way of gauging sector rotation;

* Using VWAP to understand market moves and day structure;

* Identifying an upside trend day;

* Tells for a downside trend day;
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Indicator and Trading Pattern Posts - Volume Two

Here are trading indicator and technique posts from September; see the prior set of posts from August for more:

* Tracking intermarket correlations to understand macro themes;

* When to exit a trade;

* Identifying false breakouts; see also this post;

* Using volume dynamics to identify downside break;

* Transition trading; here's a follow-up to that post; nice example of transition pattern;

* Momentum patterns in the stock market; a further look at momentum; and another one;

* Intraday market transitions;

* Tracking the real time development of support and resistance;

* Tracking low momentum in the stock market and what it means;

* Using a basket of stocks and changes from the open to assess trending;

* More on using NYSE TICK to gauge intraday sentiment; also, using TICK distribution;

* The value of assessing the market's volume flow; see also volume flow and intraday transitions; also, reading volume flow prior to the market open;

* Evaluating participation during breakout attempts; also see this example;

* Using volume bars to track the market;

* Using information across time frames for trade ideas;

* Primer on reading my Market Delta display;

* Identifying range days in the market;

* Identifying upside breakouts in the market;

* Non-confirmations in NYSE TICK and market reversals; see also NYSE TICK breakouts;

* Using volume to identify key price levels;

* Volume dynamics of a trending market;

* Excellent tool for screening intraday strength and weakness;

* What we can learn from intraday advances and declines in the stock market;

* When economic reports are game changers for stocks;
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Indicator and Trading Pattern Posts - Volume One

Here is an archive of posts from August that illustrate specific market indicators and trading patterns. I'll be generating archives from subsequent months, picking out posts specifically relevant to trading methods:

* Intraday sentiment and trend with cumulative NYSE TICK line;

* Tracking sentiment with a moving average of NYSE TICK;

* Tracking sentiment by assessing extreme NYSE TICK readings;

* Understanding the market's macro themes;

* Assessing market strength with short-term new highs/lows;

* Using trend status of a basket of stocks to assess market condition;

* Aligning trading with sentiment trends and NYSE TICK;

* Volatility patterns, intraday;

* Tracking sector rotation and odds of market continuation;

* Identifying market breakouts;

* A few of my trading rules;

* Creating price targets for swing trading;
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Saturday, December 19, 2009

Creating Your Learning Culture

If I had to identify one characteristic that separated successful traders from their less successful counterparts, I would say that the successful ones maintained what I call a learning culture.

A learning culture is one in which there is an explicit philosophy and set of procedures to reflect upon recent experience, extract lessons from that experience, and use those lessons to guide future experience.

While such a culture can be maintained individually, it becomes exponentially more powerful when it is shared. Imagine a small group of people, each of whom is extracting lessons from experience and sharing them with all the others. The net effect is to condense time: a person has gained a week's worth of experience in a day, simply by assimilating the lessons of others.

This condensation of time is essential to a field such as trading, in which the learning curve may outlast one's bank account. Most of us have heard of the "ten year rule", which states that expertise in any performance field requires a minimum of ten years of learning and deliberate practice. Clearly, most of us cannot afford ten years of our lives to learn to master financial markets; few trading firms could or would support such an extended process.

Within a learning culture, however, a trader can gain ten years of experience in a fraction of that time. The key is learning from others and making use of proper tools for exploiting that learning.

Imagine, for example, that I am trading with a group of four other people. At the end of every trading session, each of us shares, via video and with annotation, his or her best trade of the day. Those videos and explanations are reviewed intensively, providing high-yield access to multiple trading patterns. Over time, those patterns are reinforced--and each of the traders is seeing many times the patterns of the average trader.

Sadly, few trading firms make concerted efforts to embody such learning cultures. Whatever mutual learning occurs is the result of informal conversations and occasional collaborations. Because the traders don't hang together, too many hang separately.

Just one learning colleague can double one's rate of growth; conducting learning in groups can turn a 10-year rule into a several year one. It is no accident that the same training facilities--whether in boxing, chess, college sports, or the arts--produce leading performers year after year. Nor is it an accident that the world's leading laboratories produce consistent world-class discoveries; that the world's leading educational institutions generate the best scholarship.

Culture counts. When you're surrounded by high performers, it brings out the best in you.

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Sunday, August 2, 2009

Saturday, August 1, 2009

Trading Lessons From July

A major objective of this site is to archive readings that can help traders with their psychology and their trading. The following posts from July address important elements of trading practice. See also trading lessons from May and June and these posts on trade setups:

* Trading With the Odds

* When to Think of Joining a Proprietary Trading Firm

* Gauging Reasonable Performance Expectations as a Trader

* Identifying Reference Ranges During the Day

* Figuring Out the Structure of the Trading Day

* Range Days and VWAP

* Important Market Lesson: How Markets Respond to Bad News

* Executing Good Trades

* Organizing Your Trading Screens

* How to Plan Trading in a Range Market

* Nice Example of a Transition Pattern

* Transitions and Reversals

* Overcoming Failures in Trading

* Catching False Breakouts From Ranges

* Three Common Mistakes Traders Make

* Trading *Your* Time Frame

* Three Questions to Ask Before You Trade

* What to Look for When We're Trading in a Range

* What to Look for in a Breakout From a Range

* Two Important Lessons Regarding Day Structure

* Trading Slow Market Days

* Trading With Order Flow

* Keeping Time Frames Consistent While Trading

* When Trading Becomes an Addiction

* Upside Market Breakouts: What to Look For

* The Importance of Tracking Volume at Price

* Identifying Non-Confirmations of Market Moves

* Relentlessly Improving Yourself as a Trader

* Five Characteristics of Winning Traders

* How to Use the Morning Information From Twitter

* Integrating Market Information Across Time Frames

* A Self-Evaluation Checklist for Traders

* The Role of the Gut in Trading

* Identifying Market Range Days

* Recognizing When Trends End
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