股票交易系列三篇文章.docx

股票交易系列三篇文章.docx

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股票交易系列三篇文章

 Lightvolumeinstocks:

Whatyouneedtoknow 

MerryChristmasandhappyholidaystoall.Youmaynotknowthis,butIwasafanofFuturesmagazinelongbeforeIwaseveracontributor.Yearsago,beforeIeverknewwhatthenumber61reallymeant;allIthoughtaboutwassomeguynamedMariswhohit61in1961.ItwasaboutthattimeIreadaboutsomeinterestingfinancialinstrumentsinacutting-edgemagazinecalledFutures.We’veallcomealongwaysincethen,andanotheryearhaspassed.Ginger,Danandtherestofthegangdoagreatjobofgettingyoucutting-edgecontentonaregularbasis.Iconsideritaprivilegetocontributeinsomesmallway.

Butbecauseit'sChristmasweek,wealsohavetorealizewecanseesomelightervolume.ConsideralsoweareintheheartoftheMercuryretrogradeperiodandmixitwithlightvolumeandwecouldseesomehairraisingpriceswingsinthenext2weeks.ForthemostpartIleavethefinancialastronomytoothersbutitwasMerrimanwhohasdoneyearsofexhaustiveresearchconcerningMercuryandlet’sjustsayit’sanoccupationalhazardtothoseofinvolvedwithtradingandfollowingmarketsonadaytodaybasis.Theproblemis9outof10peoplehavenoidea.

Thatbeingsaid,thetimewindowseasonisover.Ican’trememberaperiodwherewehadsomanywindowsinan8weekperiodliketheonejustcompleted.What’sthebottomline?

Themarketsarestillhigher.Wecoveredthisconditionlastweek.WiththenewmarginalhighintheNASDAQandNDX,wehaveinvalidatedthelatestwindow;the161daymarkerofftheAprilhigh.SincewearealreadyhigherthantheAprilpivotthatonehadlesssignificancetobeginwith.

ButifyounoticedtheNASDAQputinanalmostperfectdojionFriday.Theopenwas2643.35andtheclosewas2642.97.Thedifferencewas38cents,notevenenoughtobuyanewspaper.Soonewouldthinkthisisit.Thereadingsherearemixed.OntheNASDAQ,thedojicomeswithnoreadingsbutitdoescome450tradingdaysofftheMarch2009bottom.TheNDXdoescomewithreadingsasweareaveraging2.301pointsperdayonatradingdaybasisbacktoNovember08and1.597onacalendardaybasis.Thatdoesn’tmeanwehaveatop,itmeansachangeofdirectionisverylikely.GoingovermySaturdaychartsmyreadingsontheAussieDollarsuggestahighbuttherestofmyindicatorstheredon’tsuggestalongtermtop.ThesameistrueonmyGreenbackindicators.IseefurtherupsidefortheUSDollarbutI’mlookingatthisasmoreofatruncatedCwaveinabearmarketrally.Thelogicalconclusioniscorrectiveactivitytotheequitymarket.

Whileweareonthesubjectofequities,didyouseetheactivityinthebiotecharenalastweek?

OursubscribershavebeenprivytooneofthebetterplayssinceitsturnaroundDecember1,that’sAMGN.Buttheoverallindex,theBTKhasbeeninalongconsolidationandexplodedhigherlastweek.Itbasicallydiditsthingin2daysbutbiotechistheheartofthestockmarket.Itisthereasonpeoplegetinvolved.Thecasualinvestor/tradergetsinvolvedinbiotechbecausetheyarehopingtheir$5stockisgoingtodiscoverthecureforcancerandgetrich.Sowhenpeoplearespeculatinginbiotechstocksthemarketisgood.WhenyoumixtheeuphoriaofbiotechrollingwiththeChristmasseason,youseetheresults.Wehaveamarketthatwon’tquit.

ButIcan’tignorethedoji.AsfarasI’mconcernedtheyarecomingatatimewhenCopperischallengingsomeverylongtermresistancelevels.Arewetosayit’swedgedinnearahighwithnoplacetogo?

It’squitepossible.WhenanimportantcommoditylikeCopperchallengesgenerationalhighsitmighttakeweeksorevenmonthstoresolve.I’veshownyouthischartbefore,itstimetotakeinventoryofitagain.Themedianchannelshaveseveralimportantvalidations,mostimportantisthetopin2008andthequarterlinewhichendedupvalidatingatthebottomofthecommoditycrash.

Whatdoesthishavetodowiththestockmarket?

IthinkitsgoingtobereallyhardforCoppertobreakthroughrighthere.IfCoppercan’tgetthroughitmightmeanthatthewholecommodityreflationtradebusinessisgoingtotakeabreakinthefirstquarterofthenewyear.Thatcouldmeanarougherroadforstocks.Thatdoesn’tnecessarilymeanareversalbutitcouldmeanequitiestakeabreatherafteralongadvance.We’veseensomanybitsofevidencethatshowunderlyingstrengthformetocomehereandtellyouIthinkthereadingsI’mgettingmeantherallyisover.Forgoodnesssakes,evenifitturnshere,youcan’tputtoomuchstockinwhathappensoverthevolumechallengedholidayperiod.Butaswe’veseeninholidayseasonspast,wecouldtreadwateruntiltheNewYearandthenabsorbthehit.Overall,I’mneutralonthestockmarketrighthere.Ican’tgettoobearishduetoalloftheunderlyingstrengthandIcan’tgettoobullishduetowhatI’mseeingontheCopperchart.IfsomehowgoingforwardCoppermanagestobreakthrough,thecatisoutofthebag.Itsgoingtomeantheinflationbugisonlygoingtointensify.Buttraditionally,breakthroughssuchastheseonlymaterializeaftertestsandretests.

I’dtakethedojiintechnologyseriously,especiallybecausebiotechisnowextended.I’dlookforwildswingsoverthenext2weeksandatradingrangekindofmarketgoingforward.I’mlookingtoseehowCopperrespondstoresistance.That’sthekey.

IamscheduledtodotheFuturespaneldiscussionwithDanCollinsonPresidentsDayattheNewYorkTradersExpo.WearegoingtotalkaboutGannpriceandtimesquaring.IhaveaGannarticlecomingupintheFebruaryissueofthemagazinesowearehighlightinganddiscussingitinNewYork.Wearegoingtotalkpatternrecognitionandshowyouhowtogetadefiniteedgeonyourcompetition.ByusingGannpriceandtimesquaringonecangetadvancewarningofmovesbeforemostpeopleseethem.

Clickcharttoenlarge

 Theartofwarandthescienceoftrading 

Inmostpursuits,beiteducation,businessorsports,wearetaughtthathardworkisthekeytosuccess.Thisisnotalwayssointrading,atleastnotatfirst.Most—thisauthorincluded—experiencethisfirsthandwhentheylaunchatradingcareer.Tradingisdifferent.Effortoftenseemsinverselycorrelatedwithresultsifthateffortisnotspentonpreparation.

Indeed,tradingsuccessoftenappearstoexistindependentlyoflifeexperienceoutsidethemarkets.DespitegraduatingfromWestPoint,excellinginflightschool,survivingcombat,startingasuccessfulcompany,raising$50millioninventurecapitalandtakingitpublicasCEO,thisbeginnerhadhisbuttkickedbyhisfirsteffortsintrading.

Ultimately,itbecameobviousthattheproblemwasnottheswingtradingmethodology,perse,butthattheinitialapproachtomarketanalysiswasanunworkablefitforthetrader.Findingthisfitisperhapsthemostfundamentalingredienttolong-termsuccess.Thestrategyyouadoptcannotruncountertoyourtemperament,goals,experienceandrisk-tolerance.Inthesensethatcomingtothisrealizationpavedthewayforabetterunderstandingofwhatwouldwork,thefirstyear’s$20,000"tuition"waswellspent.

Thelessonslearnedincludethefollowing:

∙Tradingbecameajob:

Itwastediousreadingchartsforpristinesetups,monitoringopenpositionsandcontinuouslytweakingexitstrategies–reactingtothelatesttwistsandturnsofthemarkets.Whilesomethriveinthisenvironmentandrelishtheconstantanalysis,toothersitisexhausting.

∙Under-trading:

Withonlytwotofourtradespermonth,resultswerehighlydependentonsingletradesand,therefore,highlyvariablemonthtomonth.Thiscreatedfearanddefensivehabits,suchastakingprofitstoosoon.Withfewopportunitiestolearnfromactualtrades,learningalsowasimpacted.

∙Overnightriskisstressful:

Whiletheinvestorinyoumaybeabletosleepeasyholdinglong-termpositions,thetradersidecanberockedbythestressofholdingshort-termpositionsovernight.Theunknowncanbecrippling.

∙Tradingforwardisnotaseasyaslookingbackward:

Wecanlearnfromthepast,butwealsocan’tconfuselearningatechniquewithsuccessfullytradingwithit.Withsomeapproaches,youmustpredictthedirectionofthemarketstwice:

atentryandatexit.Somecandothis.Somecan’t.It’sanartthatsimplyescapesthoselackingacertaineyefordiscretionarychartanalysis.

Findingfocus

Approximately15monthsofintenseeffortwereinvestedinahistoricallyviableswingtradingstrategy,butitneverworked.Thetechniqueswerevalid,butwithlimitedtradingskillsandatechniquethatdidn’tfitwiththetrader’sprofile,successwouldhavetobefoundelsewhere.Thiswasabattleforlivelihood,happinessandfinancialsecurity,sostartingfromscratch,theancientclassic"TheArtofWar"bySunTzuwasdustedoff.Oneofthefirstlinesencounteredwas:

"Soitissaidthatifyouknowyourenemiesandknowyourself,

youcanwinahundredbattleswithoutasingleloss."

Moststrugglingtradersdon’tunderstandtheir"enemy"—themarketsinthiscase—buttheylikelyknowthemselves.Indeed,followingafailedattempt,atraderlikelyhasakeenunderstandingofhistradingstrengths（say,disciplineandmath）andlimitations（say,impatience,limitedexperienceandaninabilitytograsptheartofchartreading）.

Anotherkeyforsomenewtradersisastrategythattradesfrequentlyenoughtoofferconstantinputtoacceleratethelearningcurve.Othercriteriamaybenotwantingtotradealldayortoholdpositionsovernight.

ThisbringsustoanotherlinefromSunTzu:

"Victoriouswarriorswinfirstandthengotowar,whiledefeatedwarriors

gotowarfirstandthenseektowin."