Trading Tools

Better Trading: Know the stock. Know it’s peers.

Excellent example today as to why it’s important to stay on top of related peers when live news drops.

AirTrunk IPO delay news hit Bloomie at 3.06pm…the really switched on players knew (or quickly found out) that SKS was in line for the engineering work. Given the debacle with Firmus and carnage to MGH there was only one way this was going to go. SKS started dumping on volume pretty well instantly. It had another $1.36 move in it by close.

SKS 1 min

SXE, one of the obvious peers (and one that had been performing pretty well intraday on broker target increases), didn’t hit new lows until 3.13pm. It dumped over 50c.

SXE 1 min

What else? The larger the carnage the bigger the net. TEA got attention. More diversified but by that stage punters wanted blood. New lows there at 3.18pm. 50c more in that by close.

TEA 1 min

GNP next. Even less closely related but definitely in the basket. Breaks significant intraday support at 3.25pm. It dumped another 40c.

GNP 1 min

Moral of the story?

1. Know your stocks…they are your tools

2. Don’t give up on a live news trade idea because you think you’ve missed your ideal entry.

3. Speed is key.

Other traders are working through the same process….beat them.

Are you using the right tool for the job?

Choppy markets can be a pain in the arse to trade.

For me this has manifested in several different ways. Setups not following through. Breakouts failing. Random intraday spikes and dumps stopping me out.

It can definitely lead you to start changing the way you trade. Sometimes you need to.

Sometimes you just have to identify that your current tools are the wrong ones for the job. The setup that your past results proved has a valid edge may still have that edge — just not in the current market.

It might not be a case of throwing it out, but just parking it for a while until the right conditions return.

It’s why one-trick ponies rarely last very long in this game. When conditions deteriorate they have nothing else to go to…and they are rarely aware (or patient) enough to stop trading.

It’s SO important throughout your trading career to keep building a solid toolbox of trade setups that work in different conditions.

You also need the awareness to know when to change those tools. Or when to walk away.

I don’t believe either option comes naturally to a trader.

Happy Trading

Alan
Traders Edge
Trade Independently. Grow Together
www.tradersedge.com.au

A useful tool to help eradicate your trading demons

You’ve followed all the apparent big hitters on Twitter.

You’ve watched countless hours of Youtube videos on trading.

You’ve bought, borrowed or stole every trading book you could get your hands on.

You’ve opened your first trading account and followed all the steps you’ve decided were the keys to success.

You’ve taken all the best signals.

…. and you’re still losing.

Finding your edge takes hard work, perseverance and often luck. But often what is holding you back is not the trades you’re taking, but an internal road block that is causing you to make recurring errors. You could dive deep into your own psychological DNA to find the root cause, but I think a better way to approach this “witch hunt” is to track them down in your actual trading results.

Tom Dante’s (@Trader_Dante) Demon Finder spreadsheet is a fantastic template to help you identify if you have an aspect of your trading that is consistently damaging your trading results. There have been several versions of this over the years but below is one of the originals:

Add or remove potential Demons according to your own personal experience and be vigilant and honest about checking a box EVERY time you make an error.

Once it becomes obvious where your most dangerous demon is lurking, then do everything you can to take this out of your game. Once you feel you’ve achieved this, then move onto the next. (Suggestions on how to correct these errors is one of the subjects often touched upon in our subscription community live chats)

This “slay your demons” concept is not unlike the inchworm process that Jared Tendler (@jaredtendler) covers in his excellent book, The Mental Game of Trading. Well worth a read in my opinion.

20 plus years on and I still use a version of this process, but mine is pretty simple now. Tacked to one one of my monitors is a piece of paper that simply reads “Don’t be shit Alan!”.

Once you’ve learnt how to trade, for me, everything else ever written can be summarised in those 4 words.

Many Aus stocks have overseas listings/ADRs. Do you know how they performed overnight?

Many newer traders are unaware that the potential daily price movement on many Australian stocks could be influenced by their performance on an overseeas market.

BNY Mellon has a fantastic resource to keep track of those overnight moves. To access just follow this link:
https://www.adrbnymellon.com/directory/dr-directory

My first video blog: The perfect day trade – BTA 16 Sept 2010

I mentioned the BTA dump and bounce today on Twitter. “Gimme” trades like this don’t come along every day, so I thought I’d produce a video replaying the trade as it panned out.

I actually had an alert trigger in Web Iress just as I was about to buy, and the few seconds that it took to close this and click back on my buy order was enough for me to miss this trade. There were more than a few choice words heard in the office after that…luckily my son wasn’t at home, or the swear jar would have had a nice little bonus!

It’s my first video attempt, and the volume is a tad low, but hopefully you’ll be able to hear it OK. I’d suggest viewing in “full screen” mode.

I intend to produce more videos in the future. If there is anything in particular you’d like to see let me know, and I’ll see what I can do.

Alan

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