Ask a Technical Analyst

[thehun69]

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What timeframes do you trade in? Do you daytrade or take a longer term perspective and if longer how long? Do you use and/or believe in blackbox systems or systems of any kind?

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I tried daytrading once....once.. in fact I worked at a daytrading firm for about a week to figure out that it wasn't for me. Why grind and go nuts for pennies at a time, when you can make your life easier and pick up the dollars with less stress? Making 200 trades a day isn't fun, and especially with the Nasdaq stocks, there is TA involved, but that game, to be really successful is about learning the market maker and playing against him. People don't realize that it is humans you are playing against, and like poker they have tendencies. So, essentially you have to learn the MM, learn how to fade his tricks, and get in his head because the same patterns do come up in many places. I just hated that pace.

For me, I swing trade. That means 1 week is a long term. I like to be in and out within 3-4 days, nice and quick and then move on to the next idea. I can get a good feel with how things will play out in the near future, so holding on for even a week or so, I don't mind, but a month from now, two months, I have no idea what will happen.

I do think black box systems can work and show good returns. The problem with most systems is that the designer will get too carried away and inserts 5000 parameters and this was all done to optimize the results based on the history. I think that a simple system, even the breakout system talked about earlier can be very effective. That being said, I do not use black box systems, because my analysis needs to be seen with my eyes and the context has to be understood. The Doji example I gave earlier is a good example of what I am talking about. A Doji by itself is meaningless, but looking at that chart, seeing where the Doji was (especially as it formed right near the resistance level of $46 bucks), and using Stochastics, leads me to the short. I don't know how that could be programmed into a computer. To me, TA is science, but a lot of art as well, but that comes from experience and a significant amount of screen time.

THE HUN.

[CruNKinTILT]

1. I've heard people say that P/E is a technical indicator. I personally don't, but what do you think about this?

2. Do you trade options/futures and if so, what percentage of your total holdings would be comprised of options/futures?

3. Where do most of your ideas come from? Reading specific sites/newspapers? Random browsing? Or do you have specific companies/sectors that you always keep an eye on?

[thehun69]

[ QUOTE ]
1. I've heard people say that P/E is a technical indicator. I personally don't, but what do you think about this?

2. Do you trade options/futures and if so, what percentage of your total holdings would be comprised of options/futures?

3. Where do most of your ideas come from? Reading specific sites/newspapers? Random browsing? Or do you have specific companies/sectors that you always keep an eye on?

[/ QUOTE ]

1. PE is a fundamental indicator.

2. My holdings are all in stocks, at the moment. I am slowly getting into options trading as far as volatility trading, but that's ona one off basis. My ideas, do work well with options, and I have done so in the past, but lately, as in the past couple of years, I just wanted to get back to the nuts and bolts of what I do, and get back to stocks only.

3. Typcially, I do have "watch lists" because I've been trading the same stocks over and over and over again, and that is something that I would suggest to anyone that wants to trade to start getting into. Start with 5-10 stocks, any stocks. When I started, I watched the usual suspects of MSFT, CSSCO, INTC, KLAC (I started getting into trading during the techboom). All I did was learn those stocks, learn the patterns and found how the candlesticks, really fit in well in what I was seeing. That way, when I saw INTC get to a certain price and struggle with it, I knew that was a resistence point, and I was ready, so that if it crumbled the next day, my short order was in, and if it broke through, that means it will climb a lot higher and my buy order was in. Since then, my list has broadened tremendously, and I usually trade off that list. Now, from time to time, I will see what is active off of the scan list at www.clearstation.com or at www.stockcharts.com and get some ideas from there as well. But primarily I trade off my list because I know their habits and formations.

THE HUN.

[pig4bill]

[ QUOTE ]
I tried daytrading once....once.. in fact I worked at a daytrading firm for about a week to figure out that it wasn't for me. Why grind and go nuts for pennies at a time, when you can make your life easier and pick up the dollars with less stress? Making 200 trades a day isn't fun, and especially with the Nasdaq stocks, there is TA involved, but that game, to be really successful is about learning the market maker and playing against him. People don't realize that it is humans you are playing against, and like poker they have tendencies. So, essentially you have to learn the MM, learn how to fade his tricks, and get in his head because the same patterns do come up in many places. I just hated that pace.

[/ QUOTE ]

Nah, daytrading may have been like that 7 or 8 years ago, but not any more. You do 1000 shares a trade, 6 a day, win 4, lose 2, net 25 cents per trade for $500 a day. You don't try to beat the spread, which is impossible anyway with 1 and 2 cent spreads. You play the moves, just like swing trading except smaller.

Another good site for free static charts is bigcharts.com. A great magazine for beginner and expert alike is Technical Analysis of Stocks & Commodities. There are always a couple free systems included, with source code for Tradestation and sometimes Metastock.