Over the past year I've taken some time away from the markets to place more energy and focus on other goals and passions. As I entertained these endeavors I mostly ignored the market. When I did take a glance I started to make analogies. I continually asked if there was a trading lesson to be learned or if what I was studying could relate or enlighten me in some way about trading and how I traded.
When I returned to my market studies the most important things I realized was that I am much better off ignoring the market as much as possible. I didn't want to obsess over finding trading candidates on a daily basis. I didn't want to log into my platform every half hour to an hour to see what may have triggered or how much a trade moved in my favor or against. Another important realization was that my holding period was too short. I was never really giving my trades enough time to work out and choked off positions much too early. When I resumed actual trading I made a 20 trade commitment to a plan that addressed both of these realizations.
One of the first things I did was look at this as a problem solving exercise. I started to think about what tools I could use to achieve my objectives and then a process loop on implementation. The first thing I settled upon was avoiding daily chart analysis in preference of weekend analysis. I would run my scans searching for candidates and then whittle this down further to a hand full of higher conviction anticipation trades along with a secondary list of setups for break outs. Once I have these candidates I map out their entry/stop/size/targets using Google Spreadsheets.
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| Google Trade Sheet |
Once I have my candidates I then set alerts on my platform to be emailed . I have a Gmail account set up specifically for trade alerts that I have synced to my phone. These emails set out the parameters of the trade so I can either fire off one from my phone if I'm mobile or log into my platform.
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| Email Alerts |
Having done this for the past few months I've gleamed some insight, truth, and wisdom, along with a dose of reality and humbleness.
The most important awareness this process cemented with me is trading isn't Pokemon and I'm not going to catch them all. This may well seem obvious but looks can be deceiving. What I now had in front of me is concrete evidence in real time of triggered trades. With this data I could now ask myself questions at the end of the week. Was I in a trade from my overall watch list that performed the best? If not then why? Did I take all of the anticipation trades that triggered? Again, if not then why? The biggest benefit of this was demystifying the left of the chart.
Past studies of stocks can give the belief that they are catchable and that we as traders could have made the best of them and now will do so moving forward. While it's eye catching to see stocks move up 100% or more over a short period of time it's important to take caution of all that glitters. While these are absolutely worth investigating and filtering through one's methodology, they can also leave a false impression. By having time stamped data I now know which one's I entered and can know in real time if I missed a big mover because my capital was already tied up, or if I may not have been trading that week, or price may have run too fast too soon by the time I could hit send.
Come the end of the week I will walk through my overall watch list and take note of what stocks moved the most and what refinements I can make with this knowledge. I also go through those that triggered but failed and those that failed completely to maintain a balanced perspective as well as pertinent information about the overall health of the market.
Another awareness I came to was expectation. Two key pieces of information I keep track of are the number of stocks that hit 2-1 or 20% over my holding time frame. This assist me in managing my exit plan. This could be the difference between taking off my full position at 2-1, taking off half and riding the rest over my time stop or 20%, or gunning for a full 20%.
Are my stocks triggering? Monday morning 6:35 PST with four alerts pinging tells me a completely different story then Wednesday afternoon an hour before market close with one finally triggering. I may consider that worthy of a pass. It also informs me whether I might be willing to go full margin by the end of the day or take some break outs before the close.
This year my commitment to trading will be putting in the leg work on the weekends, ignoring news and noise, refining and filtering the process, and removing myself from the market as much as possible during the week.
