October 29, 2014

Words of Wisdom

I thought I'd share some important words of wisdom from the professionals. These quotes help keep me focused, motivated, and determined to succeed. I hope you find them useful too.

Take care,

October 19, 2014

Trade Recap - IBIO

On Friday, I saw a tweet from @BlinkX90 regarding IBIO:
So I pulled up the daily chart and noticed IBIO had recently ran from about 70 cents to ~$2.70 in three days! Then it pulled back hard, then started a dead-cat bounce:

The daily chart told me shorts were (and probably still were) interested in this stock. Moreover, IB didn't have any shares to short IBIO--proof shorts were already pilled into IBIO. Therefore, I was long biased and the news that the US Government was warning makers of IBIO's Ebola drug ZMAPP to plan for production further supported a long bias.

I pulled up the intraday chart and noticed traders had already began reacting to the news and were bidding up the stock around 2:30 pm:

The Best Brokers for Traders

  1. Interactive Brokers
    • Cheap fees/commissions--$.005 per share--but requires $10k to open an account. 
    • Great for live trading practice using tiny position size (10 to 100 shares etc.) without risking a lot of capital. 
    • This is vital because the trader learning curve is steep and littered with drawdowns. Therefore, if you refuse to paper trade to learn, IB is a great choice for live trading to increase the amount of trading practice while keeping risk minimal/small.
    • Great borrows for shorting stocks.
  2. Think or Swim by TD Ameritrade
    • Pricey at $9.99 a trade.
    • Paper trade feature great for practicing. 
    • Excellent charting program used by many pros. Easy to customize platform with plenty of YouTube how-to videos.
    • OnDemand feature lets you simulate a trading day for any stock going back about 5 years. This feature is invaluable for developing traders.
  3. SpeedTrader Pro
    • Excellent commissions--$.0025 per share--but requires $25k to open an account.
    • Great for live trading practice using tiny position size (10 to 100 shares etc.) without risking a lot of capital. 
    • Incredible borrows for shorting stocks.
    • Software costs can get expensive, start at $49/month.

The Best Blog Posts for Traders

In no particular order:
  1. Why Most Traders Lose Money and Why the Market Requires It
  2. How Goal Setting Helps Performance
  3. Cultivating Self-Control by Enhancing Working Memory
  4. What Makes an Expert? Three Surprising Research Conclusions
  5. The Greatest Mistake Traders Make
  6. This Is Why We Can't Have Nice Things
  7. Why 90% of the Mental Game is Your Trading
  8. Self-Efficacy, Physical Exercise, and Goal Attainment
  9. How to Stop Comparing Yourself to Others (and Start Empowering Yourself)
  10. 11 Important Hedge Fund Terms To Know
  11. The Best Investments In 2014 (Investor flows)
  12. 94 Lessons On How To Trade Penny Stocks From The #1 Trader Out Of 60,000+
  13. How To Make $200,000 In One Day With Penny Stocks: A 3,000 Word Detailed Lesson
  14. Traders & Investors: YOU NEED THIS NOW (Pre-Promo)
  15. Technical Analysis Of Your Own Patterns
  16. Cramer's Twenty-five Rules for Investing
  17. The world’s greatest stock picker?
  18. 10 commandments for teachers everyone with a brain
  19. Mapping Investor Behavior
  20. Is Insider Selling A Concern? (No)
  21. 58 Cognitive Biases That Screw Up Everything We Do 
  22. How To Properly Short Technically
  23. Position Sizing™ Strategies
  24. Steve Jobs Was an Awesome Flip-Flopper, Says Tim Cook 
  25. An Interview With Dr. Daniel Kahneman
  26. 6 Things I Learned From the Book "Thinking Fast and Slow"
  27. Guest blog: decisions for success
  28. Determinants of Portfolio Performance

The Best Books for Traders

The Best Videos for Traders

The best trading related videos:
  1. Improving Trader Performance
  2. Al Brooks - Best Price Action
  3. Al Brooks - Trading Channels
  4. Position Sizing Strategies. Control Your Risk When Trading
  5. Trading Mistakes
  6. Trading Coach Shares Views on Three Common Problems for Traders
The best process improvement videos:
  1. How to Live Before You Die
  2. The Key to Success? Grit.
  3. The surprising science of willpower
  4. How smart can we get? (Journaling emotions around 41:00)
  5. On Being Wrong
  6. How to Make Stress Your Friend
  7. Forget big change, start with a tiny habit
  8. The Psychology of Human Misjudgment
  9. How Great Leaders Inspire Action
  10. Why Leaders Eat Last
  11. Five Tips for Graduates
  12. Your Body Language Shapes Who You Are
  13. THUNK - 41. How Emotions Make You *More* Rational
  14. Hans Rosling and Ola Rosling: How not to be ignorant about the world
The best scientific explanations of human/trading behavior videos:
  1. The Human Brain Documentary
  2. Limbic System
  3. Autonomic Nervous System (ANS) and Physiologic Markers of Emotion
  4. Endocrine Gland Hormone Review

The Best Blogs for Traders

The Best Traders to Follow on Twitter

  In no particular order:

Traderstewie - @traderstewie
Brian Shannon - @alphatrends
Modern Rock - @modern_rock and @mrockrulez
Scott Redler - @RedDogT3
Urban Carmel - @ukarlewitz
Irrelevant Investor - @michaelbatnick
Jack Damn - @JackDamn
Steven Spencer - @sspencer_smb
Peter Brandt - @PeterLBrandt
Helene Meisler - @hmeisler
Tim Parker - @autumnalcity87
Brett Steenbarger - @steenbab
The Daytrade™ - @d4ytrad3
Dan Zanger - @danzanger
Sunrise Trader - @SunriseTrader
Greg - @lx21
Chris Carey - @sharesleuth
Lakai - @_lakai_
Phil Goedeker - @OzarkTrades
Nikkorico - @Nikkorico_
DK1 - @canuck2usa
Tim Grittani - @kroyrunner89
Brandon Garretson - @crawfish_poboy
Eric Wood - @elkwood66
Al Brooks - @AlBrooksPA
Veritas - @VeritasGreen
Mile High Trader - @Mile_HighTrades
Notable Calls - @thenotablecalls
Shane Blackmon - @shaneblackmon
Blink - @BlinkX90
Marc Lehman - @markflowchatter
Adamn Feuerstein - @adamfeuerstein
TradeHawk - @TradeHawk
MuddyWatersResearch - @muddywatersre
Citron Research - @CitronResearch
Fraud Research - @FraudResearch

  These guys and gals are great to follow. Should I add anyone?


The Best Trading Gurus

The Best Trading Gurus
  1. Lakai - www.tradeitdontdateit.com (@_lakai_ on Twitter)
    • The best futures trader I follow.
    • The best price action trader I follow.
    • Cuts out all the BS indicators and focuses on pure support and resistance to make loads of dough in the markets.
  2. Al Brooks - www.brookspriceaction.com (@AlBrooksPA on Twitter)
    • Exceptional trader with almost 30 years of experience trading several markets. 
    • Al cuts out all the BS technical indicators and fundamentals and focuses on pure price action. After all, HFT algorithms control the markets these days and they trade mathematically, which leaves discernible patterns in the price action.
    • Check out his books, chat room, and YouTube channel.
  3. Dan Zanger - www.chartpattern.com (@DanZanger on Twitter)
    • Dan is the world record holder for the largest percent change for a personal portfolio for a 12-month period of time and an 18-month period of time in the history of the stock market.
    • Specializes in swing trading strategies that people with even full-time jobs could significantly benefit from.
  4. Brian Shannon - www.alphatrends.net/blog (@alphatrends on Twitter)
    • Amazing trader with over 20 years of experience trading the markets.
    • Check out his blog and his YouTube channel for exceptional videos on several topics, with an emphasis on technical analysis, entries/exits, and position sizing.
  5. Trader Stewie - http://artoftrading.net (@traderstewie on Twitter)
    • Excellent swing and day trader with over 15 years of experience.
    • Has numerous great videos and articles on his website and his YouTube channel.
OTC and Momentum Stock Specialists
  1. Investors Live - profit.ly/guru/investorsunderground (@InvestorsLive on Twitter)
    • Truly exceptional day trader with several strategies long and short, big boards and OTCs.
    • Video lessons go into great detail about his trades throughout the day.
    • Webinars recap important trading principles and trends in his own trading performance--good and bad.
    • Nate emphasizes helping his students and encourages everyone to ask a lot of questions.
  2. Tim Grittani - http://tradetheticker.blogspot.com (@kroyrunner89 on Twitter)
    • Tim's OTC level II videos are unparalleled in their helpfulness.
    • Tim isn't a guru with students per se, but he is an amazing trader that shares his trading journey with occasional trade recaps that are really helpful.
    • Tim has a phenomenal FAQ as well as a very thorough post on brokers.

October 12, 2014

Trade Recap - APT

Here was the daily chart for APT on Oct. 9th:

In the last two months alone, APT had gone from about $2 to $5! Very impressive price appreciation there. So this popped up on my FinViz scan and compelled me to pull up the intraday chart. I was short biased because the stock had been on a tear and the odds were in favor of at least a short-term pullback. I drew trendlines and decided to wait for the stock to tell me to short--i.e., break an up-trendline and subsequent lower highs or a double top.

I got my chance fairly quickly at ~$4.60, but I hesitated. Instead, I shorted after the major up-trendline failed and began acting as a top at ~$4.45. I set my stop at previous resistance and set two price targets (one short term and one long term).

October 10, 2014

Trade Recap - LAKE

Here was the daily chart for LAKE on Oct. 2nd:

So I pulled up this daily chart after seeing my twitter traffic as well as having watching this stock the day before on its first massive volume day. LAKE was overextended and trading in the red all day so I was short biased because the first red day can be deathly for an overextended stock, but I also wanted to wait to short until it broke any major up-trendline.

So I pulled up the intraday chart, drew my trendlines, and waited for the best opportunity to strike. I got my chances within minutes of getting home from work--around 2:45 pm. I shorted after the up-trendline was broken AND after the first bounce/retest of that trendline at $8.64. I also felt conviction because TKMR started pulling too. I set my stop at -18 cents and two price targets: +42 cents and +62 cents:

So LAKE acted as predicted and began to fade. I got a really nice washout at $8.50 and $8.40, but my first price target at $8.22 wasn't hit. I started to second guess my price targets because I had just witnessed two solid washouts--and one at a key inflection point ($8.50). There was some decent volume that came in too, but nothing too outstanding. However, my emotions began to take over.

October 6, 2014

Trade Recap - GPRO

If you haven't heard about GPRO, you've probably been living under a rock lately lol. GPRO has been on a complete tear since its IPO back in June. Here is a daily chart from Sept. 25th:

So this puppy had gone from ~$30 to ~$80--almost a triple in just a few months! I wasn't trying to short this at any point until I saw the parabolic move from $65 to $80--most likely a result of over-zealous/uncompromising shorts.

On the 25th, GPRO had a shake out over/under $80, and I thought I would enter short here after most of the shorts were panicked out, and no sane investor would buy at these levels--or would they? I thought it unlikely.

I shorted a tiny 10 shares in the afternoon at $80.50 after it broke its uptrend line. I told myself to use tiny shares and a wide stop because I "knew" this stock would have to correct/retrace, so I would add in more shares short if it moved higher. I set my stop at an asinine level, $92.10:

October 4, 2014

How To Overcome the Most Stressful Trading Situations

As a newb trader analyzing his past trades, I've noticed that I struggle with sticking to my trading plans/rules and overcoming stressful trading situations. I realize that I'm not alone with this problem, and so I decided to do some research that might help me and other traders identify ways to improve upon these weaknesses. This post is about what I've discovered.

First, I wanted to turn to professionals for insights on overcoming these problems. This is where I discovered what the Navy SEALs do to overcome stressful situations:

“Information from our senses [visual, auditory, etc.] reach the amygdala almost twice as fast as the frontal lobes."

The amygdala is the main culprit for our fight or flight response and the frontal lobes are responsible for rational thought and problem solving.

"The speed of the different brain signals means that, unless we instinctively know how to react to a potential threat, we may freeze in fear waiting for the frontal lobes to catch up to figure out the right response."

The key point here is "instinctive" reactions to a potential threat. How does one create and develop specific instinctive reactions to a potential threat? The answer: research, practice, and execution.

Before we talk about creating our instinctive reactions, let’s first figure out how the best of the best are doing it--the U.S. Navy SEALs--and see if we can learn from their best practices:

October 2, 2014

Trade Recap - LAKE

Here is a daily chart of LAKE on Oct. 1st.

As you can see, this puppy was up big time and on serious volume. Apparently this company makes HAZMAT suits--and with Ebola being diagnosed in the US--the market felt this company may benefit because there is no tested vaccine and the one that supposedly works has run out. Anyway, I could care less; I'm a technical trader.

So I pulled up the intraday chart after coming home from work and noticed LAKE started a small re-tracement towards its uptrend line.

October 1, 2014

Trade Recap - RADA

Here was the daily chart for RADA on September 29th:

RADA had huge range and volume that day and this was the first decent green candle after a huge sell-off from the $6s. This is one of my preferred setups on a daily chart--a beat chart (check out my trading rules here). So I pulled up the intraday chart and noticed RADA had been selling off since its failure to break above $4 around noon.

Here was my thought process: