Articles from Jul 2010

If you are new to this site

 

If you are new to trading or to this site , you will at first feel lost. You will see strange language and terms being used.  You will have to jump couple of orbits to start understanding every thing. Which will take time, patience, and persistence.  

 

 

When I was a beginner and struggling trader I wrote to several well known traders and some Market Wizard asking them for help. I offered to wash dishes for them if they would offer me guidance. No one replied to my request and those who replied asked for tens of thousand dollar. So I learned things on my own.
 

The reason I run this site is I know how lost I was at beginning of my career, now having achieved some degree of success in this career, if I can help some beginner learn and help  him shorten his learning curve I would be giving back to the field. 

 

We were all beginners ...............


Most of the current members have been around for 2 or more years. 95% of the members renew their subscription. Any member who has put in effort and struggled through initial few weeks and months and once got it right has found success on their own. You can ask the members who have been around for year plus  and they will tell you that . All of us were beginner at some stage and had exactly the same problems like you are facing currently. 

When you are a beginner in any field or to a new setup or to a new method,  there is big cognitive load. Whenever we try or attempt doing something new where we do not have sufficient expertise , our short term memory gets loaded and we are unable to do the job fluently and efficiently. Repeated practice reduces such cognitive task. To master a setup you need to organize around it and practice it then the cognitive load decreases. 

In the beginning you will have many questions and if  you frame your question properly several members will answer it. They also had encountered same issues when they started out. 

You can not trade if you do not have software......

One of the first thing you need to have ,if you want to succeed in trading is right software and right broker. I would say first get the right software in place. You cannot learn trading unless you have a scanning software and also historical data. In learning stage you need to go through history and unless you have easy access to historical data you will not be able to learn much.

Your learning's will be very fast once you get a software, you will learn more in a month than you learned in a year. First get software and set it up properly. Once you do that  the discussion here or the ideas discussed here you will be able to see for yourself, they will not be some abstract discussion. You would be able to figure out whether they make sense or not.



Telechart Gold is my recommended software.........

When selecting a trading software look for something which is widely used by most traders. Often I come across new traders using some exotic software not routinely used by most traders. You are just complicating your learning phase by doing this. For a widely used software there are ton of resources to help you learn trading quickly. If you select some exotic niche software , good luck, you are on your own.

The most commonly used software amongst active traders are:
Telechart
Amibroker
esignal
Stockcharts
Trade Ideas
Trade Station
Bloomberg

Telechart is the most commonly used software by most traders. And it is the best starting point for most new traders. Once you outgrow Telechart then you can think of other things. Amibroker is second best choice. You need a bit of programming knowledge to use Amibroker. 

It will take you few weeks to months to become very good at using any software. That is typical learning curve. You can pray for miracles, but unfortunately that is the reality. So set your expectations accordingly. 

Within Telechart there are many options but I use Telechart Gold. 


First learn how to use software and broker........


Once you get Telechart go to Worden site and in the forums there are many videos explaining how to use the software. If you spend a week going through all the video on Worden site you will get very good grasp on how to use the software. Scans for every method I use have been discussed multiple times and every week I make a post with all the past posts related to the method. I will also be putting up videos of how to setup scans from time to time.

Once you set up your software the next important thing to look at is which broker to use. If you are planning to be a swing trader or a trader that is going to do at least 20 to 25 trades in a year, look at your choice of broker. The number one broker used by most active traders in Interactive Brokers. There is a reason for that. It is the cheapest and most reliable broker around if you are trading less than 1000 shares. 

Once you get broker take some time to learn how to place order, how to put a stop, how to close positions. How to access market data. How to use the brokers scanners. Most brokers have pretty good simulators which allow you to learn these things without risking actual dollars.

These two things, software and brokers are the first thing to get in place, if you want to trade profitably. 


It will take you 3 to 6 months or more to master the 2 methods......


Once you do that you will still have a learning curve of 3 to 6 month or more depending on amount of time at your disposal. Once you have the infrastructure in place, you need to understand how to use it properly. Most consistently profitable traders I know of had learning curve of 2-3 years before they became consistent. If you are expecting miracles then get a prayer mat. 

For each of the method traded here all the scans are done using Telechart. In some methods there are multiple steps. First a scan is done in Telechart then information is collected from other sites like Finviz, Moneycentral, IBD, or other sites.



Be aware of market situation......


You must also be aware of the market conditions when you decide to learn to trade. If you just decided to trade , your first to hundred objective should be to protect your capital. For active traders there are always opportunities in the market. Market is not going to run away from you. So if you are beginner you should first concentrate on setting things up. You can do lot of damage to your account if you start trading without ironing out all issues.


Only 3 methods are traded daily......


There are only 3 things traded here on daily basis:
Episodic Pivots
Top 25 breakouts
IPO

If you read last 3 months post you will see these methods have been discussed again and again and in next 3 months also they will be discussed again and again (skytrader would be activating the archives of old site later tonight). To me trading success is about mastering a setup. The more you trade and think about a specific setup like say the Top 25 breakouts, the more fluent you will become in trading them, you will start to understand the nuances of them. At some stage the setups would become part of you. If you master one setup you will find it easier to master other setups. 
 

If you methodically follow the direction and setup things and try and trade the method for 6 months or more you will yourself figure out whether this thing work or not. A site like this can hopefully reduce your learning curve. But the bulk of the work you need to do yourself. 

Ask questions.............


If you do not understand something ask questions on the site. Or you can email me at easyguru@gmail.com. Asking questions on the site is the best option , because most members here have been around for 2-3 years and know more about the methods traded here than I know. They will give you multiple perspective. This is a learning community and members stay on even after they mastered the setup and become consistently profitable, because they find something new to learn here.

Next week I will be conducting a Swing Trading Bootcamp. If you participate in it, you will further enhance your knowledge of swing trading and methods traded here. 

 

What builds self efficacy beliefs (SEB)?

 

Mastery Experience is the biggest source for enhancing self efficacy beliefs build up. Mastery experience is gained when you immerse yourself in a task or subject for sufficient period of time and with sufficient amount of intensity. The process results in you mastering the task or the subject. That enhances SEB.

The idea behind bootcamp is to enhance SEB. Learning is complete only if it results in learners self efficacy beliefs enhancement. If that happens there is a permanent change in behavior. A non participant cannot gain SEB by being just observer or reading the bootcamp records. It can not simulate the mastery experience.

That is the fundamental learning principle behind bootcamp kind of instruction methodologies. Participants are put through series of task which stretch their current knowledge or capabilities. In a army kind of setting the fear of punishment ensures participation and pushes the subjects to extreme limits of their capabilities which results in an intense mastery experience. Ask anyone who has been through the Marines bootcamp or any other special forces bootcamp. The experience is physical as well as emotional. It stays with the subjects forever in the process enhancing their SEB.

That is the principle behind the bootcamp exercise. That is the reason it will not be open to non participants and I will not make the logs of it available to non participants.

The other reason is once the logs are public , I can not do the same bootcamp again. Because next series of people already know the answers. That is why the second or third EP bootcamp did not work because participants could find answers easily without much effort.

 

Your process of SEB enhancement  is at its peak when you are a kid. Just observe small kids and you will see how they master task after task. This continuous learning process continuously enhances their SEB.

Some time back I was at my daughter's Taekwondo class sitting outside the glass enclosure watching the class along with other parents and small kids.

Amongst the kid sitting outside was a 2 to 3 year old kid. In the waiting area there is a large steel flip top dustbin. The kind that you press the peddle by leg and the lid opens. Someone threw something in the dustbin, the small kid was intently watching the process. After that he tried opening the lid. He could not do it.

I was sitting and closely watching the kid. For next one hour he made several attempts at opening the lid. He could not get it to open it, his mom kept telling him not to play with dustbin, but again and again he kept coming back.

Just to give him a hint I again opened the dustbin and threw some garbage in. He figured out that the pedal is the key to opening it. He tried moving the pedal by hand, it did not work. He tried standing on it but his weight was not sufficient. Finally after several attempts he jumped on it and it opened. He figured out how to do it. He smiled broadly. In next few minutes he perfected opening it by jumping on the pedal.

What happened in the process is that he mastered a task and gained confidence. Like this in a day a kid gains several mastery experience by trying new things. As a result his or her SEB continuously gets enhanced. If the kid is in right educational setup, this cycle continues.

As adult this process becomes a bit complicated. Our fear of losing our face stops us from attempting many tasks. Besides that once we acquire certain amount of security there is no need for continuous learning. So we settle in a inertia state. And keep orbiting in the same orbit.

If you want to kick your life in to next orbit you need to get out of that inertia and enhance your SEB. Which often as adult is not an easy task.

Besides that as adult we discover a wonderful thing that kills SEB.

TV.

 

 

Swing Trading Bootcamp August 3rd to August 6th 2010

Learn swing trading strategies for lifetime and become an independent trader. Learn how to find hot stocks on your own using Telechart. Learn to fish for swing trades on your own without waiting for alerts or hot tips.

This will be the most comprehensive bootcamp on swing trading exploring all options of swing trading in detail.

During the course of bootcamp the emphasis will be on building hands on swing trading skills.

Participants will develop at least 25 different swing trading strategies during the bootcamp.

Telechart Gold Subscription essential.

The Bootcamp will be conducted on this site and in format similar to original Episodic Pivots bootcamp.

For every bootcamp I go through all my books and notes and documents and prepare extensively to bring relevant, thought provoking, and original material. The quality of bootcamp depends on participants willingness to put in effort and learn actively.

So unless you are serious about learning about swing trading do not register. The content of the bootcamp will be visible only to the participants.

If you want to be part of this bootcamp await further announcement in next two days that will tell you how to register for the bootcamp on the site.

What are your choices in your 401K

 


401K investors have choice of  possible strategies when deciding which funds to invest in their 401K. Each of the choice has certain advantages and certain risks. Understanding the available choice and then selecting a approach which best suits your objective is the key. 

The strategic choices available can be broadly listed as follow:
  1. Target Date funds
  2. Lazy Portfolios
  3. Index funds based portfolio
  4. Popular mutual fund newsletter approach.
  5. William O'Neil mutual fund approach
  6. Your own custom developed approach.

Each of these approach is workable. But to make them work you need to understand the workings of each of the approaches. Each of these approach is based on certain key assumptions. The returns you will get is a function of how those assumptions work for a particular market situation or for your personal situation. Besides the key assumptions the actual execution of those key assumptions also matters.

In order to understand these strategic choices and to develop your own plan, you need to open the hood of each of these approach and look at their inner working. If you do that you will become a knowledgeable investor. 

Information to do this kind of analysis is freely available on the net. Lot of this information is available within your own plan document in many cases. But most people are searching for simple solutions without going through the learning process. So even if someone gives them simple solution they do not understand it or can make it work for them.

I will give you a simple example of this from the 401K bootcamp. I asked a very simple questions about Target Date Funds like what choices of Target Date funds do you have in your 401k, what is their asset allocation mix, what is their glide path. If you see only 1-2 people out of 111 people who attended bothered to find this information. This information is freely available in your own 401K. In fact govt has mandated since 2006 that Target Date Fund be the default option for 401K plans. All that was required was to login in your 401k account and find this information. 

If you do not understand how Target Date Funds work and what are the assumptions behind them you are not going to understand rest of the things and even the plan I use. 

The question you need to ask yourself is why it is so difficult to find this information if the importance of 401K investment is so critical to you. The answer to that question will determine your returns.

The answer  is three word s.....  e........... b..........

lesccohn Trading Plan Template

A comprehensive daily  trading plan template. File is attached for download. 

Schedule for upcoming Bootcamps

Bootcamp - Get ready to work

 

Bootcamp Schedule July - August

Swing Trading Bootcamp July 30th to August 1st 2010
Top 25 B/O Bootcamp August 6th to August 8th 2010
Episodic Pivots Bootcamp August 13th to August 14th 2010

 

Bootcamp requirements

Bootcamps based learning methods work only if there is active participation. So unless you have time and are willing to participate actively you should not sign up for these.

The best example of active participation was the Episodic Pivots Bootcamp. As a result of that active participation people learned something.

Consider that with the current 401k bootcamp, where most are spectators. As a result I have not used even 20% of the material I had prepared for that bootcamp.

Unless there is active participation in the first Swing Trading Bootcamp I will not conduct rest of the bootcamps. 
 

What is bootcamp?

From time to time members are invited to participate in bootcamps. These programs are designed to help members improve their understanding and expertise in a specific are. The number of participants is limited so that the instuction is more focused and customized.

Express yourself with an avatar

Gravatar for dcummiskey

 
An avatar is an image appears beside your name when you do things like comment on the blog or post a notice to the timeline. An avatar helps identify your contributions to this site. Read on to learn how you can change your avatar.
 

We use Gravatar which means your avatar or gravatar can follow you from site to site. Until you register for a gravatar the site will continue to display an identicon next to your username.

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Watch this video to get a quick overview 

 

 

If you have received this article by email, you can see it here.

 

401K Bootcamp July 22 to July 24

 

Starting Thursday I will be kicking off the 401k bootcamp for those interested. It will cover approaches to investing in long term account. And I will share how I developed my method for trading 401k. Details of how and where it will be conducted will be announced later tonight. It will be a 4 days bootcamp.

 

How to format your comments

This new site uses Markdown. It is 21st century syntax which converts plain text to HTML format.  It will take you few days to get used to it. But it is extremely simple to use.

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becomes

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this:

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and this:

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Ordered (numbered) lists use regular numbers, followed by periods, as list markers:

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*   A list item.
 
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You can learn more, by reading the excellent Markdown Syntax Guide at Daring Fireball.

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