Lessons

1. If VIX is under 26, buy the dip. If VIX is over 26, sell the rip.

2. Always trade in the direction of the larger trend. Find the strongest trend in your time period.

3. Nothing as bearish as a failed breakout. Nothing as bullish as a failed break down.

4. Don't worry about the last dollar. Take your money and go to the beach!

5. No more than four positions at a time. Preferably 2-4. Scope out others. Pick the strongest.

6. Buy the strongest; sell (short) the weakest.

7. Nothing is guaranteed. Nothing.

Friday, October 30, 2009

Trading - LT and ST Timeframes

I would like to have two accounts or at least two time frames: the LT/ MT (2-4 months) and the ST. The ST can be high leverage trades which I can watch carefully. The LT/MT can be 3X leveraged ETFs. For instance, at 1090, where because of fundamental and technical reasons, I was expecting a selloff. it would be fine to buy FAZ or TWM or something similar.

But to play the e-minis, I would have to be around my screen and watching.

Sunday, October 25, 2009

Setups and Economic Calendar - George Rahal

"Nothing epitomizes the novice mentality like the phrase "set-up." If your trading strategy is to wait for set-ups to emerge and to act upon, I believe you are bound to fail. Technicals, indicators, methodologies, set-ups, etc are all secondary. There is no holy grail-- the search for it frames the mentality that traps many novices. You primarily need an understanding of what the market's condition is, and have the technicals aid you. There are some important indicators that give you a picture of the market's condition, but they are also just aids, and subject to interpretation.

My best advice is to
follow the market. Watch the market everyday. Also, know the economic calender, and read the detailed reports of their releases. That was the only advice my father gave me years ago.

Following the market is how you develop a feel for it-- what others call an edge. I think this edge can, in part, be learned. If you ignore the market as a whole and wait for technical patterns you studied to emerge, you will not develop a feel for it. I also believe that following others too closely can impede the internalization of your understanding of the market. One you have your own footing, feel free to assess others' opinions."

Conclusions:
1. This was and is my strategy -- waiting for the technical set up -- for the past few months. "There is no holy grail; you primarily need an understanding of what the market's condition is, and have the technicals aid you."

2. This was NOT my strategy for my most successful trading -- I did NOT rely on technicals. I just tried to understand the market.

3. Over the past few months, I was looking for certitude from Joe, Tim Night, Futia... I was looking for a helper. Not relying on my own work. My work meaning my understanding. Look at the post below; look at the prediction in bold. back in July, I had predicted 1000 by September. I bolded it then -- NOT now.

4. Other traders will always be wrong. Read Yahoo, read the Econ reports, understand the fundamentals of the economy.