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Tim - just to say that you deserve considerable congrats for that post. You
really got the message across quite beautifully. The mixture of art and
science also came across very well and you really told the story of the day
trader...
Congratulations and thank you
Bill Eykyn
t-bondtrader@xxxxxxxxxxxx
www.t-bondtrader.com
"Learn to read the tape"
----- Original Message -----
From: "Timothy Morge" <tmorge@xxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Thursday, October 26, 2000 3:32 PM
Subject: Re: [RT] How Valid is Taylor's 3-Day Cycle Theory and...
> Brian:
>
> In markets like the past two days, I find that to trade and make money, I
> have to be more persistent than in more subdued or 'normal' market. These
> are very volatile markets and constant tug of war going on in the index
> markets can stop you out of your position right at the top or at the
bottom.
>
> When I was an institutional trader in the early 1980's, I was an assistant
> to a senior trader and she constantly reminded me that good traders often
> buy the top and sell the bottom--It's what you do after that that
determines
> the outcome of the day. On day's like yesterday, you need to be
persistant.
> Don't violate your trading rules, but you may often have to jump right
back
> in after getting stopped out without much 'down time.' If you can't be
> persistant [because either your capital won't allow it or because your
> methods do not allow it] either stop for the day after being whipsawed out
> once or play smaller and try to be more persistant.
>
> Here's an example:
>
> I was short several units coming into Tuesday's market. I had stops in at
> 1427.75. I was stopped out at my price [not very far at all from the high
of
> the day. After getting my fill on my stops, I watched the market trade
> listlessly around the 1425 area and when price didn't immediately begin
> marching over 1428 again, I sold again, and put stops above the market. I
> rode these shorts through most of the day. I snugged my stops down to
> 1413.50 at one point, but while I was watching the last 30 minutes of
> trading, it seemed obvious to me that the S&P pit would try the same short
> squeeze near the close that it had used so effectively on Monday's close.
I
> cancelled my stops and watched price run from the lows of the day right up
> to my stop area of 1413 and change...and then turn down hard after the
cash
> close, finally closing at 1403 [what a whipsaw ride! Imagine how many
> traders whipsawed themselves out of their position on this wild ride!]. I
> had a partial profit order resting in the market at 1391.75...
>
> When I walked into my trading room on Wednesday morning, I was filled on
my
> partial profit order at 1391.75. I refreshed my analysis and thought we
> would see a very aggressive sell off and test what I considered to be
three
> important support areas: 1389, 1376 1/2 and eventually 1364. I was now
only
> short one unit, so I wanted to 'reload' to a full three units. I re-sold
my
> second unit [which I had taken profit on at 1391.75] at 1393. I then
worked
> an order to sell a third unit at 1398 and I initially put a stop on the
> lowest add at 1400.75, thinking that if price filled the gap, we might run
> into the low 1400's and perhaps as high as 1405 [outside chance of running
> to 1409, which seemed to be what I call an acceleration level] and I did
not
> want to be fully short above 1400.
>
> After running down to 1385, the market screamed out of the hole and I soon
> sold my third unit at 1398. And my 1393 add was soon stopped out at
1400.75.
> I had an additional stop in at 1406 for the second unit, which did not get
> hit. It quickly became apparent that price was not acclerating to the
upside
> above 1400, so I sold my third unit again at 1399.50. Price never really
> tested the upside again and I was filled on my first profit order at 1382
> and my second at 1377.
>
> The point I am trying to make is that often, the areas a trader identifies
> for stops turns out to be a critical area--so critical, in fact, that we
> often do not give the market enough room to test and fail at that area.
You
> can address this two ways: Either try using wider stops [if you can afford
> this...if you can't, make certain you are not over leveraging your
trading]
> OR keep using the same stops but be agressive in re-entering the markets
> when you feel certain the market has tested the area you thought was
> critical and then returns to the direction of the trend, indicating a
> 'successful' test.
>
> I hope this is clear. And helpful in these frantic markets. I can't stress
> enough that it pays to be underleveraged in these conditions, because you
> often have to take a few losses to find the fast lane to your profit
levels.
>
> Best,
>
> Tim Morge
>
> Brian Keith Voiles wrote:
>
> > How valid is Taylor's 3-Day Cycle Theory and how can I tell
> > what day the market is at in the cycle: Long, Sell, or Short Sell?
> >
> > My S&P method has been doing well... but today I beat myself
> > up and lost $1250. ("I beat myself up" means I'm taking
> > responsibility for my loss, and not blaming it on external conditions)
> > yet I'm looking for any advise on how to confirm a breakout is
> > occurring. Today my trades were whip-sawed all over the place.
> >
> > Thanks to all -- I appreciate all the valuable contributions to this
> > list and how they've helped me achieve some success.
> >
> > Warmly,
> > Brian Keith Voiles
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxx
>
>
>
> To unsubscribe from this group, send an email to:
> realtraders-unsubscribe@xxxxxxxxxxx
>
>
>
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