my journal 2

This is a discussion on my journal 2 within the Trading Journals forums, part of the Reception category; Originally Posted by travis You're not the first one to disagree with me on this one, and what you mention ...

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Old Jan 31, 2010, 3:56pm   #131
 
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re: my journal 2

Quote:
Originally Posted by travis View Post
You're not the first one to disagree with me on this one, and what you mention about the Dow is a good point. However, the general understanding, also implied by the expression "buy & hold" (why doesn't anyone talk about "sell & hold"?), is that stocks go up more than down, and since I am totally positive that stocks (in the long run) go up more than down (I see it whichever way I look), I will not do any research on this subject. Since you disagree, please produce the evidence to the contrary. You should have that evidence, if you disagree.

Of course I am taking for granted that you and those disagreeing with me won't tell me things such as "oh, but look at this stock: it fell for 10 straight years" or "look at the period from 2000 to 2003 and how all the stocks fell"... obviously I am talking in general and in the long term. Even if you were to believe that stocks go up and down equally, inflation alone would make them go up more than down.
Travis. Your reply is interesting indeed. You have a belief and when asked what is behind that, you tell me I should prove you wrong. I am not sure why I should do that when all I asked was why you thought stocks went up. I can only presume you have no answer.

I actually agree that a long only strategy is OK - but for different reasons.

The average IPO lasts 8 years before the company goes under. Whilst I would agree that many IPOs go up, the average one ends up worth zero. Most are worth less than their IPO price after 12 months. 'Going public' is a huge interest free lump of cash that many companies abuse. For instance in the way of huge CEO payoffs.

I would certainly agree that the indices generally go up but I am not convinced this is because the same companies are going up in value or that the survivors are. There is obviously a difference.
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Old Jan 31, 2010, 4:06pm   #132
 
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re: my journal 2

travis started this thread Thanks for the valuable information in your posts. Your explanation makes a lot of sense.

Last edited by travis; Jan 31, 2010 at 4:18pm.
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Old Jan 31, 2010, 4:16pm   #133
 
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re: my journal 2

You know what Travis - I really have a hard time going short. I am not sure why this is but I just can't seem to do as well as I can on the long side. That's on both swing/long term trading and very short term trading.

I don't think there's anything wrong with that at all. I think downswings are a bit more vicious (people need to sell, people don't need to buy). I tend to pass them by as there are plenty of other opportunities around.

You are not ignorant by any means. We take certain things for granted based on what we are fed by the mass media. There are many things I have been fed this way that I haven't ever questioned. The 'stocks rise' story is something that I did take to task. The jury is still out.
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Old Jan 31, 2010, 4:24pm   #134
 
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re: my journal 2

travis started this thread I don't have a problem with going short on the currencies, because I know they go up and down equally. Other than this, only going LONG has many advantages, besides that the indexes and their stocks go up more than down. For example, if you are short on stocks there's all those problems with overnight margin. At any rate, I trade futures, so all my (ignorant) talking about stocks is only because I am trading them on the chart game.
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Old Jan 31, 2010, 6:43pm   #135
 
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re: my journal 2

travis started this thread Didn't use the stoploss on a couple of trades, and paid that mistake dearly.

snap2.jpg
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Old Jan 31, 2010, 7:28pm   #136
 
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playing till I double, over and over again

travis started this thread Getting good... or rather: getting used to having an edge.

This time I even played a couple of short trades.

Trades allowed: all directions, but doing mostly LONG.
All trades according to support/resistance (both bounces and breakouts).

Getting through the problem of accepting a loss: I kept on trading even after I got a loss. Maximum loss allowed: 10% (I close the position as soon as the loss exceeds that).

snap1.jpg

I played till I doubled, regardless of number of stocks played. I will do so in the future as well: doubling up and then quitting the game for a while.
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Old Jan 31, 2010, 9:17pm   #137
 
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re: my journal 2

travis started this thread Here's what i'll do next. I'll double the 10k in the four different ways:

1. long above resistance - WEAK
2. long above support - STRONGEST
3. short below resistance - PRETTY GOOD
4. short below support - WEAKEST

Wherever i'll be weaker, i'll practice more. I marked above my areas of weakness. I am better at playing bounces than breakouts.
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Old Feb 1, 2010, 5:02pm   #138
 
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re: my journal 2

travis started this thread 4. BELOW SUPPORT

I started from the type of trading which i find hardest: breakouts below support. Not really because it's the hardest, but rather because such situations are quite rare (at least with the stocks I am being offered by the chart game) and it's very hard to play 10 stocks and only find one such opportunity. So it is hard mostly in the sense that it's boring. Another way that it's hard is the great amount of false breakouts, which do not happen as frequently on the (reverse) LONG side (breakouts above resistance).

Played many stocks: it's extremely rare. If you are happy with intermediate support, it happens more frequently but it's more risky, as you get even more false breakouts. No wonder it was working so well by just going LONG. The short side opportunities are much more rare. Maybe not because stocks in general go up more than down, as a reader pointed out, but merely because the stocks which are part of the indexes indeed go up more than down. Whichever way we look at it, it's not convenient to go SHORT on the stocks offered by the chart game, which are probably all part of the indexes.

Next I will try to trade stocks that bounce against resistance, which is also a short trade but not as hard.
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Old Feb 1, 2010, 5:47pm   #139
 
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re: my journal 2

travis started this thread 3. short below resistance

It went pretty well, and it reminded me how I can make twice as much as with LONG trades. You can double your capital in half as many trades. I've come across a few of those stocks that a reader was talking about, those that go up to 100 and then come back to below 10 or where they started from. I see his point better, even with these stocks that are within the SP 500 (I think). On the other hand they still rise slightly more than they fall (maybe because they're in the index).

snap1.jpg

In my next 10k to 20k trade series, I will only play the LONG moves above resistance. Eventually I'll still have to go back to the "short below support" series to see if I can learn to double capital even in that direction.
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Old Feb 1, 2010, 6:40pm   #140
 
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re: my journal 2

travis started this thread I tried to focus on breakout trades above resistance but they don't happen often either.

Basically I find it easier to double up on bounces: above support or below resistance, but I find it much harder to wait for breakouts (hardest ones those below support).

I would say that in every chart I get a chance to find bounces on s/r, but it's much harder to find breakouts (if we're talking about major s/r levels).

It was a good idea to separate these four types of trades and to see exactly which ones are easier (for me) and more frequent. I will continue to try and constantly analyze, each time I trade, what exactly I am doing and which type of trade I am making.
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