Confession of a Swing Trader

[dbodeenisudm]

I have been reading a lot of trading sites in the past few days. Mainly out of boredom since I am on vacation. I was fairly surprised by what I have read. First of all after a few days of reading I came to the conclusion I was a swing trader. Never before had I known there were different types of traders. Of course I knew there were day traders but that is it. I got into trading mainly because I could, I got sick of 1. paying high commissions at brokerages 2. Got tired of watching stocks go up 2 steps and down 1. So I guess I just started trading towards the end of college, I lost a little money at first but nothing to shake a stick at. And after a few early losses I was profitable and have been ever since. Shortly before I began trading I attempted to create a statistical program that tried to predict the stock market, and of course it was worthless. Once I deemed that worthless I totally threw all technical trading out the window. I can honestly say I have no clue about technical trading, I understand some of the concepts people talk about like 200 day moving average but I would have no idea to apply those concepts to trading and how on earth certain indicators could ever tell me when I should buy or sell a stock. In addition I have never spent a dime on any book, seminar or anything. While being on vacation this week I have came to the conclusion that I could never trade full time, I love my full time job and I think I am a better trader for it. I can buy a stock and not watch every tick which helps me make much more sound decisions. I also avoid boredom or forced trades. I am so busy at work and I just can't sit around and watch the ticker all day. Being a full time trader would just bore the hell out of me, partly because I generally hold positions for anywhere from 1 to 5 days and I just don't make that many trades. So far this year I have probably made 10-12 "tricks" as I call them, that is bought and sold a certain stock 10-12 times. I stick with equities because it comes so natural to me, I would never even consider trading something else. Yet I have made 14% on my money in fiscal 2006 so far. The way I trade seems so different from what everybody else does, my entry and exit points are strictly intuition trades. Although I will glance at Yahoo Finance charts I wouldn't say I study them, I just glance at them and soak in the information. In Fiscal 2005 I made a killing on a stock called Omnivision [I am sure some of you heard of it]. The stock was hanging around 12-13 price with a 30-40% of floating shares being short. I couldn't figure out why anyone would want to be a short at that price so I bought and around 2 months later it was at 22 which is where I sold. Also ICOS Vision Systems where I bought at 26 and sold 1 month later at around 40. I usually just jump in between 10-20 stocks, and that is all I watch too. So I become an expert on 10-20 stocks and swing trade between them. There is no rhyme and reason behind the reasons why I watch certain stocks, they are just stocks that over the years have came to my attention in some way or another, kind of like destiny if you will. Anyways, that is my story, a pure intuition trader with a full time job who is rather surprised by how complex trading is to some people.

 

[FXSCALPER2]

I have been reading a lot of trading sites in the past few days. Mainly out of boredom since I am on vacation. I was fairly surprised by what I have read. First of all after a few days of reading I came to the conclusion I was a swing trader. Never before had I known there were different types of traders. Of course I knew there were day traders but that is it. I got into trading mainly because I could, I got sick of 1. paying high commissions at brokerages 2. Got tired of watching stocks go up 2 steps and down 1. So I guess I just started trading towards the end of college, I lost a little money at first but nothing to shake a stick at. And after a few early losses I was profitable and have been ever since. Shortly before I began trading I attempted to create a statistical program that tried to predict the stock market, and of course it was worthless. Once I deemed that worthless I totally threw all technical trading out the window. I can honestly say I have no clue about technical trading, I understand some of the concepts people talk about like 200 day moving average but I would have no idea to apply those concepts to trading and how on earth certain indicators could ever tell me when I should buy or sell a stock. In addition I have never spent a dime on any book, seminar or anything. While being on vacation this week I have came to the conclusion that I could never trade full time, I love my full time job and I think I am a better trader for it. I can buy a stock and not watch every tick which helps me make much more sound decisions. I also avoid boredom or forced trades. I am so busy at work and I just can't sit around and watch the ticker all day. Being a full time trader would just bore the hell out of me, partly because I generally hold positions for anywhere from 1 to 5 days and I just don't make that many trades. So far this year I have probably made 10-12 "tricks" as I call them, that is bought and sold a certain stock 10-12 times. I stick with equities because it comes so natural to me, I would never even consider trading something else. Yet I have made 14% on my money in fiscal 2006 so far. The way I trade seems so different from what everybody else does, my entry and exit points are strictly intuition trades. Although I will glance at Yahoo Finance charts I wouldn't say I study them, I just glance at them and soak in the information. In Fiscal 2005 I made a killing on a stock called Omnivision [I am sure some of you heard of it]. The stock was hanging around 12-13 price with a 30-40% of floating shares being short. I couldn't figure out why anyone would want to be a short at that price so I bought and around 2 months later it was at 22 which is where I sold. Also ICOS Vision Systems where I bought at 26 and sold 1 month later at around 40. I usually just jump in between 10-20 stocks, and that is all I watch too. So I become an expert on 10-20 stocks and swing trade between them. There is no rhyme and reason behind the reasons why I watch certain stocks, they are just stocks that over the years have came to my attention in some way or another, kind of like destiny if you will. Anyways, that is my story, a pure intuition trader with a full time job who is rather surprised by how complex trading is to some people.

I know exactly what you mean. I am also an intuitive trader. I swing trade and scalp. I take a trade when I feel that something is going to happen. Then, I just leave it alone. I have no idea what indicators are supposed to do and I don't want to know. You know why you are doing well? Because trading is a numbers game.

 

[billiondollars]

Although I will glance at Yahoo Finance charts I wouldn't say I study them, I just glance at them and soak in the information. ... So I become an expert on 10-20 stocks and swing trade between them. .

You are more of a fundamentals trader. A truly intuitive trader would just pick a stock from S&P500 and he will hop from one to another. The fact that you have a selection of stocks is in itself making you familiar with those companies.

Please tell us when to buy and when to sell.

Partly true, trading is a numbers game though it is in the perception of the amateurs. The analogy is like two boys building sand castle at the beach who can't swim, not interested to swim because they think it is more fun and safer to play with sand. When the waves roll in, they will run up ashore because they are part-time players. For them, beach is fun. They are no where near wind-surfing nor sailing.. the real beach sports.

 

[FXSCALPER2]

You are more of a fundamentals trader. A truly intuitive trader would just pick a stock from S&P500 and he will hop from one to another. The fact that you have a selection of stocks is in itself making you familiar with those companies.

Please tell us when to buy and when to sell.

Partly true, trading is a numbers game though it is in the perception of the amateurs. The analogy is like two boys building sand castle at the beach who can't swim, not interested to swim because they think it is more fun and safer to play with sand. When the waves roll in, they will run up ashore because they are part-time players. For them, beach is fun. They are no where near wind-surfing nor sailing.. the real beach sports.

Trading is entirely a numbers game. This is not an opinion, it is a fact. Your market maker makes money over time because he wins small amounts almost all the time. The trend follower takes a lot of small losses and some big wins. He wins because, although he may win less than 1/2 the time, he wins a lot more than he loses. The [successful] scalper wins becuase he wins a lot of the time and his losses, taken together, are smaller than his gains. The swing trader has to make sure his wins are enough to cover his losses and make a profit over time. It is all a matter of manipulating the numbers. Look at Binary bets. That is a pure and simple numbers game and the bookies know that.

There are various methods you can use to trade. I know there are psychological and personal factors to be considered. However, in the end, you win only if, over time, the numbers are in your favour. Really understnading that is what transforms you into a winning trader. In fact, all the psychological problems come from not really, really, understanding this fact , (and I am talking from personal experience). This is the secret of trading success. When you understand that, you realise two things that are crucial to trading success:

1- You have to find a system that puts the numbers in your favour over time and;

2- Individual trades are meaningless

I am sure the desire to make our current, individual positions work is at the root of all trading problems. And that comes from failing to understand the fact that, if you have the numbers on your side, over time you will win. It is just a matter of time.

 

[billiondollars]

Yes, it is a zero sum game. I was refering to amateurs' numbers game in the context of 'intuitive trading style'. One cannot sell or buy just because the numbers ( digits in the prices ) look alright. Still, you haven't talked about how the intuitive trading works, particularly about how you 'feel' the trade without any form of 'input' from external environment.

 

[dbodeenisudm]

My background as an investor shaped my trading style. I was a buy and hold investor for a while but not a very good one. One of my first buys ever was AOL at 45, a few months later it was at 15. This was way before I ever began trading. When I went to the university I majored in Finance and the schooling really shaped me into a fundamental investor. I learned how to read financial statements very well and I had a strong influence to favor value stocks. After that I would find these great stocks with great fundamentals and I would buy them, but they would still go down? This is because I had bad timing and was buying at bad entry points. And that is finally when I discovered the my own personal key to investing was finding bottoms to stocks. So that is how I really began to trade. I would first find stocks, usually by accident that had decent fundamentals, so I could have confidence in the back of my mind that these stocks wouldn't be going bankrupt anytime soon. Then I would try to pick bottoms and channel trade until I lost the channel. For example, I used to trade Cisco, everytime it would hit 17.15 or around I would watch it and jump in. Then I would hold for a certain amount of time, usually into the high 17s and get out. There are no indicators that I use, but in a way I almost develop what the bottoms and resistance lines are in my mind. But then late December Cisco ran into the low 17s, I bought a bunch of shares and jumped back out around 18. I of course hoped that it would go back down to the low 17s but instead it climbed to 21. So I lost the channel, I lost the bottom and stopped trading it until I can find the bottom/channel again. Now what happens if I miscalculate the bottom, so what would happen if I would have bought Cisco in low 17s and it dropped into the 16s. Well, this has happened before, I find it generally happens 1/6 or 7 trades. I will usually will hold onto it until I find something better to throw my money into, and I have confidence holding onto it because its backed up by fundamentals. For example, last week I jumped into Chevron [CVX] around 55. I thought that was the bottom but the stock price dropped to 54. I did not panic at all, I held it for five days and sold around 54.5, and the only reason I sold was because I found a much better opportunity, and that was Motorola [MOT] at 20.20. Over the next 48 hours MOT went to 21.75 and Chevron [CVX] went to 56. I sold out of MOT and now I hope either MOT goes back to 20.25 range or CVX goes to the low 54 range and I will jump back in. I obviously take the chance that the bottom will drop and like I said this happens about 10% of the time. I also have a list of about 10-20 stocks, and I watch them all trying to find good opportunities to jump back in. I always use market orders, and I never put in stops, I only go long on stocks, I never short and I don't trade anything but equities even though I am looking to get into bond trading. My entry points are largely based on technical signals that exist in my mind, and I pick my sell points using my intuition. I feel that I have found my niche in the market, and I feel very comfortable riding the market up, selling, and hoping that market goes down after I sell so I can get back in these stock cheap.

 

[billiondollars]

When I went to the university I majored in Finance and the schooling really shaped me into a fundamental investor. I learned how to read financial statements very well and I had a strong influence to favor value stocks.

I would first find stocks, usually by accident that had decent fundamentals, so I could have confidence in the back of my mind that these stocks wouldn't be going bankrupt anytime soon.

Then I would try to pick bottoms and channel trade until I lost the channel.

My entry points are largely based on technical signals that exist in my mind, and I pick my sell points using my intuition. .

I 'did' say you were more of a fundamentals player. You still have to make up some form of 'technical analysis' albeit in your mind whether it is a channel or highs/ lows.

So, it wouldn't be correct to say that you are a truly intuitive trader.

The stocks I held over the last year gained 200-300% but that is a buy and hold approach and falls outside the scope of this forum.