Art of Trading really teaches the Art of Trading!

I have not updated in some time. Instead I've been focused on trading and not making mistakes-- rather than analyzing the momo's lately . The Art of Trading service is definately working out and is teaching me good habits. Stewie is just as much about teaching you to learn/improve as he is about the stocks themselves. He emphasizes cutting your loses quickly and taking steady, decent gains. I am learning not to strike out trying to bat a home run, but to take the base hit. So far it is working well. I sent in my testimonial and Stewie posted it here:

http://theimpatienttrader.blogspot.com/2010/01/great-art-of-trading-testimonial.html

Update and new Momo's emerging

Well I'm back. I decided to follow both trading services, but currently I am focusing mostly on Stewie's Art of Trading service and his alerts. I started off papertrading the alerts, but then quickly started using real money, after being impressed. I am using small account sizes (and small trades) to start. For now, I'm going back to trading basics and trading straight stocks, not options. And I am finalizing a set of rules. For the week, I am in the black, albeit not by much-- in part because I ignored one alert to sell for a loss, and I was afraid to take the loss. I later took it, but by that time it was a bigger loss. I am learning to not be afraid of taking small losses, because if you don't they just get worse!

It's very interesting what is happening in the market. Some of the old leaders are still around, such as:

Cramer's 4 horsemen: AAPL, GOOG, RIMM, AMZN.
Ag's: POT, MOS, etc.
Medical: ISRG
Bank: GS

At the same time, new leadership is emerging. Hear are some of the new
momo's, many are in the IBD 100:

HEAT, PCLN, RAX, NANO, RINO

Check out this post:

http://stockbee.blogspot.com/2009/12/39-stocks-with-momentum_17.html

Also - get ready for the "Santa Claus rally" coming soon. Time for the fund managers to goose the returns and apply the window dressing:

http://www.crossingwallstreet.com/archives/2009/12/the_best_time_o.html

Deciding where to go from here

I haven't updated this blog in a while. Part of it was depression, since I had to review my prior trading when filing my 2009 taxes by the mid-October deadline. What really hurt was all the work I had to do in TradeLog to get all my *LOSSES* accounted for. At least the total amount I have lost so far in the market is only about 7k, but I want that 7k to be the first and last "tuition" I pay. Some time ago, I switched to papertrading, and my initial ThinkorSwim Papermoney account is now at $166,000 from $100,000, mostly as a result of going long stocks at about the right time. In my "real money" and retirement accounts, I've done basically nothing - just too afraid to trade. I'm trying to come up with a plan of action, and at the same time following good traders, including Bo Yoder's cash bomb sequence, which attempts to help people with low account sizes explode their accounts into larger sizes.

We shall how the market goes this week. Most of this year, every time there is a panicy sell period, it turns out to be a fake-out and we march higher, probably due to large hedge funds finally buying in. I know from past experience that the 1st of the month is always interesting, expect the unexpected...

Goldman conspiracy theories/ talk won't die

More good stuff from zerohedge.com

http://www.zerohedge.com/article/goldmans-selective-trading-disclosure-legal-way-preferred-clients-front-run-market#comments

Interesting indeed, and very depressing for the "retail" trader. I need to use thinkback to look at GOOG calls from last week before the conviction buy list got updated. I don't even know if regular people can access the conviction buy list at all, even *after* it comes out ;). Oh well. If this stuff is true it makes strategies that try to follow the "big boys" like the sizzle index and the options heat thermometer (at OptionsMonster) very prescient. Stay tuned.

Going for the Cash Bomb

OK I've been following Bo Yoder's recent "Cash Bomb" project and I've signed up for the initial alerts and video modules to support it. The idea is how to risk under a thousand dollars (e.g. $600) and double your money (or more) to achieve a decently capitalized account --- an account that you can then trade using more traditional risk management rules (e.g. 2% loss maximum per trader). We'll see how it goes.

Here is the link: CashBomb Sequence

Zerohedge.com - Conspiracy Theories with Meat Behind Them

I like reading ZeroHedge.com - it seems to be a credible site exposing market manipulation. Unlike other such sites it appears to be written by an heavy hitting anonymous insider. The site recently transitioned from blog to full-fledged site with forums. In the forums, I found a plausible account of how this fake rally may have come about:

http://www.zerohedge.com/forum/how-hank-and-ben-initially-rigged-market-rally

As individual traders, we don't have access to the kinds of inside information that would allow incredible guaranteed gains, but we do have access to volume information and price action, which don't lie. Well at least as long as there aren't too many "Dark Pools"!

A good example of the telling power of volume and price is in AIG this week. Some big players piled into this stock for some heavy hitting upside. It also makes me think of making more use of the Najarian brothers strategy, when they look for unusual call or put volume -- these kinds of things reveal the tracks of the "smart money", sort of reverse engineering what the big movers and the "people who know something" are doing.

Still Papertrading

I am still papertrading. I think this whole rally since the lows of March is fake. The liquidity that the government pumped into Banks is being used to buy equities, so that banks can run up their own (now diluted) bank stocks. The media is in a frenzy about 'the recovery' - meanwhile everyday people like myself continue to struggle - they can't get a mortgage refi or modication, only those who have a clunker that meets the requirements can take advantage of "cash for clunkers" --argghgh. My neighbour had a vehicle to trade in and took advantage - and his property tax is next to nothing due to the flawed Prop 13.. arhgghg. Bottom line - sooner or later reality will set in, since the American Consumer is 70% of the economy.

I do intend to get back into trading heavily soon - I think the current environment with (surprisingly) low volatility is good for swing trading - finally. On Aug 15 I will be taking a local all-day options class from TOS (Think or Swim). Since no one is going to bail me out, I need to take control of my own future and nail this stock trading thing..