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Clete - question about Stan's method
posted Jul 12 '10 by shie
hi Clete,
being the advocate of Stan's method and book, i'd like to ask you if you've been applying it successfully yourself? i read the book, and liked it a lot, and few days ago i was "surprised" to find out that my paper trading was rule#1, but when moving to real trading i transparently moved to using Stan's method. (btw, my results aren't so hot).
i was wondering if you could share your experiences, and even if you'd like to have a "stan thread" for discussing trades, questions and ideas.

Re: Stan's Method
posted Jul 17 '10 by clete
Sorry to take so long to respond. I've been running around like a headless chicken and haven't had much time for the internet lately.
To put it bluntly, Stan's method (mixed with a healthy dose of the R#1 system) is the only system that I've had any success with whatsoever.
Am I rich yet? Certainly not.
Will I be? I don't see how any other outcome could be possible.
It should be noted that Stan's system is not in any way incompatible with the Rule #1 system. The one only tweaks the other. In fact, Phil was talking about how there were an awful lot of red arrows out there several weeks before I called a top to this market.
The way I do things is a bit different than most on this website do it though because I tend to stay away from individual stocks. That isn't because I have a problem with stocks but just because I trade within and IRA and my account is still relatively small and so its easier to use ETFs, especially in bear markets like we are in now (you can't directly short anything in an IRA account).
I would also say that my applying Stan's system successfully doesn't really mean the system is better than any other, its not. If you aren't being successful, it probably isn't the system but your application of it that's the problem. My experience has been that when I wasn't doing well, it was my own lack of discipline that was the problem. I was making nearly every mistake you can make! I was over trading (easy to do with the R #1 system by the way) and costing myself way too much in trading fees, I was listening to too many "gurus" (i.e. I didn't trust my own judgement), single candles would trigger emotional trades that got me in (or out) to early, I set my stops way to tight and got stopped out constantly (i.e. even more over trading and transaction fees). The result being I often found myself buying at the top and selling at the bottom. That's a recipe for disaster, if there ever was one.
I've been trading now for about three and half years or so. The first 6 months was a complete disaster! The next year was not as bad but still pretty damn bad. The year or so after that was basically flat and over the last several months (almost a year I guess) I've been profitable enough to have almost made up the losses of my first 18 months. During all that time the only two systems I've used to any significant degree are the Rule #1 system and Stan's system. Both will work for any trader so long as the trader actually works the system. The problem is that it takes seemingly forever for most traders to learn how to control themselves enough to be able to actually work the system.
The point here being that you need to be patient with yourself. If you aren't finding much success then make smaller trades and risk less money and try to wait until you find set ups that are just perfect. Wait until just seemingly everything in the world is telling you that the trade is a good one.
Also, stay away from gurus except for educational purposes. In other words, don't look for suragote decision makers (a huge mistake I made). One of the key things a stock trader needs is personal conviction. If you aren't completely convinced that the trade is a good one then chances are it won't be a good one even if it really should have been. If you aren't convinced that you are right about the trade then you'll either set your stop way too tight or will just jump out of the trade after a single bad day or will sell out after a single good day or whatever. You'll do something to sabotage the trade unless you yourself understand why you are in the trade to begin with and are convinced that you're reasoning is sound. And, of course, the better you get at making these decisions the better placed your stops will be, the fewer trades you will make and fewer losers you will have. But it takes time and a lot of it. There is no substitute for experience when it comes to the stock market - or any other worthwhile undertaking for that matter.

charting software
posted Jul 17 '10 by tradingolives
I wanted to thank you for your advice in regards to stocks charting and using thinkorswim free software.

Stan's system continued
posted Jul 18 '10 by shie
thanks Clete for taking the time to write this down.,
i'm actually agreeing with all you said. except one trade where i know i busted my own rules, the other trades had other reasons to fail (too tight stops etc.). the reason i asked the question is that i'm looking for an oppertunity to brainstorm. think together, throw ideas and get feedback. the way i see it, this thing is hard as it is, so why not share the collaborative braincells and see what happens? :-)
if you're interested, we can setup a thread, and throw some ideas/thoughts and discuss.
if not, not a problem. i know we're all busy.

Re: Brain storming
posted Jul 18 '10 by clete
Sounds like a terrific idea to me.
What sort of discussion did you have in mind?
TOS rocks!

Thanks Clete
posted Jul 21 '10 by madregan
Like you, I've been running around like crazy (it's the busy season at work).
Wanted to take a quick moment to thank you for the suggestion on purchasing Stan's book. I bought it several weeks ago (used on half.com) and it was surprising to me how it was simultaneously informative and simple, almost common sense.
Not sure if you remember, but I had Noble (NE) stock and held on for a significant loss. As with anything, losses are opportunities to increase your knowledge, so I took it that way.
The one major difference I see with Stan's and Phil's methods are that Stan completely eschews fundamentals. Phil makes the point clearly that "the tools alone won't make you money". Stan believes that the charts will work regardless of the balance sheet, p&l, and cash flow projections. I would tend to agree with Phil on this one but, as Stan mentioned, it is difficult to see increases going against the tide when the Dow is currently "sideways" at best.
I did notice your comment earlier about not shorting, as you were in an IRA. I'm in the same boat, as my investments are in a Roth, which will not allow margins/shorting. With that said, a close relative who "dabbles" suggested the following tickers - FAZ/FAS. Both are funds that operate with direct regard to the Dow. Example - with the market dropping 100+ today, FAZ gained nearly 5%. Conversely, FAS (which increases with Dow gains) dropped just under 5% today. Long story short - FAZ could be an attractive alternative to shorting for those who cannot due to the nature of the investment vehicle (eg. IRA's). Disclaimer - I am not invested in either of these, but am considering as a potential hedge for the minimal long positions that I have, or as a long position for a market that may continue to drop. Let me know what you think. (Feedback from all readers is of course welcome as well).
Take care all,

posted Jul 21 '10 by shie
well, same as FAS/FAZ, you have UPRO and SPXU which are going with/again the S&P, tripled. so, if S&P drops 1%, UPRO drops 3% and SPXU gains 3%.
i've "dabbled" in those, but they are a very dangerous tool, especially in times like today. i held on to SPXU and was away from the market for a day. the wrong day indeed, as SPXU dropped almost 10% due to piece of news, as the S&P climbed for 3% without a real reason.
btw: Clete, sorry i haven't replied properly to this thread yet. i'm visiting the US, and will be back home early next week, and start the 'brainstorming' thingy :-)

Brainstorming... take #1... Action
posted Aug 04 '10 by shie
back from the US, and have questions about some stocks and their moves (via stan's)
DJI/SPX: is the break about the 150MA in both meaningful in anyway? asking, since it relates to the questions below.
PCLN: did it break out of a stage 4 dive? after the May break below the 150MA line it was heading for a nose dive. but suddenly in mid July, under a declining MA, it broke out of it and now high about the MA. thoughts on what's next for PCLN? does it make sense to short it, hoping for it to drop back down?
GOOG: trading within a range since May, after breaking below the 150MA at April. now, under a declining MA, does it make sense to short if it hits the top of the range and starts dropping again? the stock seems to be persistently hanging on to this range ...
CRM: uptrend, beyond all times high. going long?
MA: i was shorting that and got stopped out. however, it's still hanging on to the 194-215 range, under a declining 150MA. when is it a good time to go short here (if at all)?
BIDU: can it ever stop? :-) now, after breaking another all time high, i'm wondering if it's a good time to take a long position there
sorry for the long post, and thanks in advance!

BIDU et .al.
posted Aug 04 '10 by clete
BIDU: The resistence at $82.29 should now act as support. The Stochastics are over bought and volume hasn't been spectacular so waiting for a pull back would be best but stay out if it drops back below $82.29.
MA: Support at $194.00, resistance at about $217.00. Range bound. Buy the low - sell the high. OR stay out until a clear direction is indicated. Bias is down because this stock is well below its long term moving averages.
CRM: Nice up trend. Over bought though. Waiting for a retrace back to the 50ma would be less risky.
GOOG: Long term down trend. 150MA is well below the 200MA. DO NOT BUY THIS STOCK! If it retraces back up to the 150MA short the hell out of it. Otherwise you could wait until it breaks its current short term up trend. Its coming into a resistence area now. If it doesn't stop here it will likely go to the 150MA but it won't go any further than that on this move up.
PCLN: This jumped right back up above its previous trend line. If it holds it then that's pretty bullish but I wouldn't chase it. ALL the people who didn't sell in May might decide to do so now. Wait and see before chasing this big move.
($SPX) IF we close above the long term averages on Friday, that will mark the first week we've done so on the $SPX since May 10th. Is that entirely meaningless? No. Does it mean we are in a Bull Market? NO!!! If we stay above these averages for 6 weeks, then I'll be a bull again. Unitl then I'm bearish to neutral.
Note how the 150ma (30 week) is about to cross below the 200MA (40 week)? That's more significant than a short term pop up over the moving average. I strongly advise caution if you're going to go long on any stock in the near term.

BIDU et al.
posted Aug 05 '10 by shie
general question: what duration is your chart set to? for example, looking at BIDU at a 10d will show a stochastics chart that is different from a 30d period.
BIDU: where/when do you see the 82.29$ resistance? looking at my TOS charts at 10d resolution, i can only stop resistance around 81.5$ (just curious).
CRM: wierdness in TOS here. looking at 60d chart shows a 50MA at around 100, while 30d or 60d shows the 50MA at around 93. do you get that too? (you do use TOS right?)
GOOG: agree on the short sentiment (actually, that was my question). it makes sense to short if it fails to break resistance now. however, do you have any tips about signals for entry?

TOS Charts
posted Aug 05 '10 by clete
I'm guessing that when you say TOS Charts what you really mean is the Prophet Charts.
They aren't the same thing even though you can access both from within the TOS platform.
The reason I think you are using Prophet Charts is because of the way the technicals are changing on you.
The problem is that you are misunderstanding the information you're changing when you tell it 10 days or 60 days or whatever. If you look in the little window directly to the right of the "10 days" or "60 days" you'll notice that it says 30min, or 60 min or D (for Daily) or W (For weekly) or M (for monthly).
I look primarily at daily charts and weekly charts. In fact, I put in a custom period of time for the chart to cover with an end date about a month or so ahead of the current date. That way my trend lines extend past today and I can get an idea of where things are likely to go.
If you'd like to set yours up exactly the way I have mine. Click the window where you change the duration of the chart and go all the way to the bottom where it says "Custom". Two callendars will come up. Mine is currently set to show data from Jan. 1st, 2008 through September 31st, 2010. When you enter that you'll be presented with a weekly chart (note the W in the window next to the drop down box you just used). So long as that "W" is there, the indicators will be calculated using the closing price at the end of each trading week (usually each Friday's closing price). You should also remember that if its not Friday evening then the current candle is not yet complete. To change from a weekly chart to a daily chart, simply change that W to a D.
This information should rid you of all the wierdness you've been experiencing with the TOS charts.
As for you question about entry point signals, I'm not sure I understand your question. Could you clarify?

thanks for the tip
posted Aug 06 '10 by shie
Thanks Clete! never tried that custom option, and it makes total sense to see "ahead" with the trendlines.
about entry point signals: that's mostly a question around strategy i guess. there are many ways to determine when to enter the trade. some do it over night when there is no trade, so do it in the trading session. some wait for a dip and and a quick up movement. some enter a trade on a trend and slowly increase their position as the trend continues to develop.
i was wondering if you have a specific way of doing things that worked for you in the past.

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