Another solid chapter, but much like Chapter 1 there is a lot of preparation and setup in this chapter. Sykes starts out with a solid breakdown of CAN SLIM and how it inspired the Sykes Sliding Scale. It was pretty interesting to hear him describe CAN SLIM and make analogies to his own acronym weighting system.
Some funny anecdotes about Sirius and other stocks with tons of bagholders. But useful in that Tim makes the point that these traders and investors all had no “system” and traded all on hope. The best way to get destroyed in the market is to trade on hope and not have some sort of trade plan.
Beauty of the Sykes Sliding Scale (SSS) is even if it is not perfect (which Tim points out it isn’t) it creates a framework and methodology for approaching trades. One of the biggest problems for any traders, myself included, is over trading. By having a set of criteria that keeps you out of mediocre trades your potential for success is greatly heightened.
The chapter finishes up by beginning to describe the “P” in SSS, which stands for Pattern/Price. The last 10 minutes really starts to get into the “meat” of the info and wraps up by teasing “Patterns” in the next chapter.
I highly recommend NOT skipping any content but it is nice to be past all the background and setup info and getting into the real content. Of course like any class, you have to have the obligatory “meet the instructor” and “syllabus” day. As I mentioned in Chapter 1, Tim does a good job of doing all of this quickly and in an interesting manner.
Really looking forward to Chapter 3 and the rest of the course!
Breakdown of CAN SLIM
-Next specifics slide
Sirius – Stock Shock documentary
RSI – Quick breakdown
LX21 – Quick Bio and profit.ly chart
-Star rating system
Intro of the Sykes Sliding Scale (SSS)
Breakdown of PATTERN acronym
-Ease of entry/exit
-A “at what time of day”
-E – Environment
Varying weight based on criteria
-Scale of 0-100
Not an exact science, like CAN SLIM it is a method/workflow
-You will not win 100% of the time, but you can gain an edge with a method
Good to have a method/system to avoid overtrading.
Good discussion of the evils of overtrading
SSS – Early stages MS/DOS analogy – further refining coming
More indicators the higher potential for success and avoiding overtrading
Breakdown of “scoring system” on each criteria
Higher the score, more aggressive/paitient with position
Different scenarios based on scores
“Goal is to be better prepared on every trade, that leads to higher odds of success”
“Open Sourcing” (SSS) modify/extend etc. (trader checklist.com) always free
Detailed discussion of “P” Pattern/Price
-Be agile, able to go long and short
Critics criticize trading “gimmes” but thats the goal of SSS, find and trade only the layups.
Even almost 20 years later, simple patterns still work long and short
-technical scans pick these up
Avoid sideways chop at all costs.
-mid range action
Not all breakdowns/breakouts continue, cut losses quickly and trade your plan.
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Next up Patterns