Paul Tudor Jones’ 22 Trading Principles – New Trader U – via @sjosephburns

  1. It is possible to see that a market is dramatically overbought and prepare for, and then capture, huge gains after the sell off.
  2. Risk small amounts to make big profits.
  3. Bet against times when numerous leaders must agree.
  4. Long hours and a strong work ethic are keys to being a successful trader.
  5. While it is good to trade any market that will turn a profit, specializing in a market can lead to great success.
  6. The markets go down faster than they go up.
  7. If the market will not go down during bad news, it will likely go higher.
  8. The stock market moves in patterns and in cycles. Past price patterns repeat themselves due to human emotions.
  9. Many times traders think a big position order size means that a whale knows something, most times they do not.
  10. It is okay to skip a trade if you can’t get your entry price.
  11. A momentum move does not just stop, it takes time to roll over.
  12. It is possible to trade successfully by gaming the actions of other traders.
  13. Be aggressive at high probability moments.
  14. Always stay in control of your trading and manage risk.
  15. Focus on risk management as the #1 priority in trading.
  16. Having the right mindset during a big loss that it is just temporary, is the key to coming back and being successful.
  17. Letting profits run is sometimes a great plan.
  18. Being long at all time highs in the indexes is a great strategy.
  19. Great money managers trade with passion.
  20. Even Market Wizards have doubts about winning when entering a trade.
  21. When the top in a market is reached,  there is a lot of money to be  made shorting as panic selling sets in.
  22. Guys from Tennessee can trade!

via Paul Tudor Jones’ 22 Trading Principles – New Trader U –.

The two stockfetcher.com scans I use for 99% of my watchlist.

I keep it simple when scanning, other then checking yahoo finance for big gainers, or finviz etc, I run these scans EVERY night. They are simple, probably exceedingly so, but they work for me.

 

Percentage gainers:

show stocks where close gained more than 20 percent over the last one day and price is between 1 and 10
average day range is above 3 and volume is more than 100000
Red candle floaters:
stocks where close is above upper bollinger band(20) and close is below open and price is between 1 and 10 and volume is greater than 100000
offset is 0

Part time penny stocks workflow – Rule 1 – Get up Early #PTPS

In this post I would like to cover what I think to be one of the most important methods to follow to be a successful trader. While in my mind it is important to every trader, but particularly if you are a part timer there is immense value in getting up early on a consistent basis.

I have found that most traders particularly part timers prefer to stay up late and research then drag themselves out of bed 10 minutes before the market open and expect to be prepared and ready to trade. I’m sure I will get countless counter arguments but I think that it is truly idiotic and naive to expect to be able to trade successfully in the morning and even throughout the day without some sort of consistency and routine based on a consistent rise time.

One of the biggest reasons I think getting up early consistently is important to a trader is due to the fact that trading successfully demands intense discipline. If you can’t drag your lazy ass out of bed early and consistently how do you expect to apply any sort of consistent discipline to your trading? Gamblers sleep in and refuse to put in the work away from the table, traders get up and prepare and approach the market with a plan.

By getting up early and implementing a consistent workflow you can approach the market confident and with your thoughts and mindset locked in. I’ve found days that I do not get up on time and rush through my research, or worse yet complete no research and expect to trade only on the information available at that instant, I will consistently enter “random” bad trades. To truly be prepared I believe a routine needs to be created, and by refining and following this routine, you will become more consistent, more confident and more importantly more patient. I have NEVER entered a “random” trade on days I rose at 5AM and completed my entire workflow routine. At times it’s amazing the heightened level of patience on fully prepared days. Of course that increased level of patience will invariably create days of extremely low trade volume. And on some days no trades whatsoever. I will cover “not trading” extensively in another chapter, but at this point just know that “not trading” is the most powerful tool of all to the part timer!

Considering the lack of interruptions the early morning hours are also greatly valuable to research and prepare. Since I’m assuming you have a day job and family and friends, you are subject to 100’s of distractions in the evening. One thing I can count on is barring total emergency the hours of 5AM to 7AM are mine and mine alone. No phone calls, no emails, no interruptions. Not only does this allow you to focus, it allows you to truly learn and get your thoughts in order. It also allows you to work through your preparation process in a much quicker and more efficient fashion. What could have been 2 hours of research in the evening could be potentially reduced to one hour or less in the morning. Not only are you free from interruptions, you are hopefully free from scheduling conflicts as well. The part time trader will have numerous evening commitments that could potentially sidetrack research time. Family, friends, work, and hobbies should be utilizing your evening hours NOT the fucking market.

Another chapter will cover the addictiveness of the market. But at this point I will press the point that by disconnecting from the market in the evening you will be far less crackheaded about your desire to follow the market. Spend the time where it really counts, with your family, friends or learning and hobbies. Don’t waste 1/3 of your day looking at flashing green and red numbers.

The last and in my mind most important aspect of rising early and sticking to a routine is the confidence and cockiness felt by knowing you got up early and prepared while 99% of your competition in the land of penny stocks, slept in, is hungover, and probably ate fifteen donuts for breakfast. This could be simply my personality, but I have to believe in the world of trading it is valuable to know subconsciously that you are prepared and better then the other guy. On days I follow my routine to a “T” I am ready to kick the asses of every lazy penny stocker out there, and over and over those days are by far my most profitable. The only days they are not profitable is when I don’t trade. The likelehood of taking a loss can only be reduced by preparing not eliminated, but again in my years of experience the potential for making a bad trade is extremely reduced by preparation.

Tomorrow I will detail my actual workflow routine after rising and preparing.

To the reader, please keep in mind this is in essence a rough draft for my trading book. Please critique and comment, while the writing is a little out of sorts and more or less stream of consciousness I have decided to post the rough drafts here and use this blog as a workspace for editing. I certainly hope the final product will be much better structured and more clean.

Thanks

Watchlist 7/26/2010 – Boring list to follow up on a boring week.

No trades and nothing worth watching towards the end of last week. Boredom looks to continue this week. I managed to get my ass stuck in ARNA by working on the go all day Friday. Dumb. Hopefully it was just a lame Friday afternoon short squeeze but the stock has gone from looking pretty weak to now looking strong. Something a part time trader should NEVER do is get into a position when you can’t pay it full attention. That is normally one of my primary trading rules. Hmm guess I broke that one eh? Fucking stupid… Futures were up when I went to bed but now this morning they are fading, annoying. It would be nice if the market would get decisive and go one way and stick to it instead of this chop. Well here are five stocks barely worth watching.

Full list from Yahoo Finance

ARNA

I’ve said enough already, now I just need to decide to hold until their drug is proven worthless and continue to get squeezed or just cut and run. Still a short in my opinion, but not right now based on the chart. SHORT

BVX

Shady looking biotech, lame little spike, but I see no reason for it. SHORT

DSTI

A few shares out there to short, I’m tempted to take them into Friday’s spike. Good chance this stock ends up right back at a $1. SHORT

INFN

Ton’s of positive news, big revenue gains, analyst upgrades etc. Somewhat “real” company so I will probably just watch, but curious to see where this big spike goes. SHORT

SILA

I’ve been watching this for a week and would really like to short. But everyday I hesitate and the borrows dry up at IB. They are back again today, I just need to get decisive and enter a position. This stock will almost certainly tank 30% soon. Just a bummer its right at a dollar, I would like to see it run more before shorting. SHORT

Why stock chat is like hard liquor, good in moderation, TERRIBLE in excess. $$

First off lets pre qualify by stating I have no problem with booze, hell anyone who knows me will tell you I enjoy a beer quite frequently but in trying to find an analogy for my distaste of stock chat, hard liquor was the most accurate method I could find. I kept wanting to make it analogous to hard drugs, but while stock chat is annoying beyond belief and seldom useful, it is not nearly as insidious as hard drugs. Stock chat has a much more slow and gradual infiltration method that soon brings most unwitting users to their knees and penniless in the gutter. While booze doesn’t have near the completion percentage of creating personal worthlessness that stock chat does I still think its a decent comparison for the sake of a blog post and a chapter in my forth coming ebook.

That’s right I’m writing a “Part Time Pennystocking” ebook. It will probably suck and will probably be late and delayed many times, but it will happen nevertheless. Since there is a very good chance I will be presenting at Tim Sykes Pennystocking conference in Vegas in mid November I have roughly sixteen weeks to completion in order to have it ready for presentation at the conference. Ideally I will write a chapter a week ending up with roughly 10 chapters leaving me five or six weeks of editing.

This is week one and I begin with part one of the chapter “Ignore Everybody”, obviously starting with ignoring stock chat as the first section of the chapter. I may link back to this article frequently since it is the first post and details my plan. So hence the sampling of history and the outline of my “howto” on writing an ebook. Ideally I hope to accomplish two goals, one produce a shippable product, no matter how crappy and two, learn a process to further hone titles going forward, and maybe in twenty years produce something worthwhile. Since I like the idea of “open sourcing” a project like this, I will use my blog to write the book. Each chapter will be published on the blog weekly and open to comments. My thoughts are to use my target audiences comments to refine the work into the editing stage, hopefully using a mild crowd sourcing model to improve the quality of the book. While my blog is pretty low profile I do get occasional comments, and who knows maybe by creating some real content my readership will see value and increase.

Ok enough background and setup, back to the topic at hand.

While the purveyors of stock chat will constantly tell you how incredibly useful their sometimes free and most often pay service is, refuse to believe them. They are like the bottle staring at you from across the room, saying “We won’t get that drunk and hook up with some nasty skank again tonight.” While the skank and the stock chat moderator do serve purposes the lingering effects of their talents are seldom desirable. While I don’t doubt individuals have found the love of their life in the middle of a bender and gone on to live a happy and fruitful life, far more often nothing becomes of the affair but regrets. While you may find a decent alert or stock pick in chat from time to time. You will be constantly assaulted with randomness and useless information. One of my most hated parts of stock information is randomness. There will be a chapter dedicated specifically to the explosion of worthless information that creates nothing but noise and non tradable confusion.

Another disadvantage to stock chat is the “drinking buddies” scenario. This is by far the most evil and diabolical scenario presented to the foolish stock trader who wanders into a chat room. I will be the first to admit this has burned me far more then any other setup in a room. While with a little discipline a trader can ignore most random and useless ideas from individual participants, it is very difficult not to get sucked into ideas that many chat participants all start to gang up on. As in my younger days of drinking with several buddies, it is amazing how group hysteria can make normally rational young men think that standing on the roof of a moving car is a good idea! Or any other countless stupid ideas that “seemed good at the time.” with a belly full of booze and a bunch of yayhoos at your side.

So in summary, I recommend avoiding stock chat altogether except for two situations. Number one, using it simply as a tool to locate breakouts and or breakdowns. Since it is very difficult to watch all stocks with either a HOD list or screening tools, stock chat can be very effective in assisting the momentum trader in locating tickers. Investors Underground is the very best room for this, while it does not suit my style of trading if you are looking for pure momentum setups it is a solid tool for using hundreds of eyes to help you trade. Situation two is using chat to gain information about why stocks are doing what they are doing, of course this needs to be used with an enormous grain of salt, since 99% of participants in chat are fucking idiots. But the remaining 1% and the moderators are usually useful in locating news or the rational behind rapid moves. Since most moderators participate in multiple chatrooms, they can scale out into finding real info quickly. Of course this information may or may not be useful and or tradeable, but the room can find it faster then you can in most situations.

My weekly deadline for this project will be Sunday evening, while I think I got the gist across I also feel this post was greatly rushed. I will do better next time, due to an ENORMOUS project at my day job this week I was unable to get started writing until Sunday evening. And even then I was rushed due to other commitments. This will also be the last time excuses are offered up. But hey I showed the fuck up and got it done at least, what did YOU do towards your book or other creative project this week?

Please post any criticism or ideas for this post, and or suggestions for future posts. I will continue with part two of the “Ignore Everybody” chapter in the next two days. Then post part three over the weekend thereby wrapping up the entire chapter for week one.

Explanation of my recent lack of trading activity.

It has come to my attention that evidently if I don’t trade every day in a shitty market I have suddenly become someone less worth following from a trading perspective.

I will do my best to keep this post from becoming a profanity laced rant, but if it ends up going there so be it.

Last I knew CASH was a position and NOT making stupid boredom trades on bad setups was a very sound trading strategy, according to some of my followers and other bloggers this appears to not be true. Perhaps I should buy Gold, short the EURO, and sell some puts on Apple, wow theres a bunch of terrible fucking trading ideas that will surely do nothing but lose money!

Of course I also know that my blog is supposed to have trading content, so be it haters, you’ve won. I will start posting more ideas and feelings about the market. I do enjoy writing about the market, but I really despise posts like “The dow was up 100 points today based on assurance that the aliens that have landed will be buying a substantial amount of US treasuries” Blah blah fucking blah. But nevertheless if your coming to this blog for pennystock related information, then there should be something here for you to read. I have plenty of battle scars and trophies to brag about from the disgusting and putrid battle fields in the land of pennystocks. I will NOT become Jim Cramer and throw out ten tickers a day, just so I can build a watchlist. If there are no picks, no watchlist. If there are no trades that fit my setups, I won’t post at night stating, “Would have been a good day to pick up some BP on the bounce.” I’m all fucking pennystocks baby, with an intense short bias.

So if you want to complain that I never trade, so be it, beat my fucking win percentage then tell me I’m not a trader worth following. If you peruse my log below you’ll see that maybe just maybe there is a method to my madness, and you don’t need to trade every day in order to learn how to trade well and achieve constant improvement in your trading skills.

Look at all that green!!

Below is a summary, click here for more detail

Lets review the three bad trades, one break even and two losers.

CWTR

I covered on a weak short squeeze at $7.18, a few weeks later its at FOUR fucking THIRTY, yeah $4.30, hmm who can tell me if that was a good entry in hindsight?

ENCO

I held to long and broke even, I initially shorted at $4.72, its at $2.80 today and probably going to collapse soon.

DIVX

I went long at $7.10, a couple days after I sold, they were bought out at damn near $9 a share.

While its always easy to say coulda should woulda, in my mind I have a 100 percent win percentage, and some of the best trades could have been my losers had I been more patient.

In closing, if you have pennystock related questions, ask away! I have responded to EVERY comment ever posted on this blog in the most informative and helpful manner I could. But if your looking for picks EVERY day, when the market is shit, go turn on some fucking CNBC or visit the stock chat rooms, there you will find a plethora of TERRIBLE stock trading ideas. You won’t find that shit here…

And FYI, I have NO watchlist again today 6/10/2010, my big gainers scan has two terrible looking setups, and my fading scan has one even more terrible looking setup. So move along to the Yahoo message boards I guess…

I will start posting more regularly on trading related topics though, ideally every day, but if the market continues to drag along and do nothing, it may be more like every other day.

Thanks!