"The Value in Getting Away: A Subtle Lesson of Stocktwits"

Being a relatively new trader with only a handful of years’ experience I’ve attempted to learn the business in a wide variety of forms. Whether it be academic and theoretical ideology, “Security Analysis”, Livermore, O’neil etc, I have at least considered most of the frameworks.  However, one area of the business that often goes without discussion is mentally removing oneself from the trading.  As a young trader trying to develop a concrete strategy, it is easy to become completely mentally immersed in trading. Prior to my encounters with Stocktwits I had overlooked the importance of completely removing myself from the business on a recurring basis.

In addition to providing great value in terms of idea generation, one of the more subtle lessons of trading presented on the stream is the mental game of trading.  Although Mark Douglas does an amazing job discussing the psychology of trading, there is limited literature on the importance of detaching yourself from trading.  In following traders such as @gtotoy, @jfahmy, @daytrend, @howardlindzon etc I’ve observed the value they all seem to place on “getting away.”

@gtotoy is among the most consistent and transparent traders on the stream in my opinion. In following him, I’ve noticed he regularly discusses the joy he gets in getting away regularly. I’ve observed @daytrend discussing that by the end of the week traders should be mentally exhausted and in need of getting away (like making a killer BBQ that makes me hungry every time). @jfahmy has always provided comic relief throughout the week on the stream. While @howardlindzon adds to the Instagram valuation by posting his feet on Coronado Beach.

Since I’m not a fan of preaching I will wrap it up quick. I think it is easy to become completely immersed in this business, especially as a new trader. In following more experienced traders, I’ve learned a subtle lesson that it is not widely discussed. Having the where with all to escape is important for traders of all levels and skill sets.  This is not to say working hard is not a good idea. I’m sure I can speak for most in saying that trading requires a significant time commitment; however it cannot and should not be one’s end all in my opinion.

Few Long Setups for the Week of 03/18/2012

Thought I'd share a few charts of interest to the long side going into the week.

Nice bull flag after strong breakout. Breakout over $30

Strong flag pattern. Breakout over $20

Triangle breakout over $118

Breakout over $46.75

Nice flag after breaking out, breakout over $134

Looks good over $118

Recent IPO looks good over $32.50

Couple of sector charts that also look good in my opinion below

Didn't see as many setups this week as in past weeks. However, the trend is still higher and I see no evidence to assume otherwise at the moment.

Macro Weekly Trends of Interest- Make it Your Own Idea

Thought I would share a few macro trends I am interested in lately. If any look interesting make it your own and manage accordingly within the context of your strategy.

"WLT: Bottom Feeder Explained on Multiple Frames"

Walter Energy is by no means a leader in this market. However, there may be an opportunity none the less.  I've been watching the $57 area serve as major support that has been tested many times.  Given that everyone has unique time frames and risk tolerances, I thought it would be reasonable to simply point out what I am looking at.

The weekly time frame illustrates a potential slowing in the severity of the downtrend in relation to the 20 period moving average below.

On the daily frame recent action provides further evidence for $57 being firm support in the name. The wide range bar on 03/09 demonstrates institutional interest on 145% of average daily volume. The wide range day was followed by a constructive consolidation and navigation of the 10 day moving average. Friday's action caught my attention with solid relative strength on increasing volume, as it began to breakout of the flagging pattern.

I will be watching to see if we can crack the 20 period moving average and the $63 level overhead next week for a potential entry.


Never forget to make every trade your own.

Charts of Interest - 03/10/12

Thought I would run through a few charts on my radar this week.

$HSFT- Support $15-$15.20 with room to move above $16

$USB- Consolidating above prior breakout level. Supported by rising 10,20 and 50 day moving averages with price support at $28.50. Measured move out of recent consolidation about $1.50

$GRMN- Consolidating nicely after an enormous volume breakout. A confluence of price support and the 20 period moving average at $46.50. Breakout over $48 with a first target of $50.

$FBHS- A powerful breakout this week on strong volume and a well defined recent IPO trend. Potential for trailing prior breakout support in the event of a retest.

"Charts of Interest"- Manage Risk

Still seeing a number of healthy setups. Could we correct, yes, could we continue higher yes. Identify potential opportunity and manage risk.

"Top, Bottom, Middle: Does it Really Matter?"

Lately I have been seeing an awful lot of talk related to "market tops" "need for a pullback" "over-extended" etc. However, I continue to wonder why anyone feels compelled to be the first one to officially post a "top" or officially post a "continuation" in trend. Presuming that 99.9999% of the community will not be attempting to relieve themselves of multi-billion dollar positions, it doesn't make much sense to me why so many feel compelled to attempt to predict a future a market direction.

Regardless of whether or not you are a fundamentalist or technician, attempting to front run a market seems to be a zero sum game in my opinion.  From a fundamental perspective, one would conduct an in depth analysis of the future cash flow potential of an organization, determine the value of the enterprise, etc etc and act accordingly.  As technicians, one enters a position based on an edge they identify through technical analysis, a defined risk/reward and trade a stock/group of stocks. Through experience and hours of nightly work, the setups that present themselves are often indicative of the opportunities for the technician.  A combination of the two strategies would conduct their business through a blend of both philosophies.

Either philosophy, whether it be fundamental or technical does not require the average investor to look into a crystal ball and attempt to predict the future.  As conditions change, we react. The market does not price in one's crystal ball predictions, nor does either of the aforementioned investing philosophies require such bold convictions.  The market does not consider whether those predictions are right or wrong.

Having an overall view of the markets is one thing, failing to realize the likelihood such predictions will be wrong is entirely different. The latter is exponentially more valuable than the former in my opinion.

Embrace change and realize personal convictions related to future outcomes are only as valuable as the market reveals them to be.