The New Trading For A Living Part 2 ch 5 Good record Keeping
Good. Record-keeping. Before. We go to good record-keeping which. Is a hugely important, topic. Let. Me pause a little bit and talk. About the, question, that I was asked during the break how, do I scan for stocks I, have two ways of looking for, stocks. One, is. Lazy. And the, other is hardworking which. One do you prefer. Amazing. Me. Too. Lazy, way is this I. Go. To spike trade calm, login. And, we. Have these, elite, level traders, we call them Spikers, we, have certain Spikers, now and they, submitted, these pigs now. These guys are competing for cash, because, they get they get bonuses, people. Who are positive at the end of the quarter get, bonuses. And. From Gloria and, I think the value Gloria, a lot more than cash so, we have this Spikers. And this. Is a pigs so. I click, on direction, I. Click. On, sort. And so now I have all the lungs on top and, I have all the shorts at. The, bottom I, go. To spike. Trade I open. The special. Layout. That I have and, so I'm bearish, so I'm looking at Spikers. Who submitted short pigs this is smart guys who are really, who. Doing their research and who are trading to win, so. We have four short. Pigs dream. Quiz are one of our oldest members he's about 80 M very very savvy guide. He's, short and PPC. Hmm. I don't. Think so, impulse, system is green on the weekly impulse, system is green on the daily there, is no trace of divergence, how, to show that scratch. Me out and, Vladimir. Is shorting, TDC, I don't. See it as a short I see it as a buy more than anything else I'm not looking for. Complicated, trades, I'm. Looking for easy money I'm not looking for a challenge and or something it will grab me by the face so, let's say sit who is a very careful, guy is, shorting, spy. Let's take a look spy I can. Go back to spike. Trade and, see. What is it saying about spy, spy. Stopped, me out last week asked, him money the, skill looks stuffy and QQ, is trying to hold below. IWM. Is also diverging, daily is creating, the emotions on amazing histogram, also. A lot of reversal, and indulge. A days it's. Tricky, I feel, this could be another whip so weak. And small movement, up and down can. Stop you out I'm gonna look. Out for a, 78. Minute chart to enter the trade this, is where I look for my trades this is this, is option. A and. I look at all these smart people making. Their picks and. I follow them and and seed wrote a, very sensible, thing how he. Is bearish but he got stopped out last week it could be another week like that he is cautious, he is not jumping, him let, me show you a more hardworking way of. Looking, at those things I do. A scan of potential. And actual, MACD. Divergence s, in. All, S&P. 500. Stocks. How. The adult. Most. People. Try. To write a diversion, scan which. I. Don't. Think can be written. And. A diversion scan look here, you see red dots popping up what. Does it mean. You. Have. You. Have a peak of MACD, histogram a, break and now MACD, is coming positive, again. Prices. Are challenging, the old peak red. That red that you see, and it's not really diversions yet it's a potential, divergence, and so. I get a list of potential, divergences.
And Then, I bought them to see which, of those things I'm going to trade and it worked out quite nicely so. I. Did, the scan yesterday, I found. That among, 500. S&P. Stocks, there. Were. Six. Bullish. Signals, and. 58. Bearish, signals, single. Is a message somewhere there and. Then. I I ball them. To. See which one cell like so I found, one bullish, chart, that. Looked interesting, f. Lr, doesn't. Look bad at all a downtrend. Break. Below lower channel line pulled back to value a break, to a lower low so all stops get wiped out and. Start. Close actually higher for the week. Am. I going to go and buy it now I'm. I'd. Rather be shorting here but. But it is it is a legitimate buy I think. It. Will become a legitimate buy. If. It trades above sixty two thirty five it. Went out at sixty two thirty nine on Friday so just just, about there, look. At the daily chart. So. So no diversions, no nothing, but in any case that was that was a weekly pick, let's. Take a look at the bare signals. How. About this one. As, oh I. Think. Looks interesting, take. A look we. Have a full. Subside, breakout the impulse system turned blue and may see a histogram sliding. Force index is divergent, I mean. I look at something like this and say hey this. Is something let. Me work it up I, go. To the daily chart is this. A thing of beauty or it is insane confusion, we. Had on. Monday it broke out to a new high heat, race the beautiful, bearish diversions on the daily charts. So. Now, we decide, if, we sell it short, three. Three numbers entry, target stop I mean this is like a Trinity, rate without it you cannot go any more entry, targets top the. Distance, from your entry to your stop the. Amount of capital you are planning to risk the. Average True Range and. Get. Ready. How. About this one ETR. It broke out a new high and is. Not having a huge amount of progress doesn't, and actually. On Friday it completed, a false downside, false upside, breakout I'm sorry by closing. Below. Support, there. Is a bearish, divergence in, the weekly chart, and. There, is a very nasty looking, daily chart as well you see this one-day. Rally this, is where stops got run. And. It's sinking now I mean. It takes me an. Hour maybe to do this kind of thing you know you find five six stocks that, look very interesting now you start working them up just, keep in mind this is not an automatic trading system. Basically. You dig up it's. Like digging cap iron ore from the ground, it's. Enriched, iron ore but they still requires processing let's. Take this couple of kickers we discussed, and let's. Do real homework, daily. Homework spreadsheet. I call. It trade scan. It's. Twelve, seven. Today right, and we. Found these, stocks s all, and. EGR. So. We're thinking of shorting late, so. Now we need to work up these stocks so. Item, number one someone, asked me earlier this morning. The. Which day their. Watch the news and said the one piece of news I'm always on top of his, earnings. Because. I don't want to be to, run into an earnings report so. I click and I have a link there which. Says inves, which is a wonderful. Research. Website. I. Click. S, all. Earnings. Were October, 29th, so no, worries about about. Earnings, so. 1029. Were in good shape and. ETR. Earnings. November 4th again we're in good shape so the, next item I want to check is. What is the short interest in a stock. In. Futures, the, the, number the sheer number of long, and short can't. Is always, equal exact. Buttons. But not so in stocks in stocks you have very few shorts, but. Occasionally, you have a stock which has a very large short, interest and. It's. Very good if you buy if. Stock starts rallying, those, shorts, will run and. As they cover the stock can go vertical, so. If you're buying in a stock has a large. Short interest it's a good thing it's. Like a next. Philip. There if. You're shorting, and the stock has a very large short interest then you're joining the crowd that's, not, so.
Let's Check what the short by, the way last week you can see here I had. Three. Candidates. I, showed. You one of them DDG, the. Impulse system stayed read but, short, interest in DDT was 35%. Which is enormous. Enormous. Short, interest so. For a buyer it's a very good thing for, a. Short. Seller I wouldn't touch it with a ten-foot pole another. Stock was considering, last week was tesla short and short. Interest in Tesla was 23%, I would not sell short a stock with. That high shot interest once it goes into the teens count. Me out, days. To cover again, there is a free website. Short. Squeeze calm, and. S. All. Shorts. As a percent, of float is, 4%. Days. To cover is six. This. Side. Short. Squeeze calm, it. Says short. Percent, of float meaning, okay. So, short percent of load below 10 is normal, low. Single, digits is is even more normal. Above. 10 alert. Into. Into the teens I would already be reluctant to sell shrewd and and, they're not a thing this is somewhat artificial, number days to cover if. All, volume, was dedicated, to covering shorts, how many days that would need. Six. Days. Let's. Do the same the. Same query on EGR. Short. Percent, of float, for. 98, percent 5%. Days. To cover four days three, point eight days no. Problem no objections, well. Let's do a so next. I look at this, thing, the, question my, spreadsheet. Asks at what level will. Impulse, system go, blue, it's already blue on the week list at, what. Level will it go blue on the Daley's it's already blue into Dallas. So. I have, no problems. At. Either one blue. Blue. And. Next. It asks me, what, is the one eighty are in s, o so, s o. 45. 27:45, 93, so, 180 R is about, 65. Cents it's, 65, cents. And. Now it asks me, what's. Your entry price the. Moving average, is at. 47. 47. I would. Say yes somewhere there 47, 47, well, 47, 49, I want to buy to sell a little bit about value, I will, sell it short. 47. 49. What's. Your target I would say this orange line around, 45, is. The reasonable, target on. The weekly targets on weekly stops, on daily stops. On dailies what's your stuff well, this. Guy was. 4831, that's what stops get blown out I'm, not going there. 4831. This. 148. 1748. 14. 4. Th 13. I, would. Say 48 16. How. Am i doing with a TRS so. My stop, is about, 65. Cents away is, it I'm shorting, at 47, 49, protecting, at 48. 16, so this high was, 48. 31. I will. Say. 4839. I'm trying to put my stop off of some kind of chart pattern, so, I'm going a little bit about this one I. Come. Back to it how. Much am I gonna risk now. I will risk anywhere from two hundred to two thousand, dollars per trade. Depending. On whether, I'm really doing with the serious, trade or, a play trade, let's. Say it's a play trade so. I'm going to allow myself $200. Risk, how. Many shares my myself short the. Formula, calculated. My risk I am risking from. Forty seven forty nine to forty eight thirty nine. 222. Shares to Huntress. Now. What. Happens time and again I will work up a stock like that and in, the end I'll say makes no sense the stop is too far the target is too close and so. I will be plowing, and plowing, and plowing, and discarding. Four out of five stocks until. I finally say this is the one and. This. Is professional trading for you. Plowing. And discarding, plough and can discarding, it's not just oh let me okay SSO looks good oh sure, it looks good everybody, agrees it looks good do, the numbers line up. It's. It's boring, work, I don't, enjoy doing it and that's. An I do it. You. Have a you have one, more. Self-test, there, with, questions, five lines of questions. Think. About tomorrow and. If. It was the morning fill. Out the boxes and, rate, your, readiness. To trade. Start. Using it and start, changing it with the whole point is five, questions. And in, a moment you know should you be trading today or not. Let's. Talk about good record-keeping I. Wrote. This book back, in 2006. I think a book of interviews with traders I finished, this book and went, around talking to people about it many of them said what, do these traders have in common. They're. Men and women Americans, and foreigners, people. Who trade stocks options futures people, who very, short-term, and very long-term. One. Thing they have in common but they all had in common they had excellent records. Just. Really excellent records, show. Me a trailer with, good records and I'll show you a good trader I keep. My records in a trade journal which we have at spike trade calm, take. A look at the questions, entry. Target, stop, how. Much will you risk per, trade, what. Is the name of your trade each trade, has to have a name call. It a system call. It a strategy each, trade, has to have a name so these are my trades false, breakout, with the diversions, pulled. Back to value, fading. Can extreme, trading, against an extreme, and fundamental. And, that's all I have for strategist, so. If you tell me hey, take a look at such-and-such stock, and and. And it looks attractive to me and I want to trade it it.
Has To fit one of those four strategies, if, it doesn't fit it there is no trade, each. Trade, has to have a name here. In the trade journal it enables, me to attach my chart and then, when I exit, a trade I have. To classify every. Exit every exit deserves the name hits. Target, hit stop hit value, hit envelope, trade. Going nowhere, started. Turning couldn't. Stand the pain how about that couldn't stand the pain anybody, heard of using stops obviously. Not the person who couldn't stand the pain. Drunk. Trade have no business being in it, and. Now. I can pull up my equity, curve for all of those strains what. Do you think is the difference between my equity curve for hit target, and couldn't, stand the pain. But. This is how you learn by keeping records on yourself. Daily. Homework just, as I do that psychological. Self-test. In the, beginning of the day I do, this. So. Tomorrow, morning before, the market opens I'll, click on this link check. Forest markets. And. I'll switch from the u.s. to Asia, why. Because. Markets, go around the globe. Europe. Us Asia Europe us like a dog chasing its tail yes. Of course is the most important. But but it goes, in a circle so. I'll look tomorrow morning cannot see how sneaky doing, how hanxiang doing. How's. Shanghai. Doing and then. I'll go to the spreadsheet, and I will write like, a rotten Friday up. 0.2. To 1.3, percent, so. Asia was strong, coming. Into Friday morning, next. Line how's, Europe, doing. And. I will look at only at food say and the Ducks so. Again on Friday coming Kim both food saying the Ducks were strong no surprise, that the US market went up you could see this wave. Floating. Around the globe Asia, went up Europe, went up now we're opening. Chances. Are very high that this will continue. Economic. Calendar. But. Look for example on minded there were no great, news, Thursday. Jobless. Claims the, retail sales on Friday, producer. Price index you. Know that those big numbers are coming they usually come before the markets open you. Want to watch how the market, reacts to those numbers how, it rates before and after, market. Watch market. Watch is the most popular, website, for. The trading public so, I want to see what the trading public is being fed today. Share. Prices of euro yen, oil gold, bonds. By. Now you're starting to get in gear what was happening in the market Baltic. Dry Index has. Nothing. To do with the Baltic Sea but has with the price of moving. Cargo, across. The ocean, and, one. Considered, to be the most sensitive leading, indicator, of world economy new, high new low VIX. S&P. What. Is S&P related, relative to cash my. Expectations. Of the S&P candle, I don't, always have an expectation, but, when I have the next day I go back and I color it green if my call was right or.
Red. If it was wrong and this. Is my morning homework, a hugely, important, thing. Become, your own teacher when. You keep a trading, die and keep your trading career it's two, months after you exit the trade pull up its chart and mark up what, he did right and what we did wrong.