This beautiful chart on Total System Services (TSS) says it all. Bought right before market close today.
Institutional stock traders have besieged trade the trend investors like us. In cold, evil, rage, Institutional traders are selling into the up swings and buying to cover shorts into the down swings to compact the swing range too narrow for the majority of us to make money in. This has made head fakes both to the upside and to the downside over the past week.
What has scared bears like myself is that an official higher low is now in place with confirmation today.
Like I wrote about last week, the life cycle of the previous downtrend channel has come to an end. We are now in nomad land while a new channel is being created. We do not have sufficient data as of the close today to figure out if we are moving into a sideways trading channel, or an uptrend channel.
As there is no obvious trend, then what must trade the trend traders do? Move to the sidelines and the shelter of cash.
At present we have been in cash twice over the previous couple of weeks and when we thought a new trend had been established making us jump back in, it turns out we were head faked and slaughtered. I do not know about you but I’m tired of getting my butt kicked by the better equipped and armed Institutional traders.
Someday we may have a Traders Bill Of Rights where the battleground is made just, but for now, inequalities continue to exist amid professional and amateur traders such as Institutional traders have access to all limit orders, they have direct access to market makers and can make non-open market trades, they have access to a faster stock data feed and can use high frequency trading schemes against us, and they use the media groups to manipulate public opinion about a corporation or the economy as a whole.
Something that is also key is that on the daily chart of SPY, bulls have re-taken the 50 day MA although we still need verification of the break.
The mistake I made was leaping back in this market twice now and being incorrect both times. This suggests that I ought to raise the bar for what I judge to be a new trend taking shape. This suggests that I should find more bullish or bearish indicators on the charts of stocks than I have in the past. Even a Bearish Head and Shoulders Top and a Burial Cross was not enough to bet my money on the short side. Not even a Bullish Downtrend Channel break was enough to place my money on the long side. Each and every one of these indicators have meant nothing over the last several weeks. The only thing that these technical indicators have accomplished is to lure us trade the trend traders from off the sidelines and into an ambush where we have been slaughtered by the thousands.
Your search on information on the topic of avoiding losses in trading says to me that your brain is in the correct place. A large amount of newbie stock traders concentrate on greediness or the reverse of risk aversion. Amateurs imagine how much money they can make if their stock goes up to xx, and not about how they can lessen stock trading losses.
Can you avoid losses in stock trading? Nix that idea. My own 10 year accuracy rate varies between 70% and 80%. In other words, 20% to 30% of my positions result in losses. However, there are steps you can take to shrink losses when stock trading.
1 – Don’t try and earn back your losses. The most awful action you can do after a loss in stock trading is to make a decision that on your next trade you will make back the loss. Lots of amateur traders will put on a riskier stock trade in a penny stock or any stock they think can appreciate in value even greater than their original losing stock trade with the plan that they will make back the money they lost. Do not do this. Getting in a riskier trade suggests you now amplified your chances of having a second losing trade. Do not get gluttonous and lose all awareness of fear because of a loss. Instead look at your stock trading method. Did you hold to your stop loss strategy? Did you rationalize and give reason for why you were continuing to hold the losing stock even while your original profit thesis was broken? Make any adjustments you need to your stock trading method then move on.
2 – Hold to your stock trading method. Quit jumping around from stock trading method to trading system when you incur a loss. No stock trading system is flawless. Continue with your stock trading system and make changes as desired but don’t hop from trading system to trading system. Get very good at a trading system before you make your mind up to machete it. As well, don’t become frightened and be exceedingly conservative.
3 – Determine the trend of the most important indices. Use either the S&P 500 or the Nasdaq and determine the trend prior to buying or shorting a stock. The idea is to trade with the trend, not counter to it.
4 – Determine your profit thesis before you enter the stock trade. The profit thesis must include what percentage profit you will have before you sell, and what percentage loss you will have before your sell. You must never risk more than you are attempting to profit. For example, in company ABC I am going for a 5% to 10% gain, with a 5% stop loss. Cut your losses quickly but allow your winning positions to ride.
5 – Enter your positions at a better level. I have found that when I go long a stock, if I’m up the same day of buying, my likelihood of it being a winning trade for me go way up. The entry is so vital that several famous traders have gone as far to say that they make their money on the entry, not on the sell.
Though we have been kept awake at night wetting our sushi pajamas in dread of losing trades and diving off our dwelling, nearly all losing trades come from misconceptions born within our heads.
This is how most losing trades go down:
1 – Double down. Whatever dummy thought of this idea had to be a guy with a lot of money. The original hypothesis of doubling down must have come from a smashed well-off guy in Las Vegas gambling at the MGM Grand Hotel and Casino. The theory of doubling down is easy, if a stock you are sitting in drops 10% in price, buy double what you initially purchased. As time passed, as poor common folk got their hands on the theory, it mutated into averaging down, meaning purchasing any additional amount of a stock that you are sitting in when it drops 15% or more.
Evil stock trader Nick Leeson perfected the science of averaging down into losing trades, or so he thought. This double down stock trading whiz kid caused the fail of Barings Bank, United Kingdom’s oldest investment bank, for which he was sent to jail.
Never throw good money after bad. Never risk more than you are seeking to gain.
2 – Value investing. This tactic must be the brain spawn of immoral institutional traders who trust the stupid common folk will help them in selling their longs in a down trending market. The hypothesis of value investing is uncomplicated, look at the P/E ratio. If the average P/E ratio for a sector, such as Tech, is 18 and you find a company with a P/E of 12, then you are buying this company at a deep discount, a genuine valuation jewel, correct? Not!
There is a logic for why a company has a P/E less than a industry arithmetic mean, institutional investors do not like it as much as they love other businesses within that sector.
Most valuation entry points involve buying a business that is within a downtrend. Thus, the majority of value investors buy low and sell even lower.
Never buy a stock that is within a downtrend no matter how low the P/E ratio is.
3 – Cling to a losing stock trade until it eventually comes back. This is the cerebral retard line of attack. People that do this have no business putting their hard earned money in the stock market. Their reminiscent of that monkey that grabs the fruit and then the trap closes on the arm. If the monkey would let go of the fruit, he could run away from the trap. But the monkey just can’t let go.
Time is value, it’s the stuff existence is made of. Way back in March of 2000 the Nasdaq traded at 5,000. Today it trades at less than half that at 2186. So for the last 10 years, you are still waiting for the market to come back. Those are 10 years you could have been investing and making money, everlastingly gone. At just 10% a year, you could have doubled your money. But it’s worse than that.
The majority of retards which use this strategy can not do math. Let us say the Nasdaq dropped from 5,000 down to 2,500 or 50%. Most monkey retards believe if the market goes up by 50% they’ll get back to break even. Not true. The market would have to go up 100% to get back to 5,000.
Never use buy and hold on a losing trade. Get rid of your losses as swiftly as possible.
In the episode below I chat a little about the ludicrousness that is value investing.
It is official. The Stock Trading Master got beaten by professional stock traders. What happened? He was tricked in to shorting the market by the bearish Head and Shoulders top and the Burial Cross and then was creamed by bulls as the market reversed.
Even more complicated, this is the Stock Trading Master’s third loss back to back. This means that the stock trading regulation kicks in where Lance tells himself he needs to be seated on the sidelines for about five trading days.
It’s strange. When you do not have a individual investment in the stock market how understandable matters become. You are not a bull looking at matters from an optimistic predisposition, nor are you a bear looking at matters from a negative preconceived notion. You truly have no bias as not any of your own money is at stake. As a result, your opinions turn into being clear as you see the stock market for what it truly is.
Having a trading loss decree is so essential that some tribute the fact that institutional stock traders beat newbie traders just since they have such a law. When a chap at a trading desk has a succession of losses, the boss comes up and taps the stock trader on the shoulder. That means he is finished for the trading day. No questions. No disagreeing. When the tap comes, you turn off your trading workstation and go home.
In this episode Lance literally breathes fire in rage over his 3 successive losses. He then rips into himself and screams no more trading!
Facebook COO Sheryl Sandberg made a speech at the Nielsen Consumer 360 summit recently where she said that email is most likely going away and replaced with Facebook.
The reason for this that she gave is, in consumer technology, if you want to identify what people like us will do in the future, you see what young people are doing right now, and the most recent figures reveal that only 12% of adolescents use email. Most of them use Facebook.
Thus Sheryl is telling us that more teenagers are using Facebook and hence, in the future, all adults will be on Facebook.
Ludicrous.
There is little basis in reality for this logic.
Do we say, well, in 2000, adolescents began purchasing ipods hence, all adults in the future will be buying ipods so you must think of Apple as truly a valuable corporation at the moment for the reason that one day, all adults are going to be Apple consumers?
That’s Downy common sense at best. Who can tell us that these same young people are going to be interested in Apple in 10 or 17 years from now? The earth is not stationary, in particular technology. Some new business will probably come out with something still more improved that makes ipods archaic that many years from the present. Also if ipods are still around in 15 or 21 years from now, whose to tell us that human psychology does not command that a certain number of teenagers outgrow them as they mature, change, partake of more burden and responsibilities on their life like providing groceries and refuge for a husband or a kid?
This logic is a huge heap of dung that COO Sheryl Sandberg eagerly stepped into by her own actions.
However it gets even dumber.
A recent marketing poll shows that adolescents are actually quiting Facebook for three reasons: 1 – adolescence are no longer on Facebook because their parents are there now, 2 – for the reason that there are too many older people nearby, and 3 – they are concerned about secrecy.
Hence following COO Sheryl Sandberg’s reasoning, Facebook is in trouble since youth are beginning to use it less.
Sheryl was attempting to build up the worth of Facebook in peoples minds by means of her statement of watch what teens are doing right now, but what she ended up doing was reaching exceedingly far and stepping on top of a icy slope that has opened the door for criticism.
Just what does Facebook COO Sheryl Sandberg have to say about this recent marketing survey of adolescence that shows their usage of Facebook is going down? She has ran off akin to a dog with its tail sandwiched between its hind legs.
And that’s the reason why Facebook and COO Sheryl Sandberg win this week’s stupid business move of the week honor.
Word of warning! Some investors will see this video as very provoking.
Occasionally the only manner to teach someone is to insult them and upset their feelings. Tear them down from their condescending, I already know everything dais. You have been warned.
I am sick and weary of reading each and every one of these crisis newscast stories concerning how dreadful the market is and all the wealth that has been lost over the last several weeks in the stock market. Pardon? I have increased my wealth on the short side. The only question I have for you is why aren’t you?
We know the reason why. If you aren’t making money on the short side in this market it’s for the reason that you are an idiot. You are brainless. Just take a deep breath and state to yourself that you are really half the trader you thought you were.
Why half?
Reflect on a quarter. It features two sides: heads and tails. Provided you take away one of the sides, it is not a quarter anymore. By way of definition a quarter has two sides.
At this moment consider your trading approach. If you are not ready to go both long and short as technical analysis and market trends dictate, then by way of definition you are not a trader because a stock trader can do both.
I do not wish to listen to any excuses either like, I do not have a margin trading account so I can’t take the short side. Listen up you dummy. There are many bear market ETFs out there which you can buy just like a stock by way of a cash trading account and no margin.
In this episode, I’m going to rip into newbie investors and really offend some people. However understand that if I did not care regarding helping people turn into superior traders, I would not bother even doing a video like this. Someone has got to be straightforward with you and label it the way it is if you are going to turn into a more improved trader. If this video hurts you, then it’s because of a failing in your own stock trading method. You truly need to do some sincere self contemplation.
