Archive for January, 2009

Obama – Week 1

January 28, 2009 Leave a comment

In his first week, Obama was able to get an $819 billion stimulus bill passed that will include  spending increases and tax cuts in to revive a badly ailing economy. This was after a day in which bank stocks soared with Citibank rising over 18% and bank of America extended its gains by almost 14%.  The fed also made it clear that they are willing to whatever they can to get our economy back on course.  All this is quite positive after the many earnings reports that have hit the street in the last week or so.

Wall Street has always traded on humans two biggest emotions: Fear and Greed: it just so happens this time around, we witnessed extremes of greed and fear in an extremely short period of time, causing the major indices to plummet.  We now have a market that is just hoping for things to improve. Market sentiment can change in quite a hurry, when fear starts to wane and long term investors start to realize that the US economy will survive and things will indeed get better. They start to analyze the blue chip stocks and see there share prices at Historic lows.

In Obamas first week in office, I believe he given the World a look into what will here for the next 4 years. A man driven to make a change. That he will do whatever necessary to create jobs and to stabilize the housing industry. He will not be right in all his decision making, however he posses the confidence to make you believe that change is coming. This is exactly the confidence that will drive this market higher. If the market believes that things will get better, than prices will soon start to reflect this. Remember, the stock market usually prices in 6 months in advance.  The financial sector is one of the biggest reasons for the collapse. therefore, if we continue to see the banks trading with high volume to the upside, there is great probabilty that the worst is behind us and the market will indeed move higher.  But as always , let the order flow dictate your trading!


Knowing when to trade… Being Patient

January 21, 2009 Leave a comment

Today was a great example of keeping your powder dry during slow periods so you can take full advantage of the markets when the obvious order flow start kicking in. Through our mentoring program we are looking to maximize everybody’s potential. That included telling traders when to sit on their hands; lunch time is a classic example of a time frame where trading expectations should be low. It’s a perfect time to actually have lunch or go for walk, instead of looking for trades that are not there. Getting into a position for the sake of being in a position is an easy way to part with your money. Pete here in the office seriously said that it’s almost the same as getting $100 from the bank and burning it. The bottom line, find a better time to get involved.

This afternoon, commodities and the financial sector starting to push the market higher and we started to look for stocks breaking out of intra-day ranges. When we found them you need to jump on them. If you have been to aggressive during the period of time when you are doing low probability trades, you might not have the buying power to take advantage of higher probability set ups.

A lesson that every trader needs to learn, and find the discipline to stay away from is those low probability situations. Look at the chart this afternoon of XLF, CSCO, MSFT, ERTS, and many other stocks that we are consistently stalking; and you would notice how much easier the order flow was to read in the afternoon vs. the lunch time period.

We will continue to repeat this over and over, simply because it’s a basic characteristic that must be learned in order to be a successful intra day trader.

the number one goal for new day traders

January 20, 2009 Leave a comment

It amazes me how many new day traders have the same question. How can I make bigger profits more consistently on each trade?

Can you just show me how to make big money please? During the first interviews we have with potential traders and then right up through the first day of Equity Trader 101 we talk about trading goals. What are your goals, we ask. What would you be satisfied earning as a trader for the year. If one year from now you look back and say I would be OK with that number, what would it be?

The typical answer is somewhere between $100,000-$150,000. I ask what are you earning right now after four years of college and five years on the job? I am sure you can guess the answer for the majority of these potenital traders is not close to $100,000.

So at least now we have a starting point. Lets get to $100,000.

Lets go back to the how do I make bigger profits? I will answer it with a new question. Why don’t we first focus on earning some profits?! Lets learn how to make those profits consistent. then we can learn how to make bigger profits.

Learn how to run your business first. Learn to pay your bills. Then learn how to take your business to the next level. Of course you want to learn how to run a million dollar business. Who doesn’t? Learn how to run a $100,000 business first, learn to book profits and how to take losses so that you are around long enough to take advantage of your experience.

Earn while you learn. Get paid to learn. Don’t laugh at a $50 profit. Take it. Put it in your pocket. Now do the same thing three times an hour. All of a sudden you have a bunch of acorns in the bag and you get paid. Get paid something while you are learning. The you while have some experience and understand when to push your leverage and when to scale it back.

Now I know this advice doesn’t apply to most of you because I know all of you are earning well into the seven figures from your trading so why would you bother wanting to earn $150-$200 per hour. 🙂

Keep the business in perspective. Make a living before you try to make a killing.

Day Trading Technical Analysis

January 16, 2009 Leave a comment

Charts for review:

























Categories: Uncategorized

2nd week of 2009!

January 13, 2009 Leave a comment

Second week of trading for 2009! Here we go… everybody has been ready to go setting goals for trading, and making sure they start the year off on a good note. The best place to start is making sure your goals and your plan are compatible with each other. Then you have to make sure you stick to your plan. At Keystone, we have been pounding the table with traders, and ourselves, to make sure we are ready and prepared for this year.

As for the markets, we are still carrying plenty of issues from last year. The financial sector continues to be in the limelight with TARP II coming into the discussions before the start of the Obama inauguration, congress is trying to get it to vote by this Friday. That will also be options expirations ahead of a long weekend, since Monday is a day off. If the congress is able to pass the TARP II, it will be interesting to see the restrictions that are imposed to financial institutions, and how the stocks will react to them. It will also be interesting to see what if any restrictions are placed on where this money can be used, remember that TARP I was spend fast and without any real plan.

Nonetheless, with all the uncertainty still left, the VIX index has come down as leverage has come down in the equity markets. Cash positions are relatively high, historically, so for now we do have lots of investors on the sideline. This bodes well for intra day traders, since order flow becomes easier to read and follow.

The year started better, with clearer order flow… Let’s keep our New Year’s resolution and stick to the plan and our goals will follow suit.

All the best for 2009!

new office pics #2

January 12, 2009 Leave a comment
main trading floor, back offices

main trading floor, back offices

new office pics

January 12, 2009 Leave a comment
new mentor room, kitchen

new mentor room, kitchen