Thursday, June 25, 2009

Patterns and set ups


   As intra day traders it is important for us to do our preparation so that when our set ups come we can quickly execute on what we are seeing. 
   This morning was a classic example of one of those set ups presenting itself in BBBY and each trader has to ask them self if they were prepared for the scenario.  BBBY reported earnings last night and was gapping up $1.50 as the futures were making lows pre open.  Did you know how BBBY had traded the last time it reported earnings?  What is typical price action for it?  How do we capitalize on this information?  
   During the open, many traders on our trading desk noted that BBBY had traded similarly during its last earnings release (see below on April 7) and that the move came in waves until the stock had finally made a sizable up move. Further, note the extension on high volume for the stock.  If you compare the trade form the last earnings release to today, you will see an eerie similarity.  
   Again, as intra day time frame traders we need to prepare and gather as much information so that we can quickly capitalize on the information the tape is disseminating to us. Next time BBBY releases earnings I will keep today (as well as April 7th) in mind and add it to my database of information. 



 



See LEN below as well:

Ready to pounce...

This morning during our Trading RM morning meeting we talked about the current environment and how to treat it.  Everyone agreed trading has been slow, volume is declining, average daily range is declining, etc...  A great analogy was brought up: as trader's we need to be like the guy on the end of the bench on a baseball team.  He may not have played all game, all week, all season - but you can bet every professional is mentally and physically prepared to enter the game on short notice.

Everyone remembers Kirk Gibson's off the bench home run to end game 1 of the 1988 World Series.  From www.mlb.com:

"Belcher was replaced in the third inning, but despite several opportunities the A's couldn't add any runs against the Dodgers bullpen. LA managed another run off in the seventh, but things looked bleak when Stewart turned the ball over to Dennis Eckersley in the ninth. In his second year as a closer, Eckersley had really taken to the role, posting 45 saves. But after recording two outs, Eckersley was uncharacteristically wild and issued a free pass to pinch-hitter Mike Davis.

That's when Lasorda sent Gibson to bat down by a run with one on and two out. Gibson, the National League's MVP that season, was on the bench with hamstring and knee problems. But the crowd at Dodger Stadium roared as Gibson limped to the plate. After working a 3-2 count, Gibson sent one of the most memorable home runs in baseball history into the right-field stands for a Game 1 victory.

Gibson's limp-off home run was the first time a team had been trailing in a World Series game and homered to win in the bottom of the ninth. It was also Gibson's only at-bat of the entire Series. But it was enough, as the Dodgers rode the moment all the way to a World Series championship."

If as a trader I only get one at bat or one swing, will I hit the ball? 

Thanks to Major League Baseball the footage is unavailable, but we do have a Nike commercial and a Kirk Gibson interview:



 



 Good job to Trading RM guys who got long SINA, LEN, SLM, BBBY and other this morning. 

Tuesday, June 23, 2009

Name your price

A friend of the blog had some good advice on being patient in slower trading.  I think it is especially apt in the current trading environment.  He tells me to "wait for my price."  In other words do no get anxious if the set up and price does not suit me right now.

I have noticed lately that I have taken some heat initially on the majority of my trades.  In other words I am early.  I would be better off picking an ideal price (at least on part of my size) and waiting for trade to come to me.  This also involves not being afraid to miss a move.

Don't be a Kim:



Monday, June 22, 2009

Breaking the Slump - update

David Duval made a later surge and was briefly tied for the lead before finishing tied for 2nd place at the U.S. Open. 

Some great quotes from Duval in post tournament interviews (with my trading takeaway):


  •  "It may be arrogance," Duval said, "but this is where I feel like I belong."

    • Fake it until you make it

  • "It's very difficult to sit here and say second place is a failure," said Duval, who led the field with 19 birdies. "It is very much a success. It's not quite the success I had looked forward to this week and had hoped for, and in some way expected. But success, nonetheless."

    • Happy but not satisfied.  If I have a winning trade/day/week/month - I am happy but not done.

  • "I stand before you certainly happy with how I played, but extremely disappointed in the outcome," Duval said. "I had no question in my mind I was going to win the golf tournament today."

    • Confidence in yourself before others have confidence in you

  • He also said now he has more work to do and will get back to work right away. 

    • Do not spend too much time celebrating past winning trades or stewing over past losing trades

U.S. Open Championship - OFFICIAL


























































PlayerScoreEarnings
1Lucas Glover (USA)-4$1,350,000
T2David Duval (USA)-2$559,830
T2Phil Mickelson (USA)-2$559,830
T2Ricky Barnes (USA)-2$559,830
5Ross Fisher -1$289,146
T6Tiger Woods (USA)E$233,350
T6Soren Hansen (DEN)E$233,350
T6Hunter Mahan (USA)E$233,350
9Henrik Stenson (SWE)+1$194,794
T10Ryan Moore (USA)+2$154,600

Breaking a slump


A few months ago I read a book entitled "Breaking the Slump" by Jimmy Roberts.  The book is about golf but has a number of crossovers with trading.  In light of the U.S. Open which is in its final round as I write, I want to highlight a chapter about David Duval.  Take a look at the ups and downs of his career:

Highlights:

Georgia Tech: 4 time first team All American, 2 time ACC player of the year, 1993 National Player of the Year
1998: 2nd at Masters, 7th at U.S. Open, 11th at British Open
1999:  took over the #1 world ranking twice from Tiger Woods.
1999: Ryder Cup team (including this awful double fist pump):




1999: shot a final round 59 at Bob Hope Chrysler Classic
1999: 4 wins in first 8 starts
1999: 6th at Masters, 7th at U.S. open, 10th at PGA Championship

2000: 3rd at Masters, 8th at U.S. Open
2001: 2nd at Masters, 16th at U.S. Open, 1st at British Open, 10th at PGA Championship


THE UGLY:


2005: Missed 16 straight cuts
2005: earnings $7,630
March 2008: ranked #772 in world, 5.5 years without a top 10

The Return:

later in 2008: contends for British Open for first 2 rounds before finishing 39th
And as of 11:45 am est in the top ten at this years U.S. Open:

U.S. Open Championship - IN PROGRESS





































































PlayerScoreThruToday
1Lucas Glover (USA)-493
2Ricky Barnes (USA)-395
3Ross Fisher -291
T4Phil Mickelson (USA)-1101
T4Hunter Mahan (USA)-1101
T4Mike Weir (CAN)-1111
T7Tiger Woods (USA)E15-1
T7David Duval (USA)E93
T7Peter Hanson E12E
T10Henrik Stenson (SWE)+1F-2


So when interviewed by Jimmy Roberts last year what did David Duval say he has done and will do to get back his golf game?


  1. Take a break, do less
  2. Work on the basics of his game
  3. Build up his confidence to a point of bordering on cockiness (often heard fake it until you make it)
  4. Work on both physical mechanics and his mental game

All of the above sounds like great trading advice.  If things are not working do less.  Do what works.  Build your confidence.  Work on basics.  Take a break (an hour, a day, a week) if you need one.   Take small steps.  
 

Wednesday, June 3, 2009

Review of June 2nd trading and analysis by trader Michael Osacky.