Introduction to my trading style

I've been trading full-time since September 2007. I think I'm beginning to find my style. I've borrowed elements from other influential traders like Trader Mike (position sizing) and Trader Jamie (entry techniques). I'm not suggesting that anybody tries to emulate my style, or that my style is better than another style, but it is simply what works best for my personality. I think of myself as a long term short term trader. I never hold anything overnight, but I prefer to be in a stock anywhere from 45 minutes to 6 hours. Early on I ruled out scalping as being too stressful. I had to scalp here and there in October '08 due to the frenetic nature of the market and the VIX hitting 90, but I didn't much care for it. I've read four books on trading just to give me a solid base, the rest I expect to learn from the market. Here are the books though: Trade Your Way to Financial Freedom by Van Tharp, Technical Analysis of Financial Markets by John Murphy, Trading in the Zone by Mark Douglas, and Market Wizards by Schwager. Education is important. At the same time, if you want to learn Spanish, you could take 4 years in high school, or 2 years and then live in Mexico for 6 months to pick up the rest. I think immersion is the best way to learn any subject.

I'll try to run you through a typical day. I start by looking at the European markets, which are highly correlated with our own. I look at whether they are choppy or trending. I glance at the Asian markets, but they mostly reflect what happened in our markets the day before. I look at the top headlines. If there is a mix of good and bad, and European markets were choppy with little movement, then I will probably form a loosely held expectation that our markets will be choppy that day. If European markets were down big and all our headlines our negative, then I might expect a downward trending day here. It's important not to have too much bias though and to look for early confirmation of your bias. I never trade before 10 EST, so that gives me time to look at the open range to gather evidence for sticking with my expectations. You have to be prepared to throw your bias out the window and be open to what the market is telling you. From 9:30 to 10:00 I look at the stocks on my watchlist to see what is moving the most and getting the most volume. I have about 10 stocks that I like to trade and I'll rotate stocks in and out. I have a Trade-Ideas unusual volume type scan going throughout the day but I don't often trade those stocks. It can be useful to see which stocks are getting investor's attention though. Throughout the day I watch the following using 15 minute candlesticks: QQQQ, USO, XLF, XHB, VIX, AAPL. When I narrow in on a particular sector I will bring up the charts of similar stocks. If I'm trading CF, I'll also be looking at MOS and POT. Looking at each of these charts, I ask myself where is this stock most likely going to go. I admit that I don't know exactly what is going to happen. But looking at chart patterns and support and resistance I take an educated guess about the path of least resistance. Admitting that you can't predict the movement of any stock with 100% certainty frees up your mind. My best trades come when everything lines up. For example, QQQQ and XLF are both setting up inverted cup and handles, USO looks like it's going down and I'm trading the same C&H pattern in AAPL. Every time I put on a trade, I try to have as many factors going in the direction of the trade as possible. I trade breakouts using several different entry techniques. I look at the time and sales when a stock is breaking out and try not to stare at it too much once the trade is looking good. I also use tape reading to help pinpoint my exits. This is an art that I don't think I have come close to mastering, so I won't even try to explain it right now. Just like with my entries, I like to have several reasons to exit a trade. I try to let my trades run until there is just too many reasons not to be in the trade any more. I have an alarm that goes off at 3:40 just in case I haven't exited a position yet.

I think that pretty much sums up my style at this moment in time. It is constantly evolving so I'll probably have to post an update in six months time.