Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
What Isn't Working in 2009
What Is Working in 2009
We have truly come full circle. 2009 is 1999, and the Greater Fool Theory reigns. This is getting really, really demoralizing.
I'll never forget 2002, the year I began trading. Initially I
followed very simple chart patterns based on William O’ Neill and Investor’s
Business Daily (hey, a cup and handle!).
For several months I did pretty well, averaging a 2-5% gain per month
taking short-term position trades on individual stocks. It didn’t seem too difficult
consistently making small gains. At the
time I was reading every book on trading I could locate and rapidly adding an
array of indicators and methods to my plan.
One book I read covered the business cycle, and it seemed that steel
stocks and the economy were ripe for a rebound after the crushing bear market. Another book I read covered options, but I
didn’t read beyond chapter 1: calls and puts.
I watched
American Steel carve out a double bottom with a bullish divergence in
MACD. It’s long, declining trend line
was breached, and like a good trader I waited several days before buying to
avoid a potential false break. My account
at the time was $45,000, and I used it all to buy front month call options that
were out of the money by $2.00. I
initiated this trade near the top click of the range, and within 5 minutes I
was down $2000. I’d never lost more
than $150 on a trade until then, and I became oddly paralyzed, unable to sell
and accept such a hit. A week later my
account was below $20,000, I eventually sold the options when it hit $3000.
The worst
part wasn’t losing the money, it was losing hope that I could actually trade
successfully, something that I absolutely loved doing. I didn’t trade again for two years. As you see, American Steel took off nine
months later, quadrupling in short order, but I was not aboard.
With
every market defeat lessons are learned.
Roughly half of my current trading plan is geared towards avoiding a
repeat of that awful trade. Here are
some of the lessons I learned:
Thanks
for reading, and trade safe!
Well, the bearish rope-a-dope is in its seventh glorious month. One might have thought, when the /ES was getting pummelled last night, that today would be a kick. Not so.
My solution? Limericks. I just dreamed up a couple of get your started. Lord knows the charts aren't helping, so maybe this will change things up.
There once was a banker named Hank
Who feared that the market would tank.
His handouts galore
Made taxpayers roar
But who cares when your friends all own banks?
An analyst named AJC
Was just sitting down next to me
When I glanced at her face
I dashed off to race
and won not just one Sprint but three!
I'm not going to open up the bar today. Sorry, Bo. This just isn't a day to celebrate.
It is, however, a day for some stark honesty……….the deep dark truthful mirror. Because, as traders, we need to be honest with ourselves on a daily basis. The truth hurts sometimes, but pain is good in the long run. Life means suffering, as the Buddha said.
I will start by presenting this paragraph from a post I did this March; I have emphasized a few portions of it.
Now, just in case you think this bullish conviction was just a once-in-a-blue-moon thing, it's not. I have mentioned 1050 over and over and over again, as this Google search illustrates.
So here's the brutal truth for me: my inability to embrace and act on my own excellent analysis was probably the biggest failure for me as a trader thus far in my life. It makes me disappointed in myself, and it diminishes my reputation. But I still am here, day after day, head held high, in spite of my abject failure to execute properly. Outstanding analysis and failure to execute combine to yield nothing.
I'm going to try to be a little more discrete about my account size, but let's just say this – – I hit my peak back in March at a figure we can call 100%, and I've spent the past five months grinding between 100% and 85% ever since (some detractors probably figure I've lost 95% of my account, so I'm sorry to disappoint you goons). I've been creeping toward 85% more and more, and I'm there right now. In other words, I'm at the low end of my range, and that stinks, considering how accurately I "called" what was ahead back in March.
Bottom line: be honest with yourself, day to day, hour to hour, minute to minute. Anything else is a fantasy.
So I'm ending the week on a low note. I'm near the bottom of my equity curve over the past five months, and I stare in the face of a prediction that would have been profoundly beneficial to me. The only silver lining to this very big cloud is that 1050 is tantalizingly close.
I only wish that I had in my pockets the profits I would have amassed if I had followed the pathway that I laid out myself.
When I was in the 5th grade, there was a kid in my class by the name of Kevin Healey who was (as federal law requires) the designated "cute kid" in the class (I was the smart one). All the girls liked him. He was really popular.
Now that we were in the 5th grade, we could run for student council. Typically the 6th graders ran for President, and the 5th graders ran for Vice President. I signed up for the campaign, and I tried my best to explain to the kids why they should vote for me. "Vote Right, Vote Tim Knight" was my catchy slogan.
Once the votes were tallied, the cute kid won, and the smart kid lost. I was in tears when I told my Mom the news. I felt it was really wrong for the popular kid to get to be on the student council, especially when he could barely write his name in the ground with a stick. But that was the result.
The next year, I tried again, but this time, I ran for President. Against Kevin Healey. And even though my prior experience told me that I would get trounced, I did the best I could. And I won. In the end, the smart kid finally won.
When I was 16 years old, I was audacious enough to want to write my own book. I put a proposal together and submitted it. It was about how communications between computers would change the world (the book was called The World Connection, and I wrote it ten years before even the first primitive browser was introduced).
The rejection letter came in the mail. I slunked off to my bedroom and thought about it for a while (the future Mrs. Bear sat in the living room with my mom, since they wanted to leave me alone). I picked up the phone – called a different publisher – got their acquisitions editor – and got myself a book deal.
And I went on to write twenty published books before I was even out of college.
In 1992, I started Prophet, and a year later, we were a prosperous little business. A competitor of ours (we surmised) decided to cut us off at the knees, so they burglarized the office. They smashed all the windows, took all the computers, and took all the tape backups. We were effectively out of business. All our customer records were gone. Our data was gone. Our code was gone. Everything.
I rebuilt the business (alone – – my partner got out after that) and sold it for $8 million.
And, as a trader, in the spring of last year, I was getting devastated. The typical suspects (Goldman, CNBC, other bankers) were cramming their crap down everyone's throat and pushing the market higher. I was getting mauled. My accounts were plunging in value, and I was a laughingstock to friends and family. Hateful voicemails arrived. I got mocked on other blogs. I doubted I had any talent at all.
I closed the year with my two biggest accounts having gains of over 180% and 350%.
So to to all the cutey pies saying things like……….
…….my response is this: people have been trying to beat me down all my life, and they usually crawl out to do so when I'm at a low point. Like now. But I find it within myself to come back, and in the end, I win. It never seems like I will, but I do. And I will.
Your crooked friends in Washington and in the Goldman Sachs building are the only reasons for this rally. Maybe the market won't collapse until Q3 earnings start coming out, and until then you will keep snickering. But my faith that:
To the 99% of the folks who have written me supportive emails and comments, I thank you, and I'm sorry for all of us this is so hard. Slopers are, by definition, smart, disciplined, and mutually supportive. To the 1% who have recovered a portion of their losses and are getting their jollies spitting in our faces: go to hell. And if you're lonely, stick around and wait for Blankfein to drop dead, since he'll give you some company there later on.
