Subscribe Feed (RSS)MYOG
March 27th, 2006 by eyal | Filed under Day Trading. |
Print This Post
I took one trade today - long in MYOG which resulted in -1R. It seems like I’ve been treading water for the past week or so. Looking at my equity curve I can see that this has happened before, every time I’ve made some good progress and new high I’d spend several sessions in a kind of consolidation. It can be quite frustrating. I call it the equity curve dance, lots of movement back and forth and effort expended but not really getting anywhere new. I wonder if anyone else is experiencing this and if it’s market conditions related or just the nature of statistics and probability.
Hmmm, MYOG has been in a downtrend for the last month. What prompted you to go long on this one?
“I wonder if anyone else is experiencing this and if it’s market conditions related or just the nature of statistics and probability.”
Well, using the “Rip Van Winkle” test and looking at the NASDAQ Composite, if you had gone to sleep in early January and woke up yesterday you’d think nothing had changed. Tha NAZ has been rangebound since about Nov 2005. I think that is the classic definition of a “choppy” market. If you are trading those stock, statistically it makes sense that your equity curve has gone no where. On the other hand, I suppose a stop-and-reverse trader would have loved the last few months.
Hey Scott,
Yeah that makes sense. I was under the (apparently misguided) impression that day traders are somehow less susceptible to the longer term trend (or lack thereof). I also don’t have a lot of contact with other traders to be able to tell if what I’m experiencing is unique to me or experienced by others so thanks for sharing your thoughts.
P.S. I had to look up the Rip Van Winkle analogy, which is a good thing. I’m always keen to learn something new :)
Oh yeah, why I went long MYOG, actually I deviated from my trading plan a bit on this one. The main reasons I went long are that it was very active, gapped up and traded on above average volume.
MYOG gapped up and hit its 50DMA on the first bar. That then acted as a ceiling (10:30am and 2:45pm) so in my opinion there was little potential upside to this one and a bigger downside (but then with my track record …).
:-)
ET
Eyal, I got the “Rip Van Winkle Test” idea from Dave Landry (who is a swing trader). The idea is that if you had gone to sleep in November 2005 and woke up yesterday, you’d think nothing has really changed with the NAZ — it’s pretty much where it was back in late November.
I consider myself to be a swing trader, too, so that tends to be the context in which I see things on charts. In my mind, odds improve when the sector and (preferably) the market is in sync with the direction of my trade. Although I have no real experience as a day trader (well, actually, I do from long ago…but we’ll just ignore that period of my life, umkay?), from a conceptual point of view I would be inclined to agree with you that “day trades” should be less dependent on market trend. In fact, I often look at stocks day traders comment on in their blogs and very rarely do I see a trade I would have taken as a swing trader.
Oh well, you gotta do what feels comfortable to you.