WINDING DOWN

If you didn't make money in 2009, then that's too bad cause it's pretty much over now. Better make your plan for 2010 real soon. It's time to wind down and preserve your gains for the year. Don't be the idiot that loses it all at the end of the year because you want to "boost your YTD returns". Sorry bud, better luck next year. My position sizing usually reduces to 5% standard during Decembers simply because I don't feel like screwing up. An end-of-the- year killing would be great, but mentally, I am already thinking about 2010 and what I can hit in January. I like to think ahead like that.

We had a doji day yesterday and I expect more of that action. Doji days are great for initiating swing positions, but terrible for day trading, especially during the holiday season. The volume simply isn't there, but that doesn't mean that I won't try out and test out trades. You never know what will come to you. I see a mix of small cap dollar stocks and higher priced volatile stocks still in play, but again, be cautious of the illiquidity.

I am reviewing all of my posts for the entire year (there are 254 in total) so it'll take me a while to compile a year-end review. For now though, feel free to leave a comment on what you would like to see more from me, what I could have changed and made things better, and anything else you want to write. I read everyone's comments, even though I may not be able to reply to them all, so leave your thoughts (and trades, of course). Thanks.

MERRY CHRISTMAS EVERYONE!!!

Hey traders! Hope the early morning Christmas festivities are going as planned. I actually couldn't find my cork screw so I thought of a creative way to open up a wine bottle. You need a screwdriver and a hammer. Position the screwdriver on top of the cork and repeatedly hit it with a hammer until the cork is inside the bottle (some splashing may follow). When you pour the wine, the cork floats to the top, leaving the wine to freely flow into your glass. Cool, huh?

Anyways, we have only one week left to make money in 2009 and I am determined to make it my last profitable week. If you know me, then you know I'm serious about it. I don't do "tax losses". That's bullshit. Just keep making money. Who cares about paying more taxes? Warren Buffett stated that he enjoyed paying more taxes because that meant that he was making more money. Therefore I say to you, keep banking that coin hard.

I hope that my services here have helped you guys tremendously and made you into better traders. Although I don't monetarily benefit from posting trades or giving out educational articles, I do get the benefit of knowing that I have helped hundreds and hundreds of people. I made money and you made money - nothing better than that.

2009 was a great year for me in terms of expanding on the internets. I was fortunate enough to make many friends, even if I may have not met you personally. We all have the same goal, therefore, we can get along. I got heavily involved in Stocktwits, running the "Charts Gone Wild" show on Tuesdays. I found it to be the best way to be personal and to connect with you, my readers. The show is only 1 hr long, but it takes me about 3 hrs to prepare for it. I have no problem spending my time for you guys.

I also had the pleasure of personally training my students who are with me each and every day, live. It's a great feeling when you have a great and qualified team whose members help each other out on a daily basis. I temporarily ceased my travels to spend more time with myself, family, friends, and a new girlfriend. However, I will start up the private coaching program again, starting in January. I look forward to helping you guys in the best way that I can.

I am appreciative of all the regular readers on my blog that contribute. You know who you are. I also love the fact that you have the balls to post your trades. You and I are in the minority. I post my trades not so that people can follow me, but for my own record keeping and reference. The blog is my trading journal. Here's an idea: if you want to become a better trader, post your trades. You are less likely to make stupid decisions, especially when the whole world is watching.

2009, so far, has been an epic year for me. It is my best year ever. It is also my 5th straight year of triple-digit gains. I hope that you guys also scored big, especially in the summer. I'd say that my trading in 2009 really took off starting in late March. If you've been with me during that time, then you know why. We absolutely crushed it.

I chose to be with iBankCoin because I believe that it will actually be the #1 destination for serious people that want to make money. This isn't some conventional site with the same bullshit that 99% of other sites have. We have unique contributors and exceptional content on this site. Of course, if you disagree, then I'd have to ban you forever (just kidding, sort of). Appreciate what the writers here are presenting because after all, they don't have to do anything. They are offering a public service and offering their knowledge and expertise. Don't take this for granted.

I am in the process of creating an epic post. It will highlight my greatest trades for the year and also my failures. It will be the ultimate "trade review" post. I know that I can learn from what I did right and wrong, and so can you. Look forward to it in a few days. If you have any trades in mind that are memorable, let me know.

I'd just like to say thanks to Fly for bringing me on board last year. I somehow found iBC and randomly starting posting in the Peanut Gallery. Then I got my tab and everything else is history. If you have trades or knowledge to share, I encourage you to post in the Peanut Gallery. Who knows, we might pick you up from there.

Finally, enjoy your Christmas with your family and friends. I have clients that are worth hundreds of millions, but have broken families. They do not celebrate Christmas, such a shame. Know what's most important to you and never compromise it. With that said, I wish everyone a safe and wonderful Merry Christmas!!!

TRADE REVIEW: ATHX

I banked some serious coin yesterday in ATHX, eventually amassing 12,000 shares before it hit $3.85. This is a particularly rare setup that I see once every few months or so. Here's how it works:

1) The stock gaps up HUGE, typically a 100% 1-day gainer.
2) Stock fades throughout the day and closes much lower than the open, but still way above the previous day's close.
3) The next day starts with a large gap up within the previous day's range and must always be followed by significant pre-market volume.
4) Buy when the current and previous day's highs are breached on heavy volume.
5) Enjoy the ride. Take what the stock gives you, but don't get greedy.


This stock was the day's example of pure emotional madness. Make sure you're on the right side and never, ever get caught up and trapped in the mania.

Many folks on twitter followed me in and made bank. Congrats to you:

A FEW THINGS

The SPX is still in the range, however the COMP is not. Also, note that the SPX range has an upside tilt.

The RUT is making a move to reach the highs on the daily.

I also stated on my 12/8 Stocktwits show that I was no longer bullish on gold and expected an "extended pullback. Well, here it is - Wait for it to carve out a base.

The USD$ is making a move to the 200-day MA.

I am incorporating some swing trading going into the end of the year, simply because it is easier to deal with as we head into an even more low volume holiday environment.

That's all from me now.

$5-10 SETUPS

Here are some examples of setups that I look for when I do my nightly scans. Tonight, I chose to look at the $5-10 range with 1MM+ volume.

There are a variety of things that I look for. For example, BLC is a stock that will test the Oct highs. INCY broke the Sep highs and is consolidating in a flag. MTW is a dual support play. NYT is a potential late sym tri breakout. TTWO is a breakaway gap down stabilization play. VVTV is a multi-month breakout and consolidation play. DTG is a classic flag pattern testing two MA's.

DEVELOPING A COMPLETE TRADING PROCESS

Depending on who you ask, anywhere from 80% to 90% of individual traders are ultimately unsuccessful in the market. In order to avoid becoming one of them the most important question we need to ask is, “Why?” There are many lists available online that detail the top mistakes new traders make, and each list contains valid reasons for failure. What these lists fail to identify however, is that 95% of all trading mistakes can be boiled down to a single underlying reason, defined by a single word: Unprepared.

Hall of Fame football coach George Allen, who never had a losing season in his career, once said, “Winning is the science of being totally prepared.” That same philosophy can be applied to any pursuit in life, but particularly to trading. If you want to succeed at trading, regardless of what market you participate in, it is essential that you develop a complete trading process that totally prepares you for the adversities and challenges that all traders will undoubtedly face.

Unfortunately most new traders tend to have a myopic perspective when it comes to trading, focusing on only one or two aspects of their trading development at any given time. They may focus on trading signals, believing that where they enter and exit a trade will produce the success they desire. They may work on developing trading systems or strategies, applying multiple technical indicators in order to find the “perfect” combination, only to eventually realize that such a combination doesn’t exist. While trading signals, systems, strategies, and methods are all important components of successful trading, they will never achieve consistent, repeatable success by themselves. They must be executed within the framework of a complete trading process.

The aspects of trading that most new traders tend to overlook, much to the detriment of their performance, are elements such as risk management, trading psychology, good record keeping, constant and immediate feedback, clearly defined trading goals, and an organized structure for trading plan development. Trading without a strong foundation built on trading principles such as those just mentioned will make you an inconsistent trader at best and an 80% to 90% statistic at worst. Successful trading involves much more than just reading charts and placing trades. If you don’t adequately prepare yourself for all aspects of trading, you’re heading into a gun fight with a very small knife.

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Scott Beck is the founder and president of the Trading For Life program and trading education website. After working as a trader for four years with large brokerage firms he became a national instructor with a trading education company, where he taught thousands of students successful trading strategies over a five-year tenure before leaving to develop his own program.

LOOKING AT THE DAY'S BIGGEST GAINERS/DECLINERS

One of the things that I do each evening is to look at the biggest and best gainers and decliners for the day. You can always pick out continuations or reversals, especially when a stock is up/down double-digits and more especially if a stock breaks out/breaks down on the daily.

The volume on the first day is nearly always the highest. The second day's volume declines vs. the first day, but usually still remains higher than average, giving more than enough liquidity to get in/out of trades with ease. I like to stick with stuff that's about 500k+ in volume.

Then, I check the stocks the next day in the pre-market session for any activity that catches my interest.

As an example, here are today's biggest gainers and decliners:

MARKET = NEUTRAL

As covered on my Stocktwits TV show tonight, I am neutral on the market, as I was last week and the week before that. Why? We are still in a neutral range, as marked. The COMP and RUT have different patterns developing, but both are also neutral.





The sectors also spell out "neutral". I never try to force one side of a market unless I am more than reasonably sure that I have a high chance of being right. Instead, I just go with the individual stocks that work.








Gold went parabolic and I believe it will see a longer consolidation period. After that, who knows. The USO also is neutral as marked by a descending wedge.


In the end, never forget the higher probability trade setups. They will save you from a lot of unnecessary pain.

SPX REMAINS IN CONSOLIDATION / SECTOR ANALYSIS

Market remains in consolidation, however current 3pm futures shows an immediate break from the consolidation, so keep an eye on it in the morning.


The sectors are very interesting at the moment. Looking at the SPRD Select Sector ETFs, I came up with the following:

XLV - Bullish (breakout)
XLB - Bullish/Neutral
XLK - Bullish
XLP - Bullish
XLI - Neutral
XLU - Bullish (breakout)
XLY - Bullish
XLF - Neutral
XLE - Neutral