Harvey’s Day Trading Blog

Brain Hacks For Your Ears

Harvey Walsh — Mon, 16 May 2022 08:06:20 +0000

A quick heads up for you: Brain Hacks For Traders — my book about “head stuff”, and what really separates the winners from the losers in trading — is now available as an audiobook. You can get it here at the Google Play store, and here at Kobo.

If you’re not familiar with the book, here’s a quick reminder of just some of what’s inside:

How to make your trading stress-free by subverting your fear-engine.
Ingenious brain hacks to boost your performance and profit by commandeering your inbuilt cognitive biases and heuristics.
How to harness the awesome power of addiction and have it improve every single trade you take.
A simple but smart tactic that will trick your mind into revealing what’s really on a chart.
What a racing driver’s pants can teach us about human fallibility, and how that same weakness can become our saviour.
How to slay the monsters that haunt every trader, and build an impenetrable shield against self-doubt.
The one document every trader needs to improve their entry selection exponentially.
What cheat-heuristics are, why they’re good for you, and how to use them ethically.
How trading less can mean you make more money.
Five different ways to beat the boredom and keep yourself focussed. You can’t profit from a trade you missed, so make sure you don’t miss any.

I’m very proud of this book, and I’ve had some lovely emails from readers who’ve told me that it’s not just helped them in their trading, but in other areas of their life, too.

Here’s what one reviewer had to say about just one of the brain hacks in the book:

’One of the most valuable skills I learned was the “Golden Ticket”. I’ll carry that with me the rest of my trading journey, as it has proven to make me profitable with SOOO MUCH less stress.’

Brain Hacks For Traders is available from all good bookstores in regular old print and ebook formats as well as the new audiobook version.

Brain Hacks For Traders — Audiobook — Google Play Store

Brain Hacks For Traders — Audiobook — Kobo

Where’s The Money Coming From?

Harvey Walsh — Thu, 04 Feb 2021 09:59:59 +0000

I know, I know…it’s been an age since I posted here. The world has been a very strange place for the last year. The fact is I still have some issues with posting trades when so many people are suffering from this horrible virus — be that directly (medically) or indirectly through the social and economic effects. As someone in the privileged position of having already worked from home for decades, as someone who has not been put out of work because of the pandemic, it feels wrong to show money being made in comfort.

So I’m not posting here today to show any recent trades. And I’m certainly not posting to talk about GME, AMC or BB or any of the other hot stocks that have got everyone excited, except to say personally I’d steer well clear of anything getting that kind of media attention. Volatility is good, but when so many people with essentially no idea of what they are doing start pouring huge amounts of money into the market, things can go pear shaped quickly. Like brokers ceasing the trading of a stock, for example (more on that in a second). There’s no shortage of nice easy predictable trades that can put a decent amount into your account day after day without any drama. No need to start jumping on bandwagons. Especially ones where the wheels are held on with little more than hope.

The recent week’s news has prompted today’s post though, just not for the reasons you might think. What has driven me to put fingers to keyboard for the first time in months is the volume of messages I’ve been getting about so-called zero commission brokers, which are getting a disproportionate amount of time in the spotlight thanks to the aforementioned stocks.

These ‘brokers’, and I’m not going to single any out or mention any names, generally come in the form of apps. I can see the appeal — to the uninitiated, the thought of downloading a free app, plonking some cash into it, and then making your fortune in the stock market without spending a dime on commissions sounds too good to be true.

Uh-oh…you know what they say about things that sound to good to be true…

An Illusion

The first thing to understand about these apps is that they are not really brokerages. Not in the sense of that any professional trader would recognise. They are more akin to CFD and spread bet outfits.

When you place a trade through these apps, there is almost no chance you actually become the owner of any stock. Instead your trade is settled internally within the ‘brokerage’ (quotes because as I said, they’re not really brokers). It’s pooled with other orders, and the ‘brokerage’ hedges their overall position in the underlying market.

Because you don’t actually own any stock, the price you get may or may not reflect the real stock price. This is the case both on entry and exit. You are in effect trading a derivative.

Most of the time this is probably fine. In a slow moving market, things trundle along nicely. The app prices largely follow the underlying price, the traders working the back room hedge and trade and make sure that they are always in the green, and everyone is happy.

But when things move quickly, it can all go pear shaped rather fast. The ‘broker’, if you read the small print, has no obligation to match the underlying price. They don’t even have any obligation to let you trade. Which is precisely what we saw last week, when a lot of non-professionals who thought they were going to make a killing jumping on a bandwagon found themselves holding the bag — locked out of a market with prices plunging.

Follow The Money

Not all zero commission traders work this way. Some do actually execute your trade in the market. The question we have to ask, as professionals doing our due diligence, is this: where’s the money coming from? By which I mean: a brokerage is a business, and a business exists to make money. If your broker isn’t charging you commission, where’s their money coming from? The staff have to be paid somehow. The investors in the business are not a charity, they’re expecting a return. So where’s the cash coming from?

Usually the answer is simple: the spread. Yes, your trade might get executed in the real market, but at what price? If your so-called ‘zero commission’ broker is taking more than a penny off the spread, you are actually paying over the odds for every trade you make.

Cost of Business

I’ve written before about how brokerage fees are a cost of doing business for a professional trader. Every business has costs. A taxi driver has to pay for fuel, tyres, maintenance, and insurance. A builder requires a whole host of power tools. Sure, they might get away with buying the cheapest kit for a while, but the false economy comes back to bite when the poor quality equipment fails on the job.

As professional traders, we too require professional tools. A fast, reliable computer and internet connection are a must. Quality data is a given. And a reputable, reliable broker is part of the set. We need to know our trades will be routed to the underlying market at the best price. We need to know we’ll be able to open and close trades at will. And we need to be sure we’re not going to be cut off from the market because the venture capital that’s keeping our broker afloat just ran out.

That’s not to say these zero commission apps don’t have a place. They can be useful as a way of dipping a toe in the water, to find out if trading is something that appeals. But for anyone taking the trading game seriously, serious tools are the order of the day.

Crazy (Profitable) Times

Harvey Walsh — Thu, 07 May 2020 09:38:21 +0000

It’s been ages since the last post, for obvious reasons. Not much has changed since then. The world is still, by and large, in lockdown. I’m still taking time out from anything work-like to get on with home-schooling our youngest. And the markets are still profitable. Crazy profitable.

Things have calmed down a bit since the start of this crisis. I said in the previous post that I thought it was probably in bad taste to be posting insanely profitable charts while around the world people are dying and losing their livelihoods. That’s still the case, but at the same time life goes on. This is still my job, and I’m far from alone in trading for a living.

Trading is also not the only sector of the economy to be doing unusually well in these strange times. Airlines might be on the brink of collapse, but plexiglass manufacturers have never had it so good! With supermarkets encasing their cashiers in virtual prisons made from the stuff, production has never been so high.

Video conferencing is bigger than ever, at the expense of real estate. I imagine a great many people who are working from home during lockdown will decide that actually they’d rather like to stay working from home once it’s over (if it is ever truly ‘over’). Already big businesses are looking at their property portfolios, at the millions they spend on rent, and are asking if they really need to be providing those acres of cubes and the associated services when their employees are happily getting the job done at their kitchen tables for a fraction of the cost.

The world is changing before our eyes. In some ways we are privileged to be able to witness such a transformative time in human history. The last equivalent transformation was the internet, which slowly changed most aspects of life over the last thirty years or so. This pandemic is having a comparable impact, but is compressed into a timescale of months.

Anyway, enough of that. We’re all virus-ed out, nobody cares about my thoughts on the subject. We’re all here for the trades.

Some Trades

As I said, things have calmed down a bit since the frankly crazy early days. But opportunity is still wildly abundant. There are trades everywhere you look. Not just to the short side either. Here’s a little long by way of example:

Biotech as a sector obviously stands to benefit from the situation, and as well as offering us hope, they’ve been giving us some sweet trades. This was not the most profitable I’ve seen, not by a long shot, but it was a nice simple standard trade that made a decent profit, coming in at just over a grand for about twenty minutes spent in the market.

It’s important to point out that my trading strategy has not changed in any significant way. Markets may be going crazy, but the thing about trading based on reading the price and keeping things simple is that it works in all conditions. It’s something I’ve banged on about for years, and it’s more pertinent now that at any time since I began trading professionally last century.

Looking to the short side, there’s even more to be had. Much as I am trying to emphasise the positives, let’s face it, there’s more bad news around than good. Here’s a relatively small trade on Southwest Airlines:

One thing I have been doing recently is taking the earlier entry more often (this is still part of my original strategy). That’s because there’s a lot less risk involved in doing so. Trends are setting in earlier in the session.

This chart looks like it was a big drop, but actually the price is low so it’s not that far (Southwest, like all airlines, has lost vast amounts of its value already). The earlier entry was low-risk and added significantly to the profit.

These two trades combined made nearly two grand. In normal times that would be a decent morning’s work, but these days it’s small beer. And they were a long way from being the only trades of the day. I don’t say that to brag — I’m already feeling conflicted about posting any trades at all. But I do think it’s important to record some of what’s happening. One day we’ll look back at this time and try and remember what it was like. That day will come.

Stay safe. And good trading.

Trading Update / COVID-19

Harvey Walsh — Mon, 23 Mar 2020 10:46:03 +0000

Gosh, where to start? Regular followers of the blog will have noticed a lack of posts. The reasons are probably obvious, but for the benefit of anyone reading this in the far flung future (if anyone is still around then), this is the time the world is gripped by a global pandemic. Some people are taking Coronavirus / COVID-19 / SARS-CoV-2 more seriously than others. Everyone is going to have to take it seriously when it hits close to them, and it will…

The Walsh household has been in enforced lockdown for more than a week. We haven’t left the house in about ten days. Clearly any semblance of daily routine has gone out of the window.

Our priority first and foremost is staying safe. Even if we ourselves are fit and healthy and not at particular risk should we contract the novel Coronavirus, we do not want to risk spreading it to others. Lockdown is good. Everyone should be doing it.

Then there is the small matter of our schools being closed. Mrs W and I are both engaged in home schooling our youngest. Our school was given half an hour notice of its impending closure. They have done an amazing job in the circumstances, and our youngest’s teacher has been keeping everyone busy and motivated through emailed lesson plans and shared activities. She’s acting as a one-woman micro-social network, running a virtual classroom as best she can with limited resources, preparation, and time (she has her own kids to home school as well).

Trading

So what about trading? This is a difficult subject. Not because the markets are crashing. Well actually yes, because they are crashing. But not for the reason a non-trader might think. Lots of my friends have been in touch, their messages always along the lines of, “Harvey, we’ve seen what’s going on with the stock market. Are you going to be okay?”

It’s understandable. People see graphs that look like ski slopes and immediately assume anyone involved in trading for a living must be devastated. They assume I’ve been wiped out.

Nothing could be further from the truth.

I’m a day trader, not an investor. All the value that’s being wiped off the markets has to go somewhere, and the fact is a lot of it is going into the accounts of day traders. Daily profits are, well, off the charts. There has not been a more insanely profitable time for day trading since the financial crash of 2008. Volatility equals opportunity, and it’s hard to overstate how much opportunity is around right now. Everywhere you look there is more money to be made more quickly than at any time in recent memory.

So what’s difficult about that? It’s that uncomfortable feeling that we’re making money off other people’s misfortune. I’ll be honest, I don’t feel too bad about it. Most of the “people” losing money are wealthy investors. But there are undoubtedly pension funds, hedge funds, tracker funds and the like that are losing out too, and that means normal hard-working savers taking a hit. The world is in enough of a crisis without having to worry about money as well.

This is why I’ve not been posting charts (that and the lack of available time, for the aforementioned reasons). It feels wrong to post enormously profitable charts when all around people are losing their livelihoods.

I’m insanely lucky. I already work from home. Self-isolation is virtually situation normal. Apart from having to take time out to take over teaching duties (and let’s be honest, that should be seen as a privilege not a chore), and apart from not getting out to do the shopping, being at home is not a constraint. To post charts showing ever increasing profits while people cannot get out to work, or are being laid off, would be in bad taste.

2020

The rest of 2020 is going to be unlike any year almost anyone alive today can remember. We’re just at the start of this thing. Until a vaccine is generally available, which is at best likely to be a year from now, we’re all going to have to adjust. Rolling lockdowns are likely. Stay-cations will be on the cards for summer. A week in self-isolation and already it looks weird to me to see people in large groups on the television. Regular life is on hold until further notice.

Rather than worry about the negatives, we need to focus on the positives. More time with family is good. The planet is getting a breather from decades of our mistreatment. Nations are coming together in a time of crises.

When this is all over, and it will be, we’ll have a genuinely once-in-a-lifetime opportunity to rebuild our global society for the better. Will we take that opportunity and create a more caring, sharing, compassionate world? Probably not if history is anything to go by, but at least we can hope.

I wish everyone reading this good health and good fortune. Wash your hands. Stay indoors. Be sensible. Be safe.

Rounding Out The Week

Harvey Walsh — Mon, 09 Mar 2020 09:36:02 +0000

Here are a couple of Friday trades to round out the week.

First up, OXY:

All standard stuff here. A nice drop on good momentum, and a simple exit at a logical location combined with the momo falling away.

There was a second entry to be had less than an hour later, but alas I was not watching it at the time. A glance at the volume suggested there was probably a lot less momentum around then anyway. Hindsight is not always 20-20.

Next up, DAL:

The entry wasn’t quite as well signaled on this one as the price had been a bit all over the place at the open. Still, we were conclusively over the EMA and momentum was showing an upward trend, so there were some good reasons to get in.

There were equally good reasons not to try to ride this too long, hence the quick exit at the first sign of trouble.

A Turbulent Week?

Speaking of trouble, the week ahead looks like it may be pretty chaotic in the markets. From a purely trading point of view, that’s good news. We are likely to see a lot of opportunity, though much of it will not be for the faint-hearted! Good luck to all.

Back In The Saddle

Harvey Walsh — Tue, 03 Mar 2020 09:53:16 +0000

It feels like it’s been ages since I’ve sat down and traded properly. The whole Walsh family has been sick. No covid-19 here, fortunately, but it’s not been pleasant. The older I get the longer it takes me to get over these things, so even after supposedly beating the lurgy, my energy and motivation have been somewhat sapped.

Anyway, enough self-pity, there’s a market out there to be traded. By all accounts I’ve missed some stellar moves (usual caveats about profiting from other people’s misfortune apply). Monday didn’t strike me as much in the way of special, but on-off core stock GILD provided a couple of nice setups:

To be honest I would have been happy with just the first one. It was a classic setup, well signaled, easy to trade. Could have squeezed more from the exit, but you have to call it like you see it as it’s unfolding. Almost $500 (assuming a 1000-share position) is not a bad way to ease back into the saddle.

But lo, after making a nice triangle it went for it a second time. My entry was late as I waited a bit to see how it would play out. With some profit already banked, it was worth the risk, which paid off handsomely.

I won’t be trading every day this week because not all the family are fully recovered, and looking after them is my priority. But it is nice to get back to some charts.

Trading While Sick

Harvey Walsh — Thu, 20 Feb 2020 10:20:13 +0000

The whole Walsh family is sick. I shouldn’t complain, it’s not like we’ve been struck down by COVID-19 (not yet, anyway). Plenty of people are worse off than we are. It’s still horrible though. I’m the least affected, but it’s all relative. Anyway, the upshot is that there has been very little trading going on here this week.

We might not have been infected by a Chinese virus, but I did manage to get a nice little trade in on a Chinese stock on Wednesday:

The main thing to note on this chart was that the entry was quite late. The momentum wasn’t particularly clear until then. Or it might have been my addled brain couldn’t see it. Either way, I was happier to wait.

It paid off, as we can see.

Better To Walk Away

Trading whilst sick is a mug’s game really. This job required concentration. Not much, only for an hour or two. It’s not like being a surgeon where absolute focus is necessary for hours on end. But when we’re watching a chart, we do need a clear head.

Illness, lack of sleep, stress, or any other distraction can be costly. It’s usually better to walk away…the market will still be there when we come back.

I’m most likely walking away again for the rest of the week as I take some time to rest and recuperate, and to look after the other family members who are suffering more. That’s more important than making money.

A Quick Morning’s Work

Harvey Walsh — Fri, 14 Feb 2020 09:41:00 +0000

Okay, I couldn’t resist posting this one. It’s a four-figure winner on AIG, sorry.

There was a signal for a possible entry on the bar before the one indicated, but the momentum wasn’t there to make it worthwhile.

When the momo picked up it confirmed the trade and so then it was worth entering.

The exit was when momentum ran out, obviously. I let it bounce for a bit in case there was any more to come, but the run was clearly over so when the second green bar came along it was time to finish the trade.

There was a bit of a move later on, and though I wasn’t watching it at the time, the volume suggests there was some momentum behind it, so it might have been possible to grab another 20-30 cents per share without too much trouble.

For lazy folk like me though, getting out with two grand in about half an hour is plenty enough for a morning’s work.

Missing Two Bites of The Cherry

Harvey Walsh — Thu, 13 Feb 2020 09:16:36 +0000

I didn’t start this week until late as I took an extra-long weekend. Such is the joy of not working for the man. Wednesday appears to have been a good day to get back in front of the screen though, because it offered up this nice two-biter from TAP:

Actually it was a four-biter, but I missed the second and third bites. Can’t always get them all.

Anyway, the first bite at this cherry looked was one of the more run-of-the-mill trades. The proximity of the MA was the only yellow flag, and the price got stuck there for a while which was why it was a good place to get out and pocket just over $500.

The second bite, and the first one I missed, came just a few bars later. There was another $500 or so on offer for anyone who on the ball.

The third bite came after 11am. This was an annoying miss because there was an easy target — the close of the gap. The gap did indeed close so there was another easy dollar-per-share up for grabs.

However, there was more weakness to come, and by the time the fourth bite came along, I was ready and willing to take the chance. By then momentum was not quite what it had been. We were heading into lunchtime, and the price started bouncing around near what looked to be a bottom. I set my exit order and let it do it’s thing — there was plenty of profit booked so giving it wiggle room wasn’t a problem.

These two trades netted $2,360 profit, but there was at least another thousand to be had from anyone who was paying more attention than me.

The Bigger End of Small

Harvey Walsh — Mon, 10 Feb 2020 09:39:23 +0000

To end the week, having more or less stuck to my goal of posting smaller winners, here’s one on the bigger end of the small side, if that makes sense. It’s not a four-figure banger, but it was a decent-sized regular winner.

Here’s the chart for ATVI:

Things got a bit hairy on the bar following the entry, and the old trigger finger was hovering ready to get out at break even (or b/e+2 if possible).

Fortunately the momentum picked up again and we were of to the races.

The exit obviously came when the momentum ran out. Having hung on to see if we were pausing or if the move was over, there was plenty of time to exit with a healthy $840 profit.

Wrestling Profits From The Stock Market

Harvey Walsh — Fri, 07 Feb 2020 09:55:01 +0000

I’m keeping up my efforts to post smaller wins this week, but there was a banger of a winner that I want to share here too.

First off, here’s the smaller one. It was on our old friend GILD:

This was another one with if not quite a false start, at least not a great one. Still, it wasn’t hard to exit with 17 cents in the back pocket, which pays the commissions and pays for another try.

The second move was more convincing, and actually took us into four-figure-win territory, so I guess this might not entirely qualify as a smaller winner. Still, a nice mid-priced stock with some good momentum, and that’s what we like.

The bigger action (aside from you-know-who), was on WWE:

I’m not a fan of wrestling, but I am a fan of charts like this. I didn’t enter this trade right at the start because I wasn’t convinced about the momentum. I waited until things really picked up. And boy did they pick up. And then slammed down (is this even wrestling terminology?) The momo just disappeared and the price dropped fast, so that was time to get out.

That made a shade under three grand in about half an hour. And all on a sub-$50 stock.

One Heck of An Aftershock

Harvey Walsh — Wed, 05 Feb 2020 09:38:55 +0000

Yesterday I said I’d be keeping an eye on ZM, looking for aftershocks. Anyone who watched the stock wouldn’t have been disappointed — the aftershock was as big as yesterday’s move.

Here’s the chart:

There was a false start with the first signaled entry. Getting out with a handful of cents made it technically a winner, but I’d count it more as a break-even. Any effort to arrest the fall failed though, and the price soon headed south again.

This time that drop was much more impressive. I had my finger on the trigger after the previous false start, so as soon as momentum dried up around the 84.00 mark, I was ready to get out.

Combined, this ‘aftershock’ made slightly more than yesterday’s original move, although to be fair there wasn’t the afternoon action that we saw on Monday. ZM will remain on the list this week.

A Tale of Two Trades

Harvey Walsh — Tue, 04 Feb 2020 09:25:25 +0000

In keeping with the last few posts, let’s start with a smaller win. And then we’ll see a much bigger one, because it was there for the taking and it would be rude not to.

Here’s the chart for GILD, which as we can see, started out badly:

This looked like it was heading south but…didn’t. Getting out at breakeven (plus enough to cover commissions) means we live to fight another day. There was no need to wait for another day as the next opportunity came on the very next bar, and this time there was enough momo to carry the thing down by a more reasonable amount. Exiting on the bounce gave a profit of $640.

The bigger win came from ZM. I’ve talked on this blog before about profiting from disasters (natural or man-made, it doesn’t really matter), so there’s no need to delve into the fact that ZM was scooting ahead because of what’s happening in China. Instead let’s just enjoy the chart.

This made more than two grand in about twenty minutes. Exit was on the big reversal which was easy to see in real time. It looks like there was more to be had for anyone trading the afternoon session, and of course, any stock that puts in this kind of one-day move is worth watching for a few days for some potential aftershocks.

A Couple More

Harvey Walsh — Fri, 31 Jan 2020 08:53:48 +0000

Following on from yesterday’s theme of not every trade being a big winner, here are a couple more smaller wins. One was even a long trade, which is a novelty because it feels like there have been an awful lot of shorts so far this year (with the obvious exception of the-stock-that-must-not-be-named).

Here’s MO:

This was similar to the AMD trade I posted yesterday, although the setup wasn’t the same. It was another one-bar-wonder, with momentum departing on the next bar and a decent bounce almost inevitable. Not a big win, just $380 on this one, but these are the bread and butter trades that keep us in the game.

The other one I wanted to post today was a bigger winner, but as I said above this was to the long side which feels like a novelty these days. Here’s PENN:

This was an even better setup, and the momentum kept this trade going for a whole two bars. As the volume suggests, the momo ran out then so it was time to leave.

Both these trades were on sub-$50 stocks, which makes them super-accessible. Neither was a four-figure banger, but they were simple, short, sharp wins and just these two combined to four figures. There were plenty of others, too.

Not Always a Banger

Harvey Walsh — Thu, 30 Jan 2020 08:59:55 +0000

I’ve been a naughty day trading blogger. I’ve noticed that I’ve been posting rather a lot of big winners on this blog recently. As you know, I don’t post all my trades here, only those I think are interesting for one reason or another. Often it’s the bigger winners that are the most compelling to look at, so it’s tempting to keep posting those. That is to do you a disservice though. Not every trade is a banging four-figure winner. In fact most aren’t. But to look back over these pages would give the impression that four-figures is the norm. So here’s a smaller trade to try to redress that balance a little.

This is what happenend on AMD on Wednesday:

AMD is one of those stocks that jumps on and off my core watch list from time to time. Right now it’s on, but hanging there by a thread.

This was a good setup, there was some momentum there, but the move didn’t last. The green volume bar shows there was some serious buying going on, hence the bounce and hence the exit after little more than five minutes in the trade. A four-figure banger this was not.

Most trades that come along each day are in this ballpark. Taking $0.20 – $0.50 per share doesn’t sound like much, but three of those a day soon adds up. Get a bigger winner a few times a week as well, and then things become really interesting. And of course, we can always scale up our position size and make these smaller wins count for even more. Bite-sized wins for the…win!

Graduation Ceremony

Harvey Walsh — Wed, 29 Jan 2020 09:10:44 +0000

I’ve banged on before about the importance of having a good list of core stocks to watch. A well-selected daily watchlist makes the actual trading part of day trading much simpler. It’s easier to profit from good setups than bad ones. Having good core stocks to back up the watch list makes the job easier still, it takes some of the pressure off building the list.

Good core stocks are those that move predictably and with regularity. We don’t need many — half a dozen at the most. With a solid selection there should rarely, if ever, be a trading day with no decent setups to take.

This week a new stock graduated to my core list. Here’s it’s chart for Tuesday:

The first entry of the day on BYND actually wasn’t all that great, but that’s okay because at that time of the morning I’m paying more attention to non-core stocks anyway. They are the backup plan, something to fall back on.

When the second entry came along there was a bit more momentum behind it and it was worth taking. By the time a second entry sets up, much of the move tends to be over, so we look to get out pretty quickly. I hung on a few minutes while the price bounced around the bottom, but the momentum was gone so it was time to exit.

If this had been the only trade of the day it would have been fine. Making $1,500 four days a week and trading 48 weeks of the year means $288k profit a year, which is enough to live on in most places in the world. I’m not saying that’s easy or likely, this is simply an illustration of what’s possible. But it demonstrates why good core stocks are such a benefit; if we can make a living from the core stocks alone, it takes a lot of the pressure off selecting daily stocks. We don’t have to get them right every day because the chances are we have something worth trading among the core list anyway.

BYND might have graduated to my core list, but that doesn’t mean I’ll treat it any differently. I’m not going to start researching the company and learn the directors names or anything like that. I don’t care and I don’t need to know. The only thing that’s different between a core and non-core stock is that the core stock is automatically included on the daily watchlists.

How long it stays there depends on how it performs. BYND has been cropping up several times a week, and tends to make nice moves that are easy to read and very profitable. It’s slightly over-priced for my regular stocks, but not by much and it’s performed so well I’m willing to overlook that. At some point in the future its good run will come to an end and it will meander day after day instead of offering up nice setups. When that day comes, it will lose its coveted spot on the list and will be removed to make room for something new.

BYND The Weekend

Harvey Walsh — Tue, 28 Jan 2020 09:14:11 +0000

It’s always nice to start the week with a decent winner. This little trade on BYND wasn’t the greatest setup (although there was a kind of triangles-within-a-triangle thing going on, which was interesting). Anyway, when it went, it went with a short sharp move that gave up a nice profit:

The volume bars tell the story here. This broke upwards with tons of volume to keep pushing it. And then it ran out of steam just as quickly.

Taking the easy middle netted just shy of a grand. As is often the case with these kinds of moves, there was a bit more to be had late morning, but it was nowhere near as convincing. There was better stuff to trade elsewhere, including the-stock-that-shall-not-be-named.

Like Planes Falling Out of The Sky

Harvey Walsh — Mon, 27 Jan 2020 09:36:18 +0000

The week ended with some more action from BA. They were not the only aviation-related stock of interest, the airlines were dropping like, well, probably best not to imagine what they were dropping like. Anyway, here’s the chart for Boeing:

For some reason the exit arrow has dropped off the chart, sorry. The exit was on the first green bar after the bounce. This whole trade lasted only about ten minutes. The entry was standard fare, with that MA cross being the only yellow flag. The pattern was so good though, so it wasn’t one to worry about.

There was a massive spike down late morning, but I wasn’t around to watch it. Looking back at the chart I think had I still been trading I wouldn’t have touched it with a bargepole — it wasn’t signaled and looked too violent for my liking.

As if coming along to prove that the big moves don’t only happen on the higher-priced stocks, UAL gave us this beauty:

This was an even better pattern. That said, the entry was a bit hairy, causing the old trigger finger to hover on the exit button briefly at the start of the trade. Things picked up though, or rather dropped down.

The trigger finger was called to attention again around 82.50 when it all got a bit sideways, but as those big red volume bars hint at, there was a lot of downward pressure. Reading that sort of thing in real time is what I was talking about in my piece on achieving fluency in trading. The reward was an extra drop, and although it popped back up quickly, hanging on in there added about $500 profit to this trade.

Like BA, there was some more on offer late morning. But with these nice wins (and others, care of a weak aviation sector) in the pot, I was already all done for the morning and off enjoying the unseasonably warm sunshine.

In Search of Fluency in Day Trading

Harvey Walsh — Fri, 24 Jan 2020 09:37:05 +0000

I’ve been visiting a friend in France. We try to catch up every year, though usually in the summer when it’s not so bracing. My friend isn’t French, she moved to the country a few years ago. She was part of the so-called ‘Brexodus’ — folks who were getting out of the UK before the barriers come down and moving around Europe becomes a whole lot more complicated.

Each time I come here to visit, I’m struck by the progress my friend has made with her French language skills. She assures me she never studied it at school, and I have no reason to doubt that. I remember on my first visit she was struggling. Yesterday though, as we strolled down the high street bumping into various people she had come to know, I was struck by how she has become fluent, able to chat with these friendly natives about…well actually I’m not sure what she was chatting about because I understood nothing! The point is, she has achieved the holy grail of language learning — fluency. And it made me think about how actually, fluency is something we strive for not just in language, but in almost anything we do.

A Deeper Understanding

We understand how our mother tongue, our native language, works on a deep level. So deep, we don’t even think about it when we use it. I’m not talking about technical terms like knowing what verbs, nouns, pronouns, and adjectives are. And I don’t mean memorising the rules of grammar. I’m talking about being able to take a thought and effortlessly communicate it in a sentence that another speaker of the language will understand.

If we can go about our daily life communicating in our mother tongue, then we have a deep understanding of how that language works. If you are reading this and understanding it, you have a deep understanding of how the English language works, even if what I’m writing isn’t 100% grammatically correct (which is highly likely).

A non-native speaker, someone with no knowledge of English, or someone learning the language, will probably be able to make sense of these words with the aid of a dictionary or a translation site. But it would take extra time. We can travel to a foreign land and communicate with the locals with the help of a phrasebook, or more likely these days an app. But there’s a barrier there, a delay while the translation or interpretation takes place. Inevitably the conversation becomes stilted and unnatural. We take shortcuts, abbreviate wherever possible, keeping things brief to minimise the amount of translation that must be done. A conversation between people who are not fluent in the same language is never as effortless and flowing as one between those who are.

The translation or interpretation barrier limits the flow of conversation compared to fluent speakers of a language. When someone asks us a question in our mother tongue, we can speak our response with effectively no effort. Our brainpower is spent on thinking about what we want our response to be, not on how to physically communicate it. We don’t need to go through a phrasebook, dictionary, or app to translate the question into something we can understand, then a second time to translate our reply; we just reply.

Aiming For Trading Fluency

This is what we should be aiming for in our trading. Ideally, we want to get to a place where we instinctively comprehend what’s happening when we see prices move. Rather than examine the bars or candles and compare them to mental models of known setups, we want to almost feel what the chart is telling us. We want it to communicate as effortlessly as someone stopping us in the street to ask for directions or to comment on the weather.

Equally, we want to be able to communicate our intentions on mental auto-pilot, by placing the correct order types for the situation without reference to books or manuals or cheat-cheats.

The work of trading should be second-nature. We want to act and react not without thinking — because we still want to consider the merits of a trade setup, the risk, reward, and so on — but without having to go through a layer of interpretation first. That’s why as traders we should be trying to achieve fluency in our trading.

The Bad News

How do we reach this holy grail of fluency? Unfortunately, there’s only one way I know of: practice.

Maybe one day we’ll all be able to plug into the Matrix and download a brain-app that gives us new knowledge or a new skill in seconds. Until that day, the only way to achieve fluency — be it in speaking a language in any other activity — is to practice regularly.

How long it takes depends on the individual. There’s no doubt that some people have a natural aptitude for certain activities, others not so much. It’s taken my friend a few years to get to the point where she can chat with the French locals on any subject. The good news is that trading is not particularly complicated, and it shouldn’t take most people years to reach a level whereby it’s second nature. There’s certainly no need to do ten-thousand hours to become fluent (besides, that whole theory has since been debunked).

The Good News

The good news is that once fluency has been reached, it’s a skill for life and it offers us all sorts of new possibilities. My France-dwelling friend tells me that she found life opened up to her the more she got to grips with the language. For the first year she was here she was only communicating with other ex-pats. She said it was like living in a tiny enclave, boxed in, almost prison-like. Even seemingly simple tasks like buying stamps or paying taxes were hard work and something she came to dread. But as she got better at speaking and reading, she was set free, able to live and work as she had done before making this life-changing move.

Achieving fluency in day trading probably won’t change anyone’s life, but it does free a trader. When we understand a chart on a deep level, when we don’t have to spend time and mental energy interpreting what we are seeing, our mental capacity is freed up to see new things, almost like hidden layers. We see trades that, while perhaps not on our trading plan, are so obvious that we know we can take them anyway. Rather than blindly follow a plan like a robot, we can adapt to changing market conditions without thinking about it, tweaking our entries and exits to extract the very best from every trade.

In short, the work and practice we put in up-front as we strive for fluency pays off by making us more profitable; and all for less effort as we improve. If that’s not a skill worth working towards, I don’t know what is.

Boeing Crashes, Again

Harvey Walsh — Thu, 23 Jan 2020 08:55:08 +0000

BA had an awful year in 2019 with the whole 737Max debacle. I wrote at the time my thoughts about profiting from plane crashes and disasters, so I won’t repeat myself here. (A quick aside: Can you believe that was more than ten months ago already? Where does the time go? I must be getting old.) The thing is, they are far from being out of the woods, and the stock price is still all over the place. Hmm, we know what that means.

Here’s the Wednesday chart:

This chart just reeks of opportunity. The first entry was well signaled and there was ample opportunity to get out several times for a two grand-plus profit.

There was more to be had too, I’ve only marked the first trade on here, but ten minutes later there was another easy thousand dollars, and if anyone stayed around into lunchtime, another thousand after midday.