A Fundamentally Poor Trade

Never short a stock very close to an important support level. Let me explain. 88 is a very important support level for GS. Tuesday the stock leaked below 88. But it could not hold below 88. Later the stock rallied strongly. A few on our desk shorted GS when 88.30 held the offer. This is a fundamentally poor trade. Let’s … Read More

Make This Trade

Goldman Sachs (GS) is significantly weaker than the market right now.  Just a few examples: On October 29th after having rallied strongly for two days it gave back almost all of its gains in one day; as the S&P has consolidated and shown strength the past few days GS has sold off sharply on negative chatter; it dropped four points … Read More

“Rut” = Kick in the Butt, Swift Knee to the Gut

Dictionary.com defines a rut as, well the third definition at least, “a fixed or established mode of procedure or course of life, usually dull or unpromising: to fall into a rut“. And that is exactly the definition I was looking for. Like any human being I get into ruts. Which is fine, since that is human nature, no? But I … Read More

Overvaluing Recent Events

Here’s a really good article about overvaluing recent events. For a trader it is instructive. I say this because one of our new traders sent me an email recently: “I know my big weakness is trading on the Open. Do you have any suggestions on how to improve or what to look for in order to increase my morning productivity?” I … Read More

Standing in Front of a Freight Train

I am not sure why but too often traders fade moves like yesterday into the Close. The market bounced over 800 points during the last two hours of trading. I was talking with an experienced trader after the Close and came up with a theory. Traders tend to miss the beginning of bounces. The market has been weak. The market … Read More

Last 15 Minutes

Large movements generally start more than 15 minutes before the Close. The last four trading days we have seen very explosive moves in the last 15 minutes of the trading day. Today we tanked right before the Close. The last two trading days we have seen significant downmoves. The two trading before that we saw significant upmoves. Today in the … Read More

Expectations

Expectations can be harmful to your trading. We ask all of our prop traders to set goals for themselves. I do for myself. Whether its for my trading or our trading firm. As John Wooden says,”make each day your masterpiece.” But goals often for the new trader are incorrectly results based and not process based. And I want to take … Read More

Answering A Couple of Questions

Here’s a list of blogs I read: http://www.bloglines.com/public/gualbertodiaz Stock Selection: Over the last few weeks I’ve been sticking mostly to trading AAPL, SPY, and almost any financial that i felt comfortable trading. Stocks that I have also been looking are S&P 500 stocks trading near 52 week lows. I’ve been focusing on trading them on the short side, since I … Read More