04/10/12 – Simple Rules © ™
- WHAT’S HAPPENING?
I had a good friend make a trading mistake today and I thought I would post these rules, so everyone can get them refreshed in their mind. Some rules are more important than others. The school of hard knocks teaches you which rules are more important than others.
Jesse Livermore’s Trading Rules
Bob Farrell’s 10 rules for investing
Money Management by Walter Bressert
The 12 Cardinal Mistakes Of Commodity Trading by Walter Bressert
Following is a recent chart of the SP 500 futures from today (Tuesday). The period for each bar is 15 minutes. Notice the lower line and the possible bounce off of it a little while ago. The bottom is up for grabs at the moment. If that isn’t a temporary bottom, I would assume we are “in the neighborhood”.
Without looking I think some of the oscillators are getting in the oversold bounce area. Look after the close.
4-10-12 SP500 FUTURES 15 MINUTE
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Stock-Market-Observations 
April 11, 2012 at 6:40 PM
Hi Buddy,
I only post my change in status (buy or sell) for the market. Past status changes are found under the “SELL/BUY ACTION UPDATE” category.
When you are part of the blog email list, you’ll be advised immediately of any change in my opinion. When a status change takes place it’s unambiguous and readers know that I’ve been thinking about it for awhile. Recent status changes were a “Stop Buying” notice on Feb 6, followed by a “POSSIBLE” PEAK” on Apr 3 (I went short) and a “Confirmed Yesterday’s Sell Signal” on Apr 4. Unfortunately family problems kept me from issuing a formal buy signal in October 2011. However there were advisory updates during that period. There are more status changes in the category for reference.
I don’t advise anyone to trade and I “try” to avoid it personally but I “may” trade during a downturn of significance. Yesterday was an example as I covered my short late in the day. Now I’m waiting to execute more shorts when appropriate. It wasn’t relevant to update that in my blog but I did reveal it in an answer to a question by a reader.
I always try to remember the adage: There are rich traders and old traders, but there are no old, rich traders. When I was young I would never have believed that statement but what the hell, I knew everything in those days. Today I know a little bit less and forgetting more every day.
Thanks for the kind words.
Bob
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April 11, 2012 at 1:05 PM
Hi,
In the 60 minute chart it certainly appears that we have 3 steps down, but as of Wednesday’s close, we haven’t broken the “look” of the downtrend since April 2. I think Toronto has broken the “look” but the blue chips and others are lagging. That means that there is more rally to come or more decline to come (steps 4 and 5). Until we break the “look” I’m suspicious.
Bob
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April 11, 2012 at 12:38 PM
Hi Bob —
I just joined the site recently and wonder where you post your trades during the day.
I do a lot of trading in various markets and like you style.
With best regards,
Buddy
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April 10, 2012 at 9:16 PM
Good call on the top Bob. Slowly working my way through your blog.
I was wondering if we moved up tomorrow would that be step 3 completed as per the 60min chart?
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April 10, 2012 at 6:52 PM
Bob,
Thanks for your short term posts as I realize it takes time from other pleasurable things you do.
I have spent hours looking at your historical work and have learned a great deal-very educational.
Thanks again.
Jim
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April 10, 2012 at 3:42 PM
Terry is very good and never on the wrong side for very long. He’s a good guy and I like his technique, but I’m sure he thinks I’m doing “voodoo” technical analysis.
A good way to tell if I’m making a trade is that the update is classified as a “SELL/BUY ACTION UPDATE”. I made no such distinction today because that would be tweaking the SELL too much.
If I clearly see 3 steps up and think that’s the end of the rally, I’ll very likely post and say that I’ve traded on that info. But doing that can be difficult. I was “possibly” lucky today (jury is still out) and often times, things don’t jump out at you and make it easy. But I’m always ready to jump back in when I realize that I’ve made a mistake.
A good rule is that the shorter the time horizon of the steps, the more likely of making a mistake. Making mistakes doesn’t give me much credibility and it seems more like a path to oblivion.
Recently I’ve been doing short term stuff in the blog and my intention is to make calls with a longer time horizon. Trades lasting a few months or more is where the money is made.
If I go into hibernation, it will be to make longer term calls. So I’m kinda in flux at the moment and unsure what I’m doing next.
Lotsa work doing the blog, much easier to play.
Bob
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April 10, 2012 at 2:47 PM
Will you post those trades? Thanks. I see Terry has now turned bearish.
Michael
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April 10, 2012 at 2:37 PM
I did cover my shorts very late in the day. I wondered if I was trying to finesse myself right out of more profit, but at the moment it looks good. I thought about going long for a quick trade, but I probably won’t. It’s in the rules, don’t trade against the trend, and the trend is down for the moment. That was the rule that my good friend broke. I’ll pick up new shorts as we rally. If something doesn’t smack me in the face, I’ll probably tranche in on the shorts.
Forgot to add that there is a “possibility” of another bottoming step. Presently I count 2 steps down in the 5th step since April 2 (could be a miscount). It isn’t necessary that the final step take place but, who knows??? If we got that final 3rd step down in the 5th step, I “might” go for the quick trade on the upside. I don’t know, I just play it by ear and let things happen.
Bob
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April 10, 2012 at 2:21 PM
Nice call Bob. So you think we are near a temporary bottom? Do you close your shorts and go long for a pop or just wait to add to shorts.
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