Trader’s Narrative

Justin Mamis isn’t that well known but he is the author of several trading books, of which “When to Sell” is far and away the best. His book was published in the 1970’s when he was writing The Professional Tape Reader. Yes, the same one that later Stan Weinstein took over. As you’d expect, the two have very similar perspectives on the stock market.

I was just thinking about Mamis’ book these past few days and trying to remember where I’ve put my old copy when I stumbled on Tischendorf’s post about it. Talk about synchronicity!

When you think about it, the ultimate decision is when to sell. I recall reading in the Market Wizards book series an interview that Schwager did with a trader who said that he had tested completely random entries and with his proprietary stop loss and trade management process, it had been shown to be profitable. Not as profitable as when the signal was triggered by one of his trading rules but still, profitable. But when you think about it, when to sell is really furthest from our minds.

Instead, we usually, painstakingly analyze and ponder when and where to enter a trade. This is a case where intuition isn’t doing you any favors. Anyway, Tischendorf quotes from the book:

Rule One of the professional trader is: When a stock doesn’t do what you expect it to do, sell it. No hesitating, no questions or doubts raised no conjectures of the way it should have turned out, or might still turn out, no dreams of how it will do what it was supposed to do‚ tomorrow. The pro never says, “I’ll watch it one more day”. He doesn’t phone an analyst who’s been following the company and ask, “What’s happening? Is there any news?” All too often, the delay in searching for the‚ “why?” is costly. The desire to be perfect is one of the prime bugaboos of the stock market, but it’s a compulsion that belongs on the psychiatrist’s couch, not on the exchange floor.

The whole book is really about tape reading. While technological advancements have made the “tape” an anachronism, the idea of watching the ebb and flow of the market is still at the heart of speculation. And that is why it is the one skill all successful traders have. It is an edge without which you can’t really expect to bank serious coin. This is the skill that Steve Cohen developed as a teenager by hanging around a local brokerage office watching prices scroll across the wall.

If you don’t have Justin Mamis’ book, When to Sell buy it, it will help you become a better trader. There are few trading books that stand the test of time like it.

And check out Tischendorf’s blog. He’s a trader from Germany who has many insightful posts.

Here is a simple chart showing the time I was away and what the market did in that time:

To refresh you’re memory, back in spring, I wrote that based on what I was seeing in sentiment and the technical analysis tools I rely on, that the market had seen a major intermediate low.

And although the market did indeed manage to pull itself up, the rally was short lived. It was as if the market was made of ice and the increasingly hot summer weather was melting it drip by drip. Until finally by the time July rolled around we were below the spring “major” intermediate low.

So what happened? In the coming days, I’ll go into that but in broad strokes because to go into it in any greater detail just wouldn’t be practical.

Although my interpretation of things back then have been proven wrong, I’ve never shied away from holding myself as accountable as I hold others. It isn’t just a point of honor but one of the best ways that one can hope to learn and improve.

I read a lot of stuff. And with each passing year, more and more of it is online. One of the ideas I’ve toyed around with for a while is how to share and talk about the online stories that I come across.

The odd time, they are interesting enough to warrant a blog post but the vast majority of the time, I simply want a way to quickly share something with you.

To that end, I’ve put together: news.tradersnarrative.com

Here is a brief screenshot:

If you’re already familiar with reddit or digg, you’ll have zero adjustment or learning curve. For those who are not familiar with either of the sites (insert cricket chirping sound) it is simply a stream of cherry picked links which are timely, relate to trading, economics, finance, etc.

You’re perfectly fine to sit back and browse the interesting fresh links percolating each day. You can also go through a 15 second registration process and contribute interesting links you’ve found and want to share.

Another great advantage to registering is that you can give each link a thumbs up or down - telling me whether you liked it or didn’t. You can also comment on the link of course.

Full RSS feed for news.tradersnarrative.com is available as well. Or you can grab the code for the widget. To see how the widget looks, scroll down a bit and check out my sidebar. Of course, at the site itself you’ll find much more links than the 10 displayed inside the widget. I think there are currently around 200 hand picked links.

I look forward to your feedback and suggestions on how to improve it

Continue reading ‘Introducing: news.tradersnarrative.com’

Wow, check this out. I’m on Bloomberg!

No, not the website, but the Bloomberg Professional service. Click to enlarge the image - my article is second from the top: What is really going on with the price of oil?

It is on the NI HEDGE pages. I had no idea Bloomberg scoured the net, including blogs. Neat.

But why did they spell the name of the blog incorrectly?

Thanks to reader Anthony from New Zealand for the heads up.

A few weeks ago I got a nice email in my blog contact inbox from a journalist with the Globe & Mail (the Canadian version of the Wall Street Journal). Apparently he stumbled on my blog while browsing the net and for some unfathomable reason wanted to interview me for an article.

And yesterday another nice guy came over from the Globe & Mail to take my picture for the article. To be honest, I wasn’t ready for my closeup. Even on a good day my visage frightens children and causes spasmodic twitching in small animals. But yesterday I had a headcold and had slept very little. So you can imagine the challenge he faced.

Thank God for Photoshop.

Anyway, the term “close up” is passé. They refer to it as a “tight shot” now. The photographer was very professional and fun to work with. All he needed was one picture but took more like a couple hundred. I don’t envy him the job of picking one out of the pile.

So there I am, posing, turning, smiling more, smiling less, putting my chin down, putting it up, etc. When, before I know it, I’m half-naked strewn across a lounge chair. Man, these professional photographers are smooth talkers.

I just hope he keeps those pictures for his personal stash. It would be too embarrasing to have them become public: