2+2 Stock Trading Competition

[Dan Mezick]

gvibes,

Marketwatch says you can only buy 100% of the volume on the day you buy.

[zephed]

[ QUOTE ]
Hi Zephed,
On your first question: As long as the brokerage allows both orders. Certain situations can arise here. Suppose you bought stock at $10.00 ,entered a stop loss at $9.50 and a limit order at $11.00. Now let's say the stop dropped to your stop loss price and your stock was sold, then rose to your limit price before your limit order was cancelled. You could wind up selling stock you don't own. Not likely, but possible.
On your 2nd question, let's say you and 10 other people have limit orders to sell 100 shares each xyz stock at $15.00 That's a total of 1100 shares. Now let's say the market rises to $15.00 and trades 500 shares at that price and then reverses and falls back to $14.00. You can see that 600 shares will not get filled at the limit price unless the stock goes back up.

[/ QUOTE ]
I read the link about the turtles that Dan posted above. In it, they said that they typically (or never) used stop or limit orders. They were responsible for monitoring each position and if it hit their exit price they placed a market order. What are the pros and cons of each? Is one generally preferred over the other?

Also, I think I'm going to have to buy a good beginner's book so I can stop bugging you. [img]/images/graemlins/grin.gif[/img]

Don't worry, I'll use the search function to find recommendations.

[zephed]

[ QUOTE ]
[ QUOTE ]
Do you not agree that the success "traits" for trading and poker, can be learned, by anyone willing to invest the proper and certainly significant amount of time required to learn them?

[/ QUOTE ]

...to a certain extent. Yes everyone can find a model for the desireable behaviors and imitate them. A good analogy is talent in a sport, say golf. Some participants just have more. In sports, everyone can enjoy the game without being the leader in innate talent.

The same principle is true with poker and trading, but to a much lesser extent ... because of the money aspect.

The rewards from poker and trading come from developing at least some level of mastery, much like an athlete must. In trading you are rewarded for mastery and punished for anything less than minimal mastery of the key behaviors.

With a commitment to mastery comes the price of mastery, which, if you are committed, is a price you are willing to pay.

The price includes a large time investment, and likely, a substantial money investment also. The time investment can be measured in years.

While it's certainly not a 'good' mindset to expect to lose, expecting to win-- immediately-- may point to a desire to get something for nothing.

It's like an intern surgeon expecting to perform flawlessly in his first 100 operating room experiences. This can happen to talented individuals, but such talent is rare.

Note that the surgeon also went to school, paying substantial tuition as well a large investment of time and effort.

Of course, doctors get internship and residency, while traders have no formal process to guide them as they gain mastery. Each must train and figure it out for himself personally.

The issue of "innate trading talent vs. trader training" is the focus of the Turtles, a group of trading newbies taught trend following techniques by the master Richard Dennis.

Yes people can be trained to do this, but they have to love trading. To love trading IMO it must be in your blood to some extent.

Many of the original turtles no longer trade, while many went on to illustrious trading and money management careers.
.
The Turtles Story

You can learn about the system rules they had to follow here:

http://www.originalturtles.org/system.htm#download


[ QUOTE ]
The Turtle Trading System was a Complete Trading System. Its rules covered every aspect of trading leaving no decisions to the subjective whims of the trader. It had every component of a Complete Trading System.


[/ QUOTE ]

[/ QUOTE ]
I read the article on the turtles. Very interesting, and there were parallels with poker.

Were they basically computing an estimate (or researching to get this value) for the probability that a stock will move up or down (and how much each way), and then setting stop and limit rules so that in the long run they should come out ahead?

It seems similar to the concept of pot odds. With a flush draw with one card to come, I'm a 4:1 dog. I lose 4 times (sell at stop price), and win once (sell at limit price). When I win, the pot (or limit price) must be > 4 times what I have to call (stop price) for the play to be profitable.

Of course figuring out the odds is easy in poker. It looks like they used a rough "heuristic" algorithm to calculate the behavior of a stock. Is this correct?

They also discussed "sizing" which is analagous to the limits you play in poker in relation to your bankroll. I'm a little twisted around with those formulas, I may bring them up in here.

If I'm asking annoying questions just tell me to shut up. [img]/images/graemlins/grin.gif[/img]

[Dan Mezick]

It's ironic that we kicked this off last week and:

1. That's the same week Doyle and his group offer 700MM for WPTE; and

2. It goes up 50%; and

3. It's 100% poker related; and

4. It's basically the absolute killer trade of the week; and

5. None of us had it.

[wildwood]

[ QUOTE ]
They were responsible for monitoring each position and if it hit their exit price they placed a market order. What are the pros and cons of each? Is one generally preferred over the other?

[/ QUOTE ]
Good question. On the first, the pro is "you don't show the market your hand" and the con is "you have to be glued to the screen during open market hours"
On the second, the pro is "you can place your stop order and turn your monitor off and do something else", the con is "you show the market your hand, but this is not significant unless you are trading size"

Market orders get priority execution over stop orders (or limit orders) so fills should be slightly better.

[Sniper]

[ QUOTE ]
4. It's basically the absolute killer trade of the week

[/ QUOTE ]

Looking like a 1 day wonder.... posted the latest WPTE press release in the more related thread.

[Dan Mezick]

So maybe it's now, a great short sale.

[Dan Mezick]

I notice that precious metals and basic materials are the leaders in today's market action. The dollar appears to be peaking; that can't hurt these groups.

That makes AUY look like a pretty astute pick back on July 5, if you ask me.

5-day chart of AUY-- Yamana Gold

[dandy_don]

I'm in. I've given you guys a week's head start. [img]/images/graemlins/grin.gif[/img]

[OrangeCat]

Those not in the competition who want to see what everyone is holding can look here:

http://game.marketwatch.com/Competit...lusTwoEvent001


The top ten after the first week are:

paral2004lax-ebay 8.12 %
DanMezick 2.80 %
zephed56 2.49 %
orangecat32 2.10 %
shawn 2.09 %
teknalysis 1.75 %
badboybenny_gc 1.70 %
kitaristi0 1.61 %
krazyace5 1.27 %
grb 1.23 %