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Day and Swing Trading System |
Our cornerstone hypothesis a day and swing trading system basically
dictates that in order for a stock to attract, maintain, and gain momentum,
it has to first align two of the three realms of trading in the same direction.
Let's assume that the whole world of trading consist of three realms or
trading sectors: technical analysis, fundamental analysis, and of course,
the general public. The first group is the one like us who draw lines on
charts and execute trades based on our interpretation. The second group
will study an earnings report or dissect an annual report to justify their
stock selections. And the third group consists of everyone else who trades
stocks which is essentially the general public.
"Quants" or quantitative and statistical financial types are in the first realm,
technical analysis, and uses models and simulations, historical patterns and
spreads, etc., to create a day and/or swing trading system to trade stocks.
They usually work for hedge funds, arbitrage funds, derivative and options funds,
leverage buyout groups, etc. Long-Term Capital Management, though now
defunct, would be the poster boy here. Blackstone Group and KKR are also
prime examples.
The second group, fundamental analysis, consist of pension funds, labour funds,
institutional investors, mutual funds, index funds, etc., who uses fundamental
analysis for stock selections. Warren Buffett would be this group's spokesperson
and other examples would be most of the funds from Fidelity, Putnam, Franklin
Templeton, etc.
And the last realm is the general public that trade stocks but is not
in the financial sector or have it as a profession.
Money moves stocks. Period. No money, no candy! The first two groups, technical
and fundamental analysis "controls" the money to move stocks, buy out companies,
engineer financial products, and especially, move markets. They usually have deep
pockets and trade in the millions. The public, does not come close.
The public is said to be "mostly wrong" which is true as the normal day
goes like this. John or Jane Doe wakes up, turns on CNBC, hears that a
Merrill analyst is "maintaining" the buy recommendation on Dotcom's stock
after its earnings release, and calls his broker to buy. Simple. No technical
or fundamental messing around as the broker is happy to get an unsolicited
order. But the fundamental people deciphered that most of the profits came
from a reduced tax rate so they start selling. The technical group then
notices a break of the trend channel or trendline and they add to the selling
as well as getting "technically" stopped out. The stock is now down 10 dollars
and if all the professionals, (the first two realms), are selling, who's buying?
Well my dear, it is the public! Since there is a "Chinese Wall" at brokerage
houses between the traders and analysts, the former sell while what we hear
most of the time from the latter group are oxymoronic statements! "We are
maintaining the buy recommendation but have reduced the target!" "We have
lowered the rating to a buy from a strong buy!" Or if they like to sit on the
fence, they just say, "Hold." These "white lies" essentially keep the company
happy for future financings by the brokerage houses' Corporate Finance division
but for Mr. Public, he surmises that since it was not a "Sell!" but still a
"buy" or "hold," and because he loved it at $50, a $10 discount at $40 must
be a wonderful bargain! And this is the start of a downward spiral. This
scenario repeats itself so very often but at the end, we all know where the
stock will end up, right? We have all seen the analysts say "buy" all the way
down with NorTel, Worldcom, etc.
Our day and swing trading system bases itself upon the fact that when the
technical and fundamental groups are in sync and aligned together, take the
signals that trade in the same direction. Respect this trend regardless of what
the brokerage houses say because what they say is only for the general public.
The amount of money the first two realms can throw at a stock will cause the
Apples, Googles, RIMs, etc., to go up several points in one day and at times,
10 or 20 points at a time. They will buy at the opening and continue to buy
until the closing bell. They will move our positions and it is here where we
choose these day and swing trading selections. This buying or selling power
by the technical and fundamental groups underscores our trading system philosophy.
If the money is not behind the trade, the trade will not go far.
You now have a step up by reading this thesis and if you understand and
embrace our proposals, leave the public realm and join us here in the
technical camp to develop your day and swing trading system!
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Disclaimers |
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We have to use actual market
quotations to illustrate exactly what we are doing and why we are doing it. Otherwise, the
diaries and its entries of daytrader1.com will be misleading and not educational. The
spirit of this website is to teach the market daytrader how to trade successfully by using
real-time quotes and any attempt to duplicate these trades is not a guarantee to make
money. These trades are our teaching "tools" and at the end, are only examples.
Copying these trades are in fact beyond our control and we are not responsible for any
trading losses borne out from this type of action. We do not give investment advice on
this website but only attempt to show you some of what we trade and how we trade it. Treat
this website as reading a professional trader's trading journals or "diaries".
Past performance is not indicative of future profits nor are our opinions guaranteed to be
successful. We do not make markets in the stocks that we illustrate and we may buy and
sell any stock at any prices regardless of our commentaries. And due to unforeseen web or network related technical problems, we can be
down for an indefinite amount of time without any prior notice.
Our workshop course offered here is solely intended for educational purposes only
and in no way should it be interpreted as a "sure" way to make money. It will be to
show what trading methods we actually use to set target prices for most of our trades.
Please be aware that trading is risky and not a guaranteed way to make money.
We reserve the right to cancel any subscription and/or withhold our email service
towards people reselling our information, copying parts of our site and claiming that
our original work is theirs, or just any other kinds of abusive action taken against
this website. There will be no refunds for this type of behaviour.
The use of our username and password will be deemed as an acceptance and understanding
of the purpose of this website as outlined in the above disclaimers. Again, this
website is not a guarantee to make money but a teaching diary of how we setup and
exit trades. By entering our subscriber page with the use of our username and
password, the subscriber will then waive all rights to sue daytrader1.com and
any other companies associated or related on this website. Daytrader1.com will not
be held liable for any loss of money from trading as we do not give any advice or
recommendations as to what to trade but only try to teach and illustrate how we
trade our own funds in real-time trading. Again, we do advise against copying our
daily trade examples as it is not a guarantee to make money.
This site contains links to other Internet sites. These links are not endorsements
of any products or services in such sites, and no information in such site has been
endorsed or approved by this site.
Copyright © 1999 2000 2001 2002 2003 2004 2005 2006 2007 daytrader1.com™. All rights reserved.
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