Three types of traders

There are broadly three types of traders:

1.  the first type can look at a idea or concept and understand and make it work
2.  the second types are in search of perfection so the first thing they do is they find faults in any method, they back test to death and can never find things that will satisfy them. 
3. the third kind are clueless. They do not understand good from bad. Everything to them is  Greek or Latin.

There are no perfect methods. You have to make things work. Add some discretion, add some judgement and you can make  it work.

If you take that attitude you will find hundreds of workable methods.

RIMM, CREE, BRCM, and MON were leading the bearish trend today

BRCM: Broadvom Corp

CREE: Cree Incorporated

MON: Monsanto Co

RIMM: Research in Motion Ltd.

Note: Chart Notations
Green Spike in Middle Panel= Stockbee Breakout Buy Signal
White Spike in Middle Panel = Stockbee Breakout Buy Signal (liquidity supported)
Red Spike in Middle Panel= Sell Signal


The market continues to be in bearish mode and breadth trends are also currently negative.

SPRD is attracting buyers today

SPRD: Spreadtrum Communication Ads

Note: Chart Notations
Green Spike in Middle Panel= Stockbee Breakout Buy Signal
White Spike in Middle Panel = Stockbee Breakout Buy Signal (liquidity supported)
Red Spike in Middle Panel= Sell Signal


Very few things are working on long side currently. SPRD is one of those rare stocks doing well. Stock has 313% EPS growth and 341% sales growth in recent quarter. 

What can you learn from a trader who made 24500% return in 18 months....

Most of you have read the book " How I made 2 million in the stock market". Darvas grew his 10000 dollar account to 2.45 million in 18 months. People were so skeptical of his book and claims that the New York Attorney General investigated the claim and found it to be true.


What method did Darvas used to make that kind of money? He brought breakout to 52 weeks high after a consolidation on growth stocks with high earnings and sales growth.


How did he discover his method. By trial and error. And also he discovered the method because it is in the structure of the market. That is how growth stock operate during bull markets. That is the inherent nature of the market. That has not changed for 100 years.


The Darvas story is also about developing self efficacy belief. He did all the things most of us do at some stage. Bought penny stocks, invested on rumors, chased tips, bought lows and so many things. But ultimately he discovered his own method.





As Bandura says., of all the thoughts that affect human functioning, and standing at the very core of social cognitive theory, are self-efficacy beliefs, "people's judgments of their capabilities to organize and execute courses of action required to attain designated types of performances" . Self-efficacy beliefs provide the foundation for human motivation, well-being, and personal accomplishment. This is because unless people believe that their actions can produce the outcomes they desire, they have little incentive to act or to persevere in the face of difficulties. Much empirical evidence now supports Bandura's contention that self-efficacy beliefs touch virtually every aspect of people's lives—whether they think productively, self-debilitatingly, pessimistically or optimistically; how well they motivate themselves and persevere in the face of adversities; their vulnerability to stress and depression, and the life choices they make. Self-efficacy is also a critical determinant of self-regulation.


Persistent efforts are required for reaching that stage . But most human beings are capable of that.


But overall one thing you must understand is that one of the ways to get explosive returns in the market is to buy growth stocks breakout in bull market. Which means you need skills to determine when the market is in bullish or bearish mode, you need skills to identify growth stocks and sectors, you need skills to trade ad identify breakouts on such stocks and you need skills to exit at right time and retain those explosive gains.


Now that is a big idea worth thinking about if you want explosive gains.


For me a combination of EP+Top25 breakout+MM helps achieve that goal. But that is just one way to do it.

Email overload? Try Priority Inbox

This is very good functionality. Especially if you get hundreds of emails a day. Due to my public blog and members site I get lots of emails. While some are from readers who need help on particular issues, many of the emails are non priority emails. Many are nuisance emails. All the emails that are about method, or software help, or Telechart scan help, or are asking for direction about how to learn to trade, or overcome a slump, or other trading related issues I answer promptly.

On daily basis I get request for backlinks. These are nuisance requests. The way to get good links to your blog is not to beg for them, but offer something worthwhile. If you have compelling content and if you offer value to your reader, they will come and they will tell others and your blog will grow. I can tell you that from my personal experience of running this blog. Without any active efforts at playing the SEO optimization game or asking for backlinks or aggressively promoting my blog and site on social media, I have over 1200 members now. The best form of publicity is word of mouth. If readers find valuable information, they will link to you, they will keep coming back, they will recommend your site to others. At least that is my personal belief.

The other types of emails I get are from publishers asking for my address to send me books for review in hope of getting a favorable review for their book. I know lot of bloggers who do this , I do not do this. All books I review, I buy with my own money. I only recommend books I genuinely like and find useful. As regular readers know, there are very few books I recommend as a buy.

The other nuisance emails I get are from PR agencies who send out press releases to bloggers in the hope that bloggers will republish them. To me that is complete moronic PR strategy. This is a big nuisance. Some days I get hundreds of emails from these PR morons. Most of these people just blast put press releases without looking at your site content or your focus areas. Almost every day I get emails saying "I invite you to interview XXX XXXXX, founder of Shitty Corporation about how to buy gold. You can reach me at xxx-xxx-xxxx and by e-mail at pr@shittypromotions.com. I hope to hear from you!

Hopefully this new functionality by gmail would help prioritize these kind of incoming messages.

____________________________

Email overload? Try Priority Inbox: "(Cross-posted from the Gmail Blog)

People tell us all that time that they’re getting more and more mail and often feel overwhelmed by it all. We know what you mean—here at Google we run on email. Our inboxes are slammed with hundreds, sometimes thousands of messages a day—mail from colleagues, from lists, about appointments and automated mail that’s often not important. It’s time-consuming to figure out what needs to be read and what needs a reply. Today, we’re happy to introduce Priority Inbox (in beta)—an experimental new way of taking on information overload in Gmail.

Gmail has always been pretty good at filtering junk mail into the “spam” folder. But today, in addition to spam, people get a lot of mail that isn't outright junk but isn't very important—bologna, or “bacn.” So we've evolved Gmail's filter to address this problem and extended it to not only classify outright spam, but also to help users separate this 'bologna' from the important stuff. In a way, Priority Inbox is like your personal assistant, helping you focus on the messages that matter without requiring you to set up complex rules.



Priority Inbox splits your inbox into three sections: “Important and unread,” “Starred” and “Everything else”:



As messages come in, Gmail automatically flags some of them as important. Gmail uses a variety of signals to predict which messages are important, including the people you email most (if you email Bob a lot, a message from Bob is probably important) and which messages you open and reply to (these are likely more important than the ones you skip over). And as you use Gmail, it will get better at categorizing messages for you. You can help it get better by clicking the or buttons at the top of the inbox to correctly mark a conversation as important or not important. (You can even set up filters to always mark certain things important or unimportant, or rearrange and customize the three inbox sections.)

After lots of internal testing here at Google, as well as with Gmail and Google Apps users at home and at work, we’re ready for more people to try it out. Priority Inbox will be rolling out to all Gmail users, including those of you who use Google Apps, over the next week or so. Once you see the 'New! Priority Inbox' link in the top right corner of your Gmail account (or the new Priority Inbox tab in Gmail Settings), take a look.

Posted by Doug Aberdeen, Software Engineer

"

Top 25 ETF by momentum

DTO: Powershare DB Crude Oil Double Short ETN

 TMF: Direxional 30 Year Treasury Bull 3X

VXZ: iPath S&P 500 VIX Mid-Terms Futures

Note: Chart Notations
Green Spike in Middle Panel= Stockbee Breakout Buy Signal
White Spike in Middle Panel = Stockbee Breakout Buy Signal (liquidity supported)
Red Spike in Middle Panel= Sell Signal

Top 25 ETF ranked by momentum

AGQ,Proshares Ultra Silver
AMJ,JP Morgan Alerian MLP Index ETN
BRF,Market Vectors Brazil Small-Cap
DGP,DB Gold Double Long ETN
DTO,PowerShares DB Crude Oil Double Short ETN
DUG,ProShares UltraShort Oil & Gas
ECH,iShares MSCI Chile Index Fund ETF
ERY,Direxion Energy Bear 3x Shares
EUO,ProShares UltraShort Euro
EWM,iShares MSCI Malaysia Index Fund ETF
GDX,Market Vectors Gold Miners ETF
GDXJ,Market Vectors Junior Gold Miners ETF
GLD,SPDR Gold Trust
IAU,iShares COMEX Gold Trust ETF
ICF,iShares Cohen & Steers Realty Majors Index Fund ETF
IDX,Market Vectors Indonesia Index
IEF,iShares Barclays 7-10 Year Treasury Bond Fund
RSW,Rydex Inverse 2x S&P 500 ETF
SCO,ProShares UltraShort DJ-UBS Crude Oil
SIVR,ETFS Silver Trust
SLV,iShares Silver Trust ETF
THD,iShares MSCI Thailand Investable Market Index Fund ETF
TLT,iShares Barclays 20+ Year Treasury Bond Fund
TMF,Direxion 30 Year Treasury Bull 3x
VXZ,iPath S&P 500 VIX Mid-Term Futures

Blue Fin Screener Free Trial for Stockbee readers

This is a guest post by Dan of Patient Fisherman Blog.
--------------------------
When I first joined the Stockbee site back in 2007, I knew I stumbled onto something significant but didn’t realize how much of an impact the site would have over the next few years.

From time to time, Pradeep will post on self-efficacy and the basic psychological issues to deal with in trading. Trust me, I had a LOT of these…talk about baggage.

Early on I was confronted with several Inhibitors. “Inhibitors are things which inhibit us from acting on our knowledge.”

With everything laid out in front of me, the scans, how they worked, why they worked, and when they worked, I was still having issues executing on this information.

A few of these inhibitors were:

1. I work full-time so how do I gather all the information in a timely and efficient manner while not interrupting my normal workday.

2. If I was on the road how could I access the results?

3. When trading an EP, catalyst is very important. How could I quickly access the information such as; earnings surprise, sector strength, guidance, and sales and eps data?

4. We constantly talk about sector and how much of a role it plays in stock movement but we really did not have a way to easily find which sector any given stock was in.

5. Pullback EP trades can work much better if a stock gaps up a lot on the first day. How could I easily keep track of every earnings surprise so I could enter at a later date, at a lower risk buy point?

After weighing these problems, I was confronted with three options, quit and try to trade full-time, quit trading, or create an option that would allow me to access this data so I could make a trade decision within minutes.  

Taking the more sensible and conservative option, at least that’s what my wife told me it was!  I decided to build a tool that would allow me to access all of the scan results from any where at any time: Bluefin.

Now I can find a Pullback EP by selecting the Post Earnings Surprise watch list, then clicking the Vol Surge column header. This will sort all stocks in the watch list by volume surge. Scroll down looking for a 4% move and then click the symbol to get a chart. I also use the 5DG, 10DG, and 30DG growth columns to figure out if the stock are overextended or not.

We can do the same for Sector EP by running the StockBee Episodic Pivot scan across all watch lists. You can then focus on stocks with EP in Top Stocks Ranked by Momentum and Sector Momentum and Emerging Opportunities watch lists.

During Earnings Season I primarily use Today's Earnings watch list looking for candidates meeting  EP criteria. Normally, I sort by Vol Surge and look for 4% breakout or higher. I keep the Earnings Google spreadsheet handy because this contains the Eps/Sales and sector data. At some point this will get migrated over to Bluefin.

Through-out the day I review the StockBee Top 25 breakouts by clicking the watch list Top 25 Break Outs. You can see all of the results and then sort by 5DG or 30DG growth to look for stocks breaking out on prior weakness. I also add a filter in the 6MthHi column to only show stocks within 10% of their 6 month high.

To find Stocks moving in the top sectors I run the StockBee MDT Break Out scan and look for stocks in the Top Stocks Ranked by Momentum and Sector Momentum and Emerging Opportunities watch lists.

We’ve been discussing the Kirkpatrick Method on the Stock Bee site over the past few days. We added a scan to mimic the results from the Kirkpatrick criteria found in “Invest By Knowing What Stocks to Buy and What Stocks to Sell”.  Click the StockBee MDT Break Out and then filter the watch lists by selecting Top Stocks Ranked by Momentum and Value from the drop down found in the watch list column.

Another attribute we often look for are stocks with a high short interest. This list is shorter than the others so normally I will click Top Stocks Ranked by Momentum and Short Interest and sort the stocks by Vol Surge column to see who’s getting attention for the day.

Finally, if the market is showing weakness we can hop into the Bottom Ranked Stocks by Momentum and Sector. This watch list finds the weakest stocks in the weakest sectors.

As with most applications, this is a work in progress and you can expect to see new features added monthly. Some ideas I have on the to-do list are:

1. 
   Add the mutual fund ranking tool to the system. You can add your funds and it will store them for future reference and ranking.
2. Customizable columns? Choose which columns you want on your dashboard.
3. Sectors on the Move – which sectors are moving on higher volume.

To access the Bluefin screener, follow these steps:

1. Go to http://www.patientfisherman.com/dashboard
2. When the login screen appears Click “Create Account” on the bottom right of the dialog box.
3. Enter the appropriate information, and click “OK”.
4. You will receive a message saying your account has been created. Close this dialog box by clicking “Cancel” button.
5. Now enter your email address and password and click “OK”.
6. From this point on, you should not have to enter your email or password when you come back to the URL: http://www.patientfisherman.com/dashboard
7. When you are presented with the dashboard, the default screen will be the “Percolator” scan. You can update your Trading Capital by selecting the “update” button next to “Total Trading Capital”.

Below are some descriptions for your reference of the watch lists and columns found in Bluefin.

I hope you get as much use out of this tool as I have over the years. The entire purpose of starting this site was to offer tools that make things just a little bit easier.  Good luck and happy trading.


The watch lists provided are:

Today’s Earnings – This list provides stocks with earnings from the close of the previous day to before the open of today.

Post Earnings Surprises – This list provides all stocks with an Earning Surprise greater or equal to 50 in the past quarter.

Emerging Opportunities – This list spots stocks in the top sectors that haven’t caught up with the leaders found in the Top Stock Ranked by Momentum and Sector. All stocks in this list will have a 30-day growth less than 10%. .

Top Stocks Ranked by Momentum and Sector Momentum – This list takes advantage of the concept “Stocks move in groups’. It compares the individual stock strength along with the sector strength to give us a list of stocks currently leading the market. .

Top Stocks Ranked by Momentum and Value – In an effort to reproduce the Kirkpatrick method of stock selection, we took stocks with a high relative strength and compared that against the valuation of that stock to get this list.

Top Stocks Ranked by Momentum and Short Interest – These stocks are hitting higher levels of momentum with a high amount of short interest. We’re attempting to catch a Short squeeze.

Bottom Ranked Stocks by Momentum and Sector – This list was created for traders who are looking for stocks to short when the market turns. It lists the weakest stocks in the weakest sectors.

The following columns are provided:

Symbol – The symbol for the company. You can click the symbol to open a new window over at StockCharts.com. This is how I view the chart on a mobile device.

Sector – The sector name for the stock.

Watch List – The specific watch list the stock is in. Many times you will see the same symbol listed because it is across many lists. I find this useful because with a glance I can see if the stock was an earnings surprise as well as being in the Top Stocks ranked by Sector and Momentum.

Last – The last price traded for the stock. Quotes are 20 minute delayed.

%Chg – The percent change for the stock.

Vol Surge – The volume surge the stock is experiencing. Volume surge is the 100 day average volume divided by today’s volume.

Float – The number of shares available to the public for trading.

RSRank – The Relative Strength for the stock (C - AVGC126) / AVGC126.

5DG – 5-Day Growth as of yesterday’s close.

10DG – 10-Day Growth as of yesterday’s close.

30DG – 30-Day Growth as of yesterday’s close.

6MthHi – Percent from six month high.

1MthHi – Percent from one month high.

Stop – The stop price for your stock. Calculated as low for the past two days.

TotShrs – Total shares you can purchase based on your total capital.

Risk (1%) – Total amount at risk for a 1% risk trade.

Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market

Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market (Wiley Trading)

Here is my brief review. Detail review will follow later.

In a year around 40 to 50 books on trading are published, I read most of them, there are very few which have actionable trading ideas and can help you enhance your trading skills. Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market is one of the best books I have read in recent years. I am already reading it second time and taking extensive notes.

If you are growth/ IBD/ momentum/ CANSLIM kind investor you will find practical ideas and some new ways of entering and exiting trades. You will also learn how explosive returns are possible under right circumstances using those methods.

The book also goes in to details of short selling and has couple of good short selling strategies.

The book is not for beginners and those looking for simple methods without much effort, you need to have some foundation about growth and momentum investing before appreciating and understanding it.

A must buy for growth/momentum investor who want explosive returns..

Best time to buy a house might be now....

I just bought a house couple of months ago because there are good bargains around. . As a contrarian you can not help but  chuckle when looking at this cover. Time to rethink homeownership was 5 years ago when everyone was buying home.

How to find stocks likely to make big move next day

This is daily task list for those interested in identifying stock likely to make big moves next day. Especially useful for day traders. News and momentum drives big moves on daily basis. This is the kind of approach many traders like Tumbler follow.

Task	Information source
Briefing.com in play. Look at all the news released after hours and before open and then figure out how it is likely to impact the stock.	briefing in play
After market gainers & decliners and the catalyst behind the moves	WSJ Late Trading Page
After hours significant earnings announcements	Briefing Earnings Calendar
After hours significant earnings guidance	Briefing earnings guidance
Patientfisherman Earnings Spreadsheet	Patientfisherman
Earnings Whisper email opportunities	Earnings Whisper email
IBD highlighted stocks	IBD

A brief history of 401K

This is a first post  in 25 part series on 401K I will be writing for next few weeks on the Members site. After I finish all articles I will compile then as a separate section under trading guide. The series will go in to details of designing your own approach to 401K investment after understanding available choice of strategies. It will go in to details of tools and formats used for tracking the 401K.

A 401K is a tax deferred, defined contribution retirement plan. The name comes from a section of the Internal Revenue Code that permits an employer to create a retirement plan to which employees may contribute a portion of their wages on a pretax basis. This section allows the employer to match employee contributions with tax-deductible company contributions. Earnings on all contributions are allowed to accumulate in a tax-deferred trust. 

If you read books on 401K or internet sites on 401K, most will tell you that Congress enacted 401K law when it modified ERISA in 1978. That is not true. It is completely wrong information and it gets circulated again and again.

 

401K was not the idea of some smart legislator. The 401K name comes from a section of the IRS code. This section was added in 1978 but for 2 years no one paid much attention to it. A creative interpretation of that provision by a smart lawyer gave birth to first 401k plan. The govt tried to repeal the 401K provision twice once it realized the enormous tax loss from the 401K provision. 

401K plans as they evolved today are a brainchild of Ted Benna, a retirement benefit consultant working for a Pennsylvania based Johnson Cos. (not Johnson and Johnson as most sites wrongly claim). He devised the plan for a client who declined to use it because of the fear that once Govt realized the tax loss potential of the plan the 401k provision will be repealed. After the client rejected it, Ted Benna persuaded his own company to use it. 

That started the first 401K plan in 1981. 401K plan will be 30 year old next year and currently estimated to have around 3 Trillion invested in them. The 401K have revolutionized the retirement planning approach. Now most employees offer a 401K plan.

Here is a brief encapsulation of the history of the  birth of 401K as told by Ted Benna:

 

The Day I Designed The First 401(K) Savings Plan
By Ted Benna

Yes I do remember it well. It was a quiet Saturday afternoon when I was in my office without the distraction of a ringing telephone and co-workers wandering into my office. You should know there is myth and reality about what I actually did.

First the myth. I supposedly was sitting in my office reading the Internal Revenue Code when I discovered this little gem that no one else had found. Frankly I don't know how the myth started but it isn't true. Many people, including me, were aware the portion of the IRS Code that I used to design the first 401(k) savings plan existed. Because this provision was added to the Code for an entirely different purpose, no one had considered using it in the manner that I was about to propose.

I was in fact redesigning the retirement program for one our bank clients. At the time, I was a consultant and co-owner of The Johnson Companies -- a small benefits consulting firm located in suburban Philadelphia. As I was considering the bank's goals, I was drawn back to Section 401(k) of the Code. The bank wanted to replace its cash bonus plan with a deferred profit sharing plan where employees wouldn't have access to the money until they left the bank. The president wanted to add this type of plan because the president wanted the tax break and the bank needed the plan to be competitive with other area banks.

Several years earlier, I had designed a plan for another bank to do the same thing. At that time, the only option available was to replace the entire cash bonus with a contribution to a plan to give employees additional retirement benefits. Most of the employees weren't thrilled to have the cash bonus replaced by a plan that tied up their money for retirement.

I didn't want to have this happen again so I pondered how to satisfy the president without getting most of the other employees ticked off. It was in fact a bit of desperation that got the creative juices flowing. I realized Section 401(k) that had become effective as of January 1, 1980 provided some hope. I could use this section to design a plan allowing each employee to put into the plan whatever portion of the cash bonus he or she wanted. The only catch was that I had to get the lower-paid two thirds to put enough money into the plan to allow the top one third to contribute as much as they wanted.

Employees who put money into the plan would get a tax break but I knew this wouldn't be enough to get many of the lower-paid employees to put money into the plan. This is when I thought of adding a matching employer contribution as an additional incentive. I was reasonably confident I could get favorable results through the combined incentive of a tax break plus an employer matching contribution.

It was at this point when the potential of what I had just "created" hit. Most large employers had savings plans at the time where employees put money in after-tax and received a matching employer contribution. The Johnson Companies has such a plan. I immediately realized it would be possible to change all these plans so that employees would be able to put their money in pre-tax rather than after-tax.

The bank actually rejected the idea because their attorney didn't want them doing something that had never been done before. As a result, the first plan we did was for our employees at The Johnson Companies. This is what started the 401(k) savings plan evolution.

The advent of 401K plan brought about a fundamental shift in employers approach to retirement planning. Pre 401K era employers would offer guaranteed retirement plans. After 401K plans became popular the employee is in charge of his own pension plan. The employer just offer a opportunity for employees to create their own retirement plan. The employer is just a plan sponsor and the employees are plan participants.

In next post we will look at key features of 401k plan and why you need to understand and appreciate them.