Running with the Bulls Using the 8ma
A wise man was known for frequently saying, "Finding the right stocks to play each day is 80% of the battle." Well, my traders will automatically tell you that I'm the author of that statement, as it is one of my most repeated axioms.
Consistently pick the right horses (stocks), and the wins happen automatically. In fact, one does not even need a good deal of trading skill to win more often than not if the right "stocks in play" are chosen. So make no mistake about it. It's more about the stocks you choose, and less about the method or tactic you employ that determines long-term success in this game. Don't believe me? Oh no? Well, I'll prove it to you.
If a very power river with strong currents was flowing to the right (eastward), and because you also wanted to go to the right (eastward), you jumped in, what direction would the current take you? To the right.....right?
Now, what if you tripped and fell into the same river by mistake. What direction would the river take you in then? Huh? To the right....of course. The method of your getting into the river matters less than the river itself, correct? So, when you pick the right rivers with the right currents, the rest becomes easy, my friends.
The 1-minute chart of Morgan Stanley (MS) above shows one of the currents (stocks in play) I rode for a while today. Even a cursory glance at the chart will reveal its power, its strength, its potency. Take a few moments to listen to the pod cast above which details exactly how Morgan Stanley and I ran with the bulls.
The difficult part is not knowing when to buy but when to sell.
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In many respects, what you say is true. Selling is far more of an "art," than a "science" like entering. But this is the case for only certain types of sells. What you don't address for me is what form or type of selling you're speaking about, because as I'm sure you realize, there are different types.
Sells fall into the following categories:
1) Initial Stop Sells for a Loss
2) Trailing Stop Sells for a Gain
3) Profit Target Sells for a Gain
4) Troublesome Sign Sells for a Gain or Loss
5) Short Sells (entries) - I'll assume you did not mean these
The sheer number of reasons to sell makes it more vague and ambiguous then entering a stock. There is usually only one reason to enter a stock, but many reasons that may cause you to exit it. In reality the real difficult sell type is number 3, due to fact that targets are often arbitrary and only serve as guidelines. Let's face it. No one really knows how far a stock move will go. One can manage the move, react to it, but predicting its length and duration is largely guess work. But this o.k. One does not need to KNOW. One just needs to know how to manage.
With all that said, my traders are taught to create a "Sell Trading Plan" that almost makes the sell side of the trade automatic or automated. I have found that devising a small list of "Sell Rules" (which the sell plan is made up of) that one adheres to in robot-like form makes trading less emotional. Most don't ever think about doing this and therefore find the sell side a frustrating guessing game.
We take the guess work out of the sell side, so that we can focus all our attention on finding the right plays, which is to say finding money. In short, we don't sell! Our sell rules take us out of our stock plays. We are responsible for the entries, while they take care of the exits. Life is a lot easier when the difficult tasks are on auto-pilot.
I hope this helps.
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Could one use 8 MVA stops with daily charts? Also, is this intraday stop or close only below 8 mva?
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You bet you can use the 8 period moving average on daily charts. In fact, I'd encourage that you reference it on every time frame you look it, from the smallest intra-day times frames the biggest end of day ones.
A violation of the 8ma, or any thing else for that matter, is defined as a "2 bar break." In other words, if the first bar breaks the moving average and the next bar (the 2nd one) follows through by trading below the low of the first one, that would represent a violation. I teach my traders that one bar breaks are not really breaks at all.
I hope this helps.
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Well, I keep trying, but am unable to hear the audio on "Running with the Bulls". When I enter the shortcut onto an Internet Explorer window I get the following reponse.
"Sorry, but this page is not intended for browsing to."
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Dear Carmen:
I'm confused and you're scaring me to be quite frank. Firstly, I have not as yet posted a podcast for Running with the Bulls. This should be clearly seen by the fact that there is no play/audio button at the bottom of the article/post. I'm a bit behind schedule but will get to it. I did however post a new podcast on the 10 Insights for Professional Traders Only this weekend, so please review that. And know that I will soon get to the Running with the Bulls post.
Secondly, what shortcut are you cutting and pasting into your browser and why? There should be no reason to enter anything into a browser. You should be able to simply access the blog from our home site (upper right hand corner) and click on any podcast you desire to hear. They are all posted at the end of the articles that I've done them for so far. As I mentioned, I'm confused by the explanation of what you're doing.
I hope what I have written has clarified the issues for you. If not, I'll have someone work with you in the office to get it straight.
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