The best way to find out if you can trust somebody is to trust them.

- Ernest Hemingway

Current World Markets:

• World Markets
• Commodities
• Currencies
• Bonds

trade safe and
have a great day !

Some traders were in it for the shear thrill of trading these volatile highly leveraged markets and were extremely active, often with many trades in a single day. Others were more interested in building their accounts with a vehicle that in their humble opinion, presented greater opportunities and leverage than equities. Remember now this was way back in the 1970′s, a time of high inflation; a period many thought was the death of equities, in fact if memory serves me “The Death of Equities” was the cover on a Business Week issue at or very near the bear market and generational lows, as the Dow traded in a range of roughly 700 to 1000 for the entire decade.

At the time there were no personal computers, no Internet. I used to receive charts on Saturday then update them daily with a pencil and ruler (we’ve come a long way). I learned a great deal from these excellent traders that hopefully I’ve retained most of, even to this day. Perhaps I can pass a little on.

I never thought much about time frame then. In the 1970′s, savvy investors were accumulating stocks for the long term, i.e. buy and hold; many real savvy investors were buying bonds with double digit yields. Traders were gravitating to other areas such as futures and options. Where the “real action” was!

So what does this have to do with time frame? Actually quite a bit! Probably the two best traders I dealt with operated in a very different fashion that was not obvious to me in the beginning. One we’ll call him trader A was in effect a counter trend trader who thrived on choppy sideways markets, the other, trader B was a trend trader looking to catch large moves regardless of the direction. As you might expect trader A had a good deal more trades and a higher percentage of winners to losers. In relation to trader B however, his wins were relatively small. Trader B on the other hand had many more losers than winners but in this instance the losing trades were small and the winning trades were large.

There is an old futures trading axiom that states “A successful futures trader is wrong two out of three times he trades, but when he’s right he’s really really right“. This axiom fit trader B to a T.  Although both as it turns out were very successful traders over the many years that I dealt with them.

One day something happened that really caught my attention. While the chart below is not “the” chart in question it is a close representation.

Trader A went long at point 1 short at point 2 long at 3 and short again at 4. Excellent trading but this was his environment and time frame, choppy sideways and short term. At point 4 however and on the same day that trader A went short trader B called and went long obviously anticipating a breakout. I sat back and thought to myself this is going to be interesting, instead of thinking who’s right I was thinking who’s wrong. Here we have two excellent traders on the opposite side of the same market at roughly the same time and price.

My guess would have been trader B was wrong. Why? Trader A seemed to have a handle on this market and was trading it very well. Don’t we all tend to agree and give a higher weight to the one with the most recent hot hand? I might add that traders A & B did not know each other or even know of each other.

That’s when it dawned on me; these two individuals were dealing in a different time frame, one very short the other not. In fact if memory serves me correctly it turned out that it wasn’t a question of who was right or wrong as both made money. Trader A covered his short for a very small profit. The why he decided to cover I do not recall, but evidently he was no longer comfortable on the short side. Did he go long though along with trader B? No! That was not in his realm of successful trading nor was it in his time frame – very short. He stuck to his style and trading plan!

Fast forward:

Trader A never reentered this market and trader B held on for quite some time, pyramiding his position on many occasions. He was not stopped on that severe correction but used it to add to his holdings. In addition to pyramiding he rolled his contracts forward near expiration of the current contract. He caught the early stages of a good bull market and went for a ride, a long and extremely profitable ride. Both of these individuals were extremely profitable traders utilizing different time frames of analysis and differing methodologies.

The point of all this is really quite simple; prior to any other decision decide the time frame you wish to operate in. Once you have made that decision do not confuse time frames. In other words if your time frame is intermediate term, the intra-day fluctuations are nothing more than just noise. If your time frame is long, the daily fluctuations become noise in your analysis.

As hopefully I showed above, one can be successful regardless of the time frame they choose to operate in, as long as they do not confuse and alter their chosen time frames. Many of you like myself I am quite sure maintain more than one account and those accounts can have different time frames, i.e. short term trading account, long term retirement account. Just be careful not to confuse the two.

have a wonderful weekend – you’ve earned it!

Reprinted from a 2008 Prudent Trader Newsletter

Where ignorance is our master, there is no possibility of real peace.

- Dalai Lama

Current World Markets:

• World Markets
• Commodities
• Currencies
• Bonds

trade safe and
have a great day!

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A Microsoft Excel (2007) spreadsheet has been prepared for your download containing approximately 7,200 issues; the exchange it trades on, the percent change for January (sorted by change), Morningstar Sector and Industry group, and current trends – short-term, intermediate term, and long term.

Sorted by percent change (descending order) in January 2012: Click HERE!

By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest.

- Confucius

Current World Markets:

• World Markets
• Commodities
• Currencies
• Bonds

trade safe and
have a great day!

Best 16 performers:

Bottom 16:

Click on the pictures for full size.

The difference between the month column and the year-to-date column is simply that we use the previous 21 trading days to replicate a moving month and not the calendar. With holidays this January had 20 trading days.

Members:  Go HERE! select the report of interest – Changes and Trends shown. Scroll or download to .csv on your computer.

Experience: that most brutal of teachers. But you learn, my God do you learn.

- C. S. Lewis

Current World Markets:

• World Markets
• Commodities
• Currencies
• Bonds

trade safe and
have a great day!

Please Login or Register to read this content.

The spreadsheet contains: Sector, Morningstar Industry Group, Beta,Alpha R Sqr, Historical Volatility 50 average, EBITDA/Share, EPS, PEG, BookValue/Share,ProfitMgn, OperatingMrgn, ROA, ROE, QtrlyRevGrowth, GrossPrft/Share, SlsPerShr, QtrlyErnGrwth, FrwrdDivPerShare, Yield, OperCashFlow, LvrgedFreeCashFlw SharesOut, Share Float,Insider Hld,InstitutionHld, Short ShortPrevMnth, DivPayDate,ExDivDate,LstSpltRtio,SplitDate

Sort the spreadsheet by Morningstar Sector and/or Industry Group. If dividends are your interest sort the spreadsheet by dividend yield; notice the sectors and industry groups that appear near the top.  Do further looking within that sector or industry group for a better investment.  Interested in growth or value, well then sort by the criteria you believe signifies growth and/or value. Looking for volatility or a lack of volatility sort the data by beta. What are you looking for?

Download: S&P Fundamentals  (Data compiled from Yahoo Finance)

Note: this is a Microsoft Excel 2007 (.xlsx) file. Do Not use I.E. to download, use any other browser.