Transferring Skill Sets To Different Time Frames
Is This HVT?
Well, yes it is, kind of. I have received
several emails lately from readers/subscribers who have asked about my recent
focus on 5 and 15 minute charts intra-day. Is it a wholesale change in my
trading? Some new trading system? The answer is no. However, upon reflection
it is simply a way of transferring a skill set to another time frame.
A pull-back in an up-trend or a rally in a
down-trend is similar regardless of time frame. The only difference is the
trigger, or entry technique. The HVT method
take a little more finesse since it is not black and white. The farther out the
time frame, the more objective the entry becomes, although healthy dose of feel
and intuition is always key.
I think it is safe to say that several years of
HVT experience offers a solid foundation from which to build upon. This is why I
have always thought that a thorough grasp of HVT can greatly assist in other
forms of trading; it simply builds a keen awareness of market dynamics.
That being said, take a look at these charts,
they are two trades that I took/announced yesterday in my
Trading Room. Notice anything about
the entry and exit points?
The exits, while not nearly as sensitive to HVT’s
whereby you exit when momentum slows, are typically determined by a dramatic
reversal in the S&P’s or a break of the trend as defined by 20 or 60 period EMA.
So while sometimes you may not sell at the top tick, like in
AMD, it will keep you in for the bulk of the
move.
The NEM is
probably one where you are wondering why I stayed in so long. The primary
reason was that the gold stocks had been strong all day, and I wanted to see how
the 60 EMA held, if it did. Luckily it just bounced around while the
stochastics became more oversold. I had a hunch that if I bailed then while
stochastics were oversold, I would regret it. The hunch paid off.
The following quote from Richard Russell sums up
my thoughts on making some subtle adjustments in your day to day trading, which
was the point of today’s column:
You know, in this
business everybody looks for the perfect system, the mechanical method that will
tell them what to do and when to do it. The sad answer is that THERE IS NO
PERFECT SYSTEM. I’ll swear, if there was a perfect system I’d have found it.
I’ve been looking, skeptically, for such a system for 50 years. THERE IS NONE.
Succeeding in the investment business requires part art, part knowledge, part
experience and part instinct.
Use the skills you have acquired, be a patient
observer each day and believe it or not, the market will start showing you
subtle signs as to what its next move might be. Those subtle signs always
escape the dabbler and person chasing the holy grail or stock du jour.
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As always, feel free to send me your comments and
questions.