Some battles you stay and fight. Others you best walk away from. This is the part of my day when I decide which is most appropriate. I love a steroidal stock chart as much as the next guy, but one can’t minimize the importance of context and the total market picture.
By the time it’s 1:00 PM in New York (10:00 AM here in Seattle), I have a pretty accurate sense of the day’s market pulse. I keep my trading journal open and available to jot down the things I see, the key relationships and money flows. I’m essentially a juggler now. I understand what it is I’m juggling, and my intention is to remain mentally flexible – open to what the markets are telling me while keeping my emotions in check and executing specific routines. This is also the time of day when I move away from the solitary trader mode and start to chat with a few trading buddies about any fuzzy market charts I’ve come across.
For the most part, the balls I have in the air are my numerous stalking, buying and selling chartlists. For example, I might run an intraday scan for price breakouts or volume spikes. Equities of interest that catch my eye go into one of my 3 stalking chartlists. These chartlists are essentially buckets amongst which I distribute equities of interest depending upon my perceived urgency. The labels for the chartlists are tag watch, core watch and action watch. Silly names but they have meaning for me. Pick your own funny labels as long as the labels make sense to you.
The buying and selling chartlists are obviously the most important, and they demand the most consistent attention. I always work with multiple monitors, and you should, too. The buying chartlist contains those fresh equities in which I’m taking new positions, as well as any existing equities I’m looking to increase. The focus with these is on setting stops, percentage buying, news and monitoring the weight of each equity in my portfolios. Generally, I pull the trigger later in the day when liquidity increases and the spreads tighten, but I’m ready, willing and able to do so at this point.
The selling chartlist is an opposite image of the buying list in that it contains those equities I’m looking to sell. My pyramid-out sales percentages and stops are listed here. For obvious reasons reflecting market realities, I am generally more aggressive pyramiding out of my positions than I am pyramiding into them, and I’m more likely to use market orders versus my normal limit orders.
Usually, I eat my lunch at my desk and fill the balance of this part of my day with a couple of recurring weekly or monthly to-do’s. Some of the juggling is with required routines, but the rest is dictated by the mood of the day.
I began this blog by suggesting the stock market is analogous to a battle and requires you to pick your fights carefully. On deeper reflection, I believe it more accurately correlates to a dance where you need to pick your partners carefully. Rules such as “don’t fall in love,” “focus on the one you’re with,” and “stay in rhythm with the band” similarly apply to the equities you own. Don’t be afraid to join the party, but pay close attention to the music.
Trade well; trade with discipline!
-- Gatis Roze