Check out the Monthly Wolfe Wave for the S&P 500 E-mini continuous contract. Notice how the, “5 point” was overshot but stayed within the range (from the line from points 2 to 4, moved to point 3)
Let’s see if we will hit the 1 to 4 line for a massive profit. Will it happen? Stay tuned and find out?
From: Way West of Wall Street
Dear Friend & Subscriber,
This is a great video that Saturday Night Live did on the world of investment advice from Brokers and Advisors.
It is really fun and at the same time very sad, because it is very true.
This is the main reason why should you learn to manage and invest your own money.
No one takes care of your money like you do.
The market is a Zero Sum game. When you buy, someone else must sell.
So when the brokers need to unload stocks, they need the public to buy them. This is why I don’t take financial advice from Brokers or Investment Advisors.
Sincerely,
Michael MeAngelo
I have been asked by many of you about these stock , futures , and forex trading robots that are advertised on the web.
Even though I have never used one of these trading robot services, my personal opinion is that any trading system that is a black box , (a system that doesn’t let you know how the stocks are picked) are not a good idea.
The problem with Black Box systems (or trading robots) is that they don’t teach you how to trade.
They hand you over their picks and you need to rely on the service to keep investing.
So even if the picks are making you money, what happens if the service stops one day. You are stuck, with no future.
My personal theory is that I will not invest in anything that doesn’t educate me and further my knowledge of the market and trading
I want to learn how to fish so I can catch my own fish.
Sincerely,
Michael MeAngelo
From: Way West of Wall Street
Dear Friend & Subscriber,
I read some interesting statics this weekend that I thought I would share with you.
A lot of people are saying the Stock Market Sucks . Yes, the stock market sucks right now and the year has started off very badly, but take a look at these numbers below.
This proves that buy and hold is only a good strategy depending on when you exit the market.
The numbers below represent the annualized total returns from December 31, 1999 to December 31, 2007 as a percentage:
Nasdaq -4.70
S&P 500 1.66
Cash 3.24
DJI 3.95
10 Year Treasurys 6.45
30 Year Treasurys 8.77
Pretty interesting.
If you had a buy and hold strategy using Index funds for the Nasdaq and S&P 500 for this time frame, you are correct, the stock market sucks .
You would have been better off in cash or a treasury note.
Sincerely,
Michael MeAngelo
From: Way West of Wall Street
Dear Friend & Subscriber,
Are you an Indicator Junky ?
An indicator junky is an online trader that has too many indicators running at one time creating information overload causing the trader to panic and enter or exit the trades at incorrect times.
An indicator junky usually cannot trade without all of their indicators running at the same time.
After my article on TradeStation, I received many questions on the indicators that I use.
I believe that Great Traders use indicators to make trading decisions. Notice I said, “use” and not, “rely on”
The funny little secret that no one talks about is that indicators always lag. They are based on real time market data so by definition, they all lag the market.
The other little secret is that all indicators work and all indicators do not work. I will admit that some are better than others but sooner or later they will generate incorrect signals. It is just the way the market works.
If someone is trying to sell you an indicator with a 100% track record run. Run away as fast as you can.
There is no such thing unless the indicator has been optimized with specific historic data. This should make you run away even faster.
I am a firm believer in the 7+2 theory of human psychology.
Many studies have been done to confirm that the human’s mind can really only handle between 5 and 9 inputs or sources of information at one time.
I recommend keeping your indicators between 5 and 9.
When you are looking at your trading platform, if your price chart is just a sliver on your screen, it is usually a good indication that you are an indicator junky and have too many indicators up and running at the same time.
One thing that many online traders that are first starting to trade do not realize is that many of the indicators measure the same thing. They may look different due to speeds and color settings but a momentum indicator will measure momentum.
If you have one momentum indicator up and running, you usually do not need another one telling you the same piece of information. Trend indicators measure trend so once again, you don’t need more than 1 or 2 of these indicators running at the same time.
Now that I have given you my opinion, I will say that I use the same indicator with different settings to provide entry and exit signals for my trading. This is acceptable since the indicator is measuring data over different time frames.
If you have specific questions, please let me know.
Sincerely,
Michael MeAngelo
Many of you have asked about books that I like and recommend.
Here is a partial list that I will be expanding as I have time.
Time: 9:15
From: Way West of Wall Street
Dear Friend & Subscriber,
Some people wonder how many days the stock market is open in the United States. This is a very useful number because many of the online day traders want to calculate how much money they need to make per day, to replace their current salary.
The numbers below represent standard stock market hours which usually span from 9:30 to 16:00 Eastern Standard Time.
Some futures markets will trade up to 16:15 Eastern Standard time.
The markets are usually open for the normal trading session Monday Through Friday.
I have not included after hours trading, pre market trading, currency (FOREX) markets, international markets or GLOBEX.
So lets take a look at the number of trading days in 2008 by month:
January: 21 days
February: 19 Days
March: 19 Days
April: 23 Days
May: 21 Days
June: 20 Days
July: 22.5 Days (The 0.5 is because July 3rd ,2008 is a half day for the market)
August: 21 Days
September: 21 Days
October: 23 Days
November: 18.5 Days (The 0.5 is because Nov. 28,2008 is a half day for the market)
December: 21 Days (I counted the .5 day on Dec. 24, 2008 and the .5 day on Dec 26, 2008 as 1 day)
This brings the total number of trading days in 2008 to: 250 trading days in 2008.
So if you wanted to replace a salary of $100,000 per year before taxes, we could need to do the following math:
$100,000 divided by 250 trading days equals $400 dollars per day.
The trader would then need to have an average net profit of $400 dollars per day in 2008 (after commissions, software, data services, taxes and other overhead is factored into the picture.)
Many traders do not trade every single day for a wide variety of reasons, but at least you know the maximum numbers of days you could possible trade in 2008
Time: 14:42
From: Way West of Wall Street
Dear Friend & Subscriber,
Here is a list of the magazines , television shows , and papers that I like to read that keep me up to date on what is going on in the world and in the market:
1) Active Trader Magazine
2) Technical Analysis of STOCKS & COMMODITIES
3) SFO ( Stocks , Futures and Options ) Magazine
4) Trader Monthly
5) Wall Street Journal online
6) Investors Business Daily
7) Money magazine
8 ) INC Magazine
9) Fortune Magazine
10) Forbes
11) Fast Money ( CNBC )
