Sunday, March 12, 2006

How I Use Investors Business Daily With TCNet

IBD is the greatest investing tool I have ever seen in my life, to this day. I was blessed that my father mentioned this newspaper to me when I was 16. How he mentioned it and introduced me still is amazing to me. He only knew of "this Investors paper" his mom mentioned once to him. He said that she said that this was the greatest thing she has ever seen in her life for investments. My grandmother died in 1985 and IBD was only created in 1984. Fortunately, for me, he remembered this conversation and got me a one year subscription to "this Investors paper." The rest is personal history for me.

With that introduction and eleven years experience with this newspaper I will now show you how I personally use it.

First off you must understand I am an after-hours trader. I don't like doing ANYTHING during market hours, except watch the first 30 minutes of the trading day and the last 30 minutes of the trading day. During the first 30 minutes I make sure all orders I have entered into my IB and Scottrade platforms execute properly; during the last 30 minutes I do quick scans to make early buys of swing longs and sell disaster stocks like PANL on Friday. If I miss the last 30 minutes of the day, it is no big deal. I will just execute the orders the next morning. It changes nothing, whatsoever, if I am there the last 30 minutes or not.

Ding, ding, now the market closes. I am at home spending time with my girlfriend, playing poker, or out surfing the beautiful waves of Maui. Either way I still can not do anything with TCNet because the TCNet live or delayed service does not get all the stocks in my scan until the exchanges close all stocks for the trading day. So let's say that right now it is noon on Hawaii (market closes at 11am)--this is the time I will start my IBD scans.

First off: During the past week IBD will makes important stock list: IBD Top Composite 200, IBD 100, Your Weekly Review, Top New Buys of Mutual Funds(monthly), Screen of the Day, CANSLIM select, and of course the daily and most important Where The Big Money is Flowing. These list must be updated always. As soon as a new list is out, I delete the old one and add the stocks in the most recent list.

These list are made separately and put into there own personal watchlist. These list are then combined into one "master list." This is the list that is the most crucial to my stock trading. This "master list" is then sorted by price % change.

I then scroll through this list one by one and when I see a new long I flag it. It is not often, besides the very beginning of a bull market, to find a lot of brand new longs in one day. Therefore it is almost basically a check of my current holdings and gives a great gauge of how leaders are acting in the current market environment. If I do flag a stock I then place it on an order list on IB or place a limit on Scottrade. I don't care if market makers can see my orders. I am not that paranoid. This is a delusion traders have...that the market makers are out for their order. Come on, get real.

After scanning the "master list" and placing the possible orders, it might be around, let's say, 1pm. Time to play poker till 2pm when the TCNet database will be completely updated with all the final stock data from the exchanges. When that is done, I then scan my TCNet easyscans that I have created. You can find what those are by clicking the link below

How I Scan For My Stocks

After that is done, I then place my orders on paper to place in the morning, place the actual market or limit order, or put them on a list to execute when I wake up.

During this whole time scanning for IBD and "my" stocks, I physically write the tickers symbols into a diary and place the price % change behind them. I have been doing that for years, already. So it seemed plausible to start a blog and do two diaries--one online and one off. The hope is that someday this will help me either start a business for myself or get hired by a professional so that I may receive side-income from my trading business.

All of this is normally finished by 4pm if I move very slow and methodically. So there is literally four hours of work and most of the time it is less. This combines monitoring my current positions, taking action on my current holdings according to the charts, scanning the new charts, entering my new orders, and writing my stocks in the book and on this blog.

After that, I can do whatever I want. If I want to read IBD front to back. I DO. And I do that at least three times a week. But no matter what, if I can not read the whole paper because I have been surfing all day, hanging with friends at the beach, doing something wonderful with my girlfriend, or drinking at a bar (take a camera, it is rare), I will read Trends and Innovations, Leaders and Success, New America, and Issues and Insights. If I was forced to read only one section it would be the Issues and Insights section. I have 5 years of Issues and Insights in one of my desk drawers. EVERY SINGLE ONE IS MARKED UP. After living in NYC and Maui for the past 9+ years, Issues and Insights helps keep my mind in great shape. I love this island but the political depth of conversations don't usually get pass the Bush is the devil hate-speech.

So that is how I use IBD. I don't use the charts in the newspaper because I have Daily Graphs Premium and TCNet charts. I just need the list that appear in the "Making Money" section.

I am not sure if that is simple for you, but it is a very simple disciplined strategy for me. I do this everyday, ad naseum. This is the same method I have been using for at least six years. There is always an upgrade or slight downgrade. But I don't think I will deviate from this method for the rest of my trading life. It took about five years to get to this point and for the past six years I have not changed it.

I hope this makes sense. I am not going to proofread this. I am just posting it.

The waves were HUGE HUGE HUGE for a south swell on Friday and Saturday. This is why this post is so late. It is very rare I get huge waves in my backyard. The past two days I had them and I had the time of my life.


God bless and Aloha!

See you on Monday


Anonymous said...

Great post!

And just as I expected, smart, but most of all DISCIPLINED!

Its the mark of all great investors. The discpipline, I mean.

Joshua_NControl said...

Thank you very much.

Sorry for the delay. But we had a big south swell (my backyard) and I had a friend over who left on Sunday.

I have to enjoy this island now. You never know what can happen tomorrow.

Having balance of fun and work in life is a must to be a successful trader.

Anonymous said...

So I assume you set stops, just in case, on your positions since your gone much of the day?

Joshua_NControl said...

No. Never. I evaluate each postion after the closing bell. You know how many stocks blow through stops just to reverse higher? Too many. I would rather take an extra 2-3% loss and know the stocks upside is done than take the proper loss just to see it reverse and close in the upper range of the intraday trading range.

Anonymous said...

Yes I do know what you're saying and hate being taken out by a stop. i usually use a mental stop depending on market conditions,but if I was away as much as U are I would most likely set a stop way down below where I thought it would get taken out in case of some middle of the day disastrous news.....But I hate stops, really do, I usually just check on the ones I'm concerned about if away or just sell them.......

Anonymous said...

Since I am an aspirating trader as well, may I ask what would be a consistent annual ROE that will allow you to decide that it's safe to leave the workplace, or you decide not solely on returns, but a host of other variables, such as total capital, performance against indices, etc? Thanks.

Joshua_NControl said...

No matter what, you dont want to trade for a living with less than $100k if you live in an area with a low cost of living. And if you live in a place like NYC, Boston, LA, or Maui, you better have $250k to do this for a living. Now, I might just be a bad trader but I dont think quitting your day job with $25k is a plausible way to make a living trading stocks.

You better be performing as well or better than the top 5% of the top mutuals funds every year. If you are not, why not just let someone else run your money? That is unless you really enjoy it.

Anonymous said...

thx for the resp.