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Abell,
Koppel Discuss Short-Term Trading Methods
By
Jim Wyckoff
(Note:
I wrote this story a few years back, when I was a journalist with
FWN.)
No
short-term trading system is perfect. However, having and using a
system is critical for short-term trading success, say Howard Abell
and Bob Koppel.
“A
successful short-term trading system must be profitable, consistent,
and personal--conforming to the unique psychological and
methodological needs of the individual,” they said.
Abell
is chief operating officer for Innergame Division and author of “The
Day Trader’s Advantage” and “The Insider’s Edge.” Koppel
has authored “The Intuitive Trader” and is president of
Innergame Division, which is a professional and institutional
brokerage and trader execution services division of Rand
Financial--a Chicago-based futures commission merchant with clearing
representation worldwide.
Innergame
Division is also associated with the Moore Research Center, based in
Eugene, Ore. Steve Moore is the proprietor. Together, they have
created the Innergame Partners/Moore Research, Inc. (IPMR) Trading
Approach.
The
trading method has the following tenets:
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Patience
is your edge. The edge of the floor trader is buying the bid
and selling the offer. This is an unreasonable expectation for
off-the-floor day- and swing-traders. However, there are other
ways to maintain an edge. Patience and preparation serve to
create an edge that helps build and conserve equity. Knowing
what you expect the market to do and waiting patiently for the
market to come to you--in other words, to meet your
expectations--gives you that edge.
-
Good
daytraders and swing trades result from high-percentage
"set-ups". Each day must be viewed in a larger
context, which might be one day to two weeks of market action.
Understanding how markets “set up” to make predictable moves
and anticipating these moves through the set-up is a valuable
key to success.
-
Anticipating
market opportunities. In most instances, waiting for the
market to demonstrate what appears to be a trading opportunity
will result in entering too late for maximum profits.
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Predetermined
buy and sell areas must be executed. For those traders who
have difficulty “pulling the trigger,” putting resting
orders in the market will get you into or out of the trade.
-
Trade
one set-up per market per day. Overtrading comes from
indecision and anxiety. By setting your sights on one good
set-up in a market, you avoid trading your emotions.
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Ignore
the noise, follow the signal. Much of what a market does
during the day can be considered noise--that is, market action
without meaning. Hanging on every tick can be a wearisome and
misleading chore. You must eliminate your reactions to the noise
and follow the essential signals.
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Take
"fast-market" or climax-condition profits. In day-
or swing-trading it is a good idea to exit a profitable trade if
the market climaxes on heavy tick volume or “fast-market”
conditions. It is a high probability that the high or low of the
day is being made at this time. If the market hits your resting
entry orders under these conditions, expect immediate profits or
be alert for another wave in the same direction.
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Abandon
dull or non-performing markets. If you find yourself in a
market that is very dull, look elsewhere. Time is scarce and
watching a dull market drains energy.
Koppel
and Abell made their presentation to traders attending the Technical
Analysis Group (TAG XVIII) meeting in New Orleans late last week.
The meeting was sponsored by Dow Jones Telerate.
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