The 2005 Trader’s Camp with Dr. Alexander Elder officially ended on Friday. Saturday turned into a bonus day with an impromtu invitation from Alex to sit in on his weekly top-down analysis of the markets, a.k.a. “homework”. Now its one thing to be told how to do market analysis, a better thing to get ready-made spreadsheets for it, and best of all to look over the shoulder of a seasoned expert who can articulate his thoughts in real time. We got all three as best-selling author Dr. Elder sorted through over 130 market indices and 237 sub-industry groups to find candidates stocks for the trading week ahead.
Actually, several months prior to the camp I’d found a sketchy description of the process on the web. I’d used it to find some good trades, such as STTSY, which Dr Elder wrote about in his latest book, Sell and Sell Short. But all along I’d wondered “am I doing it right?” In truth, Elder’s Impulse System way of color-coding never spoke to me, except, and this is a big except, that it got me to look at each index and sub-industry closely enough to classify it. Even so, decent trades came out came out of the process when I mostly just followed directions.
On this day in Cyprus, though, I got to calibrate my judgement with the master. I came to believe that from my weekly analysis I should be able to discern what the market was going to do the following week. Very frustrating that the market often did not cooperate with my predictions!
I have since automated my trading with scripts to find candidate stocks and manage trades. The computer is not a crystal ball either, but it is more consistent than I and my experience in software is one of my edges in trading.
Still, I keep looking at the markets and sectors in a structured way each week both to decide what direction to emphasize in the coming week and to build the expertise that comes from years of practice. I relentlessly ask myself the question “how can this weekly process help me decide what to do?” That drove me to streamline some parts and add other ingredients to my market analysis. I can write about my current process in another post.
The reason I bring it up now is that today, three years later, I look at the Cyprus camp handout and see its clearly labeled at the top “Decision-Making Process”. That is exactly it! A trader needs an orderly way to get a handle on the many, many aspects of the markets today. Not to predict what the market will do, but to decide what the trader will do.
I’m glad I took the opportunity to watch Dr Elder go through his decision-making process live. He showed how he takes a top-down approach to the vast market, zooms in on an interesting area, and plans actions to attempt capitalize on it. He is an expert who generously shares what he is thinking and painstakingly explains exactly how he trades.
This brings me to the end of a fine Traders Camp. I will write a couple more posts about traveling in Cyprus. You can read more about the class sessions and the whole trip here.
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