Stephen K. – Stocks Trader

Stephen has used TradeGuider (formerly VSA) since 1993. He uses TradeGuider with TC2000 to filter stocks to determine which ones fit his profile. Stephen is well capitalized and he takes the philosophy that he wants to make a little money on each trade and then get out. He is happy to take high probability trades that allow him to beat the spread, make a few points, and then exit the trade. Each trade tends to last just a few days. He uses a combination of his own experience and the stop-loss systems in TradeGuider to determine his exits.

How did you come to use TradeGuider?

Despite the huge bull run in the 1980’s, I actually lost money! I used to follow the tips in newspapers and I used to study the charts in the financial pages. I was lulled into a false sense of security, as all my friends we trading the stock market – everyone seemed to be. I lost out and most of my friends did too. After this bad experience, I pledged never to invest in the stock market ever again. It wasn’t until my father introduced me to the “Master the Markets” Book that I realized what a fool I had been in the past. I didn’t realize that the journalists for the financial press are regularly and unwittingly manipulated by professional interests. I often wondered why a share that was tipped to rise often dropped like a stone afterwards – after reading that book, I now know why! After being so impressed by the book, buying the software was just the next logical step. I haven’t looked back since. My father persuaded me to buy into some stock and I used TradeGuider to track it.

Can you give us an overview of how you trade?

Well I like to use a whole combination of tools in my trading – I’m more comfortable doing this. My father was using TC2000 to do some scans and we started using the two programs in conjunction with each other. I continue to use TradeGuider with the Worden Brothers software to this date and I’m really happy with the combination. Basically, I use the “Balance of Power”, “Time Segmented Volume” and “Money Stream” indicators from TC2000, and then I use the various indicators and tools in TradeGuider to help with the timing. I like to use the diamonds indicator in TradeGuider, as that’s really good at showing the trend. I also take note of the diamond stops tools which allow me to time my entry.

The Volume Thermometer shows the relative bullish and bearish volume and I really find this useful when combined with the volume-based indicators in TC2000. Obviously, I take into consideration the volume-based indicators in TradeGuider too, and it’s kind of fun to combine these with the volume leaders scan in TC2000. I run the volume leaders through TradeGuider’s stock scanner to see if any of these stocks are particularly strong or weak. Each day, I find 5 or 6 stocks and add them to my watch list. I run the Indicator Scan in TradeGuider to see if any of them have just flagged a signal. When combined with the other techniques I’ve mentioned, I get a lot of good hits. I recommend these techniques to anybody who’s interested in trading stocks – it’s highly effective. To be honest, I don’t care much for moving averages, but I care a lot about volume. By mixing TradeGuider with the volume indicators in TC2000, I get the great results I need. I like to get in and out fast and working with these two programs allows me to identify fruitful situations and take advantage of them.

How have you done?

I easily take two or three thousand dollars a week and I’m very happy with that. Using the techniques I’ve talked about, my hit rate is over 90%. It’s a far cry from how things were when I was trading in the 80’s <laughs>; that’s great.

You’re obviously content with your performance.Can you elaborate on some of what you have said? How did you develop this philosophy?

When my father supplied me with the “Master the Markets” Book, and I sat down to read it, it was almost as if someone had switched the light on. For me, it was a life changing moment – I could finally see things in context. I realized how important volume was after reading that book and this is why I tend to focus on this.

Do you look at real time data?

No, not at the moment. All my analysis is carried out in the evening. Although, I am interested in monitoring prices in the day and I’m considering getting the real-time version of TradeGuider to do this.

How about going short?

Sure, I have no problem trading both sides of the market – in fact, I would encourage it. The stock scanner in TradeGuider identifies the ten weakest stocks, as well as the ten strongest. The stop-loss systems are designed to help you stay in a trade, irrespective of whether you are long or short. My advice for anyone new to trading short is to trade in harmony with the parent index. In other words, if the NASDAQ is trending down, then you should also be looking for opportunities to short the constituent shares that make up the NASDAQ index.