Saturday, August 19, 2006

Important Announcement to TraderFeed Readers

Starting this coming week, I will be posting modeling results to the Trading Psychology Weblog based upon the most promising Weblog measures. I call this the Micropsychology Modeler (see August 13 posting to the Trader Performance page of my personal site), because it tracks variables directly related to the psychology of the market itself, including volatility, sentiment, and momentum. The purpose of these postings will be to establish whether or not there is a significant bullish or bearish edge to the market over a 1-5 day time horizon. The target market will be the S&P 500 Index. Given that many individual equities (and other equity indices) correlate quite well with the S&P, this information should be relevant to a variety of short-term traders.

With the publication of the Model results, the material offered in the Trading Psychology Weblog and in TraderFeed will be tightly integrated in an effort to help traders improve their performance. Here is how I suggest you utilize the information that will be provided in the two sites:

1) Trading Psychology Weblog - This will provide the big picture for short-term traders. There will be links to valuable information sources, an assessment of intermarket forces, and an ongoing evaluation of strength and weakness in the market based on the aggregated trading patterns of thousands of stocks. Many of the market metrics summarized in the Weblog are available nowhere else, to my knowledge. The Weblog will continue to offer an assessment of the market's short- and intermediate-term trending, and it will conclude with an overarching trading plan for the coming day. In the section that has been labeled "Market Context" will appear the Micropsychology Modeling results for that day. At a glance, readers will be able to determine whether the models are bullish, bearish, or neutral at defined time frames. The Weblog will generally be posted by 10 PM CT, summarizing the past day for traders and orienting them to the coming day.

2) TraderFeed - This will continue as a blog site for original historical market research, with occasional articles relevant to an understanding of trading and markets. Most of the posted studies will focus on market variables widely available to the trading public (unlike the Trading Psychology Weblog, which is modeling with proprietary measures developed over many years) and will have some relevance to the upcoming trade. For instance, TraderFeed may look at what happens when we're at a particular level of price change and VIX level and compare those historical expectations to what was discovered in the recent Micropsychology modeling. The TraderFeed posting will generally be on the site before 7:30 AM CT. The new feature of TraderFeed will be a second, mid-morning posting that tracks how the market is actually trading that day. A particular focus will be a tracking of large traders and how they are leaning. I find that this information is most often missing in traders' awareness and is of greatest assistance to their performance. Knowing how large traders are trading will keep you out of bad trades and help you assess whether or not the historical modeling findings are likely to pan out in the day session.

As a result, traders can expect three pieces of communication to help them with their trading:

1) An evening market summary from the Trading Psychology Weblog providing the big picture;
2) Premarket research from TraderFeed offering an additional assessment of historical edge;
3) Midmorning update from TraderFeed providing the immediate, intraday trading picture for very short-term traders.

If you think this information would be of interest to you, I suggest that you add TraderFeed to your feed list, so that updates will come to you automatically. You can subscribe to Bloglines and add TraderFeed to your list that way, or you can simply click on the RSS feed link on the TraderFeed site and add the blog via FeedBurner. Of course, subscription is free and does not expose you to spam or other commercial solicitation. Both sites are now and forever more non-commercial.

You might also want to bookmark the Trading Psychology Weblog.

To the best of my knowledge, the integration of the Weblog and TraderFeed will provide the first real time, quantitatively driven trading guidance widely available to traders. The information on how large traders are trading and the Micropsychology modeling results will be data that, IMO, have the potential, to supplement your existing trading/analytic methods.

I encourage you to take a look at the information and not be too much in a rush to act upon it. See what makes sense to you, and see what might fit with your existing trading strengths and methods. Then provide me with feedback about what you like and don't like; what's useful and what's not. That will no doubt help me fine tune the offerings over time.

The idea is to improve trader performance, and my hope is that these trading tools will aid in that goal. Consider the sites as sources of decision support: data to be considered, but not blindly relied upon. I'd like to augment what you already do well, not turn you into a Dr. Brett clone!

Thanks for your continued support of the two sites. I look forward to hearing from you.