A better day

Today I made 2.62R on four picks. I went long on FDG and shorted MA, AGU and CLF. I lost 1R on AGU but gained on the rest. That gives me a little more confidence.

I was tempted to virtual trade today after my 4R loss yesterday. I decided that I'll learn much quicker if I'm using real money. I dropped the dollar amount risked on each trade to $100 which is a tenth of what I normally risk. I'm going to spend a few months figure out what kind of R (or risk) value I can achieve each month. If I can average 5R a month, I'll up my dollars risked.

If I don't have a knack for daytrading, I'll probably return to position trading using screens again. We'll see in a few months, but I'm encouraged by a better day today.

Another one that got away

BUCY was another "watch list" stock that I ignored today. If I would have bought it after it broke its 10:00 candle I would have risked 40 cents per share. Selling it at the close (at $75.86) would have made 6.48R.

I got stopped out of four stocks today. All of them were stocks that I pulled from different sources. Most were up on big gaps. I'm wondering if it would be better to just keep an eye on stocks that I've been following for awhile so that I'm more familiar with the stock's recent movements.

I won't be able to last long if I stop out of four stocks every day, so I better start learning quickly.

Not as easy as I thought

I took four positions early today and things looked pretty good until lunch time. All four stopped out for a loss of 1.45% to my account. I like the "every day is a new day" philosophy of day trading, but the quick gains and losses (as opposed to waiting days or weeks) is a bit unsettling so far.

I had to resist the urge to just jump back in. I've set a limit for losses per day, and I need to stick to them.

Missed this one

This is a good example of the type of daytrades that I am looking for. I ignored this one even though it was on my watch list. Dumb.

This is a chart of Union Pacific Railroad (headquartered here in Omaha, NE) I've circled what is called a "compression" candle at 10:00am. These candles indicate indecision, and often the breakout from these candles is large in either direction. You have to wait until the breakout to make your move.

On this chart if you bought as soon as you saw the breakout (about 78.26) and placed a stop at the bottom of the signal candle (about 77.83) you'd risk 43 cents per share. If you held until the end of the day you would have gained $2.84 per share or 6.6 times your risk. If you risk $1,000 per trade that means your would have made $6,600 on that trade.

Both Ugly and Trader Mike have much more information on their sites about trading this way if you're interested.

Day Two -- Not so good

I felt pretty good about staying out of the market yesterday. I made 5 trades today and lost .60% on a day the indexes muscled their way back. I'm a bit disappointed.

I made 1.69R on SAP. I bought it at the narrow 10:30 candle and sold it near the close.

I lost 1R on FDG. I probably should have waited a bit more for the uptrend to be confirmed. I'm learning, but it sucks being down on a day like today!

I'm back

After a relaxing and fun-filled vacation with my extended family, it's good to be back! Today was my first day live as a daytrader, and I couldn't pull the trigger on anything. Nothing on my watch list moved like I hoped it would, so I quit at noon. It felt really nice to avoid getting pulled down by the market (although the urge to trade frustrated me a bit).

Off to the Ozarks

Before I leave on my trip, I wanted to thank everybody who has responded to my posts via e-mail or by posting on StockPunk. I am truly blessed to have so many of you spend so much time writing me words of encouragement and bestowing excellent gems of wisdom. Some of you write more than I do! That's what makes the blogging community so great. I wouldn't have the first clue how to do what I do if it wasn't for the help I've received from other bloggers and from the folks who read StockPunk.

I hope that I haven't sounded too whiny lately. I'm not really going off the deep end. I realize that drawdowns are inevitable. This drawdown is not even near the worst that I have experienced. I know that I'll be up-to-speed sometime.

My goal is to provide the perspective of a part-time trader who is often confused about the goings-on in the market place. Things can get a little frustrating when you watch your hard earned money fly out the window. Trading isn't easy and it isn't for everyone. But I love it and I don't plan to ever quit.

EPS screen still sucks

This screen usually screams--especially when the averages are doing fair to OK (like this week). But these outperforming stocks are still struggling (just like me). Sometimes things just don't work the way you think they're supposed to.

I took a big hit today on AZZ and on another ill-advised purchase--ATHR. Those two stocks drug my portfolio down 1.77%. I day traded 4 stocks today and ended up even on them. I'll take that over the loss.

My portfolio is once again, stock free. I'm taking Thursday and Friday off and will return on Monday from a family vacation. The market will probably gain 1,000 points during my time off. You guys should buy StockPunk futures. Sell when I'm in the market and buy when I'm not.

I've dug myself a nice new 18% hole. To think that I was back near even for the year one month ago makes me a bit ill. The crazy thing is the losses have been small--but they've been consistent. Since June 17th I've had 5 up days and 19 down days. That can't be good for the ol' portfolio.

If the market continues to show the strength like it has recently, I might have to move the StockPunk Market Meter next week. Exciting!

Why I want to be a day trader

AEHR is one of the Zweig picks this week. It had a good showing a month ago, but recently has been quite pathetic. It gapped down 30% over night (despite being rated a "strong buy"), so if you were long with this one you were left holding the bag. I've had this happen a few times to me, and I hate the feeling of not having control over night. Several people have told me that trading intra-day is too risky. But I think you have more control when you don't hold positions overnight.

I won't be able to have a day job if I'm selling before 4:00, so that's something I'll need to work out before I jump fully in. I really think this is more my cup of tea than the weekly screen trading I've been doing for the past couple of years. Maybe when the market corrects and starts a new bull run I'll change my mind. But the last six months has really punished my stock screen trading right out of me.

I plan to keep everybody informed as I start trading in a new direction. I'm "going live" next Monday with my first day of selling at the close. I plan to detail at least a trade a day on the blog. If it works, it will be a less stressful (and hopefully more lucrative) way for me to trade. If it doesn't work, it will be another good lesson for me and the 2 others who read StockPunk.

It's official

I am the world's worst stock trader. Down another 1% on a good day for the market. I spent most of the morning dumping the stocks that I bought on emotion and jerry-rigged technical analysis. I held on to AZZ and a couple of dumb options that wouldn't sell. I feel like I'm having some sort of nervous stock breakdown.

I have NEVER felt this incapable with my trading. Thanks to all of you who have encouraged me to take a step back and re-focus. I think that is some great advice. I think I've muddied the waters with too many ideas and too much information. I leave for a family vacation on Thursday and I hope to regroup.

Here's the thing though. I tried my first day-trade today and stopped out in about 3 minutes. Of course I got all worked up and quit. I decided to spend the rest of the day virtual trading. I know virtual trading isn't the same as the real thing, but I managed to somehow (virtually) make 47 times my risk. That's more than my YEARLY goal! How is it that I can do so well in my virtual account?

Lost some more

Today I lost another .41%. Typical.

I tried some virtual day trading today and I really liked it. I made a virtual $1,000 in 20 minutes with no worries about what is going to happen overnight. Maybe I'm just not cut out for longer term stuff. I'm going to investigate things a little more.

This week with StockPunk

Your guess is as good as mine on the direction of the market this week. I've decided to focus my trading account more on what I do best -- stock screening. The last couple of weeks have slapped me around. All of that slapping has come from a trading style that I'm not entirely comfortable with. Screening has been my bread and butter for the past 4 years and it seems silly to abandon it (especially for something I'm not especially good at).

I still want to learn more about which stocks work in my screens and why. I think I've relied too much on the screens themselves and I haven't done enough "homework" to really know what's going on underneath.

I got a mention on UglyChart last week. Thanks Ugly! His blog is one of the most informative and fun stock blogs out there. When I first started reading stock blogs, most of them bored me to tears or overwhelmed me with stuff I didn't understand. Ugly has a unique gift for combining humor, sarcasm, and information all together in a refreshing and entertaining way. If you haven't seen Ugly's videos you're missing out. They are hilarious!

Week In Review 7-18-2008

That just sucked. It isn't very often that I have a week as frustrating as this one. I watched most of my screens scream ahead while my account continued to lose money.

For the week my account lost nearly 3%. The Zweig RS 5 screen made 5.53%.
The Zweig MACD screen came in at 5.46% for the week.I'm not sure if I would have been comfortable buying NSYS because of its low volume. Some days it was trading below 7,000 shares. That stuff scares me a bit.

Hopefully I'll be able to turn this ship around and start making some money. Sometimes things just don't work the way you think they will.

Oh well . . .

After another sucky day (down .53%) I decided to check some of the screens I follow to see if they suck as much as I do.

The screen on the right takes the 5 highest relative strength stocks from AAII's "EPS est. revision up 5%" screen. Most of those stocks looked pretty good on Monday (click on the chart for a better view).

I'm getting dinged on high momentum stocks that are crashing as the stocks in the dumpster start to show some life. I guess this is just another life lesson.

Stupid, stupid, stupid

For those of you who have followed this blog for a while you know I am prone to emotional (translated--stupid) decisions. Today was a classic day for stupid decisions.

• I didn't trade my plan
• I let market movements dictate my decisions
• I traded against the longer term trend
• I worried about not making money on a big-move day
• I placed sloppy stops
• I rushed into stocks that were up heavily hoping to catch some gains

Despite the positive day for the major indexes, my portfolio was down over 1%--not good. I had two round trips (bought and sold the same day) for losses.

I think a lot of it was suffering through the worst June in a long time and anticipating a strong move every day. When I saw the move happening today, I made uneducated decisions that hurt me. The excitement of the market hooked me today and I got my buttocks kicked. Will I ever learn?

Another volatile one

I ended up losing .40% on a wacky day that still didn't lend any confirmation as to where we are headed. I lost a bunch on an ARO option that traded 1 contract today. Nobody else would buy the dumb thing to bring it back up. Punks.

I traded my first short today. It wasn't quite as dramatic as I had pictured it being. After trading options for a few months, it wasn't even a big deal. I don't know why I waited so long.

Fade that gap!!!

I thought for sure that with the negative bias this morning that there was no way that the opening gap would get filled. It didn't take too long to prove me wrong--yet again. Corey at Afraid to Trade has been tracking these gaps on his site and it is remarkable how many get filled.

Corey has been my personal "stock instructor" for the last couple of months and I must say that the benefits I have received far outweigh the piddly price he charges. Most of the charting that I have been providing over the last few weeks come directly from what I've learned from him.

Lately, instead of stumbling around the market (like I usually do) I've been able to actually make some educated decisions. When it comes to trading, I think the more you can learn from people who have done it, the better off you are. Corey trades for a living and is extremely gifted at breaking down the market in a way that is practical and educational. I highly recommend reading his blog daily. If you really want to grow your knowledge, take his mentoring course. It's the best I've seen so far!

A tiny gain

I managed to squeeze out a .14% gain today. I'll take it.

The weekly chart of the S&P 500 looks pretty ugly.

However, if I would have followed the trends (trend changes indicated by arrows) and sold when the trend flipped to the downside and bought when things were trending up, I would have ended 2007 with a 53% gain (instead of 40%). This year I'd be up nearly 20% instead of down 12%. Interesting stuff.

Must resist . . .

When I saw the premarket numbers, I must admit I was chomping at the bit.

From Reminiscences of a Stock Operator:
"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!"

I haven't got the skill of sitting tight quite down yet. If I had I'd probably be up 20% for the year. But we all need to be able to adapt to a changing market and be able to accept the fact that it has changed for now. It will pass, but right now doesn't seem to be the time to be aggressive.

This week with StockPunk

It seems like there may be some opportunity out there this week with as oversold as the market is now. But I thought that last week as well, and that didn't turn out too pretty.

There aren't really any stocks that jump out at me in the Zweig screen this week, so I'll probably use this week as an opportunity to learn how to short a stock. I've never done it, and I know that puts me at an extreme disadvantage (especially in this market).

We're officially in a down-trending market which hasn't happened since 2003. That can't be good. Corey at Afraid to Trade pointed out to me that the S&P monthly chart looks eerily similar to the run up and subsequent sell off in the late 1990s and early 2000s. Time will tell.

I began trading in March of 2003, so I haven't had to deal with a down-trending market yet. I'm trying to quickly learn, but trading short doesn't come naturally to me for some reason.

Join the Club

If your portfolio is suffering, you're not the only one. Both StockSuperstars which is run by AAII and the Prudent Speculator have suffered this first half of the year. I admire both of these services for their candid sharing of portfolio performance. Both services are extremely profession and trustworthy which is why I follow them now and have subscribed to them in the past.

But it's pretty obvious that even the professionals are having a hard time navigating this market.

Week In Review 7-11-08

7-11 didn't bring me any luck today. I capped off an entire week of losses with a final -.23% For the week I lost 2.27% even though I held very few positions. If I had been fully invested in the Zweig RS 5 screen I would have made 2.54% even with a nearly 15% sell-off of AEHR. NSYS was the best performer in the screen with a 14.38% gain, but it was very thinly traded (less than 2,000 shares today), so I wouldn't have bought it anyway (I've got to find something).

You guys posted some great comments on the Zweig Screams post! I love discussion about different approaches. I wish I would have followed the advice of one of the anonymous posters and just played the screen this week!

I've decided to quit paying for Zack's Rank numbers for the time being. I haven't bought stocks lately based on Zack's Rank, and I think there are other methods to screen for stocks with earning surprises for less than $200.00 per year. StockBee has an interesting article in that regard.

So now that I am no longer a Research Wizard I won't be able to specifically screen for Zacks #1 ranks and will stop keeping track of the Zweig and Zacks screen from here on out.

Zweig Screams

Get it? "Screams" not "screens". Get it?! Whatever . . .

Anyway, I was cleaning up my portfolio tracking information (I used Smartmoney's excellent site) and found the Zweig screen from February which I hadn't deleted yet. Here's the thing. If I would have bought the Zweig screen (12 stocks) as it appeared at the beginning of February and held it until now, I would have gained 23.35%. Interesting.

Looks like a positive open today, but these last two days have been really goofy. We'll see where things go. I still think there is a lot of short term opportunity out there, but I'm still too nervous to be very aggressive. What do you guys think?

Just as expected

The bulls came rushing in, just as many had thought they would. Now well see if they have any traction. A small pull-back is natural in the next few days so don't flip out over a couple of down days. We have a set up for a bear-market rally, so I put some money to work this morning. We'll see how things play out.

Chris Perruna has a great article (if you're bored with this market) called the 10 Steps to Profitable Trading.

Way Oversold

I use this chart as one of my market "health checks" to help determine where the market might be headed in the near future. Right now it says that there are so few stocks trading above their 50 day moving average that a bounce is likely soon.

Oil Bubble?

I saw this chart on PitbullInvestor.com on Henry Ford's daily commentary. It always interesting (to me) to compare and contrast different things on charts. It sure would be nice to see the price of oil come down to "normal" levels again. Time will tell, but this doesn't seem the best place to buy oil stocks if you ask me.

Ths week with StockPunk

This should be a sort of "recovery week" for the indexes. I expect that those stocks who were hit hard last week will show the strongest recovery this week (ie agriculture, metals and energy). I plan to lay low this week unless things go nutty. I've got one position which will probably tank. Good luck out there!

Month in Reveiw --June 2008

I'm a few days late, but I wanted to discuss the month of June.

Thanks to Seeking Alpha for this chart showing that this was the worst June performance since the Great Depression with nearly a 10% drop.

I began to get more defensive and stopped aggressively going long the 3rd week of June. I made a few mistakes along the way, but overall I'm pleased with my ability to limit my losses. For the month I was basically even. I was down about 2 times my risk for the month, but my tiny position sizes toward the end of the month saved me from big dollar losses.

The screens had awful months as well with the Zweig RS 5 screen losing 10.48% and the Zweig MACD screen losing a whopping 21.54%. Zacks and Zweig gained a bit, but only had one stock qualifying for one week during the entire month.

Back from vacation

It looks like I didn't miss anything while I was gone. What a mess.

I have one open position now as I have stopped out of everything else. Everything on my watch list yesterday was down hard--like 3% or more. That doesn't make me want to jump back in any time soon.

I'm going to enjoy the holiday and regroup. Have a great 4th of July everybody. Enjoy the freedoms we have as a country!