This is getting old

I was up a thousand bucks for about an hour today. I gave it all away and added more. Down 1.24R.

I struggled with several trades that were going my way early on. I felt like we were in a trend day so I wanted to hold on instead of taking profits early. Things didn't go my way and I ended up breaking even or losing on most of my trades.

One of my positive trades today was CBST.
CBST had a long period of consolidation and a tight bollinger band squeeze around 2:00. I thought the stock would shoot up a bit more than it did and I sold it as I saw the general market start to falter toward the close. Of corst CBST went on to finish the day near its high.

MVL looked to me like it had a nice bear flag setup in the direction of the general market.
It reversed and stopped me out and never made its "target".

My trade in POT was just stupid.
For some reason, I gut feeling that shorting POT was a good move. There was no real reason other than my "feelings" and as usual, the market rewarded my lack of edge with a 1R loss.

DANG IT!!

All day long I waited for a rally and played a couple of short rallies unsuccessfully. I kept my powder dry for a late afternoon rally. A meeting at 2:30pm went long and I rushed to my computer to watch the final minute of the 500 point rally that I missed. What a sucky week.

Today I lost 2.25R.

Chewed up and spit out

I was anticipating an oversold bounce today. We got a bit of a bounce for a short time. Then all heck broke loose again. You can almost anticipate a 300 point sell off or rally at the end of every day anymore.

We've sliced through the lows of 2003 now. Wow. It's pretty scary out there.

I lost 1.3R for the day.

Opportunity Wasted

I had the potential for a swell day. My self-doubt got me out of trades too early as the market gave up the ghost. My short trades could have brought in 10R. Here are the two that I could have made a nice return on.

There was really no excuse for my exit on TCO. I got tired of holding on to it after it gyrated for an hour. The market was in a solid downtrend and when I saw TCO touch the 20MA I got rid of it and broke even.

I'm too worried that the market will whipsaw me out of my positions and I've been way too quick to move my stops to break even for fear of losing. I've proven that if I let my trades pan out that I make more than when I monitor them too closely. It's still incredibly hard for me to watch a trade go against me even if it has only made a little bit of cash.
SYK was a little more iffy. I probably would have sold when price broke the 50MA around 3pm so my sell around 1pm netted me a bit more. Of course, in retrospect, holding until the close would have been the smartest move.

I had myself convinced that when the DJI hit 8100, that all sorts of heck would break loose and the market would rocket upward. Obviously, that didn't happen and once again my bias cost me. Van K. Tharp always emphasizes that we don't trade the markets--we trade what we believe about the markets.

I topped my emotional trading today with a ridiculous scalp play on DIA.
I thought when price broke the 50MA average that we were going to shoot upward. The market bounced off the 50 for a half hour and then plummeted. I was away from my computer for 45 minutes after I made the trade and came back to see that my stop had triggered and that the market was free-falling--just the opposite of what I had thought was going to happen. In addition to being humbled by my poor decision-making, I discovered that I had used a position size that was double what I intended. Dumb.

For the day I made a lousy .30R. I guess I shouldn't complain given the markets big declines, but I should have done better.

Terrible Tuesday

After analyzing my returns by day of the week, I discovered that my Tuesday returns averaged out to be negative. Today I continued the trend by losing 3.57R. I'm such a punk. Fortunately, I'm still trading half of my normal position size so I didn't lose an insane amount of money.

Here are my average "R" results since August for each day of the week.

Monday--2.20
Tuesday--(.51)
Wednesday--1.03
Thursday--.27
Friday--.70

So, it looks like I've got some things to figure out for my trading on Tuesday. I think maybe I grow too confident after a good day on Monday and figure I'm trading with "the house's money". I tend to throw my trading rules out the window and take impulsive trades that quickly turn on me.

Also, Tuesday is usually a busy day for me with meetings and appointments. I often try to "squeeze in" trades when I have time available. Obviously, that strategy hasn't worked out too well.

An Uncooperative Market

I remember the days when a tenth of a percent was considered a trading range. Today the Dow was bouncing between 8500 and 8375 and that was considered "range bound". The market made it difficult to find clear entries and exits for me today. There were some really good setups, but I got too jittery and didn't allow any of my trades to develop too much. I made 1.30R today, so it wasn't terrible.

Many stocks spent the day stuck in a range today, so I decided to trade a couple of Bollinger Band squeezes.
AOC started nicely but I raised my stop too soon and broke even. It continued higher and I missed out on a couple of "R" in gains.

I traded AMZN going the opposite direction (I shorted it). I had a good gain on it, but it turned on me (I ignored the signs to sell early). I made .50R on AMZN.

My main goal right now is to preserve capital while I continue to learn how to exploit the edges I see. My goal remains to crawl back to break-even returns for the year by the end of 2008. I'm still down about 15% YTD, so I've got a ways to go.

Revisiting the Zweig Stock Screen

Last week AAII's Zweig Stock Screen had just 3 picks. That's the lowest I've seen since I started following the screen several years ago. This week there were just 4 picks (the numbers on the side are 26 week relative strength):

The top 5 relative strength stocks in the screen are down 50% year to date.

Week In Review 11-14-08

I was able to improve my performance this week after feeling a bit out of control over the last two weeks. I made 5.07R for the week. Unfortunately, I decreased my position sizes by half for the whole week, so my profits were cut in half as well. That's OK, because reducing my position size allowed me to get back to my old trading habits and kept me from getting overly emotional with each trade.

After my stupidity on Tuesday, I made it a priority to keep my losses small and avoid over-trading. I feel good about how the last three days ended up (a 5.25R gain). Now if I can just keep things in check and continue to trade this way, the month should end up pretty good (hopefully).

Another Crazy One

I had a hard time finding any good trades today. I placed a "fade the gap" trade after the open. It nearly filled and then headed back down. I made a piddly .34R on that one.

I made a bit over 1R on a quick scalp of SRS during the downward push.

My final trade came on a bear flag setup on NTRS. It was up over 1R but retraced back along with the rest of the market. I sold it for a .21R gain.
For the day I made 1.58R.

NOW we get a trend day

Yesterday's fake trend day got me all scared and so my trading today was pensive and skittish. After the bear flag failed at noon, I decided to call it today and took a paltry .42R on a day that was practically handing me setups. I had some afternoon appointments so it's all OK.

To show you the fractal nature of chart patterns look at the chart below. I originally posted this chart because I thought it was the chart for today. Actually it represents the last 6 days, but it's kooky how it has nearly the exact same pattern as the 5 minute chart for today.
Here's a trade that I wimped out on way too early today. I was following 30 minute charts today and noticed a narrow candle on MOS. It went on to follow the market down for the rest of the day.
Here's another trade I wimped out on. I took the trade after the bear flag, but when things reversed a bit, I got out for a tiny profit. If I had held until the end of the day, I could have made 5R.
It's important to take one day at a time. Every trade is different. I missed out on a potential 8.75R today because I let yesterday's trades affect my trading today.

Some good advice

Brett Steenbarger has some good advice on TraderFeed for guys like me when it comes to managing risk throughout the day. Today I lost more than I should have because I didn't follow my rules. Here's what Brett has to say:

"Every intraday trader needs to have--and enforce--a "drop dead" level for the day. That reflects the maximum loss you're willing to incur in a single day's trading. If you hit that level in a day, it tells you you're not seeing the market well and, like a pitcher on a bad outing, you need to get off the mound and call it a night.

In my own trading, I have--in addition to the drop dead level--a warning level that is roughly half of the maximum loss I'm willing to incur. If I hit that warning level, I drop my size (risk) and don't return to normal-size trading until I've worked my way out of the red for the day. By heeding the warning level and dropping my size, I give myself a chance to battle back. I also give myself an opportunity to participate in afternoon moves that could make my day. Dropping the size and waiting until I see markets well keeps me in the game."

Whipsawed

I made the assumption that today was a trend day and quickly stopped out of several trades as the market broke through the 50MA. It came down just as quickly so I imagine a lot of traders got smacked around today.

I was too impatient with my trades today and I didn't really wait for confirmation from the averages or from the trades themselves. Take a look.

CVS was probably the closest thing to a good trade today. It went against me for a 2R loss, but I think the setup was there. I took the trade after the bear flag and made money until the reversal near 1:45pm.
DOW was my first trade of the day. I sold it short on the first red candle on the 20MA. It didn't take long for me to stop out as the stock headed for the 50MA. As it turned around, I thought I might have placed my stop too close, but the stock really didn't go anywhere and I would have been stopped around 2pm anyway.

I lost 3.42R today. I violated my rule of quitting after a 2R loss because I was convinced that the market would continue trending down. Dumb.

I went back to my trading journal to figure out why things don't seem to be working for me lately. What I discovered is that I have become much more impulsive with my trading. In August, I seemed to have a lot more patience. I traded only 11 days out of 20. My largest daily loss was 1.83R. I also was trading using 30 minute charts instead of the 5 minute charts that I've been using lately.

Here's the 30 minute chart for DOW.
On this time frame there is no clear entry point or trend. I should have used this chart to confirm whether DOW was a good trade or not.

Here's one that I was following but didn't take.
SOHU had a decent 4.23R potential with much less stress monitoring the 3o minute chart.

I think that I'm going to try and slow down a bit. I seem to do much better at a less frantic pace and my decision making seems to be less impulsive.

Cool head=cool profits

Today I traded the way I'm supposed to. I followed my plan, I avoided outside noise (I didn't read or listen to anything this morning), I chose stocks with clear setups, I had specific targets and I avoided emotion-laden, knee-jerk decisions.

The market rewarded me by giving back my losses from last Friday -- 4.37R.

Most of my gains (3.45R) came on one trade (out of the four I made today). Let's take a look.

I actually took two trades on NRG. The first was just after the bear flag formation. It petered around for 15 minutes and I sold it at break even. After that last doji near the 20MA I took another position and followed it down until it quit around 1 pm. I debated holding on, but I'm glad I got out.

I made my first "fade the gap" trade with DIA. I got nervous when things reversed a bit and I got out at break-even. I should have held on. Maybe next time.
Overall, I'm happy with how things went. I don't know why I got caught up in trading in ways that leave me feeling exhausted (and broke). I'm glad I made some money today because it will reinforce my trading plan and help me get back on track.

Should have stayed out.

I threw all my rules out the window and traded like a true punk today losing $3,000 in the process. I was up $500 at two different times and still insisted on trading it away. The whipsaw late in the day wiped me out and I was done.

Unfortunately, I can't feel "good" about this loss since I made all the mistakes that I made last Friday--with the same results. I went for quick scalps while avoiding my bread and butter trades, I traded after I had lost 2R (ending up with a 4R loss), I followed the chatter on a stock chat room, and I didn't take profits when I had them.

So I turned an OK week into a crummy one. For the week I was down 1.67R. My frantic trading created nearly $400 in commissions.

I've got to get back on track and quit this stupidity.

Where are we going?

It's hard to know what the market is going to do today. Futures were positive, but with the breaking news about unemployment being blasted all over the news, it's hard telling what chaos that will wreak on the markets. I think I'll sit out the first hour and let things settle out before I try any trading. Be careful out there!!

Another Missed Trend Day

Today was a nearly perfect trend day (take a look at Corey's explanation), but I traded all day fearing a reversal. I made over 2R, but I could have made a ton more if I had just followed my instincts rather than worrying about being wrong.

All my trades were 10 minute scalps, so I don't have any good charts to show you. There were a ton of bear flags out there, but I was just too wimpy to take them.

Flat on a trend day

There were so many opportunities out there today to go short, but nearly every one I took didn't work. I ended the day up about .36R.

I've never traded the indexes, but the DIA set up a nice bear flag about 12:30. It went on to make the target near the close after reversing for a bit. A stop on the declining 50MA would have insured a decent risk/reward return.

I was up over $1,000 on two stocks today. After moving my stops to break even, they -- broke even. I can't seem to get the knack for how to manage my stops so I can avoid losing but also keep my profits. Sometimes I wonder whether it would be better during this volatile market period to grab 1R profits whenever they appear.

The Market giveth & the Market taketh away

Monday was good with a 1.38R gain on two trades. I gave all of that back today with a 1.77R loss. I'm avoiding the frantic trading that characterized last week.

Month in Review -- October 2008

Despite the record breaking downturn in October, I was able to survive the month with an 8.81R gain. Ironically, the last week of October was my worst. I was up nearly 15R for the month going into last week. I got too cocky and started trading for quick gains and got my clock cleaned with a 4.16R loss for the week.

I have some time to reflect over the weekend, and I know what mistakes I made. It takes me a long time to learn from my mistakes, but hopefully I won't be taking the same stupid emotional trades that I took last week.

My stats for October:

Win percentage: 41.18%
Number of trades: 65
Number of days traded: 21
Average number of trades per day: 3.1
Average win/loss per day in "R"=.42

I've noticed that my average win/loss per day in "R" has been declining each month. I only traded 11 days in August and averaged 2.12 R each day I traded. I think I was sticking to my system better in August. The same goes for September.