I'll probably be keeping my eye on things for the next two weeks, but I doubt that I'll do much trading. There's too much going on right now to worry about a thinly traded market. I might chime in here and there, but for now, I wish everybody happy holidays. We made it through the most insane market in years. Here's to hoping '09 is a little more predictable!
I've been a bit busy with stuff the last couple of days and I haven't had a chance to watch the market at all. It's actually kind of nice to be able to go back after the market close and find trade setups. It's so much more easy when it's not in real-time.
Friday looks like another busy day, so I'll probably stay out until next Monday.
I was dashing back and forth from my computer today and I really shouldn't have been trading, but I just can't give it up! It ended up OK, with a 4.4R gain. I probably would be upset with myself if I had lost money today.
I got out too soon on my successful trade as the market had a lot further to go. I was just so tired of being burned and I knew I wouldn't be able to monitor things. With the way trades have gone lately, I'm happy to finally make a nice gain. We'll see if my fortune continues. I still plan to trade very lightly for the rest of the year.
This past week was the busiest of the year for me, so I haven't been posting or trading. I did take a couple of dumb trades on Friday and lost a couple of "R". Hey, that's just the way I roll.
I will be transitioning with my work and with my future plans in the next couple of weeks and I'll keep everybody informed as things happen. I'll probably limit my trading for the next couple of weeks as I have an overwhelming number of things to get done.
I'll attempt to post as I have time.
My day was a wash. I was up $1,000 for a while, but things didn't go my way on a few trades. I found it difficult to trade today because the market flat-lined for several hours and didn't provide any decent setups.
The bulls should be encouraged by the last few days of trading. Things have really held up well despite everything that is going against the market right now.
I found this video of Peter Schiff to be quite entertaining. He really did a swell job predicting what would happen this year.
Although I lost a bit of money this week, I'm still chalking it up as a success. I was able to reign in my impulsive trading and slow things down dramatically by:
Yesterday I made two trades on DIA. The first trade was based on a bear flag that appeared around 11:30. I saw it developing and placed an order below it anticipating some dojis and a bounce off the 20EMA. Everything went according to plan, but things quickly reversed on me, and I stopped out around noon.
I had noticed the momentum divergence (MACD chart with yellow line) but I ignored it believing that there was no way the market could make gains after the dismal jobs report. Of course, whenever I assume something, I always get kicked in the pants. You would think I would have learned my lesson by now. Nope.
The second trade bailed me out. This time I paid attention to the divergence and bought at the moving average crossover a little before 2:00. I held on to near the close for a decent 2.34R gain.
Brian Shannon of Alphatrends provides an interesting and educational glimpse into his trading day. I think Brian's videos are an invaluable resource for anyone interested in learning technical analysis and market dynamics.
Corey Rosenbloom at Afraid to Trade continues to demonstrate how Elliot Wave analysis works on multiple time frames. I find Elliot Wave and Fibonacci numbers fascinating and Corey seems to have a knack for spotting patterns and a deep understanding of how markets work.
Charles Kirk demonstrates the rewards of discipline in trading and financial frugality.
Pradeep Bonde at Stockbee summarizes several popular trading books to help you find the one that meets your needs as a trader.
Tim Ferriss has a new TV show on the History Channel where he learns something in a week that usually takes 5 years to a lifetime. I left a comment on Tim's blog encouraging him to use his amazing abilities to learn how to manage his own money after he attended a Berkshire Hathaway meeting here in Omaha.
My "old school" or "dummy trades" today really helped me get back to the old feelings of unemotional trading. I avoided news, chat rooms, and many other bias-creating forms of information. That helped me focus on 30-minute charts and just a few candidates for trading.
I'll have to admit, I more fun trading today than I have had in over a month. I was even down $600 and it didn't bother me because I was trading what I saw and not what others were seeing.
My best trade today was CASY.
I took the trade after the narrow 10:30 candle on the 30 minute chart setting a protective stop (blue dotted line) right above the candle. The stock trended perfectly the rest of the day as you can see on the 5 minute chart.
I got jumpy as the market moved into positive territory and I sold when price broke the 9 period moving average. As in classic trends, the price bounced off the 20 MA and headed south for another nice drop into the close. I made 2.09R on the trade, but I missed out on another 3R. Part of my nervousness came because the market as a whole wasn't trending down (at the time I sold) and CASY was already down 13%. I thought the chances of it continuing down were slim.
I missed an opportunity on POT as well. Here's the 30 minute.
POT quickly moved in my direction and I moved my stop to break-even. I stopped out soon after and then POT moved down the rest of the day. I missed a perfect bear flag on the 5 minute chart.
I had a couple of long trades today that went against me. Overall, I made .87R on the day--my first positive day since November 19th.
November was my worst month since I started day-trading in August. I lost 2.73R for the month.
November also took a toll on me psychologically. I just couldn't seem to make things work week to week and I ended the month "Afraid to Trade" as Corey puts it. I avoided nearly the entire last week as the market rallied nearly 20%!
There are a few things that I think went wrong in November. First, I got caught up in shorter and shorter time frames to the point that I was getting stopped out of trades within minutes. Losing money that quickly created anxiety, so I'd lower my position size after my first or second loss. Often, when I finally hit a winner, my position size was so small that it didn't make up for the losses I took on the first couple of trades--which created more anxiety.
Second, I think I've tried to cram too much information into too small a time frame. What I mean by that is that I've learned an enormous amount of trading setups, techniques, indicators, patterns, etc., and too often I try to cram them in to every trading day, and I end up making too many trades in a frantic bid to "trade them as I see them".
Third, I let too much "noise" affect my trading. I read far too many blogs, listed to too many news programs, and spent way too much time in stock forums. Nearly every single time, when I traded based on some outside influence, I lost money--often very quickly.
Fourth, I made too many trades--83 in all. I traded 65 times in August and made 23R.
Fifth, the market seemed a lot more volatile in November, and many of my setups just weren't compatible with the type of volatility that we were experiencing. I should have been much more patient with my trades, and allowed the day play out a little more before I committed money.
When I started day trading in August there were days where I couldn't find a good setup, and I would end the day without trading a single stock. Lately it seems that I find dozens of setups which all seem to go against me.
I think I am going to try and step back from the five minute time frame to the 30 minute time frame that I was trading in August. I tried that today, and although I didn't find any good setups, I was much more relaxed and really felt good about staying out of the market because nothing "looked right".
I guess I should still feel good about how I'm trading. Last November I lost 17% trading the Zweig screen, and most of that disappeared in one week!
I decided not to trade last week with the Thanksgiving holiday and all that. Of course, last week turned out to be one of the most trade-worthy weeks in long time. Curses to you Mr. Market.
My job prevented me from trading yesterday which was an incredibly trade-worth trend day.
So I had a couple of hours today and the market see-sawed me out of a 1.5R loss. I'm getting a bit frustrated.
I'll be back tomorrow with a November wrap-up.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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