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.

Moron Trader

I traded like a complete idiot today. The lessons of Monday's lunacy didn't stick apparently. I think I was emboldened by my quick profits in my scalp trades yesterday, and I tried to duplicate my success with awful results.

I won't even post charts of the stocks I traded because none of them had any sort of setup. I kept trying to catch moves up or down but the indexes couldn't make up their mind which way they wanted to go and so my stocks duplicated the uncertainty.

My first trade lost nearly 2R from the get go. I couldn't believe how fast that much money disappeared from my account. I didn't even have time to set up a decent stop and in a panic, I sold the stock as it raced down.

I should have quit there, but I assumed that the trade was an anomaly. I quickly discovered that it wasn't and I was down another 1.50R. Ouch. I took a couple of more trades that were up nearly enough to make back my losses, but I only broke even after I moved my stop up to my buying price. I ended up the day with a 4.42R loss. Just dumb.

I need to get back to the trades that worked over the past three months and quit trying to get fancy with new trading setups (or lack thereof). I need to follow my rule of quitting after 2R in losses in a day as well.

Crazy swings

I had active trades going for a total of 6 minutes today. This market still freaks me out a bit. The last hour of trading is a good reason why.
I made 1.87R today. Most of the gains came on a 3 minute scalp trade on MOS as it was consolidating down. I didn't have the guts to trade the bull flag that occurred after the consolidation. It met it's target despite the huge drop in the indexes at the end of the day.

Holy Moly

I made back my losses from yesterday and then I got all conservative and timid as the market rocketed to 11% gains by the end of the day. I've never felt this bad about making money.Most of my gains today were made trading CF. I shorted it for a gap fade after the market rolled over about 10:15. I took profits on the way down because I was nervous about the volatility in the market and in the stock. So I turned a potential 8R gain into a 2.69R gain.

Because nothing worked for me yesterday, I was scared about my losing streak continuing. Nothing worked for me yesterday because I took trades that were outside of my comfort zone and I didn't trade my plan. I continued to trade after I had met my -2R limit trying to get back to even.

That's why it is so important to look at each trade as a unique opportunity. My trades today were completely different from my trades yesterday, but I allowed my failures yesterday to influence my trading today.

My second trade with CF was after the nice bull flag that set up at 2pm. I set up a bracket trade and was going to allow this one to run on auto-pilot, but after the trade triggered, I got scared and dumped it way before it had reached its target (which it went on to meet--and more).

I went back to my days as a "newbie" with my trade on UYG. This was a completely inappropriate trade for me on so many levels. First, I put an order in before the market opened anticipating a huge opening. I knew better (it has NEVER worked for me to put in a market order before the open), and I watched my price get filled at the high. I was down .75R within seconds.

Secondly, there was no setup and no edge to this trade. I thought that the financials would spike today (they did--hours later), but I really had no business trying to get in when I did. Thirdly, I had no logical place to place a stop and determine my "R" value because I didn't know where my order would get filled. Just dumb. I lost 1.08R on that one. It could have been a lot worse if I didn't immediately notice how badly it was going for the ETF.

Our Economic "Crisis"

When I lived in Romania in the mid 1990's, I constantly had to convert American dollars to Romanian lei. I often had to go out to the street corners and find a "bisnitar" (pronounced beeshneetsar--they gave the term "money changers" in the Bible new meaning) to convert my currency.

Inflation was rampant after the fall of Communism, and many retirees saw their comfortable retirement savings deflate to the cost of a hamburger and fries in just a couple of years. My wife and I had to carry sacks full of money to the telephone company to pay our bills. You never kept cash around for more than a day because it could lose 25% of its value overnight.

Recently, in Zimbabwe, the bill pictured above would give you enough buying power to purchase these:

(Thanks to a WallStreak contributor Market Monk who posted a link about Zimbabwe here.)

Things are tough here in America, and the stock market sucks right now. But we still have a ways to go before we should be running in the streets worried that the world is over.

5 trades--down 3R

This wasn't a good day for me. Nothing worked and I kept trying to find working trades despite being down 2R by lunch time. I should have packed things up and waited until tomorrow.

The market really chopped around and seemed to reverse every time I took a position. I hate days like this.

Stock Superstars Report in the Red

My beloved Stock Superstars Report which is run by the American Association of Individual Investors (I'm a member) has gone negative in overall performance since its inception in 2002. The portfolio consists of over 40 stocks that are picked by experts using screening criteria and risk metrics. There's not much working out there right now, folks.

Week In Review 10-24-2008

What an interesting week that was. This was only the second week since I began day trading in August that I didn't have any losing days.

For the week I made 4.81R. I monitored my trades much more as the market chopped around and I took my profits much more quickly. I'm sure I left a lot of money on the table, but it felt better to pocket gains than to continue risking losses as the market jumped up and down.

My only trade today was a quick (10 minutes) in and out on AGU for a .58R gain. I could have held on for more than 10R gain, but I wasn't comfortable with the swings the market was showing.

The Zweig RS 5 screen was down again this week with a 10.53% loss.

Crazy Stuff

It's been really busy for me the past couple of days. I have been trading and I'll post my results tonight. I'm not so sure I'm prepared for trading on a day like today. It looks a bit wild out there and I've never traded with the threat of limit down hanging around. I might just sit back and watch the carnage. Who knows, maybe this will be the "capitulation" day everybody's been hoping for.

1 trade today

I made 1.88R on this trade today, but I messed up on my target. I sold CS short on the gap move down after the consolidation flag. I've drawn the target (black arrow) but I hadn't set up the target at the original purchase (dumb mistake). Instead I moved my stop to the top of the second consolidation (red arrow) and got stopped out as the stock moved back up. Setting up a target would have gotten me out with another 1R in gains.

Another clue that things were heading the opposite direction was less momentum on a lower low (MACD chart at 11:00 am).

Ever other trade that I considered taking would have turned against me, so I'm glad I stayed out for the rest of the day. It's my 42nd birthday today so I quit trading at lunch time and went out for some Indian food with my family. It was swell.

Got me in the end

I sold at 3:30 to protect my profits only to watch things go nuts the last half hour. I should have known. My trade in AGU took all day to jell. I assumed that it wasn't going to make it to its target so I cinched up my stop and got taken out right before the end of the day rally. I'm a goof.

I tried using Corey's tip using Tradestation's Fibonacci extensions. I didn't trade it, but I found the bull flag on the DOW to be interesting. Notice how the price bounced off the target four times before breaking through and heading higher.
All in all, it was a wimpy day for me. I made +.38R.