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.

Week in Review 10-17-08

This was a wild week that turned out OK in the end. For the week I made 5.41R.

The Zweig screen finally had a good week making 6.26%.

A good end to the week

The market was very choppy today. I found it hard to keep profits and sold several stocks at break-even. I did manage to make some money on a couple of trades.


NIHD was a decent trade, but I didn't hold to my target which was met near 1pm. You'll noticed that momentum shifted downward right after my target was met. I made 1.02R but I could have made an additional 3R if I had held until it hit my target.

AGU was another winner, but again, I sold too soon. I could have held a little longer and made an additional 3R. I pulled 3.54R out of it.

I got out of AMED right on time and made 1.09R.

All told I made 4.69R on the day.

Better

I got out early. Things were chopping around way too much. I managed a decent trade that was more luck than a decent setup.

This half hour trade made me 3.12R -- not great, but decent for today.

My other trade was on FDG. It refused to go down yesterday so I bought it when things were looking good at the beginning of the day. I sold it as things soured and lost .54R.

How did I do that?

I somehow managed to pick the only two stocks in the market that didn't go down today.
I assumed the market was in a downtrend so I shorted AMT when it bounced off the 20 period moving average (green line and arrow). It had a pretty good run down to 29.50 but then bounced up with the market just after 2:00pm. I trailed my stop on the 50 period moving average and stopped out about even.
FDG was an emotional buy as evidenced by my entry point. Dumb. It was a losing trade until it headed down, but for some reason it bounced back up near the close. I had placed my stop on the 20 period moving average later in the day to avoid a loss in this stock. I thought it might head down with the rest of the market (and the rest of coal stocks) but it jolted higher.

I'll live to fight another day. I did make 7 bucks today, so I guess I shouldn't complain. I'm sure there were quite a few people that lost their shirt today.

Down today

I took two trades today and neither went my way.
TRMA could have been a good trade if I had set my stop a little further away. It went just a few pennies past my stop and then ended up with a pretty good drop for the rest of the day. Could have been a 5R+ winner. Instead I lost 1R on it.

MWV looked like a nice continuation of yesterday's gains with a consolidation pullback. It tanked with the rest of the market for a 1.11R loss.

Late to the party

I knew this would happen. After getting burned several time last week thinking that we were going to bounce, I got all conservative today. I didn't trust this bounce and even though it held throughout the day I played it with little risk. I got paid back with little gain--a measly .11R. There were several opportunities for 10R gains today, but I was too scared to jump in. That'll learn me.

My best trade today was LLL for a 2.38R gain.
I sold with about 10 minutes left in the day--just before the final huge push up where it met its target. Oh well. 2.38R.

AOC was probably the only stock that didn't make money today--that's because I bought it. It quickly deflated and left me with a 1.11R loss.

I bought IMCL because I thought it would break out of a consolidation. It didn't. I lost 1.11R on that one too.

Zweig Screen Down 43.74%

My beloved Zweig Stock Screen that takes the 5 highest relative strength (26 week) stocks is now down 43.74%. Since I began tracking the screen I have hardly ever seen it underwater and have NEVER seen it down this month.

Last year I blindly followed the screen and made a nice 40%. My schizophrenic trading this year has been a blessing in disguise. Although I abandoned my bread and butter screens and was regretting it for most of the year, this last few months has proven that blindly following screens doesn't always work.

Prudent Speculator & Stock Superstars Report

Occasionally I enjoy comparing my performance to The Prudent Speculator which is a newsletter service that is highly rated by Hulbert Financial Digest--a well-respected stock newsletter rating news source. For a newsletter service, The Prudent Speculator has had a fantastic run averaging over 20% return for the past 20 years.

This year hasn't gone so well as you can see in the box to left. The pain of this market crash has been wide spread and affected nearly everyone--including funds and services that usually perform quite well.

Don't feel bad if your portfolio is down 30 to 50%. Nearly everybody's is.

Hopefully, we'll be presented with an amazing buying opportunity in the coming years. I think it's much more easy to make money when the market is going up and I look forward to a time when things turn around.

I still believe that the market has a remarkable ability to heal itself and absorb all manner of disasters. My foundations have been shaken a bit, and I have become hesitant to assume that I can make a living trading stocks. However, until they tell little guys like me that we can no longer trade, I still see opportunity out there.

I'm looking forward to the opening bell on Monday.


I also follow the performance of the Stock Superstars Report, a stock newsletter service provided by the folks at the American Association of Individual Investors (AAII). I have a great deal of respect for AAII, and I learned a great deal when I subscribed to the Stock Superstars Report. The newsletter introduced me to stock screening and helped me to create market beating returns.

YTD they are down 40.4%!! That means to get back to break-even (for the year) they'll have to make 67%!! Whoa!!

Week in Review 10-10-2008

I'm glad its over.

From the Kirk Report:

For the week, the S&P 500 crashed -18.20%, Dow -18.15%, the Nasdaq -15.30%, and the Russell 2000 -15.65%.

"Crashed" is the appropriate term here. Holy moly.

Despite the devastation out there this week, I managed to "only" lose 2.75% of my portfolio. I lost 4.5R for the week, but I was trading smaller positions sizes as things continued to go south. Today I continued my string of losses with stupid emotional trades that I made based on rumors and emotion. I traded MOS as the market headed higher and then lost it all (and more) as the roller coaster headed back down. I broke all of my trading rules again (I didn't have a good entry point and I hadn't even calculated a stop when I entered). Just dumb.

I need to learn to be much more patient during times like these. I let my plan get sidetracked by indicators, news, and emotions.

Is it over yet??

I''ll have to admit that this week got me a little worried. I'm starting to see folks that I deeply respect and who are market geniuses wonder if things are so broken that they can't be fixed. That scares me. I've always been impressed with the market's ability to absorb bad news, but it doesn't seem to be doing that lately. Every single technical indicator is SCREAMING that we should be seeing an enormous pulse to the upside, but it just hasn't happened.


I got into the markets in 2003 thinking that we'd never again see the kind of detestation that we witnessed from 2000 through 2002. The market had learned its lesson about "bubbles" and "irrational exuberance". In many ways things seem much worse than they did then.
I kept expecting to see the big bounce this entire week. It never came and I got chewed up for my incorrect assumptions. It's going to take some time to convince me that I can pull money out of the market once again. Maybe this is an incredible opportunity, but with every passing day I get a little more worried that my dreams of trading full time might be extinguished by a market that no longer works the way it is supposed to.