For some reason... as I lay there in bed thinking about the day of trading as I tend to do... I was thinking about the range and liquidity on Ford and it made me remember a trading strategy I had come up with several months ago. The strategy, I was sure, was golden. But I basically only gave it a test over the course of one or two days, and most assuredly, it was on the wrong stocks to try it on. I'm not going to say the strategy out here, because quite frankly, it really is golden if you do it on the right stocks. And it won't work if everyone starts doing it. So... if it works for me, don't expect me to ever say how I'm making money.
The thing is, I need to be able to use more of my buying power. After these past few days, I am restricted now to a cap of 900 shares on any given stock at any given time. I need to be able to trade higher volumes.
This sounds like a complete doubling-back on what I have written on here in the past couple days... and in some sense I guess it is. But looking back on things... I am an absolute idiot for not having re-tried this sooner on more appropriate companies. Provided I can either get permission from my boss to occasionally go over my share limit or get back to my previous levels (which isn't really very far out of my reach at all) then I will embark on that immediately. Assuming I do not get special permission, then I will simply play very very conservatively... just getting a NET of what I absolutely need to go up a level and get more shares - and also attempt the strategy on a thinner scale.
Wednesday, June 6, 2007
Frustration
Gross: -92
Net: -123
Shares traded: about 50,000
Trades: 67
Well... today was very very frustrating. I began the day avoiding the thin stocks because they were either completely berserk like WMT or pretty flat. Neither is a way to make money on thin stocks. This didn't actually change much until the big tank... at which point I was pretty tied up in other things and missed out. They were rickety drops though anyways... needed guts to hold those.
So what I did was continue what I was doing on CDE at the end of yesterday - jumping ahead of the queue on SLR, CDE, ILA, and F. All thick stocks that don't move a lot. Also played EWM and EWT. I was doing fine on everything until it all began crashing. CDE dropped from 3.71-.72 down to 3.67-.68 in literally less than 5 seconds. I happened to be long and took a massive hit. I started fighting my way back when it all happened again but on everything I was playing. In the end, -72 of my -90 was on CDE. Some people made a mint on that but most tried catching the repeated false rebounds happening frequently and took a spanking.
So here I am 4 days into the month and exactly in the reverse position of where I should be... down 450$. This is going to be an almost insurmountable road back up and has shaken my morale to the core.
What really has me shaken here, actually, is that what I have been seeing over the past 5 months is ever increasing instability in the market. Overall, things look as though they are calming and then for a week or more straight you get crazy instability. Reading the online blogs of other traders out there, they seem to agree that things are not great and getting worse. This is fine if all I do is play the volatility... but I will absolutely get fired if that is all I do. They don't want that no matter how much money you are making. And of course... relearning this is going to take more time than I have before I run out of money. I HAVE to get a cheque sometime this month... whether from trading or some other job.
Furthermore... older traders are leaving the office. Finding other jobs with more stability and otherwise. We have only had 2 graduates since august last year... and both of them are in the whole over 1k each after these first three days and didn't make any money last month either.
I will continue trading... but I am officially looking for another career as of today. This is very very disheartening. I've put many months into this now and don't really have a lot to show for it except a whack-load more debt and a questionably-useful understanding of the market. And of course... this is a dream-career for me... it's very hard to let go of dreams.
Net: -123
Shares traded: about 50,000
Trades: 67
Well... today was very very frustrating. I began the day avoiding the thin stocks because they were either completely berserk like WMT or pretty flat. Neither is a way to make money on thin stocks. This didn't actually change much until the big tank... at which point I was pretty tied up in other things and missed out. They were rickety drops though anyways... needed guts to hold those.
So what I did was continue what I was doing on CDE at the end of yesterday - jumping ahead of the queue on SLR, CDE, ILA, and F. All thick stocks that don't move a lot. Also played EWM and EWT. I was doing fine on everything until it all began crashing. CDE dropped from 3.71-.72 down to 3.67-.68 in literally less than 5 seconds. I happened to be long and took a massive hit. I started fighting my way back when it all happened again but on everything I was playing. In the end, -72 of my -90 was on CDE. Some people made a mint on that but most tried catching the repeated false rebounds happening frequently and took a spanking.
So here I am 4 days into the month and exactly in the reverse position of where I should be... down 450$. This is going to be an almost insurmountable road back up and has shaken my morale to the core.
What really has me shaken here, actually, is that what I have been seeing over the past 5 months is ever increasing instability in the market. Overall, things look as though they are calming and then for a week or more straight you get crazy instability. Reading the online blogs of other traders out there, they seem to agree that things are not great and getting worse. This is fine if all I do is play the volatility... but I will absolutely get fired if that is all I do. They don't want that no matter how much money you are making. And of course... relearning this is going to take more time than I have before I run out of money. I HAVE to get a cheque sometime this month... whether from trading or some other job.
Furthermore... older traders are leaving the office. Finding other jobs with more stability and otherwise. We have only had 2 graduates since august last year... and both of them are in the whole over 1k each after these first three days and didn't make any money last month either.
I will continue trading... but I am officially looking for another career as of today. This is very very disheartening. I've put many months into this now and don't really have a lot to show for it except a whack-load more debt and a questionably-useful understanding of the market. And of course... this is a dream-career for me... it's very hard to let go of dreams.
Tuesday, June 5, 2007
Promising
Gross: +32
Net: +27
Shares traded: 30,000
Trades: 192
Well, if I hadn't violated my rule of not flip-flopping which what I was doing right off the bat I probably would have done a lot better. One of my first trades was back on evil-ol' CDE and I got spanked for 1.5c on a double fill of my full share lot... which is admittedly low right now. But yeah, $30 after fees. From then I hit the plan and largely ignored CDE til the end of the day when i discovered I could jump the cue using Millenium while ignoring the stock for the most part (it wasn't really moving). I managed to make what I lost back doing that, and I think I will still do that in the future as well on stocks I can ignore and jump the cue on.
For the most part, I focused on three stocks: JNJ, WMT, and NEM. JNJ and NEM both tend to trend longer term and WMT is bounce-happy and ridiculously volatile. Also had one trade on EWT and a few brief forays onto S.
For a first day focusing almost exclusively on this style, I think I did not bad. I had numerous gains in the +5 to +11 point range. I did however make several particular mistakes repeatedly.
- A lot of my trades still lacked intent. I would buy with an intuitive sense that it was a good spot, and then decide afterward what exactly I planned to do with it. This lead to incorrect decisions on where to get out. Rather than taking the penny, I'd hold it and end up going offside and punching out at a loss. This cost me about 30-40 points over the day.
- A few times, I bought more into bad positions to average my price down. I absolutely have to get out of this habit... but at least it was on my mind every time I did it.
- I did not take advantage of nearly as many things as I could have. Partly this was distraction... I was not being aware enough of all that was happening in the stocks I had data on and missed at least 6 amazing breakouts on WMT alone.
- I averaged into good positions the wrong way... by buying at a high moment instead of waiting for a low.
- On several positions, I got out way too soon. If I'm on-side with the intent to hold... there is no point getting out from a small downturn. My best trade was on NEM for 10-11c and I should have held that position for most of the day as NEM continued to trend up again after a fairly long plateau. I could hae made 30-40c on that trade... and assuming I had averaged into it, that would have been ~100$ just on that trade.
I probably could have done more position reversing as well... but in retrospect I think that is something that can wait until I am more comfortable.
Net: +27
Shares traded: 30,000
Trades: 192
Well, if I hadn't violated my rule of not flip-flopping which what I was doing right off the bat I probably would have done a lot better. One of my first trades was back on evil-ol' CDE and I got spanked for 1.5c on a double fill of my full share lot... which is admittedly low right now. But yeah, $30 after fees. From then I hit the plan and largely ignored CDE til the end of the day when i discovered I could jump the cue using Millenium while ignoring the stock for the most part (it wasn't really moving). I managed to make what I lost back doing that, and I think I will still do that in the future as well on stocks I can ignore and jump the cue on.
For the most part, I focused on three stocks: JNJ, WMT, and NEM. JNJ and NEM both tend to trend longer term and WMT is bounce-happy and ridiculously volatile. Also had one trade on EWT and a few brief forays onto S.
For a first day focusing almost exclusively on this style, I think I did not bad. I had numerous gains in the +5 to +11 point range. I did however make several particular mistakes repeatedly.
- A lot of my trades still lacked intent. I would buy with an intuitive sense that it was a good spot, and then decide afterward what exactly I planned to do with it. This lead to incorrect decisions on where to get out. Rather than taking the penny, I'd hold it and end up going offside and punching out at a loss. This cost me about 30-40 points over the day.
- A few times, I bought more into bad positions to average my price down. I absolutely have to get out of this habit... but at least it was on my mind every time I did it.
- I did not take advantage of nearly as many things as I could have. Partly this was distraction... I was not being aware enough of all that was happening in the stocks I had data on and missed at least 6 amazing breakouts on WMT alone.
- I averaged into good positions the wrong way... by buying at a high moment instead of waiting for a low.
- On several positions, I got out way too soon. If I'm on-side with the intent to hold... there is no point getting out from a small downturn. My best trade was on NEM for 10-11c and I should have held that position for most of the day as NEM continued to trend up again after a fairly long plateau. I could hae made 30-40c on that trade... and assuming I had averaged into it, that would have been ~100$ just on that trade.
I probably could have done more position reversing as well... but in retrospect I think that is something that can wait until I am more comfortable.
Monday, June 4, 2007
Testing theories
K, first things first, today pretty much sucked. I started the day shorting things based on the assumption that the fall in the Asian markets would translate to a downturn on the NYSE... it didn't. After I took a number of small hits, I was all set to turn things around when the market basically fell flat. Eventually I turned to Sprint, which historically has been pretty hit or miss for me but lately has been repeating a pattern. For quite a long time Sprint has been trading below 23.00 and in the past few days has been repeatedly bouncing off this level and heading south anywhere from 5 to 30 cents. Once again, Sprint headed up to the 23.00 mark and hovered just below. I averaged in and out at various prices but piled up and prepared for the plummet as it hovered below 23.00. Sadly... today was the day it would finally break it. I managed to get out with only a 4c hit - just as it broke 23.00 - but there was no shorting it after that and I had gone far too deep and was basically at my stop. Blah. Not a great start to June here so far.
I came home today and have basically spent the last 4.5 hours thinking about trading. Thinking about as much as I could... and especially how badly I want to succeed at this job.
I thought a lot about strategy, because I've been at this long enough to have noticed that I have particular strengths and weaknesses. I am quite strong on anything that is highly liquid, regardless of how volatile it is. I've learned a few ways to be safe and profitable on high volatility but also how to take advantage of fluctuating channels. My weakness is the opposite: thick stocks with tight ranges - which typically move very very quickly but only for short jumps.... ie: poor liquidity.
The latter tends to bore me. ETFs, and many very large-volume stocks trade like this. They don't move that much, so to trade them profitably you need to take very large positions. but when they move, they move damn fast so you better well be right. And if you're wrong, you have to either have the cajones to sit offside for long periods of time, or take a hit, reverse the position, and hope it keeps going the way it just went.
The former is very fast paced so it's easy to keep focus. But it still requires a lot of patience, just of a different kind. With a fast moving highly liquid stock, you have to keep watching for that perfect opportunity, which can take a while.
Up until now, I have largely flopped back and forth between these two types of stocks. This is largely because the training and business model my boss prefers is more based on the latter. Our stops and goals are largely based on trading higher and higher volumes in a single trade. Mathematically, this is more risky since you are risking more on each trade. But really, the difference is mostly just in the particular psychology of the traders. At any rate, this flip-flopping has, i believe, really prolonged my training period and cost me considerable profitability. So thinking about EVERYthing after work today, I came to the conclusion that I absolutely MUST commit to either one or the other. And since my strengths are very clearly with low share volumes on highly liquid and volatile stocks (called "momentum trading" for the uninitiated who may be reading this) then that is where I should focus, regardless of the various stops and goals.
So... thinking about this more, I decided I needed to set some rules. Reading through various blogs of momentum traders and just sittin thinking I came up with a few. So here they are:
1)
Have absolute focus and absolute intent. I am either:
a) buying with the intent of selling very soon afterward... as in a Punch-for-a-Penny or playing an unstable channel, or;
b) buying with the intent of holding onto the position for a long time to see how far it goes
2) If the intent is...
a) ...to hold, ONLY buy once the stock has momentum in that direction.
b) ...to sell fast, do not hold offside; reverse or exit if the stock struggles to go in the desired direction.
3) Let the intention of the position determine the attention paid to it. A long hold bought on an upswing can be ignored once reasonably onside. A short hold must have full attention.
4) Don't get hung up on certain stocks. Every day is different. Look for stocks with unusual volume, and watch them to ensure high liquidity and a smooth continuity. Liquidity and continuity are ALWAYS more important than range or volume.
5) NEVER begin ANY position with more than 100 shares. Buying into a WINNING position is sometimes good, but NEVER buy into a losing one.
I am going to strictly adhere to these rules for the next 4 days and let the dice fall as they may. My boss may not totally like it, but I am not the only one in the office who has fought with him over this, and if I prove to myself and him that I am more consistent and more profitable at it, then my goal will be achieved regardless.
If it proves to be unsuccessful, then next week I will give it my all on the low-liquidity, tight-range stocks. If that fails... then and only then am I going to give in.
I came home today and have basically spent the last 4.5 hours thinking about trading. Thinking about as much as I could... and especially how badly I want to succeed at this job.
I thought a lot about strategy, because I've been at this long enough to have noticed that I have particular strengths and weaknesses. I am quite strong on anything that is highly liquid, regardless of how volatile it is. I've learned a few ways to be safe and profitable on high volatility but also how to take advantage of fluctuating channels. My weakness is the opposite: thick stocks with tight ranges - which typically move very very quickly but only for short jumps.... ie: poor liquidity.
The latter tends to bore me. ETFs, and many very large-volume stocks trade like this. They don't move that much, so to trade them profitably you need to take very large positions. but when they move, they move damn fast so you better well be right. And if you're wrong, you have to either have the cajones to sit offside for long periods of time, or take a hit, reverse the position, and hope it keeps going the way it just went.
The former is very fast paced so it's easy to keep focus. But it still requires a lot of patience, just of a different kind. With a fast moving highly liquid stock, you have to keep watching for that perfect opportunity, which can take a while.
Up until now, I have largely flopped back and forth between these two types of stocks. This is largely because the training and business model my boss prefers is more based on the latter. Our stops and goals are largely based on trading higher and higher volumes in a single trade. Mathematically, this is more risky since you are risking more on each trade. But really, the difference is mostly just in the particular psychology of the traders. At any rate, this flip-flopping has, i believe, really prolonged my training period and cost me considerable profitability. So thinking about EVERYthing after work today, I came to the conclusion that I absolutely MUST commit to either one or the other. And since my strengths are very clearly with low share volumes on highly liquid and volatile stocks (called "momentum trading" for the uninitiated who may be reading this) then that is where I should focus, regardless of the various stops and goals.
So... thinking about this more, I decided I needed to set some rules. Reading through various blogs of momentum traders and just sittin thinking I came up with a few. So here they are:
1)
Have absolute focus and absolute intent. I am either:
a) buying with the intent of selling very soon afterward... as in a Punch-for-a-Penny or playing an unstable channel, or;
b) buying with the intent of holding onto the position for a long time to see how far it goes
2) If the intent is...
a) ...to hold, ONLY buy once the stock has momentum in that direction.
b) ...to sell fast, do not hold offside; reverse or exit if the stock struggles to go in the desired direction.
3) Let the intention of the position determine the attention paid to it. A long hold bought on an upswing can be ignored once reasonably onside. A short hold must have full attention.
4) Don't get hung up on certain stocks. Every day is different. Look for stocks with unusual volume, and watch them to ensure high liquidity and a smooth continuity. Liquidity and continuity are ALWAYS more important than range or volume.
5) NEVER begin ANY position with more than 100 shares. Buying into a WINNING position is sometimes good, but NEVER buy into a losing one.
I am going to strictly adhere to these rules for the next 4 days and let the dice fall as they may. My boss may not totally like it, but I am not the only one in the office who has fought with him over this, and if I prove to myself and him that I am more consistent and more profitable at it, then my goal will be achieved regardless.
If it proves to be unsuccessful, then next week I will give it my all on the low-liquidity, tight-range stocks. If that fails... then and only then am I going to give in.
In the beginning...
I've created this blog more or less as a means to track my progress as a day-trader and to try to learn from my mistakes. I've been trading for a bit over 6 months now and so far, while I have recently begun to make money, it is far from consistent and I am not pleased overall with my progress.
What I have learned so far though is that it is very very important to think. Think about each trade before you get into and out of it. Think about the trade immediately after the fact. Think about the trade in the larger context of the market's environment at that time. Think about the day's trading when you get home. Think about what trades were good, which were bad, and why. Think about the role luck had to play. Just... think.
I haven't done enough of this, which is why I'm creating this now. Writing down the thoughts of a day is the best way to infuse them into our minds and force ourselves to review the events carefully and dispassionately.
By nature, I am an intuitively-driven person. There is nothing wrong with letting your intuition guide your trading... but intuition is not great at specifics. Logical thought is much better at that. So while Intuition might tell you about overall trends, and that a good buying opportunity is nearby, rational thought better be the force making you press the key. Distinguishing between these two forces, and thus distinguishing between an intuitively-motivated trade and a rationally motivated trade, I believe, has been my greatest struggle. Requiring myself to write down my thoughts and motivations for each trade should greatly affect my ability to do this, so it is with that idea in mind that I trust this blog will aid my transition into a successful professional trader.
What I have learned so far though is that it is very very important to think. Think about each trade before you get into and out of it. Think about the trade immediately after the fact. Think about the trade in the larger context of the market's environment at that time. Think about the day's trading when you get home. Think about what trades were good, which were bad, and why. Think about the role luck had to play. Just... think.
I haven't done enough of this, which is why I'm creating this now. Writing down the thoughts of a day is the best way to infuse them into our minds and force ourselves to review the events carefully and dispassionately.
By nature, I am an intuitively-driven person. There is nothing wrong with letting your intuition guide your trading... but intuition is not great at specifics. Logical thought is much better at that. So while Intuition might tell you about overall trends, and that a good buying opportunity is nearby, rational thought better be the force making you press the key. Distinguishing between these two forces, and thus distinguishing between an intuitively-motivated trade and a rationally motivated trade, I believe, has been my greatest struggle. Requiring myself to write down my thoughts and motivations for each trade should greatly affect my ability to do this, so it is with that idea in mind that I trust this blog will aid my transition into a successful professional trader.
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