Hardest lesson to learn

So far, I think the hardest lesson to learn is when I make a good trading call, however play the trade poorly, and even though I made the correct call/assumption the way the trade was handled means I am either out at a loss or breakeven.  Take my BGZ long for example.  I was stopped out of that trade when I was on my way to work yesterday morning.

My thought on the trade was to place a stop in there to "at least protect my winnings" to make sure if the market made a re-test, I would still be in the green.  Well the market did make a re-test, however stopped me out, than continued exactly the direction I had anticipated.  Now I am stuck with a market going down, when I want to find a good entry with good risk to reward, which I am not sure when that will happen.

I would gladly take a loss simply because I was wrong over this type of mistake, now I am stuck wondering "what if" and I also am tempted to jump on board the impending drop in prices.  I will stay on the sidelines the best I can - I think the market can still surprise some weak bears and cause some short covering to leg the market back up a few bars.  I just hope I didn't miss my mid term entry short.

Playing with fire

I have recently been having more internet access/computer issues - mainly due to the fact that I need to make a new build.  The current computer I have is about 3 years old, and the motherboard, RAM, and CPU have all seen better days.  I will post as much as I can with the tech issues.  Now onto the trading:

I am again trying to hop on board a potential longer trend at its beginnings.  Right now, for evidence is the following on the SPY:

1. Declining volume for the past few months
2. Daily, and the beginnings of weekly momentum divergences.
3. Divergences on the RSI.
4. 20/50 EMA crossover on the hourly chart.

Also we'll have to keep an eye on the currency markets, right now the dollar is being destroyed in value, causing the stock market to trickle upwards as it has been doing.  A reversal in the dollar decline, perhaps coupled with a spike in the VIX and we'll have ourselves a ballgame.

Now lets all root for the Patriots in London!

Weak positions

After my last few trades where it seemed like I was running around with my head cut off, I realized I am trading very weak positions with really easily reached stops, and I have not been patient with the market and letting the proverbial boat pull you.  My thought now after the big drop yesterday was to play a longer term downturn, but I neet to wait for a good entry in the market - my stop will be above yesterday's - and the markets - yearly high. Here's my thoughts:

Wait till there is a favorable risk to reward ratio, right now it looks like the market is headed toards 105.41 at the trendline, the high yesterday was 110.31.  That currently is risking 1.95 points for a potential 2.98 gain...too much risk.

We'll see what the market says.

Silver and gold

There's no way to make or lose money unless you take some action.  The dollar is looking like it may turn, which would crush the run-up in precious metals.  The SLV chart looks more exhausted than the gold chart, and also there's a nice big gap in it just begging to be filled.  I have an open order to buy ZSL, ultra short silver ETF @ 4.78.  We'll see how the charts play out.

Interesting developments

I am watching a few different stocks/indices for some great oppertunities.  Of them, LIZ, SLV, GS and some others look interesting.  However, I came across the charts for the Nekkei and these are some pretty interesting developments:

Let the boat pull you!

Just got my internet connection back together - however my computer is still acting up.  I think the computer overheated a bit in the new desk we put it into recently, because ever since the change it has not run smoothly at all.  My best guess is the motherboard is messed up - still boots and runs, however the on board ethernet no longer works and the whole system has been very touchy.

That being said I also made a very aggressive play into my last trade, and did not have it pay off.  I have wiped out basically all of my earnings so far, and now back to square 1 at 5k.  It wasn't much to begin with, and I am not upset with my trade...just another realization that I need to look for trades in a different way than I have - maily because I do not have the precision to enter a trade on a given notice, it will have to be a predetermined trade.  Although again not a bad thing...the one trade I wasn't watching was the one I had the best entry on (my BRCD trade) - talk about an argument for doing my research and sticking to my guns.  The biggest drawback to this trade in hindsight was not holding it longer, since the upside turned out to being all the way up to 9.80, which could have netted 13%.

My new strategy is to look into non-correlating markets like commodity ETFs, currency ETFs, and different indices out there and spot potential set ups.  Now heres the change...to wait for the set ups to take shape!  When I was learning how to waterski when I was a kid, it was at a family lake and there was a neighbor who used to say in a funny accent "let the boat pull you!"  Now my family all laugh about it years later, but the guy had some dam good advice - you don't control the boat, the water, or your speed.  All you can do is brace yourself for the ride, and make sure you're in the best position to get out of the water.

Here's to making sure I am in the best position to getting out of the water going forward!

Like shooting a bee bee at a freight train

Long SMN into close on Friday:

150 shares @ 10.21

Will hold unless a real convincing new low sets in.

Deer in headlights

I have trying to find out some oppertunities this week in the market, and I haven't been able to pull the trigger on any of the setups that come up.  To my defense I was pretty late in catching these developments, and would only be a trade chasing the tail of the breakout that already happened.  

I will keep an eye on the charts yet again today, not much conviction in a direction however.  I do have a short term bullish bias now after seeing the strength to the rebound, and taking a look, it appears the long term trend line for the spy was never broken.  That being said, I think this rally is going to run out of steam soon, and will be looking to accumulate some short positions in advance when the chance comes up.

Perhaps today is a buy day for a short term swing?  Market is taking a breath for now - I'll update my positions page if I jump on anything, but the market is out of focus for me right now, I can't quite jump onto anything feeling this out of sync.

You might call it a blur:

Sold

Stock: SRS

10/06 Buy 300 shares @ 10.29
10/06 Sell 300 shares @ 10.26

Bad entries mean a whole lot of added stress on the trade - it could have been positive with a more controlled entry.

However it looks now with AA's earnings in that we are back into some solid bullish momentum.  I will be looking at some long chances with:  UMC, APT, DSX, TBSI, AZK, TLB, and WYN

Stewie has a good point, it looks like the market leaders are on their way up, and today's action definitely goes to the bulls.  Happy trading!

Introducing the GPA

I am going to use a new metric for tracking my trading, I have started a spreadsheet on google docs which capture my trades and equity curve.  (You can view it here)  One of the stats I am tracking is my trade grade, from which I will be keeping a running 5 trade average to help determine when to slash trade sizes and try to catch bad streaks as they come up, and also when to recognize I am trading well and to step on the gas.

I will be rating my trades and give them 1 point for the following:

1. (default score is 1)
2. If it is profitable +1
3. If the % gains is more than twice the stop loss %
4. If there is a favorable size to risk ratio (some leeway here)
5. If I made the correct call (market feel)
6. Good entry
7. Good exit

Rules

• When my GPA is below 4.5 I will be cutting my trading size from now on to 2k max.  
• When above 4.5 to 6 I have up to 4k.  
• When above 6 (not sure if this will happen) than all trades are to be maxed out.

Long SRS

I am long 300 shares SRS at 10.29 - daily chart looks interesting, and my bearish bias makes this one the best looking one for an early entry.

I wasn't necissarily planning on jumping short today, however the market failing to hold its highs showed a bit of weakness, and I think that's all the bears are waiting for to jump in.  It will be arduous holding this position through the beginning of earnings season, hopefully it works to my advantage.

Stop at 9.40

Week 2 Trade Breakdown

This was quite a losing week for me...while I anticipated a weak market, I onto into trouble with a number of key areas which I will need to learn from so I don't have anymore weeks of lost trades.

The bright side is that my capital stayed intact pretty well considering 3 shitty trades in a row, and managed only a loss of $154.66, however this should not happen again, since these were easy mistakes to correct in the future.

My first trade was a fantastic set up, and would have been some great quick gains, however poor on the execution.  The stock was YRCW, here are the charts I had made earlier:

My biggest mistake was't my bad order of stop limit, it was buying back in to try and chase the stock after the market had presented a gift of an oppertunity.  Followed shortly thereafter by the fact that  I gave a shit about a fancy entry that may have gotten .02 better price for the stock on what turned out to be an awesome rip of a short cover.  Of course I had not Idea this was going to happen, but the idea for a set up is planning out all options, hoping for the best and getting ready for the worst.

Loss of $45.52

The next trade I took was PCYC.  This was a tale of a penny stock which just simply failed to develop into the opportunity I thought I saw.  The idea behind the trade was that PCYC showed some strong volume a few days ago into some strong gains, which had tailed off in a pretty orderly fashion.  The stock also had a high short interest, so I figured it was a multi day bull flag formation, and would be buying into a big short covering opportunity, similar to YRCW.

The big lesson here is to not trade something with such pitiful volume.  After taking on this trade I figured the ticks in the chart happened very infrequently, and that it could go even 45 minutes before a trade.  No more of this B.S.

Here's a chart of my entry and exit:

Loss of $41.00

Finally was my BGU buy on support attempt.  Here is a chart of the price action (keep in mind my post about buying on the breakout the day before this move where I went completely against my analysis here)

 

Tight stop upon the market making my entry a foolish one.  I realize that as far as risk to reward goes, an entry on support is pretty hard to beat.  That being said, however I did one major thing wrong, I didn't wait for the price action to set up a reversal in price before entering.  The previous supports took an hour to 2 to finally exhaust themselves and reverse...I should have recognized this and used the information to my advantage.  Also I should realize that due to SEC regulations, I cannot trade more than 4 round trades within a 5 day period or else I would be considered a day trader and need 25k for capital, so I don't want to restrict my acct by over trading it - this also means I need to trade breakouts from longer term trends, so the breaks have some conviction to them, and because I don't have the ability to try to buy support, have it break thru my stop and flip the position.

Loss of $68.11

This is one week to remember, and to make sure it doesn't happen again.

Somehow It's like I know what I'm doing

Today's trade was a mix of luck and good execution, and was a previous learning experience paying dividends now.  I leave for work around 9:30am which makes following the open (usually the best time to trade) damn near impossible.  BRCD came out with some important info and opened well above its multi day resistance.  It looked good to buy into, but where?  Fist off, here was my trade, a limit order to buy long 350 shares @ 8.47, it filled while I was driving to work, here is the execution in all its glory:

Given this was a limit order, even in hindsight knowing exactly where the stock would find support I may not get a better entry!  The real meat and bones for figuring this limit price came from looking at the premarket data, which paints a much more informative picture:

That's it for tonight, still looking for longer term shorting opportunities in a few days.

Today's Daytrade

Stock: BRCD

Buy 350 shares @ 8.48

Sold 350 shares @ 8.85

Gross gain: $129.50

I don't have a chance to post intraday updates at work, so this will have to do to track my progress.

The Plan!

Today's plan is to look for long breakout trades to either take as a day trade, or perhaps hold overnight if there's some strong follow through.  My feeling is the market will roubound off last weeks lows, and make an attempt at getting new highs, however it's clear that this rally is losing momentum.

I will be looking for these quick oppertunities to make a few bucks with a quick trade, then look to go short later when the market shows its hand.

Looking into ATLS, CLP, BRCD, PLCM, and RINO for set ups.

Waiting for VXX BGZ ERY FAZ to set up

I will post my trade recap from last week tomorrow AM - was a busy weekend with hiking.  Until then, enjoy some pics:

For those curious, this was a Mt. Kinsman, NH hike, we only bagged the North peak, since we got a late start.  Still was a workout at about 9mi trip.

Where is the heard headed?

Not trading tomorrow will give me a much needed day of observation to the overall market.  If the market continues to show weakness, perhaps we have finally arrived to the correction to this run up the past few months.   The bull market since march has been fantastic to my 401k, however its an incredible reaction to an economy which seemingly has many fundamental flaws left within it.

There have been no regulatory or policy changes within the financial industry.  And there are still very troubling companies out there which would not exist without the backing of some serious taxpayer cash.  If something doesn't work...and you don't fix it. don't you think that I will fail again?  I am sure you've heard the saying that goes something like "try something different and every time get the same thing is not crazy, what's crazy is repeatedly trying something the same way, and expecting something different." Have we learned nothing from Chrysler?  Don't get me wrong, I do think the fed's reaction to the situation kept the initial downturn from being much more catastrophic.  However the root of the problem in this downturn, in my small and humble opinion, lies in an American consumer who had run on empty with a negative savings rate, a banking system  with an obscene amount of leverage and low holding requirements.and an unregulated derivatives system driven by default swaps that absolutely dwarf the stock market in value (outstanding derivatives are estimated at 592 t. vs. the stock market's puny 36.6 t.)

So long story short, the problems are still there, the rules are unchanged, the players are essentially the same (the firms left standing are even more interwoven with the economy and 'too big to fail'...could you imagine what would happen if Goldman Sachs or JP Morgan went down now?).  And the market is still shedding jobs with a battered US consumer, the DOW his 14k high in '07 because investors were toking up and high on credit.  Well, the fumes have cleared, and I don't really see how this market in its current state could be worth 10k.

Does it mean that it can't?

Absolutely not, I have read that bull markets and bear markets have a tendency to continue long after they have exceeded all expectations.  And while I am a novice trader, I try to learn from the past as much as possible, its the only free advice out there.  My wife is a history major, is a big believer in that history is a study into the human experience, technology changes, however people don't.  Very profound words translated for stock trading - because what is trading but participating in human emotions.

One up, one down

The first week out of the gate I was trading in the positive, with a pretty good start - self admittedly not very good trades, however at least in the correct direction.

This week is plauged with bad decisions, poor timing, poor order entry totalling 3 losing trades for a total loss of $154.66, a 2.9% loss week over week.  Time to get my head in the game and right this ship.  The BGU trade I took on Thursday really chaps my ass because I made the correct call in my blog post earlier, however after reading one of the blogs out there I said "oh yeah, maybe there is significant buying out there, and I can buy on the support" when I should have trusted my own assessment and went with BGZ on the breakout.

It feels like now the market will turn short for a while, maybe at least until the SPY hits the rising 50 day EMA.  Good thing I am sitting out for now, I will look for some opportunities to hop on the ride if any present themselves.

Done tradin this week

I was stopped out of my BGU long position at 49.45 when the market chopped through the resistance trendline.
That leaves me long the PCYC shares, and to be honest, I am not too thrilled about the price action that is ahppening on that trade.  My stop for that is $1.94.

That makes 2 losing trades this week, and a TBD trade.  I am going to stop trading for this week, look over the chards since they aren't very directional right now, just very choppy, and that is probably lending to my lack of success.

A few comments about my entries this week.  They were very ill timed, this BGU trade was too early to determine that the resistance would hold out and there would be a reversal.  And my other trade was a much too late entry.  I will have to think more about the timing of my trades going forward, as much as I think about price.

Motivation Proclamation

Is anyone else out there just flat out lazy?  


I look through the trading blogs out there and each and every one is a story of a very driven and motivated individual.  While yes, I do have drive to succeed, and actually this blog and my current situation with work lends itself to getting up much earlier than I have been to be able to make comments.  But sometimes I just like sitting in and playing video games.  


Can someone make it in this business who has a tendency to be lazy?  I am aware of my motivation issues, however I'm no Matt Foley.

My hope is I will be able to stay attentive both to the markets, and this blog can be a tool to help keep me focused.