End of day journal (1-29-2010)

 

  

Comments:

Another gut wrenching day... the last day of the month and the first day that the account value was actually below the start value !?!*&!

Wow... and the day started off so strongly. Nothing hit the stop loss spot - but things were just not going well so I ended up liquidating all but LYV. I tried to buy into BEXP on a sag and got burned pretty badly. I bought in on TWTC as well, posted a modest gain, but the bottom fell out and I panicked and sold. BEAV started up, lost ground, and came back to almost even before crashing. LPSN was at my breakeven point before dipping right around the time I was selling everything else. I bought back in on BEXP towards the end of day because of the strong early day action. Here is hoping Monday gaps.

What is a guy to do in this kind of a situation? Strong economic news kept me in the market. Somewheat frustrating to say the least. 

I think I will perform some type of analysis over the weekend, just looking at my losses and trying to figure out how I could have gotten out sooner. From a high of + ~20% this month to a negative 5%. Boom and bust.

End of day journal (1-28-2010)

One of those - 'Arrgggh!!' days.

Change of format to the end of day journal entries: after some thought, I decided that it will be more informative - and easier - to post a screenshot of the current portfolio, filled orders, and account balance; and then comment, ruminate, or prattle on about the day's action and my response. I have a feeling that letting the world know about my piddly positions is not going to have any impact on the future price of the stock, especially given January's spastic record - my strategy ain't so great =).

I can't seem to find anything that I like in Strategydesk with respect to a clear and concise information format, so expect this to keep changing as I continue to search and experiment.

Comments:

As it turns out, I was struck with some sudden inspiration last night and settled on what I think is a reasonable sell strategy. After I completed the analysis, I have some definite profit/loss stops that make sense. This brought a lot of confidence to the day and I was looking forward to see how things would turn out.

The day started off great. I came within $0.09 on one sale, the TKTM to LYV translation showed up in the account balance, and all of the other positions were posting positive. SANM went high enough to finish yesterday's pending sale. Then the market tanked. LPSN actually hit the stop loss point for the day's low but I didn't sell. Not sure exactly why... I couldn't shake the feeling that the general market momentum was dragging this one down. Regardless, I didn't stick to the new rule already.

I rode everything down, and it was a gut wrenching slide. I feel like I need to address the general market trends and get out when things are going downhill. I think I have said this before, but I am not at all sure about how to incorporate this into my strategy. The 10 minute BEAV and LPSN are almost replicas of the NASDAQ Comp 10 minute. Or - dare I even suggest this - should I go back to an intraday strategy? I only lost on one intraday this month out of about 7 trades maybe. Food for thought. Let's see how tomorrow works out.

End of day journal (1-27-2010)

Today was stressful.

Selling:

Shortly into the morning I liquidated everything. No doubt about it, it was an emotional decision. The account was showing mixed balances and then took a steep nosedive and I sold. I also sold a partial on a round trip later in the day.

Buying:

 I bought back in during the course of the day. Completed one round trip with another partial.

What ifs:

Two of the three positions that I liquidated finished the day higher. Tough call here, but it is what it is.

You may notice the big increase in the account balance - this is actually due to the Ticketmaster stock that I purchased on Monday. As of today, the proposed translation to LYV is 1 to 1.474 which by end of today bumped the account value up ~$2200. I decided to go ahead and include this.

2 more trading days in the month. Wonder how it will turn out.

End of day journal (1-26-2010)

What a month this is turning out to be.

Selling:

I sold 5 positions today, one a partial pending sale from yesterday, 2 where 2 round trips at $210 each, and the third was a repeat of one of the round trips that sold after hours, another $200. The fifth was the position entered yesterday that ended up falling out of the screener criteria the last 15 minutes of yesterday.

Buying:

The three round trips, and another repeat entry on a round trip.

What ifs:

The position that sold after market hours came out with an earning surprise 30 minutes after market close, bumping the price $1.65 over my sell. Heh - if only I had done the usual bump up for after hours. Oh well - $200 is $200.

Obviously 3 big losers today, which is a bummer. One was the position that fell out of the screener yesterday. In retrospect, I should have sold right away - for all intents and purposes, it was a wild card; I really had no idea what to expect and was my usual optimistic self. This should have been a definite no-no. The second position is one that I should not have bought as well - it is a re-entry on a stock that had met criteria some time ago, then was listed again in subsequent days, but fell out. In fact it fell out again today. I think the third position still makes some sense.

I really need to come up with more of a definitive sell strategy: something that makes sense and something that keeps me from chasing the intra-day highs and lows. This is similar to what happened over November and into December - that is, holding onto stocks longer than I should have. How do I balance this with what happened at the beginning of January  - that is, when holding them actually worked out?

End of day journal (1-25-2010)

Mixed day today, but overall a good return.

Selling:
For the most part I held all positions today. An open order was partially filled at end of day, but was not completed.

Buying:
Established two new positions today in the last half hour of trading.  One closed with a modest gain, but the second actually fell out of the screener before end of day. not sure what to do with this one.

What ifs:
Early morning saw the account value bump up >$1000. I should have perhaps sold. I didn't because several positions were still showing negative overall. I am beginning to wonder whether or not I should re-assess the way I measure the gain. On a side note (and some positive reinforcement), all of the positions that I sold out of on Friday closed lower again today.

End of Day Journal (1-22-2010)

Wow ... what a week. Who was asking for a reality check? Hmm?

Selling:
About an hour into the morning I liquidated everything, taking losses all around.

Buying:
The screener was full today and I took this as a positive sign for the overall day, especially as the DOW came back around, and by early afternoon I had initiated three new positions. The account value reflected positively  ($110, $180, $290) on all three positions before I walked away from the computer for the day. But by market close, the account saw a huge hit on all three, pushing the value down another ~$1200..

What-ifs:
I should have reduced my sell targets.

A few comments on the week:
The losses accumulated this week are definitely due to my in-experience. There has not been a week like this since I have been actively trading, and as naive as it sounds, I just did not think such a week was possible.
Though it is awfully tempting and might in some way make me feel better, I am refraining from beating myself up for the decisions made this past week - they were all made using the same approach I used the week prior which was pretty spectacular. Who could of predicted 3 down days in a 4 day trading week? No one. As much as it still exasperates the engineer/modeler in me, the stock market refuses to behave in well behaved, predictable manner.

So what about a stop loss? Would a stop loss have cut my losses last week? Maybe, but after last year I am reluctant to set one. I think every book that I have read regarding trading strongly recommends setting a stop loss, advice which I dutifully heeded as I started to actively trade again. In retrospect, I think a large part of my overall losses were the result of the stops... A typical trade would work into something like: buy on the upswing, optimism on the uptick, miss the sell, hit the stop loss, sell, and then watch the stock rise again.

I am coming to terms with the idea that trading is very personal and mostly about what goes on emotionally, psychologically, mentally. In the past, as much as I have tried to plan, test, and analyze, weird things would still happen in my head when I had money in the market, and even weirder things happened when I start winning or losing. At this point, I would say more than half the battle is knowing myself and how I react. I think it fits my personality better to buy with confidence, go with the flow, and let the daily/intra-weekly trend judge the buy decision. Hence the current strategy - a lot of confidence in the buy, ride out a loss, and sell on some gain. About as simple and non-technical as it gets - in fact it is almost too simple for the analytical side of me.

But the general market trend was just too much for the bulls this past week.

Rather than beat myself up for not just realizing the market was tanking this last week - or insisting on a stop loss, I think there are two things that I could have done. My biggest loss was $1900 realized on 3000 shares, a position that I had doubled up on, and then bought another 1000 shares on later. My original sell on this stock was at a $700 profit, and the first pre-market morning of ownership saw a $790 profit high on a news release and strong volume,  I got carried away and bumped the sell up. That decision alone would have grossed a ~$2600 positive difference for the end of this week. I got too carried away.

The second thing is along the same theme: nearly every new position this week realized something near a $200 profit at one point. Conservatively, I would say that at least half did. $200 was my sell point over December and the first part of this month. Given the success I had last week with bumping the sell points up, my initial exit this week was $400. But this week was different, and by the second down day, and despite my inexperience, I had some unease about what was happening in the market. If I would have paid attention to the sense of  unease and acted conservatively, I would have cut my losses substantially. Too greedy.

So here is what I am taking from last week: stick with the basic strategy, but try to pay attention to the general market. When I am buying a stock, I always take care not to be the one to start the trend reversal. I think I need to acknowledge the same thing for the broader market - I shouldn't try to be the one to start the uptrend for the whole market. Practically, this probably means sitting out a day or two sometimes.

Thoughts on tomorrow

One reason for this blog is to record and share thoughts, feelings, musings, and rational - or lack of rational - as I experience and try to work out what my day trading will look like. Right or wrong.

I have been giving some thought to tomorrow and what it will look like. I am trying to decide whether or not I should sell one of the positions that I have taken a pretty large beating on. I came up with some interesting graphs of the data I have been collecting. This first chart plots the stocks that are at or below -10% gain (i.e. a loss) at day 5:

It is interesting  to note that of the 5 stocks charted, 3 of the 5 were all purchased on the same day.

This next one shows all of the stocks purchased on the day in question:

 

Nearly all of them took a dive today. Of course the one I am holding happens to be covering the bottom. I think this offers some justification for delaying the sale - the stocks are all being pulled by the general market, and not necessarily how people are valuing the individual stocks.

I noticed something though that sets this stock apart, one of the metrics I use as buy criteria had an especially large value: >7; 4 to 5 times what the average is. I filtered all of the stocks for a value of over 2:

You will notice that there are several repeats,  there are only four different symbols for 8 series. The stock in question appears 4 times - and they are all on the bottom end. Doesn't look good.

Bottom line: I have no idea. THe lack of a definitive sell strategy over the last couple of weeks has really troubled me and I have been spending a lot of time trying to make sense out of something, I don't feel that I am much closer. Or perhaps it is better to say, I don't have much more of a basis for deciding when to sell. I tried to work something out with technical metrics over the spring and summer, and for one reason or another, nothing worked very well. Maybe I should try to come up with a good short strategy... hmm... that might be an idea. Whatever happens tomorrow - it is very likely that I will again take a look at today's data and try to figure out how I could have predicted it... I am not sure that this is at all possible. I am just not at all sure that the answer is some metric. The more I do this, the more I am aware of how much of the game is a mental one - or intuitive, rather than a technical analysis one. Maybe it is mostly about going out and doing it.

I decided to throw one more chart in. This last one plots the average % gain realized, calculated via the close, high, and low for the day, for all purchases:

I thought this was kind of interesting, and not really sure what to make of it all yet. It is pretty remarkable how uniform the high, low, and close for the day remains. I am pretty sure the two dips are the last couple of days of trading. Keep in mind too that this data is weighted towards the front end - not all of the stocks have 34 days worth of data. This new trend in the general market may re-define the averages.

Another day tomorrow. I think I will try to hold, but if the market goes south, time to sell.

My selling strategy (1-04-2010)

At this stage in my day trading experience, I find the question of when to sell out of a position pretty complicated - and constantly evolving. For whichever reasons, I have already decided to buy, and for better or for worse, I am invested; now the day's gains and my prevailing mood depend on the whims of other traders. How many times have I sold only to later realize that I sold at the low for day, or at the start of the rally? How many times have I not sold, only to watch the price spiral down out of control while I sit on my thumbs and shut my eyes to all of the bright red on StrategyDesk? I am guessing that both have occurred with equal frequency. There are huge emotional and psychological elements to day trading - and personally I feel like they all come to a head in the sale - an essential pronouncement of judgment on my decision to buy and everything in between. Now it is done - the profit or loss are locked in and realized.

So... how do I sell?

This is about as un-scientific and un-technical as it gets. And which, as I sat down to write this, really, really bugged me.

I shoot for daily targets - from $150 to $200 per trade, gross. I usually buy in units of 500 or 1000 shares, so that means setting the sell anywhere from $0.15 to $0.40 on top of the buy point. All sells are limited, GTC + ext. If I don't sell the first day by close, I bump the price up for extended hours and possible gap open. I don't set stop losses.

Yup... I have tried a bunch of approaches and nothing seems to work very well - except this: shoot for so much a day. When it comes to selling at a loss, I feel like I am pretty mcuh flying by the seat of my pants.

The thing is, I am not at all sure that it is possible to be rigorous in one's approach to selling (and buying for that matter). But I keep collecting data to see if I can't figure something out.

End of day journal (1-21-2010)

Another bummer of a day. The portfolio did surprisingly well - barring one breaking of a rule on my part.

Selling:
One position that I had been holding since the beginning of the week hit my sell point and I came away with a nice $720 gross. This is a position that I had doubled up on yesterday. I was watching another stock that had appeared on the screener early in the day, was bumped off, then back on. This was still early in the day with good volumes. I watched it hit the high (I could have realized a +$0.64 gain), and drop back down. I bought on the re-bounce - only to have it move slightly up and down the rest of the day. I sold the position for a $1.84 loss. I bought way too early - against my own rules, especially on a day like today, which was already reflected in the DOW being down some 100 points at the time of purchase.

Buying:
The a fore mentioned round trip, and also doubled up on another position that was down for the day, lowering the basis. Same one I doubled up on yesterday.

What ifs:
I had another position that came very close to the sell; in retrospect, it may have been a good idea to get out of. The stock closed higher for the day, but this market has me a little on edge.

Another position (that I missed selling several days ago) took a significant hit. down some 9.56% on this one and I have doubled up twice. Could have sold at the beginning of the day for only a slight total loss. This stock is below $5, which is even more cause for concern.

Hmm...

End of day journal (1-20-2010)

Bummer of a day.

Selling:

Did not sell anything today, decided to ride the wave down.

Maybe it was more like, I had no idea what was going to happen, so I stuck with the program. Again, the idea is that the overall market selling spilled over into my picks; fundamentally, the portfolio is still good.

Buying:

Doubled up on a position, which, by end of day, did nothing for the account value.

What ifs:

What if I had sold at open? And bought back in on the same stocks at day close? Naw - I can't time the market like that, I am not sure anyone can. I tried that all last spring, summer and most of the fall with nothing to show for it but losses. Let's see what tomorrow brings.

By the way, updates have been delayed because I have been sick - again. I had most of yesterday's end of day journal typed before retiring for the evening, so I think it pretty much captures the mood I was in.

And - one additional point of interest, yesterday's sell was a good idea.

End of Day Journal (1-19-2010)

My head needs to be examined. As I asked a good friend this afternoon - in what part of the universe is a $1400 gain in one day (and for one stock) not enough?

Well - a stellar day on the markets, and a nice bump on the account value, but it could have been much better...

Selling:

I sold out of one position today. I sold out at the intra-day low, and ended up taking a  $250 loss; and this on a stock that was up $790 on the first morning of ownership; silly me. At one point today I had a nice $360 gain, and from there it  crepted downhill, that is, kept crept down until I  finally decided to sell, then everyone bought back in - I couldn't have timed it better; it almost felt like everyone was watching and waiting for my sale.

Buying:

I entered three additional positions today; two of them realized gains before the end of the day, and one is even.

What ifs:

Good grief.
There happened to be a positive news release on one of the stocks I was holding and  pre-market trading saw the value on one stock go +$0.12 above my sell with good volume; more than enough to cover what I had, and enough to realize a $1400 gain.  But I kept nudging the sell and missed it.

I am sure the one that I ended up selling I should not have. That is what I get for watching it all day. I think the fact that I held this position for several days and missed a previous high contributed to the decision to sell.

Mid-morning, the account was up $1864.88. I seriously contemplated selling everything, but I did not, and watched it crawl down the rest of the day.

I thought I had learned this lesson already: don't be greedy.

But... the last couple of weeks has seen  great action on the account, and I attribute this to doubling the effective sell point (from +$0.20 to +$0.40); that and the ability to ride out an intra-day loss given the cushion above the minimum margin requirements. A couple of good weeks has lent itself to the urge to hit home runs. I think I pushed it too far.

The more I do this, the more I realize that the biggest game is in my head, i.e., win or lose, I think success will be consistent if I can maintain a consistent perspective: not getting carried away hitting them out of the park, and if I am losing for the day, establishing and keeping sell points.

End of day journal (1-15-2010)

Upgraded my OS to Windows 7 and ran into some glitches, so a little delay on this update.

Regarding the market and change in account value on Friday: traumatic... but after some consideration, I think it was healthy.

I was not at my desk for the market open and the first several hours. Over confident? Naive? Maybe it had more to do with me not knowing how this whole trading business is going to eventually look and wanting to go hunting (which is where I was) and taking the risk. I had sell points set and I left Strategy Desk running. I was also able to periodically monitor (when I had cell phone service) what the market was doing throughout the morning. Yes, definitely traumatic, and I am kicking myself for not collecting yesterday, but I am still confident in where the positions are heading, so I think I am gong to stick with it.

Selling:

One position sold today at a nice $300 profit; this stock ended up climbing another $0.30 as a high for the day. I rode everything else down.

Buying:

I doubled up on two additional positions rather late in the day, but as it turned out, not late enough. The stocks lost another $0.15 and $0.20 respectively, which increased losses significantly, but also lowered the basis. One stock I still feel pretty good about, but by the time the day ended, I wondered if doubling up was the right thing to do on the other position.

What ifs:

Selling yesterday would have definitely been the thing to do. Or selling early today. But - this is a tough call for me. My strategy does not rely on timing the day; of course it helps when I do get it correctly, but I try to resist the compulsion to get too carried away with the intra-day price fluctuations. This is a deliberate decision - a result of all the expensive mistakes made thru the spring summer and early fall.

Overall, I have confidence in the buy strategy - the applied criteria has a good history over the last couple of months, and my theory is that the sell-off mindset just spilled over into these stocks as well. I think they will bounce back on Tuesday, even if the rest of the market does not. But - there could be another broad sell off and the confidence that I have could well turn out to be misplaced.

This puts me in an interesting position for Tuesday, and I wonder how things will turn out. If things go badly, how do I decide when to sell? What if activity in the portfolio is mediocre, do I hold out for another day?

This suggests that some work is needed on my sell criteria, which have deliberately been quite simple: sell on a gain. As I was starting to re-build the margin cushion, I kept the gains small - and consistent. With the larger cushion, I have increased the magnitude of the gain, just riding the loss out. This has worked - much better than trying to time intra/inter-day swings, backtesting thru 2008 even showed net gains of something over 50% of the time (I can't recall the exact value, but maybe I will check it again over the long weekend). But this can't always work - sometimes the market just drops - right? Thus far my buy strategy does not have an explicit general market metric, but this might be something that I need to keep thinking about over time.

For the sake of posterity and historical perspective - and so everyone will finally realize what a simpleton I am - I will try to finish the sell strategy post this weekend.

Time spent:

Spend most of the morning hunting, and most of the early afternoon watching everything drop - but not actively.

End of Day Journal (1-14-2010)

Today was a little more realistic - if I can call realistic what I have been expecting: missing the highs and a couple of bad trades. Still up ~$389!! The sad part about this is that I 'could' have been up ~$1500...

Selling:

Sold out of one position that was held from yesterday. Made 4 round trips on another that I had owned yesterday. 2 trips at +$300 gross, one trip that I typed the wrong sell price in at (-$10 + minus commission) and another at a $190 + commission loss. I could have kicked myself on the mistake... I changed the decimal and did not change the dollar side. Thankfully there was a bid right below where I had bought so the stock did not sell at list. On the other sale - I ignored my own rules and sold on the down draft - which happened to be a quasi-bottom. I bought back in at +$0.04 cents, which was another mistake.

Two things here - be CAREFUL! (which is nothing new), and OBEY THE RULES. I think the earlier part of the day contributed to both of these mistakes/decisions: I missed a +$790 sale on one stock which was a little frustrating, and I had made two round trips on the other stock at a very nice profit. I felt a lot of self-imposed pressure to make up for the missed high.

I have been there and done that - will I ever learn? Today's mantra: set your daily, call that a success.

Which today was - at $389!! But ya know...

Buying:

I mentioned the round trips. The last two round trips I was 'too-confident'. But that is a hard call. There was significant upside action and I waited as I had the other two times. But I missed it. The big mistake was the sell side.

What ifs:

Crazy day. I should have sold at the +$790, but I was expecting it to keep going up. It dropped for the rest of the day. I did stick to the rules on this one and didn't sell on the down... after hours trading suggest this was the right decision, but tomorrow will be the real test.

So I could have been up $1500 - absolutely - which was just incredible! It seems like these 'What if' type of days are becoming less frequent, which is another move in the right direction. (WHOOT!) At one point, I thought about selling everything at bid which would have put me at $1000 for the day. Wasn't meant to be.

All things considered, $389 is a great day - it is very close to the target average (which when made, I thought was completely unrealistic!). Being up so high and not capitalizing on it of course is a disappointment. It is crazy how quickly the internal sense of how much I should make changes. A couple of weeks ago, I thought $400 was completely unrealistic, today I hesitated at $1000. If I could do everything over, I wouldn't have set sells so high, I think it was forgetting the daily goal and expecting the price to keep going up; the last couple of days have definitely lent themselves to this.

Time spent:

About 3 hours... hard to take my eyes of off the 1 minute ticket window.

End of Day Journal (1-13-2010)

Today's numbers speak for themselves... I won't even pretend that I really know what I am doing. But whatever it is, it seems to be working. Maybe... maybe... What is it that makes me nervous about success in this arena? Maybe it is about going thru all of this and the potential for being disappointed again. Trying to keep it real.

Selling:

I made one round trip in a new pick - strong volume, good news, and a good turn around. Also sold two additional positions early in the day, with a healthy profit (~$400 each). A left over from yesterday tanked - but confident in the system, I stuck with it. At one point I was down >$1000, but I convinced myself not to sell on the down trend. I managed to time the turn around and bought back in, lowering the basis, and ended up coming out with a $250 profit.

Buying:

I mentioned the round trip, and also purchased back in on the same stock towards the end of day based on the screener. Had about 15 options for end of day, and ended up entering two additional. Got into all very well, setting up for a great day tomorrow.

What ifs:

None in this account. I am still trading in the IRA, but not watching it as close as I should have been and I took a big hit - but this blog isn't about the IRA.

Time spent:

Again, a lot of time just watching the prices go up - and down. I couldn't take my eyes off, despite a bunch of work sitting on the desk. I moved sell points up several times as volume piled in. I am guessing about another 4 hours, with plenty of time for phone calls and emails. And hikes out to the kitchen to tell my wife the latest.

Am I really going to finish the first two weeks of January ahead of the 100k goals?

Timeout

Today is a weird day. Reality check.

This stock market thing is just in a weird place right now.

After hours and hours of books, charts, backtesting, tweaking; and 7 months of terrible application and ending up with 25% losses on two accounts (~$11k), I have two months of net positive trades (2.3% and 4.1% respectively). Feeling good about myself, I decide that maybe I can actually do this, so I start a blog to chronicle my struggles.

Not even two weeks later I am up 13%. What gives? Is this for real? Is all my hard work finally paying off? Have I finally paid my dues? Am I just lucky? Am I getting too confident? Or are the market conditions just right for the approach I have settled on? When do I know this is for real? When can I entertain thoughts of quitting my day job? Should I not be giving my 'secrets' away? I have no idea.

But look at this chart:

(% Gain for all stocks meeting screener criteria)

That is the basis for my confidence. The chart represents the % gain for all of the stocks that passed the buy criteria since December 1, 2009. The heavy red line is the average. If I would have purchased them all, I would be sitting at a hypothetical positive 16% gain.

Of course there are some losers in the mix. I haven't happened to purchase any since I started this blog, and hopefully - maybe even skillfully - I can keep staying away. But I haven't hit any of the home runs either, and I have been selling them all too quickly. I think I need to be more careful with that, in a confident, non-stupid, kind of way.

Exciting stuff. Kinda scary stuff.

To be continued...

End of Day Journal (1-12-2010)

Pinch me. I must still be a rooky - this feels like the first 2 weeks of trading 10 years ago. Except... I hadn't loss >30% of my initial investment already, and I didn't have the backtesting record, or the historical 'what if' charts. 6 out of the 7 last days positive.
Today was a confidence day - no doubt. The chart of 'What-ifs' coupled with the exhaustive backtesting gives me enough confidence in the buy point to refrain from selling on the downdrafts. Today and yesterday.

Selling:

I sold out of one position that I had entered this morning; it had dipped, I doubled the stakes, and road it back up. This stock was not on yesterday or today's screener, but it had been a couple of days ago (and I had bought and sold). But - I was looking at the what-if data last night, and there have been a lot of stocks climbing into the 30-40% range after I sold. This one seemed to fit the bill, so I marked it this morning, and timed it right.

Buying:

I bought a lot today. The two round trips, another that had been on the screener yesterday (which did not perform well today), another that I had marked from a couple of days ago, one early screen (which went down far enough to almost completely wipe gains today), another dip into the first two round trips, and one at end of day. Almost makes me nervous going to bed tonight with 90% invested.

What ifs:

Heh - I couldn't have asked for a better day. Except for the low volume stock from yesterday's screen - that was a mistake... it would have been a good buy yesterday, but I jumped the gun this morning.

Time Spent:

I couldn't find a stop watch that worked, so nothing official again. I am sure I spent at least 4 hours off and on today watching the charts. But - I managed to get all of my outstanding work caught up and hold several chat, email, and phone conversations. I need to be more disciplined about this - and count off-market time, to get a better gage on overall time spent. I have been wracking my brain trying to define the optimization problem for the stop-loss, and still am not satisfied with it.

I have a very good feeling about two of the stocks in the portfolio - based on the historicals. We shall see.

End of Day Journal (1-11-2010)

Waka waka. I am not sure what to say. Another gorgeous up day and above the target average. I am almost afraid to jinx this, but now I am up for last 5 out of 6 days since starting this blog.

Selling:

I sold out of both of the positions I was holding, one sold in early pre-market trading, and the second sold early afternoon. I would almost be ready to call both 'flukes' but when it comes to the stock market and trading - how do you measure a fluke? You make a decision and go for it and this is what happened. The stock that sold in pre-trading ended up closing the day down, which would have put my position at a loss. The other stock drifted down all morning, came back above even, drifted down again, and then finished strong. I sold $0.11 off of the high, and $0.05 off of the close.

Both of these stocks were relatively low volume stocks, and it is pretty amazing how the price can move around with 100 share trades. There were several times I debated selling while stock #2 was on it's way down; especially given that I had been plus an additional $0.10 from where the day started at some point on Friday. How many times have I had the gain, but held out for more, only to watch all profit disappear? Plenty of times. I wish that I could say that I was reading the signals and knew this would happen. But I didn't and I wasn't. My thought process hinged on two things today: not to sell on the down swing, and confidence in the initial purchase. This was all severely tested as the stock came up to +$0.04 for the day, to almost back down to the low again. I wish I should come up with some clever maxim for the day, but I am just not qualified. Keeping it real.

Buying:

I purchased into another position at the end of the day, another low volume stock, so I was hesitant. Only had two candidates all day, and in retrospect, the other finished more to my liking. I may watch it tomorrow morning as well and try to buy in late morning.

What ifs:

One of those rare, well finished days. What if I had a bunch more of these?

Time spent watching the market today:

About 40 minutes total.
I want to start tracking this to give myself a sense of the time commitment. This is a guesstimate - tomorrow I will keep a stopwatch handy and do my best with punching in and out. I work from home and I have a 3 24-inch monitor setup, I keep SD up in the background with current positions peeking from behind my work apps. This is the kind of day that I want as a trader - lets see if it keeps up.

End of day journal (1/08/2010)

Almost a fifth day of gains... almost; but then I would have had to pinch myself or something. Back to reality...

Selling:

Did not sell today. The position I entered yesterday realized a significant gain, closing somewhat off of the high. I will probably glance over the general performance this weekend and try to have some idea about what to do on Monday. Maybe this is one of those 20% gainers I keep missing.

Buying:

A stock that showed up on yesterday's buy criteria showed up again today - with a 2% gain for the day. I was watching it early on but was reluctant to buy in due to the relatively low volumes. I ended up chasing the price up and bought just off of the day's high. I bought back in again after it settled, but was not able to fulfill the complete order. Another day of low buy candidates...

What ifs:

Ok - I should not have chased the price on the purchase. This seems to stem from a lack of confidence in my assessment - which sometimes serves me well. I broke my own rule with respect to waiting till later in the day to purchase, in order to guard against the stock falling out of the buy criteria by day's end. But then again - the stock did meet the buy criteria yesterday as well, which was unusual, I should probably note this.

Charts and stuff (1-17-2010)

As I have been posting entries, changing blog formats, and thinking about how I want all of this to eventually look, I thought that an entry dedicated to more in-depth, yet still casual, review would be kind of cool. Hence this post.

Below find what are mostly charts documenting various metrics on the account. This will be periodically - or rather - non-periodically updated to keep everyone more or less up to date.

Expect the content on this entry to change as I keep thinking about it. Feel free to make specific requests as well.

 

 

The next three charts plot the percent change realized on a stock after it met the buy screener criteria - in other words, if I was able to buy all of the stocks the day they met the buy criteria, gains would match the pretty little red - and uptrending - line (the average)on the first chart. The second and third charts show the performance of the stocks that were either above or below the average gain value on day 10 of ownership.

(Above Average at Day 10)

(Below Average at Day 10)

 

The next two charts are new to this week - I am thinking I will be using them for part of my sell criteria, but not sure how all that will work out yet. The data is filtered for every day positive and every day negative in each chart respectively.

(Positive every day)

 

(Negative every day)

End of day journal (1/07/2010)

Whoot! 4 days in a row!! What is going on here? At this rate I will actually make first week challenge goals - go figure! Lower expectations, lower expectations...

Selling:

I sold out of the remaining position, at the price I was trying to get yesterday; as it happened, I got the early morning jump, which ended up being the high for the day.

Buying:

Several stocks passed the day's screener criteria. One popped up early in the day, and with the substantial volumes (~33% of 30-day average) I went ahead and bought in. The remaining 3 were still at low volumes by end of day, so I stayed away.

What ifs:

The high for the day on the new position came within 2 pennies of my sell - which would have realized a >5% return. Greedy? Maybe, but I have also found myself selling too quickly on similar action. And looking at the historical data, strong starts tend to bode well:

(%Gains on stocks with a higher than 3% gain on first day)

Based on the change in price from the day a stock meets the buy criteria, most stocks realizing a larger than 3% gain on the first day go on to higher gains. For the past two months, I have tended to sell early, I think I will try to wait on this one.

End of day journal (1/06/2010)

Another up day - three in a row! Heh, maybe I should have started this blog 6 months ago...
But... another day below the targeted average: today brought the daily average down to $528.08, with the weekly hovering at $1584.23.

Selling:

My account only had one position to liquidate - the one I was kicking myself for not selling yesterday... I generally start the day with a relatively high sell price, anticipating a morning jump. Ready for the day's fresh perspective, I was greeted with low volumes and a dropping price. By mid-day I changed the order to a penny above current bid. About a third of the shares sold for what happened to be just off of the low for the day. I realized a 3.2% loss on the 700 shares.

Buying:

Two stocks showed up on the screener, but both again with low volumes. One with a relatively high volume and a lot of enthusiasm, but I refrained from buying both. This is the third day in a row for a low number of buy candidates, and I find myself wondering if I should change the screener criteria. That would probably be a little hasty - it is probably reasonable to expect times in the market where it is just not good to buy in. I don't recall trying express a 'do not buy period' in the screener criteria, but maybe it works out. I will stick with my backtesting results for now.

What ifs:

An hour after I sold a third of the shares and with the price seemingly stalled, I withdrew my sell offering, and posted another sell at a ridiculously higher price. It is doubtful that what I did had anything to do with what happened next, but who knows? The price started to come back up on significant volumes, in fact, it came up to the price that I had initially set as the start of the day sell price. Of course, by then I had followed the price up and was trying to sell for slightly higher - I am sure the fact that I had sold for so much lower earlier didn't help matters. I ended up missing the sale, with the stock dropping back down to close almost exactly where it had opened.

Funky. The when-to-sell question is a tough one. Today's price action (and my reaction) is comparatively tame to what I went thru when I was trying to trade on extremely short time frames. I have to ask - what is driving trades during the day? A simple answer is people - and most everyone looking at the same information and deciding something. Part of me wants to analyze the price action and my response to death, but at the end of the day, what it might come down to is some confidence - confidence in the analysis behind the strategy.

Confidence in a strategy is a tough sell, even in trying to sell it to myself - there are plenty of times that my confidence and optimism did not serve well - at all. In hindsight however, I think this had more to do with confidence in a very short term trading strategy, which was just not a good idea.

The $100,000 per year Challenge

What does $100,000 a year in net trade profits look like for the short term trader? I want to find out. Not sure how long it will take, or how it will end up, but here goes.

First, some definitions. In terms of 'trade profits', this will be before taxes, and after margin interest and transaction fees. This will be tracked via my standard 'lump accounting' method - adjusted end-of-the-day gains (I don't want to spend time keeping track of everything else).

Progress tracking metrics come out to $2000/week and $400/day (using 50 weeks a year, and 5 trading days a week).

Why am I doing this? First off, I feel like I am still very much in the experimental stages of trading, the notion that someone, somewhere, is actually making enough money to live off of, is, as far as I can tell, nothing more than a rumor (probably perpetuated by online brokerages to get me to keep coming back and spending my hard earned money on transaction fees). As it turns out, I have been quasi-successful with this trading thing the last two months, and the idea of actually living off of the procedes is starting to become a little more real and personal. This seems like the natural progression - how do I bump this up to some feasible and reliable income levels? How much capital do I need? How would it affect my trading style? Will my trading strategy scale effectively, or do I need to adopt and implement additional strategies?

To make this more realistic, the challenge needs some type of time frame: let's say I have one month to generate the income for the next month. By the beginning of February, I will need to pull enough out of the account ($100,000/12 months = $8334) to make it thru February, and still have enough capital in the account to trade and generate income for the next month. Meh... already thinking of what this means - will I liquidate in order to meet cash requirements if I think it is better to stay in? Hmm...


I won't actually be withdrawing the money, so I can use any additional capital to generate additional income. If the working capital is just not enough to make enough this month work out this month (and again, if I don't go broke), there might be more capital to work with next month. Eventually, there might be enough capital in the account to actually hit $8334/month. Time will tell.

This sounds incredibly and quite stupidly ambitious: ~$25,000 in capital used to raise ~$8000; = ~33% gain for the month, for 12 months of the year... Oh well, I need to start somewhere. Worse comes to worse, I can lower the annual in 6 months and start over (if I am not broke).

And along the way, some avid (future) reader may feel sympathy and find the courage to offer some gentle suggestions. As far as that goes, how about some suggestions for how to impose the challenge more realistically? As long as they aren't too complicated I am all ears.

Regardless, it will be fun, and it means an interesting progress chart at the top of the blog. Rawr!

End of day journal (1/05/2010)

Today was another positive day, but below the goal $400/day, bringing the daily average to $760 and the weekly average to $1519.

Selling:

I sold out of two positions, one that had been held for a day, another that had been initiated last week; for $149.93 and $280.31 gains respectively (or 5.05% and 2.46% respectively).

Buying:

Only one stock passed the end-of-day screener critera, but with relatively low volumes coupled with the fact that I lost on the purchase last month, I did not buy; and though I usually do not do this, I did not bother adding the stock to the historical tracking data.

What if:

A just-shoot-me-already day: a stock that I have been holding for about a week showed a positive gain (at one point during the day the account was up a total of ~$540), but then proceeded to lose it all and then some by day's end. I thought about selling, I really did, but I decided to hold on.

Should I have sold, or shouldn't I have sold? The decisoin to not sell was based on a hunch, and as it turns out, a rather bad hunch. Here are some other approaches that I think I could have used:

1. Compare stocks at similar gain/loss percentages

After having passed the purchase criteria 6 days ago, this stock had been at a negative 8% gain. It seems like looking at stocks with similar behavior at Day 6 may give some indication of future behavior, no guarantees of course, but it help refine the hunch:


The stock in question is highlighted. Not a lot to go on, but out of the 8 stocks below a 7% loss on Day 6, 4 went on to close higher; 50/50. You will notice that Day 7 actually shows this stock higher, which would seem to bode well. After considering this, I think I should have sold.

2. Minimize potential future loss

Another possible approach is the floor optimization routine that I have been working on. The output from this suggests that the minimal loss cutoff is -0.01 % for day 8. The stock closing below this level again suggests that I should have sold the stock.

Unfortunately I didn't. Another decision to make tomorrow.

End of day journal (1/04/2010)

What a great day on the markets!

The account saw a substantial increase in value. Most of this had to do with the steep sell off on New Year's Eve, but regardless, it is cool to see the value increase.

I still feel like I am wandering around on my sell points, not quite sure if I trust my approach and analysis yet. For the day:

Selling

There was only one stock that actually showed a positive gain, and I ended up closing out of that position for a $219.89 gain (1.8%) over 3 days.

Buying

Only one stock on the NASDAQ passed the buy criteria, and with relatively low volume, I was a little hesitant to buy, but I went ahead and did it. It ended up closing up slightly from the buy point.

What-if

Another stock came relatively close to it's sell trigger, but didn't quite reach it, and then proceeded to lose most of the positive gains, closing for an insignificant overall gain. That is always an end of the day kick-myself - should I have sold for the overall positive (and significant) gain? The third stock closed substantially higher, but is still showing a slight overall loss. Nothing happened to either during after hour trading. Tomorrow will offer some additional perspective.

My approach to buying stocks

Now for some practical - and principled - application of my personal market philosophy. And a few personal anecdotes along the way.

My approach to trading has run the gamut of extremely short time frames, longer time frames, whimsical notions and gut feelings, virtual trading, technical indicators, and fully automated trading. What follows is not by any means ground-breaking, but it is the result of expensive mistakes - lessons learned the hard way, and all what I would consider important things to consider in developing one's own buy strategy. What I wouldn't have given to read something like this prior to starting to trade again last spring...

Let's get started.

And by the way - I like to keep things simple.

Principal 1

Change in price is the best indicator of what people are thinking about a company, and where the price is headed.

First, when I started trading several years ago, I decided that there are people participating in the market that are much more sophisticated and better at compiling and interpreting company performance data than I am. I realized that I didn't have the time - and, honestly, I didn't want to spend the time, researching and interpreting company financials. In fact, for awhile this led me to believe that the best way to take advantage of this was thru mutual funds. Paying smart people for their opinions and expertise.

Secondly, when I started trading again over this past spring and summer (2009), I learned the hard way (and awfully slowly) that the market is always right: if most people want to buy a stock the price goes up and if most people want to sell a stock, the price goes down. Doesn't matter what I, all by my lonesome, think about the price or the price potential of a stock. It doesn't matter what any other single person says or thinks about the price of a stock, even if they are well paid professionals - it only matters what a lot of people collectively think about the price of a stock. Funny thing is, this also means that if there are current/fashionable ways by which to determine stock value and/or future potential value, they may work simply because they are popular - no matter how silly or irrelevant it may seem to me.

I think both of these concepts led to a hypothetical scenario: there are a lot of people doing a very good job researching and interpreting company financials (or, for that matter, astrological charts). After a person makes a decision with respect to value, that person will proceed to make a trade decision. If there are enough people coming to the same conclusion about a company or stock, then the price will change. If there are more buyers then sellers, the price will go up, if there are more sellers than buyers, then the price will go down. It doesn't really matter how they get to the decision - no matter how complex, how strange, how seemingly irrelevant, or how simple.

Principal 2

For there to be a change in stock price, there has to be enough time for enough people to realize trades.

This one is simple as well, but unfortunately for me, rather expensive.

I came to this conclusion while I was attempting to trade on very short time intervals - sometimes within the minute, but always within the day. I found some very successful backtesting strategies, and actually had some very good results on live alert tests based on short intervals, but they just did not work out consistently for real trades. Some days I could do no wrong, but the vast majority of times found me buying, not being able to sell, and then watching as the price proceeded to tank. And then selling and watching it climb back up again. On those days I could have sworn someone was just watching and waiting for me to trade and then calling the market demons to take pleasure in my emotional nail biting agony.

Conclusion:

The big word here is TRENDS. Simply put - a trend in price requires enough people and enough time.

Not so new, and not so exciting, but I this is what seems to be working.

How many people and how much time to constitute a trend? I don't know for sure. For now I have adopted the idea that time is the more critical factor of the two. The longer the length of time, the more people potential involved, and the more reliable the trend. I also assume that there are people in the market just like me - looking for a profit, and at some point in every up-trend, some people will decide to collect their profits. After a stock moves up in price enough, enough people will decide to sell; but the overall price trend is rising, and at some point, enough people will start buying again to continue the uptrend.

That is the basis for my current approach. It is not by any means flashy, and in retrospect, that may be one reason it took me awhile to settle on this - it just wasn't complicated enough for the engineer in me.

Applying the ideas:

Using TD Ameritrade's StrategyDesk, I set up a level 1 window and linked it to daily and weekly charts in Ameritrade's StrategyDesk. I set the level 1 screen to only show stocks that had increased in price significantly over the past year or so and spent some time trying to identify similarities or indicators marking the return to a longer term up trend (up for some weeks, down for a few days, and on the way back up). Working under the assumption that change in price was a good indicator of future price action, I came up with an expression to measure/express the change and added it to the daily and weekly charts. (BTW - Ameritrade's StrategyDesk is incredibly flexible when it comes to level 1 screens and charts and a great tool - I don't think any other brokerage offers the same flexibility and customization at this price level - free with a premier account.) I then flipped thru several stocks looking for common themes in the rate of price changes associated with the daily trend reversals. After selecting a candidate, I came up with an expression to trigger the trade in the backtesting window and then proceeded to run trade simulations over a progressively higher number of stocks and time periods, changing the approach as things worked out or didn't work out.

There are a lot of things to consider while backtesting (I think I am going to do an entry on the backtesting lessons I have learned... of course, all of them learned the hard way). As I was testing only the buy side, I used simple sell criteria (sell at 4% gain) at first. After I had good backtesting results on the buy side, I set a simple sell at a loss criteria (sell at 4% loss) and then refined buy triggers until things worked out. By the time I was finished backtesting, I was using all of the stocks listed on the NASDAQ and testing over a one year period. I tested from Sept. 08 to Sept. 09 and realized a ~93% positive trade rate. I figured I could probably work with this. In total, this probably took me about 2 weeks ~ 60 hours (not sure where I found the time...).

Trading application:

1. Using a level 1 window in Ameritrade's StrategyDesk, I set up a screen for all NASDAQ stocks. The screen is based on the buy criteria I have backtested.
2. I check on the filtered results throughout the day. In order to meet the backtested buy strategy, the stock actually has to finish positive for the day - to help ensure I am buying stocks meeting current criteria, I generally wait to purchase a stock during the last 15 to 30 minutes of the day (usually either 500 or 1000 shares - another lesson learned the hard way). However, if I see relatively strong volumes during the day, I will purchase the stock sooner in the day.

Tracking and refining the strategy:

I hope to improve and refine my buy criteria, so I keep track of all of stocks that meet the buy criteria at end of day - along with variables that I believe may be important in gauging future price potential. I consistently review the data. I have the whole collection and review thing down to about 10 - 20 minutes at the end of the day. I have included several charts to give an idea of last month's performance.

The first image (below) presents the percent change in price for all of the stocks that met the buy criteria, for all working days in December. The second and third image present the day ten above average and below average percent gain stocks respectively. The fourth image is a tracking of the average values - the return if I would have purchased all the stocks on the day they met the buy criteria, and sold them all at the end of the month. The calculations assume that the stock was purchased at the end of first day close price. The x-axis refers to the number of working days since the stock met the buy criteria.

(% Gain for all stocks)

(Above average % gain as of Day 10 of 'ownership')

(Below average % gain as of Day 10 of 'ownership')

(Average % gain for all 'purchased' stocks)

(On a side note: I have November and December of 2009 saved using the current buy criteria, but at the end of November I made some serious adjustments to data storage format data. making it much easier to record and process everything. I don't feel like salvaging November's data to work with all the macros, so it will not be presented.)

The image quality is somewhat poorly displayed in the entry, but double clicking on the image should pull it up for better viewing. Image 1 is too busy to follow all of the series, but gives a general sense of the performance. There were 102 buy triggers during December - with some stocks coming up more than once. There were 86 individual stocks. Examining the average chart, the return is +11.9%. The NASDAQ saw a 5.8% increase over the same time period, and I personally realized a 5.6% gain on the stocks I actually traded (unfortunately I do not have a nice graph of personal gains... but maybe next month).

I can't buy all of the stocks that meet the criteria, and at this point I use additional discretion; primarily looking at volumes and average volumes, percent change in close, and my gut. I didn't do as well as I could have, but looking at the performance of the stocks that I traded (after I sold them), I think this is mostly due to my hazy sell criteria.

This data can be used to help determine better buy criteria, but at this point, I think developing something other than my intuition as a selling strategy is a higher priority - even the majority of stocks on the below average chart presented several decent profit opportunities - IF a guy could just figure out when to sell them...

My trading history - as of 12/31/2009

I suppose all of this counts for experience, so in some sense, I could almost say that I now have about 10 years of stock market experience, but as sporadic as it was for several years, that would be a little misleading.

Lemme preface by saying that I have probably broken every good trading rule in the book, if I have missed any, I will probably get around to it tomorrow.

My stock market trading began in the late summer/fall of 2000. I took $2500 out of savings and opened up a Datek account. My knowledge of the stock market at the time was virtually null: maybe 2 or 3 articles regarding the insane amounts of money some people were making in the stock market. Oh yeah, that and the fact that my brother-in-law had seen the value of one of the mutual funds he was invested in grow something like 100% a year for the last 3 years. I figured I could afford to lose the $2500, so I just dove in to see what would happen.

Somehow I managed to select a few stocks to trade in and ended making several trips in and out - the majority of transactions in Webvan. Within 2 weeks I had tripled my initial investment. And (I have to remind myself) this was real money, not just account value - at the end of the week I actually had the money out of all the stocks and sitting in the money market account. Whoot! I remember thinking either this was incredibly easy or that I must be incredibly brilliant. The problem was, I really didn't know what to do with the money except more of the same. Since I had made most of my money in Webvan, I stuck everything back in. Within the next week Webvan had announced bankruptcy and I lost something like 50% of my account value. I decided to take a bit of a breather and try to learn more about market dynamics.

Over the course of the next couple of years I sporadically read several different books (my favorites being from the 'The Idiot's Guide ...' and '... for Dummies' series) and tried several different strategies But nothing seemed to work very well for the amount of time and effort that I was willing and able to invest. I became convinced that my best investment strategy invovled mutual funds - capitalizing on the experience and opinions of professional, full time people with a lot more knowledge of the market. I bought some GOOG and stuck the rest in mutual funds. That was pretty much it for 5 or 6 years. Every once in awhile I picked up another book and read it, but after each one I would come to the conclusion that I just did not have the time it took to profitably invest.

In the spring of 2009 I happened to take a class in engineering entrepreneurship as part of my doctorate curriculum. Our professor stressed the importance of a familiarity with the stock market for wannabe entrepreneur's - 'The stock market is the real world of money, and you need to know what people are choosing to value in order to be a good entrepreneur.' He started each class with a 30-minute talk/presentation of the day's market activity. My first reaction was: 'Been there and done that, can't beat the professionals'. But seeing some of the day's activity up on the class projector week after week got me thinking and dreaming again: 'A lot of stocks see a 5% movement in a day, if I could just capture half of that...'

By the middle of the semester I had picked up another couple of books, one on candlestick charting and a second on technical analysis. Seeing as I still had the Ameritrade account (somewhere along the line Datek had been purchased by TD Ameritrade if I remember correctly) I gained some familiarity with their StrategyDesk application and became enraptured with the back-testing routine. Really cool tool - but what a learning curve. I re-call my first successful and virtually profitable back-test run. All I could think about the rest of the day - how much money this was going to roll in, and how in the world I was going to protect this strategy after the folks at Ameritrade realized that one of their StrategyDesk users was amazingly successful. That lasted until I realized that telling the backtesting app to sell the stock on the condition that the price is within 1% of the high for the day works differently for a closed day versus a live yet-to-unfold day. Fun stuff.

By the time I had settled on a strategy I was chomping at the bit to see if it really worked. I decided to transfer one of our IRA's out of a mutual fund into the Ameritrade IRA. As the account was an IRA, I could not set the account up for margin, which limited the funds to one in and out trade within a three day period (e.g., unless the buy-sell exceeded 3 days, the funds would not be available for immediate re-investment). For the next three months I kept track of all the potential trades (using the alert window) and at the end of the day I was able to look at the 'What if I had been able to trade this stock?' scenarios. I had a few good days, but overall this ended up being an exercise in frustration - my buys and sells netted a ~30% loss and the 'what-ifs' netted substantial profits.

By then end of the 3 months I came to the conclusion that my strategy was good, but I was just not able to trade often enough to net a profit (I was going all in with each purchase to keep the transaction fees relatively small, and was only able to trade 2 times a week at most). So I opened up a standard margin trading account with $30,000.

I made $1000 the first day of trading, and $800 the next. But by the end of the week I had lost $7000: $5000 of the initial investment, and the $2000 I had gained. The following week saw another $2000 loss. In order to meet margin requirements and continue intraday trading, I had to invest another $2500 in the account ($25000 minimum equity). Then another $1600 after additional losses. Ouch.

I slowed down my trading frequency and examined, re-examined, and re-re-examined my strategy. I found out a lot about myself and the market over the next 3 months. I came to realize that I can get very emotional about a trade, that I have a hard time following my own rules, and that I was berift of any trading intuition. A couple of valuable lessons: no matter how amazing, useful and successful the back-testing and real time alert data was, for a strategy to actually work there had to be someone at the other end of the trade: someone to actually sell the full amount of shares that I wanted to buy at the price I wanted to buy them at, and someone willing to buy all of the shares that I had for sale at the price I wanted to sell them at - all within the hypothetical trade interval. I also realized that my personal purchase and sale of a stock - or even my personal offering to buy or sell - can have real impact on the immediate price action.


All of this contributes to my current market philosophy and applied trading strategy, which has met with some success over the last 2 months. As applied over the last two months of the year, I have realized a net positive increase in the account, over probably about 20 trades - not as exciting or flashy as >$800 in under a minute, and definitely not something to move to Costa Rica on, but moving in the right direction. New Year's Eve saw the account close at $26025.74, with approximately 44% of the portfolio still invested in 3 stocks. Based on the account value at the beginning of November, this amounts to about a $1800 increase for the last two months, or about 9%.

Current figures are posted on the blog sidebar (as of January 4, 2010).