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.