End of Day Journal (5-26-2010)

Summary:

Another losing day. The account is down -$238.92. For the sake of posterity: the account was down a maximum of $866.41 (at 12:21 p.m. my time) and reached a max profit of $68.59 (12:50 p.m. my time). Two stopped out trades on TNA (with loose stops) brought it down to the final number.

That is crazy. Over $900 profit in 29 minutes. And to tell you the truth, the trading over the 29 minutes was not perfect, I left quite a bit of money on the table - probably because I was gun shy given the cumulative losses up to that point in the day.

Here is the summary:

The entries and stopped scored a 75% and 85% respectively, much better.

But I am still doing something wrong. The entries don't really matter if the momo isn't there. And it isn't there, at least not on the morning's entries. Well - I take that back, I had JOYG in my sites and I entered on the wrong side and wasn't watching until it started hitting new highs. The candle change reverse was not clean and I got stopped out on loose stops as I tried to find the rhythm twice. That was luck of the draw and the day's second and third biggest single losses at $126.46 and $102.12.

I then proceeded to try to find some mojo on JOYG for the rest of the day and was nibbled to death. the decent moves did not come until the market was moving: i.e., big candles. I knew today was an inside day, without a doubt. But I tried to trade it well, and I think I did a decent job at it -  I think I am seeing probability/potential often where there is none.

I have been internally debating about what I should do from this point forward (since mid-morning today, after reading FNG insightful comment on yesterday's post). At this point I am just not sure.

Paper trading is just not the same as real trading. I think it is good for working out the trading mechanics, but it does nothing for coaching thru the emotional connection money brings to the game.

Emotionally and psychologically I feel fine today. I am sure the strong ending on the day helped - I know I can trade it if I can spot the momo. I still have a lot to learn, but when things are rolling it is pretty easy - when the real money comes it is just a matter of latching on.

As tough as I think I am though, I am certain that another 1k loss today would have put a damper on tomorrow morning. So - for the sake of avoiding unwanted emotional baggage, I am going to follow up on Scott's advice by cutting trade size down to 300 shares and seriously reducing the number of trades in the day.

I am not quite sure how to reduce the number of trades. Implementing a daily loss limit doesn't work for me - the day is not over until the bell rings - and there is always money to be made, e.g., the last 30 minutes of today. Another option is to set some very selective trading criteria, but I am hesitant to set up some quantification scheme - because this method of trading (and I believe it is still the best) pretty much defies quantitative analysis. So I need to do this with some qualitative guidelines.

Yikes - trading guidlines! Rules! pfft...

FNG had an excellent post today re. probability. He compared TNA's action to the Q's. I am thinking potential  guideline.

I put together a JOYG and Q chart to see how they compare - and how I would of traded this differently if I would have been using this as a guideline. So - the faded bar is the Q's, and I drew a red line over potential signal doji's. I highlighted the flat (relatively) highs and lows, and then I drew blue lines over the hypothetical entries on JOYG - looking for momo on the Q's (big bars) and assuming the doji signaled a return to the momo:

I came up with 5 potential entries, with 4 of them working out, assuming they were traded perfectly. This is versus 11 (12 if I count both attempts at the 7:45 short) that I traded today. More than a 50% savings.

Can I do it? Tomorrow will tell, but I have every intention of carrying it out.

I am not so sure that this (deferring to the Q's and SPY) is about me trading less as much as it is something that I should have been doing all along.

Or - I could just wait until there is market action like this afternoon's and yesterdays before trading. Maybe.

Just because these charts look so cool - here is one comparing the TNA and Q's:

And for the sake of posterity - one of JOYG versus SPY:

Sleep well! trade well!

Heh - me and my long posts...

Details:

AEO looked to be trending so I shorted on some flat highs (0:20) (1/1). The stop was placed a tick or two away from the green candle high (1/1). The exit was late. Looking at it, I should have bailed after the second test of the new low. I highlighted additional momo s/r; not a lot of great price action, but it is interesting to see that yesterday's assumption still applies (+$21.23):

Short on BIDU as it re-tested the low (2:12) (2/2) with no support for the stop (12 ticks from entry) (1/2). This is a hard call - the entry had plenty of market support, but the stop lacked some testing. In retrospect, I think the stop should have been placed  just above the prior low. I still would have been stopped out, but the two tests prior lent some support . I shorted on the next candle change as the candle prior showed some indecision and the market was determined to head down (0:04) (3/3). Stop was set on the prior high (2/3). Exited for a scalp (-$11.93):

DV was headed down this afternoon. I watched it stall and tried to buy further up the wick, but I ended up chasing it down (3/4 - entries). The stop was placed at the top of the long red two candles prior which ended up being 12 ticks and acceptable under the trend (3/4 - stops). I should of exited as the lows flattened. In retrospect, the entry should have been on the long green candle that I exited on: another test on the immediate high - perfect (-$73.01):

I shorted JOYG as the highs flattened and it dropped below the near term low (0:21) (4/5). The stop was placed on the low (4/5) This was a great trade - but something I noticed today - I should have been playing the other side: I should of shorted as it tested the near term high (the support side). As this failed - I would the long green could have been a signal to reverse on the next change. The long green did violate the momo support by a tick.

As I watched it go up, I decided to short the candle change (0:01) (5/6). I got stopped out in a bad way - over 20 ticks with slip. The stop was on the prior high, I just didn't get the best price on entry (5/6). As it faltered around, I shorted again as it fell pas the prior high (0:52) (6/7). Stopped out again as it tore thru the latest high and my stop (6/7).

The 9:10 long was based on the doji, some green candle in play and the market coming off of the new low (7/8 - entries). The stop was placed on the green reverse hammer open (7/8).

The 9:30 long shows a change in tactic - I started trying to buy the support side, using the very near term lows (3:48) (8/9). The stop was very poorly placed - it should have been much tighter (7/9). Anyhoo - the new tactic didn't work and I got stopped. I tried the same thing again on the next candle - basing the support on the some of the longer term support which is somewhat dubious IMO(0:11) (8/10). The stop was placed on the prior candle low (8/10). Despite the questionable entry, I got some price action and I exited shortly after the new candle. I tried again on the next candle - which had more near term support (2:51) (9/11). The stop got hammered as I lowered it and with slip got pretty much the low (8/11). I shorted a few seconds later as it appeared to have some momo (10/12) with the stop on the prior low (9/12).

The 11:25 was an early short on the flat highs, the high had already been tested and the market was headed down (4:05) (11/13). The stop was placed on the candle's high (10/13). I doubled up as it shot down (0:56) (11/14 - should have waited for a supported pull back). The exit was discretionary and nervous, especially with the market's action, and I came out negative on the trade. I went long on the 12:00 (0:56) (12/15 - entries) with the market rebounding and the stop on the prior low (11/14). I exited on a fading candle change and shorted towards the back half of the candle with the market dropping (3:56) (13/16). The stop was on the candle's high and I got busted (12/15). Shorting on the momo support on the next candle (12:20) would have been the way to go (-$618.33):

Early on a short for RIMM, the candle was close to done and I was thinking stall (4:44) (14/17 - entries). I fudged on the stop - had it 10 ticks, then brought it down to 2 ticks above the stalled highs as the pattern progressed (13/16 - stops). The exit should have been after it passed the previous candle high, but I used a discretionary as it went on to look inevitable (-$26.46):

No idea here on the long, very poor entry - I think I just wanted some of the action (14/18). The stop was placed on the prior close (14/17) (-$59.41):

I shorted TNA as the market was dropping and it hadn't reacted yet (0:10) (15/19). I can't recall why I exited, but it was a dumb move - the stop was never violated (15/18). I went long on the next candle change (0:04) (16/20) and was stopped out some 40 seconds later (16/19). I shorted 7 seconds later (17/21) and was stopped out some 30 seconds later (17/20). I went long 16 seconds later (1:36) (18/22 - entries) as it looked to be giving it up and was stopped out again (2:26) (18/21 - stops). Shorted at 2:48 and held on until the candle change where I reversed (19/23). This was stopped (19/22) and I shorted 4 seconds later for most of the ride down. I went long after the 12:35 candle change (0:09), but exited for a 24 tick scalp as it bounced around. I then shorted (4:00) (19/24 - entries) as the rest of the market kept going down with the stop on the prior close for some 20 ticks (20/23). I took a chance on a long (20/25) (still the 12:35 candle at 4:40) and exited for an 18 tick profit (21/24).

The 12:40 candle started with a short at 2:10 as it passed the prior open (21/26 - entries). This was stopped on the prior open (22/25 - stops). The stop turned into a reverse (22/27) (stop on the prior close again - 23/26) for the ride to the top of the 12:45 with an exit on market bounce.

Late on the short entry (0:13) (22/28 - entries) for the 12:50 candle (stop on candle open 24/27). It went down and retraced and I spooked for the exit. The next 3 entries were all stopped with only one on the candle change (23/31 - entries) (25/30 - stops). The last entry was a short on the candle change (24/32) (26/31) and an exit 20 seconds prior to close for an 18 tick scalp.

I left a lot of money on the table here - and traded a little too often. The first few switches were ok with tight supported stops (nothing over 12 ticks). 2 stops (12:35 and 12:40) suffered from poor entries and got hit at 20 ticks. Likewise with the 2 on the 12:55.

Somewhere during the action I started paying attention to the VXX numbers - which seemed to be leading the market and TNA action. This kept me hanging on for the 12:40 to 12:45 capture. This could have been played much better. I am afraid the early first exit was due to the day's losses at this point (+$586.10):

 Long on VXX as the prior candle broke resistance with market support (25/33). The stop had support on the resistance, but I let it slip to 10 ticks (27/32). The best move here would have been to play the support - on the next candle, but there were some long wicks ahead (-$50.85):