End of Day Journal (6-22-2010) (and a review of the exit plan)

Summary:

Day 2 of practice.

Interesting day - after starting this morning, I realized the sim account was messed up so I had to re-set about an hour into the morning. Then I felt a nap coming on, so I took an early break.

This style of trading is different. Keeps me busy, and being busy seems to keep me focused. The alarm system worked fine today - unexpectedly the alarm triggers on every line on the chart (cross-hairs if active, EMAs, order lines - and alert lines), so received more alerts than I was counting on.

Overall, the rely on the intuition game is pretty easy and fast. It was something of a challenge staying away from trades that I normally would of entered. This will be good practice.

My exits left something to be desired. A lot to be desired - while taking profits I was out too early nearly every time. The one glaring exception being WHR where I got out too late (and despite losing half of the unrealized, it was still the most profitable trade of the day). In an effort to remedy this I think I need to setup an 'idealized' exit, my intuition doesn't have enough experience yet for those uncanny abstract exits.

Reviewing the early exits today it looks like the 7-period EMA (orange on my charts) may serve as a decent reference point (Fozz mentioned/noticed this today as well).

I think a couple of approaches might be called for here. On slow trending stocks, a cross and close over the 7-period EMA works great. On big momo stocks however, a retrace to the EMA can wipe out all the profits, so for the big momo stocks I will exit if it retraces more than a third of the candle. Big momo will be defined as biggest bar (thus far) of the day.

This won't keep me from leaving money on the table, but I think I can live with the consequences. Both criteria are readily verified visually. Again, the goal here is to get myself used to making an intuition based exit decision, for now I need something I can visually and quickly identify to keep that analysis bit out of my head. While I learn to trust my intuition, I will be gaining a better background for my intuition.

Hullabaloo and balderdash. This blog post is more about convincing myself every day than anyone else. But I like what is happening after day 2.

To recap:

I will exit a trade when the stock has stopped moving in the expected direction, or after a big move in the expected direction. This will be visually determined by:

1. A change in candle size, from larger candles to small candles
2. A close on the opposite side of the 7-period EMA
3. A retrace of 1/3 or more on the candle if it is the largest candle of the day 

Ok - now for the un-important stuff. I closed +$50 (w/o commissions, all on paper):

Far fewer trades, not that I didn't want to jump in several times, but I stuck to the plan. And as I mentioned earlier, I left a lot of money on the table today... I would of made bank following the exit rules above.

Feel free to comment/encourage/criticize.

Trade well.

Note: I am going to create a new exit and summary of strategy post with the re-vamped exit rules.

Details:

AVB: Go figure on that first exit... didn't give it any time. Set up again after the stop (+$14):

CRM (-$55):

DNDN (+$51):

DO: the oils shot up today, didn't have an alert set on any of them (-$142):

RIG (-$81):

UFS: out early (+$25):

V: out early on the big move - discretionary (-$86):

VNO: set up again - the close was a discretionary... (-$24):

WHR: out late (+$303):

XEC: Out early (+$45):