End of Day Journal (12-10-10)

Summary:

Live trading on 100 shares:

Traded the morning session with the same uber entries - and the same EOD results. My trading is riddled with fear. I was long on CMG's $4 (10:00) move, and long on NFLX's LOD for a $5 move (9:45). I got out of both too early.

So - back to the drawing board - no sense in throwing good money away. I think the foray into live trading was good - it served as a reminder/refresher of what I am up against in myself. But for now, back to paper. Actually going to take off for the rest of the holidays - we are heading up to Bonner's Ferry ID for some snow and cold and family. I may do some chart reviews but for the most part I plan on working on the internal struggle and simply taking it easy.

No charts - same old, same old. Great entries, either not holding long enough, or after missing a big move, holding too long for the profit and stop. Mind games. Gonna get thru it.

Happy holidays!

Trade well.

End of Day Journal (12-14-10)

Summary:

Live trading on 100 shares:

What happened?

Hope happened.

I want to say that 'hope' is what happened Friday when I bumped up shares, Monday after licking my wounds all weekend, and today when I was $20 away from breaking even after being down >$400.

When I am able to focus on and read charts - I trade like a champ. I am more Chuck Norris than Chuck Norris. I am so freakin' pro. That may sound a little over-confident, but really, I am convinced of it. Really. The problem is - I don't know how to keep myself from becoming distracted; from not being distracted by me.

And that is the problem, here is the scenario for the afternoon: The morning started great with 4 profitable trades right at the get go. I lost everything on a slippery stop on CMG and then proceeded to get my rear end kicked by NFLX. I think this was beneficial - because at the end of it I felt like I had 'worked out' the anxieties associated with being so negative. After I realized it wasn't as bad as I had thought, I started trading from a place of focused nonchalance (albeit with a few fear based exits), before I knew it 3:45 came along and I was almost positive for the day. I almost quit due to the late hour, but I recall thinking - it wouldn't be that hard to be positive on the day. Thus I hunted for another setup, all I needed was $0.50. MA looked like it was heading down so I jumped in short. Stop. Looks like it wants to head the other way, no problem. I had to make over $1 now, but no worries, MA was a mover. Long. stop... Short, stop, short... etc., etc.; all at the ends of the candles (see the 20). 10 minutes later I was back down to -$350.

What changed?!?! I think it was a classic case of 'I want to see a potential move'... so I saw it. Granted, MA was falling fast and setting new lows, but it was already some $0.40 off of the prior LOD. In times like this I rationalize getting in with 'You never know what will happen' - that is the language of hope. Sure - the same words can be used while thinking in terms of probabilities, and I use that as a basis to trade, but make no mistake about it. This is not probability, this is me hoping - plain and simple.

I am just not sure what to do about it.

Trading happens fast, often if you stop to think about it, the moment passes and it becomes too late to do what needs to be done. This makes it harder to take a time out - with the MA trades, I 'only' had 15 minutes till market close which added more pre-tense (albeit completely false pretense).

The 'wannabe a hero' scenario was laid, I didn't have 'enough' time, and even more importantly, I didn't have the tools to be fully aware of all this.

Don't get me wrong, to some extent I acknowledged all this was going on - somewhere in the back of my head I told myself this didn't feel right, but I pushed the thought aside in the name of probability and profitability (hero complex) and went for it. Bleh.

More than anything - I need to be aware of and alert for my propensity to do stupid things. My stupid things are brought on by and directly related to my emotional state. This includes the state of hope, patience, and fear. How can I recognize this in myself?

I do best when I am watching a stock and waiting for something to happen - volume stacking up at the top/bottom of a move, a second attempt at S/R, a pause in the price action, etc. By then I have watched the action and identified the players. I have a feel for what is going on and where things want to go. I avoided MA most of the day - all the stocks I had been trading looked dead in the water at 3:45. I checked MA one more time and saw it was hitting new lows and went for it. I can make a rule about 'waiting at least 5 minutes before placing a trade' but I am not sure that that will cut it. The fact that I traded had more to do with how close I was to being profitable and how badly I wanted to end the day on a profit. Deadly combination.

It is kinda crazy - I went thru the opposite side of this during the morning. The PnL was showing heavy losses, but by the time it got to the bottom I had let it all go and didn't care anymore. I remember feeling a distinct difference, in fact, when I got up for some water, I told my wife that I was negative but I felt like I had worked thru 'it' and the rest of the day was going to be different. I am not making this up. Funky or what?

When it comes down to it, this is all about the PnL. If I would of closed out the trade prior to 3:45 (CMG) and been profitable, I would of stopped for the day. What would I of done if I wouldn't of known what the PnL was? I am guessing that I probably would of stopped as well - all the stocks I had been trading had no setups to speak of.

PnL is powerful - that is the supposed end result of all this blood, sweat, and tears: BIG P. I am not sure that not looking at the PnL throughout the day is the healthiest thing to do. I have been thru this once before, made the commitment to give up looking at PnL during the day, and somewhere along the line, assumed that I had outgrown the commitment. But the fact that I would of stopped trading if I would of been profitable at 3:45 serves as a very real example of how this affects my mindset. Ideally, I should be able to look at the PnL and trade regardless of what it was - like with what happened this morning at the low on the curve. But... I am afraid that is not the case. Until it is, I am not sure about what to do except to endeavor to never ever trade with the PnL in mind.

>$4/share is some kind of crazy money to make: and this is what happened when I was able to trade with no heed to the PnL. Not exactly 'Scott-esque', but some kinda crazy.

The day has been too stressful and long to do chart reviews - or to read back over and edit this blog... It is beneficial to do reviews, but it is not the core of my problem. I did get one done on CMG, but the others I am just posting trades.

And on an end note, simply in terms of terminology, I am not sure that 'hope' and 'patience' are the correct terms to use. I think perhaps 'wishing' and 'wishing' are probably better terms. Only because I think that both true hope and true patience are excellent character qualities. What I am experiencing has something to do with a blatant disregard for reality - which neither true hope or true patience have. Just a thought.

All advice, comments and feedback welcome.

Trade well.

Details:

AAPL

CMG

CRM

FFIV

MA 20 range (arrrgh!)

MA 45 range (arrrgh!)

NFLX

OPEN

SODA

YOKU

End of Day Journal (12-13-10)

Summary:

Live trading on 100 shares:

My trading was wracked by fear today - fear that I wouldn't succeed at this.

Crazy how this works. I think that my emotional state carried over from Friday and a weekend of thinking about it. It wasn't helped by today's schedule either; I had quite a bit on my agenda for the rest of the day, items that needed a lot of prep and I wanted to get done with trading early.

I started the day ok; I think the emotional state of fear came just before hitting the profit HOD. I was actually determined to quit and walked away from the comp to tell my wife that I was done for the day. Then I came back to shut down NT and thought I spotted an opportunity for another quick gain. Pffft.... this rapidly descended into another, and then another trade and before I knew it I was negative. Then the game became very much about fear and breaking even.

I am not sure about what to do with this - some days I am not affected at all - it is more about a state of mind. This fear is usually associated with me wanting to take a quick scalp and I become more concerned about that then I do price action. This can drive me crazy and I am not sure how to diffuse the emotion. Perhaps more work on the visualizations.

Today's agenda sure didn't help. Let's see how I feel tomorrow.

Trade well.

Details:

The same patterns show up again and again.

AAPL

CMG

LULU

MA

NFLX

End of Day Journal (12-10-10)

Summary:

Live trading on 100 shares:

Pfft.

After a great week - one of the best ever - I finish off with the worst day ever as I doubled up the shares I was trading. A few thoughts - the commission per trade on 50 shares vs. 100 shares is about exactly the same. It is much more expensive to trade 50 shares. But... if I would of stuck with 50 shares for Friday, I would finished the week slightly positive at around +$100. Just to put things in perspective, if I had been trading 1000 shares (as I was when I started last spring) EOD Thursday profit was > +$8000 (and substantially so, due to the commission difference); by EOD Friday the account would of finished at > +$1000. I effectively loss something over $7000 on Friday. 

Here are the IB summaries, For the week ending Thursday:

For the week ending Friday:

Well, well. After spending the weekend licking my wounds and thinking about what happened, here I be at the end of it and still not exactly sure what 'it' was. Or what to do about it.

A few things that I do know:

• By EOD Thursday I was coming off of one of the best weeks ever. My confidence was at an all time high, I was thinking of myself as a trader and fully convinced that I could do this and make it work.
• I bumped up the number of shares I was trading.
• I could not short YOKU.
• I had some very good entries.
• I had some very poor entries.

Those are the facts. That - and price went up, price went down, price went sideways.

I am guessing that being able to short YOKU would of kept me out of a heap of trouble. I tried to short on the 11:00-ish new low and when I couldn't decided to try and time the bottom. The first entry would of been a champ and it is very likely that I would of stopped after that trade. 

What about my emotional state? What were some of the thoughts that were running thru my head while I was trading?

This is the question that I have been concentrating on - and I am not really sure what to make of it; or perhaps better said, I am not sure how my mental state affected my trading and how I can recognize it and prevent it from happening in the future. Here are some of the thoughts that I believe might be helpful:

• When I made the decision to bump up the size, questions came up - what if I completely blow it after I increase in size? What if I lose everything I made and then some? This is exactly what happened. I didn't for one second entertain these thoughts and pushed them out of my mind as they came in. As the day started, they were no where to be found - but after I hit the -$400 mark they popped up again: 'See? Watch, you are going to lose everything you made and then some.' I pushed them out again, but they rang with sarcasm and a sense of inevitability. I kept trading, knowing (or maybe it was more 'hoping') that a few good trades would take care of everything.
• As I mentioned earlier, my first attempt on YOKU was a short on the 11:00 new low. IB didn't have any shares to short, so I said to myself, well - it has to find a bottom. I still stand by the first four entries (though the exits on 2 and 3 should not have gone to the stops). The rest of the entries were all bogus and more an attempt at what I 'wanted' to see, rather than what was actually happening with the price and volume. I think that by then YOKU had gone down so much and I was so 'desperate' for a big move that my perspective was biased and remarkably skewed.
• I was up numerous times - too many times to count > +$0.50. I let all of them came back to stops. This is all too typical. Some days I let the stock 'speak' and some days it becomes about me hanging on and hoping. Friday late morning and afternoon were definitely about hoping. I think this problem tends to show up when I am down for the day. I know that one or two great trades will put things positive and I go into each trade thinking this is the one - I just need to be patient. My thinking goes along the lines of 'You never know what will happen... let it come back to the stop or shoot for the moon... just hold on...' That needs to be a heads up: time to take a break, re-asses, and perhaps get out of the trade.
• On the opposite side of the reaction, I start chastising myself for not taking the easy profit and start taking money at the first sign of price hesitation, e.g.,  the HOD shorts on CYH and FSLR. This is just as damaging.
• Last but not least: I recall thinking at about the 3 o'clock mark that I will have to make $5/share in order to break even for the day and thinking that there was no where near enough time for this to happen. But - a guy never knows - and under that pretense I traded what I wanted to see happen - YOKU was moving big for the day and it was bound to hit bottom... nad I kept seeing it. FFIV had a nice ATR and was bound to move big on the last hour... and I kept seeing it.

Several of the thoughts I mention are recurring themes of mine, they recall the initial attempts at momo trading. I have come a long ways since then. I think what I am still seeing now is about some of the core of my personality - who I am when not much else is left... I would characterize it as optimistic riskiness. 'You never know, I might get lucky. Just keep trading.'

The thing about this is, I am not entirely sure how to catch myself in these modes. I don't think it is a stretch to say that my chart reading skills are adequate for profit, that is, if I use them. I think there was an unconscious shift in focus that took place on Friday afternoon. I am going to make a bit of an assumption and say that the circumstances that lead to this type of trading are the same: I am negative for the day and I have several relatively small moves that come back to stops. So in an effort to remedy this I am going to mandate a break if I have 3 consecutive stops. Since I think the 'see a profit - come back to a stop' moves are more a signal that I am not reading price action correctly, and potentially more damaging, I am mandating a break if this happens once (>$0.50).

By break I mean getting up, walking away from the computer, and doing something entirely different for at least 10 minutes. And before I come back to trade, spending at least 5 minutes re-focusing on my objectives.

This might sound silly, but I know me - I can make excuses galore if I am not specific.

Another thing that has been troubling me is why I didn't stop trading on both Thursday and Friday morning. I think it has something to do with not being positive - which... when it comes down to it, is neither inherently good or bad. I thought I could get by with setting an arbitrary/intuitive 'time to stop' standard, but I just don't know. For now I will keep it this way.

Feedback, insight and advice all appreciated.

Trade well.

Details:

CMG

CYH

FFIV

FSLR

HBD

NFLX

YOKU (with cut scenes below)

End of Day Journal (12-9-10)

Summary:

Live trading on 50 share lots today:

!!

I didn't stop today. I am not sure why... Maybe it has to do with an unconscious daily target - or??  I know that the trades did not smack of desperation - I felt in control and aware of what was going on.

Things can happen so fast, up then down. Reviewing today's charts, there was a lot of 'fighting' going on in NFLX. Very very interesting chart, especially around the 66 candle mark. There are very few clear non-overlapping candles with volume coming in on both sides, over and over again. I would enter, be up ~$0.50 and then get stopped. My stops are on the very top/bottom of candles way too often to count. I finally moved my stop quite a bit further than I usually do to see what would happen (candle 153), and sure enough - I get hit and the price turns around. It was right about then that I noticed HDB and started trading it.

Looking back on NFLX, buyers were not 'clearly' in control - but the price moved up after the morning push. I can see that the buy side was consistently coming in higher now, i.e., buy side was defining S/R. Tough crowd. My timing would of had to been impeccable on my entries to stay in. I actually bought very close to the LOD, got stopped out on the bottom of the next candle, went short assuming the break was real, and was stopped out again. Pfft. I think realizing how the setup can change before it is actually set up will be beneficial.

On a side note - some of today is what I was trying to avoid by implementing the MA cross on color rule. Reviewing NFLX, my timing was actually very good a lot of the time, but I hard a difficult time understanding the strong side of the market (buy side for NFLX). It was a good experience - but costly. Watching for candle overlap and for violated highs/lows coming back with volume, and knowing that in those types of conditions I need to watch for several price tests, is key. There was definitely money to be made.

Speaking of which - I grossed >$800 on 50 share trades. Go figure. NT is recording a +$206 day (without commissions) and IB came in at +$122: right around 30% of the day's profits went to commissions. Incredible.

And on a side note - I am starting to be a little concerned that this style of trading will not scale very well, especially on a low volatility stock like CMG. I think I will need to learn to adapt in order to ensure my trades get filled; I will need to ramp up slowly... but I need to ramp up. Thus - I am going to bump up to 100 share lots tomorrow and see how things go. I am pretty sure 100 shares will be easier to fill than 50 shares (I never see my limits show up on bid/ask), but I think 1000 shares will require some adjustments. One day at a time.

I almost stopped trading as the account went positive for the first time. It was still relatively early and I almost folded. But - I thought I saw another good opportunity (the stalled top on NFLX) and decided to try for a scalp. When I got stopped, I thought once more. That kept me in the game and I somehow failed to see the true direction of the the stock. Perhaps one of the better entries was on candle 123 (test of the bottom coming back with high volume), but I covered after a failed high and a touch on the lower low. I will have to say it again - it was a tough crowd.

A first on HDB - the sell power behind that stock was almost palpable. I wish I would find those types of moves everyday. And - my first add since I started trading live again showed up on YOKU.

Trade well.

Details:

CMG

HDB

LULU

NFLX

SINA

YOKU

(Split for easier viewing)