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