End of Day Journal (10-14-2010)

Summary:

Paper traded 200 shares lots today:

I traded very well today. I felt tuned into what was happening.

As I mentioned in today's earlier post, I focused on two objectives this morning: Sell when a stock runs out of buyers, and buy when a stock runs out of sellers.

Not entirely sure what to make of all this.

But some interesting and new things happened today.

For one, I was aware of some reason to add onto positions, I added because it looked to me that my initial assessment was correct and there was more on the way... Does that make any sense? FSLR worked out, GRMN didn't. Every time I have added in the past it hs felt like a shot in the dark.

Second, I reached a point where I knew it wasn't good to be trading. This started happening on the FSLR position after it reached the +$0.50 profit mark. I started asking myself whether or not I should get out rather than if the stock was running out of buyers. I noticed that my attention was shifting from the stock to my PnL and how it would make me feel to cash in, or what I would feel like to have it come back and stop. There was a distinct difference in my thought patterns and I was aware of the difference. I had to work to re-focus. The trade came back, but it didn't look like the buyers were done... based on the price action in FSLR and what was happening with the Q's (they were dropping nicely)... or something like that. By the time it got to the +$1.00 I had managed to re-gain some focus and objectivity. When +$1.50 came along I was back to being a mess and knew that objectivity was a lost cause. Before I exited the trade, I knew that I had to take a break after I closed this position in order to re-focus.

I am not sure how long it would of taken until I felt comfortable and objective again, but I decided to stop on a good note and think about it the rest of the day. Stopping today was about me and how I changed rather than the PnL. Usually I keep trading because I don't know what else to do. My perseverance is about 'shut up, stop thinking, and trade - things will work out'.

Third, I felt a distinct shift in buyers and sellers today. This happened on the GRMN position. I was long, and added; I had the impression that buyers were waiting on the sidelines. In fact, I still believe it - go figure. It was like the 11:30 mark was a tipping point - people were watching and waiting to snatch the stock up. I think that if I would of put in an order at the right time the ball would of started rolling and it would of shot up. But the moment came and went and the tide shifted to the sellers. I am not explaining this very well. I am trying to say that it felt like a deciding point - things could of gone either way and the momo shifted. The moment was less about the pattern and what was supposed to happen and more about what was happening... and I felt a shift - and exited before my stop. This was after the FSLR trade and my decision to take a break, so I didn't even consider a reverse.

Pfft. How abstract and bizarre is this stuff??

This feels important, but it might be a fluke or today's market conditions; this might be another groundbreaking 'real-deal' milestone only to come back to another fizzle. Meh. But.. the experience is something new and different. And it is something to objectively strive for; I know what I should be feeling/thinking while trading now.

It is crazy - this was not a new idea or something unfamiliar - or complicated. But as mentioned on the earlier post, I have been working so hard on the charts and everything else that I completely forgot what all the metrics are supposed to represent in the first place. The 'other side of the trade' question has been nagging me - and I just found it confusing: whose side should I be on? Should I expect patterns to fail or hold? Am I trying to do what everyone is supposed to be doing or the opposite?  Asking the buyers/sellers question was objective and incredibly simplifying. And, perhaps more importantly, I could tell when my focus was directed towards something else.

Well. I think I beat that to death. I am going to spend the rest of the day catching up on some neglected items (namely my dissertation). Let's see what happens tomorrow.

Trade well.

Details:

FSLR

GRMN

JOE

End of Day Journal (10-7-2010)

Summary:

After being on top of some big moves yesterday, I decided to do an experiment today. Entry rules were the same, but I was only going to exit if there was a big in direction move on high volume (exhaustion). Followed thru on the experiment on every position except the short on EQIX. I think I saw the 15 minute doji and my usual response kicked in before I could think about it.

I know this probably sounds crazy, but I wanted to know what it feels like to actually ride a move over several points. For one, being in position on a stock and waiting for nothing but the exhaustion move or stop put me on a different level emotionally and focus wise. I think this is going to help get me out of the fear based 'I better lock in these profits' feelings that usually accompany my exits and bring me to a place of objectivity.

The day's summary provides some interesting stats:

 
Per NT's breakdown I traded 42 times today. Actual trades number of positions held (open to close) was 23. My winning percent was at 17% but I grossed $1134 profit and ended up being negative only $280.

I only made money on two positions, ADBE and EQIX. I shouldn't of closed EQUIX, but it was a reflex reaction to the 15 minute doji. I knew before it dropped that it was the wrong thing to do. The profit on EQIX was only $0.30, which didn't count with the kind of numbers showing up. I added to the ADBE position 3 times (800 shares).

Amazing what one good move will do.

Perhaps the most interesting thing about today was that my trading became about trying to determine the stock's general trend when I opened the position. The assumption was that the stock would trend until fear/greed set in and I would get out. As it turns out, this did not happen once today. Or maybe I should say that I was not able to notice this happening once day.

But there was still plenty of money to be made. I sat thru several >$1 waves on VMW and CRM. Yesterday I traded with expectations and I got out early. Today I traded with no expectations and was stopped out most of the time.

A few of my entries were lacking, which is a little surprising to me because I had far fewer than I normally do, and I thought that I had been doing very well with them. Some were the result of ignoring the current market environment (all of AEM (3 entries), afternoon shorts on  CTXS and EQIX) and one was logistical (forgot the limit order on CRM). That makes 6 bad entries out of the 23; or about 26%. Not sure how I let this happen.

The plan is to try this a few more days. Again, part of me wants to become familiar with what it feels like to hold onto a big move. I want to become more familiar with what it feels like to have a position at the end of a big move and be able to gain some sense of how to differentiate between interim profit taking and the end of momo. I want to be rid of the nervousness that comes with holding a position and trying to lock in profit. I want to do more watching and soaking in. I also like the fact that I traded much less today because I held positions longer.

I am not sure if this will help my overall trading or not, but it feels like the right thing to do. Time and time again EOD review has shown the value in catching at least one of the big moves of the day. I don't know what this should feel like.

Trade well.

Details:

ADBE

Shorted this on the first entry and got stopped out when it flashed. It stopped trading for awhile and when it started again, I thought the long was a given.

AEM

Short on the new low, stopped and reversed; stopped again. Went short as it broke thru new lows on the next candle. Each stop was wider than the last.

CREE

I thought about entering again on the blue arrow, but then just decided to mark it. By then I should of been looking to enter the up trend. I saw the ascending after the stop. Q's and TNA had the same setup over that time as well.

CRM

The second entry was a mistake. I saw a potential short on the 2:00 but was late. I put a limit sell on where I would be comfortable with the stop and forgot about it.

CTXS

I entered on what I assumed was going to be a lower high.

DECK

Long on the candle change, stopped, short, stopped. Tried the short a few more times but the market had different ideas.

DVA

EQIX

I reversed on the 15, but knew right after i placed the trade that it was the wrong thing to based on the 5 (lower lows/highs). Then it started dropping. I tried to short later, but again , this was against the general market sentiment.

FFIV

This seems to happen a lot, breakouts failing on the first try.

ISLN

Marked the trade, but didn't enter. Flat as it gets.

PBR

VMW

This is a definite study. I was late on the short and the stop was wide. It dropped a good point and came all the way back for the stop. I re-entered because it looked like the thing to do.

WLT

End of Day Journal (9-27-10)

Summary:

Paper traded 200 shares today:

Tight stops... that is what I like to see. This kept me in the positive even though I ran a 36% profitable trades today. Check out the RIG chart for an example of what happens with tight stops, no momo, and a persistent trader.

Largest stops:

Looks like I had 2 stops at $0.25/share; one on BIDU and one on HSP.

Largest gains:

$0.83/share on EDU.

Today was marked by some logistical problems this morning. Over the weekend I un-installed NT and re-installed, setting up completely new everything (database, workspace, templates, etc.). I have been having the occasional snafu (well more than the occasional) and I thought this might help. I didn't have hotkeys setup and it took me awhile to remember how to do it. Anyhoo, I missed several entries.

Another thing that I decided to do today was to limit the entries to 'large movement' stocks. I set up horizontal grid lines on the $1.00 mark which offers a very quick visual on how much a stock has recently moved: the more grid lines, the more movement. This had me being much more selective with my entries. If the chart only had one grid line I usually passed (I missed a few). Check out ISRG for a chart with a lot of grid lines. I almost feel like I am getting some 'feelings' about stocks - heh. Maybe another way to say that is to say that I am beginning to feel like some trades are more probable than others - I think this is the first time that I have actually been able to trust - or been given the choice to trust - my experience; or better said, 'my gut'. Milestone? I don't know, but it is a new feeling.

It just seems easier to make money on bigger moving stocks. pfft. Go figure.

Trade well. 

Details:

ANSS

This wasn't a mover - noted by the lack of grid lines. For some reason I still traded it:

APOL

This wasn't moving as nicely as ESI - ESI would move and I expected APOL to follow suit, but not much happened:

BID

Out on the even dollar - without the strong move into the even dollar. Not sure how important that is, but I left quite a bit of money on the table today on several stocks using this approach. When it stops right on the even or hesitates, I get a little jumpy. In this case the market seemed to be sputtering as well :

BIDU

What a beast. I was actually debating on entering on the 3:15, but I thought the stop was too far away:

CHKP

Not a very big mover:

DV

EDU

Another even dollar exit. Plenty of room below, but I don't see a clear exit. For that matter, it wouldn't have been bad to hold till EOD:

ESI

First came to my attention on the 11:35 mark. I thought that I had missed it by too much:

GBX

HSP

This was the day's fast mover. I actually timed the 2:25 short just below the top, but the order didn't fill (blame NT's sim engine, it was a market offer). When I canceled and tried again, it was much lower and the stop was triggered. I was using the 'momo' stop of $0.06 - you can see where things didn't quite work as well as intended. Notice the even dollar lines. I had a $58.00 limit on the 2:55 long, but it missed it by $0.04:

ISLN

I sat on the big volume exit - watching it the entire time. I thought about it, I really did:

ISRG

I didn't trade this monster because of the spread, but I thought I would post it to share the grid spacing idea. I have my grids set up in $1 increments. This allows me to get a quick visual on how much the stock has moved recently; more horizontal grid lines == more movement. ISRG has moved a lot recently. This visual kept me out of several setups today: 

ITC

This was another mover, but I didn't like the price action - I can't recall why, just didn't seem right. I caught it on the 11:55. The high got to within $0.05 of the even dollar:

JNPR

This kept coming up on the new High/Low scanner list, I added it sometime around the 12:30 mark, but I didn't draw an arrow for some reason. Pretty. at least until you get to my trade arrows:

LVS

NFLX

No trades. the 12:30 doji on the 15 would of been a sweet move:

PCP

Hugged the bottom for most of lunch... which happened to be around the $129.00 mark:

RIG

Tight stops. No Momo.:

ROVI

SQM

Arrow when I spotted it. No trade:

A morning perspective

This streak of losing days is discouraging. I can't help but try to take a second look at everything I am doing and trying to figure out what is wrong. What has changed since the first part of May and a couple of good weeks?

My perspective. I started out May with zero losses. For the month of June I have wins and losses to match. Can I do this? When I started in May I believed that I could. Now here in June I find myself wondering.

It is what it is. I put this out there in order to work thru it. This is the real deal and since I intend on being a successful trader, this is a step on the path to successful trading.

I have been reading The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility". The book is written by a trader and has some interesting trading concepts/applications - I think he could of pulled some material right off of Scott's blog (though after about half way thru, I am starting to find it somewhat repetitive and egotistical, which Scott's blog is not; well, not egotistical, Scott never strays from what he thinks is key). Here is one quote re. coping with losses (and perhaps contributing to my change in perspective):

"The hippocampus is the structure where memory is supposedly controlled. It is the most plastic part of the brain; it is also the part that is assumed to absorb all the damage from repeated insults like the chronic stress we experience from small doses of negative feelings - as opposed to the invigorating "good stress" of the tiger popping up occasionally in your living room. You can rationalize all you want; the hippocampus takes the insult of chronic stress seriously, incurring irreversible atrophy. Contrary to popular belief, these small seemingly harmless stressors do not strengthen you; they can amputate part of your self." (Emphasis added.)

Anyone else hear FNG in this? The book is full of Scott's blog (planning on sharing more as I continue to read, but hoping to read about some application before I do).

What does this mean for me? I think this mental atrophy manifests itself as doubt in my trading abilities, primarily resulting in a lack of concentration.

To help overcome this, and as  reminder about what I am trying to do everyday, I went back and looked up Scott's momo analysis definition:


"Momentum analysis is essential in determining what side of the trade is the winning side and to get onto it. As my postings this year demonstrate, it is safer to be nimble and quick to change direction when the trade dynamics have changed. Big losses do not occur when a trader is not married to an idea of where a stock is headed.
I firmly believe that momentum is easy to spot long or short once you now what to look for:
1. A rise or drop in volume after a trend.
2. Longer or shorter candles
3. Markets and stocks moving in sync with each other.
4. Price acceleration/deceleration

Pare your indicators down to these few and immerse yourself in the flow. Getting into the flow and rhythm of the markets allows you to stretch out those daily price movements, maximizing your return." (Emphasis added, for my personal benefit.)

Simple and today's goals.

Trade well. 

Change of heart

No trades today, just a lot of reading and thinking - oh yeah, and dreaming. Research for my dissertation didn't happen, and I had some bookwork to catch up with, but I got a little carried away with FNG. Some of this may not sound that well thought out, but I think it is important to catch the moment. Success, failure, or something unforeseen may change the environment next week.

I am pretty enthusiastic about my change in approach. But I admit - and my wife can readily attest, that I have been here before. Another flash in the pan? It seems different this time. These ideas have been tugging at me  over the course of the last 3 to 4 weeks, worked out practically and logistically this last week, and patted on the back today (via reading thru Scott's blog entries at FNG - here is my hands down favorite).

What's changed?

With the change in approach, I went thru some of my 'basis' posts to keep things in line with what is going on. I changed the entry/exit posts, but realized that I didn't have to change the content of the philosophy post at all, that is pretty much the same.

Interestingly enough, I mention in my philosophy that I think the market is impossible to predict, but then I proceeded to try and predict over the course of the last three months. I didn't think I was, but I was. Analysis wise, I thought I was all into probability, but I wasn't into probability at all, I was into making the market behave as I expected. I think I finally touched on it as I formalized my sell strategy. In retrospect, perhaps the biggest clue should have been the feeling of desperate hope that would accompany every decision to enter the market. Buy and pucker. Watch it go up, watch it go down, white knuckling the entire gut wrenching ride. That is no way to trade - or live for that matter.

The approach now feels more like I am relaxing on the sidelines, tuned into and trying to be very much aware of what is happening, and then when things look ripe, stepping in. If I happen to be wrong, then I quickly step out. If I am right, I hang on for the ride.

I can imagine a first reaction to this as - how is this different from predicting? Aren't you still trying to say what is going to happen? No. Rather I am 'listening' to the market, and letting the candles tell me what is happening. Candlestick patterns? Not really. Technical analysis? Not really - at least not in the traditional sense. It is more just going with the flow - the direction of least resistance as Livingston would put it.

This is a far cry from my previous approach - sticking with the strategy because it was tested and all the signs were in place, probability was on my side, and not hanging on for a little longer was the problem. I hated that even while I was in the middle of it. Without realizing, I was trying to bend the market to my will. Silly me.

Every trader is familiar with sharp, unexpected market moves. And when it moves, it can really move. Waiting to enter the market until this happens is what I am talking about. Try setting up a new high/low screener, and watch what happens to QQQQ as the screener lights up. Click on one of the new highs/lows and watch what it does. It is almost like magic. And incredibly freeing.

It is more like playing off the fear and greed of everyone else. Another Livingston staple. (but Livermore died broke - didn't he...)

It almost sounds like I have this figured out, which I assure everyone I don't. I have only caught a few real trades, have entered when I shouldn't have, and gotten out earlier than I should have. But in some sense, none of these decisions were wrong - I was 'listening', and I did exactly what I thought the market was telling me to do. I was mistaken, but I was still trying to heed the market, that is, to be in tune with it rather than trying to shove it around. It feels natural.

Well - I did do some wrong things - I had some logistic issues, I was not disciplined in thinking about and setting stop losses prior to entering, and entering markets without enough volatility (spread wise). And I accidentally clicked on the Bid when I was trying to buy twice (give me a break - they both begin with 'B'... thankfully I was paper trading.)

It will be interesting to see what happens (I say that a lot on this blog). A string of successes may ratchet up my greed - or a string of losses may ratchet up my fear. I don't know. Today I feel free to listen - and to be wrong - AND to be right.

So for the next few weeks, since the account value is now well below day trading minimums, I will trade for real when I can (and only when I get that tuned in feeling), and paper trades between real trades. I am tempted to stick more money in the account to bring it back above minimums, but at this point feel it is probably wiser not to.