End of Day Journal (6-4-2010)

Summary:

A mixed day. For the most part I traded very well, but jumped the gun on some returns to the trend, and some late TNA 'no-clear-signal' trading turned the day negative at -$29.00.

The trailing stop kicked in several times today. I didn't have it set right on the first few, so the profit was some 5 ticks off of what it should have been. It cost me money nearly every time (e.g., the stock was still headed in the expected direction), and I am sure realizing even 50% of the money left on the table would have put me significantly higher for the day. I think for now though, I will keep the settings as is - again, much better this way than to realize the gain/reverse/loss. I realized that 25 ticks is a little generous, so I am moving the first adjustment to 15 profit stop at a 20 tick gain, then move the stop up 5 for every 15 in additional profit. I don't know what I am doing, but I need to go with something that won't have me flinching or cringing.

Maybe I just need to let my momo reading skills mature.

Also, after the review, I have decided to go with a minimum stop of 15 ticks. There were 6 trades that were in the right direction, but got stopped when I moved the stop in tighter. This would have put the w/l trade ratio at 14/20 rather than 10/24. I can't be sure how the trailing stop would of handled the profits, but there was more than enough to grab.

One additional thing to consider: today's break kept me out of the big downward afternoon trend. It was hard to find a place to jump on (granted I did find two that I exited for some reason). Not sure what to make of this, just throwing it out there.

Have a great weekend!

Details:

APC - couldn't of played this better, just wasn't meant to be (-$14.00):

BIDU - I think I was giving the stop some breathing room above the prior high (-$17.00):

CF - trailing stop came into affect here; over 40 more ticks to the high (+$12.00):

CMI - Minimum stop would of stayed in play (-$9.00):

CRM - I just kept calling this one wrong. I am scratching my head over the first entry, what was I seeing? The 12:40 long was on the market uptick, thinking CRM was behind the curve. Consideration of volume on the Q's may have kept me out. The 12:55 short was a chase, coming in on the 0:53 mark; not enough for me to be making that decision (-$83.00):

DNDN - short on the market. Reversed and got stopped. A better play would have been the exit, then post buy limit on the underside of the doji. So easy to say in hindsight, at the risk of losing out on the move completely. Minimum stop would have stayed in for the delayed rebound (-$9.00):

DRQ - the trailing stop cost me some 80 ticks at best. Minimum stop would have kept me in the game - but this was a discretionary 'I have misgivings' exit... (+$8.00):

ETN: the first short was on the same bar as CRM. Looking back now, I think I noticed the down trend, and anticipated the return. The second time was a better choice coming on the indecision (just prior to the next candle), but still stopped.  I could of kept holding this one without a problem stop wise, but I don't have a very good track record.  Better to take the profits and look for another chance to enter. Minimum 15 tick stop would have benefited the second short (+$23.00):

FDX - looks like another attempt at an 8:40 short. Should of kept watching all of these (-$11.00). 15 tick minimum stop good here.:

PNC: a 15 tick minimum stop would have been good for some 60 ticks at the 9:45 low (-$7.00):

PXD - minimum stop here would have yielded nearly 90 ticks at the 11:55 low. Bad thing is, this was a discretionary exit. I had misgivings after I entered for some reason (-$3.00):

SRS - new highs, and thought it might want to finish strong (-$12.00):

TNA... pffft. One of those rare days... I actually came out positive on it... go figure...

First short hit the 15 tick min. Second hit a 13 tick stop (no basis, just brought it down for some reason). Exited on the next short on a discretionary, and went back in after confirmation. Went long on the next candle, and the trailing stop kicked in.

The 12:00 long was on the candle change, coming off some indecision in the market. The next long exited on the trailing stop x2.  The short on the 12:15 exited on the trailing, and I re-entered as it re-traced and stalled. This one got stopped on a generous stop. All the others just didn't work, and in retrospect, should not have been traded. The only potential signal was a short on the 12:40 (+$83.00):

VECO (-$5.00):

VMW - exited on the trailing, potentially some 40 ticks on the 11:55 low (+$15.00):

Morning perspective

Delaying the morning trading with a follow up from yesterday.

I thought about the day a lot last night, and I realized a few things.

I was trading paper money yesterday. Despite being paper money, the positive direction and retrace for the stop had a real impact on my trading. And this even when I was preparing myself for it to happen.

I am not sure that preparing myself for the stop was a good thing to do. I just sat and watched it happen.

Also - I think it is clear that the frustration was not about the money. It was more about being right, substantially right, and letting that 'rightness' turn into a wrong. Looking back over the last couple of weeks, I think this is a common theme - and a source of the most frustration.

The way I see it, there are only a couple of options:

1. Call the situation out of my control and accept this as part of the market randomness.
2. Not let it happen.

I have tried the first option and it doesn't seem to be working that well.

I think an attempt at the second option is in order: take the profits, at the risk of missing out on a big move. 

The problem is, missing out on a big move could have negative impacts as well. I have no way of knowing this yet, but there is no question concerning the impact of the retraces.

So, a little modification to the trading plan: I think a retrace on anything less than 25 ticks is psychologically manageable for me personally. I am going to modify the ATM strategy to bump the stop up to 15 ticks above break even at the 25 tick profit mark. Then bump it up another 15 for every 25 ticks unrealized.

Another thing - yesterday I had several stops beyond my comfort zone, the price moved faster than I could move the stop. To avoid this I am going to move the stop loss down to 15 ticks default. I would rather err on the conservative side.

Trade well!

End of Day Journal (6-3-2010)

Summary:

A positive day. And a very well traded morning.

Re. the consecutive day tally: Implementing the plan is not quite as simple as I thought. Each day I do the best that I can, but the fact of the matter is, things do not go perfectly - e.g., today I had two stops that got out of hand because I did not have time to change them, before they moved beyond the stop. And after going thru all the trades, I recognize that by the end of day I was not in the emotional place that I was this morning. I think I need to address the emotional problem, I don't think the plan is enough,  but I am not sure how - feel free to offer a suggestion if you have one. This is probably the most important part of the entire excercise.

Part of this trading business is about discovering my weaknesses - and remarkably, this happened today - while paper trading. The weakness was an emotional trip - without real money on the line. It was more about being right and then being wrong, not about how much I lost.

If you go down thru the trades, I think you will notice a distinct turning point in trading style. The morning I remained focused on the markets with great results. I took a break, and started the afternoon the same way. Then the chop session came along. At one point this afternoon I had 4 shorts on a good market signal. But I ended up getting stopped on three of them after seeing 24,  30, 37 and 43 ticks of direction respectively (12:15 on ANR, CMI, WLT, and TNA). Even preparing myself for this - I kept repeating 'Be prepared for these to come all the way back and stop" - it was a blow. I had maybe one good trade after that - and all the trades after that happened to be TNA.

The fact of the matter is, it is hard to see plenty of direction, no clear reverse signal (the 12:25 was a low volume/big reversal - bizzarro world - move), and get stopped.

Anyhoo -  today was paper trading on 100 share lots, watched for market sync, than a stock to match for the entry. Tried to let things run as much as I could, with mixed success. +$49.80 EOD, with a max of +$261.10 (@11:14), a minimum of -$38.35 (@8:28), and the account sitting at +$192 just prior to the 12:15 debacle. I was +$168 after the 12:25 stops (which is still a pretty good number for the day, but mentally I was not able to acknowledge it). Ignore the trade number. For some reason NT did partial fills on the order of 1, 2, and 3, share size orders. Go figure:

Details:

ANR - trying not to be frustrated on this one. Good market signals and in on 4 positions (all short). 25 ticks at best and then stopped. I wouldn't have entered on the green candle and even volume. Market retraced on even less volume. The exit and reverse looked like a great decision. I guess this is the way the ball bounces (+$8.12)

BIDU (-$16.95):

CMI: 30 ticks at best - one of the four positions over the time (-$15.96):

CRM loose on the stops (-$46.94):

DO - who would have thunk it could retrace like that? The long would have been nice - but the exit would of stumped me (+$95.24):

OII was close enough to price point on the strong market. Another opportunity for a reverse, but the low volume 12:25 would of thrown me - like it did on TNA (+$39.13):

POT (+$88.13):

RDC - not a very good read on the initial exit - way off. Tried to go long on the candle change, and tried to find direction after. Controlled trading, which is good, but that exit left a lot to be desired. The doji I was short on (at the candle change) should of turned into a long (-$6.43):

Back and forth market, and SNDK was holding a doji on the market red. Could I of called the long? maybe if I would of noted the change in volume (-$9.91):

TNA.... TNA, TNA, TNA. Why do I bother with this beast? My Achilles heel.

Worth spending more time on this one.

Awesome perfect first short. What prompted the exit and reverse? Looking at the 1 minute, it was the drop and then the reverse back to the prior close. The next exit was a discretionary as it came all the freakin' way back - after being up 60 ticks.

How to call/play these? I want to let it run. I don't want to be distracted with the minutia (intra-5 minute candle). Maybe moving the stop up to prior hi/low respectively? That is pretty much where I exited. Tough, tough call.

Same thing happened on the 10:55.

The 11:20 was right at the end of the candle and a good call. The 11:30 short was on TNA's green, but good market support. It finally gave in, only to stop on the next candle.

I went long one the 11:50 doji. Why? See the gap open? Just after the candle change. The stop was a downright beast. This entry went against everything else that I did right today.

Short at the end of the candle - trying to find the flow. Was this going to be the big finish for the day? Good stop and worth the chance.

Now - with my head back on, I shorted after the doji, only a little late for the price point. This was the retrace and stopped.

I tried to back on the wagon at the 12:35 with another terrible stop. A matter of timely movement, and it didn't happen very timely.

Short on the 12:55 change, with initial market. TNA decided to go up, while the market was red so I shorted again.

Then I went long on the final candle after the prior short was stopped. Good entry and tripled up. And got stopped.

The decisions on the last two bars were made with what I thought were market support - and I was watching the VXX. Everything looked good. But I had poor stops, and things were just too choppy. No doubt about it, I was edge. Looking back now, I was not in a good place emotionally after all the retraces. This should have sent a flag. Part of becoming a good trader has to be knowing my weaknesses. And my psychological reaction to those violent retraces is one of them. After 4 good entries for the prior part of the day, I fell apart (-$64.38):

WLT: The first long is not a double up, it was a slow fill. I should of tried for a better price point on the second attempt. The 12:15 short ended with a reverse with just a little too much on the stop - not enough momo for a launch. But there is no way I would of called an exit on the 12:45 (-$26.42):

Wrong call on the discretionary exit for X, but it was with the market (+$6.17):

A Mid-day Perspective

A great morning of trading. Taking a morning break to give my concentration a break and preparing myself for the afternoon session. Glancing at the charts, it appears the mid-day doldrums never showed up.

Nassin Nicholas Taleb (the author of The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility") shares some interesting insights with respect to knowledge and information. As it turns out, too much information tends to cloud judgment and detract from the decision making process.

Case in point:

"Show two groups of people a blurry image of a fire hydrant, blurry enough for them not to recognize what it is. For one group, increase the resolution slowly, in ten steps. For the second, do it faster, in five steps. Stop at a point where both groups have been presented an identical image and ask each of them to identify what they see. The members of the group that saw fewer intermediate steps are likely to recognize the hydrant much faster. Moral? The more information you give someone, the more hypotheses they will formulate along the way, and the worse off they will be. They see more random noise and mistake it for information." (Emphasis added.)


Basically, the problem is that ideas tend to be sticky - we make up our mind about something and tend to avoid changing our minds.  Those who delay in making the decision (within some guidelines of course) tend to make better decisions. Interestingly enough, after we make a decision, new information only tends to re-enforce our initial decision rather than change our minds.

A good example of this was yesterday's TNA action: I kept reading and judging within the 5 minute candle. It then didn't matter what the candle turned out to be, I saw the rally weakening. And I kept trading it as such.

And this morning on my POT trade:

The mistake happened on the long - exiting at almost the worst possible moment, and prior to the candle finish.  Because of what I thought the candle was saying mid-stream.

Lesson? Try to avoid making a decision on intra-candle play.

I am not sure how all of that works out, but that will be my goal for the afternoon.

Trade well.

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. 

End of Day Journal (6-2-2010)

Summary:

2/2 on the consecutive day tally.

Down for the day - drastically (-$258). Paper traded 100 lot shares. A lot of stocks today, but not many trades:

I think 56 trades (per NT)  is a minimum for me (since starting this style of trading). But I still lost a lot of money (relatively speaking). The shorts far out weigh the the longs, and I am sure this had something to do with my skepticism for the entire afternoon rally. I did not expect the rally at all and jumped on board too quickly - as I thought I saw signs of it failing.

The morning session went pretty well. No huge moves, but came out on the positive side. I was paying more attention to the market then I was individual stocks, looking for the market signals and  trading candidates. It seemed to be working pretty well. I felt that my concentration was up and I was tuned into what was happening.

Things went all awry this afternoon during the rally. I was positive until 11:40. This caught me out on attempted shorts for several stocks, and good ole' TNA several times. I went short 18 times and long 7 times (VXX and an uncooperative RIG) between 11:40 and 12:50; almost 1/2 of the day's trades. Rather than catch the ride up, I fought it all the way to the poor house lol.

A lesson here? Get in the moment. Any thing can happen. Do not anticipate. Patience with the candles.

Details follow. Again, not a lot to look at or learn from (God forbid), but if you have any insights feel free. I think I had 2 early exits, and 2 delayed exits (ignoring a clear reversal signal). Needless to say, my wife is glad that I am paper trading these days.

Quite a run of negative days... but tomorrow - ahh, tomorrow. I am sure everything will come together tomorrow. Trade well!

Details:

Anticipating a return to the trend on AMAG (-$10):

Anticipating the market reverse on APA (-$3.00):

Covered as the candle went green on APC, which ended up being much too early (+$12):

Looked like BP was setting up for a free fall with the volume tapering off on the new high (-$13):

BXP tested the new low, but the market was setting up for the rally (-$16):

CLF decided to follow the market lead (+$9.00):

Anticipated CXO's additional highs. Unfortunately stopped the reverse was a little early. This was a different read, but very nice lazy corrections (+$47.00):

Short on DRQ on the 12:00 market doji, I felt the reverse coming. Wrong. (-$12.00):

Trying to play the candle change, then I got a short coming off of the doji. Wasn't sure what to make of the green increasing volume and all of the long wicks, so I bailed. The 8:55 doji was a great setup. Expecting the market to reverse and FTI looked like a great candidate in the afternoon. I doubled up - and I was negative when I did... go figure (-$16.00):

GG triggered the TDA alert and I came in with a late short (-$10.00):

HAL: Anticipated a short opportunity on the candle change and got stopped for it. In the afternoon looking for the market to turn around and shorted (+$8.00):

Looks like JOYG was one candle behind the rally - would have been good to see that rather than the short opportunity I thought I saw. $0.05 slip on the stop (-$20.00):

Expecting the market to freefall and OEH to go along for the ride (-$7.00):

Early exit on OII with the strong green on volume (+$26.00):

I thought I was golden coming off the doji and hitting the new low for PVH. Looks like it was lagging the market at the time, while I thought it was returning to trend. THis would have been a good stock to latch onto (-$8.00):

PXD looked like a candidate for the reverse on the rally that I kept expecting (-$10.00):

I just wasn't able to read RIG. The first short looked good and in line with the markets.  The second short looked good as well, again with market support. It worked for a bit and I let it go to the stop. Breaking the entry candle high should have been a sign? That and maybe the market's subsequent indecision. 8:45 marked the first try at a long coming off the doji. I am not exactly sure why the exit, but it ended up being a good thing.

The 9:15 short came in mid candle and after a market doji. This didn't work out so well either and I think I exited as the volume broke above the prior bar.

Long on the candle change (I think this was the only time I tried to follow the market lead during the rally), and it got stopped with on a $0.05 tick stop. I went in again as the candle went green and the market was going bonkers, then doubled up some 20 seconds later as it dropped and the market was still going crazy. Stopped out (-$35.00):

Some controlled, market led trading on TNA this morning, but plenty of stops. I was 2/4 and slightly negative. Then I anticipated a reverse on the rally and it never materialized. The 12:20 short was the only candle change entry, all the others were based on red or market activity: the 11:50 came on some market indecision, the 11:55 on the seeming stall after the candle change (0:32 mark), the 12:00 on the retrace and red, so on, and so on. Only two profitable trades on the afternoon.

I was fighting the trend, I didn't believe what I was seeing. Lesson? Fozz pointed out that the lows never broke the prior low - strong indication of an uptrend. Something to keep in mind. Also, looking at the chart now, I see only two potential real time entry signals: the 12:00 doji and the 1:20 red. Both of those may have been stopped, but there was some room for profit on the 12:20. I think it is probably a good idea to wait for the candle to form for the signal. Sure I will miss some early potential profits, but I think the odds are better (-$105.00):

UAUA: Short - an exit on the entry signal would have met with some profit. As it was I let it run to the stop and then went long. Scott mentions buying new highs/lows several times, but the strategy requires more discretion than I have: mine ending up getting stopped an awful lot. I can't see any difference between the 7:55 test of the high and the 8:30 test of the high, but the 8:30 failed. (-$18.00):

Another new high with a reverse on UPL. It might be better to play these new highs on the dip/return to trend (-$19.00):

VMW (-$14.00):

Expecting the reverse on the market rally and long on VXX. Then short (-$13.00):

Where oh where was the reverse on the rally? Definitely not to be found on WLT. I placed this short on a limit order - along with about 4 others - to get the price point, and I missed moving the stop after the order filled. By the time I realized the order was filled I was way out of bounds (-$31.00):

End of Day Journal (6-1-2010)

Summary:

I managed to stick to the rules today - well, kind of. I am not sure how well my exits measured up to the plan, but I did the best I could. Positive at +$15, paper trading on 100 share lots.

I was exhausted today, seems the 3-day weekend wore me out. I was not into trading this morning and took quite a bit of time off.

I had a couple of great entries, and a multitude dumb entries. I would get analytical here, but I will save it for the TNA chart. Fact is I was tired this morning and should not have been trading.

Details:

Rather than look at all of today's trades, I selected a few - the best and the worst. I caught some good action on OII and WLT:

I can live with these kinds of trades.

But then I get back into TNA:

I would attribute a lot of this to being tired today, but the fact of the matter is, I do this kind of thing a lot.

Scott traded TNA today as well and he did very well at it.

What am I thinking?

Let's take a look:

For the sake of evaluation I thought I would try and keep track of the correct/incorrect reads: correct meaning that the direction expected lasted at least one candle. Then compare where I differed from Scott.

The first trade came on the candle change. I went long, expecting a return to the upswing. It looked to me that the market was showing some signs of heading back up: the Q's were showing some indecision and SPY was actually green. I was prepared to lose 18 ticks on the trial, and I did (0/1 correct reads)

Same thing on the next candle, but not timed on the candle change. 6 ticks on that one - which was acceptable (0/2 correct reads).

8:15 saw me trying again (on the change) but when it didn't work to the tune of 9 ticks (0/3 correct reads), I went short (1/4 correct reads). Doubled up on the 8:20 (1/5 correct reads). And then paid for it with the discretionary on the 8:25, which turned into a long (1/6 correct reads). And I got stopped.

Ended up long on the 8:30 (2/7 correct reads) with a discretionary for a small gain.

Long on the 9:00 candle change (3/7 correct reads)  with a discretionary and a short as it retraced and the market went red (3/8 correct reads). This got stopped and I reversed (4/9 correct reads) with another early discretionary.

I went short on the 9:25 candle with the market showing indecision (4/10 correct reads) and got stopped.

Short on the 9:40 with a stop (5/11 correct reads).

Short on the 10:20 (6/12 correct reads) thinking that  all the green was too much of a good thing. Stopped.

Long on the 11:45 because of the alternating green/red everywhere (6/13 correct reads).

Short on the top of the 11:55 (7/14 correct reads). Which ended with a discretionary and a reverse which got stopped (7/15 correct reads).

So I was right about 47% of the time. Without commissions, the largest loss was at $18 and the largest win at $49. Total profit was negative at  -$17.

Scott traded TNA today as well. Assuming he posted all of his TNA activity, he had 4 entries, and was right 100% of the time.

2 of my entries corresponded with his, the 8:25 long and the 11:55 short. I made money on the 11:55 but left a lot on the table. I didn't make money on the 8:25, but caught some of the move on the 8:30. It looks like he must have entered after I did on the 8:25: I got stopped on the wick, and it appears that he covered and went long after the wick. (Perhaps the 'failed' down trend and retrace, along with the market turning green was his prompt?)

What can I glean from this?

Looking at some of my correct entries, I would of encompassed 4 of my entries by letting my correct entries run, bringing the number of entries down to 11.

I tried to time reversals on the candle changes 4 times without success. Looking at TNA's chart, this only occurred once today on the 7:00 to 7:05 change. These types of reversals may require stronger candles. Adopting a stronger candle criteria would have brought the number of entries down to 7.

This leaves entries that were stopped and in the right direction, entries on other signals and stopped, and correct non-stopped entries. I had 1 of the first and 2 of the last, leaving me with 4 entries on other signals and stopped: 8:15 (long), 8:55 (long) (twice), 9:45, and the 11:45. The 11:45 is the only rather stupid one (alternating green/red), all the others are indecision based.

Assuming TNA is representative of a lot of my entries, adopting these guidelines may improve entry numbers tomorrow: discretionary exit only when it appears the stock is turning around (exhaustion volume, change in volume, candle play), don't expect reversals on the candle change unless there is strong candle action, and no stupid entires - or more specifically, entries without price action signals.