Took a Giant Hit

I have to get this off my chest because I know this will linger in the back of my mind until I do. I took a huge hit on Thursday. I lost 5 times my average loss. First two trades I got caught on the wrong side of the order flow big time and then the third time I got caught just as the market started to decline at the end of the day. The third one was revenge trading for sure. I wasn't paying attention to anything and saw a stock running and I wanted to jump on. I did, and lost big.

 

I think I needed this though because I've been pretty careless with my trading. But now I have this huge hit which is probably officially my worst loss I'm starting to feel a little more cautious with my selection. I need to wait before diving in right away when I see a possibility instead of seeing the probability. Just be aware of my surroundings (market conditions) before getting in.

 

Also, I need to know when to fold' em. For example, Thursday morning when I sat down I looked around, checked the conditions and even told myself, I probably shouldn't trade today and actually had a...I don't know if you'd call it intuition or instinct or what but I got a flash in my head saying go short and it quickly disappeared and I ignored it. Missing out on a huge decline that day. So, I really need to start trusting myself, pay attention to what I'm telling myself and follow it.

 

Man, this is so much easier said than done. It's like you need a thousand different scenarios running in the back of your head and pick the right scenario when you see certain conditions. Also, I need to realize I'm still going through the learning process. I can't expect to be pro after 6 months of hard trading, learning, and research. I just hope I have enough cash to get me through this phase.

 

Anyway, I feel better now. :)

JRJC Caught Off Guard

Got caught with my pants down on this one. Right after I got in the entire market was selling off because of the Assassination yesterday I'm assuming. Anyway, it fell so hard and fast I didn't have time to put in my stop after I got in and sold out at market level for 24.83 Entry was at 24.50

 

CTDC Trade

I saw CTDC at the open and it didn't look too hot. What I overlooked was that it was way above R2 at the open. Which should of told me, Hey, this is gonna break out. Well, I didn't get in until I kept hearing my audio alert going off like crazy and it was CTDC that kept going off. So I finally got in which I wasn't planning too. I was actually playing some madden and I was watching CTDC out of the corner of my eye and got in at 8.69 and got out at 9.

 

I got out at 9 because I thought the round number might be some kind of barrier which it was at first but the buyers stepped right up and ate up all the shares and it blew by. There was no reason to sell and what I based my sell on was stupid. It had great momentum, the EMA's were increasing and volume was great.

 

SOLF Two Trades

Made 2 trades this morning in SOLF. I got in at 39.93 after I put in a limit order for 37. Which was good, lower the better as I knew this thing was going to move more. It had a nice rally with huge volume and this pullback was expected. I wanted to get in low because the selling volume was very very weak compared to how much buying volume was going on. Well, what happened was I had an order to sell all ready and I decided to cancel and I hit send order. Zecco has recently changed their layout and I don't know if they changed their send order and cancel order buttons or not but I could of sworn they were in reverse order. Anyway I sold at 36.35 on accident.

 

 

 

 

Once I realized I was out of SOLF when I thought I was in, I put in another order to get back in on SOLF. I got back in at 37 and sold out at 37.30 not quite as much as I was looking to get back but I rode a small move that I was expecting and got out 37.30 making half my loss back.

 

QID- Went Short Again

Still sick, and still going short. I didn't trade yesterday because I felt I just needed to break away from the pattern of me making a trade everyday which I think might be making me a little gamblistic, if that's even a word. If you don't know what my new made up word means, means I might be getting in a gamblers mind set. So I had to stop for a day, take a breather, and realize what the hell I'm doing. I focus way more on the possibility of something happen and not enough on whether the probability is even likely. Also, I'm going to focus more on perfecting my decision making process instead of trying to perfect my outcome.

 

I went short this morning. Main indications that gave it off were, before we opened the Q's were already up in R2 land. The Q's will get there but rarely and even more rarer that they get there pre market and continue to rally. So I went short when I saw that. TRIN was in an up trend and VIX was declining which told me that support/resistance would of held up more. I should of bailed once QID touched that support level but I didn't and held out for a decline before I bailed completely. I'll try not to make that mistake twice.

 

What else, well, I got in at 39.31 about 5 cents higher than when I saw it but logging in to my broker, filling out the order form, haha you know, excuses, excuses. My stop was at 39 even and my exit target was 40.00 which I thought was do-able maybe even more so if the VIX was running wild. For the first time in a trade I asked myself if I was wrong about the trade. This was after I saw it peak and then decline a little, looked a few indicators and said, probably, and sold out at 39.39 nothing exciting but better than taking a loss. Seems like I've been making one step forward, two steps back.

 

Went Short While Sick :(

I felt myself getting sick about 4 days ago. The day after I felt ok and thought I might of been a false alarm but it came back it hit me hard yesterday and then harder today. I guess it's some kind of head cold that's been going around here in Southern Cali. It's all of the place..

 

I woke up about 30 minutes after the opening bell which I've never done. I'm usually up around 6:15 or so ready to watch the flood gates open. When I wake up late I'm usually pissed but this time I didn't care, I was sick and probably shouldn't of traded anyway. I came over to my PC just to see what the market was doing and I noticed QT lost Internet connection and wasn't recording any of the data for this morning. So that kind of bummed me out but not enough for me to get pissed. I shut it down and restarted and then starting getting data. Watched it for about 20 minutes or so and saw QID running up during that time. All my other data was pointing to go short, so I went short. I got in on QID at 40.76 (green arrow).

 

One thing I didn't realize though was that when I fired up my position size calculator, I set my risk to 1% instead of 0.5% so I put on a bigger trade than normal. Didn't realize that until I started seeing QID fall right after I got in and saw how much I was losing and wondered why it was so much haha. Anyway, once it flattened slightly right above my stop. I set my audio alerts to let me know if it was close to my exit point or if I got stopped out. Did that, and went to bed and flipped to CNBC to watch the ticker every 15 minutes or so to see how the Q's were doing. Oh yeah, stop was at 40.30 and then moved it up to 40.80 when I sold my first lot.

 

Finally came back to my PC to see what QID was doing and it was making higher lows. I was stoked and that when I sat down because QID was taking off like a rocket and I had to be their to bail on my first lot of shares. Sold my first lot at 41.45 which is 10 cents lower than my target but since it was around resistance I got a little worried and lock in some profits early. It did hit my target and then some, saw it ride back down, bouncing around and all of the sudden, it stopped. The price just froze for about 2 seconds and I was like, "Shit, here we go, were gonna decline" So I sold the rest of my shares and went back to bed. Came back right now and see that QID went on a nice down trend since then.

 

The feeling that I felt the most throughout all of these was that I really didn't care what happened. It's like I put on my objective glasses when I don't care and I almost got caught going long but thought, "no, I missed it, do something else" Went short and thought I blew it because it declined right away but I didn't get stopped out and just reinforced myself, "either get stopped out, or hit 2%" and walked away.

 

Some Observations

Watched the VIX index go into a steady downtrend while the Q's were also working its way into a downtrend. At about 6:50am PST I went short because I saw the markets breaking down and getting weak. What I did was I went long DXD which I believe is a Dow short fund. Such a stupid idea. Why would I short the Dow when I'm watching the Q's? lol, so I bailed out of that one for a tiny loss after I realized what the hell I did. I had the right idea to short the market I just chose the wrong vehicle to take me there.

 

I've been taking some multi vitamins and some Omega 3 vitamins which I used to take a lot when I was lifting and remembered how great I felt. I stopped for some reasons and started taking them again for the heightened sense of being which I'm hoping will ease the slight fear/anxiety I have sometimes when watching the markets right at the open. I did notice a change already, maybe it's a placebo effect but I do feel better overall. Maybe these helped make my decision to go short? I felt confident, calm, had a healthy dose of fear but not enough to debilitate me, leaned back in my chair for about 5 minutes and said out loud, "I'm going short, it's perfect".

 

I'm still keeping an eye on the correlation between the VIX index and QQQQ to see if there's any significant patterns between the two. Last week I did spot a significant situation between the two that have been yielding my momentum stocks. VIX has to be in a downtrend while the Q's are in a steady up trend. Today we had the VIX in a downtrend in the morning but the Q's were also in a downtrend. So, like I said, I'll need to keep an eye on these and see what happens.

Picked up some new Books

I guess you can say I went on an all day shopping spree and picked up about 8 books between Borders and Barnes on Noble yesterday. I picked up some awesome stuff and can't wait to finish them. This is what I picked out:

 

Trade with Passion and Purpose: Spiritual, Psychological, and Philosophical Keys to Becoming a Top Trader by Mark Whistler (if you liked the books by Mark Douglas but wanted something a little bit deeper, pick this up, it's amazing. I can tell this will be in my top 5 already.)

Pit Bull: Lessons From Wall Streets Champion Day Trader by Martin "Buzzy" Schwartz

Millionaire Traders: How Everyday People Are Beating Wall Street at it's Own Game by Kathy Lien and Boris Schlossberg (It's like Market Wizards but average people)

More Than You Know: Finding Financial Wisdom in Unconventional Places by Michael J. Mauboussin

Inside the Investors Brain: The Power of Mind over Money by Richard Peterson

Techniques of Tape Reading by Vadym Graifer and Christopher Schumacher

The Disciplined Trader: Developing Winning Attitudes by Mark Douglas (I read Trading in the Zone and had to get this also)

Come Into My Trading Room by Dr. Alexander Elder (I'm familiar with his work and thought I'd check out his book)

 

So far I've only read started the top 3 and I probably won't dive into more until I finish these but so far so good. I like what I got.

ONXX- Slow

Had a loser today but it was less than 1R because I was moving my stop up slowly as it was gaining in price. Only down side was that I moved my stop right onto a support level and once I got stopped out finally, it rallied right after lol. I need to keep an eye on that.

 

After I got stopped out I wanted to see if I could spot a pattern between what the market conditions are like and my winners. I found that when the VIX is up I usually have more success and when the VIX is down I have some losses. To me, when the VIX is increasing implies that people are afraid of losing money and when the VIX is up implies that people are afraid of missing out on money. The latter is what I'm looking for which is the driving force of my momentum stocks. So I'll be making it a rule now to only trade when the VIX is up at least 2-3% but ideally around 4-5%. I'll see what kind of performance I yield with that new rule.

 

So back to ONXX I got in at 56.97 with my initial stop at 56.25 Once I got in it started to move and pulled back a little but I felt ok with it and let it ride out. Started moving up again and I had a feeling it might reverse right under that resistance level and it did but I still held on because I felt that the buyers were all over this. Plus it wasn't at my 2% target yet. On a side note, I also noticed that support and resistance are so much more effective when the VIX is down. Anyway, it reversed and I let it go all the back down to my stop and got out at 56.50

 

Mission Statement

I've written up a business/trading plan for my "how" of what I'm doing but I'm currently reading a book called "Trade with Passion and Purpose: Spiritual, Psychological and Philosophic keys to becoming a Top Trader" by Mark Whistler, and he mentioned you need to know "why" you're doing this. Why do you trade? So when you go through a series of losses for example, and ask yourself, "what the hell is the point of this? Why do I keep trading?", you can go back to your mission statement and be enlightened as to why you keep on going.

 

This is my Mission Statement/Purpose:

 

My purpose is to be profitable over the course of my trading career. I trade because I love trading with a passion. I am trading so I can financially liberate myself. So I can have the time to develop myself as a person as well as pursue other interests. While giving back and donating to local charities to help younger generation kids who aren't as fortunate as I am to be doing what I love. I am a trader because I love the mental stimulation, self growth, and the personal battle towards success. Anything is possible in the market, and if someone else can succeed, so can I.

Why do I trade? Someone asked me the other day why I wanted to get into trading. I thought it about it and this was my response.

 

Well for the most part, I really really love the challenge. I like knowing that there's only an elite 10% that survive and I know I can get there. I'm driven by passion and the desire to succeed. I've dedicated everything to becoming a consistently profitable trader. Trading is just,...it's the ultimate in personal development and I love being tested and I love beating expectations. I love the process of trading, the ups and downs, constantly striving to better myself each day. I love that and I can't imagine doing anything else..It's just one of these things that clicks with me, this is what I want to do.

Pattern Examples

I probably shouldn't be posting these to the public but since this is a public blog and I use it to post my thoughts and progress and I'll do it anyway.

 

The charts below are examples of what it is I'm looking for. All these charts were from today's action. One thing I noticed which I blogged about earlier is that the wicks are very long on almost all of my losers. For the most part the candles below in my examples from today are tight and concise in a steady trend. Volume and momentum are both increasing. My PRGO trade today had a pretty crazy quick trend which I mistakenly took as a pattern I thought would work out. It had some pretty long wicks. So anyway I wanted to post this so I can come back and get a refresher on what it is I'm looking for.

 

Below is VDSI

 

Below is SCON

 

Below is TIVO

 

Below is INCY

PRGO- Fine Tuning Selection

Had a failed trade this morning but I noticed something about my losers and winners. A lot of my winners have the same characteristics as my losers but the one thing that's different is that my winners don't have very long wicks. The candles are really tight with short to almost no wick. Yet, my losers will have very long wicks and are a little bit more volatile as their increasing on volume and good momentum. So, I'm going to add another rule to my plan and only trade stocks with short wicks while on the rise. We'll see what happens.

 

Got in at 33.26 with my stop around 32.80 Basically died, again, right after I got in and got stopped out at 32.83. It now looks to be heading up now that I'm out. I seem to be good at picking bottoms, haha. I get stopped then it decides to move without me.

 

PSS- Failed Pattern

Saw a pattern on PSS that I've made some decent cash on so I took the opportunity and bought in at 18.79 It was making higher lows and then blew through resistance and shot up which I've seen before waited for it to dip and then got in. It struggled to keep the momentum and died just before it fell hard. My stop was at 18.69 but didn't get filled until 18.66 which caused a 1.3R loss. Which isn't too bad but not ideal. Worst case scenario I can handle about 5 2R losses in a row but ideally I want to see them under 1R.

 

Looks to be rallying now that the Q's are starting to take off as well. There's always tomorrow.

 

KBH- Wrong Exit Plan

I've noticed something very interesting lately about my exit strategy. I haven't been scaling out like I used to and according to my log my performance has take a huge hit because of that. Before, I'd sell half my shares at a 2% gain, break even and let the rest ride. Reason why I stopped because the cost of doing business with Zecco will kill me in the long run. So I stopped that one extra sell so I could pull in a higher R multiple. Not doing that scale out method has cost me a lot in profit not taken. I need to be able to lock in some profit and break even because I don't know of any other way that will work for me. I just need that ability to sell for a gain and then let the rest ride.

 

What I'm going to be doing is use the rest of my free trades at Zecco and then start moving over to MB Trading where I'll be charged 0.5 cents per share. Which something I can work with. Plus it'll be integrated into Quote Tracker which I use and love so that'll be awesome.

 

For my trade in KBH this morning. In hindsight it's a perfect trade. I got in at 21.73 early this morning. I hit my 2% target but didn't take any profit and I let it dwindle down because without scaling out I don't know when to sell so I'm basically deciding to sell on the seat of my pants. I sold at 21.92 which looking back now was a horrible place to sell consider the stock is now around 23.10 which would of been a roughly 12R gain.

 

This same situation has happened in the past. In fact I think it was a few days ago. I sold out early because without being able to scale out I don't know when to sell and I sold early and left a 18R gain on the table. I have to be able to scale out and Zecco won't allow me to on a financial front so I'll be moving to a place where I can employ my strategy at a cost I can afford over the long run, which is MB Trading.

 

SOLF- Can't Control the Cash Flow

Man this was an intense trade. I couldn't help notice the extreme amount of buying, strong momentum and the fact this thing has gone up about 4 or 5 days in a row now. So I got in at 23.08 I could of got a significantly lower price but it was moving so fast I couldn't even calculate my position size so I said screw and and adjusted my risk after. You'll notice I don't even have my black stop loss line on the chart because I didn't have time to put it on haha.

 

I immediately sold half my shares after I saw a 5R gain in the next few seconds. My account drained of all its profits and actually went red for a few seconds and that got me a little worried. I held on and watched it move back up pretty fast and decided to unload my last lot at 23.37

 

I basically got freaked and should of held out and waited as it's now up about another 30 cents or so, but I'm still working on the psychological fact that I could see a huge amount of cash flow in and then flow out. I need to get used to that because it will happen.  But this was a good start for the day.

 

The chart might not look like anything but keep in mind it's in 50 cent intervals and I usually deal with 5-15 cent intervals.

 

TPX- Nothing Exciting

Bought in at 30.39 everything was looking good. It stayed solid while the Q's were falling and once the Q's made a turn around TPX started to stall and do nothing. I look away for a few seconds and look back and see that it's now down to 30 bucks. I'll admit, I was pretty damn scared so I sold half my shares once it got back to ground zero at 30.41

 

For the next hour it did nothing. I contemplated selling the rest of my shares but I last time I did that the stock rallied like crazy. I held my ground, stayed patient and moved my stop to 30.30 from 30.10 Next thing I know out of know where it shoots nicely but not quite to my target of 30.99 so I still held my ground and didn't sell yet. It started declining right after it peaked which told me there was a lot of fear and so I held a couple more ticks and finally sold out at 30.48

 

Not a good trade but not bad either. I was watching CCC at the same exact time I got in on TPX and I actually pulled up CCC before I saw TPX which is the one I should of traded. But hey, what's done is done. I don't second guess myself but I do make observations. We'll see what tomorrow brings.

 

Positive Expectancy

My sincere advice to people who are contemplating trading, or who are even trading at the moment, and who are not familiar with the concept of positive expectancy , is to make it their priority to fully understand its meaning and importance to successfully trading. 

From my experience positive expectancy is an idea that is least understood by the majority of people who are planning to, and who are actually, trading. When I have been invited to present I always ensure that at some point during my presentation that I ask the audience whether they understand the term "positive expectancy"? Rarely would anyone volunteer even a mild grunt of understanding. And yet these audiences are people who have an interest in trading, and yet are not aware of what I believe is trading's "Holy Grail". and that is the pursuit of a trading methodology that produces a positive expectancy.

 

This is taken from a web page that has an article about expectancy, what it is, why you should understand it, and how to apply the concept. I highly, highly recommend everyone read the article and try to integrate it into their log.

 

 

Read Article: http://www.stator-afm.com/positive-expectancy.html

Key Elements to a Successful Trading Model

 

Found another chart. This one is by Van Tharp and I think it sums up what it takes to be successful and to truly view trading as a business.

 

 

Risk of Ruin- Chart

Found this chart earlier. It show's the probability of Risk of Ruin. Which is a concept that every trader should know and follow. It's a fairly straight forward chart, however, you won't know your Risk of Ruin unless you keep a detailed log of all your trading data. Without that, you're blind and keeping a log of your data in itself, is the best book you can read on trading, your own.

 

The left hand side shows the ratio between your average win and your average loss and the top row shows your Win Percentage. Right now I'm about 1.5 and I'm hitting 50%. So my risk of ruin is about 4%. My odds of me blowing out my account by 50% net capital loss is 4%

 

At the moment based on my current data, those are good numbers to have. Plus, the fact I have a positive expectancy should tell me that over the long run I'll be profitable while keeping the odds of a Risk of Ruin to a low odd.

 

A side not: This is based on if you do 100 trades (strong statistical data to represent the long run) and Risk of Ruin is 50%

 

On the Sidelines

I've been sitting out these last few days because I need to let my funds settle so I can start moving some out. I just so happen decided to pick these days off while the market shoots about 500 points. Oh well though. I probably could of made a pretty penny these last couple days but you can't trade everything all the time.

 

Hopefully, I'll be back in business on Monday or Tuesday. Until then, I'm just watching the action.

PRGO, Great Rally

Spent about 45 minutes going over a lot of charts and found PRGO right before I almost called it quits for the day. It's funny how you will succeed right after the point you feel there's no hope.

 

Got in on PRGO immediately when I saw it at 30.59 I liked how it a small breakout being setup just under R2, it had already broken out when I saw it so I missed the initial break but still rode the rest of the momentum to my targets. I unloaded my first lot a little early since I didn't account for slippage when I got in and my targets were off a little.

 

My first 50% lot was sold at 31.10 instead of 31.20 which would of been my 2% target but oh well. After I sold I saw it dip with the Q's which made me think we might be getting weaker. So I sold my second lot at 31.05. It looks to be shooting up a little more now that I'm writing this. Momentum is dying but it's still increasing on decent volume. Whatever happens, happens but I'm stoked about this trade.

 

Momentum Trading Plan

EDIT: I've developed a new trading plan that I've been following since Early January, 2008.

Check it out here: http://tradeswing.blogspot.com/2008/01/trading-plan-residual-morning-momentum.html

 

 

I've been doing a lot of thinking and going over my past winners and comparing them to my recent losers to see if I can spot some differences and then to eliminate those differences.

 

The loser I had today was moving on weak volume. It had momentum but the volume wasn't there to back it up and sustain the move. I'm going to use this post to write out in detail exactly what it is I'm looking for. I'm going to print this out and lay it on my keyboard and every time I come to my PC to trade, I'll see the plan, read it and keep a fresh image of exactly what it is I'm looking for.

 

Selection Criteria for Winning Candidate:

1) Momentum has to be in a steady up trend. Nothing moving straight up and not dead slow either.

2) The 10 EMA (red line) for intra day volume has to be increasing and showing moderate to heavy white volume. Volume will confirm whether the momentum is good or not.

3) Price action of the stock must be in an up trend, confirming the volume backed behind the increase.

4) Ideally, the stock should be going against the overall trend and should be obvious that the stock is taking off whether the market is up or down.

5) The wicks on the candles should be very small and/or almost non existent. Do not trade long wicked candle patterns. Pattern should be tight and concise.

 

Entry:

1) If above criteria has been met then don't hesitate to buy at market value.

 

Exit:

1) Stop will be placed in a spot below entry that's not too far away but not too close so that I'll be stopped out immediately. This will completely discretionary. Risk will always be 0.5% of total equity unless a 2.5% draw down has been reached, at that point risk will be cut to 0.25%

2) When a 2% increase has been reached from the point of entry, stop will be raised to break even. The selling of 50% of shares at this 2% increase will be mandatory.

3) When the 2% mark has been passed and the price action is still increasing, the stop will be trailed continuously until stopped out. Once the stop has been increased, it won't be lowered for anything.

TPX- Horrible Trade

Oh man, where do I begin. Maybe it's from all the turkey I ate or that I missed a day or what, but I screwed up big time. My entry was fine I got in at 30.04 and I put my stop at 29.80. Now, I have no idea what happened but apparently I canceled my stop order and had no idea because when TPX hit 29.80 I wasn't being sold. I go to check my order status and it says I'm canceled. A few curse words later and I put in a new stop loss at 29.75 and this time I put in a market order to sell not a stop loss. So I immediately sold out at 29.68.

 

1.5R loss because I can't pay attention to what the hell I'm doing. The black line was my initial stop loss but the green line shows where I actually got out.

 

Happy Thanksgiving!

 

 

QDEL- Ran Out of Steam

Watched the market conditions for about 20 mins. VIX was up but the Q's seem to be stable and even inching it's way higher as all the short funds I watch were going up, etc. It was weird. I'd say 80% of my watchlist was in the red but I picked out QDEL and liked what I saw, and wanted to get in. I bought in at 18.46. Initially it looked good, I liked what it was doing. Then the Q's started to fall apart and the tick index was going off at -1000 and everything started to collapse, along with QDEL.

 

My initial stop was at 18.20 but I jumped ship when it hit 18.35 and got filled at 18.32. It looks to be stabilizing a little bit now at 18.29 while the Q's make lower lows.

 

I'm happy with this trade. Saw a pattern I liked and I took it. I bailed before it hit bottom which was a wise move as I saved some cash. I'm bummed it didn't work out, but hey, there's always next time and I know I'll make it back.

 

ISIS, Another Great Trade

Had another great day. The market rally at the open definitely helped me out a lot. I got in on ISIS at 16.70 with my initial stop at 16.40. My stop was so wide because I had to account for the lower buying power in my account but once I got in I bumped it to 16.55

 

It kept rallying like I thought it might, momentum and volume looked great all the way until we hit R2 which I sold half my shares, 6 cents lower than my target because I didn't know if it would have much steam after breaking the line. It did ht my first sell target and before the candle turned blue I saw the momentum seemed to flatten out at the top and sure enough I watched it decline as I finally got stopped out at 16.84, 1 cent below my raised stop.

 

Overall, I'm very happy with my performance. I stuck with my plan even though I had thoughts of selling before it hit my targets, I stayed discipline and came home with some nice performance numbers to add to my trade log.

 

Pay Stopped Out

Went long on a massive wide spread decline. I thought I might be able to duck and run as the bullets were flying by my head. I got in on PAY at 44.81 which is a pretty high price in retrospect. I bought on a huge tall shadow and then it fell big time and slowly made its way to where I got in and then basically declined after that.

 

It was strong at first and then remained strong for about 30 minutes after everything started to decline and then PAY finally broke down and gave in to the wide spread selling and started selling off as well. My initial stop was around 44 but I raised it to 44.20 where I was finally stopped out.

 

CCC- Umm...WTF?

Ok, so I'm looking around for a good trade even though I probably won't find one and I shouldn't be trading anyway. I come across CCC and it showed a patter I've been trading a lot only problem was that I missed the breakout and got in a little late at 12.37

 

I'm sitting here waiting for about an hour for it to do something. I had my stop initially at 12.10 but soon raised it to 12.20 to try and cut some risk. I had a sell order to get rid of 25% of my shares at 12.47 I canceled the order about 10 seconds before it hit 12.47 and I decided to sell my entire position at 12.37 and just get out.

 

lol, I'm a little pissed. I mean, I got in waited and waited for it to show me something as to why I should still be in this trade. I didn't see anything that should keep me in. I sell, and then it shoots up. Oh well.

 

I didn't execute my plan. I got bored and anxious and wanted out. I'm pissed at myself not because I missed out on a nice chunk of cash but like an idiot, I didn't follow my plan. I knew when I wanted to sell for a profit, I knew when I was going to get out if the it goes against me, yet I sold based on my feelings not on my plan and I paid the price.

 

I got in late, and got out early.

 

No Long Trades- Staying Flat

Market is crumbling right now. Every chart I pulled up looked like a nice setup but then it fell apart and deflated right in front of me as the Q's were tanking fast. I thought I might be able to find a solid strong stock but doesn't look like I will. I missed my chance to go short so I won't be chasing the ride.

 

I might just sit on my hands today and watch the action from the sidelines, which is ok because I need to let my funds settle in my account so I can move some out.

 

We'll see what happens.

 

It's about 7:10am PST and the NYSE is about equal in advances and declines but we've made 113 new lows already and only 21 highs. Not a good start to finish out the week.

STV- Nice Trade

I got in on STV a little too early I think. I jumped the gun and bought on the huge tall shadow at 37.74 and had to sit and wait for it to develop without a profit. It finally had a small break out which I was looking for but it happened about 5 or 6 candles later. Started unloading at 1% and 2% gains (something I might ease up on when I have to start paying commissions, it's really going to kill me). Finally got out at 38.23

 

I was sooo close to buying CRNT at the open for 13.45 but it was one of those things again. Something about it didn't seem right. It's hard for me to put it into words but I didn't like what it was doing. So I left that one and went to look for a solid trade and didn't find STV for about 30 minutes.

 

I broke even with my stop as soon as I could without being too aggressive. When I saw the candles falling down to my stop I sold the last lot but I had a feeling this was just a way to kill all the people who had stops before it rallied again. Which it looks to be doing a little bit now on the 3 min chart of STV. Oh well, that's part of the game. I'm happy with this trade.

 

HSOA- Best Gain in a Long Time

I was looking around my watch list for about 25 minutes looking at a lot of charts and to see if I could spot a strong one. I almost bought RDN and LEH which would of been at their peaks but I didn't buy them. Something about them didn't seem right. I came across HSOA and I loved the momentum it had and it was backed by the strong volume along with going against the QQQQ's (something I've really been keeping an eye out for). I also loved how it was flattening out under resistance but still making higher lows. I hesitated to get in at 2.39 and sure enough I saw it blast through resistance. I got my order in at 2.45 and unloaded my first lot at 2.48 and then again at 2.53

 

I didn't raise my stop that much because it flattened out a bit and I didn't want to be too aggressive so I left it alone. When it started blasting up like crazy is when I really started moving my stop to break even and then to 2.60 which I got close to be stopped out. Once the blast off seemed to settle I saw the selling pressure increase for the first time since this whole move and I figured a decline was coming. I was happy with what I made and decided to unload the last 50% at 2.67 Another wise move as it ended up falling to about 2.56 as I'm writing this and watching the chart.

 

QID- Went short on Small Pullback

I was watching the QQQQ's and I was watching how it seemed to go up and up and I asked myself, "If I owned shares, would now be a good time to sell" I said yes, so I went short which in retrospect was the peak of the Q's I got in on QID at 40.53 and my initial stop was at 40.10 with a 0.25% equity risk. I cut down the risk big time on this one because of the fact that I was bottom fishing and I didn't want to risk my usual 1% on this.

 

Qid started turning around beautifully right after I got in. It was shooting  up a little and I unloaded 50% at 40.79 and raised my stop to break even. I was being very aggressive with this trade. I had a market order in at 40.53 and I left to go do something I came back and I see the shadow of a candle hit my stop and I got filled at 40.58

 

I was probably being a little too aggressive because I got stopped out and I think QID can keep going higher. Q's are making lower highs and are sitting on support which I think it'll break. But what's done is done. I'm happy with my performance.

 

DSX, Nice Execution

I've been following a pretty tight criteria for picking my stocks I made about a week ago and what's even better is I've had the discipline to stick to that criteria and it's paying off, more ways than one.

 

Got in on DSX at 30.86 just before it broke through resistance as it looked like it would. It was showing a small ascending triangle. I started unloading my shares pretty fast as it blew by resistance and started raising my stop after I unloaded. Stock kept rallying and what I was impressed with is that when the Q's started to make that first dip DSX held it's ground and went neutral by showing us some Doji's. I'd like seeing that, left for a few minutes and came back and saw it was up around 32. At that point I started trailing my stop pretty tightly. I knew I was going to get stopped out at 31.75 which I did and then I'd see it rally again lol. It's funny how those guys will try and wipe out everyone they can before they take off again. It's cut throat out there...

 

I've been very happy with my performance lately. I like the fact that I'm staying discipline and sticking to my guns, however I'll still need to tweak how I trail my stop but I'm happy overall.

 

SMRT Great Execution, Again

Didn't see too many stocks in the morning that fit my criteria so I went to see what SMRT was doing. It setup exactly the same way it did on Friday so I took it immediately.

 

Got in at 7.07, I kind of figured it would pullback like it did, but I didn't know when. I unloaded the first 25% once I hit a 1% gain. The second lot I bailed a little early not quite a 2% gain but I didn't like how it was hitting resistance on weak volume so I unloaded the second 25% slightly early. From there I broke even by raising my stop to my entry price and trailed it as the price kept increasing. Volume looked great, momentum was solid and going in the path of least resistance. I did however, sell my last 50% at 7.27 I didn't like how the momentum was declining pretty fast and there wasn't much volume but selling. I guess it was more of an impulse trade and I was getting bored lol.

 

Now I know why pro's say that good trading should be boring. I was bored as well and actually got pissed as the price was increasing because I knew I'd be sitting longer waiting to sell at my target. What's been keeping me in is I've been listening to a lot of music. I might even just start surfing the web and read some tech articles as the stock is doing its thing, and stick to my guns (stop's) no matter what.

 

SMRT Perfect Execution

Had an amazing trade today with SMRT. Right after I went short at the open and realized it was wrong. I sat back and looked for a strong stock going against the crowd, and I found one.

 

Got in at 6.51 Stock increased 1% and I unloaded 25% of my shares at 6.58 at that same time I cut my risk in half by raising my stop from 6.40 to 6.45. Stock rallied another 1% and unloaded an additional 25% of my shares at 6.65 At this point I raised my stop to break even to give myself a risk free environment to work with.

 

I let the rest of the shares ride while trailing my stop behind it. For every 1.5%-2% increase in price I raised my stop 0.5%. When it hit the R2 line at 6.90 I was more aggressive with my stop and raised it to 6.80 because I didn't think it'd break an R2 line. Volume was declining and RSI was weakening so I decided to be aggressive. It ended up falling to 6.80 after it tried for about an hour to break R2 and I got stopped out at 6.79

 

TWM Trade Complete

After I got in on TWM I raised my stop to 70.90 and left do something and started thinking about why my ordered took so long to get filled. I realized that it had to of been the post market news and decline yesterday about wachovia or something. I'm sure people got freaked and put in market orders to sell at the open of today. At the same time people were putting in buy orders for TWM. Once the market opened everything was getting filled at once and would explain why it took 15 minutes for me to get filled. Once the orders got filled we started rallying back up. Today will probably be flat for the most part maybe even a close higher than the open but I could be wrong.

 

I got out TWM when I got back and realized I was in a bad trade and sold before it hit my stop. Which I'm glad I did because I would of gotten stopped out anyway so I saved my self some moola.

 

15 Minutes to Fill an Order

Oh man, I can't believe this, hah! It took Zecco 15 minutes to fill a buy order for TWM. A Short fund that I like to buy when I want to short the market. I wanted to get right at the open as I saw nothing but huge amounts of stock being distributed in big volume. I wanted to get in at 71-71.20 but got filled at 71.56 Stop point is at 70.50

 

I'll be scaling out at 2% gain increments. When I hit my first 2% I'll move my stop to break even.

 

I'll post the chart when the trade ends.

TWM- Stupid Rally

Went short a little late but I thought the sell off had more juice in it to keep going. Got in on TWM at 71.19 just under resistance but it was looking good. It shot through resistance and turned it into support which was a good sign. It had one more last leg up and peaked and I thought I should unload some shares at this point but I didn't (I was waiting for a 3% gain to unload instead of a 2%, a little aggressive). I was stopped out at 70.40

 

I held on as it was going neutral. I did notice something that told me I should sell. TWM was on a downtrend but was holding support. A clear sign that a breakdown is in the works. What made me hold on was that I heard a tid bit on CNBC and some guy thought we'd be going lower before the close. That's the only thing that kept me in. If I hadn't heard that there's a pretty good chance I would of got out. CNBC is killin me. I like watching it because it's entertaining and I never do what they talk about unless it's the opposite. But this time it just got stuck in my head and bounced around and I wouldn't sell because of that.

 

ONXX- Beautiful Trade

Very pleased with with my performance and how I handled ONXX. I watched to see which stocks were being accumulated right at the open and ONXX shi9ned right away up about 50% in daily volume in the first 5 minutes of the open. Pulled up the chart and saw it had some resistance to break through at 52.50 before I'd get in.

 

A few minutes later, the next thing I know it's up at 53 and jumping around higher. I waited for a small pullback and got in at 53.05. Saw a nice move right after that as the buying volume kept pouring in and sold half my shares at 53.71 and raised my stop to 53. I let the last bunch of my shares ride it out until it either looked like it might reverse or hit my imaginary trailing stop. It kept rising and when hit it 55 I raised my trailing stop to 54. Right after that It seemed to pullback pretty hard and got down to 54.02 not exactly my stop point but I sold when it hit that point and got out at 54.12

 

Right after that it looked to jump higher. I should of held my ground and waited for it to really hit my target of 54 instead of chickening out and bailing when it was only 2 cents above it. Could of extracted a little more but overall, I'm very happy with my performance.

 

QID Paper Trade

Took a shot at QID again. This time I felt confident in the trade. I was watching QID fall down as the market was rallying up and it looked like a good time to short the market for a quick pop. QID was right above some support and as the candle was forming it stayed a Doji for a while before it finished as a tall white candle. I got in during the Doji time. I waited for it to rally a little as it did and once I felt a good time to unload came around I got rid of 50% of my shares. At that same time I raised my stop to 34.90 to bring a risk free environment. I watched it a few more minutes and decided to unload the rest at 35.03 as the ride seemed to be close, if not already, over.

 

See, if I just would of been patient earlier instead of making those idiotic trades I could of really traded this. I tried putting in the order but apparently I don't have anymore buying power. Bummer... Patience young Grass Hopper...

 

CROX, Stopped out but Happy

I got stopped out of CROX but I'm happy with the overall trade. CROX was up on some really good volume. I think around 90% of their daily volume in the 30 minutes. That got me interested so I pulled up the chart and watched the rally. Saw it pullback which I was also looking for and got in. Once I was in it established support which I liked. I had a target of 43.40 to sell 50% of my shares. Once I sold half I was going to raise my stop to break even so I could have the rest of my shares in a risk free environment.

 

CROX was following the market very closely and started falling as the Q's were heading down and the beginning of the sell off started. I got stopped out around 62.20 and I got in at 43.05 My plan was executed flawlessly. Once I got stopped out subconsciously I'm sure I was mad that's probably why I went to go chase QID on the rally.

 

QID- Rookie Mistake

Basically I went chasing after a rally. Market was falling and kept breaking support after support and I eventually went short at the bottom. I'm pissed about this trade because I did something that I'm trying to get myself not too. I'm working on the fact that I don't need to be trading every single day chasing opportunity. Every time I do that, I lose money, over and over and I can't get it into my head that trading like that is wrong.

 

Again, what I need to focus on is being carefree, but not reckless. What I'm doing now is being carefree and reckless. Man, that's easier said than done.

 

I got out before my stop was hit because it stopped acting the way I wanted it too. Looked like the decline was over and realized I made an idiotic trade.

 

WCRX Stopped Out

WCRX had a nice volume increase about an hour or so after WIND and ERES did. It peaked above some resistance I believe that turned into support and I got in at 19.01 It stayed steady for the most part for about an hour almost. The market had a wide spread sell off which caused WCRX to finally break its steadiness and dip a little down. I got stopped out at 18.90

 

As I'm writing this it seems to be hovering around 18.87 and on very low volume. Could see a comeback after this dip now that the market seems to be rallying back up a tad bit.

 

WIND Small Trade

Saw WIND when it was up around 100% of it's daily volume in the first 30 minutes of the opening. A very good sign. Pulled up the chart and waited for it to pullback to establish some support levels, which it did. However, I didn't pull the trigger on what I thought looked to be a good buy. I hesitated and missed the spike up again.

 

So I waited a little more and decided to take a relatively big risk and get in at 13.17 which at the time looked to be right under resistance, the opposite side I would normally buy on. My reasoning was the volume was now up about 150% and the buyers were greater than the sellers buy a huge number. So I got in wanting to ride a small wave up to about 13.30 Well my plan worked out but my target never got hit while the stock seemed to be stuttering to get up so I got out at 13.22 and at the moment of writing this looks to be close to the top of that small move.

 

The morning run looks to be over and I won't be surprised if today turns into a slow neutral day.

 

Bear Market Ahead?

Looking at the SPY 15 year chart you can see that we're basically at the top. The highs we are at right now are back from the .com bubble back in 00/01. If you look closely you can see that we had a false breakout above those levels (red line) and pulled back immediately. It's ironic how we have a credit crisis right at the time of this top. Maybe this is what we'll be blaming the bear market on when we're actually in the middle of it. Leads me to believe that we might not have enough strength at the moment to really blast through these highs.

 

We have a lot of uncertainty and mild fear at the moment about the market. I think this will eventually turn into bigger fear and eventually full blown panic as we're watching the market decline more and more. I mean come on, this market seems to be held up buy 3 stocks, RIMM, GOOG, and AAPL. The market's been stuck at or around the same levels for about 2 weeks.

 

I think waiting for more fundamentals to come out is crap. We're putting up false hopes that the market will get better if we just wait one more day to see what it does. Well, I'm gonna be bold and come out and say I think we're in the early stages of a possible bear market.

 

PRGO Late Trade

Traded PRGO a little late in the day and late in the rally. I was watching it move all day as I was in CPHD and ERES, lol. Saw it pullback a little and got in at the perfect time. Which was interesting because I felt really uncomfortable doing the trade but I also felt really confident. Something I didn't feel during those other 2 trades. In fact, I felt like I made a mistake right when I bought CPHD but I held on anyway to give it a chance.

 

I had a target of 29.20 when I got in at 28.91 with a stop at 28.60 PRGO hit my target of 29.20 but I never pulled the trigger. I got that thought in my head again that, oh it'll go higher. Well, it didn't basically peaked and fell again. I had my finger on the trigger as I was watching it come back down and sold on reaction when it hit 28.99

 

I'm not too worried about selling immediately when I get to a loss on a stock. That part I can handle but I need to focus more on selling when it hits my target. I think I might start using sell orders when it hits my price target and keep using my mental stop losses until I can sell immediately when it hits my target instead of waiting around for it to go higher and then holding it as it comes back down.

 

ERES- Bad Trade

Traded ERES right after CPHD. It was a bad trade. I tried catching the wave and basically got in on the top. I sold out before it hit my stop though. Got in at 9.63 and got out at 9.39 and my stop was at 9.10... Bad trade.

 

 

Stopped out of CPHD

Unfortunately, I decided to go long just before this wide spread sell off started, haha. Everything looked good, right when I got in on CPHD at 25 everything started to fall, I was a little annoyed. I got stopped out at 24 and it looks to be hovering around it for now. I wouldn't be surprised if it starts to rally right now lol. Isn't that how it usually works? Get stopped out just before a rally? Oh well, I should of put my stop at a better spot.

 

QID Trade

Thought I'd go short again. I missed the quick morning sell off and for some reason thought it would be a good idea to get in on it after the fact. I got in on QID which is a QQQQ Short Fund at 34.56 which was higher than what I wanted. I initially wanted to get in at 34.50 I just sold right now at 34.44 because I didn't like the way it was acting. It was jumpy and neutral and the volume was low. It was showing a lot of small bodies with big wicks, something I don't like seeing a lot of one after another. So, I decided to get out and clear my head.

 

Went Short During Cut

I went short by buying the SDS Short Fund about 2 hours before the announcement. I had a feeling they wouldn't cut because I didn't want them to cater to market expectations. But, they did cut rates on par with what the market was expecting and everything sold off. Which doesn't quite surprise me as we already had the "cut rate rally" before the announcement so now that we know the fed did what we wanted, the rally isn't there anymore. Expectations have been met.

 

Anyway, I got in at 49.92 I told a couple people I was going short and everyone laughed at me so I knew I was doing the right thing. I sold out at 50.44 and SDS continues to climb as I'm writing this. Just under 50.80. It's really volatile though huge jumps and then comes back down. But I'm happy with my decision.

 

DSX Quick Trade

I got in on DSX a little too early. I didn't plot out the resistance and got in just under it. When I bought it is when I decided to draw the resistance lol, which is the top red line on the chart. Then it made sense as to why it was struggling to break those levels. Had a quick dip which is when I should of gotten in as it bounced off support but what's done is done.

 

it advanced up to a peak of 63 which was my target but once I saw it hit that level, I'm like, "oh, it'll keep going" Wrong, it dipped again and seem to struggle at the resistance line again so I dropped my target to 42.90 which was the new top of the down trend line. I wasn't going to miss this again so I put in a limit order to bail out at 42.90. It hit my point and I got out.

 

Since then, DSX seems to have pulled back slightly, it could keep going higher but I don't know if it has the strength to break 43 and keep going. I mean, it's already up about 8% which doesn't mean that much but considering the environment I think that's a substantial gain and profit taking could be happening later today but I don't know.

 

Couple Scalp Trades

Went short this morning by buying SDS at 50.36 and got out before the market started reversing again at 50.43 Very small trade like the last few I've made.  I feel really really confident making these scalp trades.

 

I feel my risk is a lot lower compared to holding a stock overnight, or weeks or months. Plus I lower my risk even more by accounting for the volatility in the stock and adjusting my position size accordingly. So my risk is very very low compared to my reward. This fits in with my personality as I'm a relatively impatient person but I've developed the patience to wait for opportunities now.

 

The volatility right now in the markets make what I'm doing fairly easy in my opinion. I just ride the waves up and down, trying to make a little cash in a sideways environment.

 

 

I went long on SCON right after I went short. The market started turning and the stocks I have in my "hot seat" watch list were starting to turn tot he upside. I got in on SCON at that moment. Got in at 13.20 and got out at the top of the candle at 13.60 which seemed to be the high for that time and about 20 minutes after that.

 

 

I'm probably going to call it a day as I'm low on buying power and I can't keep buying the same stock over and over (SDS) even though I want to keep going short on these small dips. So, we'll see what happens. Maybe a rally will happen at the end of the day.

Got out of TWM, Finally

My little fiasco on Friday got me a little worried. I couldn't get out of stock due to some crappy over protection laws by SEC. Anyway, I got out of TWM this morning at 62.20, 20 cents above my initial stop loss point so I'm happy about that. This is the intra day chart for this morning so far. The chart for TWM on Friday should be a couple posts down under General Update.

 

General Update

I figured I'd post an update of everything going on in the last couple days instead of making a bunch of posts for each topic.

 

First order of business: I bought a second 20inch widescreen monitor. This one will be solely for keeping charts on. It'll hold about 6 charts, each one being a decent size. I'm excited about this. I bought it because I'm getting to the point where it's hard to manage a couple charts, all my watch lists (about 6 of them) and manage my orders on one 20 inch monitor. This new monitor will allow me to keep my watch lists and my charts separate. I can manage my orders and watch lists on my current monitor and the second monitor will be dedicated to at the most, 6 charts.

 

I ordered this off Newegg.com I love this place for computer stuff.

 

Second order of business: I'm going to be writing up a detailed business plan for trading. I have it in my head but I feel it'll be better in the long run if I transfer my thoughts into a hard copy. That way I can go back and review it without having to remember it and I can modify it as I develop as a professional trader.

 

I found two sources with information on how to go about creating a business plan specifically for active traders.

 Trading-Plan.com and Tradingwinner.com are the two sites I've printed out and I'll be going over both of them and jotting down my responses to these questions. I'll then elaborate more on each response and organize them into a well defined business plan that I'll keep and modify over time.

 

Third order of business: This I'm a little bummed about. Basically what happened is today I made my 3rd trade of TWM this week which happens to be a 5 day period. I didn't realize that at the time as I put in my buy order of TWM at 63.88 I put in my stop at 62 but I didn't double check to see if it actually went through and waiting in que. When the time came around for me when I thought it was a good time to sell, I canceled my stop order and put in a market order to sell. Well, I double checked this time around to see if it sold or not, and it never sold. Said I had insufficient resources. Now, I'm stuck with a losing position until probably Monday when I'll try and sell it again.

 

I'm not too worried about the loss though. I adjusted my position size accordingly to where I put my stop and since I'm getting over a losing streak I've cut my risk per trade in half. So, even though I'm in the red, the overall loss is very minimal. If TWM breaks 62 I'll start getting worried but it looks like it's been hovering around 63. So, the situation isn't as bad as it seems, financially anyway.

 

Green arrow was my entry early this morning when I thought it would be a good move to go short. Which it turned out to be good but a few minutes before 9:30 when I wanted to get out, I couldn't. So I was stuck watching TWM go all the way back down and now we're hovering around 63. Needless to say, I was pretty pissed.