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.

 

Getting Rid of Covestor

You might have noticed that I deleted my Covestor Badge on the left which displayed my performance. I was up about 25% a couple months ago and now I'm down about 20%. The dip in performance was mainly me trying to figure out my methods. Unfortunately I had to use my capital to figure it out because I feel it's the best way. No one knows how they will react to something until the shit hits the fan. I've learned tremendously what works for me and what doesn't based on that.

 

Also, I can tell it's been screwing with my Ego. There's been a few times where I won't get out of a losing trade because I don't want it to hurt my performance trend line and I'll wait and wait and all I'm thinking about is Covestor and how I compare with other traders. I was thinking about this late last night before I went to bed. I noticed that Covestor added a new Ranking section so you can see how you fare against other traders. I saw all the people making 800% and it bummed me out. So, I won't be having that badge up here anymore. It's not about winning and losing money it's about making good or bad trades and I feel I've been making a lot of good trades even though they turned out to be losers because I traded my plan.

 

I need to focus on what I do, not what everyone else does and then compare myself to them. That's what I've been doing and it's messing up my ability to think objectively.

Tiny TWM Trade and the QQQQ Channel

Made a very small trade this morning, haha. Got in on TWM at 64.02 and got out at 64.39 As I'm writing this TWM seem so be rallying up higher than my exit point. Which is cool, I'm glad there's people out there making money. In retrospect, yeah, I should of held on but I'm happy with what I did.

 

Basically rode a wave down in the channel that the market is in. Buy low sell high. It's kind of easy now considering we haven't broken the high or low channel lines for a couple weeks now.

 

Below is an intra day chart of the QQQQ's. It's in 3 minute increments over a 10 day period I believe. We can see by the red and green lines that we're stuck in this tight channel. Buy low sell High would apply at this moment for active traders. Investors, I don't know, I don't know how to invest so I don't know what to tell you, haha.

 

 

Below is a chart of my TWM trade, my tiny, TWM trade, haha. Entry and exit points are in green and red arrows.

Sold AMZN

Just sold AMZN a few minutes ago. I wanted to hold it over night but the stock showed a change of plans. I got out at 88.20. It started acting weird, bid and ask started getting jumpy, momentum seemed to slow down, the QQQQ's looked to be reversing as well as volume picking up for them. TWM started gaining on good volume. Seemed like a good decision at the time. It'll probably rally more but whatever, it was a good trade and I'm happy with my roughly 4% gain.

 

I missed the sell off this morning. I wanted to go short but I missed my entry and so I kind of waited around and watched everything go down. Then we flattened out and seemed to form a double bottom and I knew we'd rally again. I mean, everyone over reacted so hard to the news that came out and it just made sense that we'd bounce back at the end of the day. AMZN seemed like a good candidate to ride the bounce back.

 

Bought AMZN

Got in on AMZN a few minutes ago. Entry was 85.04 I bought it because I think today is just another over reaction to news. AMZN had extremely good earnings but the stock fell because it wasn't up to par with AAPL and GOOG. Which is pure crap. People are expecting way too much and over react way too much.

 

There's support around the 85 level also some around 84. Stop is at 82.50 and I plan on selling tomorrow on the rebound.

 

Goose Egg Today

Not much happened today. Market rallied and then went stale for most part of the day and then rallied a little before the close. I had about 8 setups I liked for the day but none of them hit my lows since we were so neutral. I didn't force any trades today which I'm happy about. One step closer to overcoming my impatience problem which in the end should save me some money from making stupid trades.

 

When I start feeling excited and want to make trades I think about the stocks I looked over the night before and all the work I put into the setups I picked out and I feel more relaxed and confident. I feel better knowing that I have setups I've picked out myself and I have confidence in my abilities so I wait for them to happen. If they don't happen then all the better. I'll end the day with a Goose Egg but it's better then red numbers. So, that's something I'm working on.

 

I notice that I make better decisions when I lean back in my chair with my arms crossed rather than leaning forward toward the screen with my hand on the mouse. The TWM trade for example is a perfect trade in my opinion and I did it completely objective and I feel I can be that way when I'm patient and relaxed about the market. When I see stocks shooting up huge amounts I'll get excited and try and get in on them but I know that I already have setups waiting for me and when the alerts go off I've got my own set of opportunities to look for.

Sold TWM- Break Even

I basically liquidated my portfolio this morning. I noticed that CHNG and WIND kept falling and falling right at the open like a lot of stocks and I didn't know why they weren't being sold (stop orders). I go to my orders section to double check what prices I set for them and my orders aren't in even que! I put in Day Orders and not GTC. I was so pissed so I sold both CHNG and WIND because I didn't want to lose any more money than necessary.

 

I then put my focus on what I had left, TWM. It's a short fund. Since I can't officially short stocks I buy short funds to make it work. I was more patient with this one. I sat back and watched the action. I compared TWM with the QQQQ's, watched the volatility index, watched all the market indexes, watched the other short funds. I sold because all the market indexes were basically just under break even point, volatility made a new high but quickly cut itself in half, volume was picking up on the QQQQ's so I got out of TWM at 67.54 roughly a 4% gain. But the gain I had on TWM basically offset the losses I had on CHNG and WIND. Back to square one.

 

Green arrow shows my entry on Friday and Red arrow shows when I got out early this morning.

 

Bought TWM

I turned on CNBC this morning to see what was going on and why the market is down big. First thing I heard was talk about a recession. I immediately came over to my PC and put in an order to buy TWM. It's an Ultra Short Fund I've been following and wanted to buy it a few days ago because I had a feeling something like this might happened but I never bought it. Well, today gave me an obvious good reason to get in. Basically playing on the fear of the market and also hedging out my portfolio.

 

The arrow shows my point of entry. Got in at 64.78 with a stop at 62.50 which I might raise on Monday and buy more shares, depending on how things play out. If we rally to the upside it's showing we're in a strong situation but if it continues to decline the overall public could be losing confidence in the situation. It'll be interesting to see how things play out.

 

Sold USU

This was my last position on my old style of trading. Wasn't working out anyway. Sold at 8.75

 

Bought CHNG

This isn't quite up to par on my rules for picking stocks but I've always liked CHNG. When I saw it down around 11 bucks it looked like a good longer term position. So I got in at a decent level. I'll keep this in the corner of my portfolio for the next couple weeks.

 

I got in at 11.60 stop is at 10.50 just because of the crazy volatility but I'll raise in time to slowly lock in profits while adding shares, if it plays out right.

 

Sold LOCM

Got out of LOCM. It was part of my weird ass style and I've changed my ways so I wanted to get rid of it. Plus it was acting weird. Exit price was 6.75

 

 

 

Bought WIND

I started changing things up a bit as far as how I go about getting into stocks. I noticed that I had a plan for selecting them, but I didn't quite know when to get in. I guess I'd just kind of wing it. Also with my horrible stop loss methods I get screwed up a lot. That's all changed now.

 

I've got a somewhat general plan on picking stocks but still detailed enough to weed out the crap. My entry point is a little more defined based on what I think is a good method to use. Coupled that with my methods of managing risk things should be turning around, but we'll see what happens.

 

Anyway, back to why I started this post. I got in on WIND at 11.88 and stop is at 11.55 The overall trend of WIND is up, EMA's are looking good and volume is relative to the price action. I set an alert to go off if it a decent support level. It hit that level and watched to see it confirm these levels once again, it confirmed, so I got in. It was also going up while the QQQ's are falling, which is always good to see.

 

Still working on my patience/over trading problem. I feel I need to be in the markets all the time but what I need to do is find a plan that I'm confident in and wait for the setups that I've created and buy it. If I do that enough I'll start gaining more and more confidence in my abilities and I won't want to keep changing up my plan and I won't want to over trade as I have a sound system to work with.

 

Bought USU

I went over a lot of charts last night and I don't remember why but I wrote down USU's 6 month chart as something I liked. It's a pretty bad chart and I don't know why I would of saved it to look back on but I did. I set alerts for the intra day chart. They went off and I started looking at USU. I got in on the ride up to the resistance line and it pulled back and now it looks to have broken that resistance.

 

I got in at 6.87 and my stop is at 6.65 I noticed already that my new risk management method is going to help a lot in preventing weak stop outs. I've tailored both of these picks around a stop loss point and have adjusted my position size accordingly. I can tell on LOCM I would of been stopped out because I know I would of put a really tight stop under that support line. But I didn't I put it below the action which has kept me in for the time being. Although I don't know if now would be a good time to be actively trading the markets right now.

 

8.90 looks to be the new resistance line. Also, I'm still long LOCM

 

Bought LOCM

Got in on LOCM. I like how it was up pre market and it tested a support level 5 times. I had to get in. Got in at 6.87 with a stop at 6.60 that's in a good stop below the action. That's a 4% decline roughly and I've adjusted my position size accordingly. I'm leveraging the best amount of cash for this particular situation. Green is the support line, black is my stop, purple is more support that I havn't colored yet, haha and the red line at top is resistance.

 

Risk Management- Revised

I made a post I think about a week ago about risk management and the formula that I like to use. I've been thinking about my trades and I've noticed that I get stopped out on almost every single one. Now, a lot of those stops have saved me from losing even more money but they've also cost me a lot of potential money. For example, getting stopped out just before the stock rallies which has happened to me quite a bit lately.

 

So, what I'm going to do is very simple. Keep my current formula, but set the stop at a point that's out of the way of the action but not so far away where to the point of it being pointless to trade. A point that clearly confirms and tells me, "hey, this trade is definitely wrong" instead of "hey, this trade could be wrong".

 

That point will be based on my current trading methods of using Support/Resistance levels on a Daily chart and incorporating them onto an Intra day. I'll see what the action is like on both charts and pin point a stop loss target that I think confirms that the trade is officially wrong. Depending on how far that stop is from the current price, I'll adjust my position size accordingly to my max risk per trade. If the stop is far away, I'll put on a smaller position, if it's closer to the current price, I'll put on a larger size relative to my risk. Basically it's what I've been doing now but really focusing on what a good stop point is instead of a generic automated stop I use for every single trade.

 

I feel this will help weed out those false stops in which I get stopped before a rally but still keep me relatively safe from potential disaster. Now that I have the plan and what to do, I need to put it into action so it becomes habit.

Traded CPSL

I originally saw CPSL a 9.50 and went to put in an order but I got distracted by someone and then I had problems putting in the order with my broker and by the time I was about to submit the order I missed the first move. Then it broke resistance and it I missed the second move and thought I'd get in even though it could of been too late.

 

I tested the waters with a small amount of shares and increased the amount as it started showing me a profit. It stalled out at the top because some news came out about CPSL reporting a 1% loss in revenue, I think. At that same exact time, the stock basically started stalling out and slowly coming back down. Established new levels and it couldn't break 1.90 so I got out.

 

I feel really good about this trade, even though I lost some cash. I was extremely objective. I could totally tell a difference on how I was acting compared to my last trades. It felt good when I sold the shares. I had this weird, calm, confident, good feeling.

 

Yellow boxes on the left are my entry points as I kept buying on the rise and sold on the right yellow box. Looks like I caught it on it's last legs up.

 

Still working on my impatience problem. But I'll get there.

 

Stopped out of AAPL/Mental Stops

Stopped out of aapl earlier this morning. What I'm going to do from now on is still use a stop but I'm going to make it a mental stop. I'll draw out my stop and see it reacts to it. If it keeps falling then I'll sell but if it seems to stall out like it did here then I'll hold. There's been a lot of times I shouldn't of been stopped out but I did. CHNG for example, bought it at the dip on everything tanked and immediately got stopped and it rallied big time the next couple days. If I just kept that mental stop and watched it closely, I wouldn't of sold.

 

Not much else to say. Rallied in the morning real quick and fell and then stalled out. Stuck in another channel like Friday. Upper and Lower tredlines are starting to come to a point. Could see some serious action this week.

 

Bought AAPL

Wasn't planning on doing much today. Kept an eye on AAPL and saw it's been trading in pretty tightly in this channel and I wanted to see if it could break 167. I did once but the volume wasn't to my liking and it fell. About 10 minutes before the close today it broke above 167 on huge amounts of volume and I just had to buy it.

 

Got in at 167.10. My stop will be around 162 But I'll keep this in my portfolio for about a week to let it grow.

 

Perfect Setup

Ok, this is what I'm looking for. It's a great setup of what I planned on doing yesterday.

 

1) Stock was up pre market

2) Support confirmed by the 3rd tick from the open on huge amounts of volume

3) Stock rallies to resistance and falls back on pre established support level

4) Stock rallies off support and breaks through resistance on huge amounts of volume and settles on top of resistance and makes it support

5) Market conditions were solid. Great economic news came out and volatility was down 5% from yesterdays huge sell off.

 

 

 

This second chart below is LDK. I paper traded this roughly a week ago and the setup is almost identical.

 

1) Stock was up pre market

2) Stock confirms pre-established support levels with huge amounts of volume at the open

3) Stock rallies and hit's established resistance and falls to confirm a new support level. Bearish and Bullish Candles bottomed out at the same levels

4) Rallies and breaks through resistance first level of resistance and hits second level and pullbacks.

5) Q's fell at open but rallied just before 7am PST

 

 

 

All I need to do now is have the patience to wait and wait for this setup to happen while ignoring all these stocks that rally around me. That's going to be the hard part.

Going Over Trades

I went over my trade book to see if I can spot a common error. I'm impatient. I've been buying stocks before the opportunities fully present themselves, I'm jumping the gun basically and it's been biting me in the ass.

 

I have the right idea, I just force the trade. I'm impatient. So, this is my plan to help combat that.

 

I'll be looking for stocks making pre market highs. When the market opens I'll let it do it's thing and wait for a pull back and buy once it's fully established new support levels or current ones. I'll only buy if the market is rallying in the morning to help boost my odds. If it's not then I'll wait for the market to rally and see if I can spot an entry. I'm not going to be buying stocks in bad market conditions anymore. It's not worth the risk.

 

 

Strong Points:

- I can buy without fear or fear of losing money

- I can buy without hesitation when I see a potential opportunity

- I predefine my risk before I enter a trade

- I'm constantly monitoring my emotional and psychological state while I'm trading

 

Weak points:

- I'm impatient

- I'll force a trade without viewing it objectively

- I over trade

 

I need to work on eliminating my weak points. I'll try and come up with some ideas on how to do that.

Yahoo Finance Downplaying Sell Off

I just saw that Yahoo Finance has changed their headline for the same story from "Wall Street Gives Back Gains" to "Stocks Retreat As Investors Book Profits" which makes it sound more bullish. I think we're in for a bad situation. Something I called back over a month ago (previous post). The time has come, and I think it's time to sit out unless your shorting the hell out of everything.

 

 

 

People aren't booking profits. Their getting the hell out to save what tiny bit of profits they have. AMZN has erased over 2 weeks of profits in about 30 minutes.

Taking a Break

I need a break. The current pace I'm going now I'm going to go broke by the end of the year. I've got to stop trading in my bad market conditions. I don't know when I'll be back to trade but I need to stop and take a breather for a while.

 

I've been making a lot of stupid trades. I need to stop and really see what I'm doing wrong.

Sold CWTR

Another fizzled out stock. Didn't like the way it was acting along with JDSU so I sold it before it got stopped out.  Sold at 10.98

 

Sold JDSU

Wasn't working out. It was a bad stock to begin with. It had a nice run which got me interested but the volume wasn't there. I think I'm just getting frustrated. I've either sold or been stopped out 12 times now. I forgot what it's like to see a stock actually bring a profit.

 

Got out at 15.90 Again, another stock that fizzled out.

 

The gap in the price is because QT crashed on me and had to restart.

 

Bought CWTR

This one I like as well. It's trying to make new weekly highs. Got in at 11.16 and stop is at 10.85 Green is entry, black is stop, yellow are the support/resistance lines I drew.

 

Bought JDSU

I really like this trade. JDSU looks to be breaking out of this channel it's been stuck in for about a week or so. I waited for it to hit 16 which would be the top of the channel and got it at 15.99 I set a stop at 15.65 which is roughly a 2.5% drop and is also a low for the day.

 

Green line is my entry point. I bought it during that tall white candle and the black line is my stop. I'll hold it until I either get stopped or take a profit where the stock might be turning around. Don't know exactly how I'll determine when I'll get out but I'll know when I'm in the moment.

 

Traded DRYS

Bought DRYS at 117.00 It was touching the lows of the day. It made a double top and fell and I thought it might turn around at the low of the day. I set a stop at 115.90 and got stopped out a few seconds later. It continued to fall which it probably will for a while since it break the lows of the day.

 

It's funny how I've been watching this stock since it was around 85 bucks and the one time I decide to buy it I lose money on it. I'm weird..

 

I was trying to catch a falling knife and I got what I deserved but I felt good about the trade, it just didn't work out. I didn't fully wait for the 3 minute candle to fully develop, I saw a doji at the time and it went bullish but finished negative. I need to fully wait for the candles to develop before making a decision.

 

Green arrow is my entry and red arrow is where I got stopped out.

 

Alcoa News

Found an interesting article this morning about Alcoa's weaker earnings at yesterdays close.

Wall Street on Wednesday took back a piece of Tuesday's record gains after missed estimates from blue-chip aluminum producer Alcoa Inc. and a profit warning from International Paper Co.

"We're beginning to see some negative earnings reports come out," said Peter Cardillo, chief market economist at Avalon Partners.

"Percentage-wise, I would expect more disappointments than pleasant surprises, so for the next week or so we could see this market give up 3% to 5% on slower earnings growth," Cardillo said.

 

Full article here.

Stopped out of ICOC

No surprise here. ICOC had a quick run and as fast as it went up it quickly fizzled out and I got sucked into it. I had a super tight stop because I knew it was pretty much done for but I still wanted to give it a shot to the upside. If it fell I thought it'd probably keep heading down. Got stopped out 14.77

 

Plus, the markets have been really neutral lately, not too much has been going on. Probably in anticipation for earnings season next week so I shouldn't get too hopeful when it comes to getting a winner this week. I'm still keeping an eye out though.

 

Bought ICOC

Got in at 14.92. Stop is at 14.85 I liked how it is just under key resistance at 15 and If it breaks 15 it could keep going higher. Risk is minimal but the potential gain could be relatively  big. We'll see what happens.

 

Green line is my entry and black line is my stop.

Sold LDK...lol

Man, I don't know how to invest for the long term. My brain is so hard wired now for day trading. If I was going to trade LDK I wouldn't of bought it. I don't know what the hell I was thinking. I saw it making new highs pre market and got all excited.

 

I have my IRA at eTrade and since I bought it with cash from another trade (CHNG, made 20%) and it never settled I may be subject to a 90 day holding period, lol. I need to preserve what gains I've made so far if I'm going try and get it back to where it was before.

 

I'll probably buy some mutual fund or ETF for it. Something slow and steady.

 

I'm not even going to post the chart as it doesn't matter. Got out at 42.50

Bought LDK

Bought LDK for my IRA this morning. Got in at 44.50 Time frame for this guy will be 2 weeks at the most. LDk has been up huge for months now and I like how it's pulled back to the mid 40's. It's a good solid stock, I like where it's been and I like where it's going.

 

Stopped Out of ISIS

Doesn't really surprise me as it seemed kind of fizzled out when I bought it and there wasn't much time left in the day. Worth a shot though. Lost about 1.5% of my overall portfolio. Got stopped out at 16.78.

 

Bought ISIS

Bought ISIS at 16.99. Saw it move and thought I'd get in. I probably got in a little late in the day since I only have a couple more hours before the close but I thought I'd give it a shot. Stop is at 16.75

 

We'll see how it plays out.

 

Sold CHNG

I bought CHNG for my IRA mid last week I believe at 7.50 and sold it a few minutes ago at 9.00 A nice 20% move which is good because I took a huge hit about 6 months ago (lost about 40%, long story haha) and I'm trying to get it back. The chart below might look a little confusing. It's a 3 day intra day chart on a 3 minute interval. Red lines are resistance levels. Green box on the left was my entry and red box on the right was my exit. I didn't take intra day entry and exit snap shots as I wasn't planning on putting my IRA trades here but now that I have, I'll start doing it.

 

Reason why I bought CHNG was because over the summer it had a huge spike and I was trading the spike for about a week and made a killing. All I know about CHNG is that it's a Chinese Oil company or something like that. Since we've been having this huge China boom lately I thought I'd go back and pick this stock since I knew it was Chinese and it provided nice gains in the past and it's obviously worked out well for me. I'll probably be buying this again if it comes back down.

 

Risk Management

Risk management in my opinion is so absolutely crucial that I'd like to share with you how I determine my risk. Determining your risk before you trade is something a huge amount of traders/investors don't do. Why don't they do it? Because pre defining their risk tells them that they could lose and we all know people don't like losing. Well, if your trading to sustain yourself financially as I am doing now and plan on too in the future then you need to realize that a lot of your trades will be losers.

 

Now, what we need to do is figure out how much we'll be ok with losing on each of those trades instead of letting them run wild before we feel like puking before we finally sell them for a loss. Screw that noise. If I see a loser I get rid of it ASAP and preserve my capital so I can trade to see another day lol. Without capital my business is done for.

 

Onward and upward, this is how I determine how much to lose on any one trade.

 

For example, let's say we have $2,000. It's easier to do in my head with this amount. Ok, the first thing I do is look at how much capital I have and figure out 1% of that. 1% of 2,000 is 20. The reason I use 1% is because it's what I'm personally comfortable losing on any one trade and if I'm on an 3-5 or more trade losing streak losing 1% isn't that big of a deal.

 

So now we know how much we can lose on any one trade, 20. Now I figure out how much cash I can use. Depending on how volatile the stock is, I'll either pick a 4% stop or a 2% stop, you can use a 6% stop if you really like those crazy volatile stocks. How much cash can I use in order the stock to go against me 4% yet, still maintain a maximum of a $20 loss?

 

6% stop you can use a maximum of $350

4% stop you can use a maximum of $500

2% stop you can use a maximum of $1,000

 

Notice that as the percentage amount we risk declines, we use more cash. The more volatile a stock, the less cash we put in. This idea of risk management is one of many out there you can use but I like this one because no matter what stock I get in, I already know how much I'll lose. Once I know that, I'll start looking for stocks that have maximum potential for an upward run. That's when looking for 3:1 risk/reward comes into play now that we know how much we can lose, how much can we gain?

Over Excited

Wow, can't believe how much the markets are up. The only significant piece of news today was the unemployment rate which stayed the same at 4.7%  It's funny how the general public of traders over react to good news and always over reacts on bad news.

 

These reports that came out today aren't the "holy grail" were looking for to determine if we're going into a recession or not or if the feds need to cut rates again. There is no "holy grail" that will let us know everything is ok. Only time will let us know what's going on and the more time we have the more it'll help build confidence or fear into people. So far it looks to be building confidence, doesn't mean we'll stay confident in the future though.

 

I'd like there to be some kind of sell off at the end of the day. That'll tell me that people recognize this upswing as too much and start taking profits. If not, then this could lead into next week and then maybe have some kind of sell off next weak. Either way it'll happen it's just a matter of when.

 

Overall we're looking good. Dow, SP, Nasdaq are all up big, volatility is down almost 2 points. How long will this last?

Back in Black

Zecco finally has my cash and I'll have buying power tomorrow morning. Can't wait to see what's out there.

 

On another note, I bought all kinds of books to keep me busy after market hours.

 

- Think for Yourself by Robert P. Crawford

- The Ruminator by Humphrey Neill

- The Nature of Risk by Justin Mamis

- Famous Financial Fiascos by John Train

- Speculation: It's Sound Principles and Rules for Its Practice by Thomas Hoyne

- Dance of the Money Bees: A Professional Speaks Frankly on Investing by John Train

 

Can't wait until these come in. I've read everything on my "Books I Love" list twice already not to mention all the other books I didn't add to that list. Time for some fresh content.

LDK- Paper Trade

Still waiting on my cash to settle in Zecco so I can get the action going. While I'm waiting I'm paper trading some stocks I see opportunities in.

 

LDK was up pre market which got my interest because most of the times LDK is up pre market it tends to keep going. Especially when the overall market is in positive territory.

 

The green line on the chart represent my entry at the time. I got in at 6.35am PST with a price of 52 a share. Set my stop at 51 which is the black line. LDK rallied upward and I sold half my shares of 100 at the bottom yellow line which is 55.35. Saw it pullback and when I noticed it seemed to bottom out just above support, I got ready to sell my second half (50) of shares. I waited it to make a move above 57.34 to break that pivot point but it never did at the time so I dumped the last 50 at 56.20 (top yellow line). For a nice sized gain for the day.

 

Moving Back

haha, yeah yeah. I'm moving back to Zecco. I figured I'm going to be paying fees either way and I don't trust myself having such quick access to making trades. I don't want to get too trigger happy and make a bunch of stupid trades.

 

Plus, I like Zecco.

 

I'll be ready to rock n roll Friday morning or Monday morning.

 

Today's been a weird day for the market. I didn't pick up any stocks that were up big pre market nor did I pick up any momentum stocks. Usually I'll pick up GOOG or AAPL or GS or BIDU as that's all they've been doing the last 2 weeks. Kind of weird to wake up with no alerts. I thought my Internet was down or something.

Still Down

Man, this is rough. Watching opportunities fly by you and you can't capitalize on them. I was watching CTDC and pretended to buy it at 7.50 when it got stuck in that channel. Could of made roughly 20% if I held it for the day. I would of been done trading for the next 2 months if I made that. No big though, these things happen every day. I'm itching to trade though. No latter than mid-next week I think I'll be back in business.

S&P 500 Seasonal Chart

Found this a while back and thought it might be useful for you.

 

Switching Brokers

I'm currently with Zecco.com right now because of the free commission trades. Well today their basically cutting back on the free trades and raising the fee. Now Zecco is just like any other broker and if I'm going to be with any other broker I might as well have one that integrates with

Quote Tracker

 

I'll be moving to MBTrading.com Hopefully everything will be all said in done in one week from today. Until then, I'll be paper trading. I might post up some screen shots on my paper trades but we'll see.