Stocks on my Hot Seat

I have CHCI, TARR and EXPO on my watch list for tomorrow morning. I don't feel too good about EXPO but I'm watching it to give it a chance (probably won't trade it).

 

The other two I like more. TARR has a little resistance at 1.56 which is the 50 EMA. It couldn't even touch it today so we'll see how it reacts when it gets close. It's at 1.50 right after hours which is a good sign.

 

CHCI looks pretty good as well. I like the big blast out of some mild consolidation accompanied by the huge volume and nice 2 month high or so. Hasn't moved after hours so far so that's a good sign.

 

I'll see how these react at the open and decide whether to pounce or not. If not, no tears shed. I just saved myself from losing money and the name of the game is, "Don't lose money!" (easier said than done)

Sidelines- A little Rocky

Quote of the Day:
He who does not prefer exile to slavery is not free by any measure of freedom, truth and duty.
--Kahlil Gibran

I'll be sitting on the sidelines today. I had 3 stocks in my watch list. Two of them were down and the other one didn't even budge. All the profit taking in the last 30 minutes or so of yesterdays close I'm sure had a lot to do with the rough start.

 

Every time the fed cuts rates, people feel the need to take profits immediately like they'll never seem them again. Until we can get a cut, shoot up, and stay up, I don't see this situation stabilizing or showing any kind of strength. But then again, I could be wrong, and probably am.

 

I'll be thinking all day on trading and if I can get any "ah ha!" moments, I'll come here and write them down to share.

 

Don't lose money.

Trading Plan- Residual Morning Momentum

This is my latest strategy and the one I've been using since the first few days of January 2008. I'm up 13% for Jan and have probably cut the amount of trades I do almost in half. This strategy requires extreme amount of patience and extreme discipline (still developing both of those myself)

 

The idea behind this strategy is that the stocks I pick I expect to continue the momentum from the day before and spill into the opening bell. I'm basically trading with the public because the stocks I trade I want to attract a lot of attention. I want there to be market orders to be placed at the open and have the previous days momentum continue into the morning, where I'll be waiting to ambush. I'll be in a trade for about 10 minutes at the most because the opening spike will probably fade away quickly once the public is in.

 

I don't have a set gain amount I'm looking for. Basically trading off of price action and when I feel is a good time to get out based on the amount of volume is being traded and how active the price is moving. I'm not looking to get out at the top but I am looking to get the bulk of the move if I feel it can continue to move.

 

Selling Criteria

 

edit: When determining when to exit a trade. What alerts to the possibility of selling is when the bottom of the most recent candle is starting to significantly run away from my 7 EMA I should look to either sell half or all of my shares. The gap between my EMA and the bottom of the candle creates a vacuum and the price will get sucked back down to the EMA. When it runs away from that value line, look to sell.

 

If the price is running tightly with the 7 EMA, you're in good shape, but as soon as it moves away and starts taking off. Be cautious.

 

 Stock Selection Criteria

I first go to the scan http://stockcharts.com/def/servlet/SC.scan?s=TXA[T.T_EQ_S]![AS0,20,TV_GT_40000]![TV0_GT_AS1,20,TV*4]![TC0_GT_TC1] and I look at all the NASDAQ and NYSE stocks. Once I see what's available. I go to www.stockta.com and enter in all the available stocks and see what I like. I'm looking for a stock that has shot up in price very high and backed with huge volume. Ideally there should be about 1-3 months of consolidation before the spike. The tighter and more consolidation the better!

 

Once I've picked out all the stocks I like (if there is any) then I put them in my watch list and look at them again with my chart setup (quote tracker). From here I'll narrow it down even more and get rid of the ones that don't look right.

 

I'll go to Google Finance and see if any of my watch list stocks are up after hours and get rid of the ones that are down big. Once I narrow it down again. I'll wait until pre market the next morning. I'll see what's stable and what's up pre market and get rid of the ones that are down. Once the opening bell rings it usually takes about 5 minutes to really see if the stock is going to take off or not. I'm looking for a stock that has a nice sized volume backed behind it and making higher lows.

 

That's all there is to it. It's pretty easy actually. Making money is easy, keeping it is the hard part. Constantly work on improving yourself every day. Doesn't matter how big or small the improvement is. Whatever it takes to get better bit by bit, every day. Whether it's a mental adjustment, a strategy tweak, skipping every other day to trade. Whatever, just improve!

 

Good luck.

ORCT- Back and Forth

Had a loss today. Basically jumped the gun, got all excited, I don't know about what but I felt excited for some reason. I didn't pay attention to any of my indicators except what stocks I was watching. Got in at the top, and then got out at the bottom. Fell below my bail out point and I had to get out.

 

Got in at 6.57. Used a market order and the bid jumped right as I sent it, lmao. Got out at 6.42 I cut my position size smaller than I usually do because I didn't feel too good about the stocks I was watching. That was my first clue that, "hey, maybe you shouldn't trade this". But no, I went out chased rabbits. Why is this so hard to do! haha

 

 

DDSS- Back on Track

This is what I'm talking about. Had a nice trade with DDSS. I was watching 5 charts and not much was happening. I left to use the restroom, came back and DDSS was the only one making higher lows. So I bought it immediately. Got in at 2.05 Next candle did what I was expecting, basically started to blow up  ran up on great volume. I sold some at 2.17

 

However, I saw the giant volume spike and figured the public might be in on this. Then I'm watching the Q's fall and had to make a decision, do I sell everything here while I have the profit? Or risk having it diminish and possible turning with the market? I decided to sell and took a nice sized gain which easily cleared my loss yesterday and then some. So I sold out on all my shares at 2.16

 

The second volume spike was basically what I was looking for which shows a nice top. Huge new high on huge volume. I was a couple candles too early and missed out on doubling my gain but hey, I made a decision I felt was right at the time and walked away with a great gain. I'll have to figure out some way to keep myself from bailing too early. A lot of these gains it'll show that I bail usually on the next candle after I get in. If I could just sit and wait for a 3 or 4 or 5 candles to develop I could be pulling in a little more cash.

 

Ahhh,...see that, my greed is getting stronger. I should be content with what I have, but no...there's always a way to make more..lol. I need to control that greed factor and be stoked that I'm still alive in this business.

 

 

Thoughts on Not Trading

Not trading on days that are bad for your strategy or not trading stocks that don't work how strategy defines them is very hard to do. If one can master that idea and execute that idea without hesitation, you've just found the holy grail of trading. By only trading on good days and/or good stocks that are defined by your strategy and at the same time cut on any losses that might result from a winner, you'll be profitable. You cut your potential winners when they turn out be to losers.

 

I've been cutting losers that turn into losers. I'd trade stocks that aren't apart of my strategy, for some reason thinking they'd be winners, and I'd have to cut them. Yeah it's good I'm cutting my losses but I'm screwed before I even get in the trade because the stock is a loser.

 

When people say, cut your losses. I think it needs to be explained a little more. The idea of cutting losses is key to becoming a trader, but don't trade losers and then be forced to cut it. If you always trade potential winners based on your strategy, your odds of success are boosted extremely. Sure, you won't be hitting 100% winners but that fact that you're trading all potential winners is great. This is when cutting your losers helps a lot. You're already trading all winners, and hey, a potential winner comes a long and turns to a loser, cut it and wait for the next winner.

 

This might sound so elementary or so simple but it's like I'm getting a little light bulb turned on in my head and I'm truly starting to understand WHY these people always say these things. It's different when you read it for the first time and try and do it, but when you finally begin to understand the meaning backed behind these ideas, it's like you can see behind the smoke and mirrors.

 

Today I traded a loser and had to cut my loser. That's what I'm pissed about. I don't care if I trade a winner and it turns into a loser, that I'm ok with. I have a post on my blog about 4 different kinds of trades.

 

-Winners

-Losers

-Good trades

-Bad Trades

 

Winners and Losers will always happen. But good trades and bad trades are totally different. I'm working on having Winners and Losers come from only Good Trades. A Good trade is one where you execute your plan perfectly, you trade a good setup, you wait for the wounded rabbit instead of running in the fields tiring yourself out chasing everything you see. A bad trade is one where you are chasing rabbits, you don't trade stocks based on your strategy, you're ignoring your strategy. Now, getting a winner from a bad trade is horrible because it'll only reinforce that a bad trade could work.

 

Good trade can come from not even trading at all. By waiting on the sidelines when your strategy says, "hey, there's nothing here for you, move along", you've just saved yourself from making a Bad trade that will probably result in lost cash. This is an idea I'm trying to grasp and I believe I have grasped it, but executing that idea is the next step. Truly not trading on days that are bad for you. If I can do that, I'll be another step closer to ending the week profitable.

QID- What the hell am I thinking?

I'm pissed off. Yeah, I lost money but more importantly, I didn't even trade my strategy!? I had 4 stocks I was looking at for the open, none of them moved so I closed them all out. I look at the market falling so I go short. Like an idiot, I feel I need to trade everything. This happened the first day of last week also. It's hard for me to go over the weekend without trading, and then Monday rolls around and none of my setups work out and then I'll have to go another day without trading. Especially if I didn't trade Friday, which makes it even harder when Monday comes.

 

I don't know what to do. I had to format my PC over the weekend so my little alarm clock thing got erased which might of attributed to the problem but It was me, wanting to trade something. Well, here yo go, you fucking traded a stupid ass setup and lost money. Bought at the top and sold at the bottom.

 

Going short is not even close to my strategy, I don't even have a plan or criteria or anything for going short. I had an idea of where I wanted to get out, which I did. But I mean, fuck...walking away is so hard! Why? I don't know. Maybe I'm a greedy bastard..

 

Ten Ways to Lose Money on Wall Street

I just finished reading Tape Reading & Market Tactics by Humphrey B. Neil and at the end of the chapter he has the following rules he has come up with based on his experience.

 

1. Put your trust in boardroom gossip
2. Believe everything you hear, especially tips
3. If you don't know, guess
4. Follow the public
5. Be impatient
6. Greedily hang on for the top 1/8th
7. Trade on thin margins
8. Hold to your own opinion, right or wrong
9. Never stay out of the market
10. Accept small profits and large losses

 

If you follow any of these rules, I'd try and come up with ways to get over them, fast.

 

Here's a quote I read that really stood out for me. It's so true and sums up the difference between trading and gambling so beautifully.

 

"Speculation in stocks, to be successful, must include judgement, common sense, and market perception; whereas stock gambling is nothing more than guessing upon the tick of the quotation"

Sidelines - Again

Not putting on any trades this morning. I was watching two stocks. One of them fell immediately and the other was jumping up and down in a wide range and then broke down and fell. The Q's have been on a steady down trend so far this morning. Overall conditions aren't great for me so staying off to the side while the public destroys themselves is more than fine with me, haha.

 

We'll see what kind of action goes on through the day. I'd like to see some good stocks to trade for Monday after hours today but whatever the market brings I'm happy with.

COIN- Nice Opening Trade

I was watching COIN at the open, I had an eye on the 10.74 level since that was yesterdays high. I saw it was up pre market which was a pretty good sign but I didn't know how the overall market would react to yesterdays end of day rally. The Q's started to inch their way higher and COIN hit 10.74 about 4 times and then blew by. At that point I had my entry ready to buy at market once it broke those levels. I got in at 10.85

 

The second and third candles couldn't break that high they just made which got me a little worried. So I sold half at 11.04 set my stop at 10.68 and left to use the restroom. Came back and saw we were up in the 11.20 I let it keep running (Yay for me, I have a hard time letting my profits run but it seems easier when I have a stop in place). I was also keeping a close eye on the Q's because I wanted to see what they were doing. Volatility is around -2% so I figured resistance might be playing a bigger role. Just as the Q's were hitting resistance I bailed completely on COIN and got out at 11.35

 

All in all, a good trade. I tried to stay calm as much as I could. I set stops which relieved some mild tension and I traded what I saw.

 

MTTG- So Stupid

Man, it's hard sitting on the sidelines wanting to trade something. I feel I still have some addictive traits left in me. I still want to chase those damn rabbits.

 

MTTG was something I was looking at for a trade at the open. Which it started to move like I wanted at the open but I never got in. I was putting in limit orders as it started to run but none of them got filled. So, I put in a market order, I knew it was so stupid. I guess I just wanted to buy something. I got in at .95 cents and set a stop at .91 cents. It fell to .92 and I got filled? I never saw it hit .91 it had to of been a glitch or whatever, something happened behind the scenes but I got filled at.91 cents and now I'm out for a nice sized loss.

 

I don't know..I mean, I know I shouldn't of traded, I know the market order on a penny stock is retarded I just hate sitting on the sidelines waiting for the things to be in my favor. I was hesitate to close out the chart when I decided not to trade it but I still kept looking at it. If I could just tell someone I won't trade and then have them force me to do it. That'd be great, haha. Self discipline is so damn hard. But hey, I'm a rookie when it comes to not doing things I know I shouldn't. Still working on that. I'm improving a lot I just need to get it down in stone.

 

Accountability Idea

I'm sitting here thinking how I can stop making these stupid mistakes. I want to get an alarm clock and set it for 6:35 am which is 5 minutes after the opening bell. In that 5 minutes I can usually tell whether I'll trade the stocks I'm watching or not. I've been pretty good with closing my charts after that 5 minute period but I think what happened today was me getting impatient. It's been 4 days since I put on a trade and I probably felt like I had to be trade something.

 

So, I want to get an alarm clock and have it across the room or something so when it goes off, I have to get up and walk away to turn it off. That might help with me walking away from my potential losers.

 

 

EDIT: I went looking online for a really good alarm clock and I found one. Click the picture to go to the site if you need an alarm as well. I have it go full screen after 6 minutes of the market being opened. It then shows a message I made saying: Stop Trading! Do something else!

 

We'll see how that helps with my discipline

 

My "Success Notes for Beginners"

I've had a stack of notes on my desk that I took from various books and seminars last summer. About 15 pages or so and I just condensed them down into a 6 page PDF document for anyone to download.  The notes are all well laid out with bullet points and highlights.

 

I can't even begin to describe how much is here and I'm sure you'll find at least one tidbit in here that you can use.

 

Download: http://www.mediafire.com/?ansdxysy3wm

 

 

Sample screen shot below

 

Sidelines

Markets look to be rallying pretty nicely off the lows this morning. Although two of the stocks I was looking at didn't want to move with the crowd. No trading from me today.

 

I'll be watching to see how things play out, especially towards the end of the day to see if anyone will be selling into the close or buying up shares.

Speculation as a Fine Art

The bible for successful speculators, written on speculation, by a successful speculator. Watts was president of The New York Cotton Exchange between 1878 and 1879, which was then one of the greatest arenas of speculation in America. This is a combination of what is speculation, along with some thoughts on life, business, society, and language. An excellent thought starter. http://www.amazon.com/Speculation-Fine-Art-Thoughts-Life/dp/0870340565

I came across this book randomly this morning reading some trading forums. This is another book I've read and I highly recommend it. Another very small book and can be finished in about 30 minutes or so but it's one those books that's just so jammed packed with information.

 

Download PDF: http://www.mediafire.com/?4mzzzm4uzr0

As a Man Thinketh- James Allen Downloads

I bought this little book about a week ago and just finished reading it a few minutes ago. To cut to the chase, the book is mind blowing. It's a very small read, about 45-50 pages or so but the content that it's packed with seems like it's a 400 page book.

 

As a Man Thinketh is a literary work of James Allen, published in 1902. The title is influenced by a verse in the Bible from the book of Proverbs chapter 23 verse 7, “As a man Thinketh in his heart, so he is.”

The book opens with the statement:

Mind is the Master power that moulds and makes,

And Man is Mind, and evermore he takes

The tool of Thought, and, shaping what he wills,

Brings forth a thousand joys, a thousand ills:—

He thinks in secret, and it comes to pass:

Environment is but his looking-glass.

- http://en.wikipedia.org/wiki/As_a_Man_Thinketh

I found the PDF version of the book so you can read it immediately from your PC and also I have the audio tapes if you'd rather put it on your ipod or whatever and listen to it instead of reading it from your PC. Either way, you need to get this information in your head, repeatedly. It struck me so much I spent a few hours compiling the info for you to enjoy.

 

• As a Man Thinketh eBook Download: http://www.mediafire.com/?7ynv2fjnyp2
• As a Man Thinketh Audio Book Download: http://www.mediafire.com/?9r0wuwvveyy

 

It's interesting that the most amazing information is free yet no one seeks it. Because it's free,people, in my opinion, assume it has no value. If it doesn't cost a huge amount of money, then it's crap. Take the public library for example, it's a gold mine of free information yet not many people utilize the resources. Read this book!

Some Thoughts

I need to report to someone/something to help with my discipline. I don't have anyone who can manage me so I'll have to report to this blog more. I'll come here and post the night before when I'm not going to trade the following day, after I've done my research. That way I won't leave it up to the next morning to decide what will happen because I will have made a blog post stating I wasn't going to trade.

 

I'll need to do it immediately after I finish going over my routine.

 

Also, I'm going to have to rewrite my trading plan because the one that's listed here is a plan that I haven't followed for about 2 weeks now. I've been developing a new strategy which I might post here, I don't know yet. I might keep it offline. So far all those people who like reading my business plan, you can use it if you want but just know that I haven't been following it recently.

 

• Report to my blog ASAP about whether I will trade or not for the following day
• Re-write business plan
• Don't force myself to trade losers. Trust my original judgement and never second guess.

LCRD- Took a Hit

Kind of funny how it happened. Lat night when I was going over some charts, initially, I didn't see anything I liked so I left but I had this nagging feeling like I needed to go back to make sure there wasn't anything I was missing. I went over all kinds of charts again and sure enough, somehow found what I thought was a winner in a pile of stocks I deemed losers a few hours before.

 

I went out looking for the winner, and I found one whether it was one or not. My emotions got the best of me on this one. I got in on LCRD at 12.40 saw the weird crazy candles after and really didn't like the way it was acting and I got out at 12.17 just in time before a nice decline came.

 

This trade is more than just a loser, it's a pure, rookie and emotionally charged mistake. I shouldn't of traded at all last night and I knew it too, I walked away, came back and forced myself to find a winner and lost.

 

DON'T FORCE YOURSELF TO TRADE

 

NITE- Can't Complain

This was a fairly decent trade. My entry really limited the possibilities on this one as far as the gains go. Exits look to be ok for what it's doing now but I jumped the gun as I got in at the top of the morning candle at a price of 15.20

 

I sold half at 15.37 because that was the high for yesterday and I didn't know how it would react to that. It ended up acting pretty good, shot up and got out at 15.49

 

The gain was basically in line with what I've been doing so I can't complain. I'm just happy I might end this week profitable.

 

Sitting on Sidelines

Put me in coach! This is how I feel. I'd like to put on a trade but the conditions aren't right yet. I was watching MATR, CRIS, and RSC. Two out of three were up pre market but once the gates opened they all started to fall along with the market.

 

So, I'll be waiting for this day to pass so I can see what I can do about tomorrow. I'm starting to like the days I don't trade, you know? I don't have to trade everyday. I've only been making a few trades a week and I've been pulling in more cash than I usually do in a month. Me sitting on the sidelines during the down times I think is what's helping me stay profitable. But it's still early in the game to get cocky.

 

There's an African poem I like to read, I'm sure you've heard it.

 

"Every morning in Africa, when a lion wakes up, it knows it has to run faster than the slowest gazelle. When a gazelle wakes up, it knows that it has to run faster than the fastest lion.

It doesn't matter whether you are a lion or a gazelle, but when the sun comes up, you better start running." - Herb Caen