Thursday, April 5, 2007

A digger of holes in a land of holes


"I'm a digger of holes in a land of holes."

-Wolf Parade, from "Dear Son's & Daughters of Holy Ghosts"

I can't tell you how prepared I was today to take it easy. I said it to myself, I said it to others. I said, "I'm going to take it easy today."

By 9:45 or so I was up a couple hundred bucks and had no positions. I could have taken the rest of the day off and started the long weekend a little early with my confidence intact ahead of the big earnings weeks to follow.

But no. I had to make things interesting.

Not sure how many times you need to "learn" a lesson in the market before you truly "learn" it, as in, you stop making the same bone-headed mistakes. I have no idea how many times I have tried and failed to "anticipate" a bottom in a stock. I know why I do it. I do it because I'm so afraid that once the bottom is in that I'm going to miss the entry. I'm afraid that I'll look back and say, "Oh man, that was such an easy trade to catch. Look how it ripped straight up off that bottom and I missed the whole thing!"

What's worse? Missing a "good trade" or being involved in a "bad trade". The answer is being involved in a bad trade. By a long shot.

Anyway, so I made a lot of mistakes in MON today. I was down over $2500 in the stock by noon. Between noon and 1:30, I built a 3500 share position in the stock as it consolidated. During this consolidation, the stock broke a downtrend line that had been dogging the stock since the afternoon yesterday. The best thing I did today was to NOT sell the stock when it finally started to move in my favor.

I was overjoyed when the stock finally broke upwards at around 1:48. It would have been a mistake for me to sell here even though I desperately wanted to take some profit. Instead, I held and watched as the stock took a quick plunge back to the figure. This time however, instead of breaking the fig which had been acting as resistance for the last 2 hours the stock bounced right back up to 57.17 or so. At that point, I realized that a new sheriff was in town. The bears were gone and the buyers were again in charge. I held on to almost all of my shares and sold out of most of them in the 57.45-57.50 area. I cut my loss in the stock from around $2500 to about $900. Some silver lining, eh?

The main thing I want to take away from this trade is recognizing that if I had just been patient and waited for the stock to break that downtrend line before I began to buy that I still would have made money in the trade. And, I wouldn't have had to contend with all the losses that piled up while I was buying on the way down.

Anyway, here are the damn stats:

P&L -$674
Best: BTU $258
Worst: MON -$896

stocks traded: 8, 3 positive, 5 negative
shares traded: 48,200 (29,000 of these in MON)

Enjoy the vacation day.

I'll work on another "history" post this weekend. Also, by next Monday I hope to have a new feature on this blog.

2 comments:

Edwin said...

DT,

Tough day over at my end too. Good work on at least having a nice exit on the MON trade. Thankfully the P/L comparisons start Monday! Have a good weekend.

Dinosaur Trader said...

Yeah, an ugly way to end the week. I saw you had some trouble too. Best to get it out of the ole system...

Ah well, have to put it behind and focus on the coming week.

I'll shoot you an email this weekend.

DT