Monday, April 23, 2007

Quite a losing streak

In the grand scheme of things, I am in a small slump within a bigger slump. Lots of slumps. Great name for an animal, no?

Anyway, I lost a little money today. Actually, it's been so weird lately how I'm trading so much but coming right in around unched on many days. Trading not to lose and making it impossible to win? Perhaps. But today I had a fat loser that wiped away some decent gains elsewhere.

I'll talk about my good trades first.

I was thinking about ET's day on Friday when I saw oil began to rally this morning. That's when I figured he was probably shorting those airline stocks he loves. So I gave it a shot.

At 10:30 or so, I sold short 500 shares at 28.86 because I felt the general market weakening and oil strengthening. When the trade worked in my favor, I added 200 more shares to the position at 28.72. From that point on, it was simple. Oil kept rising, the market continued to weaken and AMR just slid slowly down. I covered a couple hundred in the 40s, some more in the teens, and then my last 300 at 27.80 at 3:36. It was one of the more relaxing trades I've been involved with in some time. And I remembered that when things work in your favor, this job is much more relaxing than when you're constantly battling.

I had a second good trade in the afternoon. This came in CMI. Let's forget that I missed the 10 points on the long side.

I short 200 shares at 86.91 at around 1:45 because well, for no other reason than I just couldn't believe the stock was up so damn much. I'm nothing if not honest. No reason to lie here.

Anyway, the stock fell immediately and I covered 100 shares a few minutes later at 86.13. Problem was that the stock them ripped straight up and I covered the other 100 shares at 86.95. That kind of hurt. It hurt more when the stock immediately went back down. Angered, I short 200 at 86.08. This was a mistake and I realize that I made the trade more because I was angry that I covered than because I thought it was a good entry. Stupid, but I realized the error of my ways and covered at 86.50 and 86.45 and took the loss. This was smart because the stock ultimately "squeezed" way up into the mid 87s. I was happy that I hadn't held.

But the squeeze into the 87s came on light volume and the stock began to collapse. When it broke through 87 on the downside, I got short again, 200 shares at 86.74. The stock dipped, the trade felt right, and so I added 100 more shares at 86.53. The trade from this point on was fairly smooth to the downside. I covered 100 shares at 85.72, 100 at 85.54 and another 100 at 85.74 making almost an exact point on all shares.

My bad trade of the day was in RAS. I hate to even write about this because this stock has been the bane of my existence for a week. I'm churning the stock. Perhaps writing about it here will help rid me of it's spell.

One lucky trade led me to make many bad trades in this stock. My normal entry size in stocks lately is 300 shares. For some twisted reason, I entered trades in RAS with 1700 shares (the lucky trade that worked in my favor), 2300 shares, 1400 shares and then 2200 shares. It's simple revenge trading. It's stupid and I will not be doing it again tomorrow.

I lost $571 in RAS. That hurts on a day where I'm barely down. What it means to me is that absent all the boneheaded trades in RAS where I broke my rules, I would have had a decent day. Now for the stats:

P&L -$27

Best, AMR $441
Worst, RAS -$571

stocks traded, 16, 4 positive, 12 negative
shares traded, 38,600
total trades, 148


Edwin said...

Nice work on the AMR trade! I missed that one, much to my frustration. Hopefully airlines will keep treating you well I'll have someone to celebrate and commiserate with. Good luck tomorrow.


Dinosaur Trader said...

Thanks, ET.

Looking forward to trading them as a group soon. I was always scared away from them because I thought they traded too much volume. Back in the Dark Ages when I used to "tape read" I only traded stocks with volume less than 1 million shares a day. But now, since tape reading died in December, I guess I should start looking at these thicker stocks again.

Anyway, thanks for introducing me to the airline sector.