Wednesday, June 27, 2007

Good Trades Funded The Bad Trades

I'll admit it, I suck at getting long.

I think that most of my money days these last couple of months (few and far between, I know) have come when the market gets clipped. Right now, (really, since February) I have simply been more comfortable on the short side.

It's a huge limitation and I need to find a way to overcome it.

Traders need to be neutral on the market and be able to move long or short based on the opportunities that they spot. Since I'm chronically looking for shorts I am missing huge longs (see the REITS today) and worse yet, getting squeezed for losses way too often (see the REITS today).

I started off the day with a big bang, shorting TNH at 129.27 and 129.84. I covered 100 at 126.54 and the last 100 at 123.68. That was at 10:20. This was also the same time that I was covering my short in FSLR. I short 300 at 87.79 and covered at 86.80, 86.08 and 85.48. So, these trades alone along with a couple of smaller winners and no notable losers probably had me up close to $2000 by 10:30.





That's when I started pissing it all away shorting stocks while the futures moved steadily higher.

I lost money shorting VNO, POT, ALB, and VMC. But even my longs weren't working! I lost money getting long AG, CNH and OMG. It was very frustrating.

The one that hurt the most, mentally and financially was VNO.



I was looking at the lows from yesterday, 107.75 or so as a place where I thought the stock would meet with some resistance. So I started shorting around 107.50. You can see from the graph why this position was bound to fail.

So far this is my biggest problem with the new "system". Yes, it allows me to let my winners run more, but I haven't figured out how to limit my losers yet. I guess I need to continue to work on my entry points.

Perhaps I shouldn't have been shorting anything, but between 10 and 11 when I was entering this short position, the market wasn't up much and the TRIN was neutral to bearish... given the recent activity a reversal lower was a real possibility, especially with the leaders all being taken down this morning.

Anyway, on the bright side, I covered around 108.40 which, in retrospect, isn't awful. And, better yet, I didn't try to "get revenge" in the stock by churning it on the short side all day.

If I can continue to make money on "bad days" I'll be happy. For now, my mental state is slowly improving. I need to be careful these next two days not to "let go" and take a big hit. Small gains bring big confidence. It's important for me to get back in the habit of making money everyday, even if it's just $144.

Here's the stats:

P&L,
$144
Best, TNH,
$887
Worst, VNO,
-$377

shares traded, 16,200
stocks traded, 15, 6 positive, 9 negative
total trades, 89 (this number goes down everyday lately, which is good)

5 comments:

wincity said...

I have the same problem. Most of my trades are on the short side. I've been trying to fix myself too.

wincity said...

This is just my opinion. I feel that VNO short is low reward. The toad has been sold hard already. Unless the sky falls, there shouldn't be much more immediate down side. Besides, the market was way over-sold in the morning so a bounce is almost a certainty.

Dinosaur Trader said...

Win,

You're right about the market being oversold this morning. I meant to write that in this post... I need to start taking a macro look in the morning to get my perspective straight.

Too often I get overly bearish or overly bullish. If I just checked the S&P this morning I might have thought twice about trying to get short all day...

Thanks for the comment,

-DT

MIsstrade said...

Got to know where the overall market is, spoos, nasties, rusties, dowsters, then know the AD intraday and let the first 30 minutes go. Don't gamble with the other gamblers. Let ranges evolve!!

Dinosaur Trader said...

MT,

Absolutely. Today I went into the day not even realizing that the market had made new lows for 7 consecutive days.

What do you think of TRIN, MT? I have never heard you mention it.

-DT