A New Approach, But... Not Really

At 9:30am I slipped the Skygreen Leopards into my disc drive, leaned back in my chair and watched my screens blink madly at me. I imagined them angry at me for not engaging them. They must have wondered why I wasn't cursing at them.

But I was impassive and watched CNH with a bit of amusement as I imagined all the traders who got their balls ripped off in him trading the open. It made me feel smart. What a freaking lunatic!



For my first trade of the day, I shorted 100 shares of AMG at 129.73, this was at 9:46. As you can see, I didn't have to endure much pain in this trade, it worked in my favor almost immediately. I only threw in 100 shares because although it looked short term overbought I thought it possible he may get all the way up to 131 and I didn't want to risk too much right off the bat.



Anyway, I covered at 10:00 at 128.57. I'm still not sure if I should have. I mean, the first big question I need to answer about this new style is whether or not I should actively cover, trail stops down, or just leave my original stop in. In this case, ultimately, the stock went lower on the day.

It's already late so I can't get into everything about my day (I'm waking super early again tomorrow) but there were a couple of other trades that bothered me and that I didn't handle well.

The first was SPG which was my biggest winner of the day.



I bought 500 at 96.13 and figured if I put my stops just below the low of the day that I'd be risking about a half point. On the daily this stock has been crushed because it's a REIT and I guess it sold off with the rising interest rates. Anyway, I sold out early. 100 shares at 96.18, 200 at 96.37, and 200 at 96.85. But all of these were nervous sells. I mean, I was never as much as a dime out of the money on the trade but I was nervous whenever the market looked like it was weakening and sold really, because I was scared to lose.

It gets worse. Check out this beautiful graph for AB.



At 11:24 I bought 300 shares at 85.10 just before the breakout... right before the stock ripped straight up for 3 points. But guess when I sold... at 11:28 at 85.18. I really wanted to lock that 8 cent gain in... awful.

Finally, I get to my big loser on the day, CF. I short 500 shares at 56.50 at 2:20. When it broke the lows from 12:30, I thought it could break and follow the downward path that TNH, another fertilizer stock, was tracing. Anyway, 2:20 was basically the afternoon low on the S&P and the stock followed the futures up and squeezed me out at 57.15 for a $300 loser.



So anyway, I lost money. But I realized something that explains the title of this post. The way I've been trading for the past few months is just wrong. Everyone who has told me I was overtrading was exactly right. I am churning positions when I really don't need to.

I picked some good stocks today and had I let them run instead of getting nervous and covering, I would have made good money. I think it's a matter of readjusting and regaining confidence that I am actually buying stocks at decent levels. I mean, my entries weren't the big problem for me today, it was my exits.

It's the old rule, "Let your winners run".

What I realize is that this isn't really a huge change to my trading style. It's just calming it down... a lot. I don't need to reinvent the wheel, I just need to let the old wheel roll a bit and gain momentum and maybe it won't fall over so much... it's late and I'm going to let that corniness about the wheel slide. Hopefully you understand what I mean.

Oh, and GO LNN! Beat and raise! Beat and raise! Please! I held into earnings.

Anyway, here's the stats:

P&L, -$102
Best, SPG, $193
Worst, CF, -$297

shares traded, 9600 (about a third or a quarter of a "normal" day for me)
stocks traded, 9. 4 positive, 5 negative.
total trades, 78