The Importance Of A Floor To Stand On

I was going to name this post something like, "RIP 'Slump' March 2007-July 2007" but I decided against that.

I think that instead I'm going to treat "the slump" kind of like we treat the "War on Terror" here in the U.S. It's going to be a never-ending battle that requires vigilance and constant changing of tactics.

That said, I won a pretty significant battle today, no doubt.

My "best" trade of the day also happened to be downright lucky. It was a short in TBSI.



I was turned onto this stock over the last week by the guys in Wallstreak. It's a shipping company and therefore, it often trades along with the price of crude and with oil stocks in general.

It was relatively strong going into the Oil Inventory data that was released at 10:30 and so maybe I shouldn't have been shorting it at all. However, with the weakness in every other shipping stock, including the other recent leader DRYS, I took a shot.

Here are my trades in the stock:

10:14:13 Short 300 @ 38.85 (-300)
10:14:27 Buy 300 @ 39.04 (flat)
10:23:15 Short 200 @ 38.65 (-200)
10:30:36 Buy 100 @ 37.70 (-100)
10:31:39 Short 300 @ 38.09 (-400)
10:38:05 Buy 100 @ 37.65 (-300)
10:44:04 Short 200 @ 37.78 (-500)
10:50:09 Buy 300 @ 34 (-200)
10:50:49 Buy 100 @ 34.18 (-100)
10:50:54 Buy 100 @ 34.20 (flat)

Never in my dreams was I expecting the stock to drop to $34. I was thinking it could go to "unched" on the day, but I didn't see that drop coming. In fact, the low of the day was $33, so I left a point of profits on the table. No complaints, I made over $2000 in the trade.

Anyway, at around the same time that TBSI was falling off a cliff I made another good trade. This time in a recent favorite of mine, MOS.



Again, I found this trade by watching all of the fertilizer stocks decline. They were all weak, though again, I had no idea that they were all about to fall off the face of the market.

I initially short MOS up around $38.80 because it was struggling to regain it's highs from the early morning and the rest of the fertilizers, most notably MON, were coming off. Again, I was hoping the stock would get to it's 50-day moving average line and then stabilize, setting up an opportunity to buy.

It shot straight through the MA. In fact, I covered way too early and then got long. I took a loss in that initial long but kept watching the stock. I bought back a little later and rode it up for a nice retracement. I made a little over $1500 in these trades.

I also had two other fertilizer stocks that I traded for over $1000 in gains each, CF and TRA. Both were short trades made at the same time I was shorting MOS. So, the charts speak for themselves.





On the other side of the ledger, I made bad trades in ARD and BTJ today. I bought ARD during it's slide lower in the morning and then missed the bounce. BTJ, I bought once and lost a straight point on. Sometimes that happens in BTJ, he's a lunatic. The good news was that I didn't get stubborn and try to fight the stock or make a revenge trade. I took my loss in BTJ and walked away. -$392 on 400 shares traded.

So back to the post title. Surely the market has been better for trading these last few days and that has something to do with my recent success. However, I also think that calling my risk manager and placing a very tight loss limit on myself has done wonders for easing some of my mental strain. It was kind of like admitting that I had a problem and that I needed some help in getting my discipline back.

Simply put, I no longer feel like I'm trading without a net.

During my big years, I was in an office. I can be a "competitive shit" and I wanted to beat the other traders because frankly, I thought most of them were meatheads. I never had big losses. I knew they were the hallmark of a bad trader. I just focused on making good trades, taking long lunches and letting the boys with the big egos scream red-faced at their 12 monitors and talk about their fancy cars and their country clubs.

Wanting to beat those idiots made me a better trader. And for the years I traded in the city, I beat most of them day in and day out. Back then, my competitiveness provided me with a "net".

Since I've begun trading from home, I've had a hard time channeling my competitive spirit back into the market. Despite the fact that I'm a trader and I like to trade well, I've never been a materialistic guy. Making money for the sake of making money has never interested me.

So then I became a father and the entire focus of my world turns towards my daughter. Making money then became more about "security"... having enough for her college, having enough for (if you can believe it) her nursery school! This led to a classic mindfuck. Every time I lost money it became anxiety. Every new loss turned into "how can I afford to send her to school?" etc. This is a very poor mindset to trade with because it killed my ability to want to take on any risk... I became afraid to lose money and ironically, this led to me losing money over and over again.

Over the past few months, even before I contacted my risk manager, I started working on taking my foot off the pedal. I took up surfing again. I started walking away from my computer in the middle of the day... I began to trade less and I began to search for perspective again. These efforts, combined with the "net" from the risk managers have given me a floor to stand on again.

Hopefully, the trend has finally changed here.

Here's the stats:

P&L, $6817
Best, TBSI, $2078
Worst, BTJ, -$392

shares traded, 63,200
22, 14 winners, 8 losers
total trades, 300