Wednesday, August 1, 2007

Bitter Tasting Medicine

Well, my last trade of the day was this:

15:35:05 Sell 400 MTG @ 34.25 (flat)

I took a quarter point loss in the trade but more importantly, took myself out of the market for the rest of the day because my self-imposed loss limit had been triggered (-$1500). Immediately after I sold out, the market ripped.

Painful but I only have myself to blame. I traded like shit today.

Whereas in the last few days it seemed that whenever I entered a trade it immediately moved in my favor, today the opposite happened. I took a lot of small losses (and a couple of big ones), over and over again and they added up.

A perfect example of my awful timing today is shown in my worst stock of the day, MA.



I bought the stock just after noon and quickly, almost before I was able to react, lost a point. Then, I waited a moment before I sold (hoping it would bounce) and lost another point.

Another bad loser came on my first trade of the day. I short GHL at the open and lost a quick, clean point.



Also interesting today was the movement in TNH.



When the stock broke $100 on that huge down spike I bought. Problem was that I bought too much.

With my system putting me on liquidation only mode if my P&L even ticks down to -$1500 this stock was simply too volatile for me to be holding as much as I was. I was filled at around $99.75. With my early loss in GHL (and a couple of other less significant losses) I didn't have that much wiggle room. So when the stock traded down to $97, it triggered my account loss-limit and I was left to do only one thing, sell stock. I couldn't buy any more TNH or any other stock. This messed with my head and when it came back close to breakeven, I exited the trade for a small loss and then watched it rise up over $103. Frustrating.

But nothing can match the frustration I felt watching the market rip in the last 30 minutes unable to get involved. I felt like a eunuch or something. It sucked.

The point is however, that I deserved to be sitting on the sidelines because I wasn't trading "right" today. I just wasn't timing my trades correctly and I should have been a little more careful so that I didn't put myself in the position to get stopped out by my system.

I haven't updated everyone on my system loss limits. After my success of the last week, I upped my loss limit. I did this after Wednesday of last week. I upped my loss limit for two reasons... first off, I made some good money and felt aggressive again. It's hard to be aggressive with a $500 loss limit. Also given the market volatility, I thought that my limit was too tight, for exactly the reason that I pointed out in the TNH trade.

Anyway, so today wasn't my day. I took my medicine which was watching the market rip from the sidelines because I had traded irresponsibly beforehand. I hated it. That is something that will stick with me and I'll be more respectful of my loss-limits. When I feel I'm not "on" or the market isn't "acting right" I'll be less apt to churn and burn and more apt to sit and watch for opportunities so I don't die the death of a thousand small cuts.

Here's the stats:

P&L, -$1624
Best, SPG,
$376
Worst, MA,
-$755
shares traded, 50,400
30 stocks traded, 12 winners, 18 losers
265 trades

10 comments:

jeremy said...

this volatility should be your bread and butter, why losing?

Dinosaur Trader said...

Jeremy,

This volatility has been my bread and butter. I just had a bad day today. Check the last few days and you'll see I did okay.

How do you trade, by the way? Are you a swing trader or long-term investor?

Thanks, DT

artha said...

DT,

At least you kept your losses much smaller than your recent gains. The market always humbles us when we're on a roll.

In a prior post, you mentioned the S&P futures 1460 level. Any particular reason you look at the S&P futures versus the SPX?

Good luck tomorrow.

jeremy said...

i've been taking the opposite of your trades, it's been making me a wealthy man

wincity said...

I bought TNH too, about $1 lower than you. I was waiting $2 higher initially but chickened out and took my price down $2 just before it was about to fire. Seconds later, it fired. A few more seconds later, I was in the hole for $2. What a crazy stock!

Dinosaur Trader said...

artha,

For whatever reason, that's what I've always watched... whoever taught me to set up my screens those first days told me to put the futures up and so that's what I've watched...

You think I should watch the SPX?

Anyway, you're right about the market being a humbling place.

-DT

Dinosaur Trader said...

Win,

Yeah, the stock was absolutely nuts there for awhile... that's why I bailed. I just couldn't take the heat.

-DT

Dinosaur Trader said...

jeremy,

I didn't realize at first that you were "asshole jeremy" from "the Fly's" blog. Don't you get enough abuse and embarassment over there?

Go eat some rancid meat or something.

-DT

jeremy said...
This comment has been removed by a blog administrator.
Dinosaur Trader said...

Bye Jeremy,

Bring your negativity elsewhere. I've no need for it.

-DT