Tuesday, November 6, 2007

A Profitable Slumber

We had a late night. Saw Darjeeling Limited, really liked it and then had drinks with friends afterwards. Last time I had seen 11:30 on a worknight was in 1997, so I was hurting this morning when I woke up.

I planned on taking it easy today anyway, since I got so smoked yesterday. All day long I was trading with small positions, maxing out at 400 shares. I basically scalped all day... I hate trading like that, but I wanted to focus on taking profits and cutting losses quickly.

My best stock of the day was ABK.

They had a conference call at 10:00. It was pretty clear that they were going to come out and bash on the analysts who have recently been bashing on them... it was stupid of me to not load up more since I had good conviction on this play and it worked out.

Another good play I had today was DSX. This was a "darkside" trade... or short.

I noticed the relative weakness in this stock as compared to the other shippers at around 10:30 or so. The stock had a large bid (a rarity in the hybrid world) at $38.72 and I figured if he smacked it out that he would plunge a bit if the other shippers started to weaken. That exact scenario played out and the stock dropped nearly 2 straight points in short order.

Yesterday really messed with my head. I was so consistently off with my timing in the morning that it's hard to believe. Also, I lost about $800 in BAP in the first 15 minutes of trade. I'm posting a 1-minute graph here so you can easily understand the absurdity that occurs when you mix the hybrid market with thinly-traded stocks.

So, I got short right away, at around $72.85. I hated the trade and went to cover at what I thought would be a small loss. Instead, when I went to cover, the "ask" jumped above the $73 and I lost a quick $200. Worse yet, I screwed up and forgot to cancel my buy-stop order. So, instead of just covering my short, I also got long, up near $73.50. It was basically like I was trading with myself. There was absolutely no liquidity and the quotes were all 1x1 and spread wide. The stock quickly dropped over a point so I lost money on my short and then on my "accidental" long.

This trade made me so angry, so quickly, that really, I should have at least walked away from the computer for a few minutes. But I thought yesterday was going to provide good opportunity, so I kept plugging. Clearly, a mistake. Yesterday did provide great opportunity, but it was later in the day.

The point is, I'm happy I bounced back today but I traded really nervously. So, even though I "won" I feel like I "lost" a bit.

Hopefully, by the end of the week I'll be back on track.

Here's the stats:

P&L, $1074
Best, ABK, $556
Worst, CNS, -$155

25,000 shares traded.
15 stocks traded, 11 winners, 4 losers.
147 trades.

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