Wednesday, December 12, 2007

"Selling Out" (Part 8)

(Note: Since I've gained more readers in the time that I first posted the history posts (months ago, I know, I'm sorry) I figured I'd link the two previous to this one. If you want to put this post in context, I suggest reading at least these two first.) Part 6. Part 7.

After my "interview" with Peter, conflict set in.

I grew up in a middle class household that placed zero emphasis on materialism; my mother was a nurse and my father was an educator. I went to public schools.

Somehow I managed to get accepted to an Ivy League college. There, for the first time in my life, I felt poor.

All of my new "college friends" had attended private schools and had connected parents and fancy summer homes. They didn't cook themselves pasta every night and get "work study" jobs so they could afford books. They didn't seem "normal" to me. They would get excellent summer internships because some guy owed their father a favor, while I got stoned and served up "fish'n'chips" all summer at a local Bennigan's.

It built character.

The point is, me working on Wall Street seemed kind of wrong. I felt like I would be "selling out" or joining this "culture of money" that I'd been observing, somewhat critically, from the outside. I wasn't sure if I really wanted to head in that direction.

I had drinks with my best friend Sam to express my concern. He told me I was nuts.

"Fuck it. Make money and then become a monk."

He worked for the State Department and was on his way to South America. "It's crazy down there." He explained. "Everyone wants to kill somebody."

I didn't have to worry about that stuff. I just had the plastic smell of my keyboard and the gentle hum of my computer to think about.

"Make money and then become a monk." It was excellent advice.

I was young. I'd have plenty of time to work out my life's details later. Sam and I drank a good amount that evening. As I watched him walk down a wet street in Brooklyn to hail a cab back to the city, I could never have guessed how different everything would be for us both in just a few months.

Now that I had worked out any lingering doubts about working on "the Street" I had to begin studying for the Series 7.

Studying for "The Seven" is an exercise in monotony and memorization. I didn't try too hard to absorb what I was reading, because I knew I wasn't going to be selling securities products; I just had to pass in order to trade. While the study book was gigantic and all the material completely new to me, I only gave myself three weeks to absorb it all and take the exam.

Those three weeks are more or less a blur now.

I'd study for the first few hours of the morning, then break at 11 to drink coffee, have a cigar (I started smoking cigars because I thought it would put me in a "Wall Street" frame of mind... kind of like method acting), and watch "carnies and fat people" beat each other up on the Jerry Springer show. After Springer, I'd study until Judy came home.

When I had taken every practice exam and memorized every question I set a date to take the test. I don't remember much other than the instantaneous scoring. It's a scary process. You study for weeks, sit and take a 6 hour exam and learn right away whether all that work was worth it or not.

Happily, I passed. I haven't smoked a cigar or watched Jerry Springer since.

The next day I was back at Anvil Capital in the small hot room "papertrading."

Radiohead, "Ceremony" (New Order cover)

Dazed And Confused

Here's my blotter for the day. I'm publishing the full thing to give you some idea of how completely crappy I traded.

JLL $115.81
LDK -$41.75
BBD -$56.12
OSK -$60.34
MBI -$63.91
WNR -$102.47
ABK -$119.42
ITU -$124.64
TSL -$174.50

Out of all the trades I made today, I think only two were in the money for any period of time. It's like I was completely wrong, over and over. I'll go through some of them. I don't really feel like writing colorfully... I'm exhausted and pissed off, so bear with the dryness.

First trade of the day. Buy 300 RWT at the open. Below you'll find a 1-minute graph.

You see what happened. It dropped over a point in that minute and then shot right back up. What could I do? I sold. I lost about 60 cents. Fine. Bad trade. Thin market with no size on any bid or offer.


You see the circled area? That's where I traded this stock. Solars were strong and TSL was breaking it's opening range. So I bought 200 shares at $50.88. The stock popped over $51 so I bought 100 more and was filled at $51.14. I moved my sell-stop up to $50.60. It traded back down, through my stop and filled me at $50.39. Loss booked.

ITU. Well, perhaps I shouldn't have been trading in the middle of the day. Anyway, I got into the trade just after noon when he looked like he was breaking the low of the day. This was happening just as the market was weakening further so I felt pretty good about it actually.

Bad entry. It popped up and took my stop out up at $28.25. So it broke lower. Very frustrating. I got short again, this time with a smaller position size. It immediately popped back up to the figure and (breaking a rule) I doubled my position. This was around 1pm and the market looked like it was about to turn, so I covered, taking a small loss and.... I got long. I made a few pennies on the trade and... it went higher. Pissed that I had released my initial position, I bought again, pu near the high of the move. I sold half for a few pennies gain, but then sold the other half when the stock retreated again to the figure, for a 20 cent loss.

So, I churned the stock. Also, the stock was stuck in a pretty tight range. I didn't take a huge loss on this stock for the day, (-$125) but on a day where I couldn't find a winner, it stung nonetheless.

Anyway, those are my three worst stocks of the day. Frustrating losses.

But the real story of my day is that I just couldn't find any winners for me. That's why I left to go surfing. I was feeling defeated and I'm pretty sure you can't trade right when you're expecting to lose.

I don't feel like I can take too much away from today. Hopefully tomorrow goes better.

I feel like I'm braindead.

Here's the stats:
P&L, -$900
Best, JLL, $116
Worst, RWT, -$241

11,600 shares traded.
11 stocks traded, 1 winner, 10 losers.

Virtual Office, $5524. Dow, +41.13, 13,473.90

Misstrade, $8243 on 6000 shares traded.
Sanglucci, $784 on 30,800 shares traded.
OBAT, $294 on 6000 shares traded.
Wincity, no trades.
Akalawoo, no trades.
Denarii, -$3 on 744 shares traded.
Dehtrader, -$194 on 1570 shares traded.
Me, -$900 on 11,600 shares traded.
Evolution, -$2700 on 6000 shares traded.

Solid volume at the NYSE today. We traded 1.7 billion shares. However, the VIX declined 1.12 to 22.47.

The FED opened up more liquidity to the market today, a day after cutting interest rates 25 bp. The market gapped up huge at the open and then sold off all day long. The sell-off accelerated at around 3pm and the market dipped into the red. The last 30 minutes saved the bulls.

Looks like it was a pretty great day to trade. I fucked it all up.

The silver lining is that Esignal worked like a charm today. Go figure.

Anyway, onto the daily post.

Going Surfing

Take that OSK trade, multiply it by 6 or 7 and you have my day.

I'm frustrated beyond belief. I need to clear my head.

There are waves today for the first time in weeks. While the water temp is a chilly 44 degrees, fuck it, I'm going surfing.

So the VO will be late. I'll be on the bottom.

Oh, and there's like a 90% chance that I'll have a "history" post up either later tonight or by tomorrow morning.


The worst thing about this trade is that I thought I was being "careful." But man, it sums up my day.

I bought around $49 when it showed increasing volume and then I bought 100 more when it broke the OR around $49.30. I sold some up near the top, but then added more when it came back down to my original entry.

This time, the $49 level didn't hold and it broke through and stopped me out of my full position at $48.75.

So, I turned a winner into a loser. Very frustrating.

Bears On Fire

You only need to watch the first 30 seconds to get the point...

Schizophrenic Market

Wow, after we got drubbed yesterday, the futures have bounced 15 points. I'm happy I went out flat yesterday because with my bearish slant I could have easily gotten sucked into the market on the short side.

Meanwhile, Dummyspots gets it right again. I couldn't agree more, Will.

UPDATE: The FED just set the futures on fire. They will use swap lines and auctions coordinated with the ECB to address liquidity issues.