So Where Did I Go Wrong?

Okay, on a day where the Dow rallied 400 points off the low and where we traded a huge amount of shares, I should have made money.

Especially considering that my first two trades of the day were winners.

I short MA pre-open and covered with a 4.5 point gain. Then, I short X on a spike up and made about 80 cents. So I was up over $600 in 5 minutes.

Of course, it's easy to look back and say that I should have just stopped and gone surfing, but I thought I might be in for a big day and with a $600 cushion, I felt good about my prospects.

So here's what went wrong.

First mistake, buying in anticipation of a trend break instead of waiting patiently for the break to occur. And yes... I make this mistake a lot.



Simply put, I need to be more patient. Had I waitied for the break and test I would have not lost $600 with my first 2 failed trades and I would have had more confidence to hold size for the move when it did come. Instead, I did buy again but with big losses in the stock already I was defensive and had only a couple hundred shares for the majority of the move. I trimmed my losses in the stock, but those losses shouldn't have even happened.

I think what I'll do is at least force myself to not buy a full position ahead of a break. If I want to be aggressive and pick up a couple hundred shares and risk a failed trade with small size that's fine. However, both times I went in early on the stock I had 600-800 share positions. Not a good idea.

Another problem I ran into today was not lightening up winning positions. I think again, that I had this problem because I was looking for "a big day" and not dealing with what was right in front of me, mediocre positions. I got seriously clipped at around 11:45 when the futures ran up on good volume only to pull back drastically in the next 15 minutes. The position that hurt me most at this time was CNS.



I seriously top ticked the stock at around 11:50. I had 400 shares and bought 400 more at the high, right before the stock dropped 80 cents. It ripped my face off and brought me negative on the day.

Instead of getting caught up in the euphoria of the market rip, I should have been lightening my winning position because clearly, the futures were moving into an overbought situation... a pullback had to come. I just wasn't careful here... Another problem? This is a thin stock. 800 shares is too much for me there.

I also had a churning problem today in BBD, my 4th worst stock of the day. Nearly a third of my shares traded went into this "toad" (to borrow Wincity's term) today. In fact, my worst 7 stocks of the day accounted for over half my shares traded today. Considering I traded 33 stocks, that's very bottom heavy volume there... never good.

In general, my biggest problem today was position sizing. I was buying and then adding because I was swinging for the fences and I ended up striking out a lot. If anything, as I size up again I'll need to buy larger positions when I enter but not worry about pyramiding, until I get my confidence with slightly larger positions again.

Overall though, looking back on the month, I did great.

I started the month unemployed after leaving my employer of the last 6 years and shacked up with a new group. I completely remotivated myself, stuck to my new research schedule and starting taking the job seriously again. I learned a new software system in a very volatile market and only had 3 or 4 down days while making over $10,000 in less than a half month's work.

Not too shabby considering my circumstances.

Anyway, here's the stats:
P&L, -$654
Best, MA, $450
Worst, RWT, -$232

44,400 shares traded.
33 stocks traded, 11 winners, 22 losers.

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