Friday, February 1, 2008

Daytrading As A Spiritual Practice

The other day, in one of the comment sections here, I told someone that daytrading is analogous to a spiritual practice.

Sounds funny, I know, but it's true.

I mean, I write down these rules, all of the age-old daytrading adages, like, (add booming voice of God coming down from mountain), "let your profits run young man, but cut your losers" yet I still make the same mistakes.

I have the wisdom, it's just hard to implement it in the reality of the market moving. It's so easy to look back at static graphs and no where you went wrong. But when the futures are moving one way, ticks are moving another and news is constantly hitting, it's hard to keep your presence and perspective.

It's like "love thy neighbor." I mean, okay, I get it, but when I get cut off by some shithead driving a Hummer and talking on a cell phone, it's a good thing I don't carry a gun.

I freak out. I lose my presence and perspective. 10 minutes later I can look back and know that throwing my water bottle against my windshield only hurt myself and not the Hummer shitcake, but that doesn't help me in the heat of the moment.

So here are two trades that I wish I could make again.

First off, LFG. It was as perfect an afternoon play as any.



I bought 200 shares at $49.85 at 2:41 in anticipation of a move up to the figure. So far, so good. The most the trade moved against me was 22 cents. Now here's where I begin to fuck up. At 2:50, I sell 100 shares at $49.90 locking in the 5 cents of profit... YES! And then, at 3:16 I sell my last 100 shares "all the way up" at $50.13. Total profit, $32.

Meanwhile, look at the move! I should have made a straight point on my shares without question! There was never a reason for me to sell. The market wasn't coming in. Furthermore, I should have added to my position when the market broke $50 and then came back on light volume. In other words, I made $32 on a trade that I should have made hundreds of dollars on. It was an easy trade. My execution is all wrong.

Here's another, MTW. While this trade wasn't as perfect, still, it should have brought me more money than I let it bring.



Again, I bought 200 shares in anticipation of a breakout at 2:20. The stock had been in a long tight base and the market was moving higher. Volume started increasing to the upside. And here's where I screwed it up. I sold 100 shares at $38.65 and the other 100 at $38.72. Why? I don't know. Again, here's a trade that didn't even run a dime against me yet the moment it ran a little in my favor I locked in the profit, $37.

In this trade, I'm not as upset that I didn't buy more because the position never really tested the base. It just ran. Here, I'm upset that I didn't have the patience or the confidence to let a winner run.

Here's a final analogy for you Seinfeld fans. Remember the episode where Jerry makes a plane reservation but then his seat is sold anyway? He gets into an argument with the ticket representative and repeats over and over to her, "You see? You can take the reservation, but you can't hold the reservation..."

It's like that.

Anyway, I can't get into the system to give all the stats. Enjoy your weekend. I'll post here once or twice this weekend, so check back.

P&L, $155
27,600 shares traded.


NOTE: Again, I apologize if there are egregious spelling errors in this post. Spellcheck isn't working. WTF, blogger?

7 comments:

Tyro said...

Time to get you onto Firefox with it's built-in spell checker :)

Dinosaur Trader said...

tyro,

I use firefox... is it one of the add-ons? I'll check for it, thanks.

Still, WTF blogger?

Have a good weekend,

-DT

Tyro said...

Firefox 2 has always had a spellchecker built in. You can use Add Ons to get different dictionaries, but it comes standard with US English.

Re blogger - yeah, the last couple weeks I've noticed connections to blogger and ever Google docs have been erratic. Not happy about that, but I assume someone's getting to it.

Good weekend too...

Bluedog said...

I love how you locked in the $30-odd profit twice. That's awesome! I think everyone is a little edgy trading in this market. I went long on 8 positions today that I'm going to hold as swing trades. Call me crazy...

-BD

TraderCaddy said...

You may have taken early profits on LFG for the same reasons I took early profits (about 3:00-3:20) on SMH (Semis ETF), SNDK, KLAC. My reasoning was that the weekend was coming up, I have good $$ that I don't want to lose, and who the hell knows anymore what is going to happen in the last half hour.
If I stayed with it for another 20-25 minutes I could have been up a bunch more (there goes that greedy stuff again).

PS I believe the Seinfeld episode was at the car rental place but the quote you have is accurate. Very funny scene.

LP said...

Yep just use firefox. Built in spell check that help you check spellings in any text box. It's really nice to have it. However, it won't help fucked up grammar. Well I feel better since I maybe be better than our president in this regard. LOL.

wincity said...

Good point, DT. Trading is in many ways psychological.

Thanks tyro for the Firefox spell-checker suggestion. I've used it for years and never realized it has a spell-checker.