Thursday, February 7, 2008

Is Daytrading Gambling?

(Shameless SEO title there... the answer? No, it's not.)

I had a pretty good start today. Last night, retailers reported same-store sales and the initial reaction to the data this morning was positive. I don't trade WMT (Walmart), but he's a pretty good indicator for the group and he ripped over a point right at the open. That's quite a move for WMT, so I looked for catch up plays and I found TIF, who opened up about flat.

I bought 800 shares between $36.60 and $36.70 and sold the entire position about 50 cents higher for a quick $400 in the first 5 minutes of trade.

By 10:00am, the market was turning negative and since I have a bearish bias right now, I was happy to get short. However, at just that moment, the market ripped higher again and I took some hits. Ironically though, my biggest loss came in my old friend/nemesis, RWT, on the long side.

That's just an old-fashioned "fuck job" to use the technical trading term. I lost a few hundred in the mofo. Now, RWT can make some nice moves every once in a while. Lately, I've been on the wrong side. So, until I start getting on the right side, I'm restricting my position size in this dude to 300 shares.

Finally, we can talk about a well thought out trade. If you're a daily reader here, you know that's a rarity. I don't do too much thinking when I trade, I do much more reacting.

Anyway, at 10:00am when the market was ripping my face off in all of my shorts, I noticed that MA was not taking part in the rally. So I started getting bearish thoughts about the stock and I waited for the spike in the futures to subside. And then at about 10:13, I got short around $201.25. About a half hour later, I covered at $198.15, pretty close to the lows of the move.

I was so happy about finally catching a full move, even if it was just with 100 shares.

Better yet, I watched and figured he might find some resistance up near $200. So I threw in a short limit at $199.69 and was filled. The trade initially went against me, but given the volume that came in on the downside and the weak volume on the buy side, I decided to give the trade a little room. I put my buy stop up at $201, so I was risking about $140. Considering I had just caught 3 points, I was willing to take the trade to test my "$200 resistance theory" and prove myself correct.

Happily, the stock turned tail and dropped like a rock and again, I covered near the lows of the move, at $196.25.

Those two trades gave me half of my profits on the day even though I was only trading with 100 shares. More importantly, they gave me a boost of confidence.

After that trade, I head off to the beach. The surf was way too big for me, between head high and double overhead... for me, that'd be like trading CME with 2000 share lots. I'm just not ready for it. I'm going in the early morning again because I think the wind will knock down the swell a little tonight.

I also wanted to thank Moom for quelling my fears over our Banks collapsing.

Anyway, here's the stats:
P&L, $1361
Best, MA, $590
Worst, RWT,

17,800 shares traded.
19 stocks traded. 9 winners, 10 losers.