Thursday, February 14, 2008

One Good Trade, Many Bad Ones...

I had a nice trade today in UBB. Of course, it could have been better, but I'll take it as a sign of progress.

It gapped up this morning on (what I thought was) no news. However, after 10:00 they reported earnings. Still, BBD and ITU were weak to flat as were the rest of the financials. So I felt comfortable getting short. The reason why it worked out as a good trade was because I got short at good prices, around $131.80 and didn't panic and cover one I had small gains. Instead, I held for awhile. I was short 500 shares (a good amount in this lunatic) and only covered when I thought the stock might hit support.

So my first covers were around $131 since he had found support there early. I also covered a little in front of the opening range low in case he found support there. The other 200 shares I held for the entire move (down close to $128) and I had a nice winner, $757, my biggest in awhile.

However, I also had my first sizeable loser in awhile, in EDU.

This was a stock that announced buy back news today... big deal. I still don't get it. I got short and the thing just never came in... my mistake was not at least taking some off the table when it traded down to $58. Instead, I let the stock bounce all the way back to the highs and I covered over $59. I even added to the short. So really, I could have gotten out with a $200 loser. It turned into a $514 loser. A mistake.

Also, this stock was trading way too thin for me.

One thing that I have found is that I now hate to trade thin stocks. That is one lesson I have learned about the Hybrid Market that has actually stuck. Thin stocks are just too difficult to trade now... the liquidity is just not there to make it worthwhile.

Still, even with the EDU, I was up $300-$400 on the day. I gave it all back when the bond insurer news started hitting CNBC at around 2:40. I lost $200 in XL and another $100 in other financial stocks.

One thing is clear to me. When my win/loss ratio is poor after the morning trade, I should not trade the afternoons. The ratio always just seems to get worse. There will be exceptions to this rule, like, a major news event or market move, but from now on, on a churny low volume day like today, I'll take the afternoon off.

Another funny thing about today. I was complaining in the chat room how I was only up $300 and a guy wisely pointed out that a few years ago he was working for FDX and would have loved to make $300 in one day. I need to remember to have perspective. When I don't and feel the need to "make more" even in a suspect market, I will lose that $300, as I did today.

Here's the stats:
P&L, $8
Best, UBB, $757
Worst, EDU, -$514

27,800 shares traded.
23 stocks traded. 7 winners, 16 losers.


wincity said...

I shorted the stupid EDU as well. I was amazed too by its stubbornness. It's stupid for the company to buy back shares which trades at 10X sales. I'm sure they can buy them back next year for half the price. I bought it in last year's Feb panic near $22.

Reese said...

$8 isn't too bad for such a shitty day trading.
I lost a decent amount back in Oct-Dec trading thin stocks. I determined they just aren't worth it. The good thing is that when they are setting up, they tend to pop in the right direction because a lot of traders are watching them and they're so easy to move. The bad thing, if you're not out quick enough, you're toast. Definitely not good for swing traders.

Rob said...

I hate getting tossed around and loosing more in commissions than in actual trading...i don't know why but it just burns my ass.

JakeGint said...

I think your people are overtrading. I can't believe how many "shares" are getting traded for such little net gain.

Is this a strictly "day trading" experiment? Seems like a lot of transaction friction going to someone else.

Sanglucci said...

DT you should open up a weekend thread about jakegints comment...

Jakegint man I'm trying to move over towards a more selective trading style and only hit good setups but daytrading is just different man I don't know how to explain the shit there are an assload of commissions going to someone else you're absolutely rite but that's just the way the style is... I dunno DT maybe u can explain it better or someone else can but I'd def. like to hear other traders thoughts... DT get on that shit boi

Glenn said...

I don't think it is over trading. If I traded 500 shares for +0.20 over and over again, it adds up (each side is 500 so really 1000). If I trade 100 shares for a buck it adds up. Each is a different style.

Dinosaur Trader said...


Good idea. To your point, I'll say that there are a couple of guys in my office who are up well over $100,000 on the year already. They don't care too much about paying a few thousand in commissions each week.

To non daytraders, (and really, most stock market blogs are not run by prop traders) it's hard to grasp. The stock market blog world is run by guys looking for "setups" and stuff. Prop trading really isn't about that.

That said, I find many of those "setup" guys very helpful. Just another piece in the puzzle that can help you make money day in and day out.

Or, $8.


Rob said...

The stock market blog world is run by guys looking for "setups" and stuff. Prop trading really isn't about that.

So what is it about?

Dinosaur Trader said...

Managing winners and losers.


Anonymous said...


How many traders in the VO use Level 2 info to get in and out of their trades? Or do most of you just watch the charts and scalp during the day?

Like Jake, I too am surprised by the number of shares being traded given the amount of profit. In my trading, I always look to maximize profits while minimizing the number of trades per day, which fits my personality.

I understand why you do what you do, and would never criticize a technique that obviously works for you and many others. There is no one right way to trade after all. I guess I just have trouble wrapping my mind around the technique because I don't fully understand how you gauge entries and exits.

Care to give us a short primer?


Dinosaur Trader said...


Yes, I've been meaning to do so for awhile.

Perhaps Monday will give me the opportunity to write some type of intelligible post on the matter.

To answer your first question, I don't look at Level 2 at all. Haven't in 9 years... however, I only trade NYSE stocks at the moment (I need to take a damn exam to trade Nasdaq stocks again...). I don't think any of the guys that I trade with look at it either. Most everyone is focused on charts. Quotes seem rather useless post hybrid.


Anonymous said...

Thanks, I'll be looking for the post.

Best of luck to your mom, wish I could help.