The Pain Play

(long, rambling, unedited post warning)

I'm trying this new system out, as you know. And I have to say that it has exposed a little something about myself that I'm only now realizing.

I get bored easily when trading.

Like, back in the day, I had loads of positions all the time and it was more about money management than about entries and exits. And there was a lot of exhilaration in that, and when I made money, it was fun, and I felt like I was playing a game.

Currently, trading feels like more work and waiting and it's not very much fun. I'm not stopping with this method just yet. I mean, my real office, filled mostly with guys who trade like "crack-addicts" isn't doing that great either... most are doing better than I am, but not with results that tell me I'm on the wrong path.

Right now, what I'm worried about is that I'm not going to have a $28,000 day anytime soon... last year, I pulled that one out of my pocket and it saved my year. I'm currently up about what I was this time last year, but I don't foresee another July and August of 2007 happening. So I'm worried.

And yeah, the vibe on the blog has been thick... a little heavy. But you know, I'm a real guy, going through this very real shit everyday, and I don't sugarcoat here. I have gains and losses and that's part of this job. This year I've had too many losses. And let me tell you, small gains aren't even fun. So it's been a grind. A fucking grind. And it's depressing and not much fun. Even my normally dark sense of humor is failing me. I even let Jake Gint get to me last night with his idiotic comments.

But I'm stressed out, for real. And so that's part of this blog too... it has to be, because it's all very real.

I could report my good trades everyday without any other color on my life, or my bad trades, but I don't think that would get me anywhere. What's this blog about? And who is it for? Ultimately, the answer to both of those questions is the same. It's for me.

If you read it daily and you enjoy it, that makes me very happy. But at the end of the day, this blog is a release for a stressed-out trader who has been struggling with this job, alone, for the first time in his 9-year career, since January of 2007.

I just wanted to get that out. I know the tone here has been despondent, depressing, and sometimes angry but that's the fucking point. That's what this is right now. It's a period, it's a phase, and hopefully, I get to the other side.

Because really, while some of you may trade because you like stocks, or research, or for whatever reason you trade, the only reason I trade is so that I can be free. I don't have career ambitions. I never have. I can't compromise myself working for someone else, taking orders, writing memos, whatever. I've tried it and I can't. Does that make me a dick?

Well, if you worked with me you might think so... I'm just not the cubicle type.

What's the point? I don't know. I guess what I'm saying is that for now, you'll have to bear with a slightly depressive DT. I've felt pressure the last couple of days to come up with some funny shit regarding the slowly disintegrating VO, but I've been unable to muster the interest.

Perhaps that's because since I've had access to the numbers of the other traders in my real office (the RO?), I'm no longer in need of comparisons from other stock bloggers to figure out if I'm trading relatively well or not. Also, right now, it's very obvious where I'm at... I suck. So I don't need to necessarily have that reinforced by watching myself make $300 one day while losing $250 the next, or vice versa.

I'm a chart with no pattern, a stock absent of volume and trend.

But I feel the need for a story to move us forward here... but the story here is my trading. So we'll just have to get through this together. It's quiet... it's a little dull. Something could be growing under the soil or the bulb could be shot. Time will tell.

Okay... enough of that... Now, lately I haven't been paying attention to my office mates. I haven't been joining in on the chats, I haven't been listening in on the call, I've just gone solo, me and the graphs, following only the HCPG newsletter and their style of trading (or approximating their style the best I can. I want to note that my failings here shouldn't reflect on their system. Just check out Wall Street Warrior to see how well the trades can work.) But as I said, I've been getting bored. And since I haven't been trading their system perfectly, I haven't had much success. And so I'm bored and frustrated... so today I turned on the office chat.

A friend of mine was getting blown out of PDO. It was around 10:15 and he just ate a five grand loss on a short trade in the stock. PDO and MXC are both currently beyond parabolic. They've had volume, wide spreads and insane volatility. Being in my bubble, I didn't even know they existed until 10:15 today. And all I can say is that instinct took over.

In the office, you'll hear someone say, "I'm taking pain on this GOOG. I'm 3 points out of the money and can't fucking take it!" and like vultures, other traders swoop down and start buying "on the pain." I don't know what it is... if it's out of respect for the pained trader as in, "he thought it was a buy 3 points ago, so it's that much cheaper now" or if it's out of competition, as in, "well, he's getting smoked... if i buy here, no matter what happens, I'll be less smoked than he is... and if it works out, I'll make more since I have a far better entry." I'm just guessing the psychology behind the "pain play." All I know is that today, when that very good trader announced that he was taking the big loss on PDO, I just felt the end of the move must be nigh.

So I located some shares and sold it. 300 at $22.50 and $22.61. About 10 minutes later I covered 200 for a small gain and then got stopped out of the last 100 over $23. But I kept watching... A couple minutes later, MXC took a ridiculous tumble.



I called out, "shorting PDO on MXC" and short 400 shares at $22.69.



It worked out and I have to say, I almost felt a little guilty about it... like, because I cheated myself and the new system. I wasn't "pure" to my current methodology. But fuck that... it felt real... visceral... like I was in the stock. A part of the trade, some electronic crowd, messages, bytes, communicating to bring the price in line, create order.

Now, I didn't have a great plan or anything... I threw a stop for 200 shares up at the high of the day, which would have meant a large loss, and I was going to cover the other 200 at market, based on how the stock acted. Had this trade not worked out, I might very well be feeling like this guy. I made $372 in the fucker and it saved my day.

I'm not going back to trading purely like a "crack addict." That's not the point of this post. However, I think that my current discipline, informed this "degenerate OTB guy" trade. I felt like I was in control, my emotions were in check, I was prepared to take the loss should it get there... I dunno. There's a place for these trades in my book, is all. I just need to keep working on getting back there.

Meanwhile, just to put the PDO trade in perspective, check out it's daily... below the PDO is MXC.





Here's the stats:
P&L, $218
Best, PDO, $372
Worst, GG, -$149

8600 shares traded.
8 stocks traded, 3 positive, 5 negative.