Friday, May 9, 2008

Why I Feel Like Lighting Myself On Fire

After last week, where I gained 5 successive green days, this week, I've been smacked 5 times, digging myself a deep and cold hole to start the month off.

Special note to mother market: You win. I've been permanently humbled. Should you ever see fit to let me be a profitable trader again, I promise always to show you the proper respect.


I'm down a little today, instead of taking the day off, as planned, I decided to come in and trade small.

Here are the two trades that "broke my heart" today.

First off, in OII. I liked the base under $70, a key level, the high volume, and the relative strength versus the market. I entered 400 shares at an average price of $69.85. The stock shot up, with convincing volume through $70 and hit a high of $70.47 before reversing back to the $70 level. I did not lighten my shares during the move up, because frankly, I was expecting at least a 1% gain on the breakout. I had a limit to get out of 200 shares up at $70.67.



When the stock reversed, I expected $70 to hold, so I added 200 more shares at $70.08. Alas, the stock broke $70 and I was forced to exit my entire position, all above $69.85. So, not a big loss, but depressing, because I really felt good about the trade.

Later in the day, I reentered this stock at $70, got shaken out at $70.44 and watched it run over $72. Truly, I am due to catch one of these moves soon...



And then there was CAM. Here's I missed the original entry, but bought on a pullback to the entry level, at $51.12. I held while the stock moved up to a half, and adjusted my sell stop up to $51.15 where it came back to take me out of the trade, before ripping up to $52.



I can point to many more examples like this today. Seriously, I feel as if I'm jinxed lately, getting stopped out of positions at the lows of their moves (or highs when I'm short.) I'm extremely frustrated right now.

Oh, and fuck "TraderMD"for having so much success using this HCPG stuff while I struggle like some refugee in a third world country. To make matters worse, the dude isn't even a trader... he's gonna be a doctor. He's just doing this shit for fun.

Pure hate.

Anyway, I doubt the weekend will do much to clear my head. I'm that pissed. I'm just gonna come in Monday and keep my size small, until I start catching good moves.

Off to kill bugs and mutilate cute furry animals.

Here's the stats:

P&L,
-$178
Best, OII,
$130
Worst, JEC,
-$190

10,600 shares traded.

11 stocks traded, 3 winners, 8 losers.

8 comments:

Trader M.D. said...

DT,

Don't kid yourself. You're a better and far more experienced trader than I.

I remember reading the message you left back at the end of February? before taking a break. The kind of results you had on that one day in August, still takes some kind of skill.

I can't say I was an active trader that day, but the markets have been choppy this week. Not to mention, as an HCPG reader I'm sure you've heard them say that oil stocks can be slippery.

You forced some entries today and trade on emotion.

We both suffered from the use of some tight stops, but you have to give your trades some room to run, especially when trading oil stocks.

Your system works, and you've obviously had success with it, or else your blog wouldn't still be around (nor would it be as popular as it is). I'm not in anyway questioning your strategy/system when I say this, but it must be incredibly hard to constantly trade off of 1 & 3 minute charts.

I've learned a lot from Jamie by just looking at his entries day in an day out. Unless it's a specific HCPG recommendation, I only enter trades off of 5m, 10 & 15 minute charts (usually 5/15).

That being said, I do find 3 minute charts useful for trading stocks. Again as HCPG mentions, they are great to watch volume spikes.

As you alluded to in your comments, maybe I just have an easier mindset right now, in that I don't feel like I have to make a certain amount of $$ (not having to force trades). You have to remember that you can only take what the market gives you.

It's extremely difficult to trade when frustrated (from missing moves, from a series of losing trades, from leaving $$ on the table, etc).

I don't know what you do to clear your head. I try to go running 4x a week and make sure I run after a bad or very good day. If that's not enough, a drink always helps :)

For the record: At one point I was so jaded against how medicine is practiced in this country (fucking lawyers and unappreciative patients), I literally thought about dropping out or not continuing my medical career past the degree.

Who knows, many years down the line I may end up feeling the same way again. I plan on being a trader for life (swing, day, whatever).

You're a good trader, but you can't beat yourself & the market.

Take it easy. Good luck out there.

Dinosaur Trader said...

Damn... and you mean you're a nice, reasonable person as well?

Thankfully, you understand I was kidding. I saw your trade on CTSH and was impressed.

You make many good points in your comment... thanks for the thoughtfulness, and continued success.

-DT

wincity said...

DT,

I remember making the same comment on a similar trade you made a while ago. I feel your first long of OII was very low probability. The toad went up $2 later yesterday and spiked another $2 in minutes today. It got to take a rest, which means retracement and which means you're likely to get stopped out. I make most of my money shorting opening spikes and in my experience, most of them come down, some lightning fast, like CRZO today.

I feel the problem with your second trade is that your stop is too tight. In fact, I suspect this is the main cause for your recent frustration. I remember you had a discussion on your blog a while ago about stops. One guy said stops are for disasters and I tend to agree. I hate stops.

Dinosaur Trader said...

Win,

I need to be able to limit risk. I have a bad tendency to rationalize losing trades, and hence, I rely on stops to keep me out of bad disasters.

One of my favorite stock market sayings is "disaster starts slowly." More with the hybrid than ever before, 20 cents can turn into 2 points in a matter of seconds... hence, I use stops.

It's true that perhaps they're too tight... this is something I need to work on more. So often lately, I have trades run in my favor 30 or 40 cents, only to later stop me out at 10-20 cent losses. But then I have something like OII today, (second time) that started to run, I took 40 cents, and it ran 2 points. I guess I need to work on figuring out when something is just strong... OII had such relative strength and great volume, perhaps here I need to widen my stops.

-DT

Trader M.D. said...

DT,

Believe it or not, I actually got a chuckle out of your post. God knows my blog could use the traffic :)

I've been a subscriber to your blog for sometime, although I don't necessarily visit everyday, but I got the sense you were just frustrated.

I also get the sense that from your comments, that you feel like you have to succeed at this.

Maybe work on setting up another smaller source of income, or putting yourself in a mindset that you don't absolutely have to succeed at this? I mean hell if you can be a half decent trader, you probably can do most other things in life. Taking that pressure element out of the equation may help things.

Thanks for the comments on the CTSH trade.

Get some rest this weekend. Do what you have to in order to clear your head, I have a feeling volatility & choppiness may pick up next week with all the economic data on the horizon & it being OpEx week.

A few other quick suggestions on what helps in a dry streak:
- review your recent good & bad trades and figure out what went right/wrong
- review your rules
- reviewing a good source of trading related information, like HCPGs best of blog section

Re: using wider stops. I don't know if that would be a cure-all. One thing that may help is using multiple time frames. Maybe smaller share-size/wider stops would help for certain sectors like Oil/Coal/days the market is acting choppy/etc.

For the record, your best all time post is the Dennis Kneale post. I was watching CNBC that day, listened to his usual idiotic comments, saw your post and then later heard him mention that a blogger called him an idiot.

Classic.

If that idiot can get a job like that (who wouldn't love talking to Melissa & Erin all day?!), surely we shouldn't have to worry about finding jobs either :)

Win,

I have to say I agree about the first trade being low probability. Entering after a sharp move higher is usually low probability, unless the market is acting spectacularly well.

I disagree about the stops comment. I mean there are a handful of traders who can consistently trade with out using stops, but even then it limits your options. What if you want to setup multiple trades at once using mental stops? What happens if the market reverses in an instant? Are you really going to mentally be able to close yourself out of several positions at once?

That being said, there are traders who do well with mental stops. Trader Stewie comes to mind, then again he also uses much larger size than most traders I know and closes out his trades the second they start working against him.

I personally like stops because they let me focus on finding other setups while limiting my risk. There are plenty of times where you will get shaken out (even in the most logical of all stop placements) and the stock will run another few points, but you can't get frustrated over moves like that.

Hell, I'm an uber-bull on Oil and I've been out of it since it was at $112 a barrel (I've been saying, amongst friends, we could hit $200 /bbl with in the next 6-8 years long before Goldman Sucks ever did). We're now $15 higher. At some point you just have to think to yourself, "it can run higher, but it can go ahead with out me." I haven't re-entered my crude positions since and I consider that more of a victory than chasing it, putting unnecessary risk on the line and making a few $$.

wincity said...

A few points about stops.

I'm not against using stops or hard stops on break-out trades. I just feel DT's stop on OII way too tight - it's probably $0.25 or $0.30 from the high. For a $70 stock to retrace $0.50 is just so normal.

Also I feel we could use some reasoning when deciding on where to put stops. Oil service stocks are strong now. OII was just profiled by IBD on Friday. It's not terribly extended. With only 200 shares, I doubt there's much risk involved so I don't buy DT's risk control argument.

Sometimes I feel lots of us use stops as a way to soothe our fear rather than as a valid trading weapon. In my opinion, if we use small size and pick our trades very carefully, we could be very liberal with stops without incurring much risk.

When DT made 20 grand in a day last August, he didn't do it by worrying about stops. Instead, he just put down his house, closed his eyes and screamed, "fuck you, stupid market". An hour later, he's 20 grand richer. That, IMO, is the way to trade. Getting a second income or thinking we could still be happy even we fail as a trader will just make us more of a chicken.

S. said...

Tokyo Trader here - one of the problems us Tokyo traders have is the software we're forced to use is - archaic. No trailing stops. No OCO orders. You can only have one sell order in at a time - i.e., you can't have a profit-taking order in, and a stop-loss. One or the other.

It's one reason why it's hard to let profits run - if I'm going for a scalp, I'll often put in the profit-taking order as soon as I'm filled. If it's a larger position, or a slightly longer position (overnight, for example) I'll set a stop. Often, those stops have cost me money, because you have to cancel the order before putting in a new sell order. Very frustrating. I suppose there are better (i.e., more expensive) alternatives out there, but I don't need it (and can't really justify it) on my puny bankroll.

TraderDave said...

ill say it for the 10th time, if you keep trading the hot sexy stocks that EVERY SINGLE DAYTRADER is trying to make a dime, you will NEVER NEVER NEVER be consistent. I have guys trading on my team that haven't closed down for 19+ trading days in a row and it all comes from proper stock selection

Wish youd either accept it, or stop bitching.