Thursday, January 31, 2008
NOTE: Don't forget to watch the Democratic Debate tonight at 8pm on CNN. Only Hillary and Barack... should be great! I'll put up an "Open Thread" if anyone wants to comment on it.
OH, ALSO: I know I said I'd have an "around the house" thread up, but I got smoked today and was just busy, so it may have to wait until early next week...
Okay, on a day where the Dow rallied 400 points off the low and where we traded a huge amount of shares, I should have made money.
Especially considering that my first two trades of the day were winners.
I short MA pre-open and covered with a 4.5 point gain. Then, I short X on a spike up and made about 80 cents. So I was up over $600 in 5 minutes.
Of course, it's easy to look back and say that I should have just stopped and gone surfing, but I thought I might be in for a big day and with a $600 cushion, I felt good about my prospects.
So here's what went wrong.
First mistake, buying in anticipation of a trend break instead of waiting patiently for the break to occur. And yes... I make this mistake a lot.
Simply put, I need to be more patient. Had I waitied for the break and test I would have not lost $600 with my first 2 failed trades and I would have had more confidence to hold size for the move when it did come. Instead, I did buy again but with big losses in the stock already I was defensive and had only a couple hundred shares for the majority of the move. I trimmed my losses in the stock, but those losses shouldn't have even happened.
I think what I'll do is at least force myself to not buy a full position ahead of a break. If I want to be aggressive and pick up a couple hundred shares and risk a failed trade with small size that's fine. However, both times I went in early on the stock I had 600-800 share positions. Not a good idea.
Another problem I ran into today was not lightening up winning positions. I think again, that I had this problem because I was looking for "a big day" and not dealing with what was right in front of me, mediocre positions. I got seriously clipped at around 11:45 when the futures ran up on good volume only to pull back drastically in the next 15 minutes. The position that hurt me most at this time was CNS.
I seriously top ticked the stock at around 11:50. I had 400 shares and bought 400 more at the high, right before the stock dropped 80 cents. It ripped my face off and brought me negative on the day.
Instead of getting caught up in the euphoria of the market rip, I should have been lightening my winning position because clearly, the futures were moving into an overbought situation... a pullback had to come. I just wasn't careful here... Another problem? This is a thin stock. 800 shares is too much for me there.
I also had a churning problem today in BBD, my 4th worst stock of the day. Nearly a third of my shares traded went into this "toad" (to borrow Wincity's term) today. In fact, my worst 7 stocks of the day accounted for over half my shares traded today. Considering I traded 33 stocks, that's very bottom heavy volume there... never good.
In general, my biggest problem today was position sizing. I was buying and then adding because I was swinging for the fences and I ended up striking out a lot. If anything, as I size up again I'll need to buy larger positions when I enter but not worry about pyramiding, until I get my confidence with slightly larger positions again.
Overall though, looking back on the month, I did great.
I started the month unemployed after leaving my employer of the last 6 years and shacked up with a new group. I completely remotivated myself, stuck to my new research schedule and starting taking the job seriously again. I learned a new software system in a very volatile market and only had 3 or 4 down days while making over $10,000 in less than a half month's work.
Not too shabby considering my circumstances.
Anyway, here's the stats:
Best, MA, $450
Worst, RWT, -$232
44,400 shares traded.
33 stocks traded, 11 winners, 22 losers.
QUESTION: Is anyone else having issues with Blogger spellcheck?
Evolution, $3384 on 43,600 shares traded.
OBAT, $302 on 9800 shares traded.
Retardo, no trades.
Wincity, no trades.
Denarii, -$125 on 2200 shares traded.
Me, -$654 on 44,400 shares traded.
Dehtrader, -$1435 on 4250 shares traded.
What a crazy day.
We rallied over 400 points from the lows of the day to the high on excellent volume. We traded over 2.1 billion shares on the NYSE and the VIX dropped 1.37 to 26.25.
So why didn't I make money? ARGH!
Anyway, at least Evolution stepped up to save the office and do a sweet repair job on his rocky month to close out in style. Nice work, ET.
I think Denarii summed it up quite nicely when he said, "If I had just held my longs from the morning, I would have tripled my monthly profit." Exactly. Today was a buy and hold type day...
There were some clouds on the horizon at the end of the day though... GOOG missed earnings and just before the close, S&P cut their rating on FGIC and said MBIA and XL may soon get cut.
Looking forward to February. Let's hope it's as trader-friendly as January was...
NOTE: This is the last day I'll report the Dow number with the VO. From now on I'll report the S&P 500 since it's more representative of the overall market.
Also... who will be the new VOer? Details Monday...
Bubs got Clarence on the macedemia nuts again... it's sad.
Unfortunately, I haven't been able to use this volatility to my advantage... quite the opposite really. However, the office is making loot.
First of all, a message from our sponsor:
The IBD says that even if this recent rally holds, there's nothing worth buying as most stocks have yet to form sound technical bases. The process could yet take months.
Now, onto the love.
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