Friday, February 15, 2008
I lost money today. All of my losses came in two stocks, DV and RNR.
I made a very stupid mistake in DV. I bought a couple hundred shares early, around $45.75. The stock moved up to the figure. I saw a huge amount of volume go off, I got excited and I bought 600 more shares at $46.02. I was shortly stopped out of my full position at the low of that big red bar, at $45.46.
RNR was the ole get short and stubborn play. It's really a great way to throw money away.
I'm not going to talk about my winners. Instead, I'm going to relay bits and pieces of a conversation I had in the chat room today with my office mates concerning stop orders.
The names are changed to protect all parties...
Me: my problem is just that. if i don't use stops, i feel unprotected
Gid: with the hybrid 25 cents is just noise so i get stopped out a lot
Me: but do you set yours far away or are your entries just spot on?
Joe: "The entry is 85% of the trade" I don't remember what book that quote is from......
Yaz: Dan's entries are always violent
Me: But on a day like today, the futures are a mess. Are you just shorting or buying aberrant spikes?
Yaz: Dan's entries are always aberrant
Dan: Joe, drop some science
Yaz: that's not the only thing u should drop
Yaz: using stops now isn't careful it's much much more dangerous
Joe: i disagree
Me: don't get all jedi on me
Yaz: the spikiness of trading is so much more than it used to be
Joe: stop placement is key
Yaz: yeah, if you keep em as far as Dan it's just so you don't get destroyed
Yaz: but using them like we used to around figs and shit is suicidal
Joe: close stops are horrible
Joe: just hand me your money
Me: like health insurance with a high premium
Me: that's how you guys are usinig them
Yaz: yeah, it's pointless
Yaz: if you got the number of positions with the size Dan has, I understand
Joe: Dan schooled me on proper stop placement... he should speak on this
Yaz: i was getting clipped in shit today but i just don't worry about it. cause most of the time shit swings back one way or the other. either cause u right to begin with or because it's just choppying around.
Yaz: stops are dead to me
Yaz: but i understand other people using them right
Me: i appreciate the discussion. thanks.
Yaz: i think for dudes like u and me though, stops should not be used
Yaz: maybe i'm wrong
Me: well, you don't like to take pain, right?
Yaz: no, but if you look at your P&L as the pain indicator rather than the position, then pain changes.
Yaz: like Duk got squeezed for 50 cents on 4000 M but he held because he was making money anyway
Dan: look at your ass as the pain indicator
Gid: i want a look
Dan: yo Joe, what did i say about stops to u
Dan: i talk a lot
Joe: i think we all should be conditioning ourselves to be emotionally detached from out of the money pnl
Yaz: "stop tickling!"
Me: joe, that's true. it's smart to be unattached.
Gid: when i am getting stopped out i usually should be adding
Me: but sometimes you're just wrong and you have to take a loss. without stops, how do you guys determine that?
Joe: if that's the case, it's a problem with your stop placement
Dan: if what's the case
Yaz: i think it's a case by case basis
Joe: "when i am getting stopped out i usually should be adding" that case
Joe: to summarize what you said Dan
Dan: please summarize
Yaz: Dan doesn't understand how normal people use stops
Dan: say it in the same language
Dan: i understand perfectly well, Yaz
Yaz: cause he has no fear of anything
Dan: i'm not rainman
Dan: i have plenty of fear
Yaz: only of vagina
Duk: i'm long mad AXP
Dan: I'm always scared
Joe: you explained that the stop loss should be placed where the stock should not go unless it's reversing... you should not place stops based on how much money you would not like to lose
Dan: but i have faith in myself that in the long run it's gonna be okay
Dan: yeah, i said that
Dan: but the question is... how do you decide where you no longer think its a long... that's where being in tune with what the markets are doing comes in
Dan: the basic idea of what i told Joe is that u decide where the stop should go first, then decide if that amount of pain is worth putting on the trade at all, or what size you can handle it on
Dan: your own pain threshold should not determine stop placement, which is an absolute
Me: that makes a lot of sense.
Here's the stats:
Best, WLT, $203
Worst, DV, -$447
34,500 shares traded.
10 winners, 13 losers.
Timmay! $485 on 5400 shares traded.
Dehtrader, $444 on 6380 shares traded.
Equine, $400 on 3800 shares traded.
OBAT, $240 on 22,400 shares traded.
Wincity, no trades.
Denarii, -$144 on 2800 shares traded.
Sanglucci, -$590 on 41,900 shares traded.
Me, -$651 on 34,600 shares traded.
It was a chopfest out there today as evidenced by the mediocre VO stats.
Guys in my real office made good money today shorting the heck out of the coal stocks. I didn't get the memo.
Anyway, we traded about 1.5 billion on the NYSE today. Pretty light considering it was a quadruple witching. The VIX dropped slightly, to 25.02.
Enjoy your 3 day weekend. Not sure what I'll have going on blog wise. If you get a chance, check out VO member Timmay on the CBS Sunday Morning talk show. He'll be talking about how joining the VO has turned his life around.
Actually, if he's smart, he'll give a shout out to the VO, as he's top dog today.
Check out that volume in ESI yesterday.
I guess the story is that investors are beginning to worry about students and their loans. This has hurt the education stocks the past few days. Who knows what happens today, but I'll be watching for movement.
Ducati has left "the Fly's" struggling blog and hence, is also left without a platform from which to perform his VO duties.
The man is blogless.
Therefore, Ducati has shitcanned "the Fly" and I, in turn, have shitcanned Ducati.
That said, if you were following along yesterday, I thought things went down in a very awkward way. Ducati was accused publicly of voting only one star in the Peanut Gallery, and with his voting record leaked in such a manner, he chose to leave the blog altogether.
I expect the voting turnout in the PG to drop drastically.
Meanwhile, who gives a shit about commercial lending?
Oh, and good morning...