Sunday, February 24, 2008

Study Your Trades

I went through each of my trades on Friday. While I made money, it was only because of the "Gasparino Lottery" at the end of the day and not because of any legitimate trading skill. Here's what I learned.
  • I’m still adding to positions wrong. It’s okay to add to a position when it’s going in my favor. However, adding after a position corrects back close to my entry is a losing strategy even if that position is technically still a winner. 
  • Don’t trade thin stocks in the hybrid market. The odds are too stacked against you with the spreads and illiquidity being what they are.
  • Unless a trade looks perfect, a major news story breaks, or there is excellent volume in the market, DO NOT TRADE between 12 and 2. This is free time. Move away from the monitors and read a book or something… seriously…
  • In a choppy market environment, don’t short the first breakdown or breakout. Often the stock will chop back up to your entry. If the level holds the second time, then enter the trade. Of course, in a market with good momentum and volume, this rule would change.
  • Short failed breakouts. If a stock attempts to break out of a base and then stalls, heads back into the base and breaks that base, short it. It’s been working well in this environment.
  • Know the bigger picture. I wasted $250 on Friday trying to short DV for a break of $44. Each time I tried it, I lost 25 or 30 cents. Meanwhile, a quick glance at a 15 minute graph would have showed that even if he broke $44, he most likely would have found support at $43.40. So I was risking 25 cents for a possible gain of 60 cents… that’s just not enough incentive…
So, more of the same... trading and hopefully evolving.  Working hard to keep a positive outlook but it's been a brutal month.  I'm working for a strong close this week. We'll see.

Note To Ralph Nader: Go Away!

Now, truth be told, I voted for this guy in 2000. However, since I don't live in a "swing state" I knew my vote didn't really matter anyway. I did it as a protest because I knew Bush was a nightmare and I hate Joe Lieberman (Gore's running mate in 2000).

-Ralph Nader's car, circa 2000

However, one reason why George Bush has had the opportunity to ruin our country for the last 8 years is because Gore lost Florida, where there were plenty of Nader supporters. I mean, Gore also lost his home state of Tennessee, which is ridiculous and not Nader's fault, but still...

We don't need you this time Mr. Nader. You will take votes away from Obama, effectively handing John McCain the presidency.

Do something else... like disappear.

UPDATE: Here's a link to the NY Times article about his entry into the race.