Thursday, April 24, 2008

The Lemonheads, "Mrs. Robinson"

Score One For "Old DT"

(long, rambling, not properly edited post alert!)

So I've spoken in the last couple of months about the trader that I used to be versus the trader that I want to become. But just in case, for whatever reason, you somehow overlooked what's happening here, I'll briefly summarize.

"Old DT" was the DT of the last 9 years. I was a very aggressive prop trader, taking whatever the market would give me, whenever it would give it to me. My game was mostly one of managing risk and hoping for gains. And it worked, quite well, for a very long time. Even last year, my worst year, I averaged about ten grand a month. However, once I dug a little deeper into my year, I realized that more than half of my gains came within only a few weeks in August. For the rest of the year I was mostly churning, making a little money, and getting very frustrated.

I blamed the hybrid market for much of my trading distress and I think that's fair... the mechanics of the market completely changed and so adjustments were necessary. However, I was slow to change and I haven't really been able to adapt. In addition, with all the new NYSE fees, my commissions went up drastically. So why fight it? Why trade a billion shares a day when my margins have been squeezed?

I figured it was time for a real shift in my style. That whole process took about a year. I'm just too old to want to fight the market and adapt to its new focus on super-speed. I like making a little money each day... that I can handle. I don't like having the drawdowns. That was something I never had to deal with pre-hybrid with any kind of regularity.

I know some new traders who love the hybrid... but for the guys who learned trading with "teenies" and "bids stepping up" it's been difficult. Many "old school" traders have struggled with the changes.

Anyway (this post is already way too long) the thing is, today was just one of those days where it paid to take extra risk and not necessarily wait for perfect setups. Sure, they were out there, but it was a day to trade sector momentum. When whole sectors trade in lockstep, irrationally, as the agriculture and fertilizer stocks did today, it sometimes pays to just jump in and get dirty.

So my best trades today were catching the bottoms in CF and MOS. I made a few points in each. Now, since I don't trade like this anymore, I only had a couple hundred shares of each. So my feeling is, on days where there is wild shit happening, I still have to throw down "old DT" style with smaller size. For the rest of the time, I'm going to stick to the calmer, more calculating, "new DT."

The problem with the "old DT" trades is that there's not much to discuss... it's more a "feel" game. CF "felt" overdone this morning when he bladed down below $136... there was no setup. It was a matter of playing a change in momentum... of sellers getting exhausted and bottom pickers moving in.

So I'll just discuss one "new DT" trade that I took in GS. This was an HCPG watchlist play. They were looking for a run to the $185 level.

As you can see, the stock based a bit around $182.50 and broke out. I didn't get involved because there wasn't good volume trading. However, once he moved over $183, volume came in, so I bid and hoped for a pullback. The guy came in, just under $183 and then ripped for the rest of the day. So here there was a plan, based on the daily chart in conjunction with the intraday, that worked out. Very specific, very controlled.

So I have this love/hate relationship with the "old DT." Last Thursday, for example, "old DT" lost $1400 trying to catch a top in CLF. The difference is that last Thursday there was no "juice" in the market, and CLF was acting completely different from the rest of the metals. So what I need to do, is pick my spots better for when "old DT" is gonna come trade. The "new DT" is gonna trade every day, and try to get the consistency back. With the consistency (which is already improving drastically... I've had 11 green days this month, and 6 down days) will come confidence. Then I'll start throwing size into my trades again.

Rambling, I know, but I'm not going back to edit that shit. Apologies...

In other news, the summer people are already starting to show here. My "neighbor" (he hasn't been in his house since last August) showed up today with his goddamn dog. It's out there barking right now. I hate dogs. But really, I hate owners who let their dogs out in their yard to bark all night.

If any of you happen to have a dog, and you leave it outside at night, and it barks, just let me know what that's all about, so I can better understand my neighbor. Perhaps if I understand why people do that, I'll hate him less and not shoot his dog.

Here's the stats:

P&L, $932
Best, CF, $665
Worst, BG, -$96

14,600 shares traded.
11 stocks traded, 6 winners, 5 losers.

NOTE: I just went through and realize that I've had 3 big down days this month that account for about $4000 in losses. I've only had one day where I was down over $500 and came back... so maybe I should really just stick to a -$500 daily loss limit. If I'm having a good day, it normally starts good right away.

Virtual Office, -$135. SPY, +0.78, 138.50.

Me, $925 on 13,800 shares traded.
OBAT, $520 on 12,600 shares traded.
Retardo, no trades.
Ainkurn, vacation.
Dehtrader, vacation.
Denarii, -$287 on 2800 shares traded.
Sanglucci, -$1300 on 44,600 shares traded.

Here, let me sum up the last 3 weeks of trade.


The ag names were ridiculous again today... the oil stocks were dropping out of the sky. There seems to be some sector rotation going on. People like the financial stocks again... they hate anything related to basic materials.

All in all, if you're a trader, these are the days you live for. Of course, it helps when you're on top of your game. Because where there's opportunity to make a lot of money, there's also opportunity to get smoked.

I was trading 100 and 200 shares lots all day... because I'm still mindfucked with no confidence. If you were a confident trader today, you could have made tens of thousands... the opportunity and movement is there right now. It's all about being able to manage risk... always the tricky part.

Anyway, I have to say, it's tough to trade when Spring is outside, calling for me. But you know, Spring will always be there... these moves in the stock market will not. As for seasonality in the world of stocks, a lot of people will be saying "sell in May, go away... blah, blah" but don't forget what happened last August. Simply put, the market is a weird and fucked up place right now, and what's typical doesn't seem to be on the plate.

I wouldn't be surprised if we get surprised... or something, by the market over the summer.

Oh... and we traded over 1.4 billion today... could it be, that volume is going to return?

The Market Is Fucked Up And Weird

Remember the volatility mascot? Well, forget about all that. The market is no longer volatile, it's just fucked up. So please welcome our new mascot of "the market is fucked up and weird."

That's a little wordy... suggestions welcome.

Sheer Lunacy

The moves in the ag names today have been nothing short of insane. Lots of prop traders are cashing in... lots of prop traders taking pain.

Which side are you on?