Virtual Office, $8982. Dow, -146.73, 13488.69.

Misstrade, $4410 on 9500 shares traded.
Me, $2977 on 7000 shares traded.
HPT, $1006 on 36 contracts and 200 shares traded.
Evolution, $589 on 61,400 shares traded.

Crappy day for the market, excellent day for the VO.

Misstrade turned some shit (fertilizer joke, stay with me people) into money with a nice short in TNH. Keeping with the agricultural theme, I had a nice gainer with LNN which I held overnight into the earnings gap-up.

HPT had a solid day and even slummed it in the stock market for a trade. ET, went on a trading binge... ET buddy, you're overtrading! HAHAHA!

Anyway, another heavy volume loss for the market. Recently, the market shrugs off these losses with bigger gains. Kind of like the whole, "Hey, they knocked down the towers now we're just gonna build them BIGGER" mentality. Let's see if it works again.

My daily post and music video will have to come later this evening as I am busy immediately after the close.

Tick Bombs

They make me skittish. And really, with this new method of trading I am using I'm thinking about just removing that indicator from my screen entirely.

The ticks shoot up to 850 and I think, "well, maybe it's time to cover the shorts" and then a second later, they're -600.

More static than anything really...

Speech About Blogging, American Politics

Whatever your political opinions may be, I thought this speech was worth posting just based on what she says about blogging and about how the media has let us down in the last decade.

Blogging, in whatever form it takes, is here to stay. And I think that's a very good thing.

Boredom And LNN, Lindsay Manufacturing

Well, I had another nice morning of surf and then I hit the screens. I was relieved to see the favorable earnings report put up by LNN. I held 400 shares into the report and the gap up helped my mood a lot!

There is a gigantic short interest in this stock which was first pointed out to me by "the Fly". And of course, there was the Wallstrip episode.



I added to my position on the pullback this morning and then sold those shares during the conference call, which was short and sweet.

A couple of things I picked up from the call:

-declining steel prices help Lindsay
-positive economic conditions for farmers help Lindsay

Should be fun to watch the next few months.

Anyway, so I've stuck to the new trading style today. One problem I'm encountering is extreme boredom. I'm a trader, but really, I'd rather be out watching birds, reading books or playing with my daughter. Since I'm not trading a gajillion shares a day anymore I find I'm losing focus. This is something I'll have to work on. I guess I can use the new free time to scan charts and look for setups, but man, it's boring!

And yes, Woodshedder, I checked the link about trade setups you provided the other day in the comments section. Much appreciated, thanks!

The Go! Team, "Grip Like A Vice"

A New Approach, But... Not Really

At 9:30am I slipped the Skygreen Leopards into my disc drive, leaned back in my chair and watched my screens blink madly at me. I imagined them angry at me for not engaging them. They must have wondered why I wasn't cursing at them.

But I was impassive and watched CNH with a bit of amusement as I imagined all the traders who got their balls ripped off in him trading the open. It made me feel smart. What a freaking lunatic!



For my first trade of the day, I shorted 100 shares of AMG at 129.73, this was at 9:46. As you can see, I didn't have to endure much pain in this trade, it worked in my favor almost immediately. I only threw in 100 shares because although it looked short term overbought I thought it possible he may get all the way up to 131 and I didn't want to risk too much right off the bat.



Anyway, I covered at 10:00 at 128.57. I'm still not sure if I should have. I mean, the first big question I need to answer about this new style is whether or not I should actively cover, trail stops down, or just leave my original stop in. In this case, ultimately, the stock went lower on the day.

It's already late so I can't get into everything about my day (I'm waking super early again tomorrow) but there were a couple of other trades that bothered me and that I didn't handle well.

The first was SPG which was my biggest winner of the day.



I bought 500 at 96.13 and figured if I put my stops just below the low of the day that I'd be risking about a half point. On the daily this stock has been crushed because it's a REIT and I guess it sold off with the rising interest rates. Anyway, I sold out early. 100 shares at 96.18, 200 at 96.37, and 200 at 96.85. But all of these were nervous sells. I mean, I was never as much as a dime out of the money on the trade but I was nervous whenever the market looked like it was weakening and sold really, because I was scared to lose.

It gets worse. Check out this beautiful graph for AB.



At 11:24 I bought 300 shares at 85.10 just before the breakout... right before the stock ripped straight up for 3 points. But guess when I sold... at 11:28 at 85.18. I really wanted to lock that 8 cent gain in... awful.

Finally, I get to my big loser on the day, CF. I short 500 shares at 56.50 at 2:20. When it broke the lows from 12:30, I thought it could break and follow the downward path that TNH, another fertilizer stock, was tracing. Anyway, 2:20 was basically the afternoon low on the S&P and the stock followed the futures up and squeezed me out at 57.15 for a $300 loser.



So anyway, I lost money. But I realized something that explains the title of this post. The way I've been trading for the past few months is just wrong. Everyone who has told me I was overtrading was exactly right. I am churning positions when I really don't need to.

I picked some good stocks today and had I let them run instead of getting nervous and covering, I would have made good money. I think it's a matter of readjusting and regaining confidence that I am actually buying stocks at decent levels. I mean, my entries weren't the big problem for me today, it was my exits.

It's the old rule, "Let your winners run".

What I realize is that this isn't really a huge change to my trading style. It's just calming it down... a lot. I don't need to reinvent the wheel, I just need to let the old wheel roll a bit and gain momentum and maybe it won't fall over so much... it's late and I'm going to let that corniness about the wheel slide. Hopefully you understand what I mean.

Oh, and GO LNN! Beat and raise! Beat and raise! Please! I held into earnings.

Anyway, here's the stats:

P&L, -$102
Best, SPG, $193
Worst, CF, -$297

shares traded, 9600 (about a third or a quarter of a "normal" day for me)
stocks traded, 9. 4 positive, 5 negative.
total trades, 78

Virtual Office, $6700. Dow, +23.09, 13635.91.

Misstrade, $5066 on 6300 shares traded.
Denarii, $768 on 3600 shares traded.
Evolution, $544 on 58,800 shares traded.
HPT, $423 on 30 futures contracts traded.
Me, -$102 on 9600 shares traded.

It was a big day for the VO, especially for MT who caught a nice drop in my old friend TNH.

Denarii also stepped up to the plate, Evolution had a solid bounce and HPT got off to a green start here in the VO.

I was the sole player in the red today. Although I'm happy enough with the results since I tried a completely new trading style.

My daily post will come later this evening. For now, I am chief babysitter.

Russell Rebalancing On Friday

If I recall last year this was a huge event. Things can get crazy.

Ray over at Hybridtalk deals with the issue in this post. If you're interested in trading this event on Friday you should check it out.

The VO Is Expanding

I would like to welcome High Probability Trader to our esteemed Virtual Office.

As regular readers know, the VO is a daily compilation of some active bloggers trading stats for the day.

HPT is the first non-stock trader that will be posting here, so bare with me if I screw up some futures terms now and then. I am looking forward to learning more about futures trading from HPT. If you haven't checked his site before, check it now. It is very informative and useful.

Blitzen Trappen, "A Lover Loves"

I woke at 4:30am today and went surfing. I haven't surfed in a decade. It's seriously the best thing I have done in a really long time. Sometimes, you get so far away from a good place that you forget how to get back there.

Life moves quickly if you let it. You have to slow it down.

Let's see if it helps me make money. Even if it doesn't it will probably help me not care about losing it so much!

Experiment, Part 3

(Again, please forgive the sloppy post. I will clean it when I have more time.)

So, what am I going to do? I have to change. And I know of no better way of doing that right now that taking my "experiment" from today and applying it to real life tomorrow.

So, I am going to go into trades with the idea of buying or shorting them for THE DAY. If by 4pm I am still in a position I will re-evaluate and see whether or not I should hold it another day.

I will have to increase my loss limits a bit. I can't expect to buy a stock and have it trade in my favor right away anymore. Normally, I don't like to lose more than $100 on a bad trade. This assumes a position size of 400-500 shares. That's my average. So I was looking to keep my risk to .25. That just rarely happens anymore.

Not one of my trades today that would have made me money had I bought (or sold) and held to the end of the day went more than 50 cents against me (except TNH, but he's a freak). The losers all moved more than a half point from my entry.

Also, that first half hour accounted for some of the wildest swings in the stocks. In the past, I loved wild swings... not anymore. Straight up and down with no easy way to get out of positions is not a recipe for making money. So, for the first 15 minutes of the day I will not enter positions and I will be very careful to enter any position before 10:00am.

I will buy or sell stocks and give them 50 cents from my entry. If I am correct in my entry, and in a good position I shouldn't have to endure much more pain than that.

I know many people use percentages and stuff to identify loss levels. I may get there, but for now I'm sticking to what I'm used to, and that's identifying loss levels based on real dollar amounts. But I'm open to suggestions.

After the first hour or two of trading, when I have entered a bunch of positions I'm just going to set my stops and leave. I need to break the habit of trading in and out. I think I can only really do it in this way, cold turkey, by walking away. My wife, who used to be a trader, is going to watch them (just in case anything crazy happens) and call me if necessary.

We'll see what happens. It's an experiment. I'll try this tomorrow and modify it as I go along.

It's just like starting over!

Experiment, Part 2

(Excuse, in advance the somewhat rambling post... it's been a long day and I don't have time to edit much).

My little experiment leads me to believe what a lot of people have told me here for some time; you can't make consistent money daytrading this market. Actually, I think I understood it in February, it has just taken me some time to accept it.

Daytrading, as it existed in the past, is dead.

It has been killed by the Hybrid market and new fees. No longer can you buy or short a stock and easily define your loss limits (within a quarter point), place a stop there and do well. Things just whipsaw too much (perhaps exacerbated by the "sweeps") and there are simply too many pockets of illiquidity to trade as I once did. So you end up with a lot of losers because stocks chop outside of your loss limits too easily. They trade too loosely too often.

I'm not saying it's dead for everybody, I know there are still some people making good money, but it is dead for me.

I have tried to adapt. In the past, I never touched Limit orders. No one I knew did. If you wanted stock, you went market and you normally got a decent price. When you wanted out, you sold at market or your stop was triggered.

Now, you simply cannot trade with market orders. You just really don't know where you are going to get filled. You can't read the tape, it moves too fast... sometimes the quotes update 10 times IN ONE SECOND! This is crazy and I still can't imagine who it benefits. But for a market-order-using-tape-reading-day-trader it has had disastrous consequences.

I thrived in the market between 2000 and the first half of last year. Back then, in the pre-hybrid world it paid to get involved with a lot of positions. You hoped to have 65% winners at the end of the day with small losers and one or two good winners. Now, it's hard to take a "small loser."

Take CNH for example. It's a perfect example of what happens to me over and over again in the hybrid market. It was my first trade of the day:



I bought 400 shares at the opening price, 52.23. It traded up a little and so I bought a couple hundred more at 52.33. But, by 9:32 or so, the bid on the stock dropped down to 52 and only 100 shares were showing there. I had 600 shares. If I chose to sell, I'd get 100 shares at 52, and then the rest, well, who knows where!

So, seeing no rhyme or reason behind the move, I hesitated, hoping that the whip down would lead to a quick whip back up and I put a sell stop for my shares at 51.75. The stop was triggered and I was filled at 51.49 and 51.52... so I lost a straight 80 cents on 600 shares.

Back in the day, I NEVER lost 80 cents on a trade, especially if I was holding 600 shares. I'd rarely lose over 25 cents! But these types of losses in CNH are all too common for me now.

And really, I don't know how to make them stop. So, I can't make these trades anymore...

An Experiment, Part 1

My daily post today will be different from daily posts in the past.

One thing isn't different, I lost money again.

Here are the stocks I traded today, in alphabetical order, with my P&L total for each.

AB, -$31.58
AGU, -$130.39
AIT, -$23.24
AMR, -$165.91
ARD, -$3.18
BBY, -$186.41
CF, $81.07
CNH, -$188.74
GWW, -$54.39
HXM, -$117.56
KMT, -$27.51
LNN, $76.65
LVS, -$40.46
MON, -$79.88
MOS, 129.67
SJW, -$119.40
TNH, -$271.45
VNO, $131.11
UBB, -$182.81

total (net) P&L, -$1155

Here's the same list. However, this time I just calculated what I would have made in the stock had I stuck with my initial purchase (or sell) and held until the closing price.

AB, $54
AGU, $55
AIT, -$48
AMR, -$290
ARD, $489
BBY, $39
CF, $21
CNH, -$632
GWW, -$215
HXM, $0
KMT, $45
LNN, $59
LVS, -$354
MON, -$35
MOS, $140
SJW, -$13
TNH, $1350
UBB, -$192
VNO, $525

total (gross) P&L, $998

As you can see, had I just made the initial trade, and then held all day, I would have made money today. Of course, I don't think anyone really trades like that. And the results are a little skewed by the volatility of TNH. But even if I took out my big winner and big loser, I'd still be up.

Since this post has the potential to be very long (and I'm short on time right now) I'm going to break it into a couple of parts. Expect more later this evening.

Virtual Office, $403. Dow, -23.41, 13616.07.

Misstrade, $1872 on 6100 shares traded.
Evolution, -$314 on 56,800 shares traded.
Me, -$1155 on 30,200 shares traded.

With only 2 other traders besides myself reporting today, it's hard to get a read on how the day really was. One look at the indexes says it was dull, and choppy.

It's the summer. The tape is quiet, volume is extremely low and traders are on vacation. So it goes.

My daily post may not come until later this evening. Time for a bike ride.

Iron And WIne, "Boy With A Coin"

From Black Flag to Iron and Wine. Dinosaur Trader has you covered.

Black Flag, "Nervous Breakdown"

This just about fits my mood.

Insanity

You may be sick of me breaking my trading rules all of the time and then whining about it. Imagine how I feel... it costs me money.

I don't have much to say about today. I had some good trades early in ARD (short) and LAZ and AB long. However, once again, I ate those profits up with lots of small losers. So at lunch, when I walked away, I was up a little.

I went to the park for a few hours and got to enjoy some time with my wife, daughter and some friends. I had a great time, it's perfect weather here.

But when I got back to my desk at 3 I was reckless. I started buying MON when I thought he was popping out of a base to the upside in the 65.10 - 65.20 area. He never got above 65.21 but I kept buying even as he went against me for 20 cents and broke the fig. I finally washed out of the position in the 64.90s and decided it was time to short.



I got short in the 80s and watched the stock descend to the 70s. Then it popped back up into the 80s where I short more. This time, it didn't break .80... it just hung around. Then it popped up and I got out of my position at .95 losing a dime. That wouldn't be a bad loss, but for some reason I was trading MON (both long and short) with more size than I normally do. I lost $500 in the trades altogether. An awful way to end what was otherwise not an awful week for me.

Like I said in the VO post, Einstein definied insanity as "doing the same thing over and over again and expecting different results."

When I am done with this post I am going to write that quote on a piece of paper and hang it on the wall behind my screens. I need something to change the way I'm doing things around here. Because really, I'm just spinning my wheels these last few months and I'm sick of it.

One step forward and two steps back gets old fast when you have a family to support.

Here's the stats:

P&L, -$520
Best, AB $151
Worst, MON, -$752

shares traded, 36,800
stocks traded, 18, 8 positive, 10 negative
total trades, 182

Virtual Office, $1275. Dow, +85.28, 13639.00.

Misstrade, $1160 on 6800 shares traded.
Evolution, $704 on 47,600 shares traded.
Denarii, -$69 on 2000 shares traded.
Me, -$520 on 36,800 shares traded.

A mixed day for the VO.

Another day where the indexes gapped up and then chopped around. However, once again, there were some interesting individual movers among stocks among them, AB and TNH.

ET had a nice bounce day off his renegade trader loss from yesterday. I was flat all day until the last hour of trading when I threw $500 down the toilet because I got stubborn with a position.

I think Einstein said insanity was doing the same thing over and over again and expecting a different result... he might have been onto something.

One VO note: Dehtrader will be on hiatus for awhile. Just about half of the VO is on hiatus. Summer doldrums indeed!

Have a great weekend everyone. Enjoy the weather.

Ron Paul on The Colbert Report

Mojave 3, "In Love With A View"

Another gap up and chop around. Less a trend and more like an explosion. Thus far anyway... we're only an hour into the trading day.

Thank goodness for HANS. A tip of the hat to "the Fly" for that call.

Anyway, I always have tough times trading on days like these so I'm taking it easy.

Here's a song. If you're a Wilco fan you'll probably like this tune.