Too little, too late

Well, I couldn't save my month completely, but I got damn close.

P&L $1274

Best: AGU, $685
Worst: POT, -$319

#stocks traded: 14, 7 positive, 7 negative
total trades: 361

There's been some discussion on other blogs lately about position sizing. My trade in POT today was a perfect example of why you need to know the stocks you trade. I lost that $319 on two separate trades with 200 shares each trade. So I lost like, 75 cents each trade, very quickly. Clearly a stock that I can't trade with my "full" position.

On the other hand, I had 2500 shares for the AGU trade. It can take AGU a full day to move a point, whereas POT can move a point in 2 minutes.

I initiated a short in AGU when it broke through 38 around 10:20 or so. The stock then sold off a little and pulled back up to the figure but couldn't break through. That's when I doubled my position. He chopped around for a little while and played with the trend line I drew but eventually broke and I was able to cover for a decent profit. Part of the reason I was looking to short AGU was because the other fertilizer stocks were selling off at this time as was the general market.

Anyway, I thought that today the issue of position sizing really was important to me making money on a good trade and not losing too much on a bad trade.

Have a good weekend. I'll post a history article this weekend and if I can get to it, a monthly review.

Almost got there...

Although I had a good day, I missed getting to positive on the month by $300... so for the first time in 8 years, I had a negative month.

I'll post my daily stats later. Also, this weekend I'll be posting a new piece of "history" and a monthly review.

Right now, I'm getting away from the computer for a couple of hours!

Los Campesinos-We Throw Parties, You Throw Knives

Very catchy tune. Listen to it a couple of times and you'll be humming it for weeks.

Nice afternoon rally, but volume lower

You were able to draw a nice trendline on the futures today. The market basically sold off from the highs of the morning and bounced along this line until it broke it after 2pm today. After that, the market didn't look back, it just rallied. The only problem I have with the market from a short-term bullish perspective is that yesterday's sell-off was on higher volume than today's rally. As an IBD reader, that's not so great. Still, no one complains when the market is up 48 points... it's bad form.

I was able to catch a nice trade in CF because if you look at the two graphs, they are very similar. CF gapped up this morning and then trended down all day. Once the trend was broken, he rallied nicely. I had a decent amount of shares from 38.10 but sold a good chunk around 38.25 because I thought the trendline for the last 4 days or so would create problems. It didn't... so I sold out of a lot of shares "early". I'm not complaining though...


Daily stats:

P&L $560

Best: CF $450
Worst: ITG -$100

stocks traded: 18. 11 positive, 7 negative
total trades: 221

Tomorrow is the last day of the month. With my last 2 days of gains, I have a shot of NOT having my first negative month ever. It will take an excellent day. Still, I'm not going to do anything stupid. It would be nice to get to even, but I don't want to jeopardize the progress I have made or the confidence I'm slowly regaining.

Black Lips - Not A Problem

I just can't get enough of this song. If you like 60s era garage rock, check it out. It's the second song on that list.

More Help from Traderfeed

Hey, I checked Traderfeed this morning for Part II of his post that was started yesterday on self-sabatoge. On today's post he linked an older post that has some very helpful articles on psychology and trading.

If you've ever been in a trading rut (and who hasn't?) or are planning on getting yourself into one soon, I highly recommend checking these articles out. They're at the bottom of the post.

To quote the band Sublime, "hard work good, and hard work fine, but first take care of head." Of course, I don't think they were writing about trading... Still, the point is that you can look at 1000 graphs a night, but if you're stuck in some bad trading patterns, spotting opportunities probably isn't your biggest problem.

Slow morning

Volume is lighter this morning than it was at the same time yesterday. And I hate the action on days like today. The futures gapped up on the GDP data but then sold off. It's hard to get short days like this because even though the market is trading down, there's plenty of bullishness anyway so the squeezes can be quick and violent. At the same time, it's hard to initiate longs because a lot of stocks gapped up and then got choppy... good entries were hard to come by... at least in this cave.

So anyway, I took it easy this morning. I'm up a couple hundred bucks but I don't have a winner or loser that's greater than $100. I'm going to spend the next hour looking at charts and then take a long lunch. Hopefully, in the afternoon things will be more interesting.

I haven't even spotted any freaky hybrid trades... (sigh).

A Good Day

I finally had a day without much drama where I just made small, smart trades. I caught CF and AGU as they broke recent downtrend lines. Even though the moves weren't huge I didn't have any bad losers, so I had a solid p&l.

Overall, the market sold off. However, the volume, though higher than yesterday, wasn't huge. With lots of eco-data still on the way this week, things could get interesting.

Total: $998

Best: CF, $483
Worst: TS, -$86

16 stocks traded, 9 positive, 7 negative

298 trades.

I still have a long way to go to pull positive for the month with only 2 days remaining. I'm going to get to sleep early and do good research again tomorrow morning so I can stay focused and try to end strong.

The "other" Stewart commercial

The guys in my office had high expectations for more Stewart commercials after the first one with Mr. P. This, I believe was the only other Stewart commercial. The real-life Stewart ran into legal trouble or something and they stopped the campaign.

Trader sabatoge

Since I've been sabatoging myself for the last year or so, I found this post, "Trading and Information Processing: Why Traders 'Sabatoge' Themselves" by Traderfeed very interesting.

I strongly suggest you check it out if you haven't already.

Low volume sell-off

Good for the bulls, I guess... there's a lot of eco-data coming out later in the week and BB talks tomorrow, so I assume lots of traders were watching today instead of trading a lot. They were the smart ones. I lost some money.

P&L: -$217

Best: MTW, $94
Worst: CF, -$189

So you see, I was planning on having a post called "CF Part II, The Upside" but things just didn't work out that way. I did indeed make some nice trades in CF and for a short while was my best stock of the day. But simply put, I over-traded today. I churned and I was burned.

I broke a cardinal rule of mine which is to not trade at all or trade very, very lightly between 12 and 2pm. That's when I went from green to red. More importantly, I lost confidence during that time and I was unable to pull together to make a single good trade during the last hour of the day.

Very frustrating. It will be difficult for me to meet my goal by the end of the week.

CF Part I - The Downside

I spent the better part of the morning amusing myself by getting squeezed trying to short AB and getting smoked by buying CF. Clearly, the lesson I "learned" yesterday needed a little more time to sink in. As I was getting worked, I came upon a realization that I've probably had 1000 times before while trading but always forget. So this time, in order to remember it, I've written it down.

It's this... that you always feel your worst trade of the day is destined to be your best.

What I mean is that I kept getting short AB thinking that "once it turned" that I had the best opportunity to make some good money. Same with CF. I kept buying thinking that "once it turned" it would rip and there would be nice money to be made.

Hope and greed work together to kill the trader.

Here are the details of my trades in CF as the stock moved down from the open until around 10:20. The following account is pretty dry so I'd suggest following along by enlarging the graph by clicking on it. They're 5 minute bars.

At 9:50, just before the stock really dropped, I started buying. I bought 500 at 39.95. It became pretty clear that the stock wasn't through selling yet though, so I sold my shares quickly. Lesson learned! I sold 200 at 39.93, 100 at 39.85 and the last 200 at 39.65. A loss, but not bad considering that the stock still had over a point and a half to go before it hit bottom. Perhaps in the recent past I would have only sold half my position... anyway, I was pretty happy with my quick exit.

At 9:55, I tried again, and purchased 500 shares at 39.32. Again, I had to sell quickly, and sold 100 at 39.11 and 200 at 39.09. Not great fills, but take a look at the graph. The stock was selling off rapidly here. So rapidly in fact, that before I sold my last 200, I bought 500 more at 38.93. So I had 700 shares and I felt pretty sure, that the stock was due for at least a "dead cat" type of bounce.

I was wrong.

So, I sold 100 at 38.94, 200 at 38.88, and 100 at 38.93. I had 400 shares remaining. At this point, either the ticks were shooting up, or the stock flashed a bid, or maybe I was just feeling lucky, I dunno, but something convinced me that the bottom was in because I bought 800 more shares at 39.01. This was at 10:00. Less than 1 minute later, I sold 700 of those shares at 39. My confidence in the "bottom" lasted all of 40 seconds...

I sold 200 more at 38.98. So I only had 300 shares remaining. And again, the stock broke the low. So yes, I'm losing money at this point, but so far, I've been right in getting out of the majority of my shares just before the stock would break to new lows. I don't remember exactly, but even after all these wrong trades I was only down 3 or 4 hundred dollars in the stock. Not good, but not a disaster either.

I bought 200 shares at 38.85 and then 500 more at 38.95. Then, I sold 700 at 38.96. So again, I'm back to 300 shares. Just churning here... but now, the stock breaks again. Here comes the "disaster" portion of the trade. It's 10:03 or so...

Instead of selling a portion of my remaining 300 shares when the stock broke to a new low, I bought 400 more at 38.70. The stock broke lower, but it hurts more now because I have 700 shares. I sold 200 at 38.55, but then 1 minute later, at 10:12, I bought 800 more at 38.54. So I have 1300 shares. I sell 400 at 38.51. I have 900. I buy those shares back at 38.47... back to 1300. And then the stock breaks and before I can think, I buy more at 38.19. So I have 1700 shares and the stock breaks 38... I was down over $900 in the stock at this point and feeling pretty ugly about it.

Before this final break, I had been doing a good job of selling so that when the stock broke I was never too "committed" to my position. I never had that deer-in-the headlights, eyes glazing over, type of situation. Luckily, this time, the "disaster" only lasted a few seconds. The stock broke back up and sold 1600 of my 1700 shares above 38.40. So I went from being down $900 to being down $200-$300 in a matter of seconds. More importantly, I was still in the game mentally and I was nearly flat in my position so I was able to think clearly when the stock "tested" the old low and held.

Wallstrip profiles GAIAM

This is a couple of month's old, but I thought I'd post it since it's one of my favorite companies (even if they send me 10 catalogues a week), it's doing well, and because the springtime is a great time to get back into a yoga routine.

Not to mention that "yoga breathing" is very helpful during trade disasters...

A stomach virus

Albert had been calling for months and keeping me on the phone for hours talking to me about the stock market. We went to a Yankee game one day and it's all we talked about. It was really boring. If you're not a trader, "bids" and "asks" don't mean crap... and even the idea of a guy named "the specialist" who controlled the way stocks moved and routinely screwed everybody seemed insane. But then, Albert had made $75,000 in the last month. He showed me the check. This caught my attention. Still, I wasn't going to make the decision to go further into debt and to take a job with no guaranteed salary or benefits lightly. So Albert invited me to "sit in" and watch him trade so I could get a feel for the job.

I didn't mind calling in sick to the job I was preparing to leave. The place was nice and everything, it was an internet company, one that eventually had success, but the pay was awful. Instead of a good salary, you could basically come and go as you pleased as long as you got your work done. There were other advantages as well. They served beer and pizza at company "meetings" and each week we all played softball together. Oh, and there was the day the head of the office brought in a few large cardboard boxes full of those little plastic balls that kids jump around in at indoor playgrounds... Fun? Yes. But I had student loans and bills to pay. Anyway, I received 100 shares of company stock priced at about 15 or so. The stock debuted in the 30s and on it's first day of trade vaulted over 100. I sold the next day in the 80s.

It was my first stock "trade". It was also the easiest...

Between that and Albert's success, I was excited about this thing called the "stock market" which I hadn't thought about during the first 22 years of my life. And so the following Monday, I had a "stomach virus" and made the trip downtown.

A damn shame...

Well, as noted in my intraday post, I really managed to screw up an otherwise decent day with my poor trades in FED. I need to talk to One Bad Trade... perhaps we should switch domain names...

Here's where I ended:

Net: $138

Best stock: IPS $298
Worst stock: FED -$548

My second worst stock was -$48. I had 4 winners for over $100. So really, if I could just erase the stupidity of FED I had a decent day. I can't erase that stupidity...

Hopefully, I can at least learn from it.

The silver lining for me today is that I had some decent success with limit orders. Normally, I trade at market. However, the hybrid market makes this a very sketchy proposition so I've been experimenting with limits.

Another positive sign for me was that I traded a lot. I made nearly 300 trades. It's important that I get involved in the market before the beginning of earnings season.

I'll have another "history" post up before the open tomorrow.

2 steps forward, 1 step back

Well, things were kind of slow this morning until that new home sales data was released at 10. Then the fun began!

I was up a couple hundred due mostly to a decent IPS trade. When the data came out, I got short a couple of the mortgage lender stocks, RAS and CFC. My p&l shot up to about $700. Problem was that I then decided to start buying another lender when I saw CFC put in his bottom. This particular stock, FED, didn't give a DAMN that CFC had bottomed and I lost about $400 in him.

This was unbelievably stupid.

On the accompanying graph, I've marked where I was buying the stock with the light blue dots. Notice how the dots kept going down... and my p&l followed. So I'm $500 off my highs of the day here at 11:15 and I'm only up $230. This makes me very concerned that if I continue to trade I'll go negative. So I'm going to sit patiently and watch for the next couple of hours instead of trade.


Last week, Traderfeed put up a great post about The Anatomy of a Stock Breakout. I even posted a comment, thanking him and remarking that I often try to manufacture or anticipate trades instead of waiting for a trend to develop. Unfortunately, part of what I did wrong in FED was exactly that. I was anticipating a bottom and so I was burned.

Lesson learned?

Weekly Stats For The Week Ending 3/23

Monday: $236

Best: HRT, $203
Worst: POT, -$113

8 stocks traded: 4 positive, 4 negative

Tuesday: vacation
Wednesday: vacation

Thursday: $142

Best: IPS, $192
Worst: MTW, $78

13 stocks traded: 6 positive, 7 negative

Friday: $437

Best: RDN, $467
Worst: FED, $128

16 stocks traded: 7 positive, 9 negative

Overall, I'm pretty happy how this week turned out. Yes, I missed the huge rally on Wednesday, but as JC eloquently posted over at A Scalper's Tale, "If I were to constantly mull over missed moves or mull over how much potential profit I could have taken had I been there, I'd probably second-guess myself at every turn and on every decision I make..."

True, true, JC.

Anyway, I had 3 positive days in a row. I averted a huge disaster on Monday, took a couple of days to clear my head and finished the week pretty strong.

Next week will be a somewhat dramatic one for me because in my 8 years of trading I've never had a net-negative month. I'm currently down a few thousand dollars for the month. I will have to have a solid week to pull positive and keep my streak alive.

Have a great weekend. Thanks for reading.

The Interview The Entire Street Is Talking About!

Congratulations to Wallstrip.com for getting a mention last night on Fast Money and then again today on the Closing Bell!

Lots of speculation about what's going on between Lindsay and Dylan. Great interview though. I love her lead-in.

Just- Radiohead

I was torn between posting a classic or a new song. I chose classic.

Anyway, this is one of the most famous music videos of all time. What does he say in the end? Endless discussion and speculation...

I personally think the dude is a trader and he says something like... you just wait, in 8 years, there will be this thing called the Hybrid Market. It will make your life difficult. Should you fail to adapt to it, you will lay here like me... forever.

Not to mention the fact that the lyrics of this song apply directly to trading disasters. "You do it to yourself, you do. And that's why it really hurts."

Finally, a decent trade.

Nothing great, but I'll take it.

After the new housing stats came out, it looked like the mortgage stocks started to jump a bit. I noticed that both RDN and MTG (which trade together) were close to breaking a downtrend on my 5-minute graphs.

So, I bought when they started breaking the trendline and it worked.

I took profits a little "early" I guess, but this was right when the futures were spiking down so I don't feel too bad about it. In fact, I started thinking the stock was "overbought" so I threw in a short order near the top. I had less conviction on the short side though, so I put in an order that was only half as big as my initial long. I've tried to provide details on the graph, but I'm not sure if you'll be able to read my writing. If you click on the graph, the image expands.

I made close to $500 on the trade. All of my other trades today have basically cancelled out. So, I'm gonna take these profits and hold them until 2:30 or so. Then I'll take a fresh look and see if there's anything worth trading into the close.

I'll post the song of the week in a couple of hours.