May 29th

Here's what carelessness and inattention will get you. Not to mention selling out a winning position instead of holding. In the morning, I had some early positive trades but closed it down for the late morning into mid-day for a lunch appointment. Back to the markets around 2:30 pm, I had a couple winning positions, one of which was a terrific entry short at about 2:45 pm on SKF; average price of $43.66. As it turns out, this was the beginning of a tremendous end of the day drop as the markets surged! I had a three-part position short but sold it for a small gain of $360. Had I held to EOD, that would have been a gain of about $5730! But I sold it... and then started trying to play some reversals on the way down. Getty sloppy and inattentive, I got sidetracked by playing GS at the same time. Now, this would have worked had I been playing only one or the other. I was caught off guard when I hit the margin limit on my account and I could no longer average down! The 3:30 pm candle would have given me a gain in either stock had I more funds to play with. So, instead of selling out the positions, I decided to see what would happen... I had never had any shares liquidated to meet margin requirements; two forced sales are the two losers on the tally above. Now I know how it works! Ha! Anyway, I took a day-job phone call and didn't sell before the close. I'm carrying big open positions into Monday with no way to monitor them as Monday's work appoinments will keep me away from the computer until mid-afternoon or end of the trading session.

This is a learning experience for a few reasons:

-1. I still must hold winners longer. I sold two positions much too soon today, especially the 2:58 pm in SKF. Had I held that one, I would have avoided my current negative situation; a result of messing with the reversals. (instead, I would have been riding the trend short with a nice winner) I still haven't had the the experience of holding a really long trend and am looking forward to it. Over the past month I have had some great entries which could have given me that elusive momo gainer, I just haven't HELD until a clear sell signal emerges. Part of this problem is in identifying the proper exit point. More study of Scott Farnham's blog is in order.

-2. Playing for reversals requires enough money in the account to execute an entry... duh?! The margin of safety is pretty thin when doing this type of trading because the reversals in a strong trend don't last long. Quick, flawless execution is necessary. Another reason to abandon this approach, perhaps?

-3. Adding to losers is a big mistake and I still do it... despite my ultimate goal not to. This really is ego driven, I cling to what has given me gains in the past because I like the feel of putting up winners; though it is ill-advised because of large loss exposure. I simply must set my stops, then either reverse direction or wait for a better entry. Darn, I was doing well beginning to break the habit last week! What happened? ...Ego happened, I think...

-4. Distractions are dangerous, especially phone calls. Two open positions required sharp attention, today. Admittedly, I would not be answering the phone with open day-trades had it been real money. Still, it is a good lesson.

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Let's see where these trades end up on Monday afternoon. IB will continue to liquidate shares if the market surges. Doesn't matter, I won't be here to close the positions anyway, whether it goes for or against me. Monday is June 1st: I'm counting gains and losses when I exit the trades so I actually finished the month of May on a winning note... ha! It also means I may be starting June with a loser :-) .

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4 for 6, 67% win rate. Gain of $432 in 2.5 hours of paper-trading. Two open positions.