June 30th

I rushed home from my day-job in order to get a trade in before the days end. I wanted to close out the month of June with some activity, giving me a sweep... my first month where I participated in the markets every day that it was open.

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I got here just as SKF was running down as the markets climbed. I went"bottom fishing," looking for the turn that had a very high probability of occuring. I got in long at 41.50, five cents from the bottiom of the move down. I put my stop at 10 cents and waited. SKF started to climb and still I waited... finally, with only about 8 minutes remaining in the day, I sold for a $60 gain (13 cents) at $41.63. The story does not end there though... SKF continued to climb and I realized then I had exited much too soon... it ended up topping out at $41.87; another 24 cents. I might have taken as much as $185 from that trade. So, in the end, I took only 32% available to me after a very well-timed entry.

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Closed the month on a winning note and I'll put together a re-cap soon.

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1 for 1, a 100% win rate. Gain of $60 in 20 minutes of paper-trading. Stop placed but did not trigger. No adding to losers on the day.

June 29th - Addendum

A review of today's trades reveals a few things of note:

I did not let the first trade of the day go to stop-loss.
Result: Bailed early and missed out on up to a 20 cent, $100 gain.

Fifth trade, I stopped it out at ten cents.
Result: That was the low point of the trade and within 3 cents of the low point of the entire day to that point and as soon as the stop triggered, the trade reversed and went up 39 cents from the stop-out point. It topped out at what could have been a gain of up to 29 cents, $145 gain. There's that frustration point again... so very close (couldn't be closer than that, actually) but just missed on a nice move. Success seems just a hair out of reach, sometimes.

It's after 10:00 pm and a very busy day-job tomorrow so I can't plot and study other trades but I've seen enough to know I am near Nirvana.

June 29th

I didn't get a chance to get to the markets until about 2:00 pm because of my day-job. I decided to watch AAPL instead of SKF as it seemed to be making larger dollar moves. As can be seen from the list of trades, I struggled with my entries and found myself stopping out often. I tried to stick to 8 cent stops but found on some occasions, quick movement blew through the stop and I took a larger loss than I'd like; 2:12 pm was a 10.5 cent, 2:16 pm a 15 cent, and a 13.5 cent at 2:34pm. However, most stops (7 of the 11) were triggered within 9 cents, so stop discipline was strictly enforced today. Also important: NO TRADES ADDING TO LOSERS TODAY. Unfortunately, this resulted in a terrible won/loss ratio and a small loss on the day. I say unfortunately because 4 of the 11 losses representing -$167 happened within 30 cents of the 2:05pm reversal in AAPL at $142.70. (on a stock which moved nearly $2.40 cents from HOD to LOD). There are other cases of being in close proximity to an anticipated turn only to be caught in chop. This seems to be a constant problem for me. I sense the changes in direction are near, so I play a stock to reverse. Then, I stop out numerous times as the stock goes through its machinations at the top or bottom of a trend. I am getting stopped/chopped to bits. My old method of buying and adding more trades to the position if it moved away from me insulated me from losses while a stock was consolidating. I enjoyed high success rates because the little moves in these difficult areas didn't take me out of the overall trade. It's tough eating all these losers while adapting to the new (but preferred) method of trading. It's worth the pain now during the change of style in order to avoid those infrequent but nasty breakouts from consolidation moving against me.

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I constantly look for encouragement... in this, I still seem to have a good feel for changes of direction which is primary to future success. I am now sticking to stops so i won't blow out my account a few times per month and offset the gains I might have. And, with all these losses because of my lack of experience, I still seem to be down very little. I can live with losses this small when I am in only my second or third day of adapting to true momentum/trend-trading. The gains will come eventually. I will sharpen my skills at picking tops and bottoms, I will limit my stop losses to under 8-10 cents, I will see and feel momentum such that I will stick longer with winners, and I will begin to see choppy consolidation areas after trends and not be suckered into them by the market-makers, et.al. Success: it's not a matter of if, it is a matter of when.

... I just hope it doesn't take too long.

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8 for 19, a 42% win rate. Loss of $37 in 2.25 hours of paper-trading. Stops engaged on all losing trades except two, no trades added to losing positions.

EOD - Boot Camp Day

First off, I am very happy and am finishing the day with a positive feeling. I took 15 trades split between SKF and AAPL. It was my first down day in weeks but as I posted earlier, I am not focused on wins/losses or dollars lost/gained today. That wasn't what today was about. That said, after 15 trades, I was down less than $165. By the day's end, I was so confident about my ability to adhere to my stops and sit on my winners longer, that I actually started to paper-trade the big EOD move in the market. Notably, I waited on SKF to sink and at 3:04 pm, went long at $42.13. I caught it two cents from the low of the day at that point and rode the rebound up to $42.34 at 3:17 pm. I sold the move 5 cents from the top, catching 78% of the pop. I must say it felt great to hang in on a run like that but I also must say that I had to force myself to stay in... especially when the trade came down to two cents from my entry, before making its climb.
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Part of the reason I didn't want to focus on the gains or losses today is that I had a few trades stop out that had some respectable positive gains. The first trade of the day, I stopped out at scratch (+$15) after being as much as 46 cents up ($230) before reversing. At that point in the day, I was planning on just going round-trip on trades; ordinarily, I would have taken a good portion of that move. On many of my early stop-outs, I made note that if I had immediately reversed instead of exiting and watching, I would have taken gains in excess of the amount lost. This is certainly something which experienced traders routinely do and I must open my mind to doing this. It only makes sense, right? If I'm wrong in one direction, more than likely the stock is going the other way and not just sitting still. I just have to be aware of choppiness and getting stopped-out to death! Those $40-$50 stop losses add up if one plays every move inside a choppy price-channel.
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I am not going to give a play-by-play of each trade but I did want to note that on SKF, I stopped out on a short at 10:44am at $43.09. SKF felt frothy and I really had a sense that it was going to break down. Well, after the stop-out at $43.17 (8 cents), it ran another 7 cents and then dropped. I was stopped out on a short that was only 7 cents from the HOD! SKF dropped 1.38 to its low of day then closed the day down nearly a dollar from where I went short. What does this mean? It means nothing, really, because every trader can say "if" this, and "if" that to many trades every day. However, I think it is an indication that my trading instincts are not too bad and they simply need refinement. I have reason to be hopeful, and that is what is most important to me now.
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This morning's post mentioned that I would post a chart but I will not be posting a chart as it would take too long to mark all the trades.

Boot Camp

Tired of blowing off my stops then adding to losers to compensate for a bad entry and tired of cutting winners short with no good reason, today I am sending myself to "Basic Training," stock traders' boot camp for the day!
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I will be placing my orders as always. However, I will NOT be exiting trades until they stop out or until EOD, whichever comes first (on a day like yesterday with strong trend in one direction, it could mean one trade lasting the entire day). A protective stop will be set at 8 cents from entry. If the trade goes in my favor and it enters a third 5-minute candle without stopping out, I will move my stop to breakeven. I'll add to a winner if it seems right and I may scale out that added amount... but absolutely no exit on the original position except at the stop. To stay engaged, I'll mark a magenta colored line/spot where I believe I should exit the primary trade then see how close to the change of direction it was. My focus will be kept to price momentum and volume of the stock and the nasdaq/S&P indices. At the EOD, I'll review the performance and post the chart of trades. I won't be keeping trade stats today as I usually do; win/loss percentage or dollar gain/loss.
Hopefully, this exercise will force me into fundamentally sound performance.
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Good luck to all today!

June 25th

No Summary today. It is what it is...
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19 for 20, a 95% win rate. Gain of $542 in 6.5 hours of paper-trading.

June 24th

That was a fun finish to the day paper-trading after the Fed announcement. I had forgotten how much I missed the crazy volatility of March. If everyday was like this afternoon, I would say goodbye to my day-job now! I went 15 for 17 between the Fed announcement and the close; $47 in losses offset by $809 in winners... and that's with one-half positions (500 shares). Mostly scalping, I still did not take large portions of most of the moves I was in, nor did I try. I didn't want to have trades go "full-circle" on me by not taking gains when I had them. It's a question of feel & timing... and I have very little for this kind of action! ha!

Overall, a passing grade today but I broke some rules, especially early. I was using one-third positions before the Fed announcement so I was a little too fast and loose with averaging in. My rationalization is that it takes three partial positions at 300 shares to roughly equal a full position so I gave myself three buys to determine my average/final cost, then set my stop ten cents from there. How's that for a rationalization??!! Ha! On each of the averaging-in situations, I scaled out quickly with small winners to lighten the weight, then let the remaining portions ride some. It worked out ok, I had 14 scale-out trades on those two full positions I mentioned, all for winners; representing $376 of my total $1050 for the day.

In hindsight, I should have been trading my live account. I'm kicking myself a little for that.

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Observation of the day: I still have a long way to go to become a real trader. I struggled early trying to get into trends on a relatively slow moving market; stopping out on 5 of my first 9 trades. The other 4 did not stop out ONLY because instead of selling my losing position, I averaged in for a more favorable cost-basis. After this run of stop-outs, as I have done other times this week, I decided to take quick profits when I finally hooked the winning trade. This trade at 11:05 did turn out to be the reversal in SKF that I had stopped out three successive times trying to get. I garnered only 10 cents of the 84 cent move... to add insult to the injury, the price never came within 15 cents of my entry and was a full 25 cents away from my stop. That is incredibly frustrating and it is, of course, all in my head. This is what makes trading such a difficult task. Fighting mental bad habits is the biggest battle.

So, I repeat the mantra: This is really going to take some work to learn how to trade, especially in slow markets. After all, there will be more slow markets than volatile ones going forward. Last September through March was an abherration, pehaps once in a generation. I cannot expect to survive hoping for those times to come back, I have to learn to thrive in a world of ten or twenty cent moves; trading them repeatedly for gains as Scott Farnham does. Only then will I be a trader.

Addendum: One thing I started on Monday was not watching my profit and loss on any trades. To assure that I can't, I removed the column entirely from my IB platform! The only time I know the gain/loss on a trade is when I close it out. I watch the charts exclusively, knowing only my entry price and my stop price.

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32 for 40, win rate of 80%. Gain of $1,050 in 6.5 hours of paper-trading at 1/3 and 1/2 postions.

June 23rd

Only got in for the last hour. Made an effort to stick to the stops and I was rewarded again, although the volatility in SKF at EOD made me just a bit uneasy about sticking too long with trends. Stopped out the first trade of the day for $30 loss on a 300 share position (kept my loss under 10 cents per share). Second trade was basically a scratch loss off a position which had a decent gain but re-traced while I was trying to stay in trend... I had moved the stop to B/E. The following trade was my best of the abbreviated session, getting a significant portion of the 3:10 pm red candle. Three more winners after that and I was finished for the day. Mostly a fundamentally sound day... I'd give myself a grade of B-. I stuck in too long for the reversal on the entry of my biggest gainer (16 cents) so I did exceed my stop by 6 cents. Also, the average grade is because of a lack of attention. I missed/watched a couple nice moves go by, including the 3:25 pm red candle and the subsequent reversal beginning at 3:30 pm and topping out at 73 cents around 3:46 pm. I actually watched it during this time... I wasn't like I was busy with something else! Ha!

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4 for 6, a 67% win rate. Gain of $120 in 1 hour of paper-trading.

June 22nd

It was a different sort of day for me, by design. I am committed to finally changing my approach to the markets. I am going to abandon adding to losing positions in order to get a more favorable average price and I am going to try to stay longer in trades. Use of stops and a keener eye for entries will help me with the first thing; patience, a focus on 5-minute charts, and developing the skill to identify impending changes of direction will help with the second.

I made 32 trades today (one was a scratch so I am counting only 31), a dramatic increase over my recent activity. Because I was back to paper-trading today, I tried 1000 share lots again. I will reduce that back to 300-500 for a taste of realism... after all, I will be trading my live account in the smaller amounts as I did last week; until I "get my feet under me." Because of my attention to minding my stops, I had more trades and more losers than usual. I only got a 52% success rate; low for me. But, I was determined not to go crazy adding to losers. Near the days end, I changed from 1000 shares trades to 300 share trades and having done that, I did add to my positions but tried to keep the additional entry within the allotted stop zone. So, the trade count was up and my success rate was down. Yet, I managed to have a gain of $788. I am quite pleased with this as it is positive reinforcement for my training regimen of breaking bad habits. Early on, I had some difficulty getting a feel for the stops and had two or three stop losses over $100. Therafter, I settled in and kept my stops in the $40-$80 range. I ddn't have another loss over $100 all day. My average loss on the day was $80, without the first three "getting acclimated" losses, my average loss was $62. That's the kind of performance I need! It was really great to not be down hundreds or thousands of dollars and hoping for a reversal. In that respect, today was the first day that I actually behaved like a stock trader.

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Where I need work:

On SKF, between 12:17 pm and 1:23 pm, I made 5 losing trades in a row. All shorts, this is where my old pattern of trading presented itself. As the SKF climbed, I kept looking for reversal, and kept stopping out. In this situation, I once would have kept my trade on and just bought more as it climbed, eventually profiting from the eventual breakdown which began around 1:25 pm. What I must do is get in the habit of exiting, waiting for a cross of S or R, and trade the other way! (which I did earlier on ERX with a terrific result). Back to the SKF run up: It would have been a nice gainer had I gone long after my first failed short in that timeframe. By my estimate, up to a $780 dollar gain PLUS avoiding the $358 in stop losses I had in the same timeframe... total addition to the day's tally would have been as much as $1138. (the initial entry would have held up since the candle 10 minutes hence was not low enough to trigger the stop). Just as that particular run-up was finishing, I did finally get the short which corresponded with the reversal! Between 1:35 pm and 1:55 pm, SKF had a nice dropoff of 67 cents per share. I had a decent entry on this drop, getting in at $45.26, but I scampered out at $45.11. No excuses, I was gun-shy because of my extended run of stop losses and was looking for a sure winner (expecting another stop out). Too bad, had I stayed with it, I would have had up to a $510 winner instead of $137. There was no reason to sell, the trade never approached the stop... in fact, it never rose above my entry price! It's tough to not be influenced by past trades...trading like a machine is going to take some serious work.

After that winner in SKF, I kept with the old theme and didn't re-short it. Rather, I watched it drop looking for a reversal again; taking three more losses on it in anticipation of the turn to the upside. I moved on to OIH and missed the anticipated turn in SKF by only a minute or so; one which would have given me a great entry on the final climb into the close for SKF. That last buy in anticipation of the reversal was only 14 cents from the turn. Again, patience, patience, patience is what pays off. Had I stuck with that final trade in SKF, the move up to the close would never have touched my stop and I would have been taking part in a $1.49 move; $1,490 with the 1000 share position I had on.

Day job will interfere more this week than last. I'll try to work in some practice trading through the week.

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16 for 31, a 52% success rate. Gain of $788 in 6.5 hrs paper-trading

June 19th

Day job took me away from the market at 2:30pm and kept me away until evening. By that time, I wasn't interested in logging in to update the blog. I wanted to do it now but found that IB is not allowing access to the platform today (Saturday). So, I'll update Friday's stats on Sunday. It was a small gain, in line with the others from this week; my first days trading the live account since October 2008.

Sunday Update:

I finally had a chance to post the results and a relevant chart from Friday. First trade was in ARM, a low price gutter-type stock I took off the IB pre-leaders list. Like Wednesday and yesterday, I had fun dipping my toes back in this vernal pool of the stock market as opposed to the ocean that is bigger cap, mainstream stocks & ETF's. Most of my activity on the day was in ERX, however, with one trade in SKF. I had small gains in all three issues.

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Patterns:

There's no mystery in my pattern of trading behavior since this blog started Feb 1st. I've put together a fairly consistent high percentage of winners to losers using strong divergence from the mean and high-volume spikes as entry triggers in anticipation of reversals of direction. In addition to some fantastic entry points on reversals, there has also been a pattern of occasionally getting in too early; a move continues instead of changing direction. This is where my dangerous habit of averaging a better price by adding to the losing position comes to the fore. For anyone interested in adopting this method of entry, I strongly suggest you get in the habit of setting a firm stop instead of averaging for a better price. Either engage a stop and immediately go the other way in the direction of the prevailing trend (employing another stop, because you know the reversal is near) OR, stay out until you get a better signal of that impending turn in the stock. This is most certainly a "Do as I say, not as I do" advisory, as this is my worst pattern of behavior and has resulted in much or all of my gains in a given month being erased from a single bad trade. Relatedly, as you add to your losing position on the wrong side of a big move, any eventual gains are often small when and if the anticipated reversal arrives. Lastly, when you finally exit the "averaged trade," you face the sick realization that you either got only a small gain for your efforts or took a monster loss all the while witnessing what would have been a big winner had you only been on the other side of the trade!

Another pattern of my trading behavior is the less worrisome problem of not letting my winners run long enough. This is largely a function of a lack of skill identifying exit points. This pattern of behavior is one I can learn to work with and manage. The former pattern of not cutting losers short with stops is not. It will lead to my ruin, eventually. It will obliterate my capital and it will destroy my psyche.

The fact that on a couple occasions this week I tried to average in for a better price with real money is the reason that I will now go back to primarily trading my practice account. I need to work on my fundamentals. I cannot afford to fail at this... it is my future. The stakes are high; much of my life hinges on my success at trading.

Weekly results of live trading: 23 for 30, a 77% success rate. Gain of $257.

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7 for 10 winners, a 70% success rate. Gain of $32.82 in 5 hours of live trading.

June 18th

My first day since last fall that I traded exclusively my live-account. I didn't even log into the paper-trade account. Overall, it went well. Nine trades, seven winners traded mostly off extremes in volume and diversion from the mean as the trade trigger. My two losses were scratch trades, the first one as a malfunction in the trading platform. I clicked to place the trade and a precautionary window came up, something which hadn't happened on any of the earlier trades. I took the trade anyway but thought better of it when I saw that IB had made the short for only 9 trades instead of the preset lot of 250. Loss of 36 cents plus the 2 dollar commission! Ha. I have no idea what happened because I made no adjustments to the platform!....?????? I spent some time trying to figure it out but really couldn't. The next trade went through fine. Set up a live-chat with IB but got no response once the chat window came up. Left them a poor grade on the customer service screen assoc with the chat then moved on. Second loss was a scratch, loss of 92 cents, while lightening my position in the final trade. I had ignored my stop-loss and been down a couple hundred dollars so when my position went green, i cut it by 33%. Should have stuck with it on the other 2/3 of the position but I sold it moments later for a gain. The gain would have been very nice had I held. Once again, that was the story of the day for me. I really need practice letting winners run. I left much $ on the table.

First winner of the day and biggest gainer was a small-dollar stock which I picked up off the IB pre-leaders board, a list I once watched closely when I participated in the old GOTS chat. It was fun to have a look at them again. There's no doubt that opportunity is hidden in the "gutter."

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7 for 9 winners, a 78% success rate. Gain of $127.77 in 6.5 hours of live-trading

June 17th

Not too bad today, traded mostly my live account. Got suckered into a stupid trade on a lusy low-volume clunker on which I made a successful paper-trade this morning. I hated to end the day on a loser but it is what it is. Had fun attempting to follow Scott Farnham on TNA throughout the day. He was a prolific poster today and so I got a chance to see his uncanny feel for changes of direction. To do what he does is my ultimate goal.

In my live account, I played SKF early on and later played TNA as I followed Scott. My only real loss was that EOD clunker in which I managed to lose 33% of my gains; small as they were. Still thankful for the gain on the day and losers are to be expected, especially since I am relatively new to this and only in my third day of live trading since the two weeks last October when I first began. That's three days and all three for winners. I still expect a losing day anytime so that is what keeps me sharp.

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8 for 10 winners, an 80% win rate. Gains of $70 in the real acct and $21 in the paper acct in 6.5 hours of trading.

I paper-traded most of the day but managed a quick real-money trade at EOD. I thought STEC might break down EOD given the big run up so I took a short at 3:38 pm but got caught in a choppy area so I just got out at the first sign of a positive number. Walked away with a big haul... $5.00 ! Paper-trading fared better with a gain of $932.50 from a position in each of the three following stocks: HES early because of the moves in oil, STEC, a big mover on the IB "Top % Gainers" list, and X just because I like to torture myself playing for reversals in strongly trending stocks. A bit of white knuckling on X but it worked out ok in the end.

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4 for 4 winners, a 100% success rate. Gains of $937.50 in 6 hours of paper trading($932.50) and real trading($5.00).

June 15th

I spent much of the morning trying to set up my real money trading account to match my simulated account. This was, in one word, trying. I typically don't mess with the IB setup and yet I managed to screw up both the paper-trade acct and the real money acct in ways I still don't understand. Over the week-end, I decided that I'd try to get some trading time on the live account but with reduced position sizes. This is only natural as I still think that I'll be fighting my"head" when the switch occurs to real-money trading. Small positions=small worries, I say. After finally getting my paper-trade acct back to normal, I practiced with it, found some more bugs, fixed them, then tried it out some. Before, I was using 1000 share trades. I am now using 250 share lots. I made two paper-trades for winners in SKF, netting $82.50 & $113.50 . then, I went to the live account and messed with the settings to match it to the simulated account. Then, I tried it for real... and it was still screwed! :-) It traded 100 share lots and not 250. It didn't make the "one-click" trade that I prefer... it asked for trade confirmations instead. So, I found and fixed the problem (I had made the correct changes earlier but apparently didn't click on "APPLY" to save them). Needless to say, my trade was more than a safe one as it netted out a whopping $21.02! Ha! Had it been correct, it would have netted out $52.50. Had I been trading my 1000 share lots from the past few months, it would have netted out $105. Basically, I took 12 cents out of it. The need for a new cellphone required a visit to the Verizon store and then a day-job project estimate took the remainder of my afternoon. Was it just me or were the stocks pretty lackluster after the early drop? Sort of like a bunch of wet dish rags, I think. I didn't check charts to see if the close offered any momo. I'm worn out and I'm leaving the computer now. I'll check on today's closing action tomorrow morning.
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3 for 3, a 100% win rate. Gain of $217 in 4.25 hours of paper ($196) and real ($21) trading.

June 12th

A number of positive distractions kept my focus away from the computer today although the full day was available to trade had I made the time. A lunch appointment, some day-job admin. responsibilities, a brief shopping trip to a local outdoor outfitter, and a slight "under-the-weather" feeling just kept me from the full focus that I had yesterday. Just the same, I took three trades in X and connected for winners on all three. I had a very nice entry short at 10:24 am at $40.34. As you see from the chart, I got out early with a paltry $60 gainer. As you also see from the chart, I marked the entry/exit diagram with the big magenta colored line which is my indicator that I missed a large percentage of gains on the trade. Boy, did I ever. The stock did not bottom out until it hit $38.80 at 2:25 pm! That's a potential gain of $1,540, more than that if I had doubled up on the trade as it sank. After returning from my lunch appt and a bit of shopping, I had a chance to short the 2:30- 2:40pm jump in X. This one also had a premature exit but I did manage to get about 11 cents of the 45 cent drop; approx. 24% of the entire move. I took about 13.5 cents out of X on my final trade; getting 42% of the 32 cents available.

In the "missed trades" department, I offer the following:

I found VMC as a big mover this morning in pre-market through the IB market scanner I use, Listed as the Top Percentage Gainer and the top Price Range stock, I decided to keep an eye on it. At 10:55 am, it peaked for the morning and I was quite tempted to take the short at that point. However, the fact that it was not tracking with the indices made me a bit uncertain... I watched and learned. It broke down very nicely with a $1.26 drop. Oh, well. I will now have a better feel for these big runners next time!

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3 for 3 winners, a 100% success rate. Gain of $671 in 2.25 hours of trading.

June 11th

It was nice to spend the whole day in front of the markets, paper-trading the SKF and POT. A couple of bad decisions to not mind my stops caused me to slip back to my old habit of averaging in for a better price on losing positions. While all of them yielded winners, this really is a tough habit to break but one I must. The one loser was a POT short at 1:10 pm which I felt had a great likelihood to come into the money. It just felt like POT had run up so much for most of two days plus it started to show some weakness in relation to the indices when earlier it had been showing strength. It was tiring and poised for a breakdown. Unfortunately, I was about two hours early for the break and I let the trade go a bit tooo long before I shut it down. A loss of $381 is more than I like to take on a stop out. Interestingly, there was a clear sign that I should not have taken the trade at all but at the time, I was so focused that I did not see the forest for the trees. On the 3-minute chart at the 1:06 pm candle, there was a huge volume spike coupled with a good divergence from the mean... both my signals for reversal. But, I was so convinced that I KNEW what the stock was going to do that I didn't heed my signals... and I paid for it. I know to NEVER pre-judge a stock but I was so intense that I didn't take a step back and look at the big picture. Had I done so, I would have waited for the breakdown.

As is quite often the case, many of my winners today were cut short much too soon; gains in the thousands were left on the table. But, as I usually write, I am grateful for the winners! All are paper-trades and as such, make terrific learning opportunities. The education rolls on...

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8 for 9 winners, an 89% success rate. Gain of $1,443 in 6.5 hours of paper-trading.

June 10th

I had the chance to get into the markets at 10:30 am and stay all day if I wanted to. However, I have some admin work for my day-job to attend to so I'm closing out the day at 2:15 pm.

Paper-traded three stocks today; POT, AAPL, & SKF. My POT and AAPL trades were examples of lost opportunity from selling too soon. I really gave away a lot of gains on the POT trade. I had an absolutely stellar entry at 11:18am long at $114.35. This was within 17 cents of the LOD! I sold 5 minutes later for a gain of $233. The price just kept rising however, finally topping out at $116.48 less than an hour later! I would have had up to a $2,130 gain had I held on. Oh, well. I will eventually get the hang of this. On my AAPL trade it was more of the same although I am giving myself a bit of a break because while the price went up another $770 beyond the $148 gain I had, the price did actually dip to what would have been minus $290 on the trade just 10 minutes or so after my entry (*see 11:15 am, 5-min candle); a price which would likely have scared me out of the trade... causing me to miss the eventual nice gain anyway.

Overall, I was happy to get the gains on the day but I certainly had much opportunity missed. One loss today in SKF was a stop out; too early on the reversal which eventually came at 1:45pm on the 5-min chart. I made up the loss on a short at the reversal (1:49 pm) and one more as the reversal picked up speed (2:10 pm). The last trade was one I made just to get me over the $1000 mark for the day; covered too soon but didn't care as it was just a "goal" trade to put me into the thousand dollar territory.

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8 for 9 winners, an 89 % win rate. Gain of $1,055 in 3.75 hours of paper-trading.

June 9th

I was happy to get a chance to paper-trade today, given my day-job schedule. While I didn't get much time in, I did pick up three opportunities at gains and watched a couple more get away, including the break of the $115.57 support in POT at 3:45 pm. I had a strong feeling it was going to break down past that level... in fact, I had a short earlier at 3:23 pm that went down through this level but it showed reverse to the upside so I sold it about 8 minutes later at $115.45. It went on to push against this support three more times over the next 12 minutes (3-minute timeframe) before it finally broke at the aforementioned 3:45pm candle. The move below the break of support bottomed at $115.14 at 3:57 pm; a gain of 43 cents per share. A nice trade, but I was watching SKF briefly then attending to the chicken I had cooking in my crockpot and I missed the move. Oh, well... can't get them all! [That chicken will be very tasty though, cooking on low all day in a blend of barbeque sauce and chicken broth :-) ]. The POT trade I did make was a satisfying trade because I found POT late off the retreat from the HOD but still took the trade short in the direction of momentum, rode it until it seemed to run out of steam, and covered near the eventual bottom of the short-term move. I didn't "chicken" out on the trade, I just watched the signals. My other two trades, both in SKF, were less satisfying. I ended up getting out too early on both after very good entry points. [*see chart above. green line is entry of trade, red is exit. The line which joins the entry & exit lines is green indicating a gain on the trade (a red line would indicate a loss). Lines slant up to the entry point for longs, down to the entry point for shorts. ]
Why did I pick these as entry points? Take a look at the distance the wick of the candle is from the mean (orange line, 10 sma)... Also look at the volume levels. Both of these are my primary clues to a high-probability reversal on a stock. They indicate extremes in buying or selling emotion and are very often accompanied by impending changes of direction. Fading high divergence from the mean coupled with high volume and an eye toward what the indices are doing will give you a great feel for reversals of direction.
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As to my bailing out too early on good trades, Mark Douglas states this in Chaper 11, page 192 of "Trading in the Zone:"
"Believe it or not, of all the skills one needs to learn to be a consistently successful trader, learning to take profits is probably the most difficult to master... I point this out so that those of you who might be inclined to beat yourselves up for leaving money on the table can relax and give yourselves a break. Even after you've acquired all the other skills, it might take a very long time before you get this one down pat."
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Needless to say, I need work on recognizing exit signals.
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3 for 3 winners, a 100% success rate. Gain of $367 in 1 hour of paper-trading.

June 8th

Summary later.

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5 for 5, a 100% win rate. Gain of $1,670 in 2.5 hours of paper-trading.

June 5th

A very quick day for me here in the markets. A day-job appt at noon coupled with some other items to which I had to attend left me with only about 20 minutes to paper-trade. I picked up a short opportunity right after I logged on and took it. I gained a quick $101 on SKF before calling it quits for the day. I don't anticipate being back at the computer before the market closes so only one trade today. As I write this and look at the SKF chart, I notice that I covered just before the end of the trend I was riding. Was it a reversal or just a pullback at 10:45? I'll see later when I return from work. Can't wait to get back tonight to the charts to see what happened today... I really love this stuff!

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1 for 1, a 100% success rate. $101 gain in 15 minutes of paper-trading.

June 4th

Logged into the market around 11:15 am and stayed until the end, although the last hour was a maze of distractions. The markets still appear sluggish to me based on where they were a couple months ago but as I've noted before, this appears to be the new norm. I paid attention to my stops today and looked for some trending opportunities as I paper-traded SKF, V, and AAPL. I'm still in the process of creating a format to measure how much of a trend I am able to capture... Also trying to pay close attention to how price and volume behave in the stock I am playing and how the indices act as the trend grinds to a halt and pullbacks/reversals take hold. This is where most of my skills need to develop, I believe. I am not nearly an expert at entries but I feel reasonably comfortable getting into a stock. Staying in is problematic and as I've mentioned before, I think it is the inability to competently identify exit points. It is my goal to initially take 60% of the move I'm playing. That gives me 20% fudge factor on the entry and 20% on the exit. I'll try to refine the record keeping as time goes on to reflect which moves I should be grading myself on... Ultimately it is my goal to trade into the longer moves of the day and not be so frenetic that I get out during the shortest of pullbacks. I'd like to develop the skill and patience to stay with good trends until serious reversals take place on the trade I'm in. Time will tell how it works out for me. Rather than measure my success in dollars, I want to try to measure success in the quality of my entry and exit points. Good execution will eventually lead to good gains. I'll measure my progress in how much of the trend I increasingly can take as a percentage of the entire move (80% would be nice) and rate it also by my ability to control over-trading. The successful traders who I've followed seem to trade 5-min candles. I'll focus on that even more. I still like the 3-minute chart but I will try to favor the 5-minute. Less information overload may help smooth out the little "bumps" (minor highs and lows) of an extended trend and keep me from jumping in and out too much. Again, we'll see how that goes for me. Right now, I'm still trying to train myself not to trade by fading extremes in momentum. I just love to trade the those quick changes of direction on a trend. However, it only serves me well if the change of direction is a true reversal (I do get some great entries on longer trends in some cases)... BUT... It is dangerous if it happens to only be a small pullback in a strong trend and I don't exit well. Further, the gains tend to be small because the pullbacks in a big move are small.
To make trading a career, I really have to train myself to trade with the momo, not fade it. Fading it is too often a suckers bet to risk my financial health on it.
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9 for 12 winners, a 75% success rate. Gain of $456 in 4.75 hours of trading.

June 3rd

Closing it down early today because I have two day-job appointments beginning at 3:00 pm. Again my old favorite, SKF, was sluggish today. I picked up 3 trades on it as well as one small gainer on a PBR reversal. I watched my stops today and tried to stay with the trend I was in. Limited success at that. More on that later. I'm in the process of trying to adopt a format for measuring the % of a given trend I take as a gain. I think the best way to improve on something is to start measuring it. I think it will really draw my focus in on this problem of bailing out too early. The reasons I've mentioned before: a lack of confidence in my ability to recognize a slowing trend coupled with the thrill of putting up a "winner" on the board, even if it is for a paltry portion of the overall move in the stock I'm playing. I'd really like to make progress this month on correcting this difficulty I have.

Hope all had a profitable day; in money, knowledge, or both!

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4 for 4 winners, a 100% success rate. Gain of $233 in 3 hours of paper-trading.

June 2nd

My day of paper-trading was one where I could not focus solely on the stocks because of more pressing things related to the day-job. I have let many of my administrative tasks lapse in favor of the markets and today I tried to do both to get caught up. I didn't do too badly considering my broken attention. The SKF was not moving very much today... the day range and the momo was not great based on other days. I t sure has changed from the month of March when I was just getting into trading the ETF's. Of course, sustained volatility like that only comes around every so often. I have a feeling that trading in the future will resemble more of what we see now as opposed to then, or even less movement/volatility. September 2008 through March 2009 was very unusual, for sure. Today and probably days in the future are indicators that I may have to go back to searching for ADR stocks rather than just being able to count on certain ones to move every day. Not sure about that, but my gut tells me it might be that way. Relying on movement in the financials and their ETF's have made trading so much easier in that no scans or searches have been necessary. Just punch up the SKF, SRS, FAZ,FAS, etc and go to work! We'll just have to see what the future holds. I really don't have much experience in the quieter market times to compare to. I know one thing, I'd really like to see the VIX above forty for the rest of my trading life! As for today, I had some good entries and I seemed to gauge direction fairly well. I just didn't stay with my trades long enough. Same old issue for me. I'm at the point where I'm ready to just take the chance that all my trades might stop out rather than take quick gains. It seems that many of the trades, if I were to let the trend develop, would offset the losers I would take getting stopped out on the trades where I normally take quick gains. I'm going to take a closer look at todays exits and measure them against the eventual reversal to see how much I gave up today. I'll post it if it is noteworthy.

7 for 7 winners, a 100% success rate. Gain of $366 in 4 hours of "inattentive" trading.

June 1st

Friday's open postions went from bad to worse... I simply closed them out when I got back to the office. The experiment to see what my broker would do to sell positions from my

account when exceeding margin and by how much wasn't even successful as IB did not liquidate any more shares after the two small forced sales on Friday. I did get an email from them however, but nothing more. So, it was a bust all around as a learning tool. So, I'm starting the month off on a losing note but it is all for education. Needless to say, I would not have let this happen with real money. I had a chance to make a few small trades after clearing my account of the open SKF and GS. All three for winners with a gain of $323 on them. Those aren't going to show up very well against the -$13,534 loss... Ha!

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3 for 5 winners; a 60% success rate. Down -$13,211 in 30 mins of trading (closed open positions)