September 29th

It felt pretty great to get back into the markets, if even for 45 minutes this afternoon. I haven't had much time to give to my stock market studies through the month of September. I truly do miss it... mainly because I know that trading is my future. I just have no idea when this will take place. There's a lot of swirling chaos around me which is detracting from my trading education; it eats up my day hours. That's the way life works sometime... I still study charts and blogs in the early mornings and in the early evenings. Mornings are best because I am an early riser and I'm fresh in my thinking.

-

HESS was pretty squirrely at the days end so I was looking to scalp a little from it. I took $64 paper-trade bucks out of it with a 3 for 4 win rate. I know that scalping is not my goal, but for now it gives me gains and may be my ticket "into the game." Being able to scrape out some gains from the market is my starting point if I want to leave my old work life behind.

Right now, I am trying to build/prepare my small business for eventual sale. I don't have a buyer but I am focused on putting it where it needs to be to attract a buyer. If and when it does sell, I am going to try trading full-time. It's a big risk for me and Mrs. Bluecollar but it will have to be done eventually. My trading progress and my ability to position my business for sale are the determining factors in this life change. It could take years, who knows. But one thing is clear to me, it will happen eventually.

September 22nd

Up $49 paper trading today, when I could take a moment to look at the screen. No chance at undisturbed focus today. There was just too much going on. These days, just 15 minutes of concentration on the markets is hard to generate. My training is suffering because of day-job concerns and real-life. A perfect world would allow me to trade in peace so I could learn this. Sadly, I am not grasping this trading art quickly enough to stay on this track. As time goes forward, I must dedicate less time to trading. I have to focus instead on my business, the object of my neglect since I started trying to trade.
-
Started slow today but finished with some strength. Best trade was pegging the 3:00 pm peak in FAS and letting it ride down some. I got out too soon but I'm glad at the choice I made to short there. At the same time, I was playing ERX the same way, which actually yielded more gain than the FAS.

Sept 20th

A quick scalp of MOS around 10:00 am. This was a good result and a nicely (lucky) timed exit considering the little pop which followed and the fact that this exit marked the low of the day.

While I did sense that momentum had stalled at my exit point, I say "lucky" because the trend was well under way when I shorted into it just after signing into the markets. I hadn't allowed myself a chance to study what was going on. I saw momentum and the red indices so in I went! So certain was I that it would continue its drop that I allowed the trade to climb on the next two candles after my entry. I was too certain and not strict enough on my stop. Two things to work on: stop loss discipline (as always) and assessing my situation before jumping into the stock. In hindsight, the best entries on a trade, considering when I signed in, would have been to wait and get in long where I had exited. Or, wait until the 11:05am candle after the stock had consolidated into a near-doji then broke free; climbing up on a volume rush. In this case, the higher lows in the consolidation preceeding the breakout would have been a clue to direction of the eventual move.

Sept 17th

I scalped a couple winners out of X around noon when I had a chance to sign in to the markets for 30 minutes or so.

No thoughts of trend trading today, I'm just trying to put together some winners, small though they are. Positive numbers are good for the psyche!

I'm trying the dulcet tones of Scott Farnham's trading mantra and it seemed to keep me focused while looking for some scalping chances today. I had it set to replay and it kept my mind in the game.

Today is my 44th birthday so these two winners are a present to myself. No losers today for the first time in recent paper-trading memory, and felt great to have them.

I took both scalps off the high-volume, large red candles at 12:00 and 12:10. The 12:25 candle would have been a nice gainer had I held. Chances are I would have stopped it out though as it dropped 16 cents below my entry.

I'm probably just imagining it, but I actually had a sense that the second trade was going to be a nice reversal. The doji into which I sold and the following red candle with the wide price range but a tight open-to-close price were familiar signs of high-probability direction change.

Thanks to Ynvai and Charlie for their recent posts. I got some "pick me up" from them. Good trading to you both!

Tough paper-trading days ...

Friday was a tough day... I found myself playing for a break of consolidation in US Steel (X) and getting on the wrong side of that eventual nice move. I was mostly studying the reasons for my mistakes as opposed to trying to trade for gains. Right now, I am focusing on entries, entries, entries. For this reason, I let the trade go. I later just exited in order to take advantage of what I thought would be a nice pullback in the primary trend (no way was I going to average in by adding to the loser). Then, the pullback was slight, my small unrealized gain on the pullback disappeared, and the stock went back to trend, against my reversal play. Just terrible decision-making. I was frustrated with my misreads.
-
Today, I got a couple right and a couple wrong in the morning session and was about $50 ahead in paper gains when I found FAS and decided to try it out. I started by trying to play for a break out at 12:40 but it immediately went down at the point of entry and dropped. I stopped it out late, so sure that I was right that I let it test beyond the outer edges of the stop area. When it came back to me I took the stop-loss. I then went on to get a quick winner by reversing direction. I was still ahead by about $20 after those two FAS trades. Then, I took a break and watched FAS climb during the 1:20pm - 1:35 pm time frame. Off that nice rise, I went short after the high-volume spike. In short at 76.55, I saw it drop down as low as 76.41 leaving me up about $130 in unrealized gains. I thought it would break down from there and I held as it rose some during this consolidation phase. I was trying to read the familiar signals, looking for doji's, near-doji's, etc. At the 2:05 candle, I recognized a turning point was approaching. I held short, expecting the fade to continue and looking for the big break downward. Not to be, though. It popped at the 2:10 candle but not enough to stop me out (15 cents, not very much on a stock which moves as much as this one). Then, it started to fade for two candles of low volume and it touched my entry price at the doji-like candle at 2:20pm. I held short, trying to read the raw data feed and knowing that this was going to explode one way or the other. It was holding just above the 7 EMA... then it blasted up! Wrong way for me. I was actually reading an email when it took off and I noticed the move late. What a move; a $1.15 breakout candle. I shook my head in disgust, rode the pullback down in the next two candles and looked for it to tank after such a bullish move. Nothing doing! It then just kept going. I exited with a big loss after the following large green candle. The stock again pulled back two candles so I took it short again but waited until it retreated to the 7EMA. Bad decision to play reversal again. It blasted off leaving me with another loss when I exited. I stopped trading there, and good thing I did... it repeated, pulling back two red candles then taking off.
Why did I not go with the trend at any time throughout this whole rise of $3.44 over one hour and twenty minutes? It's a rhetorical question. I don't know the answer. It was exactly what I did on Friday for the large loss; playing against trend. This is my pattern, it seems. I have always tried to play for reversals since I started to learn day-trading in January.
Trading for trend is my goal and it is what I was trying to do just before the big breakout of consolidation against me in FAS earlier. But, instead of taking a quick loss and reversing direction in line with the trend, I kept looking for the reversal. And I don't think it was because of fear of cutting a loser short and taking the loss. I truly believed and expected it to break down in my favor! I kept thinking that, as it rose and rose!
-
In any event, it is paper-trading and meant to be practice. But, at this point after doing it about 9 months, I really should be doing better than this. ( to my favor, I have been only trying to trade this style for less than 2 months.)
I really believe I am gaining a lot of knowledge about reading the tape and trying to trade momentum moves in succession. However, I am frustrated that I have lots of knowledge about what I am trying to do but no ability to actually do it.
-
I am now taking a break from the blog for a while. And, very likely a break from trading. It is costing me a great deal to do it in the manner I am trying. I am not playing safe, trying to pick out the very best entry spots and capitalizing on them. I am trying to trade the tape. And, I am getting nowhere, it seems. The cost? Projects around the house are piling up and business is suffering because my competition is not taking lots of time to learn to trade!
I spent about 16 hours over this past weekend studying the charts and the raw data feeds for them. I was studying the charts at Fear & Greed. All of it was no help to me today. And, I didn't get a thing done on Sat & Sunday that actually has an immediate impact on my life.
-
I can't see my trading nirvana from here. It is worlds away, it seems.
So, I'm gone for awhile. I sure wish it was for the same reason that Scott Farnham went away... :-)

Sept 10th

Struggled at first with my paper-trading... I just wasn't sharp and up to the job. Slow to react on the two big stop losses I took, $210 and $214 respectively. But I was allowing extra room for a stock that moves as much as AIG. Those were my only losses of note... the third loss was $10; essentially a breakeven.

I got rolling as the day progressed; I really tried to focus on those familiar signals. I wasn't staying in trend though; I still find myself over-trading and not playing for the longer trends of the day. I'm trying too hard to "Read the Tape" and play each of the successive moves. This not only is WAY above my skill level but is also poor trading policy in general. Scalping is not what I aspire to. Gotta work on that.

Went 5 for 5 to finish the day, which pulled me "back to black" from the three losses.

-

I threw in some of the What's Familiar... the yellow lines on the chart area for dojis, etc. The short thick horiz lines for the trend extremes with thin vertical lines dropping to the volume spike below. Yellow lines in the volume area which correspond to very low-volume candles which precede a decent move. It's so easy to see these things when the day is over. Harder to trade them as they happen. I guess if it were easy, everyone would be doing it.

What's Familiar- SPY Sept 9th

I'm off to a day-job project but thought I'd put this up for my future reference.

Yellow lines for dojis or candles with tight open/close price in relation to their high/low range. Each was a precursor to a significant event.

Short white horizontal lines at the price extreme for the move coupled with vertical lines to the volume spike, as indicators of reversal.

Note that the volume spike indicator of reversal is sometimes tied to the candles marked by my yellow lines.

Close examination will also show that not all of these candle types produce a reversal. Therein lies the danger... and a reason for a stop.

Sept 9th

Done early. Paper-traded AIG today and had some early success. I just watched it mid-day to eod, trying to "predict" the next moves. I'm a bit "wet behind the ears" for that, it seems. However, I love to see those familiar signals and seeing what the stock does when they show themselves... dojis, hammers, high-volume spike reversals, etc.

Bike Trip Photos

1. Mrs Blue Collar at Cape Enrage Beach, New Brunswick, Canada.

-

2. From the porch of our cottage, Campobello Island, Canada. Watched finback and humpback whales surface all morning, right where the photo was taken.

-

3. Acadia National Park, Maine.

-

4. The obligatory "tourist" photo. Just over the Confederation Bridge, Price Edward Island, Canada.

-

5. The warning sign at Cape Enrage Beach, just before the last leg of the trip up to Cape Enrage Lighthouse. And they meant it... for those not familiar, 20 k/hr is 12 miles per hour. A loose-gravel switchback on steep terrain was no place for a high-torque Harley, gear, and passengers weighing over a half-ton. But, risk breeds reward. Cape Enrage lighthouse was simply awesome!

-

6. This scene of old boats caught Mrs Bluecollar's eye when the tide was way out. She captured it when the tide came back in. Campobello Island, Canada.

What's Familiar? - Sept 8th

I use "What's Familiar?" as a way to remind me of the common behaviors of stocks and how I hope to someday use them to trade many of the movements profitably, perhaps even in succession.

Two charts of AIG from yesterday, the one on the left is unmarked for comparison:

-

The yellow lines indicate dojis, near dojis, or candles where the open to close price range is tight in comparison to the high to low price range. Each is a precursor to a move in the opposite direction. Are all playable? Perhaps, if you are very sharp with entries and exits. The smallest of the moves off this indicator is 25 cents (measured from the close price of the indicator candle to the far point of the move it telegraphs). Some are small moves as part of the larger overall trend and may not be candidates for trading; the 9:50 and 9:55 am candles, for example.

The one magenta line at 3:10 pm is a false signal, of sorts. It did predict a move to the upside but it was a fake-out and likely would have resulted in a stop-out.

-

The white "triangle" lines indicate the high and low points of a playable move where one end of the candle met the 17 EMA and retreated. Only one, the 2:20pm to 2:30 pm, did so on the top side of the moving average, reflecting the overall bearishness of AIG on the day.

-

The short horizontal white lines and the thin vertical line below it indicate reversals off high volume spikes relative to the time of day in which they happen. Note that many of these correspond to the doji areas (yellow lines). I now notice one which I didn't mark on the chart: see the 11:05 am candle and the volume below it. It is immediately followed by a reversal doji-like candle marked by the yellow line.

-

Patterns, patterns patterns...

Sept 8th

11 days since my last trade. I got into the market at 3:15 pm so trend wasn't on my mind. I didn't just "jump in," but rather watched and tried to pick a safe spot for a trade rather than push the envelope. I got that chance in AIG at the 3:20 candle, playing the reversal off the high volume, big price move down as the 2:30pm to 3:20pm trend finished with a "bang." I jumped out of my paper-trade too early but I was here just to scalp anyway, still acclimating myself to the new trading ideas from the Robert Deel book.

Still, it was a positive paper-trade...

Over the next few weeks I look forward to paying more attention to the 7 and 17 EMA's and how price trends interact with them.

Eleven days away from the market seems even longer because I was on a motorcycle in very rural settings; without cable tv or internet for the days the market was open. It seems like a very, very long break and it was a good one. I feel a little rusty so I'll take it slow this week when I can break away from the day-job.