April 1st

When I used to play golf, I would struggle to break 90. I loved the game but I was never able to conquer it. The old joke was that most times out, "I got my moneys worth" from the round because I would get to walk a lot...back and forth across the course chasing my ball! Well, that's the best analogy I could come up with for todays paper-trading. I felt like I struggled back and forth all day. The thing is, as I look at the trade recap, it looks pretty good. Why then do I feel like I just walked ten miles on the golf course? It's because I felt as though I was playing catch-up all day. First, I started with a loss. Next, my third trade was another bruiser although not as bad as yesterday's. Boom, after that trade, I was down $1.16 per share. And from there, while the tape looks pretty good, it was a mish-mash of scrambling to get my gains from each trade; often lacking confidence that I had a good entry. And, on the trades where I later learned I did have decent entries, I had bailed on some nice moves! I really think that except for the one bad trade early, my anguish was mostly because I was not riding my winners in a way that would have allowed a quick recovery of the big loss. For example, my 12:56 pm short on SRS at $54.58. This was as near to picking the top of a major daily turn of a stock as possible. Yet, I sold at 12:57 pm with a 6 cent gain. The shortest-term bottom following my exit was at $53.88 about 3 minutes later for what would have been up to a seventy cent gain. The bottom of the longer-term major move was at $52.05, a full $2.53 per share move from original short. Truly, I would not have held that whole move. But, this illustrates the reason why I had a "blue collar" hard work day at my desk! And this is just one of many examples of early entries on decent moves of that I jumped out of. The last trade of the day was a first for me. I quadrupled down on a reversal off that monster move in the market around 3:30 to 3:45. I was so sure that this was a winner; a power move which had to reverse! Again though, I took only a fraction (20 cents) of the $4.40 per share gains available to me on it (because it was 4x of a $1.10 per share move). I predicted the move but got only 5% of it! Sometimes, I really make things more complicated than they have to be. Phew, what a day. I'm going to the fridge for a Bass Ale.
19 for 24, for a 79% win rate; 99 cents gain.

New Trader Important Info ...

The following does not represent advice and must be verified through independent means:

To all who are considering trading as a "business" in 2009: If you have not yet requested "Mark To Market" status from the Internal Revenue Service, your deadline to do so is fast approaching! April 15th is the deadline and the election for the Mark to Market status can be filed with your 2008 tax return. If you file for an extension, send the "M to M" election notice with your extension. While I have not investigated the details of the process yet, it is my understanding that the notification is simply a written statement which must contain a few specific things. It was pointed out to me that acceptance by the IRS of this status is reliant on certain behaviors of the trader, not on the simple act of making the statement.
Among other things, Mark to Market relieves you of the burden of the "Wash Sale Rule" as well as allowing greater recognition of stock losses in the year they accrue; no requirement to carry-over losses to later years. It is also my understanding that the "M to M" election allows relief from self-employment tax in some way. I realized that I must investigate further the details of Mark to Market after getting an overview from the IRS agent with whom I spoke over the phone yesterday. He recommended reading IRS publication 550, page 72 in particular.
While I am still sketchy on the details, of one thing I am certain. The deadline is April 15th.
I will update this post when I get new information. Green Trader Tax is also a resource if you are willing to spend some money. See their website at www.greencompany.com/index.shtml.
The IRS may be contacted at 800-829-4933, call them to verify the statements I made above. Do not rely on me as an authority on the subject.