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
