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.
