Starting tomorrow at noon, I am on vacation until after Labor Day. If the weather is sunny, Mrs. BlueCollar and I are planning a motorcycle trip to the Canadian Maritimes (Nova Scotia). So if, if, if we can get the weather, the blog will also be on vacation. If the weather fails us and we can't ride, I'll probably be spending some time with the markets.
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Last year, we did a bike trip to Ottawa for Canada Day (great fireworks) and then through Montreal to Quebec for the 400th anniversary of the city. Standing on bleachers under the Chateau Frontenac, it was the best fireworks show I've ever seen, by far. Not to mention, saw Van Halen's final tour-date at the Plains of Abraham before walking down to the fireworks. Finished the trip by getting back to Maine for our USA Independence Day festivities. There's nothing like the freedom and calming effect of riding. It mellows even my Type-A personality...
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If anyone ever gets the chance, I highly recommend Nova Scotia as a destination. Some of the nicest people you will ever meet. For example, when we were there last in August 2001 with two other couples on bikes, we decided to walk to dinner based on our motel clerk's distance estimate. It turned out to be a long walk... a couple miles each way, and after dark. We met a local couple having their anniversary dinner and I'll be darned if they didn't offer us a ride back! It took two trips and one spouse had to stay at the restaurant while the other drove complete strangers around Yarmouth, Nova Scotia. And they were so gracious about it... wouldn't think of taking a dime for their troubles. Can't imagine that happening anywhere else.
Not to mention some great scenery and the largest tides in the world in the Bay of Fundy. A tide of over 70 feet was recorded in 1869. Now you can amaze your friends with great tide trivia. Don't say you never got anything useful here...ha!
Thursday, August 27, 2009
August 27th
Whoa. I was overmatched by AIG today because of the speed. I haven't tried playing something with that much volatility since early spring. For me, a couple lessons from today. First of all, if I had kept my 
three biggest losses to the stop limit of $400, I would have been down only two dollars today. However, I did escape with gains from a couple trades which I had let go over the stop. So, this is a bit of a distortion too.
I was mesmerized by the speed and unaccustomed to stops as large as was needed on this fast mover. I finally settled on $400 because I remember that amount being in the neighborhood of where FNG had his last fall during the big price movements. I really had no clue as to where to place them without that benchmark.
Second lesson of today was that I was focused on the unrealized gains column on my trading platform and not on the charts. I finally removed the gains and losses data and still found myself searching for it. It's gone for good from my paper-trade account now. I need to focus on price and volume, not gain/loss.
Third lesson was that I was suckered into trying to trade consolidation areas and not waiting for familiar set-ups.
Finally, I did not follow the plan I have been trying to create... I got a good entry long: $47.78 at
2:15 after the 2:10 candle closed above the 7 EMA and price started to rise above both EMA's. But, I got distracted and impatient after about 5 minutes and bolted with a $50 gain. That was a bad move because it was a nice entry into a 30 minute trend of continuous green candles which could have yielded up to $1.97 per share in gains ($1,970 on the 1000 shares). During this run, price did not close below the 7 EMA and only once in the next candle after entry did it drop below my entry price (by only 2 cents). So, the trade was never in jeopardy of stopping out. I just didn't follow my plan. The speed of the movement got into my head.
As a result of bailing on this solid trade, I was trading too much... multi-trading when I should have been managing one trending trade. My losses during this trend timeframe: $-1,521.
So, hypothetically: The true cost of discarding this one trade: Missed gains of up to $1,970 added to the losses of $1,521... the net swing in my returns today was up to $3,491.
Other observations:
I know I mentioned it before, but Speed Kills.
Secondly, I am still in the initial stages of formulating a trading plan; only since last week-end, really. I'm toying with using the 7 & 17 EMA's in it but it needs a lot of thought. For instance, had I stayed in that trend mentioned above, using an exit signal of the "First Close Below 7 EMA" would have been at $48.74, during the large drop at 3:20pm. Ouch! That late an exit would have taken away a huge chunk of the potential gains (although it would have given a prfitable trade). Clearly, other signals have to be considered. Using the High-Volume spike I have relied on in the past as a signal, it would have led to an exit during the 2:35 pm candle. Definitely more profitable than the previously mentioned 7 EMA Cross signal. Although profitable, the High-Volume signal seems premature. I just don't know yet. Eventually, I hope to be able to read momentum and base decisions on it primarily, discarding pre-determined entry/exit points. I really am impatient with myself and need to allot the time to learn this.
This is still really new but has been a necessity for a long time. I never have had a plan, a framework, for trading and certainly never had any semblance of an exit strategy. Mostly, I have operated based on one primary signal; the high-volume reversal of direction.
All of this is a work in progress but I am excited by the possibilities. I just wish I had more time for the research...
three biggest losses to the stop limit of $400, I would have been down only two dollars today. However, I did escape with gains from a couple trades which I had let go over the stop. So, this is a bit of a distortion too.I was mesmerized by the speed and unaccustomed to stops as large as was needed on this fast mover. I finally settled on $400 because I remember that amount being in the neighborhood of where FNG had his last fall during the big price movements. I really had no clue as to where to place them without that benchmark.
Second lesson of today was that I was focused on the unrealized gains column on my trading platform and not on the charts. I finally removed the gains and losses data and still found myself searching for it. It's gone for good from my paper-trade account now. I need to focus on price and volume, not gain/loss.
Third lesson was that I was suckered into trying to trade consolidation areas and not waiting for familiar set-ups.
Finally, I did not follow the plan I have been trying to create... I got a good entry long: $47.78 at
2:15 after the 2:10 candle closed above the 7 EMA and price started to rise above both EMA's. But, I got distracted and impatient after about 5 minutes and bolted with a $50 gain. That was a bad move because it was a nice entry into a 30 minute trend of continuous green candles which could have yielded up to $1.97 per share in gains ($1,970 on the 1000 shares). During this run, price did not close below the 7 EMA and only once in the next candle after entry did it drop below my entry price (by only 2 cents). So, the trade was never in jeopardy of stopping out. I just didn't follow my plan. The speed of the movement got into my head.
As a result of bailing on this solid trade, I was trading too much... multi-trading when I should have been managing one trending trade. My losses during this trend timeframe: $-1,521.
So, hypothetically: The true cost of discarding this one trade: Missed gains of up to $1,970 added to the losses of $1,521... the net swing in my returns today was up to $3,491.
Other observations:
I know I mentioned it before, but Speed Kills.
Secondly, I am still in the initial stages of formulating a trading plan; only since last week-end, really. I'm toying with using the 7 & 17 EMA's in it but it needs a lot of thought. For instance, had I stayed in that trend mentioned above, using an exit signal of the "First Close Below 7 EMA" would have been at $48.74, during the large drop at 3:20pm. Ouch! That late an exit would have taken away a huge chunk of the potential gains (although it would have given a prfitable trade). Clearly, other signals have to be considered. Using the High-Volume spike I have relied on in the past as a signal, it would have led to an exit during the 2:35 pm candle. Definitely more profitable than the previously mentioned 7 EMA Cross signal. Although profitable, the High-Volume signal seems premature. I just don't know yet. Eventually, I hope to be able to read momentum and base decisions on it primarily, discarding pre-determined entry/exit points. I really am impatient with myself and need to allot the time to learn this.
This is still really new but has been a necessity for a long time. I never have had a plan, a framework, for trading and certainly never had any semblance of an exit strategy. Mostly, I have operated based on one primary signal; the high-volume reversal of direction.
All of this is a work in progress but I am excited by the possibilities. I just wish I had more time for the research...
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