April 30

No trades. Unbelievably busy with day-job today.

April 29th

I had only about 45 minutes to sit at the computer today and it was EOD. Rig was on my list as a big mover today so I had a look at it then made two paper-trades, both for winners.

Although, the first trade did get away from me because I was in early on my trade idea... that is to say, I was wrong! As I had expected, RIG did reverse.. better late than never. Wow, what a reversal it was, with a rocket-ship candle of $1.32. I was out far too early but did manage to get 24 cents of it. This seems to be a recurring theme dating back as far as I can remember. I am in early and out early. I do not let my ideas develop fully before acting. Patience, Patience, Patience!

My final trade was a scalp just as the 5-min candle was ready to end, so I could ride price down when the longs took profit off that monster green candle. Again, out early on it but I really didn't expect the price to drop much after such a strong move in the preceding candle.

LOL funny...

If you like the movie "A Few Good Men" as I do and are fan of Jack Nicholson as I am, you will delight in Upside Trader's rendition of the courtroom scene in the movie. See it here, copy and paste if the link doesn't work...

http://www.upsidetrader.com/2010/04/28/you-cant-handle-the-truth/

April 28th - Days End

Here is the days-end post from my efforts in the market. Actually, I had only one additional trade beyond the one posted this morning, given my attention to mattters other than trading.

I watched AIG at the EOD, finding a point where momentum seemed to be ebbing and presenting a good opportunity for a paper-trade long. The 3:40 pm candle had a long lower wick but a relatively narrow body... (ie. it couldn't sustain its price drop for the full five minutes) and then the 3:45 candle hesitated to move lower than the 3:40 low. A realization that this all occured with increased volume (3:40pm candle) at a minor support area made the decision to go long easier. Further, I just had a gut feeling that there would be some profit taking by the shorts after the $1 drop from the 2:25 pm candle high.

I took only nine cents out of the twenty-two cent closing pop. Even so, it was an acceptable pick of direction reversal.

April 28th - Morning

I had a chance to log into the markets this morning for a moment before doing some work on my construction project. I had a day-job appointment set up and after arriving at my customer's home at 8:15am, she promptly received a last-minute call to report to work on her day off. So, my appointment was postponed. But, there is plenty to do on my home construction project today... drywallers are finishing up on Friday and the insulators finish today. I have a multitude of things to do before the Mid-June deadline.

With regard to yesterday's EOD trade in TV, my trade idea continued successfully into the open this morning, in concert with the market overall. It is further validation that attention to and an understanding of the overall markets pays dividends when playing individual stocks; restating the utterly obvious.

This morning, it was back to the practice account with a momo trade in FAZ. I took a short in the direction of the prevailing move and exited when I felt the momentum change. Too bad I didn't reverse and go long, from what the chart shows now... That tactic will come later, one must learn to crawl before learning to walk.

Now, it's back to "real" work :-)

Saw it, Liked it, Reprinted it...

Ove at FNG, I mentioned in the comment section of one of Scott's recent posts about how important his posting of successful trades is in terms of allowing us to associate with excellence by reading them and visiting his and other traders' sites. A much more eloquent and valuable post at Dr. Brett's site ( http://traderfeed.blogspot.com/ ) today emphasizes the same idea in the final two paragraphs... I am seriously going to miss him when he stops posting soon.


Tuesday, April 27, 2010
What Competent Traders Need Most
I've written quite a few posts to attempt to guide beginning traders. But what if you're a trader who has reached the stage of competence? Now you can consistently cover costs and sustain modest profits. How do you get to the next stage of expertise, where you can make a solid living from your trading?

What many competent traders do is try to magnify their modest profits by trading more instead of by trading larger. Because they have modest account sizes, they cannot size their trades significantly, so they try to put on more trades. Such overtrading takes them out of their niches of competence and leads them to lose money.

Those traders don't recognize that they may already have the skills to become excellent traders. After all, a trader who can make $200/day trading 5 lots in the ES futures could be making $2000 a day trading 50 lots, not a bad six figure income. Given the liquidity of the market, the trades that work with 5 lots by and large will work with 50 lots. It's just a matter of growing into that size. The actual trading doesn't have to change significantly.

Probably, this issue occurs in other areas of business. The successful local restaurant might have all the makings of a powerhouse chain of eateries, but without access to capital and a managerial talent pool, that growth never happens.

That is why access to capital is key for the competent trader: either capital one has saved up or that one can access through trading for deep-pocketed firms.

The second thing that competent traders need is access to expert traders. A beginning trader, like a Little League ball player, can benefit from coaching from a more experienced person. It doesn't take an expert to coach a rookie. But once athletes becomes college stars, they require hands-on mentoring from coaches and mentors with expertise. It is not too unusual to see self-made competent golf players, traders, or singers. It's rare to see expertise develop in relative isolation.

That is because expert coaches and mentors help to mold and accelerate learning curves, to make the most of a person's talent. If you've reached a stage of competence, it is vital to use online resources, personal networking, and/or access to trading firms to learn from pros. Look at the history of great achievers in business, the arts, sciences, and sports: even the self-made greats stood on the shoulders of giants.

April 27th

I had a few minutes near the end of the day to have a look in on the markets. I was trading in my live account today for the first time since last fall. I found TV had dropped significantly throughout the day and watched it for a rebound at end of day. It hit a spot where I felt a pullback might occur and traded a mere 250 shares manually(limit order without using the quick entry, preset button). I was about 5-6 minutes early on the reversal; I sold the minor gain in the last minute when it felt like it had run out of gas. Unfortunately, because of my infrequent use of this live account, I had forgotten that the short-cut "button" was preset to 500 shares. So, what ended up happening when I closed the 250 share long position was an additional trade going short for the same # of shares. I bailed on that when I realized my error, losing most of the tiny, single-digit gain I had. Oh, well. NBD. This was never meant to be a money-maker to begin with.

This was more or less a practice-trade to test my reversal instincts with real money on the line, even if it was only a $5,000 position. I'm satisfied with the result. I didn't add to the position when it was losing money, and I waited for my idea to develop. My entry was based on study of chart and momentum, as was my exit. As mentioned earlier, the entry was a bit quick but the exit was dead-on.

What's Familiar...

I haven't done this in a while so it seemed like a good time. I had no time to get in the markets today but the charts were interesting. On the screen are SPY and FAZ...

As I have done in the past, the short, angled white lines pointing to a candle indicate areas where there were dojis, near dojis, candles ending their 5-minute timeframe at the top or bottom, or candles with a tight open to close price range in relation to a much larger high/low price range. Further, the long white lines that reach down to the volume chart correspond to volume spikes.

All of these portend reversals of direction; some large and some small. These indicators continue to be above-average in reliability and can provide nice exit signals. Or, with caution, can generate entry signals.

The fact that these changes of direction occur consistently is the reason for the What's Familiar moniker.

Lots of day job and lots of critical construction project tasks this week and coming week-end so trading will be severely limited if it happens at all. Sure do miss it when I can't participate.

April 23rd

Only in the market for 15 minutes. It was a busy day for everything else...

My only thought on this trade was to go bigger than normal with size because of the low price of FAZ and to go with momo and not look for reversal. It paid off with a small gain and as I sensed momo stopping, I exited. Then, it was back to work. I logged off and didn't see the reversal move that followed.

April 20th

I had a chance to get into the markets while I ate my lunch... about 20 minutes in all. I made two practice trades and got a couple small winners... out much too early on both, especially the first one. I took $103 paper-bucks out of a possible $850 available to me on the trade. It bottomed in the next candle. Patience, patience, patience.

Distracted...

My live stock market training is on hold for a few days while I attend to some crucial elements of my construction project as well as Day-Job. I'll try to get in on the action when possible this week.

Saw it, Liked it.

From Dr. Brett's blog post yesterday, I found this link to his April 19th, 2008 thoughts:


"* I mentioned in my book an important law of performance: In every performance field of note--from Olympic athletics to Broadway--performers spend more time in practice than in formal performance. That is how expertise develops. The ratio of "practice" time (time spent on markets outside of trading) to trading time is a worthwhile indicator of a trader's prospective success."

April 15th

"The power to tax is the power to destroy." - Thomas Jefferson

I had a few trades earlier as I was working on my final tax stuff. Now, at EOD, I found a great short in FCX but escaped much too early, as I watch the chart and type this... I could have had another 10-12 cents on it. In any event, I had to get out as I am heading out to meet Mrs. Bluecollar and Mother-in-law Bluecollar for an early dinner and drinks.

April 12th

I signed on during a lunch break and took this AIG trade long. I was early, which is the same as saying I was wrong, but I had the feeling a push to the upside was coming. I added to my trade but only after it went positive (!!!!!!) and got out near the top of the move I was in. I won't know where it is going until I check the chart tonight. I'm back to work in 5 mins.

While I was Away...

I had a good week "off." Mrs. Bluecollar and I are fans of the economy and all things financial so we are never really away from it altogether. While I don't watch it if I'm trading, CNBC is a staple of our 4:30-6:00pm TV time. And I am a big fan of Larry Kudlow; his congenial manner and his socio-economic views at 7:00pm, although during baseball season, the Red Sox take precedent after 7:00pm if they're playing.

I took two trades last week and probably had my trading platform open for about 40 minutes all week. No charts with the results, just a photo of my "ride." We've had it out twice this season. There's nothing like the feeling of riding a bike.

Reflections

It's 3:30 am and I am unable to sleep, so here I am, thinking and blogging about trading.
As the blog title suggests, it is about my transformation, my journey from an average bluecollar small business owner to stock-trader. My goal is simple: to initially survive then thrive making money off the daily movment of stocks. There are related goals as well, not specifically financial in nature.
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I have lately had a rise in my level of frustration at my inability to progress toward my goal in a meaningful way. I have been pushing myself to do things differently. There's no question that I have been taking more risks in my practice-trading and I have been pushing myself to make trades that do not fit the outline of higher-probability success. In short, I have been doing "more" but not doing "better." And, I have been more prone to "averaging price" to make up for bad stock entries.

Why? There are two reasons and both have to do with outside influences and distractions.
First and foremost, Mrs BlueCollar's job recently has taken an ugly turn. She has a coward for a boss who will not lead his department. Therefore, the level of infighting and backstabbing has risen over the past few years as the "inmates slowly realize they can run the asylum." For her and a few others, it has begun to carve at their souls and recent formal attempts to combat the problems have been presented to weak and ineffective leadership. She is in a difficult period there and more than anything wants to make a change. Financially, it is not possible for us, given our current path and the goals which we have set for ourselves. This is crushing for me to have to watch a great person like her travel to a place that is slowly sapping the life-force from her. She is good at her job but has a narrow field of expertise in the industry and openings for her to move companies are few and far between.

Secondly, my level of dissatisfaction with my current career. I am grateful to have my small business. I have built it over twenty years to one which provides me a middle class income. That being said, I am more than ready to move on. It is physical and often repetitive in nature and my age is advancing. Those are not compatible, as we who are mid-life know all too well. The work is satisfying from a customer service standpoint but can be distasteful to perform at times. And, I am currently beholding to one customer for a greater percentage of my income than I feel comfortable... there's that "risk" idea popping up again. In short, this business is not my future and I am loathe to grow it to the next level. It would require a major investment of money, employees, and time; time I need to learn to trade if I am to advance. These are the reasons why I began this journey in the first place. They have not changed.

The point of this post is not to whine about the pressures of daily life, There is nothing different about us from many others in the developed world. In fact, we have teriffic and full lives outside of work. The point is really about how the outside influences of life can bleed into trading decisions and disrupt things. Even as a paper-trader, I find myself changing my behavior away from my best self-interest. I am pressing beyond where I should in order to force success. But my skills are not sufficient to allow the change. I am a risk-taker and always have been. I have fallen flat a number of times in my life as a result. But I have generally profitted from my willingness to drive into the unknown areas of life. Right now, I believe wisdom is not accompanying my risk-taking.
I am not thinking of quitting nor am I thinking about taking a long hiatus. However, I am currently weary of the journey and frustrated with what I perceive as steps backwards in my decision making as I practice. And ever-present is my inablity to cut bad trade ideas loose quickly. Life is mucking up my trading arena and it is very disruptive. In my opinion, the only thing which will really solve this problem is trading success. And that is the kind of circular situation which can elevate the level of frustration.
My short-term goal is to try to press the stuff of my life back away from the trading arena. Anyone who wants to be a successful trader must not let the emotions of life dictate his or her decision-making. Trade like a computer if possible.

How is your daily life influencing what you do at the computer as you make trading decisions? Have you identified the problem and how best to address it?

Markets are closed today and I am going to take a week-long break from posting as well as practice trading. I have been getting behind on my home construction project and the deadline is just two months away. Further, with the recent flooding in the Northeastern US, a portion of my business has been quite busy. I think a step back to reflect is in order. Best of luck to you all!

March 31

Here are yesterdays trades. I had a couple hours to sit in with the markets.

The first was HES and a what a bad entry it was. In fact, it couldn't have been much worse. When I shorted within a penny of the reversal to the upside, I know that I was the one "left holding the bag" when the real traders were getting out. Why did I do it? Because after Tuesdays trading, I decided that I would try to follow momentum and play in the direction of the trend to change things up a bit. To get myself on the correct side of a trade from the outset. Well, I bought the worst price of the pullback, and within three cents of the worst price for the rest of the day (the 11:20 candle dropped three cents lower thn my entry). This was clearly a suckers play by the market makers to get the stupid money to chase. Fortunately, I am paper-trading. The lesson: don't throw out what I've learned and just jump in. Wait for the familiar entry points which have proven higher rates of success.

And, get out with a stop loss. I sat on this and tried to figure out why I took the trade instead of cutting it loose.

Second loss was TNA, and I decided to learn from the first trade by using a stop. I saw the 10:25 red candle that was a "near-doji" and thought it represented a good likelihood of reversal. But, I hesitated and didn't get in soon enough. I shorted too low a price and the normal intra-candle oscillation bumped up the price, pushing me to stop out. Then, the price dropped after I was shaken out, proving my instinct was right. Good idea, bad execution. I like that I didn't hesitate on the stop, though. And, I could have given my idea another try in the 10:35 candle. I didn't maintain my patience and I didn't trust my instincts to be right once it didn't suceed the first time.

In FAS, I reverted to my old "habit." First, I stuck with my plan to go with momo but as in my first trade of the day, I got burned at the low of a move going the wrong way on a reversal. Instead of getting out, though, I held and watched. Big mistake. Should have exited and reversed because I was on the short side of a nice move up. At 11:50 and 11:55, I found my reversal point and hit it with two positions short to add to my other position. My trade idea proved correct, FAS dropped, and I rescued my earlier bad trade idea. As it has been for the past 13 months, I have given myself a "mulligan," a "do-over" for you non-golfers. I think the greatest allure of this risky strategy is that it works a lot of the time if you can correctly time the additional entries. But, the risk is big, big. Definitely not the safe way to trade if doing it with real money.

Today, April 1st, I am spending most of the day with my construction project so I might sit in on the markets at lunch for a short time. Unlikely I'll do much more than that.