September 29

I am swimming in administrative work for the day-job then have to prep for a celebration dinner for a friend so I don't have time to comment on todays paper-trading.

Suffice to say that all three were clean trades (no averaged/blended prices).

More comment later if I have time.

September 27

With two hours left in the session, I looked for paper trading opportunities in TNA. I was early on my read of a breakdown of the markets near the highs of the day but held through the consolidation and rollover. Closed it out at a support area corresponding to the doji at 10:55 am. I stayed out of the consolidation chop for the next half hour, but missed the short opportunity as price broke that same important support/resist. area where I covered my earlier short. I did catch a little winner on the profit-taking pullback of the major move down.

Toward eod, I went long near where I thought price had stalled. It did dip some but instincts were correct and price performed a mean reversion in the last minutes of the day, yielding a winner (though out too soon).

September 23 & 24

The reason for today's result from the overnight held, swing paper-trade? See this morning's post. Nothing more to be said.

Saw it, liked it, reprinted it here...

From www.coiledmarkets.com , August 31 2010 post:

"Ever have that thought flash thru your mind inside of a plodding, deliberate trend session? Up or down, doesn’t matter. Have you ever let the thought of price is “too high” or “too low” for taking a new position there hold you back, only to see price continue much deeper in that same direction after giving you all kinds of time to open a new trade?

A funny thing happens when we watch that process unfold the the hard right edge of our charts. Once price shoots away from where we passed on entering, a new compulsion overwhelms our senses. The market is now irrational and extreme. The sensible thing to do here is fade the move… short each new upthrust high, buy each plunge-down low. Sooner or later the “herd” will figure out they are wrong and you are right. These prices are insane here. Then the market will turn back in your favor, reward you for being so sensible with your “discount” purchases and reward you again for not taking that other stupid trade which worked a little bit but must surely stop working nearby, soon.

For those who have experienced that emotional pattern, how did the story turn out? Were you victorious more often than not, or run over by the StraightTrend Express more often than not?

I tell ya, it’s a deep-seated emotional flaw that prevents traders from mindlessly buying and selling into extended trend moves when continuation signals confirm. One of the hardest personal flaws to overcome in this profession, by far.

Also one of the deep core reasons why reversal-trade or “fade-trade” tactics appeal to newbie traders before they get chewed to shreds by the market in rapid fashion. It feels really good to time a high or low entry when trading. It feels five times good to make a public call somewhere and be right, then bask in the accolades of fellow newbies who don’t know one whit better about reality themselves.

Then begins the constant (but relatively brief) quest to be right again and again about picking tops and bottoms, highs and lows in a market."

I'm trying to figure out (still) why the red highlighted section is a perfect description of me. Until I figure that out, I won't trade real money and can't achieve my goal of trading the markets for a living. We all have our "anchor," that weight that holds us back while trying to learn this art... the red highlighted area is mine. Are you self-aware enough to know your anchor? I think it's the first step to fixing it... we'll see!

September 22

Just a short time to watch TNA because I am involved in some admin. work for the day-job that can't be ignored. Went long at a point which I thought would continue but didn't. Held it, then bought the bottom of the move for a blended price...and sold both around the first significant resistence level. Looks like it is still going up as I type this, though it did pullback just after I exited. Looks like I wasn't the only one who wanted to get out at the first chance.

Thought for the Day

"If you don't like something, change it. If you can't change it, change the way you think about it." - Mary Engelbreit

Gus

September 20th

I was watching the markets for a couple hours as I performed some other duties here at my desk. First trade was a short during a two-candle pullback during the 1:00 - 1:40 pm minor trend down. I saw bid/ask getting squirrely so I exited. About 10 seconds later, the price really dropped and kept going for another ten to twelve minutes. I missed that one... scared out by a signal that was not one I normally would follow. No matter, I'll take the good from it; I properly recognized then paper-traded an intra-trend pullback in the direction of the primary move. Something I have struggled with over the many months I have been practicing. I attended to some work then but kept and eye on the charts. I then was involved in an important call about my home heating system when I noticed the explosion in price after the FOMC meeting. Wow... I paper-shorted into the big 2:15 candle, blending a few entries for a good price and awaited the expected drop. It came and I covered for some winners.

I watched instead of playing, looking at some nice movement... then shorted into the decent sized 2:35pm candle. As expected, price broke down and I covered for some more gains. I ddn't play anything more through the consolidation phase that followed. Then, I had to deal with a sick kitten, our Maine Coon Cat we got in late July. A 4:00 appointment with the veterinarian revealed a high likelihood of the virus FIP. The tests should be back by Friday but we suspect it to be the illness. Incurable and fatal, it looks like little Gus will have to be put-down by the week-end. So, it's turned out to be a sad day here at bluecollar central.

A recent paper-trade, Redux

Last Wednesday, I posted the results of my swing-trade in GS. this is a redux of that trade with an eye toward the Technical Analysis phenomenon of "filling the gap." My recent discovery of Austin P's blog at coiledmarkets.com has re-awakened my interest in this market tendency. He emphasizes it in his analysis.

(Please note that he is selling a subscription/service and you should keep that in mind if you choose to visit there. I am not a subscriber and have no intention of signing up)

With this in mind, I revisit my GS trade mentioned earlier. The left chart is a screen shot of my trade timeframe but extended slightly to include later parts of the day that I closed out my paper-trade. (For chart simplification I have removed all the lines which indicated my blended entry prices and my exit point). The lower Magenta-colored line indicates the close on September 10th before the GS gap open on September 13th. On the 13th, GS stayed up above the gap. On the 14th, it gapped down and then traded in a range all day. However, on the 15th traders gapped it down again, taking it to the point marked by the first magenta arrow... Interestingly, the very point it had to hit to "Fill the Gap" from the 10th-14th of September! From there, it touched the same spot one more time a short time later then popped up for the rest of the day. Where did it go? It rose to fill the gap from the day's open, indicated by the second magenta arrow on the chart. It rose a bit above the gap fill point later in the day before dropping again on the 16th (not pictured on the chart).

Austin P pays particular attention to traders' proclivity to fill gaps eventually, using it increase his probabilities of nicely sized winners.

I think it would be a misuse of this idea to "predict the future behavior of a stock." But what study of this phenomenon can yield is a view into the collective mind of traders and give us another "inflection point" to watch; to learn from the behavior of price as it approaches these gap fill areas. They seem to provide support and resistance spots of particular interest to day-traders and swing-traders alike.

Watch and learn.

September 16 - Thursday

I started a nice work project yesterday and had to meet an employee at noon. This didn't leave much time for me to practice-trade. I logged on from approx 10:00 am and was getting whiplash watching the 5-min candles toss and turn. After the short push up that didn't follow-through at 10:45 am, I had the feeling that the markets were going to drop... I took a paper-trade short just before the beginning of the 11:00 candle, knowing that I would have only a couple candles of face time on the computer before having to go to work. I covered a few minutes later. As it turns out, I had a nice spot to enter... price continued to fall away from my entry and if I were using a stop loss over 7 cents, the trade would have held. It was a one dollar gainer before the consolidation area at 12:15 - 12:30 pm.

Based on my past performance, it is unlikely that I would have held it long enough to reap that reward, but based on my entry point, it certainly was within my grasp.

-

It has been frustrating to not be able to commit any meaningful amount of time to my market practice over the past months. My day-job has a seasonal component to it and the fall is often a slower time for me. I am hoping that I will be able to do more paper-trading going forward. In my last post I indicated that my computer time will be limited over the next couple weeks, based on the work activity I am experiencing. I still think that will be the case.

No market time today, Friday the 17th, as I am with a customer all day and wrapping it up sometime Monday.

We do what we must until we can do what we want. A little practice is better than no practice and quitting is never an option.

-

Good trading to all.

September 13, 14, & 15 (thus far)

As the screen shot shows, there was no activity on Monday. Too much day-job.

-

Yesterday I had a chance to sit in on the markets for a short time between work projects. I added to my GS swing-trade by taking two short paper-trades. The weakness in the market was apparent and I took the short as consolidation approached its end and the impending drop began to "tip its hand." The dark green lines indicate the four spots that I entered short on the paper-trade swing position. The thin horizontal green line is my average price of those four entries.

The dark red line is my exit point this morning shortly after the open.

-

There is a lot going on here outside of my trading education and my attention to this blog and to the markets in general after I post this will be unpredictable for the next few weeks.

-

Best to all !!!!!

September 10th

No trades yesterday with work so busy.

Today, I had a couple hours to watch the markets and manage my swing-trade in CRM. As the cliche' goes, "when opportunity knocks, you must be there to answer the door." That was not the case with my CRM position because I got to the office too late and missed the LOD and potentially a nice gain. Instead, I was forced to exit with a much smaller gain, if getting out today was the goal. I did just that.

I liked GS for a short late in the day but the thing took off against me, very quickly as it turns out. I really like the formation of the near-doji on the 15 min chart as a potential short-term reversal, so I am holding as a swing-trade on the two part paper-trade.

September 8th

I was very busy witht he day-job yesterday, Tues 7th as well as most of today. However, an early finish allowed me to sit in on the markets for the last hour or so. I was still in my GS and CRM papertrades which became swing trades because of my stupidity and my inability to be by the computer at an opportune time. Today I shorted GS with four trades at the final top just before the big collapse of the day. I held and got the entire GS position out with a gain at the bottom of the move. How the heck I can do what I did today in GS, near perfection in momentum timing, and then screw the pooch so badly at other times is a complete mystery to me. I wasn't even thinking today... I just saw and felt what was there then clicked the mouse.

Anyway, I am still in CRM, awaiting a collapse. We'll see how that goes over the days to come.

happy Labor Day

September 3 - Open

Bad time to be short anything overnight, as I am CRM and GS. These sim-trade positions are being punished right now.
There are some general lessons to be learned here, as well as personal, more specific ones: the resurfacing of mental blocks which adversely affect my decision making. On these specific difficulties, I haven't changed since I first started practice-trading in early 2009. That's the real problem... if you do everything the same, don't expect things to change. And change they must...

A while back I found this new blog and consider it one of my new favorites. A few days ago I was reading the blog post entitled, "Our Daily Bread" and was moved by it... I couldn't get it out of my head all day as I worked my day-job. I've read it five or six times since... and while my first reaction is to disagree with the implied negative portrayal of playing reversals as a "novice" trader behavior, I am thoughtfully considering that even that slight disagreement may be misguided, knee-jerk defensiveness on my part. Especially given the results of the two practice trades I have going at the moment. Had I gone long in GS yesterday at the same spot that I was going contrary to the trend, I would have a sweet paper-gain right now. Similarly, the CRM position would be very nice had I just followed trend. Austin's thoughts have really struck a nerve.
I admit I am in many ways the novice trader described in the August 31 essay from http://www.coiledmarkets.com/ reprinted below. As usual, I have highlighted parts which meant the most to me.

Our Daily Bread
Posted on August 31, 2010 by austinp
As I mentioned in last night’s video conversation, the price on my favorite type of bread rose 20 cents a loaf since the last time we shopped. Considering it was pretty much $1.99 for the past couple of years and suddenly offered to buyers now at $2.19 instead, my first reaction was that like anyone else who suffers from the basic-human-nature affliction.

We usually buy ten loaves to last roughly two weeks. Sometimes they do, sometimes we run short until the next big shopping trip. Then it’s just a matter of picking up a few other loaves from the local mart to fill in the blanks. Price is not really an issue on those other loaves, because they aren’t the routine.

So my first thought last night was to only but eight loaves instead of ten. Very first emotional reaction to a +20% premium over recent cost was to avoid the same purchase. Why?

Well, because we’re all human. We are taught to buy low, sell high. We are taught to wait for sales. We are taught not to pay too much for something, only to suffer “buyer’s remorse” when lower prices to follow do appear.

That constant pounding of the lesson “not to buy higher” is very costly to traders. Very costly, to the point where it often costs them an entire account balance and/or fledgling career.

The easiest money a trader can ever make is inside of a deliberate trend session or period. Price is rising, pulls back level and continues to rise all day… or days at a time. Same story for the short side, identical logical emotions involved. Traders see price at now higher levels and inwardly regret buying that new price. In their minds they screwed up… should have bought it before when it was cheaper or “on sale”. Now it’s too high to buy (too low to sell) relative to where pricing just was a moment ago.

Ever have that thought flash thru your mind inside of a plodding, deliberate trend session? Up or down, doesn’t matter. Have you ever let the thought of price is “too high” or “too low” for taking a new position there hold you back, only to see price continue much deeper in that same direction after giving you all kinds of time to open a new trade?

A funny thing happens when we watch that process unfold the the hard right edge of our charts. Once price shoots away from where we passed on entering, a new compulsion overwhelms our senses. The market is now irrational and extreme. The sensible thing to do here is fade the move… short each new upthrust high, buy each plunge-down low. Sooner or later the “herd” will figure out they are wrong and you are right. These prices are insane here. Then the market will turn back in your favor, reward you for being so sensible with your “discount” purchases and reward you again for not taking that other stupid trade which worked a little bit but must surely stop working nearby, soon.

For those who have experienced that emotional pattern, how did the story turn out? Were you victorious more often than not, or run over by the StraightTrend Express more often than not?

I tell ya, it’s a deep-seated emotional flaw that prevents traders from mindlessly buying and selling into extended trend moves when continuation signals confirm. One of the hardest personal flaws to overcome in this profession, by far.

Also one of the deep core reasons why reversal-trade or “fade-trade” tactics appeal to newbie traders before they get chewed to shreds by the market in rapid fashion. It feels really good to time a high or low entry when trading. It feels five times good to make a public call somewhere and be right, then bask in the accolades of fellow newbies who don’t know one whit better about reality themselves.

Then begins the constant (but relatively brief) quest to be right again and again about picking tops and bottoms, highs and lows in a market.

Most traders never grasp the reality that buying medium and selling much higher or selling medium and buying much lower is where the easiest money is. The easiest, and the most. Chunks from the middle of directional swings. Harnessing the market’s own power for our own good. Throwing chains around the market instead of throwing spears at it. Big difference. Tough concept to internalize and accept.

Fortunately for me, my second thought last night at the bread aisle was the fact that I made enough money on two TF trade that day (one loss, one win) to buy every loaf of bread product in sight down the entire row.

Didn’t matter if it was $1.99 or $2.19 or $2.99 a loaf: knowledge and skilled applied in the markets mixed with patience and extreme discipline resulted in ability to afford all the bread in sight without worry or concern. A mental lesson I need to replay the very next time we are faced with a grinding trend session and I hesitate to buy higher or sell lower when confirmed signals align.

Lessons learned, lessons unlearned. Lessons relearned

Trade To Win

September 2

This went from bad to worse, though I could have got out even... had I been here do so. Also short GS overnight.

September 1st

Interesting day... early surges upward which I missed because of my day-job, then a relatively quiet stretch which I tried to make the best of. I made four clean trades, the first in GS, which I exited far too early, then three in TNA, the second of which moving so nicely for me that I added another papertrade to the winning position (the third TNA trade). Closed both portions of the doubled-up paper-trade for winners.

Then, my eagerness to latch onto a bigger mover led me to CRM, one of the bigger movers of the day. It was there that I ran into trouble. The 2:50 pm BIG volume surge along with the doji which followed told me that a reversal (profit-taking) was in the wings. Alas, it was not to be. This thing took off against me and I sat on it expecting a breakdown from any HOD resistance. Nope, it pushed right through to new highs of the day. I did not average a better price though I considered it in the 3:25 timeframe. had I done it, there was an opportunity later to get out even. However, I wanted to keep this a "clean" trade so I held, thinking the profit-taking I was looking for would come tomorrow. Holding this one overnight. After-hours shows it down about 26 cents.

Thought for the day...

"No matter. Try again. Fail again. Fail better." - Samuel Beckett