End of Day (EOD)

The last chart I posted earlier turned out to be my last trade of the day. I spent much of the afternoon on the phone with Microsoft Technical Services. Actually, the man from MS was very helpful and solved my software issue, but it took nearly two hours. Anyway, I'm now going to take a moment to recap the day.

I sensed that momo was slowing when I went short at 2:15pm, and I was correct. TNA entered a consolidation area for 50 minutes before breaking out for the last leg of the afternoon trend. A trend that I should have been in all the way had I not tried to get "cute" in my third trade of the day by moving up my original stop as price rose after the 11:35 entry. That is the penalty for seeking protection from the larger stop loss that I had set. Basically, I cheated the mandate I had set for myself. I still took the loss but tried to mitigate it by moving the stop up with price. The problem is that price did not breakout of consolidation before I moved the stop up. I will try to remember that lesson. Don't move the stop until price breaks consolidation and enters trend. The more I think about it, the more I see it is an error of poor fundamentals more so than fear of taking the larger loss. As it turns out, that original stop was just a few pennies above the low of the day and would have not triggered the rest of the day. That also means that I would have had over a two-dollar gain! I assume I would have stuck to my mandate holding until the final 15 mins of the day as I did yesterday.

So close, yet so far away. A bad decision to move my stop and then getting punked on the next trade: stopped out at the low of the 12:35 candle... the one that was the start of the big afternoon move after 2 hours of consolidation. Two unfortunate events... but "almost" does not pay.

Looking at the bright side:

1. I stopped out each trade faithfully which is the whole point of this exercise I am involved in.

2. My stop outs were in areas where my read of trend/momentum change was pretty good. It needs refinement... maybe some patience. I also MUST trade with trend as my first impulse as opposed to trading for reversals. My first two stops of the day would have been avoided had I done this. This is a perenial problem of mine.

Overall, I am happy with today. I am not joyful like yesterday, but I met my goal of exiting only by hitting stops or getting out in the last 15 mins of the session.

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I am noticing as I stay in stocks and don't exit from anxiety that I am paying closer attention to price action while engaged in the action. For some reason, the anxiety has not been present these past few days; I don't dwell on finding a place to exit with quick gains like I was before. For this reason alone I will continue with this plan.

stopped out

in short...

Thursday

Well, I got punked by the market again. Stopped out on the low of a candle just before the price reversed and put in the big move I was trying to capture. I do this quite a bit, as I've mentioned before. HFT's? Big players? In this case, they drove price down quickly in order to stop out traders and use the liquidity to fuel their intended upward move (in this particular case).

I had stopped out three straight trades before this happened, though in the third trade I would have taken profits instead of holding for a stop out had I not been following my loss-familiarizing exercise. For the record, I marked what would have been my exit with the orange dash at the top of the 11:40 candle.

Here's the kick in the pants: On that third stop out, I had moved my stop line up closer to my entry as the price climbed into what I considered a safety zone. My original stop is the short red line in the 11:30 candle. With this revised stop, I was forced out in the 11:50 candle when price retraced. In the next candle (11:55), price dipped a bit further before reversing upward as the choppy consolidation continued. Had I kept my original stop in place at what I thought was the bottom when I originally entered the trade, I would not have been stopped out at all during the entire consolidation phase and would have a very nice gain right now. I would not have been in the fourth trade (12:35 pm) in which I ended up being Punked; I would have been holding the thrid trade still!

This is a perfect example of the gamesmanship that is trading. It is a contest between experienced players (or their black boxes) who know trader habits and psychology and the prey on which they feed (like me, if I were trading live). All those traders who got long during that consolidation area got stopped out and punked just like me in under two minutes by one of the longest five-minute candles since the open. The moral of the story is that a good entry price leads to a good stop price, which leads to a safe trade when one tries to trade a reversal of trend. Notice also that when the price was pressed down quickly in the 12:35 candle I'm discussing, it was pushed just 3 or 4 cents beyond the trendline marked on the chart. The reason the stock snapped upward in reverse after this spot is because people like me had their stops just below the trendline thinking it would hold. Stops got tripped, the big players bought them up, and price snapped up.

For the record, the orange dash in the current candle on the chart is where I would have stopped this out, had I been in. The orange dashes on the 10:25 am and 10:35 am candles are trades I was contemplating but never entered. Both would have offered gains had I played them right, but I'll never know for sure.