BlueCollarTrader

Again with shorts unavailable

2012-01-25T16:41:00.002-05:00

Today is the irst time since the last writing that TNA has been not readily available for shorting. I have no idea, as stated before, what this means. The market and TNA specifically have climbed since the week it was not readily available to short, so certainly it wasn't an indicator that a drop was imminent.
It is unusual, in my experience... if anyone who is reading would like to speculate, please feel free.

Again

2012-01-12T15:04:00.004-05:00

As of about 10 minutes ago, TNA shares available to short became unavailable. Yet, the market still goes up. This is peculiar... four days in a row, but the first time I've seen shares unavailable to short even on one day in the past year...

****UPDATE: On Friday, next day, TNA was also unavailable to short in the afternoon.

Oddity in TNA

2012-01-11T16:27:00.002-05:00

I have been watching TNA every day for over a year... it's pretty much all I use to practice trade. All four days this week in the afternoons, TNA borrows for shorting have been very hard to come by on Interactive Brokers. Those familiar with the IB platform know that when shares are not immmediately available to borrow, the dark green bar comes up next to the ticker. Well, in the afternoons this week, that dark green bar has been present, with the longest timeframe being on Monday, to my best recollection. To put in perspective, this is the first time in over a year that TNA has been not immediately available for shorting. These bad-boys are being grabbed up at a high rate, it seems. I am not experienced enough to understand the inner workings of market operations so I cannot come up with all the reasons why this might be happening. Intuitively, however, my gut is telling me that shorting is becoming popular and shares are possibly being accumulated. I have no proof of this, but this certainly is a rare occurance on Interactive Brokers.
Regular followers of the market know that we are at a critical point in the markets right now, and may become a big inflection point. Some very good traders as well as some hedgies (based on what I am reading) have gone to cash and/or are bearish. I try not to let others opinions steer me, but my read has been a bearish one for a couple weeks. Early last week, I moved all our 401K into cash. We'll see what happens... this market stuff sure is fun to watch!

An Ambitious Goal...

2011-12-14T06:23:00.005-05:00

"Most of this book came to me from sitting still and keeping a journal over the years with notes from the classes I've taught and insights I've accumulated about myself. I am not afraid of who I am or what I sound like. Best of all, I don't care what others think about me. I am immune to peer pressure. In that regard, I am fearless, I have surrendered to the fact that I am an emotional being and that my emotions run my system. I have cut the throats of all the pink elephants that lived off the fat of my land over the years. I have my feelings as friends and allies, and I speak about them frequently. In speaking with me, people think I have candor. I just think it's emotional integrity."

- The Inner Voice of Trading, Michael Martin, p.22

I come to identify over the years, that fear, insecurity, emptiness, desire, and other basic human emotions manipulate people to behave in certain ways. Behavior often with bad consequences. We all know people who "can't get out of their own way." That is, they can't save themselves from self-destructive patterns of actions; can't put together a successful and happy life. But why is this so? Why do certain people seem to be consistently attracted to failure? Bad relationships of all types: difficulty with siblings and parents, rebellion against rules and laws that are legitimate and necessary, turmoil in romantic relationships, and clashing with others in the workplace?
I submit to you that it is the inability to know themselves and accept themselves... the inability to understand their emotional makeup.
So, how can one fix a problem when he or she does not know the cause? He or she cannot.
I believe that a happy successful life is derived from being able to accept our short-comings. Accepting our short-comings can only occur by admitting we have them. And admitting we have them is the hardest fear to overcome.
There is no doubt in my mind now, after all the study I've done, that my successful life will come from throwing off the shackles of fear. I am 47 years old and weary of not realizing my full potential as a mate, a friend, a neighbor, a citizen, and yes- a trader.
-
I am no longer looking to the charts for my transformation from blue collar guy to a career trading for a living, I am looking inside myself.
To find something, one has to search in the right place.

Trading Education

2011-12-10T06:53:00.010-05:00

It's early Saturday morning and I've already been here at the computer for 90 minutes. MY frustration level is high because recent notable improvements in my mental approach to the markets regressed this past week. It is no small coincidence that on Tuesday Mrs. Bluecollar had a substantially upsetting event at her perennially lousy workplace that may threaten her job. I won't go into details but will only say that since the sale of my business in January, she has been the only source of income and source of benefits for the household.
This past week only further reinforced the fact that trading is mostly a mental exercise and that substantial emotional events will interfere with successful performance. I did well on Monday before the news and I have done well over the past three weeks, going to the computer each day with a calmness and sense of mental lightness and agility that has eluded me since the beginning of my journey to become a consistently profitable trader. Then, on Tuesday, the negative news caused me to "try harder." I let my stops run a bit before engaging them. On Wednesday, I had a good read on the turn upward in TNA between 10:25 am and 10:35 am. I went long at $43.95 and set a stop 18 cents lower at $43.77. TNA turned upward and I was in the money... as is often the case, it drooped in the next candle and I faithfully stopped out at $43.76. This was the bottom of the candle and the next candle (10:35) was a hammer but ended green; TNA had made the turn. I was early on a very good read, which is the same as saying I was wrong. The bottom print was $43.70, meaning I had missed the bottom by 25 cents on a stock which had already moved nearly 900% more than that since the open an hour before! TNA soared to $46.89 in the resulting trend, and though it pulled back from there, it later regained its strength and went on to post a new HOD near the close.
Regret is a horrible emotion when trading... if we cannot "forget" our trades which don't work, we are doomed as traders. The inability to do so on this day was a direct result of my "need for success" given our personal concerns. I later went short with a double-sized position during the uptrend at a well chosen spot, sensing a reversal. The reversal turned out to be only a consolidation as buyers stayed strong and in charge, pushing TNA up, as I mentioned earlier. I didn't stop the trade out... I needed a measure of success for us, and I had a good read that was "stolen" from me earlier by big players who jammed price down to trigger stops causing it to accelerate up. (I'm not playing the "victim" when I say that, it is a well-known and often-seen tactic to generate liquidity to fuel the reversal while getting a few extra ticks in their favor). I was insisting on a winner. The market did not comply. I did not add to this losing trade, I havent done that for so long I can't remember the last time. But holding a bad trade was bad enough... made worse by the extra size trying to "make things happen." Price, as it so often does, eventually came back to my entry area, and I sold out with a 34 cent gain. I sensed the change in momo, exiting at a very good spot, before it made the final push to new HOD near the close as I mentioned earlier. It's fair to say that I wasn't helped by the fact that I was rewarded for my bad behavior. So, my evaluation is this. I had good reads of the turns on Wednesday, just as I seem to on a day-to-day basis. My technical/chart reading skills are reasonably good. But my head got in the way.
And so it was for the rest of the week.
----------
My negative performance this week associated with unsettling news in my personal life brings me to what I've been thinking about this early Saturday morning, after surfing the trading blogosphere.
1.) Searching for and nosing through new blogs, I realized that self-doubt was the reason for doing so. I am a trader-in-training and don't make any money currently, at a time when it seems like a few extra bucks would be helpful. My concern is causing me to "try harder" by looking for more information. The truth is that I already have the knowledge I need about chart reading. My reads are good, and have an acceptable level of accuracy. I do not need to look for answers by watching CNBC or digging through more trader blogs (even the good ones).
2.) More generally, the reality is that most of us who understand charting fairly well, can't be helped by more books, charting education services, etc. The answers to our success are not outside information brought into us. Success lies in addressing the fears and other emotions we already carry inside. It is my opinion that most of the purveyors of books, plans, self-help manuals, like those I have seen this morning know this. I believe another book, or course, or on-line subscription is akin to buying one more piece of workout equipment to get you to a slimmer, fitter, you when you don't use the one(s) you already have. It ain't gonna work. It will never happen because just like all those trading materials and expensive subscriptions to trading sites, exercise equipment does not come with the willpower needed for the buyer to use it faithfully and consistently. And the buyer will always be searching for the next "tool" as the answer. How sad that they are easy marks for those willing to sell them exactly what they don't need.
------
I just purchased and am reading one of the few "tools" a chart-savvy trader will ever need. It was inexpensive and is clear in its presentation. "The Inner Voice," by Michael Martin. It explores in greater detail and clarity all the underlying points that Mark Douglass covers in his great book, "Trading in the Zone."
Take note, the will to face any underlying emotional shortcomings, a necessity for success, wasn't shipped in the box with it. I didn't even bother to look...

Over My Head

2011-12-09T10:44:00.004-05:00

Here is the sticky-note I pasted a couple weeks ago on the bookshelf over my head. This is the essence of what I study now as I sit with the markets day in and day out. There are other important things to which I pay attention, but they are secondary.

Mea Culpa

2011-11-30T15:08:00.002-05:00

This blog has really been an afterthought to my daily activities pretty much the whole time I have been studying as a full-time student of trading; starting March 1st of this year. The original intent of the blog was to document my progress, maintain my energy level for trading while I was still working my day-job and building my home, and provide an outlet for honest discussions related to the journey from a blue collar guy doing a blue collar business to trading for a living. To the best of my belief, I did just that. Since letting the blog alone for the most part, I have been thinking about a post I did back in April that really pounded the table in favor of day trading radio dot com. I finally have gotten around to putting in an update on that post, and I'd like to also repeat it here. In the interest of openness that has been the foundation of this blog, here it follows...

UPDATE AS OF NOVEMBER 2011: It has been a long time since posting the following couple paragraghs below. Every so often I think of writing this "Mea Culpa" about how short-sighted I was in recommending John Kurisko's daytradingradio so strongly. It is true that I had a minor epiphany after watching his videos and sitting in on his radio/webcast every day for a couple months. I even became a paying member of his site for about a month. I got a great eye-opening as to the importance of trend-lines and the idea of improved odds of success when multiple indicators line up in favor of a trade. My understanding of market movement and momentum has really taken off since this discovery earlier this year. However, what I soon discovered about day trading radio and John's approach is that his exit formula on bad or faltering trades drastically lacks the discipline and sharpness of his entry formula. If you were to go to his site and review his success record this year, you'll see what I mean. BIG LOSSES when the market turned down. As a swing trader who sort of "wing's it" on his stops and exits, he posted some big draw-downs in comparison to his wins when the market reversed this past summer. Do I think he is good trader now? Yes, I do. And his openness and honesty, and his integrity is laudable. He is a profitable trader, but one whose method is not one I wish to emulate.
So, in appreciation of keeping it real, I am leaving up my post below which highlighted his site and method. But this preface should suffice to let you know how I think about it now.

That didn't last long...

2011-10-05T15:09:00.002-04:00

Yesterday's TNA trade long had a longer timeframe in mind. But this morning when as I watched the charts and saw it was up more, I decided to exit with my 18% gain in just over one trading day. Pigs get slaughtered. I exited $33.55 at about 10:25 am, after the 10:20 volume rise coupled with a nice up candle touch of a trendliine. TNA ran up a bit more to $34.26 then faded to $32.47 about an hour and 45 mins later. Looks like my exit was a common one among traders, given that it is the approx. center line of the consolidation in TNA for most of the day since my exit. As I write this, we're getting a run up on volume (317 pm) which for the moment is double topping from the 11:00 am high and failing. Let's see what the future brings. I'm always watching this big mover for exceptionally low risk entries. I've made about four trades in this account this year, that's it. It's a small account; under $5,000. But I'm up over 44% this year by being choosy about entries, then going all-in when the time seems right.

New Stock Entry

2011-10-04T19:29:00.002-04:00

A while back I outlined the fact that I had made my first Live Trade in two years. While I am still not back into the market in my trading account, I have taken a longer timeframe position in TNA in my Roth IRA account at TD Ameritrade. This is a fairly inactive account, with only three trades thus far in 2011; gains of 25% on those three TNA trades. My current entry price is long at $28.41. I am prepared to ride some serious volatility with this 3x small-cap mover... in fact, it was up $5 in the last 35 minutes of the day! I was tempted to take my gains, but I decided to stick to my game plan on this account and hold, even in the face of a down trending market.

Good trading to all!

Saw It, Liked It, Reposting Here...

2011-09-20T12:21:00.002-04:00

I have been AWOL from the blog for a while, and not posting much for longer than that. But, I saw this recent post from Joe Fahmy and thought someone else could benefit from it. You be the judge:

http://joefahmy.com/2011/09/15/5-signs-youve-matured-as-a-trader/

5 Signs You’ve Matured as a Trader

Posted by Joe Fahmy on September 15th, 2011

1) When you don’t need to rely on anyone else’s opinion and you stop asking others: “What do you think of the market?” Have conviction in your ideas and don’t be easily influenced by others. You shouldn’t have to rely on other opinions because YOU should know yourself.

2) When you stop feeling the need to pound your chest every time you make 30 cents on a stock. “Act like you’ve been there before!” Don’t act like you’ve never had success trading before.

3) When you stop feeling the need to trade every day and you get over the “fear of missing out.” This “fear” is the downfall of most traders.

4) When you make a good trade or a good call on the market and don’t feel the need to remind everyone. If you are doing a good job, people will notice.

5) When you learn to cut losses without hesitation. No one likes to lose, but cutting losses is part of the game. Accept it and move on!

Good trading to all.

First Real Money Trade in Over Two Years

2011-08-09T16:14:00.004-04:00

Yesterday I bought a small long position in TNA; only 250 shares. With the monster run at end of day, I decided to sell at EOD for a $443 gain. Not much of a gain, considering the recent volatility, but I am happy with the fact that I put a positive number on the board. The last time I traded my live account, I lost over $3000 on a single trade. After getting some VERY GOOD advice from Scott Farnham to stop trading immediately, I did stop and committed myself to not trade again until I had a better understanding of what was going on. Not certain I have a full handle on it yet, but based on what I know now, I can't believe I dared to try live trading back then. It is my intent to put this long trade back on if I can get a good price, then hold it as a swing trade. I will not be day-trading my real account, despite this winner and my intent to put it back on. I haven't quite mastered this art just yet. I am still fighting my mental weaknesses, even though I feel my technical understanding and chart reading is sufficient to produce gains. It has been only 5 1/2 months of watching the market full-time; not quite enough yet to go full live trading.

Simplicity: The mark of experience

2011-07-10T11:38:00.005-04:00

As I have remarked here a number of times, I am a fan of the blog over at SMB Trading and their July 9th entry from Mike Bellafiore is a real winner. I decided to repost it here: http://www.smbtraining.com/blog/a-change-in-pyschology

I continue to work hard at practice trading, and at chart study during non-market hours. I am pleased with the progress, though I do wish my skills would develop faster. The market will tell me when I'm ready. It is my goal to return to more regular blogging as my time allows. Good trading to all.

Saw it, Liked it, Reposting it here...

2011-06-03T12:47:00.003-04:00

Regarding minimalizing one's existence in life and in trading. Hope it makes the same impression on you as it did me.

http://www.chicagosean.com/2011/05/31/start-the-adventure-by-remembering-you-are-the-adventure/

What I've been up to...

2011-05-21T10:41:00.019-04:00

It has been a while since my last post, though I have been just as busy and attentive to learning the art & science of trading as when I was actively blogging. I have been faithful to not averaging a better entry price by adding to a losing trade. I have been struggling to faithfully obey my stops as well as having trouble learning to trust the technical patterns I have discovered in the past month; these are my primary mental challenges.

On the technical side, I am working out the details on an edge in the market which I believe will work. I am confident that once I have established and practiced my edge, my psychological difficulty of not trusting technical patterns will alleviate itself. Setting and obeying stops will no doubt be my last struggle.

I have had fairly negative results on my practice trades as I try to work the bugs out of my method. On range days, I still see good results but on trend days, I still get slaughtered. There is no mystery to me why. I know my shortcomings. I have to try to beat them as time passes.

UPDATE AS OF NOVEMBER 2011: It has been a long time since posting the following couple paragraghs below. Every so often I think of writing this "Mea Culpa" about how short-sighted I was in recommending John Kurisko's daytradingradio so strongly. It is true that I had a minor epiphany after watching his videos and sitting in on his radio/webcast every day for a couple months. I even became a paying member of his site for about a month. I got a great eye-opening as to the importance of trend-lines and the idea of improved odds of success when multiple indicators line up in favor of a trade. My understanding of market movement and momentum has really taken off since this discovery earlier this year. However, what I soon discovered about day trading radio and John's approach is that his exit formula on bad or faltering trades drastically lacks the discipline and sharpness of his entry formula. If you were to go to his site and review his success record this year, you'll see what I mean. BIG LOSSES when the market turned down. As a swing trader who sort of "wing's it" on his stops and exits, he posted some big draw-downs in comparison to his wins when the market reversed this past summer. Do I think he is good trader now? Yes, I do. And his openness and honesty, and his integrity is laudable. He is a profitable trader, but one whose method is not one I wish to emulate.
So, in appreciation of keeping it real, I am leaving up my post below which highlighted his site and method. But this preface should suffice to let you know how I think about it now.

If you are interested in learning how I diagrammed the GS chart posted here, go to http://daytradingradio.com/ and you will finally know much of the technical aspects of what every successful trend trader knows. I was a listener to John Kurisko (Day Trader Rock Star, his radio moniker) when I first became interested in day trading... it was early 2008 and I just happened to come across his vids on youtube. I was intrigued right away, mainly because I liked his story. (he was a young postal employee in search of a better life for himself. He blew up his trading account twice before achieving success on his third try.) Admittedly, I moved on after a few months when he shifted from all free to a pay sight and because of my restlessness with swing-trading. It is important to note that he is primarily a swing trader though he does day-trade the ES and a few stocks now and then. It is notable that his swing-trading concepts transfer to day trading quite well. I worked my way back to him in January of this year when I had more time to sit with the market after the sale of my business. It was a revelation! Although I had seen his entire method before, it finally made sense to me where it didn't 3 years ago; my experience brought me to understand his concepts and the importance of what he was teaching. In full disclosure, I am a subscriber to his website now. I am not being compensated for any of what I am writing. I don't participate in his chatroom because I find it hugely distracting. I have to admit that his mixing of music in with the broadcast can be a bit distracting, though that is his schtick... he's a former pirate radio guy. And when you run your site as a radio show, you have to fill every second. I actually like the ES pit feed from the CME in Chicago.

His method helped me to finally understand what I have seen Scott Farnham do for the two years I've followed him. I can't say for sure if it will have the same affect on you, but give it a try. It costs nothing to watch the videos... they are completely free. And he usually runs them in a continuous loop on Saturday and Sunday though for some reason he isn't today. The vids are on his site... just look for the Video tab on the top of the homepage (link posted above). I recommend you start at the video shown on the youtube link below, and you'll get the idea. This one is fairly new and offered in High Def for better viewing- his older vids are not... : http://www.youtube.com/watch?v=AlVV01aIxdg&feature=player_embedded

I thought this was wickedly funny...

2011-04-29T21:22:00.002-04:00

Joe at http://www.upsidetrader.com/ often makes me laugh. This one was extra special, imo, especially the Steve Ballmer part. Apologies if you are not into schadenfreude.

http://www.upsidetrader.com/2011/04/29/5-possible-successors-at-berkshire-hathaway/#comments#disqus_thread

The past week

2011-04-28T07:55:00.007-04:00

It has been a rocky week in my practice-trading. I have shelved my old ways for the most part and am trying to approach training in a different way, the correct way. Over that timeframe, I did revert once back to doubling up on a losing trade after not stopping it out, and paid a heavy price for it (metaphorically speaking); because I do not practice-trade with real money. But I only did it once.

I have put up a lot of losing trades over the past eight to ten days while I try to adopt a method/edge to what I have learned about the patterns of movement that stocks make every day. This is tough to take because I am putting up losers and am having to face the fact that I have to "un-learn" my bad habits, some which I have tried to perfect for two years. Just as a tennis player who wants to go pro must not "run around his backhand to hit a forehand" but must instead perfect the backhand stroke, I must ditch my old ways. I have some big losses where my method wasn't appropriate to the chart area and I just got frustrated and let the loss run; moving on to other things. Walking away from the problem will not solve anything. Mental toughness is going to be the last hurdle to clear for me, as it is for most people who try to trade professionally. As I clarify and hone my edge over the next few months, I believe it will be easier to systematically set and obey mental stops. In addition, I'll develop confidence on where to place hard stops in case I have to get up from the computer with a trade on. Of course, I could just set hard stops every time and solve my problem that way... but that doesn't teach me anything. The hard stop is a crutch in this case. I can't cheat the devil. I have to stare fear in the face and beat it in order to progress in a healthy way. I am tired of "running around my backhand" when it comes to trading. Screw that.

I will continue to put up losing trades, some big losers as I struggle with setting stops in correct areas as well as attempting to teach myself to reverse direction after stopping out. This is crucial, because what I have found in all but one instance of taking a loss in the past ten days is that had I simply reversed direction, I would have had a big winner after the stop-out. It only makes sense, right? I'm playing stocks with high ADR; they move big. If it doesn't go the direction I choose, the likelihood is it will move big the other way.

2011-04-19T08:32:00.004-04:00

Joshua: 5-min chart on left, 1-min on right.

April 18 - Tax Day, No market time for me.

2011-04-19T05:33:00.001-04:00

Saw it, Liked it, Reposting here...

2011-04-16T10:20:00.005-04:00

From Adam Grimes' blog at http://www.smbtraining.com/blog/book-update, I take this excerpt that really hit home for me. Something I always knew and am seeing with even more clarity since I started practice trading full-time in early March. - "...the biggest dangers traders face is that they are trading without actually having an edge in the market. If that is true, you’re screwed. Discipline, money management, good psychology, execution, etc. all will not help and in fact may hurt you. For instance, if you spend a lot of time doing positive thinking and working to become more aggressive on your entries, but your entries don’t actually have an edge, you’re just going to lose money faster. You cannot win this game without having an edge. I also spend quite a bit of time looking at and thinking about risk. For instance, one of my claims is that the “risk” in risk/reward is actually mislabeled… if you’re trading with an edge, it’s not even actually risk but a regular and somewhat predictable expense. (Again, if you’re not trading with an edge, you’re screwed.)"

April 14 & 15

2011-04-15T16:19:00.004-04:00

Yesterday and today.

Today at the close I sold TNA daytrade cum position trade that I was getting killed in a few days ago. Escaped with a $261 loss on that papertrade. What goes down, will come back up eventually. With the market showing some strength yesterday and today, maybe it would have been positive next week... but I am not going to allow myself a winner on such a piece of crap execution. I didn't stop it out and so I'll take a red-mark on my record, as I deserve.

Yesterday, I made a tremendous breakthrough on my mental / emotional difficulties that I have been trying to overcome. I began to form an edge/method that I can use. In doing so, I also had a place to set a stop. What resulted from the boundaries set by my attempt at an edge was a sense of control and certainty. Et voila', I stopped out my first trade basically at breakeven when it appeared to be reversing against my "boundary." The nezt two trades that violated my method: first stopped out at B/E again and the second stopped for a $79 loss. The final trade was put on same as the other three prior, except this one was free of the consolidation area which had failed the ones before. It rose and instead of cutting and running with a small winner, I held on through five candles until it felt as though momentum had slowed and a reversal was forthcoming. In fact, my exit was nicely placed; there was a slight rise beyond my exit then a pullback. Now, here my inexperience showed. I should have entered long again. I missed the second and more profitable leg of the trend I had entered well earlier.

I am generally happy with my execution yesterday. Onward and upward.

April 7 - 13

2011-04-13T20:27:00.005-04:00

I've been Blogger lazy lately. Here are my results from the past week. It should be noted that I am long 500 shares of TNA from a couple days ago in which I am down roughly $2000. Again, not having a stop killed me. To my credit, I have not averaged a better price by adding to losing trades in recent memory; an advancement for me in my mental battle to succeed in the markets. Now, I must come to grips with accepting risk when I put on a practice trade so that I can take stop losses in stride, as part of an overall trading plan.

I had two nice reads of ES today and was out far too early on both, especially when I caught the 2:15 candle near its low and sold early as it made a dramatic rise through 3:00 pm. I was in beautifully with a possible 7 point gain available to me; only took 1.5 points. I also had a couple lesser trades in ES: one in which I went long a bit too early and took much of the gain available to me on the 11:35 pullback. The other was a shabby reading of the day's major mid-day reversal where I exhibited zero patience for my idea to develop. It was the right idea but was simply too early, and too bold with me so confident of the reversal that I entered four contracts. It would have been superb had I waited another four to six minutes. If I had done so, I would have nailed the LOD. Close doesn't bring home the trophy, though.

April 6

2011-04-07T10:13:00.005-04:00

Mostly TNA with one ES short near the top of the afternoon run-up. all trades were successful, though a couple out too soon. Maintained some discipline by not adding to the one losing trade that I held; a short around 2:15pm in TNA where I was too early and didn't stop out. TNA did roll over and I held for most of the drop before exit. It was a correct read of direction, wrong execution spot. I MUST learn patience to let the momo reverse before entry.

April 5

2011-04-05T16:40:00.003-04:00

The rest of the day...

Some TNA and some ES. Was upside down in TNA after a lack of patience had me shorting it far, far too soon. I took it short off a volume spike combined with where I thought a trend line might hold as resistance. Not to be, as it turned out. Same old, same old, from there. I held it instead of stopping out. I DID NOT average better price by adding however, which exhibited unusual discipline for me. TNA, like the market, rolled over and came back. I took a loss by covering at a spot which felt like a reversal was developing. Price did reverse at that point but it was just a pull back from the general afternoon trend. Had I held, I would have had the chance to get out close to even. No worries, I deserved a loss after holding it like a fool. A quick scalp by reversing direction and going long where I exited was a chance for a small gainer to offset the loss.

On ES, I took two contracts short just a bit early but near the top for the day. Impetus was approach of the R1 pivot on a volume spike. It rolled over an hour later then at 2:00 pm I scaled out half as it started to feel like momo was waning a bit. See chart. I held the other half through that pullback then exited all on a volume surge down. This was far too early however because ES dropped through the close; it is weak still in afterhours. I missed an additional 3 points approx.

The past week.

2011-04-05T08:13:00.005-04:00

Some good, some bad over the past week. Really hate the -$1500 rip last week. Same ridiculous move; didn't stop out and loss mounted. I will catch on eventually. Only practice trading until then.

I like yesterday afternoon's short of ES as it neared trendline resistance at the close. Then a hold overnight. Covered this AM near the bottom of the move for a gain.

Warren Miller's 1983 classic, "Ski Time"

2011-03-31T11:43:00.010-04:00

http://www.youtube.com/watch?v=GsA7_UnBXeA&feature=player_detailpage Featuring former 4-time world champion freestyle/mogul skier, Joey Cordeau. (who also happens to be my brother-in-law)

To the right, REFLEX Ski Poles did an ad campaign featuring Joey. This one hangs here at the house.

Arnold Schwarzenegger is a long-time resident of Sun Valley, Idaho. When he asked around for ski lessons and only wanted to be taught by the best skier on the mountain, everyone sent him to Joey. Arnold now has a ski run on Baldy named after him, "Arnold's Run."

If you want to learn to ski the bumps and never settle for second best, here is his website which includes educational videos:

http://www.weekendwarriorsguide.com/

March 29 - Tuesday

2011-03-30T05:27:00.006-04:00

I struggled to find a trade I wanted to take, even though there were periods of movement.

For the past two weeks or so, I have been using a chart of the front month Mini S + P Futures as my way to track the market; instead of the SPY or the SPX. It gives me the same picture of the overall market's behavior and it allows me to follow a moving market nearly around the clock, though admittedly, volume and movement are quite muted in off-hours. Ever since I was in High School, I have been an early riser, up most days around 4:00 am. This is a perfect fit for me because that is the time some volume comes into the ES, allowing me to practice learning a new market. I'm also considering it a "hedge" against my learning curve... if I run out of cash to support myself while I try to learn the stock market, I can still trade the mini futures before whatever job I might have to take. I refuse to ever quit doing this, no matter how many years it takes.

Two ES trades, a small winner and a small loss, basically offsetting one-another. My trade for the short that I closed for a loss just hung in space and didn't really move so I took it off; time=risk. A couple candles later, it broke down and would have given me a chance at two points. I have to adapt to a slower pace trading after-hours.

Visitor

2011-03-29T07:59:00.004-04:00

Our little Maine Coon kitten came to visit me in my office, and I snapped a photo. Not pictured is the little ball; the object of her attention.

March 28

2011-03-29T07:32:00.005-04:00

I took last week off from blogging. My results were typical for me... lots of winners coupled with two trades where I didn't use a stop and I closed out for relatively large losses (one over $400 and the other at $1,400). The two losers easily offset my gains and I was down for the week. Had I averaged for better price on both of them by doubling down, I would have made them winners the next day.

I didn't do it, rather I just cut them loose and took the loss. This is part of a program I am attempting to follow: accepting losses, and taking responsibility for not triggering a stoploss by accepting the losses when they are substantial.

Yesterday was pure drollery, so I accepted an offer to meet my sister for a late lunch; 2:30pm. While away, I missed the big drop in the last hour. No matter, I finished with two small but clean winners in TNA.

March 18

2011-03-19T10:06:00.011-04:00

TNA dropped to and retreated from $73.20 support seven times throughout the day so on the eighth, I decided the breakdown was probable and paper-traded short there. Nope, it bounced again. I held for the breakdown that I KNEW was coming before the close. Price came down to same support again at 3:45pm candle... "Vindication!" says I. Opportunity to escape, breaking-even and lucky, right there, but hope is a nasty thing in trading. The traders slapped me again while I hoped for the breakdown by sending it soaring into the close. I am short over the weekend; dumb-ass.

Conventional T/A wisdom states that the more times S/R holds, the stronger it is (Read: higher probablilty of maintaining itself). Often I find myself over-thinking, or better stated, complicating things. It is a tremendous challenge trying to find the balance between following simple T/A principles or making decisions by "gaming" the premise that the market has a goal of fooling the most people it can. Today, simple T/A won. I was too clever by half.

The Bankrobber's TNA trade and mine; a contrast

2011-03-16T15:51:00.005-04:00

At the same time that I was covering my TNA trade, the Bankrobber was going short. And I really mean "the same time" because his entry price and my exit price are the same and at the same point on the chart. His chart and mine are posted here.
There is something very significant about this from a technical standpoint; or better described, from a trader behavioral standpoint.
Understanding this divergence, at least from a technical perpective, is something that will increase the odds of my success.

Insight

2011-03-16T11:55:00.020-04:00

I have often lamented on this blog and in private, my tunnel vision for reversal plays. Call it fading the trend, call it mean-reversion trading. And I have written of my frustration that doing so exposes me to nasty losses when I am wrong.

About an hour ago, I felt a shift in momentum in TNA and decided that a short was a solid play for my first practice trade of the day- I entered 10:49 am at $74.45. I exited 10:52 at $74.26 for a winner of 19 cents. Following my cover, while I had stepped away from the computer, the markets tumbled deeply on more headlines from Japan. In the 10 minutes that followed my exit, TNA dropped an additional $3.58 per share. I turned a tremendous opportunity into a tiny morsel.

Since the inception of this blog, honesty has been a cornerstone as I document my journey from regular guy doing a blue collar job to trading the markets for a career. To my knowledge, I was the first to post screen shots of my trading results directly from my trading platform so that my successes and my failures were verifiably disclosed. And so this post is simply another in the trend.
At the heart of my inability to progress is an emotional need to be right. Protecting my ego is more important than achieving my goal of trading for a living, more important than being financially successful enough to rescue my wife from a job and boss who chip away at her self-worth every workday. It is more important than financially helping a beloved family member near retirement from having to suffer 70-80 hour work weeks with no end in sight. And personally, my opportunity to trade for a living has an expiration date because there is a point where the money from the sale of my business will run out and I will have to find a job to support my household. So, I can say that my fear is more compelling than my own personal financial ruin.

This is the cost of protecting a fragile ego; one that can't bear the feeling of being wrong.

And there you have it, the reason I know that I cannot trade real money now, even though my technical skills are sufficient to do so. It is the reason I average for better price by adding to losing trades instead of stopping out. And without a firm stop loss in place, I have to protect myself by taking winners quickly before the chance of reversal and potentially a losing trade. This reinforces the dysfunction because with my small winners, I get to feel terrific about myself for having a 90-95% win rate in my simulated trading. Hooray for me!... if I play this all "correctly," I will have the honor and distinction of being one of the best paper-traders on the blogosphere! (sarcasm intended) And, I will never earn a dime and never get any closer to real trading.

I believe I can beat this internal demon because I am aware it exists and I am not afraid to admit it. But it is going to take a lot of work to break down a wall that has taken a lifetime to build. I have to figure out why being wrong is so corrosive to my inner self. My entire future comes down to this very thing. And beating it will mean that I will be a much better person for it, and I am not refering to money and trading. Inner strength is its own reward.

So here's a question: How honest are you with yourself in pursuit of your goals? Do you REALLY know what lies between you and success, as you define it?

Today's post by Mike Bellafiore at SMB Trading blog brings it home. I have included his last paragraph below, and emphasized in red the part that really hit home and prompted this post in the first place.

Follow the Trend?
March 15th, 2011

...The angriest I have ever gotten at a trader was the one who constantly fought the trend- he faded everything. Great trading skills, very bright, loved the markets, but just had to fade everything. A few thoughts on fading. 1) If you learn which stocks not to fade you can do very well fading stocks as an intraday trader. 2) It is easiest to learn by just following the trend and building your skills trading.3) There are some personalities that are better suited to fading everything. 4) Do you fade because you would rather show you are smarter than everyone in the market and not more interested in making money? If this is the case I have a few phone numbers for you. 5) Fading is the best strategy in a range bound market. We are in a trending market and have been since August of 07 so any study will show this system works best during the past four years. This will not always be true.

March 15

2011-03-16T10:45:00.002-04:00

A good day for me with regard to entries, some exits still too soon.

March 14

2011-03-14T16:08:00.004-04:00

Today's results:

After exiting my overnight trade idea that didn't work out, the rest of the day went quite well in terms of entries. Exits are still far too hasty.

The orange marks are the papertrades I thought would work out but wasn't committed enough to click the mouse (I know, it seems odd that I would not click the mouse for a papertrade). All practice is good practice, though, and I continue to have a better feel on range days and get eaten alive on trend days. Makes sense, given my taste for reversal plays.

Overnight Mean Reversion Play, didn't work out..

2011-03-14T11:07:00.003-04:00

Ok, so Friday EOD mean reversion play didn't work out. Sold at breakeven when MOMO stalled and a reversal appeared to be next.
Too much headline risk these days...

Week of March 6-11

2011-03-12T06:33:00.004-05:00

I really struggled Friday (yesterday). The second as well as the two final winners were bad decisions that worked out from sheer luck. The first winner was a good trade entry but out much too early. The fourth winner was a good trade all around; tiemly entry and getting out just as momentum stalled.

I am long over the weekend in TNA, going long at $76.22 in the final two minutes after a deep sell-off left it far from the moving averages. This is a pure mean-reversion trade. We'll see how it goes...

Week of March 6-11

2011-03-12T06:25:00.006-05:00

Wed & Thursday. I went all-in short of NEM at the close on Wednesday after it ran up like crazy through the final hour and into the close. At one point near EOD, the stochastics were over 99 in overbought territory !! (100 being the highest) With that much froth, I knew it had a huge probability of reversal at the open. It didn't hurt that the markets were big gap-down at the open on Thursday.

Week of March 6-11

2011-03-12T06:14:00.003-05:00

I've been blogger lazy about posting my progress (or lack thereof ).

Here's Monday & Tuesday. Most notable is the huge rip I took on Monday when I fell back to my old crutch, averaging better price by adding to a losing trade. I was angry and just exited with the loss. With an average price of $81.39, I would have had a nice gain by 10:30 am the next day. But, that's beside the point. The trade was a bad one once I chose not to stop it out and reverse.

Saw it, Liked it, Reposting it here...

2011-03-09T07:34:00.006-05:00

It is no secret to regular visitors here that I am big fan of the education provided by the blog at SMB Training. [ www.smbtraining.com/blog/ ]. I saw the announcement there over the weekend of Corey Rosenblum's live presentation on Market Structure for the SMB University. I finally had a chance to watch the one-hour five minute video this morning and would HIGHLY recommend it to anyone who is in the learning stages of trading as I am. I cannot wait to see it again; more than likely tonight. I foresee reviewing it many times over the coming weeks if SMB makes it available; repetition being a foundation of learning.
I am someone who loves the minutia, the detail of how things work. I am most comfortable doing something when I fully understand it. What Corey presents is one step forward to understanding how a market operates; the dynamics of supply and demand and the resulting movement in price. If you are wired the same as me, you will lap this up like the sweetest cream.

Here is the link:

http://www.smbtraining.com/blog/smb-university-corey-rosenbloom-on-market-structure#comments

Kudos to the folks at SMB for their continued committment to excellence in trader education.

Saw it, Liked it, Reprinting it... More on Multiple Timeframes

2011-03-05T12:25:00.003-05:00

Here is an essay from Austin Passamonte on Multiple Timeframe Watching taken from http://www.tradingmarkets.com/.
The original link is here: http://www.tradingmarkets.com/eminis/trading-lessons/why-i-keep-my-eyes-on-multiple-time-frames-783285.html and would be worth the effort becuase the orginal contains the charts that didn't post below.
I highly recommend Austin's other essays at Trading Markets.

Why I Keep My Eyes on Multiple Time Frames
By Austin Passamonte TradingMarkets.com November 08, 2010 08:40 AM
Tags: eminis, market direction, intraday swing, Swing Trade Intraday, price action, Austin Passamonte, directional forecast, Emini trade
Just about everything that has to do with trading is a variable unless or until defined specifically. The terms "trend" and "reversal" and "reversion to mean" are no different than any others.

Momentum & Change
A body in motion tends to stay in motion. That's the underlying fundamental premise of trend following. Price going one direction tends to continue that direction until greater force comes in to change direction again. Now the definition of "trend" is subjective and dependent. Upon what time frame are we referring to as the trend? Obviously that answer will differ when looking at a 5-minute chart, a 60-minute chart and a daily chart of the same symbol.
There are basically two kinds of price turn = trend change patterns overall. One is a sharp v-turn, and one is a deliberate 1-2-3 transition. The sharp v-turn is usually expressed as a gap & go move or an abrupt rally or plunge from what seems to be a trend direction sustained. The deliberate or methodical 1-2-3 turn is a classic high low - lower high - lower low progression. In other words, we watch price action roll over or upwards and continue on. That's about it for choices of directional trend change: deliberate or abrupt.
Here's the point where most aspiring traders get themselves in trouble: it's tough to setup one lone chart with any kind of price measuring tools (indicators) that can identify both patterns equally well. The easy answer may seem to be ignoring chart tools while relying on price behavior alone. Anyone who strips their chart naked and tries to follow "pure price" with nothing else invariably run into sideways chopper periods that carve naked traders to shreds as they try to get on the correct side of price when no side exists.
If that weren't an irrefutable fact, every price-only trader out there would be obscenely rich and every other trade would likewise strip their charts naked tomorrow. One of the biggest lies in trading heaped upon newer traders is the concept of using naked charts and nothing else for price direction forecast. Pure hogwash... coming from someone who uses both and knows the unspoken ins & outs of each approach.

Forest And Trees
So the answer to this problem of directional forecast or bias is neither indicator paralysis or indicator avoidance. Each has equal strength and weakness alike. One answer I have found is to setup a trend or filter chart that leans toward what patterns you wish to see that matter most for your style of trading. Think of that trend "bias" or "filter" chart as the overall view of a forest. You have a wide enough view to see all of the trees in a zone. At a glance you assess the collective trees in general size, condition and health, species of value for timber versus firewood or pulp, etc. All that information can be gathered from stepping back and looking at a collective forest of trees.
Setting up a smaller time-frame chart in harmony with the trend bias or filter is akin to walking inside that forest and examining each tree. A closer look shows every timber species like sugar maple, black cherry and walnut trees with straight trunks and solid girth. Around them you see off-species such as hornbeam, locust and hickory, only good for firewood or pulp. Inside the forest you are looking specifically for the valued timber trees while working around the off-species trees.
Exact-same concept when trading. We are looking at a longer-term filter chart to assess the overall condition of our "forest" aka the intended market to trade. That shows us current trend bias, where and when the last direction change happened, what stage of the existing direction we are in (early or later) and where next points of price attraction may exist. Then we shift our gaze over to a shorter-term chart for exact dissection of price bars and patterns that tell us where specific actions for trade entry, management and exit decisions are prudent.

All Relative
Anyone's choice of filter chart = trade chart is a relative compromise. Whether it is a daily chart and hourly chart for swing trading stocks, options or commodities (including FX), whether it is a 60-minute and 5-minute chart for intraday swing trades or even a 5-minute and 500 tick chart for short-term profit trades is irrelevant. The concept remains identical in all examples given. Selecting one time-frame chart to assess a wider scope of view for establishing "trend" direction and then working inside a smaller time-frame to surgically breakdown price behavior in harmony with the trend bias direction is what counts. Exactly which setting charts is 100% wholly dependent on each trader, the chosen market or symbol they select and what their desired trade approach is, i.e. size of intended profit versus risk in dollar value terms.
In my case, I want to work strategic pullbacks or breakouts in harmony with trend bias until the true underlying direction has truly changed. I would much rather miss an early, abrupt price turn than get faked out of the strong directional trend on a deep pullback blip. I personally want to enter inside those deep pullbacks that soon resume directional trend. So my solution to the compromise which suits my personal trading best is a slow, soft trend-following filter chart setup.
Someone who more values price turn and reversal patterns would instead setup their filter chart view with more sensitive parameters. They are willing to get faked out on the false turns which are merely deep pullbacks in exchange for hitting the true turns earlier. This is merely systematic trading 101. No one can see everything in the market all of the time. We can set that delusional fallacy aside. Anyone can adjust their charts to see prevailing trend or potential price turns with greater emphasis. But not both. Pick your preference and set filter sensitivity accordingly. Manage the other side of your choice with prudent stop-loss management.

Wave On Wave
I have always viewed the live market from two charts' perspective. For better or worse, that has always made sense to me. If you agree to the fact that price action for any market or symbol is a stair-step process higher or lower in general, why not measure which way the escalator is going and look for steps in that direction? Then it's just a matter of timing your footfall in harmony with the revolving belt heading up or down.

Pretty much the same concept in trading. Your trend - filter chart view of which way currently holds momentum. In the example above, EUR/USD rolled over in mid-January 2010 and dropped from roughly 4450 to the 4050 levels or -400 pips in pure trend fashion inside four trading sessions. That view was pretty clear in a longer-term chart such as 120-minute or 240-minute chart settings, two popular choices of FX traders.

Within that trend-down move were a couple of pullbacks against the trend. Examples of the first one are visible in 5-minute charts that follow. Traders watching just that timeframe alone would not see the overall trend itself... they would see a tape that's rising off lows, staging higher-lows and higher-highs, etc. Within the 5-minute chart alone, the view is short-term and obviously subject to sideways noise. Those who attempt the long-term failed folly of scalping FX for pips will find themselves churned to pieces in sideways noise on their way to going broke.
Traders who hunt for modest to moderate price swings for profitable trades cannot see enough information in the 5-minute chart alone here. But using a higher time-frame chart like the 240-minute as a filter to establish "trend" and trading in that direction alone (short side) is working with overall price momentum. Trading with momentum is swimming with the current: overall path of least resistance for most distance covered.
That chart selection needs to balance the compromise between "seeing" the overall trend through normal pullbacks before resumption and "seeing" true directional change. In other words, which is a true price turn headed the opposite way versus normal pullback and continuation?

Summation
One lone chart does not give clear scope to the overall market direction to anyone in any case with any exceptions. Traders who opt to use a single chart for trading likewise accept the fact that they must find ways to filter through inevitable noise of pullbacks against trend versus following trend. That in itself is a topic enough for small books, let alone brief discussions here. Suffice it to say that trading with a longer-term chart for the bigger picture relative to a shorter-term chart that shows inside view for precision is a great approach to staying on the correct side of pending price action more often than not. Bodies in motion tend to stay in motion... staying with that motion is the essence of small losses and large gains in this chosen profession of yours.
Austin Passamonte is a full-time professional trader who specializes in all commodity markets. Mr. Passamonte's trading approach uses proprietary chart patterns found on an intraday basis. Austin trades privately in the Finger Lakes region of New York.
Click here to visit www.coiledmarkets.com

March 4th

2011-03-05T10:00:00.004-05:00

Here are my results from yesterday. I spent much of the day studying price and not practice trading. I got in some papertrades in the last hour after I got my "bookwork" done. As is often the case, I had some nice entries but turned those opportunites in to mere scalps. I'm still infatuated with win percentage rather than nice gains. I have a lot of work ahead of me yet.

the Bankrobber's DVA Trade

2011-03-05T09:04:00.010-05:00

I was digging into the Bankrobber's Davita short yesterday while watching the market and as I often do, trying to see when and why he makes the decisions he makes. As is typical, he waited until after the turn to get short and he covered at $83.01. So, why did a guy who has an uncanny ability to sense changes in direction choose to exit nearly twenty five minutes before the end of trend and leave 57 cents on the table?

The chart on the right is his post. The chart on the left shows a Fibonacci overlay (in blue) of the full trend he was playing, with the bold green and bold red lines highlighting his entry and exit respectively. What you see is what I've seen many times when I apply Fib lines to Scott's trades: His moves will often coincide with Fib levels, in this case he exited on the 23.6% line. You'll also note that price retraces to this same level later at 12:19pm, further emphasizing the importance of this level and his choice to exit.

Scott has stated explicitly that he does not use Fib lines in his approach. What this chart and many of his other charts I've studied shows is that he "senses" Fib buying/selling activity by traders at these levels and acts according to his best interest.

Let me be clear, I do not believe there is anything magical about Fibonacci levels and I don't go for the mystical horsesh*t that some heap upon Fibonacci. The levels exist solely because of self-fulfilling prophecy. But, they do exist and he knows them when he "sees" them.

Chart Added To Last Post

2011-03-05T07:20:00.001-05:00

Blogger finally allowed my chart to post after about 15 tries over two days. Kept getting "Internal Error" message.

Digging for the Answers

2011-03-04T09:05:00.020-05:00

I spent hours last night thinking about yesterday's bad entry in TNA. What I remember of the moments after I pulled the trigger is that I expected to see a drop in TNA but the stock hung there for quite some time (moments seem like hours when a trade is first put on). Wrong choice, as history proved, but my ruminating since has not been about why I did not exit with a stop loss. Rather, it was why I felt in those few minutes after the trade that I had chosen badly. Something was there that I did not see... I know this because I, in fact, am not clairvoyant.

Early this morning I decided to dig for the answers in the charts. In addition to seeing a near-doji on the five-minute of the SPY which should have been a tip-off, I went to the one-minute chart of TNA and there was a more detailed answer!
I have posted the one-minute on the left and the five-minute chart on the right, then highlighted the area in question with an orange box. Also there are the horizontal green lines indicating price and the slanted green line indicating the direction of the trade (green for "GO," indicating entry). -
My entry was just after the candle shifted to 10:31 am. On the five minute chart, there is nothing that would pass for a normal indicator of reversal, so I went short. The truth, however, is revealed in the one-minute chart- price reversed quickly for two minutes then started to drop in the next minute (10:33am) after the moving averages acted as resistance. I felt here that my trade idea was working because the 10:34 candle showed a continued drop of price, but only for a matter of seconds. The answer, the truth is in the 10:34 candle and the 10:35 candle which came next. TWO DOJIS !!!! There was my reversal indicator that I sensed but did not heed. Like I said, I am not clairvoyant- I foolishly relied only on the visual cue provided by the five-minute chart and did not rely on what really happened; what I REALLY saw as I watched the price move. I felt it, I saw it happen, but I didn't trust my judgement because I did not see the "picture" of it in a five-minute chart.
-
Trading using multiple time-frames is a well-known tactic among successful traders. When I first started practice trading, I loved the three-minute chart while watching the five-minute primarily. I would see dojis on the three that were not on the five, much as the one-minute revealed what I noted above. I dropped the three-minute after 4 months or so because I was focusing on it too much and I knew that most day-traders used the five primarily. About two months ago, I felt comfortable again putting up a small three-minute chart and have been glancing at it every once in a while.

(FYI:It did not reveal the doji's that the one-minute chart research showed in this case)
-
As I mentioned in the paragraph above, successful traders use multiple timeframes, though they often are longer timeframes... 15 minute (as Scott Farnham uses) and beyond; sixty-minute, daily, monthly, yearly, etc.
They use them at SMB Trading and they certainly put forth a top-notch training program. Brian Shannon wrote a highly-regarded book a couple years ago entitled, "Technical Analysis Using Multiple Timeframes." I was a devout reader of his blog for a long time before he converted it to a subscription site.
-
To finish my post, I believe that one of the biggest reasons Scott Franham and those like him have the success they do is because they focus in on price and see exactly what is going on in timeframes shorter than the charts they use. I truly think that Scott is "charting" in his mind the stock he is trading. He is seeing those doji's and the shift in momentum without having to rely on a chart. He certainly advocates focus as a "truth" in day-trading. He has written that he doesn't know why he is able to do what he does, calling it "tacit knowledge." I postulate that among other advantages, he charts price in his mind by paying careful attention on a second by second time scale. And then uses charts to see doji's, etc., over longer timeframes like the 15 minute.
-
Perfection in trading is not possible, in my opinion. But i continue to believe that the best risk management is a timely entry. My research will help in this regard. Onward and upward...

March 1 & 2

2011-03-04T05:11:00.009-05:00

Wednesday the 1st was one where I practice traded the market briefly then decided to shut off the computer and take much of the day for mental recovery . My brain was fried. I had lunch with Mrs Bluecollar then went over to the Maine Coast and walked the beach for two hours. The seven mile beach in the Old Orchard area provides plenty of calming for even the most tightly wound minds.

Yesterday, March 2nd, I just couldn't sync up with the market. One early bad decision took me out of the game for the day... went short for a reversal in the wrong spot, held instead of stopping out, and tied up my capital (paper money)... blah, blah, blah. With so much at stake I still struggle with taking a stop-loss, even the simulated paper kind. This is beyond ridiculous...

Anyway, I'm still trying to sharpen my focus and refining my search for the few highest-probabality opportunites in a given day where I might be able to use my live account; maybe in a month or two if I can master the acceptance of stop losses.

I've also added a 14,3,3 full stochastic oscillator to measure the "energy" of the stock I'm watching and the SPY 5-minute chart. I don't find it distracting so I'm going to keep it for a while. I'd like to use it to help measure momentum then eventually ditch it once it has served its purpose.

Saw it, Liked it, Reprinting it here... Rage to Master - Part 2 by Adam Grimes

2011-03-02T09:19:00.003-05:00

Adam Grimes of SMB Trading follows up his excellent post from last week with part II below.
http://www.smbtraining.com/blog/category/adam-grimess-blogs

Steps to Mastery

February 28th, 2011 Long before it was popular in books and on blogs, musicians suspected that the learning process actually involved a physical re-wiring of the brain. The cutting edge of neuroscience research verifies that this is, in fact, true. When you learn a skill, your brain (and, longer nerves, if the skill involves muscles) actually grows new connections. This process takes time, but there are some things we can do to help it out and speed it along. In fact, the training environments developed for musicians, athletes, chess players, etc a long time ago already included many factors that increase the speed of this process. Today, with new insights from neuroscience, we can do even better.

In my last post, I talked a little bit about the kind of commitment and emotional charge that I believe it takes to truly excel in any field. I wanted to write a follow-up post focusing on some of the things that I learned about skill development as a top-level classical musician. I think all of these apply in one way or another to trading, but I am going to leave it to you to connect the dots. (For one thing, I don’t have all the answer to this one, just some interesting questions.) I won’t explicitly draw the connections from these points to trading performance, or to the process of learning trading, but I hope that at least a few of these are good food for thought:

•One of the keys to developing skills is consistency. It is not possible to develop a high level skill without repeated, consistent exposure… rehearsal, practice, or whatever you want to call it. Days off should be rare, but the work may be paced to allow for muscular growth if that’s a factor. (I don’t think it is in trading, but it certainly is in many fields.)
•Length of practice sessions is not incredibly important, as what is done at the beginning and end of the session is most valuable for longer-term retention. If you have 3 hours to work, it may make sense to break that up into 20 minute sessions with 2-4 minute breaks in between. Of course, this tests your conviction because many people will go on one of those short breaks, punch up a video game, and never come back.
•It is well known that your brain continues to work and process while you are not actually involved in the practice activity, if (and this is key) you have constant, repeated exposure. Progress actually seems to be made more in the “off times” than while you are actually working, but it is the hard work that causes the advance in skills. I can remember struggling for hours with a difficult passage to no avail, feeling that I had made no progress in the session, moving on to something else, taking a break, and coming back to find that I could play it flawlessly. It wasn’t magic—it was due to many hours of concentrated work.
•Sleep is important. This is an extension of the previous point, but a lot of progress is made while we sleep. If you are dreaming about the activity, your brain is probably still practicing and developing the skill—this may well be part of the process by which those physical changes happen in the brain. If you aren’t dreaming about the activity, then you aren’t working hard enough. (No joke.) In addition, work done immediately before sleep seems to almost be “supercharged”. If you can study something or work on something and immediately fall asleep, the overnight progress is usually very impressive.
•Over the longer-term (months to years), progress is not linear, but is more of a step function. Again, musicians know this only too well—you will work for weeks and weeks, and sometimes even have the experience that you are actually getting worse at what you’re doing. (Let me tell you, that is awesome, especially if you’re putting in solid 6-8 hour days.) Then, in a sudden burst, you will wake up one morning and have made massive progress seemingly overnight, or perhaps you will make incredible progress in a few days. What has happened is that the hard work finally paid dividends, but it can come after many weeks or months of no progress. Your growth will not be a line or curve… more like a series of plateaus and steps. Most people get lost here because they lose faith on the plateaus, or they think they magically got better because “they are just that good.” No, you didn’t, and you aren’t.
•Great learners are captivated by the process of getting better. The goal may be motivating, but the struggle and work itself is rewarding in its own right.
•Most people experience that as they move closer to mastery, they are more fascinated by a focus on simple fundamentals. As a musician, this might mean focus on simple building blocks of technique long-ago mastered, or on simple pieces that are well below the artist’s ability level. As a trader, maybe it means losing the indicators, charting by hand, and focusing on simple fundamentals of trading. Beginners tend to be entranced by flash and glamour. Experts often bring a profound focus to simple fundamentals of their art.
•Emotional state really matters. (See this recent Newsweek article that mirrors many of these points.) Perhaps this is why that “rage to master” is so important. Being emotionally involved in the process actually makes you learn faster. Good coaches can help, as can being in the right environment, but, in the end, I think a lot of this must come from the individual. If you can make it fun, make it play, skills will come faster.
•Visualization is a powerful tool. It’s interesting because I hear this now being touted as a new advance, but I remember my teachers talking about their teachers talking about learning pieces without actually touching the instrument—so musicians, at least, were doing this before 1900. (One of my teachers learned both books of Bach’s Well Tempered Clavier as a child without ever touching the keyboard, performing the entire 5+ hours of music from memory the first time he sat down to play them. This type of seemingly super human feat is not that uncommon, actually.) Visualization is most powerful when it augments and extends work being done physically as well, and, in my experience, may be more useful for a master to hone and develop skills than for a beginner to build those skills.
•High level skills are assimilated beyond the level of conscious thought. For instance, playing rapid passagework often involves such accurate timing that the critical ear can perceive imperfections of just a few milliseconds. This is far beyond the conscious mind’s ability to manage—there is no way, for instance, that the brain can micromanage the muscular coordination required to produce a perfect scale in a Mozart concerto. However, years of practice build a technical ability that allows many of the details to be managed by the performer’s subconscious. It we do it right, it looks very easy… so easy that you lose sight of the complexity and believe you could do it (you can’t, not without years of work).
•Chunking is an important component of mastery. (I’m sure there is a more elegant term for this somewhere.) Just as good readers do not read the sounds of each letter, but see words and whole phrases as units, good musicians don’t see notes—they see phrases and passages. I can zoom down to the level of individual notes if I want (or if I want you, the listener to focus on them), but in general I am focusing on a higher perspective. Masters in all fields use this skill. A competent chessplayer can glance at 4 games in progress and easily reproduce, from memory, the board positions for each one, but if you give him one board with randomly arranged pieces, he probably will not be able to do it. How? Because he doesn’t see individual pieces, he sees them as meaningful units that arise in the course of a game. He doesn’t see, say, 14 individual pieces in a middle game, he sees 3 or 4 units that he recognizes. If the pieces are randomly arranged, he has no edge and can’t do any better than you or me. (I know I said I wouldn’t make direct trading tie-ins, but I believe this one is really important.)
So there you have it… a long list in fairly random order…. I could have gone on and on, but this post is probably too long already! I am sure how some of these tie into trading, not so sure about others. Maybe we’ll get some good discussion going in the comments, so check back in and/or please feel free to contribute

Feb 23, 24, 25 (Last Wed, Thurs, Fri)

2011-03-02T09:05:00.002-05:00

IB only lets me go back 7 days so I can't post all of last week, only these three days...

Feb 28 & March 1st (Yest & Today)

2011-03-01T17:10:00.002-05:00

Results from yesterday and today.

Saw it, Liked it, Reprinted it here...

2011-02-25T08:53:00.003-05:00

I found this on one of my regular "reads," http://www.smbtraining.com/blog/
and appreciated it. Adam Grimes' blog has been a great source of info since its inception...

The Rage to Master
February 25th, 2011

Most of my past blogs have focused heavily on technical trade ideas, setups, or statistical analysis of market data. As I have mentored more and more traders on the SMB desk, I have been thinking a lot about the parallels between the process of learning and teaching trading, and my previous experience as a top-level classical musician and teacher. I want to write a short blog series sharing some of these ideas because I think there are many interesting and valuable lessons here for developing traders.

One of the things that I struggled with most as a music teacher was why some students did so well while others, given the same effort and attention from the teacher, did not. I suspected the answer was related to another interesting question, which was how and why I was able to make incredible and rapid progress after I came to music relatively late in life (nearly 10 years old). After struggling with this question a long time, and usually asking what I, as the teacher, could have done better, I decided the answer was actually pretty simple—students who made real progress toward mastery loved what they were doing. They were passionate about it… not in the sense that every business school student will tell you they are “passionate about I-banking” or “passionate about capital markets”, but passionate in the sense that music, for them, became all-consuming. At first a fairly normal kid, once I became obsessed with mastering my instrument, I literally practiced 6-10 hours a day, every day, in addition to whatever else I had to do. I carried printed music with me at all times and rehearsed in my head (visualized, but that’s a topic for a later blog) every chance I got. In every class, I pretty much ignored the teacher and studied music as much as I could. Every spare minute, at recess or study halls I usually managed to work my way into a practice room instead of wasting time doing whatever “normal” kids did. When I got really obsessed on a particular piece of music, I would skip entire days of school so that I could work on it. (Yes, I skipped school… a lot of school… and stayed home to work!) I rigged my instrument so that I could practice more or less silently, well into the wee hours of the night. I was, in no way, shape or form, a “well balanced” kid. I was completely consumed, completely obsessed with the drive to master my chosen craft, and I eventually became better than almost anyone else at what I did.

In retrospect, it is obvious to me that some sacrifices were made. I didn’t do a lot of the things normal kids did. Teachers and a lot of my peers thought I was an alien from outer space and had no idea how to relate to me. I probably missed out on a lot of things a lot of other kids did growing up, but, and here’s the interesting thing, even though I was working close to 60 hours a week on mastering my craft it did not seem like work. I was completely immersed in the process of learning, absolutely addicted to the flow experience when I performed well. Incremental progress was as satisfying to me as any drug could have been. I could see the where the ragged edges of my technique were not up to the challenges of certain pieces, and I took every failure as a challenge to get better. I was actually angry when I couldn’t play something, and I channeled that anger into effort. Frankly, I didn’t spend much time thinking about the possibility of failure. For one thing, I saw clearly that with proper focus and effort I could do pretty much anything in my chosen field. Challenges and milestones were clearly defined, and my teachers taught me how to break huge challenges down into manageable chunks. I guess I also didn’t think too much about failure or about not being able to do something because failure simply was not an option.

I wasn’t until much later that I heard a term (first used by Ellen Winner I think) that captured the essence of what I went through as a child musician, and what I later saw reflected in my best students – the rage to master. Children are able to find this much easier than most adults, for many reasons, but people who have the rage to master are completely obsessed beyond any sense of balance, beyond any reason with mastering their chosen craft. For these people, working toward mastery rarely seems like work, simply because they love what they are doing. They are motivated by the end goal, yes, but perhaps even more so by the process of learning and the process of getting better. I had a major “ah hah” moment sitting on a plane, reading one of the first copies of Dr Steenbarger’s Enhancing Trader Performance, when he used the term rage to master to describe what he saw in the master traders he worked with. I had been trading for a long time before that, but I never drew the connection between elite performance and trading until that every moment—and nothing has been the same since. (Thank you, Dr Brett.)

I know that many people with a wide range of interest levels read this blog. If you are casually interested in markets or trading, then that is fine. It is certainly possible to have fulfilling interactions with the market, enjoy the experience, and get something valuable out of it as a lifelong hobby. But, if you think you have made the commitment to really master trading and to become a professional trader, I challenge you to ask yourself a difficult question. Reread what I wrote above. Though it specifically described my early childhood experiences as a musician, most people who really master any field will tell you very similar stories. The best athletes, artists, actors, writers, professors—the elite performers in any field—would be able to write similar descriptions of their own obsession and efforts at improving themselves. If you want to be a top-performing, elite trader, ask yourself if you are consumed by the rage to master your chosen craft. Do you dream about trading? Do you work seven days a week? Are you thinking about trading in the shower, in the car, on the train, while you are eating? If so, are you prepared to maintain that level of intensity for the 3 to 4 years it will probably take you to achieve some mastery? When you close your eyes, do you see the market patterns? If the answer to these questions is no or maybe, I suspect you can still become a competent trader given enough time and the right environment. However, if you think you have made the commitment to becoming a top notch professional trader, if you think you have “burned the ships”, and you cannot emphatically answer yes to those questions with no reservations, I suspect you may be in for a bumpy ride.

In fairness, I think there are some things that make it difficult to maintain this level of intensity through the process of becoming an elite trader. Let me collect my thoughts, and I’ll share them in another post soon.

Posted in Adam Grimes's blogs, Trader Development, Trading Psychology
2 Comments »

Thoughts on the Year 2010 & 2011

2011-02-15T10:10:00.011-05:00

It was an eventful year, 2010. So much was changing that wasn't brought to this blog. I foreshadowed my goals that lead to these changes in my post on January 5, 2010. Reprinted here...

Tuesday, January 5, 2010

2010 - What's In Store...
Here's the new year, here's the new decade. But, it seems it is more of the recent same for me. My time in front of the markets is reduced compared to where it was late winter, spring and the early summer of 2009. What I discovered was that the old adage is true: you cannot serve two masters. My two masters are the stock market and my small business. By dividing my time pretty evenly between the two for much of 2009, I was doing both a disservice. Now, I have thrown a major home construction project into the mix! For the next few months, the stock market will be the lesser of these three priorities. However, for the long-term, it is my first priority. As I have blogged before, the construction project is an apartment which will generate income. And starting February 1st, I am actively seeking a buyer for my business, which I hope will sell by years end. The sale of the business will produce revenue and time necessary to follow my path to trading the markets full-time. Construction and business sale... these are the short-term foci of attention here at bluecollartrader central. "Winners Finish Strong" is a phrase I've heard and like. That is my intent... to finish my business strongly enough to be happy with the outcome. This is not to say that I will be ignoring the stock market... not a chance. I will continue to practice and blog my results, to follow the blogs I like, to read and re-read books on the subject, and keep track of the general condition of the economy through the news and CNBC.
I believe I reached the point last year where I could not advance in my abilities unless I was trading full-time. I have a pretty good grasp of technical analysis and a basic understanding of momentum analysis. What I lack is perspective and relevance. Both of these require experience... face-time in front of the computer studying the intra-day movement of stocks; continual attention. But, I cannot apply this required amount of effort this year to practice trading. It would not be in keeping with "Winners Finish Strong;" as I defined it above. At age 44, I have the entire second half of my life to trade stocks. I can sacrifice another 6 to 12 months in service to my business and other matters which in the longer term, will free me financially to pursue my goal of earning my living as a self-employed stock trader. I expect that what you'll see in 2010 here at http://www.bluecollartrader.blogspot.com/ is close to what you saw between August 2009 and the present and less like what you saw from February 2009 through July 2009.
My best to you all for a stunningly prosperous 2010!
----------------------------------------------------------------------------------
Goal Oriented and Finishing Strong, Assisted by Common Sense & Life Experience

I am happy to announce that my two primary goals noted above were realized in 2010; the completion of an income generating apartment and the sale of my small business. The former was completed at the end of June, and the latter effective December 30.
Throughout last year, I acted as designer, general contractor, and primary tradesman on the 1400 square foot construction project that included the completion of a 750 square foot apartment. The project was much more than the income unit. Also included was another 700 square feet of living space added to our personal home in the form of a guest suite; large bedroom with private stairway, and full bath. Beyond the new construction area, the project also involved the installation of an additional 800 sq feet of hardwood flooring and nearly 50% of the trimwork on the already occupied second floor of our home. These items were intentionally neglected for the first 6 years of our occupancy until our mortgage debt level got to a point where we felt comfortable enough to proceed. In fact, this responsible management of personal mortgage debt was the overriding determinant of when we would do the entire project to begin with! It is more coincidence than design that my interest in trading and the sale of my business occured at the same time.
And, the work continues still... Without a "day-job" anymore, I am using much of my time to complete the trimwork/finish carpentry which remains. It is finicky, slow work for someone who doesn't do it as a primary trade. And some is entirely custom, like hand making 1/2 moon window casing for two windows and designing and building from scratch a bathroom vanity that will work with the design limitations in the new guest bathroom.
My goal is to complete it all by end of February. With the exception of the initial basic framing, the drywall installation, connecting the heat to our boiler, and much of the painting by Mrs Bluecollar and her brother, I have done all the work myself. I am many things, and of them, I am well served by my frugality! And frugality provides great reward, both for financial gain and for the self-discipline it requires. Profligate spending simply does not nourish the best parts of our spirit, it fosters waste and over-indulges the ego.
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I had initially intended to pursue the business sale earlier in the year but found that the timing was not good, considering the construction project that was in full swing and just how active the business was as compared to 2009. After the tenant was secured in the new apartment, I put out the word in my industry that I was "for sale." A buyer, one of my competitors, immediately expressed interest and we negotiated throughout the Autumn months. And finally, the paperwork was signed on December 30th. I insisted we not wait until January 2011, in order that I could meet my written goal from the January 5, 2010 blog post reprinted above. I fully intended to do as I said I would.
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I now have time on my side to learn to trade for a living. While I still am finishing the remnants of the construction project over the next two weeks, I will also be practice trading when I can. Ironically, ever since the sale of my business, I have actually spent less time paper-trading a live market than before when I had day-job committments! Assisting in the transition with the buyer of my business, the last of my construction project, and the computer virus issue noted in earlier posts has eaten up much of my time since the first of the year. However, I have spent more time with chart study in the early mornings and evenings than before... and I still dream of candlesticks at night; something that hasn't changed since January 2009 when I set my career goal as being a self-employed market trader.
I am resolute in my pursuit of this goal. However, Mrs. Bluecollar & I are not wealthy people and do not have an endless pool of money on which to live while I pursue my goal. At a well-defined point, the money will run out if I do not begin to successfully trade live.
There is real financial risk in this, and it is always in the back of my mind as I go about my daily tasks. The future is uncertain and I do not have a clearly defined backup plan in place if trading does not work for me. This is all without a safety net. And I wouldn't have it any other way.
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Once February ends and I can sit with the markets full-time, I will begin to put up more posts on this blog. I look forward to the new year, 2011. I sense I am at a turning point in life, and the nervous excitement is driving me on.
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I wish a prosperous 2011 for us all.

February 15th

2011-02-15T10:00:00.003-05:00

I was reading my old posts from January 2010 and came across my reprint of a post from Dr. Brett's site, http://www.traderfeedblogspot.com/
I found it insightful then and still do. Go to the actual post to see the charts he refers to in the text.
Here it is again...

Sunday, October 08, 2006
Who Controls the Markets?

In my posts, I have frequently emphasized that large market participants dominate the equity index markets and control its movement. My trade-by-trade analysis suggests that the largest 3-4% of trades (those over 100-200 contracts each in ES) account for well over half of the total volume in that market. Because volume correlates very highly with price volatility, the presence or absence of large traders in the marketplace is an important determinant of opportunity for the intraday trader.

Above we have a demonstration of how size controls the markets. The chart represents the S&P emini futures (blue line) over the past month. The red line is a cumulation of the ES price changes over the month that included only those one-minute periods that traded on twice (or more) the average volume expected for that time of day. In other words, the red line is price change solely attributable to time periods in which size has hit the market. These high volume occasions accounted for only about 11% of the minutes in the trading day.

The two lines correlate almost perfectly: .96. Essentially all of the movement in the ES can be accounted for by the small number of periods in which large participants have entered the market. When large locals and institutions are not in the market, the market--for all practical purposes--goes nowhere.

Many market indicators and technical analysis formulations treat each time period during the day as equivalent. An alternative--and promising--strategy is to separate signal from noise by analyzing only those time periods in which large participants are present.

My data suggest that fully half of all ES trades are one and two lots that only account for 3% of total market volume. In a very real sense, over half of everything that occurs in the equity indices doesn't matter. The key is focusing on the trades--and traders--who do move the markets.

system test

2011-02-10T16:25:00.000-05:00

testing system

Computer problems have left me unable to post for quite some time

2011-02-10T14:26:00.002-05:00

I had computer virus issues back in early January. As a result, I installed a firewall/security program which disallowed me from a number of activities.
One of which was posting to my blog. I just removed the program today and found that I can now watch video and post to my blog.

I have been practice trading in the meantime ...and much has happened on the personal front since last I posted.

More on that later. For now, I am going to just say hello and long time, no see.

January 3, 2011 - Yesterday

2011-01-04T10:26:00.003-05:00

I had only the last 30 minutes to look in on the markets and saw some scalping opportunities as the EOD volatility ramped up. The thought with these two trades, as is often the case with my efforts, was Mean Regression Scalping; the EMA (7) representing the mean.

I was rusty and found it hard to track the movement. My common faux pas, fading trends in anticipation of reversal, was my enemy on this first effort, requiring me to make the decision to either stop out or scale in for better average price. I chose the latter and it worked to my advantage though I was out FAR too soon to capitalize on the enhanced risk I took by not stopping the trade out.

Late last year, I switched my practice trade entry size to 25% of what I had been using as a standard, going from 1000 shares to the present 250 shares. Last week, I also reduced the size of my practice account to $75,000. This is going to be a severely limiting factor in my ability to average for better pricing. I am in hopes that my willingness to do so follows my reduced ability to do so. I am attacking this problem from every angle.

Year End

2011-01-02T10:04:00.004-05:00

No practice trades on December 29th, 30th, or 31st.

May all have a blessed New Year. There is so much good to which we can look forward.
Stay focused, do not waver, take defeats in stride: It is how I intend to live 2011.

Goal oriented and diligent.

December 28, Tuesday

2010-12-30T08:22:00.003-05:00

This is from Tuesday, I didn't practice-trade yesterday and it is doubtful that I will today.

TNA was "behaving itself" on Tuesday and I had all winners on clean practice-trades (no averaging/scaling in), though small scalps for a number of them. I was out far too soon on a few! Staying engaged in order to realize some real gains is one of the things I must work on.

December 22 & 23 (last Wed & Thursday)

2010-12-26T20:52:00.004-05:00

There has been a lot going on and I have been

"Blog Lazy" since early last week. Hope all of the Christians out there had a great Christmas celebration. For the chosen people, I hope you had a festive hanukkah.

So much time has passed since I practice-traded last week that I don't have much comment on my market activities.

Snow storm is to hit the Northeast tonight and tomorrow, though the way some are acting one might think it is going to dump three feet on the State of Maine. Last I heard, we were expecting about a foot. When I was a kid, that was considered a dusting! We didn't even change out of summer shorts for that little amount of the fluffy white stuff! :-)

December 20

2010-12-20T20:50:00.007-05:00

In TNA today, I made 5 practice-trades as well as closing out the short from Friday; all for gains, though some pretty small. In fact, with my positions now at 25% of my standard trade of 1000 shares, all are relatively small. All were reversals of moves that had run their course.

I was away checking on a day-job customer between 1:30 and 3:30 pm and missed that very nice 10 minute run on huge vlume at 2:00-2:05 pm.

I'm always on the hunt for volume spikes, doji cnadles, near-doji's, signs of price rejection (long-wicks), waning volume and shorter candles at the end of trends, as well as opportunities to catch moves early out of consolidation (though not much of the latter today). After a while, these things start to be commonplace and I count on them to appear. Familiarity, I believe, is part of becoming good at this art. There is no substitute for time spent watching a moving market.

December 17 - Friday

2010-12-20T08:13:00.005-05:00

Here is the delayed post of last Friday's limited practice trading. It was a busy afternoon, having to finally make a run to a recycling facility so to properly dispose of my own home-construction waste as well as that generated from customer projects over the past week. Why do I bother mentioning that? Because the facility closes at 4:00pm and I decided to leave with an open short trade in TNA with an entry at $71.12. I returned after the market close to discover a decent gain accompanied by an acceptable sell signal (ramping volume with moderate downward price rejection) was presented around 3:10 pm then later a more dramatic sell signal (volume spike plus significant downward price rejection) at 3:35 pm. After that final sell signal, a reversal had taken place and I was near breakeven in the trade.

Monday morning finds the futures up and my practice-trade now sharply under water. I have a customer appointment this morning and have been given permission to come and go as I please because they are not at home anyway. I haven't decided whether I will stay and watch the stock at the open or whether to just let it go and return when the my real job is done. Either way, the trade served its purpose and ended its usefulness when it went positive and presented an opportunity for gain on Friday afternoon.

December 16

2010-12-16T16:21:00.004-05:00

One relatively quick trade between day-job duties. My goal was to enter and hold a while. It was tough to watch a 40+ cent gain with a volume spike exit signal and not execute a cover order! But, I want to develop some patience... I held and eventually it started back down in my favor after the 1:50 pm candle top. I had to get to the day-job so I exited at the bottom of the sizable red candle. Looks like I would have had more available had I been able to stick around the office; the move didn't bottom out until 2:30pm.

December 15

2010-12-16T06:38:00.008-05:00

I sensed a great spot for a breakdown in TNA and took the paper-trade short around 12:20 pm. I was early and sat throught another 10-12 minutes of consolidation waiting for my trade idea to unfold. The delay made me "antsy" so I covered for a tiny gain. Too bad... I was in the infant stages of a teriffic breakdown, just as I had predicted. Emotion-fueled impatience ruined a nice trade. I made an attempt to target the reversal of the big move I missed and the entry was early, (wrong) so I used it as an opportunity to scale in knowing that the move was getting "stale" and a reversal would come. As the turn was made and the stock started going up, I scaled out at $69.42 with all but one full share which I held until after the 17 EMA cross. This was a bit early on the final exit, but I avoided holding through a pullback which brought price back down to my initial scaling-out area. As the minor trend I was playing came to an end, I shorted... once again a very nice entry but out too soon on a end-of-day drop; a drop which included enough downward pressure to include a nine cent gap down at 3:40-3:45 pm which didn't get closed. I got a nice scalp long at the end of that quick move down, exiting near the eventual closing price of the candle. I was done at that point and didn't participate in the final two candles of the day.

Thoughts: My entries are getting better and my "gut feel" for momentum is improving, albeit slowly. I still have difficulty with patience, getting in and out far too soon in many instances. And, I still am lax about setting stops. This is my major mental/emotional hurdle to clear. I simply don't want to realize defeat on bad trade ideas; it believe it will be my last conquest in the struggle to become a live-account trader.

I have day-job for most of today so it will be unlikely that I can practice-trade. If I do, it will be briefly.

Good luck to all!

December 13 & 14 (Monday & Today)

2010-12-14T16:11:00.004-05:00

I've been tardy getting my posts up in a timely way. Here is yesterday and today. I was unable to spend the either entire day on practice trading but I am always happy to have the time I do get.
I have reduced my standard trade size to one-quarter of that which I have used for most of the two years I have been practicing: now 250 shares down from 1000. With the exception of the cover of Friday's short in TNA.

December 10 - Last Friday

2010-12-13T07:32:00.002-05:00

I forgot to put up Friday's simulated trading results. I am currently short a practice-trade in TNA from Friday. Could be a rough opening for my position, given that the futures have been strengthening all morning. I am with a customer for the early morning then back around 11:00 am or so. I'll have to wait and see how my swing-trade fares.

December 9

2010-12-09T17:31:00.003-05:00

I struggled some with the accuracy of my entries but bought my way out of it by picking my spots carefully as I scaled in. Certainly not ideal, but effective. At some point, I will accept momentum and choose to play with trend more often than counter-trend.

I took it on faith that I would begin to feel when direction changes are to take place and I am starting to get it, for the most part. Much more to learn though, that's for sure.

December 8 - later

2010-12-08T20:15:00.002-05:00

I was able to take 2 more practice trades in TNA after my work appointment. Mostly I watched the market closely, seeing other areas to get in but satisfied to just study.

December 7(yesterday) & December 8 (thus far)

2010-12-08T09:36:00.004-05:00

I'm late for a customer appointment and can't comment. Maybe more later if I can think of anything to offer.

December 6 (yesterday) & today so far (Dec 7th)

2010-12-07T10:51:00.006-05:00

I didn't get to post yesterday's practice-trades in MCP until now. I got to the computer after 1:00 pm yesterday and shorted into a huge upday in MCP to take advantage of a reversal area at 1:35-ish. Also, at days end I saw an opportunity to short for a profit-taking breakdown. It didn't come so I held overnight and was rewarded this morning. I didn't get an opportunity to cover at the 10:00 am bottom because I couldn't sign on to my platform until after 10:30 EST. I expect it to break down more, though one can never be too sure. Certainly not sure enough to hold a short for a long swing-period! I don't know enough about the fundamentals of the recent bid for Molycorp to risk a longer term hold on a stock that ran up the amount it did yesterday.

December 3

2010-12-03T16:39:00.005-05:00

I had until about noon to look at the markets and decided to work with LVS. It went well: all four practice trades were clean and no losers. I did exit far too early on the first three because any of them would have been great trades to hold through the noon hour. Hindsight is 20/20.

No matter.

On the fourth, I took a reversal play, exiting quickly considering the primary move of the day was down. Smart to do so because LVS did continue "South" for another 20 minutes or so before consolidating for 2 hours. During that 2 hour period it built a nice "triangle," using the 48.75 - 48.80 area as a base and the 2:20 pm doji at 48.84 as the acute angle/take-off point. An hour and fifteen minutes of almost uninterupted climb took place after that.

December 1

2010-12-01T16:04:00.005-05:00

I didn't have a lot of time to look at the markets today; maybe the last hour and 45 minutes.

TNA wasn't moving too much but because I am trading for practice and not for $, I decided to stick with it and try to pick up some experience. I got a bad read and went short. It went in my favor about eleven cents and reversed. I should have stuck to my quicker exits that I typically operate with. However, I held and it reversed against me. So sure was I that my read of a fade into the afternoon was right that I held anticipating the downturn. Well, it didn't come and I didn't stop it out. I bought a better average price at what felt like the top then waited. The turn did come shortly afterward and within 7 cents of my second short entry. After the turn, I looked for a chance and exited when it felt like a short-term bottom was in. Good read of momo there, because price did climb for 20 minutes from that point before topping out and dropping into the close.

What I take away from this is:

1. take some time to feel the movement before jumping in

2. faithfully set a stop

3. play the moves I see and not what I expect will happen because I tend to be early/wrong.

For the most part, I am starting to get a feel for movement. If I am wrong at first, I seem to later be able to get it right after paying closer attention. But, I need to be sharper with my entries... or, maybe I should be more selective about the set-ups I think are worthy of playing.

Certainly, I must be more in tune with playing the extremes of moves and not the S/R levels in the middle of trend. These are low-percentage plays.

To close this out, I'd say lack of patience seems to play a part in most of my faulty paper-trades.

November 30

2010-11-30T16:26:00.004-05:00

I was office-bound for the first half of the day so I had the trading platform up and running while I attended to other tasks. I saw some opportunities I didn't take but did manage to get these practice trades in.

Nothing notable with the exception that I thought the second trade entry was a horrible one and I was very uneasy for the 3 minutes I was in it. I have no idea why it felt wrong but I just had to exit. Strange that it would turn out to be a good entry on a ten minute move up. I will be giving that some thought as the hours pass this evening. The third entry was a good one and felt right also. I took it 30 seconds before the candle change and just before it broke out of consolidation. Then it dipped slightly as it entered the new candle then moved up and away. I sold the initial big candle, sensing that a reversal was coming after such a nice move. It did reverse slightly, pulling back to the 7 EMA, then rose nicely for an hour and fifteen minutes. By that time, I had already left for the afternoon, so staying in was not an option anyway.

November 28, update

2010-11-29T09:37:00.003-05:00

I stuck around until the open this am after seeing the futures on CNBC. I'm now out of my TNA swingtrade.

Something tells me that the market wants to close that big gap-up from last Wednesday, and is flirting with that area right now. I really have to get to the day-job and can't stick around to watch the action.

Good trading to all!

November 24 - 26

2010-11-29T08:10:00.003-05:00

Still short the TNA from the other day. I was certainly wrong from last Wednesday and price rose substantially. That day I did buy a better price short in TNA but I haven't done anything with any other stocks over the Thanksgiving holiday. Price dropped Friday which would have let me out even but I decided to hold. I think things are getting weaker and that this paper-trade will bear fruit soon.
I am away much of the day with work, but will return later. Let's see how this goes...

November 23

2010-11-23T20:30:00.009-05:00

Off and on through the day, I did some practice trading and was completely out of sync with TNA, the stock I was working with. Other than my 12:54 pm short, I was wrong on my reads, mostly because I am predisposed to look for direction changes rather than riding momentum. Although, on a few of my paper-trades today I was trying to enter at S/R levels and was getting caught on the wrong side of the breakaway. I basically sat on some losers until they reversed in my favor or cheated by "buying" my way out. Today was one I want to forget, the sooner the better.
I am also short some TNA overnight at 56.27, which in hindsight is not the best place to be given the market's penchant for closing opening gaps like the one from this morning. I'm thinking it will be down some after the open considering the run-up in the last ten minutes in addition to any carryover of nervousness from geo-political tensions in S. Korea.

I have an early am day-job and might not be back for the open. It is my intention to take any gain I can no matter how small.

November 22

2010-11-22T16:05:00.006-05:00

I had some time in the afternoon to sit in on the markets to practice. First around lunch, then later near EOD. I thought that RIMM was poised for reversal based on the chart and feel of momentum. I was, as has been the case recently, just a bit early; what I have come to characterize as "early wrong". I took a long trade at 58.51, corresponding to the price at the near-doji yesterday at 11:40 am. Nope, that wasn't the level traders were seeking: RIMM dropped further to significant levels from Nov 15th (see doji at 1:10pm), the 16th, and the 18th. I felt momo shift in my favor around $58.20 so I took two more longs at 27 cents. Price dipped only six cents below that level in the next candle then moved up. I exited early for a small gainer.

I then left to remove a desk from Mrs. Bluecollar's old office in Portland. When I returned near the end of the day, I found that my exit from RIMM was close to the low of the day and its price had climbed about $1.20 per share from my exit.

I then went to TNA which was moving up near the close... the run-up was getting stale and I didn't want to push my luck by going with trend. I waited until it felt like momo was going to shift then I set a mental stop (red line above) while taking a short. Price rose against me about nine cents before dropping into the close. I got out about 13 cents shy of the bottom of the move but I'm satisfied with my 20 cent winner to end the day.

I'm twisted and think this is funny...

2010-11-20T07:04:00.006-05:00

I found this on http://www.pointsandfigures.com/ and got a nice chuckle from it; 2 minutes 45 seconds of fun, especially for aspiring traders.

http//www.youtube.com/watch?v=85lpWoESHUM&feature=player_embedded

November 19th

2010-11-19T16:06:00.004-05:00

Like yesterday, I was in the office briefly between day-job appts. and took a practice trade short in TNA and had a very similar result as yesterday. That is to say, it stop-limited out automatically while I was away. It was a short just prior to a pull back but it was not the drop I was looking for.

When I returned to the office, I traded manually(?) and took a short that proceeded to give me a small gain. I was out a bit early but the stock did reverse and head up so I made a good choice. At EOD, I shorted again, sat through a slight move up that didn't trigger a stop, then got the drop I had anticipated and covered in the last 30 seconds of the session for a winner. Positive for the day in my practice trading.

One thing for sure, this works much better when one is present to actually perform the trading. duh!

November 18 - Set it & Forget it

2010-11-19T06:39:00.005-05:00

I stopped in to the office for just a minute to reload with supplies for the day job project I was working and turned on the markets. TNA looked like it was topping out and was ready to roll over for the day. I decided to take it short, set an automatic stop just above the HOD, and go back to my duties. It seems that TNA had just a bit more life in it before turning over for the day. I got stopped out for a loss on a price that turned out to be quite close to the HOD in relation to the amount of the climb from Wednesday's close. My sense that the charts were signalling weakness was reasonably good... Sometimes there's wrong, but sometimes there's early right. Both are wrong but one is more wrong than the other. :-) ...How's that for a rationalization?

It has been my goal for a long time to grow accustomed to taking losses; it is the next step in my development. I am thrilled at taking the loss in this manner. I gave up control in two ways... a) I took a trade and walked away b) I set the stop and didn't move it, didn't cancel it, and didn't fret over the loss.

Taking more losses is something I am going to work on as I go forward. It is crucial to good trade management and it will sharpen my entry skills, if I want to improve my win percentage.

With regard to the trade itself, it was folly to see a chart for two-three minutes, take a trade counter trend on a huge trend day then walk away. But when there has been a tremendous move in one direction with barely any chart reversal, it only makes sense that those who have been sitting on unrealized gains will want to lock them in. The markets turned in the candle just after I stopped out and as I write this on Friday morning, the futures are pointing down.

The markets undulate and we as traders in training must learn the patterns of that up and down movement while trying not to get "faked out of our shoes" by those who are smarter and more experienced.

Saw it, Liked it, Reprinting it here...

2010-11-18T07:10:00.002-05:00

Second day this week that something caught my eye at another site and liked it enough to reprint it. Joe at http://www.upsidetrader.com/ has a funny, entertaining post about the various traders that come and go (and stay). I have been reading him for many months and love his insight as well as the high quality of his writing.

I picked out a couple that are PERFECTLY me, which is why I don't yet trade real cash. Yesterday, especially on that last TNA trade, I was "Bob" and "Brittmeister" at the same time. Like his "Bob," I am also of Irish descent (partly), which makes me laugh a little more.

Posted by UpsideTrader on November 17th, 2010 at 8:47 pm
We see ‘traders’ raked in on CNBC everyday, they wear cute suits, sweet ties, and pocket hankies. There hair is always parted on the left and they all have a great head of hair. They shaved for the interview, but when it’s over, they probably asked their town car driver why they were asked to be on an interview about trading. You see, they aren’t traders at all, they are pundits disguised as traders. Noah Blackstein was on CNBC today, he was, and is a perma- bull that disappeared throughout the crash, but now he’s back. He was wrong forever, but given the slowness of the news cycle (ex GM IPO..please gut me) he got some play. He’s not a trader, good traders don’t have time to show up on CNBC. Ever see Steve Cohen or Paul Tudor Jone just stop on by? David Tepper stopped by recently because he is obscenely rich and probably owed someone a favor. The market rocked because he is good and never shows up in the media, so people thought Christ came off the cross and bought.

The real world isn’t CNBC or Bloomberg TV, it’s guys we all know that trade, that’s really what makes the market. So I figured I’d talk about some traders I know that have massive failures and mind boggling successes, sometimes on the same day. These are all friends of mine.

Bob- Only trades the opposite of momentum, if AMZN is up $8 he MUST short it, even though it’s going 20 points higher soon (and he knows it), he thinks “it’s up too much”. I attribute this to Irish guilt, and stocks, just like Bob, don’t deserve any modicum of success whatsoever.

Scooter- Only trades massive sell offs in stocks, a professional falling knife catcher and does well at it most of the time. He believes in the underdog and swears to God those stocks are overly misunderstood.

Brittmeister-chases breakouts when he should wait for the pullback, he knows the stock is going higher, but feels he is the only one on Wall Street that saw the breakout, even though everyone on Gods green earth sees it and waits for the pullback.

Kidder Peabody Guy-kind of a value guy, lost almost everything in the crash, but still swears INTC, MSFT and CSCO are a screaming buy and going back to $5o. He has a comforter at the office for when it gets chilly.

Shark-he thinks he sees what no one else sees and pounces on every downtick, he usually makes money, but needs to be more patient.

Shorty-we call him perma bear, he finds death in everything and cried at his wedding.

Happy Pants-every pullback is a buy no matter what, even if the World Trade Center gets hit or the Straits of Hormuz gets blocked, although he would short oil because everything will soon be fine. It end poorly.

OEX Boy-trades $10,000 in commissions even though the SPY that day had a 4 point range, broker loves him.

Couldabeen-never trades his heart, at the bar, talks about what he was gonna do

Becky Quick-still thinks he may get an edge from CNBC.

Nostop- loves his shit and analysis so much that he must be right, small losses turn into short sales on his house.

Penny-has the cheap one that will be MSFT, doesn’t trade anymore.

Steady Eddy-fights the fight everyday, respects Mr. Market and learns from his mistakes. Tries never to make the same mistake twice. Puts his mind away every morning, and lets the markets mind take over his mind and envelope him, as it doesn’t matter what he thinks at all. Toughest thing in the world to do , but the best traders have mastered it and he aspires to that.He welcomes mistakes as he knows that will make him a better trader. Trades small or not at all when he is having a challenge. Steady Eddy will be the guy that always makes money. He knows it’s the greatest living in the world when he is at peace with his trading.

Don’t quit.

November 16

2010-11-17T19:10:00.006-05:00

Paper traded a 25% position (250 shares) in MA early for a winner. Then moving over to TNA I paper-traded short near the early high, getting my best entry price in recent memory. It wasn't a "bragging" price in that I didn't peg the absolute high before shorting. Rather, it was a price that repeatedly resisted market attempts to soar above it. I had the morning resistence level as my entry. Price dropped away and I did not scurry out of my trade. I held as the next candle tested the price, then did the same in the second candle as price actually fluttered above my entry, then dropped. I covered in a similar fashion to my entry, not at the dead bottom, but close enough to yield a quality trade.

As good as the first trade in TNA was, I put forth an equally pathetic effort for the second. I succumbed to my urge to fade the move on what turned out to be one of the biggest candles of the day in TNA. What? Yeah, I know...asinine. I held it, didn't add to the loser to average a better price, then added to the winner when it went positive at roughly the same price as my original trade as price glided lower. In just a moment, it quickly reversed and shot upward as if shocked with high voltage! As we used to say on the basketball court in my teens, "I was faked out of my shoes!" Price rose but resistance was hit and price recoiled from it. The next candle was my salvation, and I scaled out near the low of the move for two gains. It seems that $53.70 -ish was a very strong level today and provided a nice backstop for my screwed up trade.

What I take from today is that I had a strange sense of calm about my four trades, especially the last "debacle." I felt as though I knew with a high sense of probability that I was safe in my trades, that somehow I had the odds on my side based on where I entered.

I was busy with other things in the afternoon. I stepped out to run a few errands and was sorry to return and discover that I missed the nice drop in TNA just after 3:00 pm.

Tomorrow I have a large day-job project for a neighbor then an estimate for another customer after I'm done. It is highly unlikely I'll get to see the markets tomorrow.

Recent TSA vs. Airline Flier issue

2010-11-17T14:49:00.003-05:00

I like the sensible approach that one of the wisest men in America iterated last night on tv:

"Focus on the terrorist and not the instrument that might be used to commit the terrorist act." - Charles Krauthammer

Could anything be more sensible than that? I think not.

November 16th

2010-11-16T16:29:00.007-05:00

I had a few minutes at the end of the day to look in on the markets. I decided to watch RIMM in anticipation of a practice trade...

I felt that RIMM had found bottom of the afternoon minor-trend down and that a long trade was in order. I did just that, but I just hate sitting through consolidation. I decided that I didn't like where I was and sold on a high point of this consolidation phase. My stop was at 56.07 - price never dipped low enough to hit it after my exit. This is frustrating and shows the lack of trust in my ability to read stock movement. I chickened out on what turned out to be a pretty good read of the reversal of the late afternoon move in RIMM, albeit a bit early. All I can do is try to gather more experience and overcome my hesitancy.

Too bad about today... I had up to 34 cents available to me and I only took about 7 cents.

Saw it, Liked it, Reprinting it...

2010-11-16T08:34:00.002-05:00

I saw this post by Austin at http://www.coiledmarkets.com/ and really liked it.
NOW I have to go to work!

Tuned In, Tuned Out
Posted on November 16, 2010 by austinp

Money is made from the markets in one way: listening to your charts. They will tell you everything you need to know. Sometimes the charts give fair warning and plenty of time for preparation. Other times your charts will make a sudden announcement with no fair warning at all. Sometimes you have all the time in the world to plan your next trade sequence, while other times there is no time for preparation at all.

But your charts will always tell you what is happening in real time.

Where traders get themselves in trouble is trying to go outside the charts for advanced warning, i.e. prediction and forecast of what’s to come. Now it is perfectly fine to map out scenarios on a long-term chart to mark waypoints such as key S/R, open gaps, historical highs and lows, etc. What gets a majority of traders in trouble is the temptation to make forecasts and predictions about what should happen according to this, that and the other reasons.

A fixation on market news will not give you an edge. Hanging on every word from the ilk on CNBC, Bloomberg, various websites or public message boards won’t provide any edge at all… it will actually blunt any edge you have in the first place. Trying to rely on logic and reason as to what should happen is exactly what the vast majority (read as “all”) of traders have done or continue to do each day. We know that the vast majority of traders lose money. The vast majority resort to logic & reason as a fallback attempt to figure out the markets. Do you see any correlation there?

Do yourself a favor. Turn off the financial news. Tune out the predictive newsletters and message boards. Tune into your charts. Believe what they say as they say it. Force out the thoughts of “too high” and “too low” that cost you too much money to harbor. Stand fast against destructive emotions that tempt you to pick tops and bottoms.

Hold yourself accountable to going with the market flow and flowing with the current of price action. Remain open minded, objective, patient and disciplined. Reward yourself with eventual monetary gain, something the vast majority of masses will never realize as they seek the wrong things down the wrong paths in this performance profession.

Trade To Win
AP

Monday & today

2010-11-16T07:38:00.001-05:00

Nothing yesterday... just too much to do other than the market. Today looks like a very nice day to be practice-trading but it is unlikely I'll get a chance.
-
Good trading to all!

November 11 - Yesterday

2010-11-12T06:37:00.008-05:00

Here is the cover of my TNA overnight short from Wednesday to Thursday (yesterday morning). As written in yesterday's post, I paid no more attention to the market after that.

Notable is the amount of time it took my cover trade to clear in the early morning... 17 to 20 minutes. During that time, I had as much as 35% more gains than what was realized. Such are the machinations on a morning with unusual activity.

Also of note, market movers made sure to fill the gap left from the low open. A gap-fill trade in TNA would have yielded up to $2.50 in gains.

No market for me today. I have day-job then I have promised to assist a friend with a "handyman" project.

Veterans' Day

2010-11-11T07:54:00.002-05:00

My personal thanks to all veterans of the United States Armed Services, past and present, especially those who have paid the ultimate sacrifice.

You are not forgotten.

November 10 - Yesterday's post

2010-11-11T07:40:00.002-05:00

Here's what I was up to yesterday with regard to the market. I don't know what to say except a sea of winners, sitting on a multi-trade short position in TNA, and couldn't be more disappointed with my performance.

I'll cover my short at my first chance then take the rest of the day off from the markets to think about where I'm headed as a trader (in training). Stopping to reflect is an important part of advancement, or lack thereof.

November 9th

2010-11-10T05:27:00.003-05:00

I had some time before noon to paper-trade. I was drawn in by CMG with its big daily volatility. This is a bear to try to trade, with spreads sometimes as large as 45 cents. I mostly worked with one-half positions (500 shares) for that reason. I suppose I'm learning something from working with this stock, but it was not my ideal situation, that's for sure. I like more liquidity and a smaller spread. Despite the allure of big money-moves, I'm eliminating this one from my watch list. I'd rather trade the smaller moves in TNA, etc.

November 8th

2010-11-08T17:08:00.006-05:00

I spent most of the day in front of the computer instead of doing my flooring project. I did get my pipe fixed however.

This was a very frustrating day practice-trading the market.

I simply go about this the wrong way. I've been through all the reasons before.

I had 12 trades today, all for winners, though the last one was a $4 gain; basically a scratch trade. No losing trades & no stop outs. Only two were clean trades and one of those was the scratch trade.
Being adept at scaling in and scaling out is not the success I seek.

A lot of work remains to be done.

November 5 - EOD shorts in TNA

2010-11-08T09:46:00.005-05:00

I didn't get to put up these paper-trades short in TNA from last Friday at the close. I was fading the move up and thought it would break down in the last minutes of the session. It didn't so I held the two-part short over the week-end. I was rewarded for my overly-risky move by getting a chance to scale out for a gain at the open this morning.

As I write this, about 8 minutes after exiting, the market and TNA are really dropping nicely and price is currently about 50 cents lower than where I go out. My trade idea was a good one but I left a lot on the table, as is often the case.

Day job is not very busy this week thus far so I expect to be able to finish my hardwood flooring installation project as well as do some practice-trading. Emergency service is a component of my day-job, so my time could fill and send this plan up in flames.

Here in the northeastern US, it was raining like crazy yesterday. At my house, it was raining outside and inside, after I pierced a radiant-floor heating pipe between the first and second floor! Beating the long odds of hitting the pipe with a hardwood floor nail in just the right spot was quite astounding but that is how it works sometimes... in construction and in trading. I quickly shut off the heat zone, cut the power to the lights in this area of my kitchen, cut a hole in the ceiling and found the leak within 20 minutes. Minimal damage overall: the heat pipe I can fix literally in two minutes with a PEX coupler, the three by five foot hole in my drywall ceiling will be more involved. As will be the painting of the entire open-concept ceiling area for the sake of a 15 square foot spot! I wonder how using "stops" might apply to this situation? Maybe stops would not apply... this ceiling incident was more like a "flash-crash?!"

November 4 (yesterday) & November 5th (today)

2010-11-05T06:54:00.001-04:00

No practice trades yesterday and it is very unlikely that there will be any today. Too much day-job going on.

November 3 - FOMC scalp

2010-11-04T07:47:00.002-04:00

I was busy yesterday with things other than the market but I made a point to be logged in to see the market when the FOMC reported. Here are the three practice-trades I made. I was logged into my platform about 15 minutes and was in the trades just under three minutes. Then I went back to my work project.

November 2nd - ...And to finish

2010-11-02T20:18:00.003-04:00

And this paper-trade short to capture a slight pullback in the afternoon while taking a break from my project.

November 2nd - Just a little later...

2010-11-02T10:17:00.005-04:00

Ok, I stuck around a bit longer after seeing this triangle develop in TNA. Considering this set-up and the propensity for stocks to fill gaps, I took a short at just the right time. I absolutely love when price moves favorably away from my entry! Now I am done for most of the day... the floor will not install itself, after all.

November 2nd

2010-11-02T09:38:00.006-04:00

ELECTION DAY- The peaceful transition of governmental power is one of the greatest gifts our Nation's founders gave to us. Treasure it and use it.

Here is the chart of the scalp in TNA at the open. I don't have time to sit here at the computer very long today so I am posting this then going to my floor project. I used Scott Farnham's entry in TNA from yesterday as a guide for my resistence line on this short entry. He is so tuned in to the market turns that I have noticed his exits and entries provide nice clues to future changes of direction. Note that his initial short in TNA yesterday was two cents from the opening candle high today and his double-up on yesterdays TNA entry was within two cents of the close of today's opening candle. He is sharp as a tack, and I have noticed these correlations for a long time. WTG Scott.

Will the markets and TNA close today's opening gap? Odds favor it... though nothing is certain. It's a roughly $2.00 per share gain in TNA if it does.

Late morning...

2010-11-01T11:20:00.003-04:00

...looks like CMG did close the gap! My decision to exit was a good one. Shorting for a gap-close on CMG would have been a nice trade, in hindsight.

-

AFTER-HOURS UPDATE: No further trades on this day.

October 29 & November 1st (thus far)

2010-11-01T09:41:00.005-04:00

I didn't have a chance to get Friday's two paper-trades up on the blog, so here they are. It was busy and things have been upside-down after a recent death in the family. I still do some practice trading but my energy for it and other parts of life has waned some over the past three weeks or so. I am off from work today but won't be able to sit at the computer and trade all day. I am actually continuing the installation of 1400 sq ft of hardwood floor on our home's second story. I have a rented nail gun and am trying to get it done within the 7-day window on the contract. I am welcome to keep it beyond that timeframe but I really want it done by then to meet a personal goal.

So, family concerns, working the day-job, home construction, and a notable lack of sleep are all intruding on my practice-trading focus. I am hoping that time will mellow things out a bit and that the Thanksgiving, Christmas and New Years holiday season won't heap too much more on my plate. ( eye-roll )

On Friday, I took the 1/2 position long in CMG at what I thought would be a breakout area. It didn't... it drifted lower all day. I actually had a chance to get out even around 11:15 am but thought I'd stick to my "long" trade idea. Bad choice, as it turns out. The drift lower, as I mentioned above, continued rest of day.

The SWC paper-trade was a nice mistake. I accidentally clicked on it in my scanner window and activated a short-sale. As it turns out, it had been on a run-up for some time and was vulnerable to a profit-taking reversal. I added another 1000 shares short (it was a winning trade at that point) then covered for a small winner.

This morning, I saw CMG gapping up at the open. I sold the long from Friday, reversed immediately, and got another winner as the price dropped just after the switch from one 5-min candle to the next. I am done now for a while and am going to work on my floor project. I may look at the markets when I have lunch. I'm curious to see if CMG will close the gap from this morning and validate my early exit.

During the day Friday, I had considered adding to the losing CMG trade to average a better price but didn't. (Had I done so, I would have had a number of opportunities to get out with a gain) This is an area where my trading has not matured and I struggle with it. While often able to resist the urge to average for better price as shown by my restraint Friday, I am also unsuccessful at times. They are well-documented on this blog. I think the real struggle is with admitting I am wrong. I hate it... it represents failure and I have never accepted failure. My personality is to fight back with all means necessary in order to come out on top. My ego is my single largest roadblock to becoming a professional trader. I am not a greed-based personality, I am a fear-based personality. As ridiculous as it sounds, a losing trade represents failure to me; and I fear failure. I do not truly "accept the risk," as Mark Douglas would put it.

I also refuse to quit, and look forward to the day when I can consistently fight the weakness inside me. I am a real person in pursuit of a goal, and this is my journey.

VOTE

2010-10-30T05:00:00.005-04:00

"The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government -- lest it come to dominate our lives and interests." -- Patrick Henry

IF YOU CROSS THE NORTH KOREAN BORDER ILLEGALLY YOU GET
12 YEARS HARD LABOR

IF YOU CROSS THE IRANIAN BORDER ILLEGALLY YOU ARE
DETAINED INDEFINITELY.

IF YOU CROSS THE AFGHAN BORDER ILLEGALLY, YOU GET SHOT.

IF YOU CROSS THE SAUDI ARABIAN BORDER ILLEGALLY YOU
WILL BE JAILED.

IF YOU CROSS THE CHINESE BORDER ILLEGALLY YOU MAY
NEVER BE HEARD FROM AGAIN.

IF YOU CROSS THE VENEZUELAN BORDER ILLEGALLY YOU WILL BE
BRANDED A SPY AND YOUR FATE WILL BE SEALED.

IF YOU CROSS THE CUBAN BORDER ILLEGALLY YOU WILL BE
THROWN INTO POLITICAL PRISON TO ROT.

IF YOU CROSS THE MEXICAN BORDER ILLEGALLY YOU WILL BE ARRESTED, SHAKEN DOWN, AND UNCEREMONIOUSOY THROWN OUT.

BUT,IF YOU CROSS THE U.S. BORDER ILLEGALLY YOU GET :

1 - A JOB,
2 - A DRIVERS LICENSE,
3 - SOCIAL SECURITY CARD,
4 - WELFARE,
5 - FOOD STAMPS,
6 - CREDIT CARDS,
7 - SUBSIDIZED RENT OR A LOAN TO BUY A HOUSE,
8 - FREE EDUCATION,
9 - FREE HEALTH CARE,
10 - A LOBBYIST IN WASHINGTON
11 - BILLIONS OF DOLLARS WORTH OF PUBLIC DOCUMENTS PRINTED
IN YOUR LANGUAGE AND THE RIGHT TO CARRY YOUR COUNTRY'S FLAG WHILE YOU PROTEST THAT YOU DON'T GET ENOUGH RESPECT

I JUST WANTED TO MAKE SURE I HAD A FIRM GRASP
OF THE SITUATION BEFORE I VOTE ON TUESDAY...

October 28

2010-10-28T16:00:00.004-04:00

I had limited time to sit in with the mkts today.

However, I took a two position practice-trade in MCP long near the final consolidation phase of the day; also near the lod. My thought was that it felt like the reversal of the big drop was waiting, mainly because there was so little profit-taking all day, relatively speaking. Unrealized Gains of this magnitude today by the shorts would have to be booked, if the trader had any good sense at all.

And that is where the reversal trader pounces.

October 27th

2010-10-27T11:07:00.008-04:00

Here is the buy-to-cover of my CMG practice swing-trade from last week. More drop coming? Yeah, I think so. Am I greedy enough to hold a stock that has some gains sitting there? No.
It appears that I picked a good time to cover, in the short-term. While I write this commentary, price is continuing to rise after my exit. It now sits very close to what was my average share price.

-
It's more about being correct in my read of the stock price; reinforcement of the notion that what goes up, must come down (at least to some degree).

*** UPDATE: It's end of day and it looks like I got the bottom candle of the day on my exit and the full breakdown didn't occur. Perhaps over the next week or two? I'm out and moving on to other stocks, but this one bears watching...

October 22

2010-10-23T05:10:00.006-04:00

I was able to watch the markets for a bit yesterday, though very distracted while doing so. I took a paper-trade short in TNA and was able to take a winner out of it, though I gave up some gains by missing the bottom and covering during the start of the retracement of the move I was playing. I consider this approach a positive one... I normally would just cover and run much earlier than I did but I consciously decided to hold. I actually started to feel the momentum shift into a reversal and exited. Much is to be learned by staying in my practice-trades during the reversals of trend instead of anticipating the reversal and getting out prior to it. Patience derived from confidence that my momentum reads are accurate is just one more step on my journey. Let's see if this develops into habit.

I found CMG through a reading of Scott F.'s post and decided to take a 250 share (25% of my standard trade of 1000 shares) swing-trade short to capture the profit-taking move that at some point will accompany the monster run-up. Recent price surges on substantial volume (April 22, June 3, and July 23 were followed by price retracements. The most recent surge on September 1 did not, however, so maybe the longs are getting cocky!?) Let's see what happens going forward. I am willing to wait for this one to crack and fall. With one-quarter of my traditional investment, I will consider averaging for a better price in 250 share (25 %) increments if it moves substantially against me. I will add more aggressively to the short when it goes into the black, if I haven't yet accumulated 1000 shares (one full position) when the breakdown takes place.

October 19th

2010-10-19T16:28:00.004-04:00

I was back at the office briefly to swap service vehicles for the day-job, so I stayed a couple minutes to sign into the markets before heading back out.

I paper-traded some retracements during a big down move. Nothing much to elaborate on, I simply tried to feel changes in momentum for scalping.