"A man is not finished when he is defeated. He is finished when he quits."

Wednesday, March 18, 2009

March 18th - Fed Announcemnet Day


Well, I ended up 85 cents per share but it sure feels like I didn't deserve it! I continued getting on the wrong side of big moves, in this case today, trading reversals on a dramatically one sided day. I owe Ben Bernanke for saving my butt, that's for sure. The action that came into the market as a result of the FED Announcement made all the difference in salvaging a gain today. I started my first 4 trades up 88 cents on a 3 of 4 success rate; from 9:38 am to 9:46 am.

Like yesterday, I should have stopped there because I then scored a 4 for 9 win rate between 10:51 am and 2:02 pm. This drop was primarily because of three trades. The first of these major losses was on SRS and was mitigated by an averaging-down long on this trade, thereby minimizing the loss to 91 cents. As has been the case often lately, I got caught playing for a reversal to the long side at the start of a wicked down-draft! Instead of getting out of it, I held for the reversal I was sure would come and while it eventually did, the sting of being down so far at one point caused me to get out with the loss instead of holding for the completion of the move back up. If I had held, I would have taken a nice profit from the trade, compliments of the averaging down buy in at a very good spot. Fear is much more of a motivating factor in my trading than is greed. The next loss was the worst of the day and was on GS. I did the same move, playing for a reversal that went against me and then averaging in at a spot that looked like a good reversal area. The move kept going away from me and I finally sold with the huge loss of $2.28 per share. Well, my instincts were correct again but my fear ruined it. The move in my favor, the reversal I wanted, happened just a moment later and the reversal would have given me a nice profit on the trade, considering that I had averaged down. That is incredibly frustrating. The two worst losses of the day, both averaged down to great entry points, ended with my nerve failing me; selling both minutes from an eventual gain. My head is getting in the way of my brain, that's for sure! But, this is why I practice-trade. I will beat this problem through paper-trading. I had visions of getting back to my real-money account in April instead of this summer, given my recent success. I just don't think I'm ready yet. It was tough holding on as long as I did with just a fake account. I would be apoplectic if this were real money! The last of the three bad mid-day trades was on GS and there was no excuse for not exiting quickly. It was a 67 cent loss per share. These three losers cost me $3.86 per share.
To close the day on a positive note, I then finished by doing 12 for 14 and a $3.54 per share gain, allowing me to close with some dignity! Ha! ...actually had some great moves in my favor at the end, and would have had an even better finish had it not been for some seemingly horrible fills with my broker, IB.
Over the rest of this week and the week-end, I'll be analyzing my trades and mapping the charts I traded today to get my head around what seems to be the incurable disease of not cutting my losses short and not letting my winners run.
19 for 26; 73% win ratio. 84.8 cents per share gain and thankful to have it considering the errors I made.

Tuesday, March 17, 2009

March 17th - Erin Go Bragh!


Happy St Patty's day!

I really felt like I was struggling today. Same issue as yesterday. I got on the wrong side of large moves, anticipating reversals.. which didn't show up in a timely way! Between 12:20 and 2:04 pm, I was 4 for 11, only a 36% win rate; losing about 98 cents per share. Clearly, I have to figure this out as it is a pattern I'm in and have been since I started trading the high-ADR ETF's. Let's face it, losses are part of trading. And while I've only had one losing day in March thus far, I absolutely MUST figure this problem out in order to become a consistently profitable trader. The big losses I had in February with this "dysfunction" are just around the corner despite some recent success. There are two approaches I could take here. Accept the fact that I can be wrong on an entry, learn how to recognize it faster and cut losses short (perhaps even reverse direction), OR... try to perfect my entries to the point where very few big losses can occur! The problem with the latter solution is that it is akin to "picking intra-day tops and bottoms;" generally considered nearly impossible.

Perhaps there is a combination of the two which will work for me as I paper-trade. Meanwhile, I'm off to drink the nectar of the Gods... Guiness Extra Stout!

10 for 17 trades, a 59% success rate. Gain of 89.8 cents per share.

Thought for the Day

"Every time that we try to lift a problem from our own shoulders, and shift that problem to the hands of the government, to the same extent we are sacrificing the liberties of our people."-- John F. Kennedy