BlueCollarTrader

Friday, July 3, 2009

American Independence Day Thoughts...

"When the government has more power than the people, that's TYRANNY. when the people have more power than the government, that's LIBERTY." - Thomas Jefferson

"America is too great for small dreams." -Ronald Reagan

"I hope we have once again reminded people that man is not free unless government is limited. There's a clear cause and effect here that is as neat and predictable as a law of physics: as government expands, liberty contracts. " -Ronald Reagan

"Those who would give up essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety." - Benjamin Franklin

In response to concern over the world's view of the United States regarding its operations abroad:
"You have enemies? Good! That means you have stood up for something, sometime in your life." - Winston Churchill

"I know not what course others may take; but as for me, give me liberty or give me death!"
- Patrick Henry

Apprapot to the recent nomination of Judge Sotomayor as Assoc. Justice to the Supreme Court and her penchant for judicial activism:
" They define a republic to be a government of laws, and not of men." - John Adams

"Americans need never fear their government because of the advantage of being armed, which the Americans possess over the people of almost every other nation." - James Madison

God Bless America and thank you to all who have served in defense of It.

Thursday, July 2, 2009

July 2nd

I decided to trade my live account today and was doing ok until I got caught on the wrong side of that last leg down in POT. I had paper-traded it before lunch and had a position which was down because of the pullback at 11:15am to 11:45am. It was coming back starting at the 11:45 candle and my position finally went positive so I sold it out for about a $60 gain because I was already going to be 10 minutes late for lunch with a buddy. (Sushi, his turn to buy!) When I returned, POT had just been on a dead run up after I closed out... it was up $1.75 cents per share by the time it topped out at 1:40pm! It was nice trade in the making. So, when I got back from lunch and errands, I decided to get into my real-money account. My first trade was short at 1:35pm in POT. That chart was begging for a break-down and I timed my short right at the top in the last candle of the consolidation area. A perfect entry... the stock never again came within 19 cents of that entry price. Now, the bad news: I covered it for a $52.64 gain. I have absolutely NO REASONABLE EXCUSE for doing it. Again, it never came within 19 cents of the entry... I was never in danger of losing my gains, let alone stopping out on the trade. I have been beating myself up for a couple hours for this stupidity. As a result of selling the position, I attempted to trade it all along the way down. I took three more shorts in it and made money on two of them and basically scratched on the third (-$7.00). At that point, I was up $101. Then I decided I would play for a reverse because on the three minute chart, a small green candle began to form coupled with a reasonable diversion from the mean as well as a rise in volume... all of which I took to be the sign of a reversal. However, it turned out to not be the reversal but rather a small pullback marked by weak volume. The downdraft in POT continued and I did not properly engage my stop and started taking a loss. That is the problem. Not every situation that meets the reversal criteria is correct. This is a game of probabilities; sometimes the low probability option is what happens... sometimes you're just too early even though the signs are right!! Lack of discipline caused me to ignore the stop, and later, add to the loser position. It did come back to nearly even but I only took off half the trade for a $19 loss. The other half seemed to want to move up but then dropped and started to sink. Instead of dumping it, I rode it down and later added to the loser again. This time, it didn't really come back enough to escape with a small loss. I did dump the trade during the EOD consolidation for a $129.12 loss. Total loss on the assinine attempt to reverse while blowing off my stops and adding to a loser was $148.74. I ended the day down $47.58. This is not a killer loss but it is a killer blow to me mentally. I am really angry with myself for neglecting my trade discipline. I am angry for not sticking with my winner, which would have offered me up to $470 WITHOUT adding to it as it grew in gains. The more I analyze it as I write this, the sicker I get. It was right in my hands and I threw it away. There was NO REASON on the five-minute chart to exit that trade!!!!!! In contrast, I held onto the later losing trade like it was a bar of gold.

Why did I ignore my cardinal rule? Because I was influenced by my paper-trading in the morning session. I took multiple stop-outs with mounting losses. I could not seem to get anything to work. During my lunch out, I kept thinking I would have been up considerably using my OLD METHOD of trading. This was not just wishful thinking, I actually would have been up. So, when I returned, I was weak and went back to what had worked for me in the past but which I knew was foolish. It is really hard to trade without emotion; like a machine.

3 for 7, a 43% success rate. Loss of $48 in about 3.5 hours of live trading. No discipline: failed to use stops on the last trade and added twice to losing positions.