I was surfing some of my favorite blogs a little while ago and while on Stock Rookie, came across a link to Michael Goode's recent post on his site Goode Value Investing Blog. Entitled, "So you want to be a stock trader?", it is an eye opening, hard slap to the face for traders in training like me. I recommend all newbies study it hard. I already read it twice.
To review and simplify, he says...
1. Trading is a game of winners and losers.
2. Trading requires a great deal of effort and time invested to be continuously successful.
3. 2 out of 10 traders make money. I've always heard the 10% study cited but Michael mentions one that indicates 20%. Purely speculating, he personally believes it is fewer than 1 percent.
4. You are not the smartest, best capitalized, or the most prepared person trading the market.
I am looking forward to the next piece in the series. If the purpose of the "in your face with hard reality" approach the article takes is to draw people back to the site, it worked on me!
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Relatedly, I was thinking this morning about the rationale of trading as a profession, as I do every day. We are in a very unusual time for the stock market right now, in terms of opportunity. The VIX is still in the 40's and has been in the 70's. Before last September/October, a 30 on the VIX was worthy of note. These are great times for traders; volatility, big price swings, and momentum. As traders, this is eden.
My thought this morning was, what happens when the economic clamity starts to pass. Normalcy is destined to return and where then will we be? How many of us by then will have acquired the necessary skills and be capable of repeatedly trading for profit when the big moves are fewer and farther between?
From 2002 through 2006, real estate and mortgage brokers were stuffing the cash into their pockets. They couldn't make more money if they were printing it themselves! People poured into the industry because the money was easy. You didn't have to work all that hard for a commission. I remember the thick, weighty real estate section in our local Friday newspaper with the advertisements for the real estate brokerages which were busting at the margins with photos of their stable of brokers. That same real estate section still comes every Friday. You can guess that it is only a few pages thick now and the ads chock full of realtors with their bright smiles and their stuffed pockets are mostly gone. What are all those folks doing now for a living? Are they trading stocks in this terrific time for traders?
Where will we be in one or two years, those of us who have just arrived?
Food for thought...
Wednesday, February 4, 2009
Tuesday, February 3, 2009
Feb 3rd Trades:
Paper trading-
Short DDM 25.99 at 9:41 am; Covered 25.89 at 9:46 am. Gain 10 cents per share.
Long SRS 59.90 at 13:00 pm; Sold 59.73 at 13:02 pm. Loss 17 cents.
Short SRS 60.00 at 14:06 pm; Covered 59.75 at 14:07 pm. Gain 25 cents.
Long SRS 58.22 at 15:11 pm; Covered 58.33 at 15:14 pm. Gain 12 cents.
Long SRS 57.72 at 15:26 pm; Sold half 58.01 at 15:27 pm. Gain 29 cents. Sold remainder 57.88 at 15:29 pm. Gain 16 cents.
Short SRS 58.32 at 15:39 pm; Covered 58.60 at 15:40 pm Loss 28 cents
* this was a "rocks in my head" trade. I hit sell instead of buy, realized it 8 seconds later and covered. Good idea, bad execution! Should have been a 28 cent or greater gain.
Short SRS 59.26 at 15:42 pm; Covered 58.97 at 15:43 pm. Gain 29 cents.
Short SRS 58.99 at 15:44 pm; Covered 58.90 at 15:45 pm. Gain 9 cents.
Analysis: Clearly overtrading, nervous when I have a gain. Gotta take a valium at 9:15 am on trading days! Even I could hardly lose with the type of momentum moves on a day like today. Of course, there's no "losing" with paper-trading, which makes it easy. Also why I don't bother to post $ gains and losses. It really doesn't matter. It's PASS/FAIL.
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Addendum as of May 7th 2009
In an effort to quantify my progress from the very beginning, I am posting gain/loss data for Feb as I did later in March and beyond.
8 for 9; 89% winners. Gain of 85 cents per share.
Short DDM 25.99 at 9:41 am; Covered 25.89 at 9:46 am. Gain 10 cents per share.
Long SRS 59.90 at 13:00 pm; Sold 59.73 at 13:02 pm. Loss 17 cents.
Short SRS 60.00 at 14:06 pm; Covered 59.75 at 14:07 pm. Gain 25 cents.
Long SRS 58.22 at 15:11 pm; Covered 58.33 at 15:14 pm. Gain 12 cents.
Long SRS 57.72 at 15:26 pm; Sold half 58.01 at 15:27 pm. Gain 29 cents. Sold remainder 57.88 at 15:29 pm. Gain 16 cents.
Short SRS 58.32 at 15:39 pm; Covered 58.60 at 15:40 pm Loss 28 cents
* this was a "rocks in my head" trade. I hit sell instead of buy, realized it 8 seconds later and covered. Good idea, bad execution! Should have been a 28 cent or greater gain.
Short SRS 59.26 at 15:42 pm; Covered 58.97 at 15:43 pm. Gain 29 cents.
Short SRS 58.99 at 15:44 pm; Covered 58.90 at 15:45 pm. Gain 9 cents.
Analysis: Clearly overtrading, nervous when I have a gain. Gotta take a valium at 9:15 am on trading days! Even I could hardly lose with the type of momentum moves on a day like today. Of course, there's no "losing" with paper-trading, which makes it easy. Also why I don't bother to post $ gains and losses. It really doesn't matter. It's PASS/FAIL.
-
Addendum as of May 7th 2009
In an effort to quantify my progress from the very beginning, I am posting gain/loss data for Feb as I did later in March and beyond.
8 for 9; 89% winners. Gain of 85 cents per share.
What this is about...
This is my first post on the first blog I've ever done, on a topic that I don't always seem to know well, surrounded in the financial blogosphere by blogs of great distinction. I guess you could say this is an inauspicious, humble, but hopeful beginning!
I have loved the idea of money as far back as I can remember. My father owned a few stocks and I still remember my fascination with the annual reports he would get in the mail. I still recall his discussions with me of how he should have bought Chrysler stock back when the first "auto bailout" occurred. I chose Economics, the dismal science, as a major in college. I pursued the job of treasurer when I could; the alumni board for my college fraternity for 3 1/2 years, two years for a local trade-association with whom I aspired to do business. I do my own book keeping and taxes for my business of nearly 19 years. Economy, money, investing: they have been a large part of my world since I was a child. Trading is just the next logical step for me.
The purpose of doing the blog is mostly to hold myself accountable for the work I put into trading. That if everyone can see on the screen my losses and wins, perhaps it will incite me to bull ahead... to continue to improve and to progress toward my ultimate goal: To earn my living as a self-employed stock trader.
To say that this is my ultimate goal somehow seems an understatement! I want it so badly that I can feel it in my every movement. I trade stocks in my sleep and I see big-volume momentum plays where others see the common sights of daily life. Stock trading is woven into everything I do and I love it.
Secondly, the reason for blogging is to keep a written record of my trading activities and the thoughts that accompany them. It is common for traders to keep a trading journal. Record keeping and admin. duties are not my strong suit and this blog, if I can keep at it, will allow me to perform this function.
I am a devotee of short-term momentum-driven day trading. I have been studying the "Momo Method" since the summer of 2008 through various blogs and chat rooms. I like the fact that there is no overnight risk. I like the fact that it is fast and edgy. I like the fact that it can be done from virtually anywhere. And, I like the fact that if it can be learned, it is a skill which can provide a nice living with very little overhead, well into old age.
In the interest of disclosure, I started with $35,000 in an IB trading account in Mid-October. I currently have $33,800. I also have an active paper-trading account with IB and that's where I spend 90% of my time. Admittedly, I am still trying to master parts of the platform, which should not be done with real dollars, in my opinion. I have been a little fickle in my trading approach, trying to discover a style which will work for the long-term. I began watching Cramer on CNBC a couple years ago, delved into swing-trading in March of 2008 by visiting Day-Trader Rock Star's blog before it went pay, and listening to his live radio web-cast (still do, from time-to-time). After becoming disillusioned by long-biased trading, I found Green on the Screen and immediately liked what was there. GOTS morphed into Dark Side Trading and when its founders recently went pay, I expanded my exposure to the Momo method by finding Fear & Greed Day Trader thanks to James (aka Yngvai), at his blog home: welcometothegutter.blogspot.com
I highly recommend his site and occasionally weight it down with posts of my own!
If you are reading this, thank you for checking it out. As I mentioned earlier, it is a humble beginning. I don't expect to have many visitors and certainly don't foresee repeat visitors! It is my hope that as I progress as a trader, the content will improve and perhaps be of interest even to experienced market folks. Until then, you can expect mostly personal reflections of trading, discussion of other blogs, of the economy, politics, and finance rather than stunning technical analysis and savvy trading ideas!
Once I learn how to manage the site better, I hope to include charts.
Once again, thanks for taking a look... drop by again!
I have loved the idea of money as far back as I can remember. My father owned a few stocks and I still remember my fascination with the annual reports he would get in the mail. I still recall his discussions with me of how he should have bought Chrysler stock back when the first "auto bailout" occurred. I chose Economics, the dismal science, as a major in college. I pursued the job of treasurer when I could; the alumni board for my college fraternity for 3 1/2 years, two years for a local trade-association with whom I aspired to do business. I do my own book keeping and taxes for my business of nearly 19 years. Economy, money, investing: they have been a large part of my world since I was a child. Trading is just the next logical step for me.
The purpose of doing the blog is mostly to hold myself accountable for the work I put into trading. That if everyone can see on the screen my losses and wins, perhaps it will incite me to bull ahead... to continue to improve and to progress toward my ultimate goal: To earn my living as a self-employed stock trader.
To say that this is my ultimate goal somehow seems an understatement! I want it so badly that I can feel it in my every movement. I trade stocks in my sleep and I see big-volume momentum plays where others see the common sights of daily life. Stock trading is woven into everything I do and I love it.
Secondly, the reason for blogging is to keep a written record of my trading activities and the thoughts that accompany them. It is common for traders to keep a trading journal. Record keeping and admin. duties are not my strong suit and this blog, if I can keep at it, will allow me to perform this function.
I am a devotee of short-term momentum-driven day trading. I have been studying the "Momo Method" since the summer of 2008 through various blogs and chat rooms. I like the fact that there is no overnight risk. I like the fact that it is fast and edgy. I like the fact that it can be done from virtually anywhere. And, I like the fact that if it can be learned, it is a skill which can provide a nice living with very little overhead, well into old age.
In the interest of disclosure, I started with $35,000 in an IB trading account in Mid-October. I currently have $33,800. I also have an active paper-trading account with IB and that's where I spend 90% of my time. Admittedly, I am still trying to master parts of the platform, which should not be done with real dollars, in my opinion. I have been a little fickle in my trading approach, trying to discover a style which will work for the long-term. I began watching Cramer on CNBC a couple years ago, delved into swing-trading in March of 2008 by visiting Day-Trader Rock Star's blog before it went pay, and listening to his live radio web-cast (still do, from time-to-time). After becoming disillusioned by long-biased trading, I found Green on the Screen and immediately liked what was there. GOTS morphed into Dark Side Trading and when its founders recently went pay, I expanded my exposure to the Momo method by finding Fear & Greed Day Trader thanks to James (aka Yngvai), at his blog home: welcometothegutter.blogspot.com
I highly recommend his site and occasionally weight it down with posts of my own!
If you are reading this, thank you for checking it out. As I mentioned earlier, it is a humble beginning. I don't expect to have many visitors and certainly don't foresee repeat visitors! It is my hope that as I progress as a trader, the content will improve and perhaps be of interest even to experienced market folks. Until then, you can expect mostly personal reflections of trading, discussion of other blogs, of the economy, politics, and finance rather than stunning technical analysis and savvy trading ideas!
Once I learn how to manage the site better, I hope to include charts.
Once again, thanks for taking a look... drop by again!
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