July 22nd

When pro football players get back to the NFL after time away and are asked what the biggest challenge was when coming back, they often remark that it is adapting to the speed of the game. That is how I felt today as I got a full day to trade for the first time in a while. I made some early gains in my old buddy, SKF, going 9 for 9 winners and up $144 from the open until about 11:20 am. At that point, I noticed from my watch list that FAS was giving a much better day-range over the same time frames as SKF. So, I switched to FAS. That's where the "Speed of the Game" hit me. Back in March, when I was early into paper-trading, I would inevitably try to play reversals without any feel for how SKF moved, especially in that ultra-volatile trade environment (You all remember March, right?). I would get punished averaging in much too soon, given the amount of day-range SKF had at that time. Today, without really thinking about it, I got long FAS and found myself in the same environment as SKF in March. Why? As I and everyone knows, it is a 3x trading vehicle and therefore, moves 33% faster than the 2x that is SKF. I was not prepared for the extra speed, however. I found myself down, nearly bumping up against my margin limit. All the while, I knew this thing was really going to crack eventually. So I held, and held some more. Most of the afternoon I held, then I decided that I would lighten up some. I took four losses and held the remainder of my position. A bit after 3:00 pm, FAS did come down and I scaled out of the rest of my position but not enough to offset the four losses from earlier. I was in the hole by roughly -$70. The bummer is that I exited too early on those remaining shares... I could have taken a very nice gain even after those four scale-out losses, had I held a bit longer.

I continued to experiment and try to get a feel for FAS by getting long on four more trades in it; collecting winners in each and adding $113 to my account, putting me back in the "black" for the day. I then went back to SKF to close out the day, adding $25 with two more winners.

It was an exciting and nerve-wracking day, that's for sure. And, as is often the case, lack of patience hurt my results.

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24 for 28, an 86% success rate. Gain of $67 in 6.5 hours of live trading.

July 21st

It was about 2:00 pm before I could get into the markets after day-job activities. I was quite non-chalant about my trading today... I couldn't get the theme song to "The Brady Bunch" out of my head and I found myself singing it all the time I was watching my trades! Very strange... really.

Anyway, with my reduced position size of 200 shares per buy-in, I continue to be undisciplined; fading big moves in anticipation of reversals and not cutting losers short with stops. I haven't resigned myself to the fact that this is how I am destined to trade but for now, I go with it.

Tried to fade that last move down in SKF at EOD looking for a last-second pop but it didn't work... I got out with only two seconds left; closing the session for my only loser of the day; a whopping $1.98 loss! Ha. There goes that Coca-Cola I was going to buy tomorrow (Not the stock, the beverage).

I still find that fading strong market emotion is a very high-probability winning trade; triggered by big price moves coupled with big volume and strong diversion from the mean. Today, I was just a bit too early on both multi-trade positions, leaving me to add to losers to keep the trades viable. Patient entries are really the difference between having to add to a loser and catching a reversal at the right time when choosing to play for reversals. They all reverse at some point... patience, patience patience.

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7 for 8, an 88% win rate. Gain of $70 in 2 hours of live trading.

July 20th - No Trades

No trades today, day-job finished too late to have a try at the markets.

The day-job gave a nice return today so it worked out fine but I would much rather have been in the markets just the same.