Random stuff

I just found this to be slightly amusing. Right now I’m long KMX at 43.77. I’m also short GBP/USD at 1.8809.

Slow and Steady

I’ve finally managed to stop the bleeding today. Didn’t trade much since I didn’t get many stocks to show up on my radar. To be honest, the only thing that popped up was FDC. It didn’t move as much as I hoped, but a move is a move, so I can’t really complain.

FDC:

I got short on the break of the 7th bar. Got filled at 41.93 and I held till the end of the day for $65 profit. Feels good to get back on the winning track. I don’t think my account can take the onslaught it took last week.

This weekend I had a conversation with one of my friends about the market who happens to be a stockbroker. I’m sure you traders out there have had this type of conversation.

Friend: So how did you do last week?
Me: I got raped
Friend: Did you see Ford last friday?
Me: No, it didn’t show up on my scanners.
Friend: You should have shorted a big position in that stock .
Me: If I knew it was going to go down, that’s exactly what I would have done.
Friend: Even I knew it was going to go down. It was DOWNGRADED. I don’t get it, trading is so easy. I don’t think it’s that serious.

I can’t wait to make money and tell him ,”yea, it is easy.”

Smoked

This is what we say when one of the traders get long a stock and the specialist starts to print a dollar below from where they got long, and you just can’t get out of the stock. That didn’t exactly happen to me but when you lose $144 , which is the equivalent of 5.5Zs, that’s what it feels like. So the drawdown went down to about $400 and change. I’m just happy it didn’t happen when that’s all I had in my account. Even though a few days ago I said I wouldn’t tweak anything, that’s exactly what I did on Friday and I missed something like this:

FMD

There was an entry on the 8th bar. Of course I would have gottent stopped out, but my persistance would have paid off on the 11th bar. Net woulda coulda shoulda been about $200 dollars on that trade alone. Sure, with all the volume going on Friday I woulda gotten into a few more losing stock situations, but the loss wouldn’t have been as great. Oh well, it really is pointless talking about the hypothetical. I’m going to go back to my old scan as far as more than average volume is concerned because it gives me less candidates.  I will also increase the liquidity from 350k shares. I think 750k is a respectable amount.  We’ll see. In the future I will make an effort to post some losers. Actually I will post one which stands out because I was stopped out by one cent, which is totally my fault.

CBH

I got long on the break of the 12:15 bar. My stop was at 35.11. If you notice the next bar is an outside bar. Now, I usually don’t move the stop below the outside bar, even though it’s a more logical stop. However, in this case, it was just one cent lower than my initial stop. I think I could have made the exception. That stop out was the difference between me losing $144 and losing $68.  To me the latter is  a whatever loss, but the former falls more into the category of devastating.

Now all I can do is patiently wait.

I know this has nothing to do with this post but I’ve bene papertrading another strategy on spot  Forex over the past two weeks. I’m up 929 pips and right now I’m short the USD/CAD. I made the fake money by shorting the GBP/USD and longing the USD/YEN.

I need to stop rambling on these posts. Did anybody catch NYX? Anywho,  I hope everybody traded well and good luck next week.

Another one bites the dust

Yesterday was another losing day (-$37), so i wasn’t too enthused about posting. I’ve been reading comments about posting losing trades. One of the reasons is so that we can all figure out what went wrong with the trade. Now, when I post, it’s mostly to illustrate a point. The point is that the system works. I want to inspire confidence into anybody that reads the blog. I don’t want people to sit down and overanalyze the trade.

This is what I fear will happen if I start posting the losers. These setups, don’t work all the time. I forget where it was that I read about this guy, Thomas Bulkowski I believe his name is, where he has stats on different formations, and his highest ranking one worked about 48% of the time. Just because I don’t post the losers doesn’t mean I don’t look at them myself.

As such, what I have realized so far is that I don’t like this drawdown. I”m sure nobody does, but it’s not the actualy drawdown that’s annoying. It’s the swings as we wannabe poker players would explain it. I don’t mind losing. It’s part of the game. But I would rather make 600 one day, and lose 100 the next, instead of making 1000 one day and losing 500 the next.  So I was looking at the trades I’ve recorded and paying attention to the big winners (1 dollar or more). Of the 15 I’ve had, only two of them had average volumes of less than 1M shares. Over the same time frame, if I had not traded shares with less than 1M volume, I would have had almost the same net P&L. The greatest differences  are  the Risk expectancy (1.52 to .91), the trades (62-111),  the profit factor (3.66 to 2.35, and the drawdown($50.80 to $258). I know this can just be a coincidence, but if the numbers are so much better as far as variance is concerned, but the end result is the same, then I would feel much more comfortable with the 1M share trades. It would also allow me to risk a bit more. Of course this is all premature so I’ll be keeping on eye on it for now. Today there should be lots of false candidates because of quadruple witching so watch out and best of luck in your trades.

Drawdown rears its ugly head

Just when I thought August sucked, this week had to come along. Between today and yesterday I’ve suffered my worst drawdown so far losing $218 after fees. I got into mostly longs. My candidates were PLL, stopped out twice, ENER, stopped out in the afternoon only to watch it close up from where I got in, and BGG, which gave me a whopping five cents. I shorted SMG but that did absolutely nothing to help the cause. This week my winning percentage has been way down and it shows  with the results. The good thing is that all it takes is one $200 dollar day to be back in the black for the month. I’m not posting any charts because frankly, no one wants to see charts of losers.

So what do I have to change in my system? Nada. Nothing. Zilch. Niet. This is where people start looking at the flaws in their trading system and start tweaking it. These are the moments in which people give up and start trading something else. This system isn’t the holy grail. Continuously monitoring your risk and remaining disciplined is. Just another annoying minor setback on my quest to increase my position size. I was curious though as to how big a drawdown this system will take. It gives me a better idea as to when I should increase positions and what to expect in the worst case scenario. I’ve never gotten more than two losing consecutive days so we’ll see what the market brings tomorrow.

Trades for the day; 09122006 ; PCL & CMVT

Today I went 0 for 3 so I pretty much lost about .86 cents. Doesn’t really bother me, it’s just annoying because I’m waiting for my account to get to a certain amount before I step up the size. Once I start trading a decent size I can enjoy the end results of trading a bit more. Making 1.50 on 100 shares doesn’t sound as good as making that same amount on 2000 shares. A good thing is that every time I have a day like today I learn something about my setup.

I scan for stocks that are trading above average volume. At the same time, I look for stocks that are trading at higher volume than the previous day. Sometimes , you may have a stock trading at 10x average volume one day, and 3x average volume the next. Therefore, the same stock will show up on both days. I would rather get involved with a stock on the first day of movement so I want it to have more volume than the previous day. The problem is that I was looking for stocks that not only trade at 3x their average volume, but 3x the previous days volume. Because of that I probably miss out on trades like this one:

PSYS

This trade would have made me positive for the day and would have shown up on my scans had I tweaked it better. Sure I would probably get more stocks that don’t work as well, but in the end if the R expectancy is positive, you want to trade as many times as possible, if your account can handle it that is.

Not sure the dummy setups work? There were multiple opportunities on a day like today. Some didn’t fit my criteria, which to me is the real work behind trading, figuring out what works for you, but they were there. GS and BBY are just a few stocks. Look at the 15 or 30 min charts. Where would you have gotten long?

Trades on 09112006; GLD, FSL, NWL

Today was one of those days where gold and oil commodities went south but then changed enough direction to eventually end the day choppy. GLD was no exception.

GLD

I got short on the fourth bar. Things were going well until the seventh bar wher ethat hammer filled. All broke loose to the upside during lunch and I was stoppedo out.

FSL

I was weary of GLD turning around with the market. As such I was happy to get long with FSL on the break of the 11th inside bar. Managed to squeeze .54 cents out of the trade.

NWL

NWL was my last trade of the day. I got long on the break of the 11th bar as well. The stock just went along with the general market and after its dips and rallies, ended up  making me .26 cents.

The day was positive, I wish I would have caught something like BUCY, but hey, a gain is better than a loss. Hopefully tomorrow will be better and television programming will be back to normal.

Latest R update

I’ve been forward testing my system since August 2nd of this year. The first two weeks were paper traded and the rest , when the market turn to sh#t, were traded with real money. The good thing is that I still came out of those weeks positive. As of right now , after 91 trades my expectancy is at 1.14. I would like to have at least 100 more trades to have a better idea as to where the system stands. However, I do feel confident that the expectancy will still be decent in the long run. Even if it ends up being at around .75, I’ll be satisfied with that.

Due to some of last weeks winners going against me, I sat down to try to figure out different types of exits, since it felt like I was losing on some profits. When it came down to it, my expectancy improved by .1, which isn’t much considering I’ve only done 91 trades. They way I see it, that isn’t enough expectancy for me to give up leaving at 12:30 and not stressing about trailing stops or watching the stock for the rest of the afternoon.  Financial rewards are a reason for getting into this business but not its biggest allure. For me it has always been about the freedom. Freedom to go where I want and when I want. That’s the only importance money has to me, allowing me those and many other liberties. I think 3.5 hours extra in my day are worth .1 R.

Friday’s trades

I had three trades on friday but only one winner. The funny thing is that I wasn’t going to trade it because according to my “expertise”, it had gone far enough

EFX

I got long on the break of the fifth bar. Unfortunately things turned sour in the afternoon, so instead of being a big winner for the day I was just an okay winner.

End of day trade results

I held on to NOVN and KOMG till the end of the day. NOVN pretty much went nowhere. KOMG however proceeded to go down only to come all the way back up and leave me with a little profit, enough to almost breakeven for the day.

I got short on the break of the eighth bar. Now, this is one of those situations where I would have made a respectable profit had I used Trader-X’s method of getting out at the Fibonacci extension from the high of the previous day to the current day’s 15 minute range low. I’ve used it in the past. I have to determine if I’ll be using that as an option for my future trades or I’ll just stick to my eod exits. With time I’ll figure if there really is an added benefit to using one over the other or using a combination of both. For the day I lost 15 bucks.