Englishman Trader

Time to go back to school ...

2006-03-14T21:39:00.000-05:00

Clearly all is not well with my trading. My mindset is clearly not right as I took another 2 1R losses today. Clearly I am doing something wrong, and until I can figure it out and get it out of my system, I am simply throwing money away.

So, time to get away from trading for a bit, pick up some books and just reset the mind. I am not sure how long this is going to take, but I am not going to trade again until I have a lot more confidence in my ability to trade well.

There are also some other things that are distracting me at this point, and have been for a while now, so I will get them resolved to ensure I have nothing troubling me in the back of my mind.

So, good luck to all. I will start posting again when I am ready.

"I'll be back."

Trading Summary : 03/13/2006

2006-03-13T17:41:00.000-05:00

I am not superstitious, but it was the 13th today …

Took two trades this morning, both longs and both were full 1R losses. Once more I had a choice between a really good setup (KMX) and a slightly suspect one (OPSW) and naturally I went with the more suspect one. With OPSW all I succeeded in doing was getting in near the top and exiting near the bottom. I entered off the 9:45am up bar and ignored the small wick.

In the meantime, KMX eventually went onwards and upwards to achieve its target of 35.08 (I would have brought that in to 35 and a 2R gain).

My second trade was KKD. I entered above the 10:15am hammer but was stopped out in the vicious chop that occurred at 10:45am. I had set a price target of 8.74 (2R gain) which was hit at 11:45am. So, I do not consider this one a bad trade, just unlucky given the degree of chop that took me out.

There were some nice short setups earlier, such as LEA. If an entry had been taken below the 9:45am bar, this would have netted a near 8R gain.

Perhaps I need to consider the type of setup I use depending on the overall market action early on. I am going to see if there is some correlation between the successful setups and the early morning market action so its back to the past trade analysis.

Trading Summary : 03/10/2006

2006-03-10T14:00:00.000-05:00

Just like yesterday, I took one dumb trade (ZQK short) and one good trade (SGMS long). However, the overall result was a wash as I only got a partial fill on SGMS, and I took a partial loss on ZQK. But at least I did not suffer an overall loss today.

ZQK was a stupid trade purely because the first bar had a long tail, but more importantly, the second bar (which I entered off) was a spinning top showing indecision. I should have waited on the next bar, which was a hammer, and that would have kept me out of the trade. In fact, the 10:00am hammer and the 10:15am up bar lifting off the OR low showed strength, meaning I could have gone long with a target of the fib retracement zone which it just hit two bars later.

SGMS was a slightly risky trade too given the 9:45am and 10:00am spinning tops. However, since they were narrow in range and just below the OR high, I took an entry above the 10:15am spinning top. The target was 33.20 and that was just touched at 12:45pm, but I had already bailed earlier below the 11:45am down bar.

So, overall I was disappointed with my trade management, once again. I should have held SGMS to its profit target, at least realizing a small overall profit, and I should have passed on ZQK.

Overall, I did not see any really decent setups. Volume seemed low, with the market trending up across the board, with nothing decent standing out. No paper trades today.

I have taken the spare time today to refine my scans once more. I currently have two scans running every 5 minutes, one for longs, one for shorts. They are based off the “Change from Close (%)” primary filter in CyberQuant. I have now dialed down the “Volume Over Yesterdays (%)” and “Volume Over 20 Avg Vol (%)” down to zero, but I have left them in place so I can easily bump them up if I want to. I have replaced my “Current Price” greater than / less than “Prior Days High/Low”, with the current day’s high/low. This should show me all stocks that are beyond the prior day’s trading range.

If any other CyberTraders want to take a look at my scans, I will be more than happy to pass them on. You certainly could do no worse than me with them !

Trading Summary : 03/09/2006

2006-03-09T13:41:00.000-05:00

Today I took two trades, both longs (SFCC and ECIL). I feel so much more at ease restricting myself to two trades. I am hoping it will really make me focus on the merits of the trades I pick. My end result, thanks to SFCC was a 1.8R gain overall.

However, my ECIL trade was a total dud. It showed up on my scans due to its high volume first thing and I took an entry above the 10:00am down NR hammer. So, mistake #1 was entering off a down bar, albeit in the top 50% of the prior up bar. Initially we saw some up movement but then the stock fell back to just under my entry and then stalled out and the volume dried up to almost nothing. It dried up so much that it fell off my scan list. I should have taken that as a bearish signal and closed it, but I held till it dropped and hit my initial stop for a full 1R loss. So, a new rule … close trades that dry up on volume so much they disappear off your scanner.

As for SFCC, I entered off the 9:45am inner hammer. A slightly risky entry given the fact that the stock had not reached its OR high, and for the fact that the stock had gapped up so much at the open (20%). We had a nervous time as the stock dropped below the OR high and nearly took my stop out, but then it climbed and I took my profit once I was up $1 on the stock.

I took two paper-trades too, long IMAX and short IDCC. IMAX was another bad (paper) trade for a number of reasons. It bounced off the retracement zone with a nice hammer at 10:15am but then there were two inner NRs, both trending down. I entered off the last inner NR. I should have set an entry on the break of the 10:15am hammer. Since that did not come about, I should have passed. Secondly, the first two bars should have kept me out, with the firat an up bar but with a long tail followed by a down bar that took it halfway to the retracement zone.

The IDCC setup was so nice. The stock had touched its 34MA line (thanks Trader-X) and reversed, then posted an inner inverted hammer which was begging to be shorted off, so I did (on paper). However, it bounced off the bottom of the retracement zone and started to recover. I moved my stop to above the high of the 1:30pm inverted hammer, and was later stopped out for a 0.6R (paper) gain.

Trading Summary : 03/08/2006

2006-03-08T22:14:00.000-05:00

I have finally uncovered the reason why I have not yet had much success at day-trading … its me ! My scans are showing up good candidates, but I am simply not taking advantage of them.

Why else would my scans show up TTWO and LEXR, and I would size them up, but then pass. I passed on LEXR as I found the reason for the move was the fact that it was being acquired by Micron Technology. However, I did not appreciate that it was a stock swap rather than a cash offer. Then on TTWO, I passed since the 2nd bar was still below the OR high (due to a long upper wick on the first bar). Both hit their profit targets.

So, how did I fare today. Not well. I took partial losses on 4 stocks, two of which (WCG and MATK) would have achieved their profit targets if I had let them. Then I had my butt kicked by INFA, and realized a single success (COO) for a 2R gain.

Overall I suffered a 2R loss. Not good. I have to ask myself why I took so many trades again especially given the choppy market. The choppiness is the reason why I got defensive and took 0.5R losses, rather than letting the trades ride.

However, my mess with INFA was the worst culprit. I panic and closed my initial short, when I should have let it ride. Then I compounded problems by shorting again at a lower (riskier) point and with an oversized position, increasing the eventual loss.

(edit) Probably the main reason for the action on INFA was the fact that the 50 DMA was right at 14:08. This would explain the big block buying that Trader Eyal picked up on, and would explain the reversal at 14.05 (11:45am).

So, fear and greed were my downfall today. I have already decided that I am going to limit myself to a maximum or 2 trades for a while now. I will accept a maximum 2R loss per day, and this will hopefully allow me to let my trades ride.

Here are my trades in the order I took them:

Trading Summary : 03/07/2006

2006-03-07T13:48:00.000-05:00

Today was a very subdued day in the market. Volume was down and the action very range bound and tight early on. I was content to sit on the sidelines and considered just walking away, but decided I would stick it out to noon.

Unfortunately I started to switch off at around 11:00am, and I missed a nice entry in LSI which was at the top of my list of longs. Just to add insult to injury, I made another error as I went long on FMD. I should have closed out the position as the stock failed below the morning high, but I let it ride all the way down to where my stop was. Then error #3 kicked in as my stop was inactive. I am not sure how that happened, but all my alerts were inactive and as a result my loss was larger than I planned.

Finally, I paper-traded a couple of shorts today, namely EDS (at 27.45) and MXO (at 9.52). It is a shame I did not really take the trades since EDS hit its target (27.23) for a 2R gain and MXO bounced along under its OR low and would at least have been profitable.

So, just one trade today, and a single (large) loss. Here it is.

And just for kicks, the one that got away, LSI ...

Trading Summary : 03/06/2006

2006-03-07T13:31:00.000-05:00

I took 4 trades today. I had partial losses on 3 but a big win on the last one, making this a profitable day. It is not surprise to see the three losers were longs, while the winner was a short.

WYNN: I entered above a doji that had topped out at the OR high and just below the prior up bar. This was a bit suspect.

Q: I entered off a very big up bar, not an NRB.

CECO: The stock had gone deep into its retracement zone, so it appeared to run out of steam once it broke out.

RBAK was very nice. The stock had rallied to its retracement zone and posts a down shooting star in the bottom of the zone, followed by a small inverted hammer. It was downhill all the way from there.

Trading Summary : 03/03/2006

2006-03-03T18:08:00.000-05:00

An absolutely awful day today. I took four trades in fairly quick succession this morning (3 long, 1 short). I was out of 3 of them by 11:00am, all losses, and the 4th one lasted till 12:00pm before being closed for a loss.

I think what happened is that I got carried away when I saw the early morning volume was higher than normal. Everything I went long on early got chopped hard before lunch.

So, should I have taken these trades ? Lets take a look.

First up, BWNG. I entered off the 9:45am up bar. This has worked in the past but not this time. I quickly closed out for a 0.3R loss as the stock dropped below the 10:00am shooting star and below the OR high.

Second up, X. I went long above the 10:00am NRB. I was not concerned about the wicks. Initially the action was good, but the stock turned and dropped hard, taking out my initial stop, resulting in a full 1R loss. This stock showed up on the Unusual Volume scan and it opened way below yesterday’s close, so it had moved a long way by the time I entered it. I should not have taken the trade due to the upper wicks and the fact that it started way below to the prior day’s close.

Third up, SFCC. I went short just before the 10:15am bar completed. This is a trade I should not have taken since the setup was not good. I got carried away with the two down bars almost negating the 2nd up bar. However, I forgot the stock was still in the upper 50% of the opening spinning top. I tightened my stop and was out for a 0.3R loss. I should have waited for the stock to round-trip back to its OR low.

Next, GNW. I went long above the 10:15 NRB. I ignored the wicks on the prior two bars and paid the price, a near 1R loss. I should not have taken the trade given the higher wicks on the two prior bars.

Then, AKS. I went long above the 10:15am down bar. Unfortunately what fooled me was a bad tick on the 9:45am bar which meant I could not determine the size of the wick on that bar. I assumed (bad idea) that ther was no wick. So, when the stock got above the close of the 9:45 bar and above the 10:15am wick, I entered. I was soon stopped out for a 1R loss. I should never have taken the trade since the wicks gradually descended showing stronger weakness.

I was not very happy at this point with my performance. I had a choice to make; either walk away with a significant loss, or look to get some back, but concentrating on good setups. At this stage, I would have to look for NR3 setups. So, I decided to continue …

WEBX. Went long above the 11:30 hammer. Did not get a great entry and it soon turned and fell into consolidation. I moved my stop up under the consolidation and was stopped out after lunch for a 0.5R loss. Should I have taken this trade ? These was significant sell-off volume and a very steep drop prior to my entry, so this was a bit suspect.

BWNG (take 2). I entered above the 11:30am NRB but only once it had also cleared the 10:15am high of 11.01. I got an entry at 11.05. This initially did well, but then started to drop towards my entry. Then, as the market tanked at 3:00pm, and the stock dropped again, I panicked and sold right at the bottom of its last dip for a small 0.1R loss.

So, due to trades I should never have taken, and to panicking, I was able to lose on every trade. Not a good Friday for me, and a very big disappointment after yesterday. Now I am back where I started having given back the last three day's profits.

Trading Summary : 03/02/2006

2006-03-03T08:29:00.000-05:00

I had a better day today. I traded 5 stocks and achieved a more respectable 3R gain overall. However, once more I took a couple of trades I should not have taken (PCNTF, PETC). However, I noticed the errors of my ways and closed both for an overall wash. With PCNTF, I should not have even seen this stock as its average volume is too low, but due to an error in my scan it did (I was using the 5 day avg volume, not the 6 month avg volume as a filter).

I also made another error, one that we have all been guilty of at some time, impatience. I closed my two winning trades (CHS, PLCE) just after lunch and before they put on further gains. CHS closed very close to where I pulled out , but PLCE went on to achieve the profit target, meaning I left 1.5R on the table.

But, I am feeling happier. Firstly, I am a lot more comfortable with shorting now. Secondly, I am on my way to eliminating bad setups. One adjustment I have made recently, in an attempt to reduce chop, is to increase my average volume threshold from 200k to 400k.

Here are the trades in the order I took them :

(Charts to be posted later)
CHS
PETM
PCNTF
PLCE
PETC

An Apology and a Correction

2006-03-02T08:51:00.000-05:00

I recently posted some information about Trader Mike that he did not want to make public. I immediately removed the information and I wanted to apologize to Mike for the post.

What I wanted to convey was the fact that on days like yesterday, a good trader should be making a very good return. I made just over 1R trading 5 stocks, whereas Mike made over 6R trading 5 stocks and Mike did not enter any trades till after 10:30am !!

Even if I removed my suspect trades, and traded the others perfectly, I would still only end up 4R up. That tells me that my scans are still not finding the best candidates. So, I am going to take a look at those and see if I can find better prospects.

Trading Summary : 03/01/2006

2006-03-01T17:35:00.000-05:00

Not a very good day, given the market rise today. As Trader Mike told me, I should be raking it in on days like these. Not yet, I am not but I will take a profitable day none the less.

My best trade was AEOS which was a typical Trader-X style entry off the 9:45am bar as it reversed the opening bar. I took my profits above the fib extension as it posted the long upper wicks. Perhaps I should have held some since it fell back a little to the fib extension, then bounced along the top of the line until the afternoon when it gathered momentum again.

However, I gave all my profits back on IVGN and ARM. IVGN was the worst culprit due to a bad market fill on my order, and a miscalculation on the position size. If I had my ideal fill, I should have taken 80 shares, not the 100 I took, and then with the bad fill, it should have been only 70 shares. As a result my actual risk was $108, not the $75.

So there is something I need to work on; making sure my position size and fills are good. Perhaps I should have taken the first opportunity (in profit a little) to reduce my position size to match my stop.

I even had a profitable short (PSUN). However, I made a couple of mistakes on that trade that significantly reduced my profits. Firstly, I took an early entry that was risky and I closed it for a -0.3R loss. Secondly, when I did take a good entry, I set the profit exit at the fib extension which was just below 21.50. I should have realized that 21.50 would be a resistance point, and that is exactly where the fall reversed.

I tried a short in ARM but that one was suspect from the start (I must be more disciplined and not take these trades) due to the tails on the prior candles to my entry. I ended up with a -0.6R loss.

Finally, I decided to top up the equity tank (ha ha) with a late afternoon trade (at 2:50pm) in ATHR, where I saw the formation of an NR3. Following my new stop placement rule, I placed the stop below the first NR3 bar, in case the stock dipped initially, and it did. However, I got the pop I was looking for and held to the end of the day for a near 1R gain.

Overall I ended up just over 1R up, thanks to the late day ATHR trade. However, I need to do better.

Here are my trades:

Another month ... and a change of fortune ...

2006-02-28T18:24:00.000-05:00

Well, February was interesting. I had a great run in January, getting into profitable territory, and then I just blew it. I was once again taking marginal trades, looking for the big winner. All I ended up doing was suffering loser after loser, and over-trading to boot, resulting in a rapid decline in my equity.

I know I was over trading for two reasons. For one, the number of shares traded in 10 days was 51,000 ! CyberTrader must love me. Secondly, it was taking an eternity to update the blog.

So, as most of you are aware, I stopped trading mid-month to take a break and to perform some analysis on my trades to determine where I was going wrong.

I have already posted my initial analysis. I have made some changes, namely to my scans, my setups, and my exit strategy (there is not much I did not alter in some way). As a result, I now feel more comfortable overall, although the future results will prove if I am back on track again. Here are my new guiding principles for the month ahead.

Do not over-trade. Firstly, only take the very best setups, and if there are no good setups, do not trade. Equity preservation rules.

Look for longs and shorts with equal attention. Now that I am more comfortable with my short scans and my short setups, I feel I can achieve this.

Do not micro-manage my positions, but let the market decide if its a winner. This is a tough one, but one I must come to terms with to realize good profits. I need to trust my setup and entry enough to let it ride, which leads to ...

Better stop management. I need to widen my stops a bit more, especially under NR3s.

Stay in the game. Persistance is the key to a successful trading career.

And now onwards into March. Good luck to all, or better yet, not luck, but success to all.

Trading Summary : 02/28/2006

2006-02-28T17:55:00.000-05:00

I finally went live again today. I thought about holding off till the 1st of March but then what do I have to gain from waiting ?

I traded four stocks today, and did not really get anywhere with any of them. Overall I finished the day with a 0.28R gain. The good news is that I actually had a profitable day. The bad news was that the profit was miniscule, given my $75 risk.

Quite quickly into the trading I was nearly 3R up, so to finish just above breakeven hurts. However, I need to concentrate on picking better prospects, and I will only do that if I let things ride.

I really tried to hold off micro-managing my positions, and just sit back and let the market determine the success or failure. That was hard to do. I fell into temptation with one trade (SNDA) and moved my stop up, and paid the price since I would have made a little if I had let it ride.

Here are the trades I made:

(Paper) Trading Summary : 02/27/2006

2006-02-27T21:56:00.000-05:00

A profitable day today, which is no surprise given the market action. My biggest winner was AH but I made small amounts on INCY and a small loss on IACI. I saw LOW but decided to pass, but Trader Eyal nailed that one nicely.

Then I took some dumb trades in the early afternoon in NVAX and INCY. I suffered partial losses on both of those. I am seeing one consistent failure and that is the stop under an NRB. Where we have an NR3, I need to place my stop under the first NR, not the last. Quite often I get stopped out as I did in NVAX.

So, in summary, I am happy that my scans seem to be finding good candidates, but I am not happy about my my trade execution, especially the taking of the afternoon trades. I need to be more disciplined.

Here are my trades:

Site Improvements

2006-02-26T10:42:00.000-05:00

I have just made some minor site improvements that I hope will help people keep track of what is happening here, and to help improve any browsing of the site.

Firstly, I have added an email reader (via feedblitz) that will allow you to be emailed any new posts or updates to this site. Alternatively, you can use Yahoo! Alerts new Blog feed (Beta).

Secondly, I have added a site-specific Google search bar at the top of the center section, allowing you to search this site.

If anyone has any suggestions for other improvements they would like to see, please add a comment to this post, or email me.

Thanks !

Englishman Trader

PS. I forgot to tell everyone that I have a new domain, www.englishmantrader.com that is re-directed to this blog. In the futureI plan to move over to a different service provider, so using the new Url will guarantee you will be switched over seamlessly when the time comes.

(Paper) Trading Summary : 02/24/2006

2006-02-24T18:08:00.000-05:00

Took 3 trades today (trying not to over-trade), with one full 1R loss, a partial loss and a big 5R+ win. So, I am somewhat happy with this 3R+ overall gain, although I am annoyed at taking the two losing trades. The full 1R loss (BMRN) should have been closed earlier as it showed a shooting star, followed by a clear down bar, and the partial loss (JWN) should not have been taken at all as it posted spinning tops, rather than bars with small or no tails.

The intriguing thing is that the winner (WTZ) was an AMEX stock. I do not normally trade these as the spreads can be large. However, the spread tightened up in time for me to enter.

Also, thanks to “President Fox”, I am now able to plot Fibonacci retracement levels using CyberTrader Pro. Now, if they could add support for Fibonacci extensions …

Edit (2/26/2006) : I did not calculate the fib extension target on WTZ correctly. It appears that I used the 23.6% fib retracement level as my basis for calculating the target, instead of the 38.2% level. Obviously I do not want to make this mistake in the future and leave money on the table.

Here are my trades:

(Paper) Trading Summary : 02/23/3006

2006-02-23T22:34:00.000-05:00

I took a number of paper trades today to both validate my new scans (both long and short) and to test out the Fibonacci levels out. I have charted most of the trades (there were a couple of other, more speculative, trades that did not work out).

I still need to take care and make sure the risk/reward ratio is good, which only happens off a good NRB and I need to take more care plotting the fibs correctly !

Here are my trades.

Initial Analysis Results

2006-02-23T08:39:00.000-05:00

I am about midway through the analysis of my prior trades, so these findings are preliminary and subject to change.

However, before I could analyze my trades, I had to sit down and define the kind of setup or trade I was looking to find and take advantage of. These are the “Unusual Suspects” that are moving considerably outside their normal trading range with above average volume. Typically such action is triggered by some significant event such as an earnings surprise, or some FDA approval or good trial result.

Secondly, I wanted to establish some kind of method to determine not only a good entry but exit points for both stops and profits exits. I decided to take a leaf out of Trader-X’s book and apply Fibonacci retracement and extension levels to my trades, using an opening range based on the prior day’s high/low to the 9:45am bar high/low (assuming a 15-min chart).

Unfortunately, CyberTrader’s charting function does not support Fibonacci levels, so I have had to manually determine the relevant levels, a time consuming effort, even with the use of spreadsheets.

Firstly, over 50% of my trades should never have been taken as they did not qualify with a decent opening range, or they did not setup appropriately for a decent entry. Another 35% of my trades showed a possibly tradable entry, but I did not enter at that point, but typically later, such as within the retracement zone or right at the extension as it stalled and turned. Finally, a very small percentage of my trades were good setups, but even in those I did not enter at the most optimal point.

So, I have reached a number of conclusions at this point as follows:

The use of Fibonacci levels (retracement and extensions) appear to be very effective at predicting reversal points. I do not profess to understand the dynamic behind this, unless it is simply a self-fulfilling prophesy as many people use it, but then it is not necessary to understand it to take advantage of it.

I am overtrading, leading me to enter many trades that are marginal at best, without taking the appropriate time to determine if the trade is a one, for example that there is no close support/resistance level on the daily or weekly charts.

I appear to be stumbling onto the good candidates, but after their optimal entry, and I have typically mistaken a reversal point for a consolidation point, as indicated by the Fibonacci levels.

Now, what adjustments am I making as a result of the above conclusions ?

I am going to start plotting Fibonacci levels on my charts. If a stock is within its retracement zone, then I will not take the trade until it breaks out of the retracement zone. I will also take more care when the stock is at its opening range high or extension.

I am re-working my scans in an attempt to expose the good candidates earlier, at least by 9:45am, to give me the time to plot out the fib levels before the first possible trading entry at 10:00am.

I will define a profit exit at the OR high (if coming out of the retracement zone) or at the extension level if breaking out from the OR high. Also, if this returns less than 2R then I will not enter the trade since the risk/reward is not good enough.

I will hold the trade through any consolidation between my entry and profit exit. However, I still need to be on the lookout for a significant failure.

I have already started paper-trading using my new rules but I do not have enough trades yet to determine if this is going to work. To date I have taken 8 trades, 3 of which were successful, 2 were partially successful, and 3 failed. Of the 3 that failed, 2 showed an initial profit before showing significant weakness (giving me an opportunity to move my stop), and then breaking down hard.

I will keep on paper-trading for now until I have more statistical evidence as to the effectiveness of my trading rules.

Stop the Insanity, I Want to Get Off (Part Deux)

2006-02-15T21:01:00.000-05:00

Given all the losses I have been recently suffering, it is clear even to a stubborn individual like myself, that I do not have a solid trading system.

I see a number of significant flaws like bad market orders, for both entries and exits, but the most critical flaw is simply the number of trades I enter that simply do not get into profitable territory. Too many entries either immediately reverse, or fall back into an existing consolidation phase, or climb a little (certainly not to a 1R profit point) and then drop hard.

I could come to grips with flaws such as bad market orders, but clearly the killer problem here are my setups.

So, what am I going to do about it ? I think its time to re-analyze my trades. I want to look at the kind of entry, the kind of failure (and in some cases success), the overall market direction, daily and intraday at the time of entry/exit, and some other indicators such as whether it was a high-on-day entry, and what the fibonacci retracement, extensions, and various EMAs were.

Where I had a bad fill, I am going to assume I got a perfect fill, so that is not a factor in my analysis, since the objective of the exercise is to identify a winning trading strategy that improves my odds of potentially entering a winning trade to 50%. I will not assume I can improve my odds to improving my win ratio to greater than 50% (at least not for now).

Then, assuming I have some improvements to my system in mind, I am going to paper-trade it to validate it before putting more real equity on the line.

I will be posting my findings on this site, but until I am ready to evaluate an improved trading system there will not be any more trades to post.

Trading Summary : 02/13/2006

2006-02-13T22:45:00.000-05:00

It seems that the combination of the New York snow and the lack of economic events prior to Ben Bernanke’s first public hearing as the new Fed Chairman, resulted in a very low volume and lack-lustre day.

Due to the lack of much serious buying power, it is no surprise that a significant number of stocks that showed unusual activity had a tendency to fail and drift back towards where they started.

I took four actual trades today, and suffered a full 1R loss, a 0.7R loss, a wash and a small 0.5R gain. So, overall I suffered a 1.2R loss. I also took a paper-trade short (CELL), and I was up 1.2R on that one. I will chart that one at the end. I also watched ACMR but failed to take any of the early entries above the 9:45am and 10:15am bars … d’oh ! I knew that Trader-X would be all over ACMR.

I still made some of the same mistakes today. I entered one NYSE trade (BLK) with a market order, and got an entry a whole 50c (2/3R) above where I expected to enter. I was aggressive with my stop and got out for a wash.

Again, my stop management was not consistent across my trades. I was loose on some, but tight on others. If I was tight, I would have done better (no surprise there).

And here is my paper-trade short:

Trading Summary : 02/10/2006

2006-02-12T23:18:00.000-05:00

Took Thursday off to clear my head and come to terms with my big losses earlier in the week that saw me squarely back in the red. So, to adjust, I reduced my risk from $100 back down to $75, and vowed to take less trades.

Well, I succeeded in reducing the size of my losses, but I still made a loss. I took four trades, one of which was a speculative short (SNDK). All four trades were losses, one a near full 1R loss (EMR), two 0.5R losses (SNDK and TZIX) and a small loss (AOC).

Once more, my stop management let me down, allowing small gains to turn into losses.

Then there was the one trade I had setup but pulled out of just before it took off (WMI). Damn.

Here are my trades in the order I took them:

Trading Summary : 02/08/2006

2006-02-12T21:59:00.000-05:00

Another big losing day. I took 12 trades, 6 of which were speculative shorts, all of which were losses. Of the other 6 trades, one was a short (BOOM) and that was a small loss. With the remaining 5 trades, one was a full 1R loss (SIFY), and the rest either small gains or losses. Add in the commissions and the loss was significant again.

The biggest mistake was taking the speculative short trades. If I am going to do that I am going to do them on paper, and not with real money. I need to apply the same to my “unusual” short setup until I get that shaken down.

Of the normal trades, none of the setups/entries were optimal. I was either late into the trade, or the stock showed significant signs of weakness prior to my entry.

As before, my stop management could be better too.

Here are the trades in the order I took them:

Damn ... trouble posting charts again !
GOOG-2 15-min placeholder.

Trading Summary : 02/07/2006

2006-02-12T15:27:00.000-05:00

My biggest one day loss was incurred on this day. I took nine trades and lost on seven out of the nine, washed on one and a very small gain on the last.

Three speculative shorts (YHOO, GOOG and CTDC trade #2). Small loss overall, but losses none the less.

My position size was suspect in some cases, with an actual risk over $120 on four of the trades. This increased the magnitude of my losses.

Suspect entries of various kinds. RMD was a suspect entry due to the first three candles being near the same size, rather than any NRB. CTDC was a dumb entry as it was taken as the gap filled.

I suffered a terrible market fill for a stop on an NYSE stock (PMI). However, the alternative (a limit order) would have been disastrous.

What made this my worst day was the fact that I suffered so many losing trades without any real winners to offset them.

Here are my trades in the order I took them:

Trading Summary : 02/06/2008

2006-02-11T22:59:00.000-05:00

I am performing this analysis over the weekend, so I have had more time to reflect on my mistakes. I had a bad day as I suffered an overall 4.5R loss. 2R was due to speculative trades outside my normal setups (HANS and TXI). I suffered a 1R loss on a short (HEW), and the rest exhibited a number of rookie mistakes as follows:

Not waiting for an NRB to enter off (LPX).

Bad in-trade management. I need to be more aggressive with my trailing stops as I was in January.

A bad market fill on an NYSE stock. I need to make sure I place a limit order when dealing with NYSE stocks.

Some stocks are not the “unusuals” I am looking to trade, as I am getting in on day 2 or day 3 of a breakout.

Here are my trades in the order I took them.

Problems at Blogger.com ...

2006-02-06T08:36:00.000-05:00

Blogger has been suffering some significant hardware issues since Friday, and it appears that all posts and changes made from Friday onwards in my blog have disappeared.

I am hoping that the problems are now over. However, I am going to have to recover my changes and re-publish. As I mentioned before, my apologies to those with email or RSS feeds, as you will be seeing the same posts again.

Englishman Trader

Trading Summary : 02/03/2006

2006-02-03T19:04:00.000-05:00

A tough day today. I went from $150 down to $400 up and then in a matter of moments down to $65 down and all in cash, thanks to a choppy market and large positions. However, I scrambled in the afternoon and eventually turned in a small profit (just under $200) having traded 7,300 shares across 14 trades.

Given the market direction, it was time to try some shorts. Of the 14 trades, 5 were shorts. Overall on the short side I had a nice win (APCC), 2 washes, another 1R win and a 1R loss. One of the washes (HUM) I later turned round and went long on and made a 4.5R gain.

What lessons did I learn today ? Firstly, when Trader Mike IM’s me with ‘Sup?’, I should not interpret that as a tip to buy SUP, which cost me a full 1R loss. Only joking Mike !

I need to stop getting into these long consolidations, but setting up for a proper breakout. All I am doing it getting in at the top of consolidation, then exiting for small losses. I guess CyberTrader must be happy though (7,300 shares is a lot in commissions).

I also tried to be a little more lenient with my stops. "President Fox" suggested I look at the 10 and 20 EMAs, so I have added those to my charts. It will take a little time to get comfortable with them, so for now I will simply show them but will not take any actions because of them.

However, I plan to analyze my trades this weekend and see if I can come up with a better stop strategy as I am simply not happy with leaving so much money on the table on frequent occasions.

Anyway, here are my trades in the order I took them.

Trading Summary : 2/2/2006

2006-02-02T23:20:00.000-05:00

From my best day to my worst day. As we all know the market dropped hard in the morning and then languished for the rest of the day.

I tried to go long and paid the price. Once I closed my last trade just after 1:30pm I decided to get up and walk away. Now that I have had a chance to relax, I can analyze what went wrong.

I entered DRIV and SIRF too early. The key to a good trade is to enter at a low risk/high return point, which is typically after a narrow range bar (NRB). Neither DRIV or SIRF were NRB-based entries.

I need to develop a short setup. Trying to go long in a hard-dropping market is like trying to run a race with only one leg.

My stop management needs to be improved. I exited both SBUX and especially ANPI before they both ran up more. ANPI is especially galling since I left $600 on the table that would have made this a nicely profitable day.

The silver lining is that I have a number of candidates for my 2-day gap/retracement setup as long as the market plays along.

Here are my trades in the order I took them.

Trading Summary : 02/01/2006

2006-02-01T22:32:00.000-05:00

Today I upped my risk to $100 per trade. I believe that had some impact, as I was up nearly $1,000 near lunchtime. However, I had to settle for a $472 profit, my biggest day yet however.

It should have been more as I am still making some rookie mistakes as follows:

Losing my head and trading at the top of consolidation while predicting a breakthrough as I watch level-II. See FCEL, my last trade of the day for an example of the penalty.

Placing my stop 1c under the low of my entry bar. This is simply too close, especially when the stock is moving considerably (see PNX).

I need to pay more attention to possible resistance from the Daily and Weekly charts (see KRON).

I should look to re-enter trades. See the afternoon action in SCSS for an example of some serious money I left on the table.

However, I am happy that my new setup, the 2-day gap/retracement seems to be performing, at least so far. ZRAN was a perfect trade, and KRON was nice too, although I should have exited higher.

Here are my trades in the order I took them.

Trading Summary : 01/31/2006

2006-02-01T09:45:00.000-05:00

My winning streak is over. I ended up in the red by the end of the day, but not enough to cause me to fall back below breakeven overall.

However, the trader’s enemies, Fear and Greed, and some stupidity to boot, conspired to make this a red day. Here is a list of the mistakes I made.

Trading in the lunchtime doldrums. I should only do this if I have VERY good cause. However, I took 3 trades between 11:45am and 12:45pm (AEM, RSAS and HSIC).

Not waiting for a breakout. See AEM (that’s 2 rules broken here)

Miscalculating my position size. Entered CHNR with twice the risk, so the loss was doubled in size … ouch.

Entering the wrong stock. Entered GRA instead of GGG. I got them mixed up as they were both on my ‘Big Up Mover’ scan list, and both start with ‘Grac’ (Graco, Grace). I need to note down the symbol in my notebook next time (more discipline).

Bad ‘profit exit’. When setting up my alert, I wait for the trade price to hit a target, but then I set it to exit at the ask. I should set it at the exit price I am willing to take instead. This one cost my 3R.

That’s it for the mistakes. I also tried a new setup that I have called the 2-day gap/retracement play. I use my prior day gap/retracement scan results and look for stocks that did not climb back over their opening range high. I then watch these to see if they start to climb again. If so, I will look for an entry, and set a ‘profit exit’ at or near the prior opening range high. See HSIC for this play working out (if I set my profit exit correctly).

Finally, I need to work on my trailing stop. I am not happy to keep being stopped out only to see the stock turn and run up again almost immediately. Obviously, fear and greed is driving me to place my stop at the ultimate point of despair.

Here are the trades in the order they were taken.

Trading Summary : 01/30/2006

2006-01-30T20:27:00.000-05:00

I need to write today up properly but I just do not have the time right now.

However, I had another profitable day, 8th in a row now, and also broke even overall, sooner than I had expected. At one point this morning I was over $500 up (see SUN and NOV), but then saw that all evaporate by the early afternoon, until I got into AMR and it lifted me back to a $250 profit.

As a result of my recent success, and passing the breakeven point, I am now increasing my risk from $75 to $100. The next goal is to see if I can average a $500/day profit and to increase my equity from $30k to $50k through organic growth. This is assuming that I can remain successful !

Trading Summary : 01/27/2006

2006-01-27T18:24:00.000-05:00

I am really starting to loathe mornings when the market gaps and rises strongly out of the gate. What tends to happen is that the stocks I am following exhaust themselves very quickly, then stall or fall.

Another bad omen was the problems with CyberTrader. The broker was unable to take trades for significant parts of the morning and was dropping connections on a regular basis.

Anyway, by lunchtime I had taken 5 trades, suffered losses in 4 and was underwater on the last one. I was over $250 down at this point and not very happy.

However, I consoled myself with the thought that on days like these I usually do better in the afternoon and vowed to come back after 1:00pm and find my winners. Pickings were very thin as most stocks were still drifting down or had flatlined. Fortunately I took a couple of good trades, one of which was an increase in the position of an existing trade (INFA). Both open stocks proceeded to pop and I sold out on the way to lock in profits. I then called it a day so that I would not give away my good fortune.

I ended up just over $200 up overall, a swing of over $450, and another profitable day gets chalked up … 7 in a row now.

Here are my trades in the order I took them.

Trading Summary : 01/26/2006

2006-01-26T21:44:00.000-05:00

Today my profits came in the morning action rather than in the afternoon action. That seems to be the trend when the market is up and finishes that way.

I took 10 trades today over 8 stocks. Overall a fair result although I missed some excellent opportunities (NDAQ in the afternoon due to a phone call … thanks Katy … I estimate a $300 lost opportunity there). I was up over $500 before lunch (not bad with $75 risks per trade) but had to settle with a $340 gain at the end of the day. However, that’s now 6 profitable days in a row, and my biggest profit yet. I am getting closer to an overall breakeven.

Here are my trades in the order I took them.

Trading Summary : 01/25/2006

2006-01-25T22:23:00.000-05:00

A very busy day today. Boy, does it take some time to write up all these trades, 13 in all today.

It started off with some madness as I attempted to short AAPL and GOOG early on. I got out of AAPL very quickly (5 seconds), but held GOOG till I suffered a monster loss greater than 2R. Not a very good start. Here are the two crazy trades.

At this point I am about $175 down on the day and no open trades. So, feeling humbled, I fall back on the gap/retrace and big mover scans. I was soon in another five trades but then had to close them out at 11:53am as I had arranged to go to lunch with a friend.

Here are the five trades where I got back some of my losses but was still $70 down walking out the door.

I am back by 1:05pm and immediately get back into the thick of things taking 4 trades in short order.

So, in forty five minutes I was in and out of 4 trades and had turned my loss into a $230 profit. So I took a break and gloated. However, I was drawn back in but saw very little. I ended up taking 2 trades in APPB, the first one being aborted, but the second one panned out.

Overall a pretty good day. My biggest single day profit yet ($330) and nicely into the black for the month. What appears to have made the difference here were the plays later in the day off very tight NRBs coming off lunch allowing larger positions than I taken in the past. “Bill” alluded to this opportunity a few days back. Thanks Bill !

Now onto breaking even overall, I hope.

Trading Summary : 01/24/2006

2006-01-24T18:11:00.000-05:00

Did not start too well today. I took 6 trades between 10:00am and 11:00am and took losses on 5 out of the 6 in short order. I was still only in the very last trade (GI) which I took at 10:56am. However, I was $350 down by noon, ouch ! I will not succeed at trading if I win small and lose big overall.

Here are those 5 losing trades in the order I took them.

The interesting thing is that 4 of my 5 losing trades were all NYSE stocks, yet I was following the NASDAQ (via $COMPX) and not the Dow. If you look at the intraday charts for both the DJIA and the NASDAQ (I have charted $DJX and $COMPX below), you will see that the decline in the DJIA is slightly more pronounced. Perhaps I should have been watching $DJX and not $COMPX.

So you can guess I am not feeling too happy at this point. Even my one open trade (GI) had risen and fallen back to my entry. Anyway, I held GI and took another trade at 1:00pm in CHAP. However, even that initially fell back a little from my entry. Feeling like everything was failing I looked at my permanent stock list (GOOG, SNDK, AAPL, HANS and YHOO) and decided to short SNDK as it dropped to a new low for the day. So just as GI and CHAP take off and I see my losses getting reduced, SNDK turns and rises through my stop … another full 1R loss.

However, GI and CHAP ran very well in the afternoon, so much so that I ended up with a profit, although a very small one ($23). With GI I finally hit a big R winner, which returned over 4R even when taking the partial.

Here are the three remaining trades in the order I took them.

Trading Summary : 01/23/2006

2006-01-23T22:51:00.000-05:00

I had a very good morning, up over $400 at one point and eventually cashed out at around $300. Here are my morning trades.

However, I then lost my head and decided to play yo-yo with SNDK, AAPL and HANS. I went short on all three, then decided to keep flip-flopping till after 2:00pm and I had reduced my profits down to $89. I then vowed to stop trading, saw SNDK start to breakout at 3:15pm but stayed out … doh !

So, a valuable lesson learnt … no yo-yo’ing. Only enter a trade if it is a good setup like the SNDK 3:15pm breakout. However, I feel I am getting better overall. That is now 3 up days in a row so I cannot complain too much. Still got a way to go to breakeven for the month though.

Trading Summary : 01/20/2006

2006-01-20T23:34:00.000-05:00

“I went long today …”

I saw the short opportunities on GOOG and AAPL early this morning but decided to concentrate on my normal long setups; the gap/retracement and big up mover. Talk about swimming upstream, but I did come out on top by just over $100.

Given the market movement, I decided to be very aggressive on my stops. As a result I made a number of small gains over my 7 trades, with only 2 trades being losses.

Here are my trades in annotated chart form, in the order I took them.

My apologies to Rockmann for stealing his short on AVII with my second trade. He was just a bit early on it.

Trading Summary : 01/19/2006

2006-01-20T23:33:00.000-05:00

Traded like a demon, taking 8 trades with 5 wins and 3 losses. I tried to be more aggressive on my stops and it helped. At the end of the day, I came away with just over $200 profit.

Here are my trades in the order I took them.

Trading Summary : 01/18/2006

2006-01-18T21:44:00.000-05:00

Traded six stocks today, all long. I lost on 4 out of 6, broke even on another and made a little on the last one. Here are my annotated trades, in the order I took them.

It is clear I need to slow down. My biggest loss was GOOG and that was an off-the-wall trade, rather than one of my normal setups (I lose less on those!). So, time to slow down, only take one or two trades and make sure they are the best ones out there and fit my setups to a 't'.

Trading Summary : 01/17/2006

2006-01-17T23:13:00.000-05:00

My first trading day after an extended vacation and then playing catch-up with a bit of work and the dreaded year-end paperwork. I took 5 trades and succeeded in turning all 5 into losses. So a good start to the year. I went short on three (SNDK, AAPL and GOOG) and long on two (ANTP and PTR).

Here are the annotated charts in the order I took the trades.

I am not sure why I decided to try shorting, as I do not consider myself ready. However, unless I try I will not learn. Clearly I need to look hard at these trades and exit my short position if the stock shows bullish tendencies. I could have exited both AAPL and GOOG a lot sooner if I had.

In terms of ANTP I was trying a new setup, a rapid riser. The intention is to enter a stock that is rising rapidly on higher than average volume, entering above the 10:00am bar. I have seen Trader-X have a lot of success with this kind of setup. Waiting till 10:15am means you get in too late. As can be seen it had potential but I did not trade to my plan (partial at 1R, stop to breakeven) and paid the price. I should have heeded the resistance at 19 and closed, especially given the fact that this was the second day of unusual activity for the stock.

PTR should have been a smaller loss. I did not exit once the stock failed below the bar I entered within.

I need to be sharper tomorrow.

Closing 2005, looking forward to 2006 ...

2005-12-24T17:56:00.000-05:00

No more trading for me until the New Year, as I am taking a vacation with the family, returning to my native land. I am looking forward to the company, the beer, and fish & chips. My next trading day will be the 12th January 2006.

December finished off with a slight profit (~$200) which is a distinct improvement from the November losses. It is interesting to see the profits occurred towards the end of the month, which points to a gradual but definite improvement in my trading.

I am still about $900 in the red overall, so my first goal in the New Year is to get that back, assuming I can continue to improve. Once I am back in the black I will increase my risk from $75 per trade to $100, and see if that impacts my performance.

I want to take this post to say a sincere “Thank You” to those that have helped me on this path, either actively or not. Trader Mike has put up with me on a daily basis, identifying possible opportunities and pointing out mistakes as they occur. Trader Eyal has given words of encouragement, and corrected spelling mistakes on my site ! Trader-X’s posts have been very informative and have shown me what to look for in terms of entries and possible exits. He seems to have picked up the mantle from "The Chairman" MaoXian and his Trading for Dummies archives. It is for good reasons I have blogrolled them all.

I also hope that some have found my journal helpful on their path. I aim to improve both my performance and the usefulness of this site next year. Please visit again once I am back.

I wish everyone “Health, Wealth and Happiness” in the New Year.

Englishman Trader

(No) Trading Summary : 12/23/2005

2005-12-24T17:43:00.000-05:00

Due to work pressures I was not able to play an active trading role today. However, I did flip shares in SUNW and SIRI to get my shares traded this month over 40,000 so as to qualify for the monthly fee waiver from CyberTrader.

Trading Summary : 12/22/2005

2005-12-22T22:03:00.000-05:00

This is my penultimate trading day this year, and I have only traded just over half the 40,000 shares that need to be traded to have the $250 monthly fee waived by CyberTrader. That is the curse of having such a low risk ($75). Trader Mike came up with the idea of scalping a low-priced, high volume, low spread stock just to get the number of trades up. I did this and got 6,000 trades under my belt for a 66c loss (less commissions).

Now, onto the real trading. I decided to trade like there was no tomorrow. I took a grand total of 7 trades. I ended up with a 0.46R average gain (yeah!). I will let the annotated charts show you what happened.

The biggest lesson was one I should have learned from some of my previous trades. See GRMN.

Trading Summary : 12/21/2005

2005-12-22T21:56:00.000-05:00

Traded 3 stocks today. I have not got much time so I will just post the annotated charts. Overall result was a slight 0.13R loss.

However, I could kick myself over FDX. My buy alert fired, but I held off the confirmation as the spread was larger than I like. I should have taken it. I need to realize that a fast moving stock and/or a high priced stock (> $100) will have a bigger spread than I am used to. This one would have made my day. Here it is.

Trading Summary : 12/20/2005

2005-12-20T18:50:00.000-05:00

Very few candidates showed up in my scans early on, and no decent candidates. I nearly did not trade but I took a couple of my gap/retracements that looked better than the rest. The overall result was a very small gain, an average 0.27R gain.

NXY. (10:34:18). Long 150 shares at 49.40 with a 48.97 stop. (10:49:29) Closed out at 49.40 for a wash as the stock was failing at resistance just above my entry.

BDK. (10:41:33). Long 250 shares at 87.25 with a 86.89 stop. (10:53:21) Partial profit (150 shares) at 87.56 for a 0.83R gain. Stopped out at 87.25 on the remaining 100 shares and a wash.

Both trades were really forced. I did not expect NXY to get through resistance at the prior day’s high and I was not disappointed. On BDK, I lucked out. The setup was bad, no clean entry, and I entered on the fly rather than setup a breakout buy alert. I got away with this one.

All told, I was lucky that I did not lose any capital as my trades showed a lack of discipline. I got away with it this time. I most likely will not be so lucky next time. NXY teaches the importance of patience as the ideal entry occurred a little later as it finally broke resistance on the third attempt.

Trading Summary : 12/19/2005

2005-12-19T22:07:00.000-05:00

What a day to prove that, if 3 out of 4 stocks follow the market, then stocks with “unusual” price and volume do not necessarily follow the market. I stuck with my gap up/retracement setup and traded two stocks for an average 0.92R gain (1.84R total gain).

TEK. (10:37:07). Long 250 shares at 28.59 with a 28.29 stop. (10:58:03) Partial profit (150 shares) at 28.89 for a 0.96R gain. (14:48:01) Closed out remainder at 29.41 for a 2.69R gain.

PFE. (10:39:21). Long 300 shares at 24.883 with a 24.64 stop. (11:58:59) Closed out at 24.937 and a 0.17R gain.

PFE was just lunch money. The stock did not act as I hoped so once it tried to rise and failed at 11:45am, I was ready to pull the plug. Capital preservation is rule #1.

Tek was a nice trade. Good entry, except my order fired on a trade price of 28.56 and got filled 3c higher. However, I still prefer a market order to a limit order given the miss I had on WEN last week (I still have not posted that day’s results). I was hoping for another run up either during or just after lunch, and if the overall market was doing anything but dropping, we might have seen it. I bailed once it dropped out of its lunchtime consolidation.

I am happy to have made some money trading to my plan on a day when the overall market went in the opposite direction.

Site Layout Changes (part 3)

2005-12-17T16:31:00.000-05:00

Just applied my latest set of template changes which should resolve the display issues on Internet Explorer. The site is still best viewed by Firefox, so I recommend you download and install ASAP. I have provided a link in the left sidebar.

If you still have problems, please perform a (shift) refresh. If you still have problems, then please email me. I have also provided an email link in the right sidebar.

PS. Trader Mike and Trader Eyal ... its all CSS now, no HTML tables !

(No) Trading Summary : 12/16/2005

2005-12-17T16:28:00.000-05:00

I had a number of reasons not to trade today. Firstly, it is options expiration. Secondly, I had an important deliverable to make to a client by close-of-business, so I was head down making sure that I got it all done and tested.

Only one week left till Christmas, so next week will probably be quiet. However, I do expect to be trading for most of next week. I might have to take one day off trading as I owe a client a site visit.

(No) Trading Summary : 12/15/2005

2005-12-15T18:48:00.000-05:00

Had a Comcast technician over this morning installing HDTV, so just in case the cable got disturbed (plus I wanted to play with the new set-top box), I decided not to trade today.

Looks like I missed another day of chop. I have a suspicion I would not have done well on the long side today, or perhaps I should say I would have done worse than usual.

On the HDTV front, all I can say is that the picture looks pretty damn sharp, and all I have seen are the regular broadcasts, not a true HD one yet. I also need to figure out how I get the 5.1 surround sound. I think I need an optical cable from the set-top box to my receiver.

On the site front, I am getting close to having a totally new template defined, so hopefully it will be looking a little sharper soon. Probably get that in place over the weekend.

Good luck to all.

Trading Summary : 12/14/2005

2005-12-14T21:55:00.000-05:00

A good start to the day. A few quick trades and I was up for once and totally in cash. So I decided I would check back in again after lunch and repeat the experience … yeah right ! The final result, down 0.66R (-0.11R average per trade).

Here’s how it all unfolded (really unfolded) …

HON. (10:19:46). Long 400 shares at 37.36 with a 37.14 stop. (10:32:10) Took partial profit (200 shares) at 37.55 for 0.81R. (10:55:34) Closed out at 38.0 for a 2.85R gain.

RHAT take 1. (10:38:23) Long 250 shares at 25.82 with a 25.52 stop. (10:52:52) Closed at 25.681 for a 0.5R loss.

NKE. (10:51:32) Long 100 shares at 90.23 with a 89.81 stop. (11:41:46) Stopped out at 90.25 for a wash.

Up and in cash. Should have quit for the day but I did not.

CEG. (13:47:03) Long 300 shares at 61.45 with a 61.20 stop. (14:30:18) Stopped out at 61.18 and a 1.13R loss.

ARNA. (13:53:59) Long 300 shares at 13.57 with a 13.32 stop. (15:57:44) Closed out at 13.44 for a 0.57R loss.

ADCT. (13:59:34) Long 300 shares at 23.15 with a 22.90 stop. (14:12:09) Closed out at 23.05 for a 0.45R loss.

RHAT take 2. (14:57:32) Long 250 shares at 25.85 with a 25.72 stop. (15:21:23) Closed out at 25.811 for a 0.39R loss.

No need to talk about HON. A nice trade. Good entry, nice exits.

With RHAT I got nervous and bailed as the price dropped below the bottom of the candle I entered in. The entry setup was not good either.

With NKE I made a number of mistakes which turned a good candidate into a wash. The entry setup was good with the two NRBs at the 10:00am high. First mistake was that I was slightly late on the entry so I was in slightly higher than I was hoping. Then I did not take my partial profit at 1R; mistake number 2. However, I still moved up my stop loss to breakeven. Because of my slightly high entry, I got stopped out and missed the ride up.

NKE was not one of my gap/re-tracement setups. It showed up on my Big Movers scan which is looking for above average volume, and a big trading range above the open. I should have used the resistance at 90.15 (which I entered above) as a level of support to determine where I should have moved my stop to, instead of to just above my entry. So, perhaps I need to expand my rules to cater for this kind of entry setup and have a different exit plan for it.

I do not want to dwell too long on the afternoon madness. I had missed an earlier entry into CEG and was annoyed, so I looked for any kind of possible entry. Bad mistake.

ADCT was a marginal trade. The straight up / straight down bars made me pull the plug. However, the volume trend was nice. ARNA was weaker than ADCT but I held on. Go figure. RHAT was even weaker given the closeness of resistance above my entry.

As I said, some afternoon madness and I paid the price.

Changes to the site (part 2) ...

2005-12-13T09:28:00.000-05:00

I have been receiving more and more comment spam recently, so I have just activated word verification. My apologies for the slight inconvenience to those that wish to add comments, but I really want to keep this blog clean.

Also, you should note that both Firefox and IE6 work, for now. I had to fix the page width though rather than let is scale. Not a permanent solution, but it will give me the time to rebuild my template properly to address this and other formatting issues.

Also, I am behind now on my trading summaries. I will be posting yesterday's summary later.

Display problems with Internet Explorer

2005-12-12T21:18:00.000-05:00

OK, my changes seem to screw up in IE6.

Working on it ...

In the meantime Firefox works well.

UPDATE : 12/13/2005
=================

I have applied a temporary fix for now. I assigned a fixed column width to the right-hand column. This means that the page width is now fixed, rather than variable to fit the width of the browser. I guess IE6 gets confused with tables.

Changes to this blog ...

2005-12-11T13:19:00.000-05:00

You may have noticed some changes to this blog already, and hopefully you consider them improvements. I am trying to improve the readability of this site, and to convey more information about my trades, and in the near future, trading performance.

Recently I have started to capture CyberTrader charts, and have been annotating them too. Some have asked what I have used to do this. The answer is SnagIT!. Its not free, but not too expensive and is perfect for this, as you can see from the results.

I have also changed the layout of the site, and changed the font size and type, hopefully to make it easier to read. I plan to make more changes in the near future, adding new links that will take you to new areas where I will describe my trading room, daily results tables showing proft/loss per trade, and hopefully monthly summaries showing my expectancy and R-gains or losses. I am doing this so that both you and I can quantitatively determine any improvements to my trading.

It will take a little while, especially the daily and monthly trading analysis. I am trying to do this in a way that is as automated as possible, using Perl to scan the CyberTrader logs, extracting the trades (difficult if it took multiple fills and partial profits taken) , then compiling the data and converting into the desirable HTML format. I also want to convert the data into Excel spreadsheets, so I can perform more in-depth analysis later, such as determining if there is a certain time of day when my trades are more or less successful.

Trading Summary : 12/09/2005

2005-12-09T21:13:00.000-05:00

Took 3 trades today, 2 longs and 1 short. Initially there were no good setups and it looked like it might be a no-trade day, but we persevered (or got desperate) and finally got in. Overall a small profit today, and I do mean small. Here are my trades.

NSM. (10:43:19) Long 250 shares at 26.52 and a 26.23 stop. (11:12:06) Took partial profit (100 shares) at 1R. (14:53:52) Closed out at 27.06 for a 1.82R gain.

SHFL. (11:09:54) Long 250 shares between 25.42 and 25.45 and a 25.05 stop. (14:27:24) Stopped out at 25.47 for lunch money.

SIRI. (11:19:32) Short 1000 shares at 7.64 with a 7.72 stop. (12:20:55) Closed out at 7.69 for a 0.77R loss.

The SIRI short trade was an experiment. I saw the resistance at 7.65 and the bars were narrowing, so I decided to short any breakout below this. It soon turned and started to climb. I decided to close out before my planned stop as (a) I was looking for a significant breakdown which clearly did not come, so the stock was not acting per my plan, and (b) the stock showed the signs of a nice long entry.

So, there is a thought. If I am in a trade and the stock posts an entry in the other direction, close it, and maybe even switch around. I should have gone long SIRI at the point I got out.

With SHFL, although I had not achieved 1R which normally makes me move my stop to breakeven, the NRBs through lunch followed by a breakdown below made me move it in a purely defensive mode.

With NSM, I made an interesting mistake. I was on the phone a long time for my “real” job and lost track of time. I looked up and thought I saw the time was 3:53pm, panicked and closed all my positions.

I need to get a big analog wall clock ! Donations anyone ? Since it will be a long time before I make any profits to be able to afford one !

Finally, I nearly took another trade that was intriguing. ARXT had gapped down at the open and then quickly flatlined. Normally you will see that action if a stock has agreed to be bought, or is making a secondary public offering, as it was in this case, but the offer price did not match what I was seeing. Here is the chart.

I decided to set price alerts above and below the trading range, with just a 5c spread, with the intention of going long on a breakout above, or short on a breakout below. It broke, my short breakout buy triggered, but I pulled back from placing the order as I just wanted to see what would happen. Boy, I really wish I had gone short 1,000 shares with an 8c risk ...

Trading Summary : 12/08/2005

2005-12-08T22:22:00.000-05:00

An interesting day today. I took 3 trades, all gap/retracement candidates. I was up 2.5R at one point, but got caught up in the early afternoon market selloff and ended up with a 0.9R loss.

Here are my three trades:

TXN. (10:16:48) Long 250 shares at 33.10 with a 32.80 stop. (11:36:00) Took partial profit (100 shares) at 33.40 and a 1R gain and moved stop to breakeven. (12:30:06) Stopped out (150 shares) at 33.12 for a wash.

XLNX. (10:44:42) Long 150 shares at 26.27 with a 25.80 stop. (13:49:50) Closed out at 26.0901 for a 0.4R loss.

NOK. (10:46:07) Long 800 shares at 18.22 with a 18.13 stop. (11:43:55) Closed out at 18.14 for a 1R loss.

Although both TXN and XLNX met the gap/retracement criteria, they were not the “unusuals” I am trying to find. An “unusual” mover is moving totally on its own merits and can be one of the “1 out of 4” stocks that does not trend with the overall market. What caught me out was the market action. Here is a screenshot of the $COMPX that show TXN and XLNX mirrored the market action.

XLNX showed a much cleaner (and slightly tighter) entry on the 30-minute chart. I think Trader-X would appreciate this.

There was one other stock that I nearly entered, WCI. My breakout buy alert triggered, the order placed, but the price jumped over my limit order. A real shame as this would have been a good winner.

I felt better about my entries today, even if the trades did not work out profitably in the end. That is telling me my exits need some work. I am thinking that I need to be asking myself if I see a short opportunity in any stocks I am holding. XLNX in particular showed two possible short entries.

Trading Summary : 12/07/2005

2005-12-08T00:08:00.000-05:00

I had applied good discipline yesterday, but totally lost it today. I forced two gap/retracement trades, and two shorts, totally ignoring my restriction to one setup until I start to show a consistent profit.

The net result was a full 4R loss. Ouch !

ESLR. (10:37:28) Long 300 shares at 11.67 with a 11.39 stop. (10:58:21 ) Moved stop up to 11.47 under latest resistance and to reduce loss if the stock dropped as it was in danger of doing. (11:44:55) Stopped out at 11.47 for a –0.76R loss.

HANS. (10:56:00) Short 100 shares at 82.241 with a 82.99 stop. (12:29:55) Stopped out at 82.99 for a -1.02R loss.

GOOG. (11:09:37) Short 40 shares at 402.50 with a 404.38 stop. (11:15:58) Stopped out at 404.50 for a –1.07R loss.

SSP. (11:21:34) Long 200 shares at 47.04 with a 46.66 stop. (13:32:32) Stopped out at 46.66 for a -1.03R loss.

I think one of the reasons why I forced my trades was that I had a fair number of candidates, unlike yesterday, plus I did not want to go away with two days of no trades. So, let’s take a closer look to determine the point of failure on each trade.

ESLR was no longer a strict gap/retracement trade, since the stock had already climbed past the opening down bar. So, I decided to trade the new day high which turned out to be a bad move. I should not have taken the trade simply on the basis it was no longer a gap/retracement trade.

HANS looked good for a short. I have some history with this stock, so I guess this was a classic revenge trade, and HANS had the last laugh. However, technically I feel it was a good setup, for a short. If anyone sees fault with the entry please let me know. If not, I will put this one down to bad luck.

GOOG was a dumb trade. The short entry just as the stock broke to a new high past the last few bars was a crazy move. Then the position size was too large resulting in a stop that was too close, and I paid the price. I guess I was just too keen on what seems an inevitable breakdown through 400.

With SSP I ignored the signals the candles were giving me. The two spinning tops followed by a down bar and a total volume dry up should have warning me off this one.

So, in summary I get sloppy and have four straight losing trades. I should have only considered the one trade (SSP) if I was following my rules.

(No) Trading Summary : 12/06/2005

2005-12-07T22:26:00.000-05:00

I found absolutely no setups I was happy with so I ended up with no trades today. I feel fine with that since it shows a good level of discipline. And for once I was up on Trader Mike, well I thought I was until he pointed out that he had traded 4,000 shares so was on his way to avoiding the $250 monthly fee CyberTrader applies if you do not trade 40,000 shares.

Trading Summary : 12/05/2005

2005-12-05T21:32:00.000-05:00

I am still limiting myself to the long gap/retracement setup. Today was interesting because of the general market selloff, but I am still only going to try the one type of setup.

I only had one trade today, NOVN, and came very close to getting into BOOM so I will chart that one too.

NOVN. (10:34:00) Long 200 shares at 14.71 with a 14.39 stop. (10:41:01) Closed 100 shares at 15.10 for a partial profit of 1.18R. (14:10:29) Stopped out 100 shares at 14.91 for a 0.59R profit. Overall a 0.88R gain.

I was happy with the entry but not happy about being stopped out at 14.91, but since I am validating my setups and entries, I cannot complain too much at this point.

I did have a problem with the stop. I did not realize that the alert template had the ‘Confirm Order’ attribute set. As a result, rather than closing my position, I was prompted to confirm the close order. It took me a few moments to realize this, and in that time the stock had moved down from my stop at 14.94 to where is finally sold, 14.91.

This made me start a conversation with Trader Mike about stops. Trader Mike uses the bid as a long stop trigger and has an automatic market sell order executed without confirmation. I have a trade-price trigger with a sell at the trade-price with order confirmation. It is obvious that my stop setup is flawed on a number of levels as follows:

Bad tick data can cause the trade price to jump considerably, triggering any alerts based on it, whereas the bid and asks are much more stable. Trader Mike informed me that CyberTrader dropped the trade-price trigger option some time ago due to the amount of bad tick data and he was surprised to hear it was back. So, use the bid for a long stop and the ask for a short stop.

When getting stopped out, it is important that the stop execute as soon as possible. To that end, a market order that does not require any confirmation fits the bill. Any other kind of order is in danger of not getting executed, at least in a timely manner.

And now to the BOOM trade I nearly took.. Here is the chart.

I decided not to take the first entry as I thought the stock was too jumpy. However, there was a much better entry a bit later but I was not watching due to “work” pressures.

Trading Summary 12/02/2005

2005-12-02T22:26:00.000-05:00

Let’s see if we can find some more gap/retracement trades today. My scan came up with four candidates : FINL,OVTI,LNG,TS.

FINL looked promising but did not get above the 10:15am doji high of 18.75 so no entry.

LNG showed a big spike down (which could be a bad tick) which I really did not like the look of so I passed. A shame since there were possibly a couple of entries; the10:30am doji and a very tight bar at 11:00am.

TS (10:30:51) Long 120 shares at 119.41 with a 118.85 stop. (14:33:59) Took partial profit at 120.11 for a 1.3R gain. (15:38:44) Closed out at 123.08 for a 6.9R gain.

OVTI (10:37:49) Long 200 shares at 21.7799 with a 21.39 stop. (11:12:50) Closed out at 21.59 for a -0.52R loss. (12:12:37) Long 200 shares at 21.84 but no stop (I forgot). (15:20:29) Closed out at 21.7501 for a -0.23R loss.

I was happy with the end result as it was my first profitable day, but not happy how I got there.

For a start the setup on OVTI was weak so I closed out the first trade in quick order. However, since the stock stayed in a narrow range, I setup for another entry slightly higher. Same thing happened once I got my entry and it went sideways for a long while.

TS looked like a nice entry, as the volume was still good, and when it initially dropped a bit, the volume was down. I came exceedingly close to being stopped out 13:45 as the price dropped to within a few cents of my stop, but I did not and we finally reaped the rewards !

So, my first profitable day, thanks to TS, and an average 0.87R gain over the three trades.

Trading Summary 12/01/2005

2005-12-02T20:54:00.000-05:00

I have received a lot of positive feedback over the last day or so about my first month day-trading for real. My heartfelt thanks to all that posted with your words of encouragement.

Clearly, there were a number of problems that lead to my losses during the month of November , but two in particular stood out.

Firstly, I needed to be more stringent with my setups. I need to concentrate on one specific setup and perfect that, before experimenting with another. To that end, I will concentrate on the setup I started to paper-trade with, the “opening gap/retracement” setup.

Secondly, my stops have been too tight. As president fox pointed out, placing stops right at the “obvious” prior candle’s high/lows can prove problematic, and widening the stop a few cents should prevent that. It is interesting to see that a number of my trades were stopped out nearly to the penny of a new low before the stock turned.

So, yesterday I thought I would setup a new scan (I still want to use the CyberQuant real-time scanner) to look for opening gap/retracement candidates that also meet my criteria for average volume and minimum price, in addition to higher than average volume. I will let the scan run till 10:30am since after that time the initial opening action has less meaning. The scan showed up only three candidates: DECK, EWW and HOTT.

Of the three I decided to go with EWW and paper-traded it.

EWW. (10:20:09) Long 500 shares at 35.20 with a stop 35.05. (11:20:50) Closed at 35.35 for a 1R gain.

Now admittedly I should have only taken a partial at 1R and moved my stop to break-even, but I was more interested in validating my entry and getting a success at this time. I was also in demo mode so there was not much point in holding for any more.

But one win does not prove the setup works … but it’s a start.

One Month In ...

2005-11-30T21:53:00.000-05:00

Well, yesterday was not a good day. Took 5 trades and lost on all but one of them. I am not going to detail them here as it is too painful.

At the end of the first month I have lost 3% of my starting capital. This starkly contrasts with my 6% gains per month when paper trading. The difference is far more than can be pinned on the difference between paper and real trading.

So, clearly I am doing something different from paper-trading. I need to give myself some time to perform the analysis so I am stopping the trading for a short time until (a) I figure out what I am doing differently, and (b) to concentrate on the “real” day job which is going crazy … and I thought year-end would be quiet !

I have some possible causes that I will need to investigate as follows:

I am using CyberQuant (real-time scanner) to find my candidates, rather than working off Briefing.com’s Gapping Up/Down lists and the NASDAQ Unusuals list. I bet the stocks are different.

I have been using the 5 min intraday chart to “time” my entries, rather than just rely on the 15 min charts. I justified this on the basis that I could see the setups more easily on the 5 min rather than the 15 min. Perhaps what I am really seeing are more opportunities that are not of sufficient quality. Reading Trader-X’s posts (I am adding him to my blog list), he firmly believes trading off the 5 min charts leads to many more mistakes as you do not have the time to do the due diligence on the stock, whereas the window of opportunity is larger on the 15 min chart, hence you do have the time.

When I started paper trading I concentrated on a subset of the “Dummy” trade; a stock showing considerable increased volatility and volume. I was looking for gappers that retraced and would look for an inner narrow-range bar. I have simply been looking for reversals. Trader Eyal’s humble1 post rings true here.

So, no more trading for at least a week until I get my head around the problem. I think I will then start with “Demo” (paper) trading once more and prove I can consistency win rather than consistently lose.

However, there is a silver lining. I have been religious about my stops so also I have lost money I have lost money slowly and still have 97% of my capital to play with. So, time to get off the horse (before I get thrown off), brush myself off, straighten the saddle and the hat, and then get back on.

YOYO'ing with Yahoo

2005-11-29T00:19:00.000-05:00

Took 5 trades today over 3 stocks. Finished up with a (smaller) -0.18R average loss so one of my better days! Here are my 5 trades.

GOOG (10:14:39) Short 50 shares at 424.61 with a 426.13 stop. (11:08:09) Stopped out at 426.18 for a -1.04R loss.

VTIV. (10:25:18) Short 150 shares at 24.07 with a stop at 24.55. (11:59:07) Stopped out at 24.61 for a -1.15R loss.

YHOO. (12:22:19) Short 200 shares at 41.631 and a 42.01 stop. (12:52:04) Took partial profit 100 shares at 41.179 for a 1.16R gain. (13:12:46) Closed remaining 100 shares at 41.03 for a 1.55R gain.

YHOO. (13:20:45) Long 200 shares at 41.01. (13:23:26) Long 100 shares at 41.07 and a 40.85 stop. (14:24:16) Took partial profit 150 shares at 41.35 and a 1.71R gain. (15:23:54) Closed remaining shares at 41.241 and a 1.11R gain.

And now the DUMB TRADE OF THE DAY …

GOOG. (13:36:36) Long 100 shares at 427.313 and a 426.66 stop. (13:38:45) Stopped out at 426.52 and a -1.23R loss.

I had fun with YHOO. Trader Mike could not believe I went short then immediately turned around and went long. But the YO-YOing worked nicely. Watching level-II really helped me spot solid support and resistance.

Now GOOG was another story. What a disaster. I think Teresa Lo would call the two trades a train wreck and she would be 100% correct. I did not apply my trading rules on the first GOOG trade. If I had I would have taken partial profits at 1R and moved the stop up to breakeven, I would have finished with a 0.16R average gain. As for the second GOOG trade, I cannot explain.

So, a lack of discipline in applying my exit rules turn a potentially small win into a potentially small loss.

I came close to taking a couple of other trades as well which would have swung in my favor. My long scan only showed two candidates first thing; NWRE and OXPS. There were a couple of nice entries on OXPS, but I did not take them as the market direction was down. Then there was a short on GOOG at 1pm that I had ready to go but I pulled back from pressing the short button … damn.

A Free Lunch is Never Free ...

2005-11-22T17:31:00.000-05:00

Only took one trade today, CNVR. (11:09:16) I placed a limit order to buy 300 shares at 16.76. It took five minutes to get it filled fully, but we were in. Then I set a stop-loss at 16.52.

However, I was meeting a friend for lunch at noon, so I also set a profit stop to close my position at 17.53 which would be a 3R gain. I considered a trailing stop as I got up to go, but decided to let it ride.

Two hours later (yes, lunch dragged on far longer than I expected), I get back and take a look. I am still in the stock, and in positive territory but see the stock had also run up twice, first time to 17.40 then to 17.35. Not a good sign. However, I persuaded myself that the action was over lunch so there could be some real action later in the afternoon.

Boy. I was right about the afternoon action, but not right about the direction. (15:25:28) I pulled the plug at 16.60 for a -0.72R loss. The stock went into free-fall soon after.

So, my free lunch cost me $50. Not so free.

Lesson learnt:

Either close your positions, or set a tight (maybe 1R) trailing stop if you must leave your station. With a 1R trailing stop I would have realized a 1.57R gain overall.

But better yet, only leave your station if it is absolutely necessary once you are in a trade.

Trading Summary - 11/21/2005

2005-11-21T16:03:00.000-05:00

My day job is hotting up so I am not able to be 100% involved. However, I really want to get some more trades under my belt.

I missed a couple of opportunities to go long this morning due to other work pressures, so I decided to wait till the afternoon. I eventually took two trades, one successful and the other not so successful. Here they are:

ASVI. (13:48:17) Long 100 shares @ 25.63 with a 25.39 stop. (14:56:47) Closed at 25.58 for a -0.26R loss.

YHOO (14:01:52) Long 300 shares @ 42.20 with a 41.97 stop. (15:21:13) Closed at 42.48 for a 1.17R gain.

Note: There is invalid datra on the YHOO chart. The stock did not spike up and down mid-afternoon. Bad tick data at Ameritrade ...

I scaled the position size down on ASVI from 300 to 100 as the stock was not very liquid. This turned out to be a good move as it enabled me to exit more easily. The stock only made a small move in the right direction immediately after I entered, but then languished at a small loss for a long time. The ideal time to enter was between 11:45am and 12:15pm but I get nervous about taking trades at lunchtime. That is why I delayed my entry till after 1:30pm (there was another small opportunity right at 1:30pm but I missed it).

I enjoyed the YHOO trade. A number of people have suggested that I pick a few stocks and only trade them religiously to get a feel for stock movements. There is a lot of merit to that so I thought I would try. So, I have picked a small number of stocks which are very liquid to follow and trade when a good opportunity arises. YHOO is one of them.

I watched YHOO through lunch and saw the resistance at 42.50 which lined up with the high from last Thursday. The morning action also seemed to be show support above 42.00, so when I saw the three down candles from 1:00pm followed by the spinning top at 13:45 I could not resist. I made my entry and set a stop loss just below 42 and a profit stop at 42.48 just under the resistance line. It took two runs at the resistance line to get my profit exit but we got it ! Perfect !

So, overall a +0.8R gain over the two trades. I consider anything above 0.4R a very good result.

Trading Summary - 11/18/2005

2005-11-21T15:39:00.000-05:00

Options expiration today so no day-trading. Although I have not witnessed it, I have it on good authority from Trader Mike that due to options pinning, price movements can be erratic and swift at times, and non-existent at others.

So, if Cramer and Trader Mike don’t like to trade at this time, why should I try ? I am confused enough with the general market on a regular day. Why throw another dimension into the equation ?

Trading Summary - 11/17/2005

2005-11-17T21:52:00.000-05:00

Yesterday I was still not feeling well enough to trade, so I just started up in demo mode and proved to myself that was the right decision. I only took two paper-trades; one I was in and out very quickly once Trader Mike pointed out that I had misread the 50DMA from another stock; the other I miscalculated my position size by quite a bit.

Anyway, enough about yesterday and on to today. My head actually felt clear this morning although the cough is annoying. I decided I would go softly today, so I lowered my risk from $150 to $75, and it will remain there until I can show a consistent profit. I also decided that I would only enter one trade at a time, so I had better make sure I pick the best prospect. Here is my one trade for the day.

CRM. (10:50:04) Long 150 shares @ 28.68 with a 28.18 stop. (11:58:09) Sold 70 shares @ 29.25. (15:57:19) Close 80 shares @ 29.20.

Overall a 1.06R gain and my first profitable trade. I took partial profits at the 1R mark and let the rest ride. I normally would have setup a tighter stop but wanted to stay loose on this first trade. My stop would normally have been at 28.43 which would have enabled me to buy 300 shares, which would have resulted in double the profits and double the R-gain.

I had one other trade setup and execute, but I cancelled the order before it was placed as I was already in my one trade. It was as follows:

LTON. (11:13:56) Long 700 shares @ 10.80 with a 10.69 stop. This one would have stayed profitable and eventually closed above 2R.

As can be seen my setup is to look for a stock that has risen from the open and prior close, and wait for re-tracement and then to enter once a reversal is likely.

In terms of scans I was using my “Big Up Movers”. This looks for stocks that pass the following filter criteria:

Top 20 from the Change from Open (%) List
20 Day Avg Volume > 200,000
Current Price greater than Open
Current Price greater than Close
Current Price greater than 50DMA (*just added)
Current Price greater than 200DMA (*just added)

I added the 50DMA and 200DMA to ensure the short –term and long-term trend of the stocks was up, not down.

Trading Summary : 11/15/2005

2005-11-15T21:39:00.000-05:00

Still not feeling well, but I came up with a compromise; I ran in DEMO mode.

Still, I only made 1 trade today early on, as I just did not see any other decent opportunities. Here it is.

ISRG. (10:23:19) Long 150 shares at 107.86 with a 106.86 stop. (10:28:07) Closed out at 107.20 for a -0.67R loss. I closed out as the market was not going in the right direction for a long.

I was aware of the market direction when I took the trade, but I wanted to see how it would play out.

After that, the market ($COMPX) was not good till just after noon, when it climbed but not on any decent volume. I stayed out through the lunchtime doldrums and was considering going long when the market turned south at 2:00pm and dropped a long way.

I nearly switched to looking for shorts at that time, but I do not have any decent scans setup yet for them so I passed.

I was trying out a new scan early today that I have called “Big Up Movers”. I was looking for the following using CyberQuant.

Primary Filter: Top 20 values from “Change from Open (%)”
20 day average volume > 200,000
Current Price > $5
Current Price > Open
Current Price > Close

Now, this scan is only useful for the first hour or so but it highlights volatile stocks pretty quickly. In the past I have been scanning for gappers, but this one seems to work better.

Trading Summary 11/14/2005

2005-11-14T23:28:00.000-05:00

Uungghh … damn I feel awful … sweats, aches and pains. So, no trading unless I am 100%. Spoken to some friends who appear to have had the same thing and it lasts at least a week. Boy, that makes me frustrated. A silver lining though; I am not losing any more money !

However, I cannot wait till I can get back in and have another go, but adjusting down my risk to $75 (it was $150) and looking to hopefully improve my entries and stops.

I have a list of things I would like to do during this downtime, but my head needs to be clearer.

Re-analyze my past trades, looking for common setups in my successes (and failures) and seeing if I can determine the optimal entry point (most probably not where I did enter).

Define scans that look for the successful setups.

Sounds easy … doesn’t it ?

Constructive Criticism (pointing out the obvious)

2005-11-13T19:37:00.000-05:00

I have received a lot of comments concerning how I can improve. Please keep them coming as I often cannot see the reasons for my failures and I will treat all comments as educational.

Some interesting ideas have come up. GlobeTrader has suggested I consider limit orders for my stops, with the comment that I only trade stocks with sufficient liquidity to trade at the limit stop. I have considered this option while paper-trading but was unable to evaluate it as CyberTrader will fill all orders at the limit in demo mode, regardless of the limit order setting. I guess this is an idea that I will just have to try out in real life. I am already using limit orders to make my entry though so I see no reason why I could not make this work.

Trader Mike has suggested that I reduce my risk from 0.5% of my equity to 0.25% of my equity until I have a consistent positive expectancy. I will definitely be doing this.

Teresa Lo made some interesting observations too, especially my entering IGT after 10 up bars, and the placing of a more effective stop as on SNDK. Not sure whether I agree on TOMO as I have placed my entry above the $20 mark where the stock kept bouncing. I still think the lack of liquidity was my biggest failing here.

Teresa also mentions that I should have known better given the books I have read. Good point, so perhaps I should re-read the books, as it is obvious that not all the lessons being offered in the books have been learnt.

Finally, being a total beginner in this game, I have yet to develop the necessary mindset to perform well. This will only come with time and experience. Obviously, I am looking to reduce that time to an absolute minimum, but until then, what is obvious to seasoned traders is not going to be obvious to me.

So, please feel free to point out the obvious !

RSS Feeds

2005-11-11T23:23:00.000-05:00

Someone requested that I add an RSS feed so I have done that. You will now find a new section to the right of the site that is titled 'RSS Feeds, etc..'.

I have added a link to the Blogger Atom feed and to a Feedburner RSS feed.

Let me know if you have any problems with either of these, or you wish me to add other flavours (hell, I am English) ok (when in Rome ...) "flavors" of feeds.

I am new to this, just like my trading, so please enlighten me as to what works best, RSS feeds, day-trading entries and exits, or even cooking oatmeal.

Enjoy !

Slippage

2005-11-11T08:25:00.000-05:00

Only five trades into my trading career and I have learnt a good lesson on slippage. When you are trading volatile stocks it is not surprising that your execution price may not be what you desire, especially when getting stopped out.

However, the amount of slippage I suffered on my TOMO trade yesterday (see Trading Summary : 11/10/2005) was significantly larger than I would expect at 26% additional risk loss (eg. An additional $40 on a $150 risk making a total loss of $190).

Was I just unlucky or was there some other contributing factor ? And then it occurred to me … volume.

When I started paper trading I noticed that some stocks would gap significantly at both entry and exit. I mentioned this to Trader Mike and he immediately identified volume as a major contributor. The monthly average volume was low, in the realm of 100k shares. After some adjustments I settled on using a 20-day average volume filter set at 200k shares on both my “Gappers” and “Unusual Volume” scans.

Yesterday Trader Mike IMed me to tell me TOMO had gapped significantly in the morning. He knows I am interested in TOMO as I requested a chart analysis on it the other day. However, I could not find TOMO on my scan and quickly determined that I was filtering it out due to its 20-day average volume being around 150k.

So, I altered my filtering criteria and lowered my filter to 100k. Then TOMO showed up and I felt justified I could trade it.

So, I made two mistakes yesterday that resulted in my expanded loss. Firstly, an emotional attachment to TOMO as I hold it in my IRA caused me to consider a stock I normally would not consider, and secondly, I ignored my earlier lessons on average volume.

So, I will put my volume filter back to 200k and I will add a new rule not to trade any stocks I hold in my IRAs until I can develop the discipline to ignore that factor.

Trading Summary - 11/11/2005

2005-11-11T08:08:00.000-05:00

Yesterday I thought I was fighting a cold or something. Well, today I know I am. Congestion, coughing, the chills and a headache are telling me that. So, no trading today since my risk/reward ratio is off the scale.

Just to ram the point home, I overcooked my oatmeal in the microwave, which is pretty difficult to do given the fact that I have been doing that nearly every day for years now. I am not aware of a better sign that my faculties are shot.

Good luck to all. I hope to return to the fray on Monday.

Trading Summary - 11/10/2005

2005-11-10T17:26:00.000-05:00

Traded three stocks today, all long. Here are my trades.

SNDK. (10:41:37) Long 400 shares at 58.36 with a 57.98 stop. (11:04:43) Closed out at 57.944 for a -1.13R loss.

IGT (12:41:44) Long 500 shares at 27.57 with a 27.27 stop. (13:35:06) Stopped out at 27.25 for a -1.11R loss.

TOMO (13:45:31) Long 900 shares at 20.03 with a 19.86 stop. (14:49:32) Stopped out at an average of 19.8182 for a -1.32R loss.

So, two days into my new career as a master day trader (joke!) and I have chalked up 5 straight trading losses. The good news is that I am being disciplined and ensuring I have stops in place to limit my risk, or at least I thought I had.

Now for the bad news.

Firstly, why am I trading if I am not feeling well. I feel like I am fighting a cold or something today, so I know my concentration levels are not 100%. I should not be trading unless I am 100% willing and 100% able to trade.

Secondly, I had an interesting experience with my stop on SNDK. The stop was set to trigger when the bid hit 57.98, placing a market sell order, routing it as a Smart order. The order was generated as a sell 400 shares at 57.97 on SuperMontage IOC. This order was taken by one of the MMs (Market Makers) and cancelled. Because the order was a smart order, the order was not re-routed. As a result I was left holding the stock without me realizing it. It took me a while to notice, but luckily the stock had not dropped much further, and I manually closed my position at 57.944.

So, I learnt a valuable lesson about Smart orders today. They do not get re-routed. This lesson only cost me an estimated $16 so I am grateful. I think I will be placing CyberExchange orders from now on, at least until I know more about Smart Orders.

But why did I choose a Smart Order to start with ? Simple really. With smart orders you can define how the order can be routed. What I have noticed during my paper-trading was that a SuperMontage market sell often sells below the current bid, sometimes by quite a margin. I think what is happening here is that the market sell order is being routed to a market maker and they are given free reign to set whatever price they like. I need to do more homework on this to make sure I am fully aware of the implications of both SuperMontage and Smart orders.

And as if the above were not enough, there is another lesson; slippage. My CyberExchange Market sell on TOMO was triggered when the bid hit 19.86. CyberExchange split the sell into two orders; one to ARCA at 19.86, and one to SuperMontage at 19.85. I got partial sells on both (140 from ARCA and 59 from SuperMontage … what is with the odd-parcel size ?). The remaining shares then got re-routed and sold across 7 separate orders and a range from 19.81 (BRUT) to 19.75 (SuperMontage again). The end result was about $40 of slippage ! This equates to around 26% additional risk, my risk being $150 per trade. Ouch !

TraderEyal was right in saying that trading for real would bring a new set of lessons to be learnt.

Finally, I am doing something different than when I was paper-trading. I am not religiously using my alerts to place my orders, as I was with paper trading. What I seem to be doing is not trusting my entry until I have had a real good chance to re-consider the it, and by then the stock has often moved on from my trigger point. As a result, I am not placing a “breakout buy” alert, but simply relying on seeing a move in good time and attempting to catch it. As a result I am getting in late on a few trades. IGT is a good example. I got in about 8c above the ideal entry point. I also had a number of decent longs and shorts on my watchlist today but I missed the entries as I was looking elsewhere.

I need to trust my alerts and stop thinking at the entry (thinking == hesitation == opportunity lost). The time to think is before and after the trade. If I do not like the entry after it has triggered I can always immediately get out for a small loss (hopefully).

Trading Summary - 11/09/2005

2005-11-09T16:02:00.000-05:00

First day trading for real. I finally got the email informing me that my account was active. So here we go.

My first real trade as a ‘pattern day trader’ was a short. Nothing like starting with a short as your first trade. I decided to go short as the market was down in the morning. I got my candidate from the “Gapped Down” scan. Here it is.

SNIC. (10:31:05) Short 400 shares at 15.03 with a 15.41 stop. (14:40:17) Closed out at 15.30 for a -0.74R loss.

(13:45:31) Long 600 shares at 28.45 with a 28.21 stop. (14:49:32) Closed out at 28.35 for a -0.47R loss.

I should have closed out SNIC earlier once it was clear the stock was not breaking down as I had hoped. However, I held on as this was my first trade just to see what happened.

I hoped to get some afternoon action with CCI but no luck. At the time of the entry the market ($COMPX) was in positive territory, which is why I switched to longs.

So, I started with a small loss, but I was within my loss limits. I do not feel too different than when I was trading on paper. I need to improve my scans, especially the midday scans, where intra-day volume and volatility are important. However, I console myself that the market today was not a good trading day, at least as far as I could see (perhaps that is a problem).

Trading Summary : 11-08-2005

2005-11-08T21:48:00.000-05:00

Still waiting for my funds to clear so I can start trading for real. In the meantime, I decided to do a bit more paper-trading. Initially I was looking for shorts as the market ($COMPX) started down, but then the market turned, so I flipped over to longs. Took four trades over three stocks during the day. Although I started well, and was up over 3R for a while, I finished up just over -1R down.

Here are my trades.

GOOG. (10:50:04) Long 150 shares at 390.68 with a 389.68 stop. (12:46:08) Stopped out at 391.46 and a 0.77R gain.

NTMD. (10:52:11) Long 600 shares at 19.07 and a 18.82 stop. (12:15:21) Stopped out at 19.16 for a 0.31R gain.

GOOG. (13:28:00) Long 300 shares at 390.22 with a 389.72 stop. (13:43:34) Stopped out at 389.70 for a full -1.06R loss.

AAPL. (13:31:16) Long 500 shares at 60.01 with a 59.71 stop. (13:50:23) Stopped out at 59.71 for a full -1.04R loss.

As you can see I tried something new today. Neither GOOG nor AAPL turned up on my scans, but I usually watch GOOG, AAPL and SNDK just for the hell of it. So, I decided I might try and trade them. NTMD showed up on my gappers scan.

Started off well with GOOG. I entered off quite a long RB (reverse bar) so I had a $1 risk spread. I liked the entry as 390 was such a nice round number and hence a possible support line. When it dipped below 390 but then recovered back over 390, I was ready to enter. Nearly got 3R out of it before it turned and dropped. The one mistake I made on this trade was not taking partial profits. I could have taken 50% at 1R and still finished higher than I did.

My second trade on GOOG was not so good. I saw the market rise, so I looked for GOOG to turn. The hammer at 13:15pm had me fooled, and I entered before it finished. However, I was too early and should have waited another 30 minutes for a better entry. I should have pulled the plug the moment the new bar started down.

NTMD was an OK trade. Saw nearly 2R out of it before it turned. Again, the one mistake I made on this one was not taking partial profits.

AAPL also fooled me. I entered off the 13:15pm hammer but then this one turned and dropped again. Once more, I need to be prepared to cut quickly when entering off a reversal bar.

I simply must remember that capital preservation is priority #1.

Nearly there ...

2005-11-08T09:19:00.000-05:00

CyberTrader have my checks and are awaiting clearance which should happen sometime today. We got hung up a little bit over my green card which I was having trouble faxing over to them.

Still, no real trading for now while I wait. I did dabble in a little shorting yesterday and came out down, but I was not 100% on top of things due to work commitments and concentrating on my scans, so I am not writing them up.

I was looking for the market to roll over yesterday but it did not happen. It went sideways for most of the day, then rallied a bit in the afternoon. So, perhaps we will get some selling today. As I type, the market just opened and $COMPX opened lower.

I might take another look at SNDK for weakness again, as I did yesterday. Saifun's new NRON technology should stir things up for them.

Finally, I will again be concentrating on my scans again today. I want to use CyberQuant to identify unusual suspects; increased volume and volatility, and to show good gappers.

Where is the market going next ?

2005-11-07T08:53:00.000-05:00

Six days closing above the prior close is impressive. There was a slight pause at the 50DMA that resulted in an inner bar, but the rise from the 50DMA was impressive. However, on Thursday we gapped up and formed a shooting star, opening the possibility that a top had formed. However, Friday closed higher but not convincingly so as it closed below the Thursday high and the volume was down.

So, what do we have in store ? I feel like two-face in "Batman Forever". On the one hand we could be having a little pause before resuming a climb as the Friday hammer might seem to indicate, or we could see profit taking drive the market down somewhat, although I would be surprised to see it drop back as far as the 50DMA. Perhaps the Thursday morning gap might be a reasonable place to land, either bouncing off the top of the gap, or filling it before going higher again.

We should have some idea by lunchtime today where we are going. I might stay on the side-lines till then. Damn, I am sounding like Trader Mike.

Did I miss something ?

2005-11-03T18:17:00.000-05:00

Now its a known fact that most of the stock market gains (or losses for that matter) occur on just a few days every year. What are the chances that I pick one of those days to take off (Wednesday) ? A very solid recovery in all the major indices was had while I was heads-down working my other job.

Today (Thursday) was also a good day to day-trade with solid volume and a lot of volatility, so that is a total of two good days missed. I know that Trader Mike has had a good few days. I could not believe that someone posted a comment about him being on the side-lines. He just does not post his trades, that's all, just his thoughts on the market as it happens.

So, I missed some great opportunities, but I console myself with the thoughts that (a) unless I can be 100% on top of my day-trading I am better out of it, and (b) its only paper-trading anyway although I need the practice !

On the paper-trading front, the funds to open an account are on their way to CyberTrader as we speak. I am hoping they will be in place for sometime next week. If that is the case, we will start trading for real, assuming I can get away from my "real" job.

Am I scared ? Hell yes. There are plenty of unknowns and possible pitfalls ahead. Will I personally behave in the same manner when my money really is on the line ? Will my orders be executed as I have come to expect in demo mode ?

But I am excited too. I tell myself that there are people out there consistently making good money at this, so why can't I ? I do not consider myself a stupid person, although I do not consider myself exceptionally bright either. This journal and the time taken in practicing is more than a lot of others do, so I feel good about that. I believe it has been time well spent and will allow me to measure the difference between "real" trading and "paper" trading.

So, I am going to try and wrap up my existing workload in the next few days, so that I can be 100% focused when my funds are available. In the meantime, if I can free up some time to paper-trade some more, or if anything notable is worth posting, I will do so.

Trading Summary : 11/01/2005

2005-11-02T08:51:00.000-05:00

No trading today. For one, my "other job" intervened, as it will now for most of this week. Also, as I mentioned in an earlier post, my In-Laws are with us, so I am duty-bound to spend time with them. Went to IKEA on Monday, might have golf on Friday. We bought an aquarium too (not at IKEA) as a present from the grand-parents to my two daughters, and I was up to midnight last night setting it up. That is why there was no post last night.

If I get the chance to do some trading I will write it up. Otherwise, it will probably be next week before my next post.

Good luck to all.

Trading Summary : 10/31/2005

2005-10-31T21:29:00.000-05:00

Happy Halloween !

Only had time to trade in the morning today, but had a good one. Took out four trades (but only two at a time) and only lost on one of them. I have to thanks a number of others that have posted some great feedback recently about taking partial profits. It paid on my one big trade today, so thanks !

Here are my trades.

SSW. (10:21:56) Long 600 shares @ 19.10 with a 18.86 stop. (11:20:14) Closed at 19.12 for a 0.03R wash as I had just taken another trade (CELL). Note : Chart corrupted.

ORCT. (10:58:34) Long 1000 shares at 20.45 with a 20.35 stop. (11:29.50) Closed 500 at 21.10 for a 6.38R gain. (11:37:29) Closed at 20.85 for a 3.88R gain.

CELL. (11:19:36) Long 300 shares @ 21.05 with a 20.67 stop. (11:39:38) Closed at 21.25 for a 0.49R gain.

NWRE. (11:22:18) Long 500 shares @ 18.55 with a 18.28 stop. (11:25:12) Closed at 18.50 for a -0.23R loss as I had violated my 2 trade rule. Note : chart corrupted.

Overall an average 1.1R gain for the four trades; a very nice result. However, some significant mistakes were made.

I miscalculated my entry into ORCT and bought 1000 shares instead of the 200 I should have. That is a serious miscalculation as I was risked $750 instead of the $150 I usually do. I swiftly moved my stop-loss up to compensate. However, as a result of my miscalculation, I got my best result. I also decided to self half at a good point (6.38R) to lock in profits, then sold the rest shortly after for less.

NWRE was a mistake. I still had an alert to buy the stock even though I was already in two trades. However, I had set it up as SSW was not performing as well as I would like, but I had already swapped it for CELL by then. So, I quickly closed the trade when it did not perform immediately.

Information Overload

2005-10-28T22:30:00.000-05:00

Limiting my concurrent trades to just two during the last two sessions has made me realize what was happening when I first I installed the CyberTrader Pro platform; information overload. I outlined the problem in my Stop the Insanity post.

I had the platform running over two monitors with one monitor dedicated to intraday charts of the stocks I was following. I had three rows of three charts, nine in all. I did not apply any organization to the nine charts so it was difficult to tell which chart related to current trades I was in and which were potential candidates.

I was also getting distracted by looking at all the charts seeing if there was any other possible trade I could jump on. As a result I was not following existing trades closely enough.

Finally I was getting tempted to jump into any stock that showed even the smallest possibility of moving up. This was due to my excitement of getting a real-time multi-chart capability.

Now that I have had a few days to reflect on the problems, I saw a parallel with the problem Nicolas Darvas described in his book How I Made 2,000,000 in the Stock Market when he moved to New York having made a small fortune.

So, what adjustments have I made ?

Yes, I have limited my concurrent trades to two as I alluded to in earlier posts. However, to reinforce this rule I made some subtle changes to my screen layouts. I still have nine charts on my second monitor but I now dedicate the 1st row of three to the two trades I am in and a 3rd chart showing the market indices.

That solves the problem of knowing which charts relate to my existing trades, and keeps me down to two concurrent trades as that is all I have room for on the first row.

Now, to remove the distraction of the other six charts showing other candidates, I placed my position sizing / R-tracking spreadsheet between the first and second row of charts, and I pull it down over the other two rows of charts once I am in my two trades. That way I can also track my R-factor success or failure as well as removing the distraction of the other charts.

It is amazing how much more in control I now feel.

Trading Summary : 10-28-2005

2005-10-28T21:02:00.000-05:00

An interesting day today. The markets opened higher today but then showed a lot of weakness for most of the first two hours. As a result I went short. However, it was at 11:45am that things got very interesting. The market surged, both price wise and volume wise and my shorts were history.

At that point I decided to call it a day as I had errands to run. The in-laws are flying in tomorrow and the spare bedroom’s built-in closet needs finishing ! Home D-I-Y is my escape / therapy.

Looks like I missed a great day for longs. Here are my two shorts I took, following my rule that I will only hold a maximum of two trades at any one time.

TKLC. (10:13:38) Short 250 shares at 14.02 with a 14.62 stop. Moved my stop up as it dropped. (11:45:44) Stopped out at 13.64 and a 0.61R gain.

UHCO. (10:59:36) Short 500 shares at 15.01 and a 15.25 stop. (11:45:12) Stopped out at 15.25 for a -1.05R loss.

Why did I go short ? Apart from the fact that I need the practice, per my Stop the Insanity post the other day, the early market trend was clearly down even though they were still in positive territory from the prior day, and it’s the trend that counts (Trader Mike I think its starting to sink in).

TKLC was a wide entry as I had to place my stop above the spike at 14.55 and I got in a little late. However, I violated my DO NOT TRADE BEFORE 10:15am rule even then and that is why I was a little late. However, technically a good entry and the stock showed weakness. It got over 1R before recovering and holding around the 14.00 mark. That had me concerned so I tighten the stop up. Good thing too.

UHCO had a tighter stop but then the upwards surge at 10:45am was not that strong so I am not surprised I lost on this one. However, its all practice. Almost had a 2R gain on this one at one point but boy do things move fast when you have a small risk spread !

Trading Summary : 10/27/2005

2005-10-27T14:46:00.000-05:00

So, after the last two days, I have decided to exercise some extra discipline as follows:

I will only take a maximum of two trades at a time. I hope this will allow me to concentrate more on the trade I enter, and make me more picky about the two I take so increasing my win/loss ratio.
I am going to concentrate on shorts, if the market is anything but up.

Intriguing difference. I ended up taking five short trades, but only two at any one time. I suffered full losses on four out of the five, but the fifth was a nearly 6R gain in the end (it was over 7R at one point). My overall result was an average 0.26R gain for the five trades.

APCC. (10:45:11) Short 400 shares at 22.00 with a stop at 22.31. (11:15:19) Stopped out at 22.31 for a -1.04R loss.

NTGR. (10:38:15) Short 350 shares at 18.21 with a stop at 18.63. (11:19:33) Stopped out at 18.63 for a -1.03R loss.

CRDN. (11:20:33) Short 300 shares at 38.51 with a stop at 39.35. Miscalculated the position size so ended up with a $252 risk instead of $150 (ouch). (11:30:31) Stopped out at 39.35 for a -1.01R loss.

CRDN part II. (11:33:29) Short 300 shares at 39.25 with a 39.75 stop. (14:48:18) Stopped out at 36.66 for a 5.82R gain … yeah !

FOXH. (11:50:24) Short 400 at 47.26 and a 47.56 stop. (12:37:27) Stopped out at 47.58 for a -1.11R loss.

A better result even given the mistakes I made. Here they are.

My first entry this morning was going to be in SKE at 10:15. I was setup for a 64.02 entry and a stop at 64.21. Had it loaded into the stock box and ready to go, but I hesitated and pulled back from the trade. I guess I was feeling nervous. I would have missed one hell of a ride. This could have been a nearly 50R gainer ! I just want to cry … I guess you do not see too many of those.

Well, CRDN made up for some of that. I saw the stock approach its 200 SMA on the 15 minute chart, so I entered. Got blown out as it blew past the 200 SMA. However, it very quickly turned and dropped back so I decided to get another entry and rode it all the way down to its retracement around the $36 mark. Nice ! Nearly a 6R.

The right time to have entered NTGR was after the 11:15am spike, not before. I nearly entered again and wish I had. The only problem is that I am not yet comfortable with working out a risk spread without the aid of a bar to work off. Looking at it now, 19.00 made a resistance level so I could have set a stop-loss above that. I should have entered at 18.97 or higher with a 25c risk (600 shares). It would have been a 3R+ gainer from there.

With APCC I just missed getting in off its spike towards the 200 SMA on the 15 minute chart, so I took a later entry and paid the price.

FOXH was another 200 SMA off the 15 min chart play. It bounced along underneath for a while before breaking through and taking out my stop. I guess that if it does not totally re-coil from the line, its going to have a good change of getting through at some point. Also, Trader Mike made a good observation that it was not far from its 50 DMA.

Good practice and a positive result even with just one winning trade out of five. Hopefully some lessons learned on entering shorts today. Let’s see if we can continue the good progress tomorrow.

Limit Order Entries and the CyberTrader Pro Demo mode

2005-10-26T22:34:00.000-05:00

Running the CyberTrader Pro platform in demo mode has made me question my entries. The problem with demo mode is that when you place a limit order you immediately get a fill at your limit no matter how crazy the limit. I proved this by entering a $30 stock at a limit price of $1; I immediately got my fill.

Now, the good news about demo mode is that the alerts appear to work well, but I am concerned about the actual execution, especially after talking with Trader Mike. Trader Mike will simply use an alert to bring to his attention that a stock has reached his buy point. He then loads the stock box manually and enters using a market order as long as (a) the stock price is still within reasonable limits, and (b) the bid/ask spread is not too large.

I am thinking there must be a better way. What I am looking to do is have my alert load the stock box, then place a limit order but with manual confirmation. That way I get the order already loaded up and I just have to hit the ‘Place Order’ button after quickly glancing at the stock box.

To improve my chances on getting an entry I am looking to place the limit above the alert trade price, basing the difference between the trade price and my limit entry on the typical size of the bid/ask gap.

I am not able to validate this entry concept in demo mode for the reason I described to start with; my limit will get filled regardless. I guess I will just have to see how it pans out in reality.

Does anyone have any opinion on this ? Am I crazy or is there some merit to my intended type of entry ? Also, any other comments or opinions on the CyberTrader Pro platform demo mode ?

Stop the Insanity ...

2005-10-26T22:14:00.000-05:00

I want to get off !

Seriously, I cannot continue like this. I obviously did not learn my lesson yesterday. I thought 9 trades yesterday were too many, so I try 13 trades today ! I ended up with a -0.16R average loss over my 13 trades.

So, clearly something is wrong here, other than each individual trade. There is something fundamentally wrong when only 3 of the 13 trades were in positive territory. Firstly, that is way too many trades; great practice on the CyberTrader Pro platform, but not so great for my trading career.

So, too many trades is one problem. Having nine concurrent charts plotting is fun, but I think it might be distracting me from monitoring existing entries, as it allows me to keep looking for more opportunities. I am thinking I should stop looking for more entries after I have two trades open, so I can concentrate on my stops. Also, I hope that knowing I will only trade 2 stocks at a time will make me more careful on the entry.

Another problem was pointed out to me by Trader Mike. Why was I consistently going long while all the market indicators from 11:15am onwards pointed to a down market ? Two problems here. Firstly, I lost sight of the market indicators. Why am I taking longs out when the market is declining ? That is swimming against the stream.

Secondly, why am I not looking to try some shorts ? The simple answer is that I am comfortable going long. I have no experience playing the short side and I am not sure if running the CyberTrader Pro platform in demo mode will provide me with a realistic experience. I really need to conquer this demon though. Perhaps I should try to go exclusively short for a few days, regardless of the market direction.

I also want to look at other factors such as the time of day I am takng trades out to see if there is a trend there.

Trading Summary : 10/25/2005

2005-10-26T22:01:00.000-05:00

A very ugly day today. I decided to concentrate on the long side early on and never changed my mind. By 2:00pm I had taken out 7 trades and been stopped out or had closed on all of them, and everyone for a loss or a wash. Terrible.

I nearly quit there for the day, but I decided to see if the indices ($COMPX and $SPX) might get a lift from an oversold position in the afternoon. I got my wish just after 2:30pm and took a couple of longs and was able to regain my losses minus commissions.

Overall a -0.05R loss (that includes commissions) over the 9 trades. Here are my trades.

BIDU. Long 100 shares (10:35:05) at 87.03 with a 86.02 stop. Closed out (10:47:00) at 87.03 for a -0.01R loss as the stock was not moving as hoped.

COH. Long 600 shares (10:45:25) at 32.93 with a 32.68 stop. Closed out (11:04:23) at 32.87 for a -0.29R loss as the stock was not moving as hoped.

ILMN. Long 500 shares (11:07:20) at 14.62 with a 14.35 stop. Closed out (12:12:11) at 14.50 for a -0.49R loss.

BTUI. Long 800 shares (11:52:10) at 14.05 with a 13.88 stop. Stopped out (11:57:58) at 13.88 for the world’s fastest -1.07R loss (less than 6 minutes).

RNOW. Long 1600 shares (12:12:00) at 14.77 with a 14.68 stop. Stopped out (12:23:24) at 14.68 and a full -1.13R loss.

DNDN. Long 2000 shares (13:02:05) at 6.71 with a 6.64 stop. Stopped out after moving my stop up at 6.72 and a -0.03R wash.

COH. Long 600 shares (13:09:16) at 32.13 with a 31.89 stop. Stopped out (13:12:36) at 31.88,a -1.09R loss and a new world speed record (3 minutes and 20 seconds … wooh !)

Those were the 7 trades. So, time to take a breath, concentrate and try to get some back.

DPZ. Long 700 shares (14:33:07) at 23.08 and a 22.88 stop. Closed out (15:05:42) at 23.55 and a 2.29R gain.

SNWL. Long 1300 shares (14:45:04) at 6.42 and a 6.31 stop. Closed out (15:02:21) at 6.58 and a 1.35R gain.

Now for the trade analysis …

BIDU. Good call on the close as the stock turned down. No complaints there.

Two trades on COH. First trade, no complaints on the first one as I closed out early before the stock dived. On the second trade I traded off a hammer. I guess I should be more patient and get a full confirmation on the next candle before entering.

ILMN. This one looked so nice until 12:00pm. Volume was increasing at it climbed. Entering off the hammer worked this time. Closed out went it just dropped like a stone. Not sure if anything was wrong on this one.

BTUI. Mmm .. I took an entry off an NRB (Narrowing Range Band) since it was up. But it was still under the prior candle’s open. Perhaps not technically a good move.

RNOW. Dumb trade of the day. Lower volume on the rise, then higher volume on the drop. The entry was off a tombstone (is that correct ?) so that was not good. Then the volume and price action should have made me pull the plug before I hit my 1R loss. I did not watch my trade closely enough.

DNDN. No complaints here. I managed the trade and kept it at a wash. Just wish I got into the stock earlier.

DPZ. I am pretty nervous by now so I am watching level-II like a hawk. At the first sign of weakness I am out. Could have gotten more holding but I feel I did the right thing under the circumstances.

SNWL. Just like DPZ, I was watching level-II and exited at the first sign of weakness.

In summary, there are some larger problems other than the individual trades. Firstly, I am taking too many trades again, although I can justify it for now while paper-trading as it is letting me get used to the CyberTrader Pro platform. Perhaps I am suffering information overload as I am looking for the next trade while in trades already. Perhaps my comfort level is 2 stocks at a time.

Trading Summary - 10/24/2005

2005-10-24T21:52:00.000-05:00

I am finally back from my business trip. I was hoping to be back Thursday, but had to stay through Friday. It took me a little while to get started this morning so I was not able to take advantage of the early morning movement. I took my first trade at 11:21am and frankly struggled from that point.

I took out 6 trades today for a -0.21R overall loss. Here are my trades.

BTUI. Long 600 shares (11:21:56) at 12.73 with a 12.48 stop. Closed out (11:34:08) at 12.70 for a -0.17 loss as the stock was not moving as hoped.

BTUI. Long 600 (12:58:43) at 12.76 with a 12.48 stop. Stopped out (14:51:27) at 13.14 for a 1.31R gain.

ABFS. Long 400 shares (12:24:42) at 39.31 with a 38.94 stop. Stopped out (12:35:30) at 38.91 for a -1.11R loss.

JCOM. Long 200 shares (11:33:18) at 43.78 with a 43.16 stop. Closed out (15:57:49) at 44.23 for a 0.71R gain.

CAMP. Long 1100 shares (12:49:48) at 10.96 with a 10.83 stop. Stopped out (13:54:44) at 10.83 for a -1.09R loss.

EFII. Long 1200 shares (14:19:10) at 24.29 with a 24.17 stop. Stopped out (15:41:37) at 24.18 for a -1.02R loss.

I believe I did the right thing in closing out BTUI on the first trade as the stock quickly fell back into its channel. So I raised my breakout buy another 3c and set it up again. Got in nicely the second time and saw a 3R gain at one point (nearly 4R). I had moved up my stop-loss to 13.15 but I should have been more aggressive. The doji star at 2:15pm was a potential reversal candle which was confirmed by the next candle. I should have closed out at that point rather than let it drop further.

On ABFS, I had a breakout buy setup off the 11:45am candle but then did not remove it when the 12:00pm candle blew it out. As a result I got an entry at just about the high and then immediately got stopped out for a full loss. Lesson learnt; clear breakout buys if a following candle breaks the initial stop-loss.

On JCOM, I setup off the 10:45am candle with a large risk spread of 62c, bigger than I normally like to see. I could (or should) have tightened up on the risk spread off the next candle. If I did that I would have seen a nearly 4R gain at its high, and a 1.79R gain if I closed at the same time.

On CAMP, I guess I was unlucky. I missed the big runup but thought we had a good entry ready for a second run. Unfortunately the stock turned and dropped. Not sure if I could have avoided this one.

EFII was my last trade. Looking to take advantage of some 2:15pm action. Setup off the 1:45pm candle but did not get my entry until just after 2:15am. The 2:00pm candle was wider than the 1:45pm candle so perhaps I should have removed my buy alert, but it was only just slightly bigger. Volume was not that good on the candle I bought on so perhaps I should have been more careful.

I guess I was a bit sloppy today. If I was more on top of things, I would have had a significantly better result. Concentration is key; and practice.

Trading Summary : 10-17-2005 through 10-20-2005

2005-10-17T08:30:00.000-05:00

I just get the CyberTrader Pro platform up and running, and I get a call and have to go away on business for a few days. I should be back Thursday night so my next post should be for Friday 21st October.

I am taking some good books to read on the flight and in the hotel, so I might need to do a write up on what I get out of them.

Good luck to all.

What is 'R' ?

2005-10-14T21:22:00.000-05:00

One of my posts elicited a question about ‘R’ and what it is. So, I thought I would explain. ‘R’ stands for risk. When trading, day-trading or otherwise, you need to know both your entry and your exits, unless you are into gambling. The difference between your entry and your stop-loss exit is your risk or ‘R’.

However, there really is a little more to this. I want to limit my risk per-trade to a percentage of my equity (0.3% in my case) and that is the size of the trade. For example, let’s say I am willing to risk losing $100 per trade. If I find a stock X that has a difference between the potential entry and stop-loss of 25c, I could buy 400 shares of X, have my initial stop-loss triggered and lose only $100. If I had bought 1000 shares, I would lose $250; too risky !

So position size is a key element of the risk. I have a spreadsheet that tells me what my position size is, given my per-trade risk and the potential entry and stop-loss. I then setup my order and wait for it to be filled.

So, when I refer to ‘R’ in terms of my R-gain, I am talking in terms of my per-trade risk. So, if stock X has a risk of 25c between the entry and stop-loss, I buy 400 shares. If the stock climbs 50c above my entry I am now at 2R. You can arrive at 2R two different ways. One way is to simply divide the gain (50c) by the difference between the entry and initial stop (25c). The other way is to look at your gain financially. I should be $200 up if the stock climbed 50c.

Using ‘R’ has three very interesting side-effects. Firstly, when looking at how a stock is performing while entered, if I look at my R-gain instead of the $ gain, I am not caught in the trap of closing the stock prematurely. This is purely psychological, but seeing a 3R gain does not come with the emotional baggage a $300 gain would. It allows me to concentrate on the trade in an abstract way without the distraction of counting $’s, which is one of the seven deadly sins in Tools and Tactics for the Master DayTrader.

The second side-effect is that it allows you to take much larger trades, in high value stocks, than you might otherwise be inclined to take. Again, the reason is that you are thinking in abstract, trade-performance related terms, rather than monetary terms. I know that in the past I have baulked at trading stocks over $100 since the trade cost would be so high.

The third side effect is that you can determine how successful a trade is, which is not always obvious while watching a chart, especially when the chart re-scales as a stock climbs. It is amazing how often you think a stock is performing fine looking at its chart, but then you figure out you have only got a 1R gain as your risk (entry to stop spread) was so large.

The only disadvantage is that it is not easily possible to ‘see’ your R-gain while trading. My spreadsheet extrapolates R out to 10-R for me so I can quickly relate the current stock price to the appropriate R-factor. However, when I was using the Ameritrade streaming charts, I was drawing horizontal trend-lines on my charts at the R-marks (1R, 2R, etc..). Seeing the R-gain visually was a great cue to how well the trade was going, or not. Once I get more conversant with CyberTrader’s charts, I would like to do the same again.

Trading Summary : 10-14-2005

2005-10-14T17:48:00.000-05:00

This was my first full day (paper) trading using the CyberTrader Pro platform. I noticed that my limit orders were filling if my limit was at or higher than the bid, and did not always match the last sale. So, not sure how that will work out in real life. I tried a market order on one of my later entries and got in 5c above my trigger point … ouch.

Also, the closing at the end of the day got erratic. On one stock my close was 4c below the bid and last sale I saw so not sure why I had such a low close ! On the other I did not fully close and had some shares unsold (holding overnight). I guess I need to think about exiting earlier than 3:58pm ! However, it was a market order placed more than one minute before close so something screwy was happening.

Anyway, took 9 trades today for a 0.69R overall gain. Here are my trades.

CELG. Long 400 shares (10:34:48) at 49.95 with a 49.50 stop. Stopped out (14:39:26) at 51.49 for a 4.13R gain.

BCRX. Long 500 shares (10:53:12) at 14.88 with a 14.54 stop. Closed out (12:05:47) at 14.97 for a 0.23R gain.

HLEX. Long 500 shares (10:48:18) at 22.45 with a 22.18 stop. Stopped out (12:47:31) at 22.93 for a 1.73R gain.

HLEX. Long 700 shares (14:30:07) at 22.88 and a 22.69 stop. Partially closed out (15:58:42) at 23.14 for a 1.31R gain. Still holding 100 shares on a market sell … not much sense.

ERTS. Long 700 shares (11:20:00) at 54.36 with a 54.16 stop. Stopped out (11:35:53) at 54.18 for a -0.96R loss.

JAKK. Long 1000 shares (11:43:15) at 16.62 with a 16.59 stop. Stopped out (14:22:39) at 16.63 for a -0.02R loss.

CHIC. Long 500 shares (12:09:24) at 17.10 and a 16.84 stop. Closed out (12:37:31) at 17.01 for a -0.39R loss .

CHIC. Long 1000 shares (13:15:23) at 17.21 and a 17.07 stop. Closed out (13:41:23) at 17.11 for a -0.80R loss.

SIRF. Long 500 shares (13:34:04) at 27.53 and a 27.25 stop. Closed out (15:57:20) at 27.76 for a 0.78R gain.

I was a bit upset over BCRX. I read an announcement stating that the bird flu is not as transferrable as people think and thought that might adversely affect the stock, making me close the position early. I would have been far better off not knowing and just playing the chart. Could have realized a 6R gain on it.

HLEX was fun. Two entries, one for 1.73R and the next for 1.31R. I had no problem getting out and back in again given the per-equity commission structure.

CHIC was disappointing. I tried two entries and lost on both.

Overall, not too bad for my first “almost” live trading day. Thanks to Trader Mike for the inspiration.

Watching a trader at work (10/13/2005)

2005-10-13T20:32:00.000-05:00

Today I went and paid a visit to Trader Mike to watch him through a live trading day. Mike does not start to trade until 10:15am at the earliest, and 10:30am most likely. Mike gets his prospects from a number of sources; his prior evening’s swing trade scan, the In-play gappers, a new high with volume scan, and a trade-ideas scan.

Given the markets’ recent drop Mike was concerned about going short unless the market was really in a funk. So, he was scanning for both longs and shorts to start with, but settled to go long by 10:00am. However, nothing was really showing up on the real-time scans, indicating that the market was really quiet.

Mike has a rule that the NASDAQ has to be above its 10:00am high (he follows QQQQ as a good substitute) before he will execute trades. We saw a couple of possible entries at around 10:30am (AAPL, TMO and PLAY) but Mike’s rule on the NASDAQ kept him from pulling the trigger. I teased him a little at this point saying I would have taken the trades.

Once the QQQQ was up, there were no good entries in the stocks we were following, so we waited the market out. When the market turned down at around 12:20pm we decided to go grab some lunch.

We returned just before 2:00pm and he immediately got to work. Entries showed up and Mike took some of them (TMO, PLAY, GOOG, DNA). Now, Mike is using the alerts in CyberTrader Pro to simply issue and audible alert, and not to either automatically place an order or fill the stock box. He does not load the stock box as he has seen multiple alerts fire off at almost the same time, overwriting the stock box mid-entry. Mike will not place an automated order as he likes to check the spread before placing an order.

We had fun watching GOOG test the support at 300, then break through it. We watched it drop then come back up and hit resistance at 300 a couple of times; a very good example of a prior support line becoming a resistance line once broken through. Mike took a bet that GOOG would break through the resistance and went long just below 300. It failed and he was stopped out.

All told, at the end of the day Mike had taken 4 trades and finished down on the day by a small amount. I teased him on AAPL stating he would have been up near $1,000 if he took the 10:30am trade.

An interesting experience. What impressed me the most was the patience Mike exhibited during the morning waiting until all his rules were met. Also, the speed and smoothness with which he entered trades was impressive. He placed two trades without me even noticing ! I guess that smoothness comes with plenty of practice.

Finally, we had some issues with both the CyberTrader Pro platform and eSignal. Both CyberTrader Pro and eSignal stopped updating their charts properly at different times, resulting in each application needing to be re-started. Also, the eSignal Net Data Manager failed once during the day. Mike assures me that these issues happen from time to time, but not too often. Apparently today was a pretty bad one. We also talked about the reliability of internet connections (we both have the same cable internet company) and what the fallback situation could be. The answer; call CyberTrader and close all positions, and have persistent (server-side) stop loss alerts.

Trading Summary : 10-12-2005

2005-10-12T20:44:00.000-05:00

Started up the CyberTrader Pro simulator this morning and quickly found that the alerts were not triggering (again). Also, I noticed that the timestamps on the ticks were not moving beyond 9:30am, and as a result the charts were not plotting along their timelines.

So, back onto Live Chat Support, and was told that the data capture from the previous day was screwy and would need to be rebuilt. So, there I was thinking that there goes another day, when one of the support people (there were 3 on the chat session) suggested I contact a Sales Rep and get a “live” guest ID to use the real CyberTrader Pro software on the real live feed, but to run it in Demo mode. This I did, I got my guest account and I downloaded the software.

So, now I can paper-trade using the same trading platform as for live use, and with real-time live data, which enables me to use my other existing systems to scan and filter candidates and to calculate position sizes. Perfect !

So, it was about 1:00pm and I am ready to try out some trading on the real CyberTrader platform. I took out 6 trades (details in a later post) and made a 0.22R gain on average. I let one trade go all the way to a loss just to test out the stop-loss so I could have done better.

The biggest mistake I made was not transferring the appropriate position size over. As a result, my biggest gain was sized 2.5 times smaller than it should have been. That would have given me a 0.4R gain overall.

However, not too bad a start to “almost” live trading. Almost time to open that account and fund it.

Trading Summary : 10-11-2005

2005-10-11T13:44:00.000-05:00

No trading today either. Working on the blog a bit and performing more testing on the CyberTrader Pro platform. I am currently trying out their alerts to see how well they support the breakout buy entry and my stop loss entry.

What I really wanted was to be able to enter both the entry and exit criteria at the same time, then have the platform execute my entry when the breakout point is reached, then automatically enter my stop-loss too once an entry is achieved.

OK, so, it looks like specifying the entry using an alert template is easy. However, then setting up a conditional alert / limit sell order is not. So, if anyone knows how to do that please let me know.

Just tried out the live chat support as my alerts were not being triggered. It appears that the relevant alert service on their demo system is not running right now. I hope that is not a common problem. The good news was that the support was fast and efficient in identifying the problem was their end, not mine. Its just a shame that they could not give me any indication when it would be up. So, I am stopping for the day.

Book Review : Trade Your Way to Financial Freedom.

2005-10-11T09:53:00.000-05:00

If you are serious about wanting to trade for a living then this book needs to be at the very top of your list. I really mean it.

Firstly, this book will not show you how to pick winning stocks or other markets, there are plenty of books that purport to tell you that. No, the topics in this book are far more important. It will cover risk management, expectancy, position sizing, the need to develop a sound trading plan, and the fact that trading is not about winning each and every trade, but winning overall.

This book really filled in a lot of the unknowns in my dream to trade for a living. Here is a list of the benefits I realized from it.

Defining my per-trade risk based on a percentage of my total equity value. I use a 0.3% risk (I am willing to lose 0.3% of my equity per trade). This means that I could lose 10 trades in a row and only lose around 3% of my total equity. This amount of risk is my 1R risk factor I refer in my trading summaries.

Defining a position-sizing algorithm based on the per-trade risk and the difference between my entry point and initial stop-loss, ensuring that the maximum loss will be my per-trade risk. I use an Excel spreadsheet that will calculate the position size given the entry and stop-loss values.

Monitoring wins and losses in terms of my R-Factor, both at an individual trade level and at a summary level. My overall R-Rating is really a measurement of the success or failure of my trading plan.

Measuring my overall expectancy (% of winning trades * average win) / (% of losing trades * average loss). Not only do you get a good handle on how financially successful your trading plan is (or not), but you also get some insight into which area needs improvement (even more important).

Possibly the only thing missing is a strong emphasis on keeping a solid journal. A good journal will allow you to analyze your prior trades to determine your weaknesses and strengths and allow you to evaluate changes to your trading system. However, I believe that his other book Financial Freedom Through Electronic Day Trading covers that topic.

Let me know what you think of this book. Do you think there is a better one ? Please let me know.

Trading Summary : 10-10-2005

2005-10-10T17:17:00.000-05:00

No trading today. I had some errands to run first thing this morning, and then I decided I would start to evaluate the CyberTrader Pro platform. I signed up for their 30 day trial last Friday and downloaded their simulator.

Evaluating a trading platform is my next step prior to live trading. I want to make sure the platform provides me with the tools and features I need. I also want to familiarize myself with the platform so that I can confidently place trades, stops, and execute exits.

Why CyberTrader ? Well, they are one of only a few brokerages that offer per-share pricing as an option, which makes a huge difference to your approach. Knowing that to get in and out of a stock will only cost me 1.2c per share regardless of the stock price is great. Take that concept and apply it to high-priced stocks, and you have a negligible commission.

More later.

Trading Summary : 10-07-2005

2005-10-10T16:35:00.000-05:00

Set myself a new objective today. I will reduce my trading to four stocks, as I believe one failing I have been guilty of recently is being too trigger-happy and attempting to trade too many stocks. However, I will allow myself multiple trades per stock if the opportunity arises. I am hoping that this will force me to be more careful in my entries and more focused on monitoring the stock and managing my exits more effectively.

I also decided to use breakout entries 3c over the prior candle’s high rather than my customary 1c. I am hoping that this will reduce the number of false breakouts I enter.

I used Briefing.com’s In Play Gapping Up list and the NASDAQ Unusuals to provide my candidates.

PHRM. Entered off the 10:30am candle with a 20.83 buystop and a 20.56 stoploss. Rose to nearly 1R then noticed the DJIA and NASDAQ go lower, so I decided to watch closely for weakness. As the stock started to turn down and bump along against support at 21.00. Decided it could break that support and really drop, so I sold at 21.02 and a 0.66R gain.

NTLI. Entered off the 10:30am candle with a 63.40 buystop and a 63.06 stoploss. It initially rose, not quite getting to 1R then turned and dropped some. Since the market had also dropped, I decided to exit at 63.30 (at 10:49am) for a 0.33R loss.

NGS. Entered off the 10:30am candle with a 27.03 buystop and a 26.55 stoploss. This was quite a wide entry (48c) so I was a little concerned. I should not have been. The stock rose strongly to 11:15am and peaked close to 5R. Then it started to re-trace so I decided to close out the position at 11:31am for 28.90 and a 3.87 gain. The stock then rose and settled into a sideways pattern on lower volume.

NGAS. Entered off the 10:45am candle with a 13.17 limit and a 12.80 stoploss. Got my entry only to see the stock drop and wallow between the entry and the stoploss. A little later it got up over my entry only to drop again, so I decided to close out at 12:07pm for 13.09 and a 0.25R loss.

NFLX. Entered off the 10:45am candle with a 27.04 buystop and a 26.91 stoploss. A nice tight entry (13c). I had to wait till after 11:15am to get my entry. It got very close to 1R before turning and dropping. At 11:51am I decided to close my position at 27.10 and a 0.37R gain.

I should have stopped here. I am sitting on a 0.87R gain and its only noon. Over 5 stocks, with a $150 R factor, that’s $617 up for the day. But no, I could not stop there. I decided to look at NGS and NGAS and look for more … these two have flat lined so I am looking for them to break either way in the afternoon. For some reason I am thinking that they would break around 2:00pm so I made a note to pay attention around 1:45pm …

NGAS part II. What a disaster. It was 1:00pm when both NGAS and NGS suddenly show some activity. Earlier than I was expecting so I hastily setup an entry at 13.30 with a stop at 12.95. I have to make it a limit order as the stock has already moved past this point. I got in, the stock rose a little but then broke down. Suckers rally. It soon turns and I end up with a full 1R loss. Ouch.

NGS Part II. This one is worse. At least I was closer with NGAS. This stock shot up rapidly, so I hastily setup a high buy (limit order) and a stoploss pulled out on thin air. It spends nearly all its time below my entry before stopping me out for a full 1R loss.

Well, what happened ? Now I have just halved my winnings for the day in a matter of about 30 minutes … ouch. My entries were not good and I was shooting from the hip. So, let’s step back and see if we can make better entries into these two stocks, if they present themselves …

NGS Part III. Setup an entry off the 1:30pm candle with a 29.93 buystop and a 29.50 stoploss. I get my entry and the stock rises a little, then channels from slightly above my entry to midway between the entry and stoploss. I move the stoploss down to 29.48 to get away from the round number. As we get into the last 30 minutes of trading the stock breaks down and I get stopped out for a full 1R loss.

NGAS Part III. Almost immediately after being stopped out. I see a nice entry off the 2:15pm candle so I set a buystop at13.30 and a stoploss at 12.92. I get the entry and this one rises to the close of the day (at 3:58pm) at 13.39 and a 1,18R gain. Phew !

Overall a 0.3R gain over 9 trades. I traded 5 different stocks (yes, I broke my first rule), trading NGAS and NGS 3 times each. I was very pleased with the initial 5 trades. I was sitting on a nice 0.87R gain overall and could (or perhaps should) have stopped there. I had managed my exits fairly well, although I should not have been so fast to exit NTLI.

However, I wanted to see the merits of re-entering the same stock more than once. NGS had been the strongest so I chose that as one candidate and NGAS as the other. Big mistake. I thought they would show signs of life just before 2:00pm and I guess that is a fatal mistake as here I am forecasting when a stock will make a move in the future! I was surprised to see them move up right at 1:00pm, so I jumped on them both, chasing NGS and getting a wider than normal entry on NGAS. I soon got stopped out on both for a full 1R loss. That is what you get for being greedy.

However, I was determined to test the true merits of entering the same stocks again later, so I again monitored both NGS and NGAS and got better entries on both. NGAS did better and rose into the close and I closed out at 3:58pm for a 1.18R gain. However NGS turned into a 1R loss for the second time as it rapidly dropped as it approached the close.

One final observation on NFLX. I set my entry off the 10:45am candle, but the next candle was even tighter at only a 4c spread. However, I thought that a 4c risk was far too tight. I could have moved my entry down 1c to 3c over the 11:00am candle and left the stoploss where it was. That would have improved my 0.37R gain to a 0.48R gain. Quite a difference for just a 1c change.

Trading Summary : 10-04-2005

2005-10-05T08:27:00.000-05:00

A tough day today. I guess the market has a way to humble you very quickly. I was looking forward to showing my prowess at trading after yesterday’s performance but it just did not work out that way.

Looking at the DJIA and NASDAQ first thing, they were down a bit but then recovered to a neutral position. I was looking for both longs and shorts to start with just in case the market broke either way with conviction, but since it went sideways, I chose to work the long side as I am just not comfortable yet with the short process.

BIDU. Thought I would take a run at this high profile stock with its news that it was being added to one of the China indexes. Decided to place a limit order at 10:51am. Set a buy just above the bottom of the candle at 71.28 and a stop at 70.99 as it looked to be showing support around 71.25. Got my entry as it turned and dived through support and my stop in short order. One very quick -1.04R loss.

FXEN. Appeared to be showing support at 12.15 off the 10:00am, 10:30am and 10:45am candles, so I set a buy at 12.16 and a stop at 12.10. Bam another very quick -1.09R loss.

At this point I am over 2R down for the day … ouch ! Looks like the idea of entering off the bottom is not working today. Back to the breakout entry.

MYL. Setup a breakout entry off the combination of 11:00am and 11:15am candles with an entry at 20.36 and a stop at 20.22. It moved rapidly to a 2R gain so I moved the stop up to just breakeven at 20.37. I then moved the stop up further to 20.46 just below a possible support line at 20.48 (from a 5 min chart). I was eventually stopped out at 12:50pm for a 0.63R gain.

ESRX. Set a breakout entry off the 11:15am candle with a buystop at 64.71 and a stoploss at 64.42. Got my entry then saw the stock turn and nearly hit my stoploss, making me fear another -1R loss. So, when I had the chance, I moved my stop up to 64.49 below support at 64.55. My stop gets hit and I suffer a -0.80R loss.

FWLT. Set a breakout entry off the 11:15am candle with a 32.85 buystop and a 32.72 stoploss. Got my entry and the stock rose to close to 2R fairly quickly. It then appeared to stall at around 33 for a while, so I moved my stop to breakeven (32.86), then higher (32.89) to just under a possible support level at 32.93. After a while the stock dipped and hit my stop for a 0.22R gain.

This is hard going. 3 more trades and a minimal improvement. However, we might get another bite as the market usually gets active again in the run up to closing. So, time to look for some more trades …

KERX. I was watching this one all day just watching it climb and climb without any sign of re-tracement, which is usually my key for an entry. However, since my normal entries do not appear to be working too well, let’s try something different. Saw that the climb had slowed running up to 12:15pm and the trading range was shrinking. So, I set an entry at the high for the day (17.68) and a stop at the top of the latest big rise (17.59) but I dialed my position size down to only 1/3 my usual risk. Almost immediately got my entry and off it went. I quickly moved my stoploss to breakeven (17.69) as the stock climbed through 5R. Then, the stock turned and started to re-trace. It showed some support above 17.90 so I moved my stop to 17.89. The stock broke down through support, hit my stop and I was out for a 2.2R gain. I watched the stock bounce and turn and just missed getting another entry at 17.89.

BTUI. Just missed the ideal entry at 2:00pm off the 1:45pm candle, so I set an entry off the high of the 2:00pm candle (10.89) and a stop at 10.77 (not sure how I arrived at that one). Got my entry and watched the stock fall back and stall for a while. Patience … OK. It broke out and climbed. It got over 1R and since this was my last trade of the day I was determined not to lose any more so I moved my stop to just above breakeven at 10.91. The stock turned and dropped to 10.90, hitting my stop for a 0.07R wash. Then it turned and rose all the way to 11.18 at the close !

What did I learn from BIDU ? Do not go against the trend. It had been trending down so going long was against the trend.

Also, what worked so well yesterday in terms of entering near the bottom of a prior candle did not work at all today. What I should have done was size my position off a normal breakout entry, then set a very tight stop just below the bottom of the support. That way, if it falls through support I have a much smaller loss, and if it does breakout, then I am nearly 1R up on the breakout. But I must have confidence that the stock is showing solid resistance and support at clearly defined points (channeling).

KERX taught me that entering a rising stock without waiting for re-tracement can work. It also taught me that I need to be faster to set a new entry on the stock if I get stopped out on re-tracement.

BTUI taught me a very important lesson on setting stops. Why did I set a stop just above a round number (10.90) rather than just below it ? For the sake of 2c I missed out on a 2R return that would have wiped out my losses for the day.

Overall a -0.22R loss today for a lot of hard work. The silver lining was that I was able to pull back some of the early losses, and nearly pulled off a full recovery. But that is how you get better … learn from your mistakes.

On to October 5th.

Trading Summary : 10-03-2005

2005-10-03T22:39:00.000-05:00

The start of a new month and time to make some changes to my system, but more on what those changes are later. A busy day trading 5 stocks. Used a combination of the NASDAQ unusuals and the gappers from briefing.com (care of Trader Mike) as my sources. Since the market was up first thing, we went long. I stopped trading at 1:40pm as I had other things that needed to be done.

FLSH. Decided to set a different kind of entry off the 10:15am candle. Saw the 9:45am and 10:00am have a support line at 30.37 and 30.40. So, I decided to set and entry just above the support line and 2c below the bottom of the 9:45am candle at 30.35. Since the volume on the stock was not huge I had to dial down the position to 1000 (it should have been 2500). Got my entry and it was up and away. I closed out at 1:42pm for 30.77 and a 5.07R gain. A shame as it climbed from there to a close of 31.05 which would have been a 10R gain.

NRG. Same style of entry as FLSH. Set a limit entry just off the bottom of the 10:15am candle (at 44.08) and a stop at 43.90 (a 0.16c risk). Not sure how I arrived at 43.90. Anyway, got my entry, then saw it rise and hold for a while, then start rising again. Since I wanted some lunch, I set a limit order at 45.00 (just over 5R). During lunch, the limit was hit, just as it was starting to really climb. It closed the day for a monster 27.36 gain ! Damn.

CHIC. Setup a breakout entry above the resistance from both the 10:00am and 10:15am candles at 14.50, and a stop loss set at 14:32 off the 10:15am candle. Got my entry only to see the stock immediately turn and drop through my stop-loss. Then the stock turned and climbed. Just the kind of trade I suffered on last month. However, I suffered a -1.06R loss.

BBG. I was watching this one and saw the stock channel between 39.79 and 39.36 (see the 10:15am candle). I wanted to set a buystop at 39.81 (39.80 was too round a number) and a stop-loss at 39.36, but I initially missed it, so I made it a limit order in case the stock re-traced. It did, I got in and off it went. Since I wanted to stop for lunch, I set a limit sell at 41.19 (just over 3R). It hit my limit order after I got back from lunch. Made a 3.04R gain.

HOKU. I watched this one re-trace and then drift mostly sideways for a while. I decided to enter off the bottom at around 11:53am. I set a limit order at 12.38 and a stop loss at 12.25 (bottom of 11am candle). It drifted down pretty close to my stop, but then turned and rose rapidly. Once it hit 4R I moved the stop-loss to around the 10sma less a bit (12.49). The stock dropped and triggered my stop-loss. I saw a 0.75R gain having seen the stock go to 5R.

A very good day. Overall a 2.65R gain, with 4 out of 5 stocks being winners. The funny thing is that it could have been so much better. NRG could have been a monster gain of 27.36 but I set a limit order over lunch. FLSH could have been a lot better (10R instead of 5R) but I closed out early due to other commitments. HOKU would have been nice if I had been tighter on my stops.

Still, I cannot complain. Made $1,560 today on paper, but it could have been over $6,000 if FLSH and NRG had been allowed to climb.

Trading Summary : 09-30-2005

2005-10-03T21:47:00.000-05:00

Went a little crazy today as it was the last day of the month and I wanted to try and get my stats for the month up. Guess what … I had the opposite effect. Traded 6 stocks over the day. All trades were long as the DJIA and NASDAQ were up significantly first thing in the morning.

NOTE: No charts since I was depressed and did not capture them.

MU. Right stock, wrong trade. Set an entry off the 10:30am candle with a 13.02 buystop and a 12.93 stop-loss. A nice tight entry. Got my entry but then the stock dropped back below my entry and continued to channel. I decided to close out the position 11:09am for 12.97 and a -0.69R loss.

VRTX. Set an entry off the 10:45am hammer with an entry at 22:31 and a stop at 22.00. A little wider and more loose than I would normally like. Got my entry and then it drifted sideways. Closed out at 11:22am for 22.23 and a -0.30R loss.

LEXR. Set an entry off the 11:30am candle as it had just re-traced off its early morning high and had just turn up. Set a buystop at 6.40 and a stop-loss at 6.37. The stock slowly drifted up but really was not moving so I moved the stop-loss up to just above breakeven 6.41 even though it had not hit 2R. Eventually got stopped out at 1:22pm for a 0.13R gain.

SGMS. Set an entry off a combination of candles; the high from the 12:15pm doji and a stop-loss just below the bottom of the 12:00pm candle. Got my entry, only to see the stock drop and I got stopped out fairly quickly for a -1.08R loss.

FLSH. Another flash-card play on the back of the Apple Nano moves just like Lexar (LEXR). Set an entry off the 12:30pm candle. Climbed to 2R so I moved the stop loss to just above breakeven (29.79). Got stopped out just after 2:30pm.

SFNT. Set an entry off the 12:15pm candle with a entry at 36.00 and a stop-loss at 35.79. I ignored the fact that the next candle dropped way below my stop. Got my entry after 12:45pm. The stock did not quite make 1R before it reversed and dipped rapidly down to stop me out for a -1.06R loss. The stock then turned and rose to a 4R gain, but not for me.

Overall a 0.50R loss but over 6 trades so that is a cumulative 3R loss in absolute terms. Not nice.

In terms of MU, it was the right stock, but I have seen a lot of -1R losses when I buy a stock as it just makes a new high while channeling, then it turns and goes to the bottom of the channel and hits my stop. So, since it had not broken out, I decided to get out. Nothing wrong with closing out, but I need to make sure I reset and setup for another breakout attempt. If I had done that, I would have seen a 3R gain on the stock by the end of the day.

Trading Summary : 09-29-2005

2005-10-03T20:24:00.000-05:00

Paper traded only 2 stocks today. I was not able to get online until around 1pm today so I missed all the morning and lunchtime action. I used the NASDAQ unusuals to look for stocks up on unusual volume.

CNVR – Went long. Saw that the candles from 12:15pm till 1:30pm were showing a solid resistance right at 13.45. I set a buy-stop at 1:58pm just above this at 13.46 with a stop-loss at 13.30 (from the 1:45pm candle). Almost immediately got my entry and saw the stock climb to 13.65, but then it turned and I got stopped out at 2:58pm for a -1.07R loss. After hitting my stop, the stock turned again and climbed to new highs. Oh well.

CPRT – Went long. Saw it show resistance at 23.90 from 1:45pm to 2:15pm and was tight underneath so I set an entry just above this at 23.91 and a stop at 23.92. Got my entry quickly and saw it rise to 2R, so I moved the stop loss up to just over breakeven (23.93). Stock immediately turned and hit my stop for a wash.

Overall a 0.49R loss today, but only 2 trades so the actual equity loss was small. But it was still a loss.

Trading Summary : 09-28-2005

2005-09-28T17:12:00.000-05:00

Paper traded only 2 stocks today. The market (NASDAQ, DJIA) was initially up a little so I was looking at longs. However, since the market did not climb, I started looking at possible shorts too. A very similar day to yesterday with the markets just churning around the neutral point for most of the day. However, we managed to get a different result.

OTEX – Went long. Found on the NASDAQ Unusuals list. Saw it hitting resistance around the 14.00 mark so I set a 14.01 buy-stop off the 10:30am candle with a 13.86 stop. Got my entry and it climbed. However, the QQQQ took a dive starting at 11:30am, saw the stock weaken to below my buy, so I moved my stop-loss up to 13.95 and got stopped out at 12:12pm for a 0.48R loss.

NGAS – Went long. Found on both the NASDAQ Unusuals and as a gapper from Briefing.com. Based my entry off the 11:15am candle with a buy-stop at 12.82 and a stop-loss at 12.74. Did not get my entry till 12:12pm when NGAS took off on the reports that Natural Gas prices are going higher this winter. This thing climbed very quickly. I decided to not keep the trailing stop at 2-R under the high, since the stock was being so volatile as it climbed. I did, however, move the stop-loss to 2-R (12.99). Then at 12:24pm, as I was about to get some lunch, I set a limit sell at 13.65 (just over the 10-R mark of 13.63). It hit over lunch and I exited for a 10.23R gain.

A nice day today. Overall I had a 5.05R gain over both trades. I was satisfied with relaxing the 2R trailing stop rule on NGAS due to volatility, as I would have been stopped out in the 13.30ish range early. However, if I had let it run to the end of the day I could have realized a 13.48R gain. Cannot complain too much though as this was my biggest winning trade to date.

I had another buy order in on OMNI too earlier on, but it did not trigger so I removed it and just let NGAS run. Shame really, that one took off late afternoon and would I would have seen a 11.77R gain off that if I had stuck around.