An NYSE Scalper's Tale - A Trader's Diary

Thursday, May 25, 2006

Anticipate More, React Less

Gross: +$646.40
Net: +$503.92
Loss From Top: 0
Trades: 85
Shares Traded: 127040

Stocks Traded Today (net profit/loss):
Bank of America (BAC): +$307.23
Corning (GLW): +$162.23
Boston Scientific (BSX): +$109.00
Walmart (WMT): +$72.92
Home Depot (HD): +$15.07
Hewlett Packard (HPQ): -$24.38
JP Morgan (JPM): -$138.15

My current trading strategy is more of a reactionary strategy. What I mean by that is my trading strategy involves spotting a potential trade, watching it, then waiting for the Futures to make a move. In other words, I react off the movements of the Futures.

What I've found lately (because of the volatility) is that by the time I react to the Futures movements and get into a position, the Futures reverse and I end up with a losing trade.

Today I played around with anticipating rather than reacting. I tried getting into a position first in anticipation of a Futures move. It worked with limited success, but I believe that further down the road, my trading strategy should include more anticipation and less on reaction.

The markets calmed down a bit in terms of volatility. There was still some, but I was cautious in my trading today. I reduced my share size (the biggest positions today were for 4000 shares) and I took my profits when they presented themselves. I still got caught a few times where I got part of my position out for a profit before it reversed and I had to get the remainder out for a loser.

And yes, today will filled with long stretched out periods in which the Futures were doing nothing and I had to sit and wait for it to do something. But I think this kept me out of trouble by forcing me to the sidelines and not taking risky positions.

There were no big losing trades today. Since I reduced my share size, I was able to get my entire position out before it got any worse (unlike the last little while where I had to chase the stock to get out of my position).

Good Trades
11:59AM - Bank of America (BAC) was uptrending as were the Futures. BAC reached the $49 level. When it broke, I went long 4000 shares. Prices popped upwards and I got my entire position out for a 5-cent winner ($200 profit before fees).

Bad Trades


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