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

Tuesday, May 09, 2006

Hello Moto!

Gross: +$680.24
Net: +$532.14
Loss From Top: $87.77
Trades: 53
Shares Traded: 157758

Stocks Traded Today (net profit/loss):
Citigroup (C): +$301.97
Bank of America (BAC): +$160.64
Pfizer (PFE): +$113.65
General Electric (GE): +$111.57
Walmart (WMT): +$64.82
Micron Tech (MU): +$47.91
AT&T (T): +$41.90
Hewlett Packard (HPQ): +$32.14
Motorola (MOT): -$342.51

Today was a rather interesting day. When all the traders came in today, we found that none of us could see any of the Time and Sales for any stock! This meant that we would not be able to see where the last print or the last fill of any of the stocks were!

They never managed to get it back up and running again, so all of us had to adapt and adjust. I know there were quite a few traders that lost big bucks because of this problem.

For me, I just kept it simple and played off the Level 2, Futures, and stock charts. I was also a little more daring today...traded a few 8000 share positions and one 10,000 share position.

Needless to say, today would have been a perfect day, had it not been for Motorola (MOT). I had only 2 losing trades today, and both were on Motorola.

Looking back, I realize what I did wrong on those two trades and hopefully I can learn from them.

Today the markets traded in an extremely tight range. We bounced around in a narrow 3 handle range all day, so I'm glad I was able to make some money. Hopefully this is the calm before the storm and I expect lots of fireworks tomorrow because of the Fed announcement.

Since we were stuck in a fairly narrow range, most of the stocks I was watching did not move much at all, which isn't good news for my trading strategy...I wasn't able to make many big winning trades - instead I had to settle for a lot of 1 and 2 cent winners.

It's a good thing I'm starting to get comfortable trading bigger sizes now so that later when the markets begin moving again, I can take in more profits!

Good Trades
11:16 - Citigroup (C) had just finished spiking up, but had fallen back down again. Some resistance appeared at $50.30. The Futures popped up, so I hit the resistance and got long 8000 shares. Once I was long, I kind of panicked a little because the Futures fell back down again, but I managed to get all of my shares out for a profit (though if you look at the intraday chart, you will see Citigroup popped up 15-cents!). Got out of my trade as follows: 2-cent winner (1800 shares), 3-cent winner (200 shares), 4-cent winner (2000 shares), 5-cent winner (4000 shares) ($322 profit before fees)

Bad Trades
12:07PM - Motorola (MOT) was uptrending while the Futures were flat. Motorola approached huge resistance at $23.00 (I think there was 4000+ size on the ask). Just then, several big orders began hitting the resistance and it looked like it was going to break so I got long 8000 shares. At that point, the Level 2 became very messy with large buy and sell orders being thrown all over the place and when the dust settled, the resistance level at $23 remained! Then, everyone who had gone long at $23 were now dumping their shares and unfortunately for me, I had to take a big hit. Got out as follows: 2-cent loser (4000 shares), 4-cent loser (2000 shares), 5-cent loser (2000 shares) ($260 loss before fees)
  • First of all, I broke one of my trading rules when I got into this position. My rule about level breaks like this clearly indicate that I am NOT suppose to take a position unless the Futures rip/tank in the direction of the trade. On this particular trade, the Futures had not moved, and so there was no real "push" to the upside
  • I should have also been smarter and realized that this break was occurring during the lunch hour. Most traders would not be around at this time and hence there would not really much of a "demand" for Motorola shares if the $23 level broke
  • Lastly, because this was during the lunch hour, I should have automatically reduced my share size. If I had wanted to trade this particular trade, I should have used perhaps 4000 shares instead of 8000


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