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

Wednesday, May 31, 2006

It Was The Best Of Times, It Was The Worst Of Times...

Gross: +$563.65
Net: +$447.26
Loss From Top: 0
Trades: 72
Shares Traded: 107800

Stocks Traded Today (net profit/loss):
JP Morgan (JPM): +$266.17
Hewlett Packard (HPQ): +$259.05
Home Depot (HD): +$73.46
Citigroup (C): +$60.20
Micron Tech (MU): +$19.95
Walmart (WMT): +$2.70
Merck (MRK): -$55.95
Bank of America (BAC): -$178.34

May has finally come to a close. The title of this post accurately reflects how this month has been. There were some highs ($1000+ day) and quite a few lows (3 big $400+ negative days, finding out my trading strategy doesn't work in volatile markets).

I am fairly disappointed in how this month went. This was one of the longer trading months of the year (22 trading days) and by the looks of the numbers so far, I wasn't able to make more than I did last month. I was also shutdown twice this month - something that I haven't done in a very long time.

Personally, I felt the markets were difficult to trade this month. No matter how good a trade looked and if everything about the trade looked perfect, the volatility quickly turned the perfect trade into a big losing trade.

Oh well. It's time for me to lick my wounds and prepare for the upcoming month. When I've got time this weekend, I'll post my trading stats for the entire month of May.

Today I saw the return of volatility again. And when the FOMC meeting minutes were released at 2PM, volatility went through the roof!

All day, I was battling back and forth between negative and positive. Just when I thought the markets were becoming free of volatility, I found myself getting into positions that quickly reversed and went against me.

I had to quickly re-adjust how I trade so that I get in and out of my positions quickly. It wasn't until near the end of the day was I able to pull through and put together a somewhat respectable day.

Since we were caught in a volatility storm today, I only had one good trade (the very last trade of the day) and I had several bad trades.

I just checked - it looks like June is also going to be a long month with 22 trading days! My goal next month will be to trade smarter, recognize volatility and adjust, and begin tweaking my trading strategy to be more consistent. I also hope to see a few more $1000+ days next month and my overall goal will be to at least try to break $10,000 for the entire month.

Let's see what June brings shall we?

Good Trades
3:40PM - JP Morgan (JPM) was slightly trending upwards while the Futures were still very volatile. Just then, the Futures ripped up hard, so I got long 5000 shares. I tried to hold on to the position as long as I could, but when it was clear JPM was coming back down, I started getting my entire position out. I got out as follows: 1-cent winner (200 shares), 4-cent winner (1000 shares), 6-cent winner (3800 shares), 9-cent winner (1000 shares) ($360 profit before fees).

Bad Trades
10:15AM - JP Morgan (JPM) was moving sideways while the Futures were uptrending. The Futures popped up, so I got long 4000 shares. The Futures immediately started tanking once I got into the position, so I got out as follows: 2-cent loser (1000 shares), 4-cent loser (2500 shares), 5-cent loser (500 shares) ($145 loser before fees).
  • Firstly, I knew I shouldn't have gotten into a position on JPM because it was moving sideways the whole time that the Futures were uptrending
  • This was an example of the volatility we encountered today - at one point, there was just enough time for me to exit the entire position for a 1-cent loser, but because the Futures were so volatile, I thought the Futures were going back up...unfortunately I was wrong
1:35PM - Bank of America (BAC) was uptrending and so were the Futures. I saw a size-vs-size battle occur and I went long 4000 shares when I saw the offer break. It initially moved 1 or 2 cents for me, but the Futures suddenly started tanking and I was forced to get my entire position out for a 4-cent loser ($160 loser before fees).
  • Normally, these are the type of trades I love: a size-vs-size battle (where there is big size on the top bid and big size on the top offer). Not only is there enough size to put on a big position, but you have some support behind your trade. Unfortunately the Futures moved against me...
  • On volatile days like this, I find that stocks are quick to react with the Futures...even if the Futures only move a little, stocks quickly move with the Futures for a few cents - in this case, I was lucky to get out for a 4-cent loser, as both the Futures and BAC continued to tank


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