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

Wednesday, May 17, 2006

The Slump Continues On A Day That Was Throwing Away Free Money

Gross: +$401.00
Net: +$250.01
Loss From Top: $82.74
Trades: 76
Shares Traded: 150400

Stocks Traded Today (net profit/loss):
Hewlett Packard (HPQ): +$216.40
Walmart (WMT): +$158.20
General Motors (GM): +$136.51
General Electric (GE): +$85.64
Home Depot (HD): +$23.59
Motorola (MOT): +$9.16
Coca-Cola (KO): +$7.60
Bank of America (BAC): -$19.96
Micron Tech (MU): -$20.13
Pfizer (PFE): -$81.89
Disney (DIS): -$87.04
Merck (MRK): -$178.06

Another day, another disappointing finish. Today Wall Street turned blood red as all the major indices were down big-time. It should have been a day when lots of money should have been made...unfortunately I wasn't able to make much.

I've been reviewing what's been going wrong and still more things seem to turn up. I noticed that today I got into positions and held them - hoping for a good run and to take some big profits. However, these positions initially went for me, but then slowly gave way and I had to get them out for losers.

In other words, I was expecting a home run on every trade. Instead of taking my profits when they were available, I was opting to wait in hopes of even more profits (that's my good friend greed rearing his ugly head). But more often than not, prices would eventually go against me, and I would have to get out at a loss.

So in summary, this is what I gather has gone wrong the last three trading days:
  • Friday's $1000 had me thinking that I needed big positions and I needed big home run winners on every trade. Since all my trades on that Friday did end up as home runs, I was left thinking they were a lot easier to come by
  • I began upping my share size and I began ignoring some of my trading rules. As long as a stock allowed me to get into a large position, I would take it without analyzing the trade
  • I also began holding trades a lot longer than I should have. I should have taken profits when they presented themselves instead of holding positions until they became losers
  • I totally lost focus on when NOT to trade (again, I always say this is one of the more important aspects of trading) - whenever it was possible, I was always getting into positions. You can see from the last 3 trading days, the number of trades are unusually high
Some of the above points are not new. I always seem to come across them whenever I change something about my trading strategy - usually when I increase my share size. I'm glad I can now identify them a lot quicker than in the past....I guess the rest is up to me to try to fix these things.

One thing that I did notice today was the lack of follow-through on most of the moves. Whenever the Futures tanked, it would quickly bounce back up. As a result, most stocks would initially fall, then bounce back up as well (usually a little higher than where it started off). I kept getting caught this way and I was bounced out of many of my positions.

Today I also had problems finding stocks to short. Everytime the Futures started tanking hard, I was struggling to find a good position to get into and as a result, I kept missing opportunities.

I think it's best if I simply forget Friday ever least it will relieve some pressure on myself to repeat that performance.

Tomorrow I'll only trade in the morning as I have to get some paperwork straightened out by the bank.

Good Trades
9:35AM - General Electric (GE) initially started uptrending. Some size was breaking on the ask, so I got partially filled long for 5900 shares. I got out as follows: 2-cent winner (1200 shares), 3-cent winner (1000 shares), 4-cent winner (1700 shares), 5-cent winner (2000 shares) ($222 profit before fees).

Bad Trades
9:55AM - General Electric (GE) was still uptrending and the Futures looked like they were starting to uptrend. I got long 8000 shares. It was at that time the markets decided to puke and it never looked back. I got out the entire position for a 2-cent loser ($160 loser before fees)
  • This was one of those rushed trades and I had dollar signs in my eyes. I should have been wary of the Futures (as they were already down quite a bit) and if I had wanted to get long, I should have waited for the Futures to rip
  • Not much else to say about this trade - the charts looked good (nice solid uptrend), it's just the overall markets had another idea in mind
10:26AM - Merck (MRK) was uptrending amid the chaotic downtrend of the Futures. There was a size-vs-size battle (where big size appears on the bid and ask). The ask broke so I got long 4000 shares. I was expecting some kind of bounce from the Futures, but I never got it...instead it continued puking downwards. I was forced out of my position and got out as follows: 1-cent winner (1000 shares), 6-cent loser (3000 shares) ($170 loser before fees)
  • This trade broke one of my rules: even if the stock as a clear trend going, do not trade it if it is not trending in the same direction as the Futures


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