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

Wednesday, June 21, 2006

The Financial Stocks Cleaned My Clock Today!

Gross: -$106.00
Net: -$360.45
Loss From Top: $723.05
Trades: 116
Shares Traded: 238000

Stocks Traded Today (net profit/loss):
Hewlett Packard (HPQ): +$310.56
Walmart (WMT): +$182.32
Micron Tech (MU): +$88.73
Motorola (MOT): +$83.74
Home Depot (HD): -$10.36
Bank of America (BAC): -$153.18
Corning (GLW): -$185.76
JP Morgan (JPM): -$228.30
Citigroup (C): -$448.21

Ughh! I hate negative days. And look at the loss from top. It was even worse before I managed to bump it back up a little. At one point, I was down over $600 and my loss from top was $1000 (meaning I lost $1000 from my peak net profit of the day).

Today, all three financial stocks that I love to trade really let me have it. Collectively, I lost over $800 on Bank of America (BAC), JP Morgan (JPM), and Citigroup (C).

Upon review, there are a couple of reasons why I ended the day negative.

I really hate days in which most of the day's move occurs in the morning and the rest of the day is flat. I hate these kind of days because you make money in the morning and expect to make money in the afternoon by getting into trades. However all you end up doing is getting into a position that goes nowhere or goes against you. And today this is exactly what happened to me.

The position size was too big in the afternoon! I think I was really hoping to make some money in the afternoon and as a result, I put on big positions in a market that was going nowhere. A big no no. There were lots of trades that I had to get out for even or a slight loser.

Too many trades were put on! The market was going nowhere for about 2/3 of the day, yet I put on 116 trades! Gotta be smarter. Gotta know when to trade and when not to trade.

All together, there were 5 bad trades compared to only one good trade.

I've got to really focus and be smarter than I was today. I will put all my energy and focus on the three points listed above as they are the things that I neglected or learned today.

Good Trades
3:49PM - Hewlett Packard (HPQ) and the Futures were flat. Just then, the Level 2 on HPQ went crazy and I saw huge size appear on the bid. I went long 6000 shares and got out as follows: 3-cent winner (1700 shares), 5-cent winner (4300 shares) ($266 winner before fees)

Bad Trades
10:09AM - JP Morgan (JPM) was up, but stalling while the Futures were flattening. I went long 5000 shares when I saw a level break. As soon as I went long and as soon as the level was broken, I big sell order came through and I was forced to exit. Got out as follows: 3-cent loser (1000 shares), 4-cent loser (600 shares), 5-cent loser (3400 shares) ($224 loser before fees)
  • I don't really recall why I got into this position. Perhaps it was because I saw a level break, however normally I would only get into the position if the Futures were ripping up
  • Both JPM and the Futures looked tired and both were flattening. I should have used smaller share size on this one
10:31AM - Citigroup (C) was in a tight range while the Futures were uptrending. The Futures ripped up so I went long 6000 shares. Like most of the day, the Futures immediately came back down before I could exit my entire position. Got out as follows: 4-cent winner (1000 shares), 3-cent winner (1000 shares), even (1000 shares), 6-cent loser (2000 shares), 7-cent loser (100 shares), 9-cent loser (900 shares) ($138 loser before fees)
  • This was the beginning of some very frustrating trade. The rest of the afternoon would play out like this - a Futures move that reverses and I'd have to get out for a loser
  • I should have been more cautious considering the chart on Citigroup did not look pretty
11:36AM - Citigroup (C) and the Futures were uptrending. The Futures ripped up and I got long 8000 shares. The Futures immediately tanked back down hard. I got out as follows: 2-cent loser (2000 shares), 3-cent loser (2000 shares), 4-cent loser (1200 shares), 6-cent loser (1000 shares), 7-cent loser (1500 shares), 10-cent loser (300 shares) ($343 loser before fees)
  • Position size was too big! Considering what was going on in the markets up until this point, I should have been more cautious
  • I should have also been more weary about Citigroup's movements during the day - very volatile and didn't really follow the Futures too well
1:18PM - Bank of America (BAC) and the Futures were uptrending. The Futures popped up breaking out of a tight range, so I went long 6000 shares. The Futures popped back down (as usual) so I got out as follows: 2-cent loser (1000 shares), 3-cent loser (5000 shares) ($170 loser before fees)
  • All day the Futures were behaving this way. Should have reduced size or better yet, I shouldn't have traded!
2:29PM - Corning (GLW) and the Futures were turning down. The Futures broke a local low and started tanking so I went short 4400 (I got partial filled). Well, the Futures ripped right back up. I got duped again and had to get the entire position out for a 4-cent loser ($176 loser before fees)
  • Tricky tricky! The Futures really had a fun time taking my money
  • Ah well, next time, I must be more observant to see what kind of a day the markets will trade like and avoid putting on big positions


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