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

Thursday, July 06, 2006

Is Bigger Really Better?

Gross: +$770.00
Net: +$641.53
Loss From Top: $9.10
Trades: 69
Shares Traded: 111800

Stocks Traded Today (net profit/loss):
Walmart (WMT): +$634.93
Hewlett Packard (HPQ): +$261.11
Home Depot (HD): +$22.71
Corning (GLW): +$13.67
Micron Tech (MU): -$42.97
Citigroup (C): -$80.34
General Electric (GE): -$167.57

Another day, another missed opportunity to get closer to my goals. Although I'm disappointed, I'm also glad to finally see a day over $500 (it's been a while since I've seen more than that).

Let's hope that yesterday and today is just the warm-up to what's to come.

I've also come to the conclusion that sometimes bigger is not necessarily better. The last few trading days I've been mainly trading thick stocks like GE, MOT, and MU. I originally traded these stocks because I could easily get long or short 10,000 shares and I could also easily get in and out without liquidity problems (since there is always big sizes on the bid and offer).

However, what I'm finding is that most of the time these thick stocks don't really move when the overall markets move. And since there are so many big players on these stocks, it's really hard to get a real idea of where it's going.

Granted, if you had the patience and are willing to wait for a half an hour or an hour for your position to go for you, then GE, MOT, and MU are great stocks to trade.

Unfortunately, my weakness as a trader is patience in holding positions. And in this game, you've got to know your weakness and find ways to get around them.

Today I switched back to the "medium" stocks ("medium" meaning the sizes on the bid and ask are medium sized). I like these stocks because when the Futures move, so will these stocks. And these stocks won't just move 1-cent or 2-cents when the Futures move....they'll really move. These "medium" stocks include WMT, HPQ, C, BAC, and HD. The only problem with these stocks it that you can maybe get 5000 or 6000 shares at a time (maybe more if there are level breaks).

The last couple of days have really sucked because I kept putting on huge positions that wouldn't move and I'd get out for even or maybe 1-cent. The problem with this is that I was too impatient and if the stock didn't move for 10 minutes, I'd start panicking and I would get out of my position. Add in trades that go against you, and the result will be those measly $100 or $200 days.

There have been times when these thick stocks moved great when the Futures moved, but these are far and few in between. For sure, I'll still watch these thick stocks for opportunities, but I won't make them my sole focus.

There were 2 good trades vs. 1 bad one today. I took a lot of near $200 trades which more than offset my losing trades.

Good Trades
9:50AM - Hewlet Packard (HPQ) and the Futures were moving up. The Futures ripped up and HPQ looked like it was going to break the $33 for the second time in the morning, so I went long 4000 shares. I got out as follows: 5-cent winner (1800 shares), 6-cent winner (200 shares), 7-cent winner (2000 shares) ($242 profit before fees)

2:31PM - Walmart (WMT) and the Futures were downtrending. The Futures tanked more, so I went short 5000 shares. I got out as follows: 2-cent winner (1000 shares), 3-cent winner (1700 shares), 6-cent winner (1000 shares), 7-cent winner (1300 shares) ($222 profit before fees)

Bad Trades
10:23AM - General Electric (GE) and the Futures were uptrending. The Futures ripped up and the $33.50 level looked like it was going to break so I went long 10,000 shares. While the Futures kept ripping up, GE didn't move up and started falling! I got out for a loser, but shortly afterwards (when the Futures weren't doing anything), it broke $33.50 again and kept going up. I got out as follows: 1-cent loser (5000 shares), 2-cent loser (5000 shares) ($150 loser before fees)
  • This is a typical example of what's been going on the last few trading days. Even though everything was moving up, some really big seller used the opportunity to dump a large number of shares - it spooked me out of my position and I had to take a loser
  • If I had waited about 10 minutes more, my position would have worked, but I would have had to stare at a 4-cent loser for a while (on 10,000 shares that's $400!)
  • This trade also demostrates my weakness as a trader - my impatience when it comes to holding positions - perhaps when my shutdown (the maximum I can lose during the day) gets bigger, I'll feel more comfortable holding such a big position


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