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

Tuesday, July 25, 2006

...A Late Start...And No Chart....Makes A Trader...Fall Apart

Gross: -$564.79
Net: -$651.91
Loss From Top: $727.76
Trades: 42
Shares Traded: 90200

Stocks Traded Today (net profit/loss):
Exxon Mobile (XOM): +$7.49
Bell South (BLS): -$16.96
Corning (GLW): -$21.16
AT&T (T): -$55.88
JP Morgan (JPM): -$127.56
Advanced Micro Devices (AMD): -$217.43
General Electric (GE): -$220.38

Holy crap! I've never seen soooo much red before!

Our system was still down this morning (from yesterday's problems) and we didn't get to start trading until about 11AM. But by that time, we missed a fantastic movement in the overall markets! A huge rally, followed by a huge tank!

When we finally came back online, all we got were choppy markets that didn't go anywhere. Worst of all, I had to leave an hour early (for a dentist appointment), and missed a gigantic rally after I left!

In other words, I only got to trade during the worst time of the day to trade!

When we were given word that the system was back up, I didn't feel comfortable trading because we couldn't see how the markets moved during the first hour and a half. Worse yet, our charts were not working properly until about 12PM. I had no idea what I was doing and why I was putting on positions (I had no idea where the trends were).

And I have never been tricked so many times by the Level 2. So many times big sizes were showing up on the bid on several levels...once I got long, the sizes disappeared and then appeared on the ask.

This just didn't happen on one stock...this happened over and over again on several stocks during the 11AM - 3PM timeframe.

Never before have I ever felt so useless! Literally every trade I put on went against me! If I had followed my trading rules, I probably would have only put on one or two trades today.

However since we missed most of the morning and I knew I had to leave early, I felt as though I had to do something...but that was a mistake as I lost a lot of money and I was not able to put on any good profitable trades.

How pathetic it is that Exxon Mobile (XOM) was the most profitable stock today and I only made a little more than $7 on it!

Definitely a terrible day...and so, here are the things I've learned (or need to do) from today's events:
  • Never ever trust what you see on the Level 2; you must use the charts to confirm the direction of the trade and you must use the Futures as the momentum for your trade
  • Feel under pressure? Don't worry about it...today I knew I missed some great action in the morning and I knew I had to leave early, so the pressure for me to make money was high, which is never good
  • Never put on huge positions when you are flying blind and you have no idea of what the current situation is; today I put on a huge position without really feeling how the markets are reacting and without charts (I had no idea what the overall trend was!)
  • If the conditions are not ideal for trading, then don't trade! Even if it means you don't trade at all during the day, it surely beats losing money! Today I probably would have only put on 2 trades for the whole day because the Futures were not trending in any direction between 11AM - 3PM
I'm also feeling that I shouldn't put any monetary targets or goals for the month because this just adds to the pressure. Instead, my goals should be to put on the best trades that have high probability for profitability everyday. With those goals in mind, money is surely to follow.

For now, let's just get this somewhat crappy month out of the way so that we can get August underway.

Good Trades
Sadly, none

Bad Trades
11:09AM - (M) I had no idea what General Electric (GE) was doing and I didn't really know which direction the Futures were trending. I just saw lots of green prints on the Futures and decided to go long 10,000 shares as I saw some big size show up on the bid. I ended up getting out as follows when the support level broke: 1-cent loser (5000 shares), 2-cent loser (5000 shares) ($150 loser before fees)
  • Just wrong, wrong, wrong! No charts! Unsure of the direction of the trend! Trusted what I saw on the Level 2 without other considerations! Position size was too big given I had no idea what I was doing!?!?!?!
11:19AM - (M) Absolutely no clue as to which direction Advanced Micro Devices (AMD) was going and I *think* the Futures were going down. I tried to go short 4000 shares when I saw some size on the bid break. I got partially filled for 3400 shares and I cancelled the balance of the order. I don't know what happened, but somehow prices on AMD just went the other direction. I got the entire position out for a 6-cent loser ($204 loser before fees)
  • For the same reasons as the trade before...I had no idea or clue as to what was going on and I trusted what I saw on the Level 2
1:20PM - (M) JP Morgan was uptrending slightly and the Futures were moving up slightly. I saw lots of huge size appear on the bid on several levels (there were 2 levels with 100+ size on the bid and one level with 200+ size on the bid). I quickly went long 3000 shares. Well, once I was long, all the sizes on the bid disappeared and prices fell back. Worse yet, the big sizes now appeared on the ask, so I quickly got the entire position out for a 4-cent loser ($120 loser before fees)
  • This kind of thing happened for the remainder of the afternoon and I kept getting suckered into getting into a position merely on what I saw on the Level 2
  • I was surprised that these size games were played on many stocks in the afternoon (T, GE, AMD, GLW, JPM, and BLS)
  • I guess it serves me right for falling for the same trick over and over again

2 Comments:

  • Here is a good way to start your trading day. Say to yourself
    "I don't have to trade today"
    I use this saying and it keeps me out of bad trades, only focusing on near perfect set ups.Much more profitable to let the market come to you than chasing it.

    By Anonymous Anonymous, at August 05, 2006 10:49 PM  

  • Thanks for the comments.

    Another thing I've been trying to do lately is after every trade or every 10 or 15 minutes, I'd close my eyes, take a deep breath, clear my mind and try to go over my trading rules in my head. Then when I open my eyes, I am more focused and I often find myself avoiding bad trades.

    One of my weaknesses is that I lack patience (I'm really trying to work on this). As a result, I get tired of waiting for something to happen and I end up in a trade I'm not supposed to be in. This often stems from the fact that lately I've been setting monetary targets, which I think is a bad idea because I then start forcing myself into trades to try to reach my targets (and of course, lead me to lose money!).

    By Blogger J.C., at August 06, 2006 11:01 PM  

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