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

Thursday, August 03, 2006

Never Surrender

Gross: +$37.42
Net: -$135.68
Loss From Top: $164.63
Trades: 107
Shares Traded: 149776

Stocks Traded Today (net profit/loss):
Walmart (WMT): +$357.60
Exxon Mobile (XOM): +$70.74
Advanced Micro Devices (AMD): +$7.97
Micron Tech (MU): +$0.07
Hewlett Packard (HPQ): -$11.05
Sprint-Nextel (S): -$11.06
Corning (GLW): -$21.45
Motorola (MOT): -$63.44
Bank of America (BAC): -$100.70
AT&T (T): -$364.08

What a dismal day it was for me today. I put on two big losing trades on AT&T (T) early in the morning, which led me from one bone-headed trade to another.

By the time 10AM came around, I was in the hole by $550!

It was around this time I was feeling lower than dirt and I felt completely useless. I was going to throw in the towel and in my mind I was thinking "OK Mr.Market, you win! I give up! I surrender!" and I was about ready to pack up and go home for the day.

But just then, the song "Never Surrender" by Corey Hart (a classic 80's song) popped in my head. As this song kept replaying itself in my head, I felt compelled to stay and, of course, to never surrender.

It wasn't easy...my confidence was rattled and I was extremely hesitant to get into positions. I also felt that I wasn't really feeling the markets this morning. As a result I ended up trading small positions and tried to chip away at my loss.

I'm still not very happy with today's result, but at least it's much better than it was in the morning. Lately I've been having some trouble with consistency, which is troubling. It's the start of a new month, so now's a good time for me to do my monthly review of my trading rules and strategies.

Two bad trades to review today versus no good trades. All afternoon I simply scalped Walmart (WMT) for $30 here, $50 there (which all added up).

There have been several times in my trading career that I've felt really low (long losing streaks, bad days, severe losing trades, unmet goals, etc). So if you ever feel this way, just remember:

"Just a little more time is all we're asking for
Cause just a little more time could open closing doors
Just a little uncertainty can bring you down

And nobody wants to know you now
And nobody wants to show you how

So if you're lost and on your own
You can never surrender
And if your path won't lead you home
You can never surrender
And when the night is cold and dark
You can see, you can see light
Cause no one can take away your right
To fight and never surrender

With a little perseverance you can get things done
Without the blind adherence that has conquered some

And nobody wants to know you now
And nobody wants to show you how

So if you're lost and on your own
You can never surrender
And if your path won't lead you home
You can never surrender
And when the night is cold and dark
You can see, you can see light
Cause no one can take away your right
To fight and never surrender
To never surrender"

-"Never Surrender" by Corey Hart

Good Trades
None

Bad Trades
9:43AM - AT&T (T) was uptrending but was pulling back slightly while the Futures were uptrending. I went long 5000 shares when the Futures popped up. Initially the position went in my favor, but I was too slow in taking profits. I ended up getting out as follows: 2-cent winner (800 shares), 2-cent loser (100 shares), 4-cent loser (4100 shares) ($150 loser before fees)
  • This was one of those trades in which there wasn't anything particularly wrong with it...it just didn't go for me
  • Trading will involve losing trades...it's just that I don't know why this one really led me to one bone-headed trade to another....I would continue to lose close to $400 following this trade

9:47AM - AT&T (T) continued to pull back and for some reason I decided to hit AT&T long 5000 shares again! Well the pullback on AT&T continued and I got out of my position as follows: 2-cent loser (400 shares), 3-cent loser (100 shares), 4-cent loser (3400 shares), 5-cent loser (1100 shares) ($202 loser before fees)
  • Talk about revenge trading! This one came fresh off the heels off the previous losing trade on AT&T (T)
  • I'm usually fairly good at keeping my emotions in check but for some reason the previous losing trade on AT&T ticked me off and I tried to extract revenge on it by.....losing more money!!!!
  • This trade is a clear lesson folks on keeping a level head and to NEVER trade on pure emotions

4 Comments:

  • Is there a post somewhere about your methodology, and things like "why not Nasdaq?" I'm just now looking around your blog, and I'm fascinated by a pure scalping approach. When I was first getting into daytrading, that was one of my first plans, actually.

    By Anonymous Richard, at August 04, 2006 1:47 AM  

  • Richard,

    Thanks for your comments.

    At the prop shop where I work, we were only given NYSE entitlements. As a result I sort of "grew up" trading NYSE and got familiar with how some of the NYSE stocks move. At some point when I become consistently profitable, I may request Nasdaq entitlements.

    I may also choose to trade the S&P emini Futures (I currently have entitlements for those now), but I find the Futures a little scary. We also have LSE trading, but from what I heard, it's a lot slower and the hours too awkward for me.

    As for my methodology...that's a good idea. Perhaps I'll take some time and provide a post. I do have a document that outline my rules, entry and exit strategies that I am constantly reviewing, adding and removing from.

    I personally find scalping rather difficult. As I evolve as a trader, I wish to actually trade. Right now I'm just getting by because I'm using big share sizes and taking a few cents here and a few cents there (which can get stressful).

    JC

    By Blogger J.C., at August 04, 2006 7:30 AM  

  • That's interesting about the entitlements stuff. Many daytraders only want to trade nasdaq, so you are kind of unusual in that respect. I've been trying to shed my nasdaq preference. I've listed you in the set of blogs I'm reading... hopefully that will get you a little traffic.

    The reason I didn't end up scalping was how little control I had over the risk/reward. I was trying to get 2 to 5 cents, but sometimes I'd face a 5 cent move against me that was more or less instantaneous. Very hard to get any traction in terms of profits.

    (BTW did you skip the July trading summary?)

    By Anonymous Richard, at August 04, 2006 10:01 AM  

  • Richard,

    Yes, it's kind of true..I too also thought that as a day trader I would be trading Nasdaq...I think I was part of the first group that they were going to have trade exclusively NYSE and now it seems that every new group of traders are trading NYSE (at least at our branch anyway).

    As for scalping...yes I agree with you. I've seen a lot of turnover where I am because it's exactly what you said...it's often difficult to get traction in terms of profit. Currently I'm trying to transform myself into a real trader instead of a scalper in the hope that more profits will follow. I'm kind of in limbo right now...not sure if scalping with big size positions is the way to more profits or if I should trade for longer periods of time to capture big moves is the way to go.

    My trading rules and strategies are always changing and hopefully it can evolve to the point where I'm satisfied.

    As for the July trading summary, I'll either post it tonight or on the weekend (it requires me to do a lot of number crunching and July finished on a Monday). Usually if the month ends mid-week, I'll post my stats on the weekend (you've got a sharp eye for catching that!).

    By Blogger J.C., at August 04, 2006 7:38 PM  

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