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

Wednesday, September 06, 2006

I Love The Commute Home

Gross: -$420.00
Net: -$510.33
Loss From Top: $510.33
Trades: 61
Shares Traded: 90600

Stocks Traded Today (net profit/loss):
Motorola (MOT): +$65.67
Micron Tech (MU): +$36.08
Home Depot (HD): +$14.09
Exxon Mobile (XOM): -$11.06
Hewlett Packard (HPQ): -$12.50
Walmart (WMT): -$51.25
Corning (GLW): -$92.72
AT&T (T): -$109.84
Ford (F): -$341.77

Sorry for the late posting...the power went out in our neighborhood as I was getting ready to type this up and it didn't come back on until around 10:15PM.

Anyways, as you can see, I had a horrific day. My day was done by 10:30AM as the system put me in shutdown mode.

Let me explain this a little. Every trader at our company has a shutdown number (or the maximum he/she is allowed to lose in a single day). The shutdown number is calculated by using the net profit you have been making the last few weeks. The better you've been doing, the higher your shutdown (i.e. the more you are allowed to lose).

However, the last few weeks has been a struggle for me and as a result, my shutdown is only $500. If you lose more than your shutdown, our system will automatically give you one hour to exit any existing positions and once you are out, you are no longer able to trade.

Well, by 10:30AM, I lost $500, and the system shut me down...thus an early day for me today.

Anyways...to the point of this post.

Most people don't like the commute home, especially if they have to take public transit. But for me, I love it.

Why?

Well, because it gives me time to myself and to mentally review what I'm going to put on my blog. It is on my journey home that I decided what my main points are going to be and the fun always seems to be coming up with a title for the day's posting.

On days like today however, the ride home really gives me something to think about. In the past when I didn't have a blog to write, I'd just try to forget they day had happened and I never really looked deeper into what went wrong.

But on bad days like today, the very fact that I have to write something on my blog forces me to come up with answers...answers as to why the day ended so horribly.

And why did I end the day so badly today? Here is the main reason:

Since I'm in "strategy testing" week, I've used this as an excuse to ignore basic trading rules. What was happening was that I would get into a trade that most traders wouldn't even consider...and I'd use the excuse of "I'm testing a new strategy out, so those rules can be ignored".

Couple that with being overly aggressive this morning, and you'll get a shutdown day like today.

I have a feeling that's why I haven't really devised or implemented any real, new strategies because of the way I test them. It seemed like everytime I tried a new strategy, it would slap me in the face with a bad day and I'd blame the strategy for not working when in reality, I was just ignoring some of the most fundamental rules in trading.

During the first hour of trade, I kept getting into positions that seemed to defy simple logic. I was trying to go long on downtrending stocks, I tried to short stocks that were uptrending, and I put on large positions in trades in which I had really no confidence in. The first hour I found to be fairly choppy and most stocks didn't really decide which direction they really wanted to go, yet I was still placing heavy bets on them (it felt as though I was just guessing where the stock would go next).

It also didn't help that I came in a little late and when the markets opened, I was still trying to frantically setup all my charts and to get all the stocks ready on the Level II.

With all this mayhem, it kind of seemed like I hadn't a clue as to what I was doing.

I don't really mind losing money near the beginning of the month but I think I've got to be careful - too many of these kinds of days adds up and it will really kill me in the end.

Tomorrow I'll just be a little more patient and I'll wait for the opportunities instead of going in with guns blazing. And of course, I must remember the rules! I can test out new strategies, but even those strategies shouldn't go against my foundations for a trade.

Anyways, that's the reason I love the commute home and you can be sure I'll be waiting for the commute tomorrow!

Good Trades
None

Bad Trades
10:28AM - Ford (F) was moving up while the Futures were chopping up and down. I saw a level break on Ford (F) and I used that multiple auto-ex order I explained yesterday and initially got long 7000 shares at $8.64. It moved up 1-cent and it appeared as though it was going to continue, so I used auto-ex to get another 2500 shares at $8.65. Almost as soon as I got that last 2500 shares, Ford decided to drop like a rock. I got out as follows: 2-cent loser (7000 shares), 3-cent loser (2500 shares) ($215 loser before fees ; In: 10:28:49AM ; Long 7000 shares @ $8.64, long 2500 shares @ $8.65; Out: 10:30:15AM)
  • This was the trade that eventually knocked me into shutdown mode
  • Normally I would trade this IF the Futures were also trending in the same direction and if it wasn't, I would have traded with a smaller position
  • Though it wasn't this trade that really did me in today - it was the combination of several trades before this that slowly dig me an early grave

7 Comments:

  • This is really a great site for traders. In your site, you said "If others can learn from my mistakes, then I will know the time and effort I put into this blog was worth it." Let me tell you, I really learn a lot from reading your blog. For that I want to say THANK YOU!

    K.L

    By Anonymous Anonymous, at September 06, 2006 11:23 p.m.  

  • K.L.

    Thank your so very much for your comment!

    You know, one of the main reasons I started this blog was because I remember when I was starting out, I wished I could see the numbers, see the stocks, and see the lessons that other traders have learned.

    Unfortunately I was never really able to find a site that had one. And so, I developed this blog with that in mind and I originally spread the word among some of the trainees at where I work (there are some that have visited this blog since inception and continue to do so till this day).

    I am just so glad others out there are able to learn from this site and in reality, I should be thanking you and everyone else that visits this site! Without you folks out there, I wouldn't be as motivated to keep this site up and running and I find that this blog is a useful tool for self-discovery.

    And without you folks I wouldn't have learned as much as I have learned because by expressing my ideas and faults in this blog, it helps make it more concrete in my mind and helps me recognize what I'm doing right and what I'm doing wrong.

    Again, many thanks!
    JC

    By Blogger J.C., at September 06, 2006 11:43 p.m.  

  • Question: when trying a new method, do you keep track of all possible variables so that you can examine the method more closely for what works and why? Are there any other points while testing you might want to share?

    Your site is excellent, I am learning trading and read it daily. Your open approach and honesty serve me well. I thank you.

    By Anonymous Anonymous, at September 07, 2006 1:31 a.m.  

  • I have a 500 max loss on my account, only if I have a trade on it will either bring me back or take me further in the red. That happened to me today too, wierd and it has not happened to me for a long while.

    By Blogger Glenn, at September 07, 2006 2:22 a.m.  

  • Anon@1:31AM and Glenn,

    Thanks for your comments.

    Anon@1:31AM,
    When I test out new strategies I will usually focus on things like a different entry technique or perhaps a different exit technique. I usually come up with ideas I'd like to test during the month and then at the beginning of the next month I try to implement them. I think the sad thing about it is that I often times will focus too much on the things I've changed and not enough on the other aspects of the trade. Another thing I should improve upon is to do like you said - keep track of the possible variables and examine the methods I try more closely. Perhaps this is what I should do from now on - really write down the rules for the new strategy and write down why it worked and why it didn't...I'll keep trying...

    Glenn,
    It was quite eerie when I read your post for yesterday and I thought "Wow, I had almost the exact kind of day as Glenn!". It was funny, when I told the trader next to me that I just got shutdown, he turned to me with eyes big and said "You got shutdown?!?! Is that the first time ever you've been shutdown?". Actually, he kind of embarassed me a little because he said it loud enough that the other traders around could hear, but I kind of take that as a compliment which furthers the point of how eerie it is between us, especially when you mentioned it hasn't happened to you in a long time (because it hasn't happened to me in a long time either!).

    Here's to some better luck trading today!
    JC

    By Blogger J.C., at September 07, 2006 7:38 a.m.  

  • your blog is interesting and informative to review. i keep thinking that after taxes, it is so difficult even on a decent day.
    one thing i did take exception to was your comment below.
    "I don't really mind losing money near the beginning of the month"

    you should always mind losing money no matter what time of month. now you have to make that back before you show a profit. granted we won't make money everyday...but i hate losing money and will never "not mind" it.
    good luck and keep posting!! thx

    By Anonymous Anonymous, at September 07, 2006 10:00 a.m.  

  • Anon@10:00AM

    Thanks for your comments.

    You know what? I think you are absolutely right! I hadn't really thought about it when I was posting that comment but it would seem as though my "strategy testing" excuse has reared it's ugly head again!

    I think my money losing comment was an excuse for "trying out new strategies" (i.e. I don't mind losing money because I know I'm testing out new strategies), but come to think about it, I really should care if I lose money! Thanks for catching that and pointing it out to me!

    Regards,
    JC

    By Blogger J.C., at September 07, 2006 5:31 p.m.  

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