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

Monday, September 25, 2006

Mistakes Keep Holding Me Back

Gross: +$480.49
Net: +$270.71
Loss From Top: $236.68
Trades: 159
Shares Traded: 177168

Stocks Traded Today (net profit/loss):
Home Depot (HD): +$289.61
Walmart (WMT): +$281.31
Hewlett Packard (HPQ): +$106.27
AT&T (T): +$78.99
Citigroup (C): -$13.43
Corning (GLW): -$18.75
Exxon Mobile (XOM): -$29.32
Motorola (MOT): -$36.01
Ford (F): -$186.62
Advanced Micro Devices (AMD): -$201.33

Here's a quick overview of what happened today: in the morning made about $500, during lunch I lost over $700 in 45 minutes, during the afternoon, I spent my time trying to play catch up and managed to make $500 back.

This seems to be a re-occurring theme for me lately.

So what happened during lunch?

Well, there was a pretty strong rally that occurred, and I was getting long in all the wrong stocks at the wrong time. The first losing trade in a series of losing trades was done on Ford. This beast suddenly goes down once I'm in a long position, and had me punching out for a $180 loser.

That was followed by back-to-back-to-back losing trades on AMD. This finicky stock had me reversing my position twice. I intially went long, but AMD went down. I got out for a loser and went short. Well, it went up and I got out for another loser and I went long again. Well, AMD went down and I punched out for a loser. I lost over $250 collectively on those trades.

Finally I went long on AT&T (T) - unfortunately I went long 1-cent below the high of the day. Lost about $270 on that one.

I had to smack myself in the face to get me to wake up and for me to realize what I was doing. I also had to cool off a little after losing so much in such a short period of time. I tried to forget what had happened during the lunch hour and managed to get back in the black.

Upon review, here are the mistakes I made during that costly lunch hour:
  • Just because the markets are rallying, it doesn't necessarily mean that all stocks are going to rally - don't blindly get into any stock just because the Futures are ripping! Assess the situation first!
  • Since the rally was relatively strong, this gave me a false sense of confidence and I put on big positions when I should have been more cautious, especially during lunch
  • I put too much trust in what I saw on the Level II - two of the big positions I put on during lunch were done because of this
It seems lately, every time I put on a big position, they always seem to go against me and puts me in a hole that I have to dig myself out of. The Ford trade was on 6000 shares and the AT&T trade was on 10,000 shares.

I think I do quite well when I use 2000, 3000, or 4000 shares. This is probably what I should stick to in the next little while. Today could have been a $1000+ day - the morning and afternoon trading were done on positions no larger than 3000 shares and I made over $500 in the morning and over $500 in the afternoon.

But it's those blasted mistakes I have to avoid because they have been very costly to me lately.

Let's see....

Last Wednesday I lost $750 during the course of the afternoon, last Thursday I lost $800 during the course of the afternoon, last Friday I had lost $300 (but made some back) in the afternoon, and today I lost $700 during lunch (and made $500 back).

That means that over the last 4 trading days I lost $2550 because of mistakes - either getting too emotionally involved, simple judgement errors, or just simply ignoring my trading rules.

I'm just glad I'm putting it all out there in this blog, which forces me to see what I'm doing wrong. At least I won't have to spend $2550 to see a shrink to figure out what's wrong with me - I already know what I'm doing wrong - I just have to work harder to avoid them.

And why is it that I seem to be soo moody lately? It really takes a lot to get me upset or angry (ask anyone who knows me!), but why is it that in such a short period of time I've blown up? Hrmmmm....

Could be that I'm just frustrated with the way September is going...I guess we are deep enough into September for me to know that there will be no improvement in my trading this month. In fact, you can probably just say that I'm frustrated with the way the past couple of months have been going.

I had really expected to be much much further along....especially when I see some of the new traders that have been at it for a much shorter period of time doing well. It gets me even more upset to know that those new traders don't do anywhere near half the work I put into this - they come in the office late, ask what's in the news, what numbers are coming out, then go out partying all night long...

Ahh well, maybe I'm just thinking or stressing about stuff too much. I just gotta give this thing more time....

Good Trades
None

Bad Trades
12:17PM - Ford (F) was moving up while the Futures were ripping. I saw lots of big sizes suddenly show up on several levels on the bid and when some big size on the offer was breaking, I went long 6000 shares. As soon as I got long, all the big sizes on the bids disappeared and huge sizes showed up on the offer and pushed prices down. I was forced out for a 3-cent loser ($180 loser before fees ; In: 12:17:22PM ; Long 6000 shares @ $8.10 ; Out: 12:19:27PM)
  • Ford is always tricky during lunch, and this was no different
  • I should have known that something like this was going to happen...why would there all of a sudden be big size suddenly show up on several levels on the bid....
12:59PM - AT&T (T) was uptrending, but flattening while the Futures were strongly moving up. AT&T already looked like it was stalling and that it wasn't going to go much further. I saw something on the Level II, and I went long 10,000 shares. AT&T moved maybe 1-cent higher, but then came back down. I got out as follows: 2-cent loser (3000 shares), 3-cent loser (7000 shares) ($270 loser before fees ; In: 12:59:01 ; Long 10,000 shares @ $33.75 ; Out: Did not record)
  • Too big - this position was too big for a lunchtime trade and also since the Futures had had a strong move that could reverse at any time - I should have used smaller share size
  • Again, I believed what I saw on the Level II and went in

5 Comments:

  • Hey JC,

    I got whacked today too..and ironically I was on the other side of your trades!

    :)

    I went short F this am and got stopped out. Other trades were choppy, but worst trade was going long QID, and then leaving for a walk at lunch with too wide of a stop.

    I know several traders who are frustrated right now...hang in there...

    Linda P.

    By Anonymous Linda P., at September 25, 2006 7:03 PM  

  • Nice job coming back today. You have a great track record, that means something. I try and trade NYSE stocks once in a while. I really don't know how you deal with it, it seems like it takes forever to get a fill. I think you would really enjoy Nasdaq stocks, very liquid, instant fills etc. I know you probably can't trade them for some reason but thought I would just mention it. Does reversing a position instantly ever work. I forget if I asked you this before but do you all trade using a keyboard rather than a mouse? What platform do you use if I can ask?

    By Blogger Glenn, at September 25, 2006 7:57 PM  

  • Linda and Glenn,

    Thanks for your comments.

    Linda,
    Yea - I've been trading Ford less and less these days...I'm think it's because it's much easier when it's going up than down...when it starts turning around, maybe I'll trade more of it....

    As for my frustrations...yea - I just didn't think that the frustrations from the summer would roll over into September...I guess I've just got to wait for next month...

    Glenn,
    Looks like you had a good day today! Keep it up!
    Yea - I've talked to some of the other Nasdaq traders where I work and they said the same thing too - they said that NYSE is slower than they are used to. With the Hybrid market coming to the NYSE, hopefully some more liquidity and faster fills are on the way...if not, I may try my hand at trading Nasdaq some day soon.

    In my experience, reversing a position never really works...the only reason I'd reverse a position is if I'm mad and I just want to extract revenge on a stock (which was what I did on AMD today - two times in a row!)

    At our firm, we use the keyboard and I'd only use the mouse if I want to change a stock on a Level II window. The platform we use is an in-house developed software called ProsperPro.

    Let's see if we can all make some more $$ tomorrow!

    By Blogger J.C., at September 25, 2006 10:32 PM  

  • Hi J.C

    iwas wondering if you could possibly release the nameof the prop firm you are working with? andif possible what is the payout rate for that firm.. i know you probably cant post it here but can you email me?

    jugiproject @ yahoo.com ( without the spaces)

    Thanks in advance

    JP

    By Anonymous jp, at September 26, 2006 5:51 PM  

  • JP,

    Thanks for your comments.

    Check your email - I just sent you the details.

    By Blogger J.C., at September 27, 2006 5:36 PM  

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