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

Thursday, September 21, 2006

A New Day...With The Same Problems

Gross: -$242.43
Net: -$394.53
Loss From Top: $811.71
Trades: 127
Shares Traded: 136714

Stocks Traded Today (net profit/loss):
AT&T (T): +$395.28
Motorola (MOT): +$41.28
Hewlett Packard (HPQ): +$7.10
Bell South (BLS): -$8.39
Exxon Mobil (XOM): -$12.90
Sprint-Nextel (S): -$19.83
Home Depot (HD): -$35.27
Advanced Micro Devices (AMD): -$193.94
Walmart (WMT): -$218.60
Corning (GLW): -$349.24

In an almost near-repeat performance of yesterday, I found myself battling with the same problems.

And it was uncanny as to how this all unfolded...all very similar to yesterday.

I made some money in the morning and I was up about $400 when the afternoon rolled around. A few bad trades later, I was trading on pure emotions.

Because of the rather choppy markets, I couldn't get a real good grasp on any real good trades. Every trade in the late afternoon broke practically every rule I have.

I traded when there was no trend, I got into big positions without any real confidence in them, I took trades that were opposite the trend of the stock.

I got more and more pissed off and I was revenge trading like there was no tomorrow near the end of the trading day. My share size got bigger and bigger and there was a few times where I just didn't care about the trade.

When everything was said and done, I had lost over $800 over the course of the afternoon. Upon reflection, I know what I did wrong and it was a total lack of discipline and I simply lost control over my emotions.

And so, tomorrow, this is what I've got to do to avoid sinking into the same trap as today and yesterday:
  • When the markets are choppy, reduce share size and be sure to get in and out fast
  • Do a two-step check before getting into any position: first check the chart of the stock to make sure it is trending, next check the Futures to see if it too is trending
  • If the two-step check fails, use very small share size
  • Feeling pissed off? Go and take a walk, go get some coffee, or just do anything to get you away from the trading desk for at least 5 minutes
  • If there are no good opportunities or the markets are very choppy, you don't have to trade - on Monday and Tuesday I did fewer trades simply because I had to patience to wait for the trades
  • Always maintain in control - I've been doing this long enough to know that discipline is paramount; all of the losing trades in the afternoon SHOULD NOT HAVE OCCURRED
  • The patience I had on Monday and Tuesday was great, but for some reason it fled on Wednesday and today...let's look for my patience tomorrow to pull out a profitable day
  • Let's scale back a little on the share size so that I can get back on track (and so that I won't get tripped up on a big position that goes against me)
  • Losing focus is bad - yesterday and today I traded too many stocks because I was jumping from stock to stock looking for opportunities; I had more success when I focused only on a few stocks
With yesterday and today in the books, it looks like September is going to be shot and will probably be another month in which no progress has been made in my trading.

It was kind of unfortunate too. I though consistency was beginning to return with several $700 and $800 days. Quite honestly, I thought getting those $700 and $800 days seemed fairly easy to come by - as long as I was willing to be patient and not succumb to my emotions.

The only problem with those $700 and $800 days is that I was extremely bored on those days. I think another problem that has plagued me the last two trading days is that once I had some profits from the morning ($300 yesterday, $400 today), I started thinking about aiming for a $1000 day...this is probably where my problems begin. I'd start wanting to get into a big positions and when I saw that the trading day was winding down, I started really rushing into things.

I recorded in my trading journal two bad trades versus one good trade. I think there might have been another one or two bad trades near the end of the day, but I was too pissed and too busy trying to extract some revenge on some stocks to write them down.

Let's see if I can make some money tomorrow.

Good Trades
10:45AM - AT&T (T) was moving up strongly and the Futures were also moving up. I went long 5000 shares and held it for quite a while. I got everything out for a 7-cent winner ($350 profit before fees ; In: 10:45:25AM ; Long 5000 shares @ $32.40 ; Out: 10:53:38AM)

Bad Trades
10:07AM - Corning (GLW) and the Futures were downtrending. GLW reached the $24.00 level and when I thought it was going to break, I went short 4000 shares. Thousands upon thousands of shares were traded at the $24.00 level, but it just wouldn't break! When it was clear this level wasn't going to break, all the shorts bailed out and popped prices up! Luckily I got out half my position for evens. I got out as follows: even (2000 shares), 10-cent loser (2000 shares) ($200 loser before fees ; In: 10:07:03AM ; Short 4000 shares @ $24.00 ; Out: 10:10:15AM)
  • Ahhh - I should have known this was going to happen. For the last several weeks, GLW always seems to subbornly prevent levels from breaking, even when the overall markets are tanking like crazy...
  • Seemed like a great short and if it were any other stock, I'd probably put on the same position
  • One thing I could have done better was to recognize that the level wasn't going to break and try to get my entire position out (and not just half of my position)
3:26PM - Walmart (WMT) was slightly uptrending while the Futures were chopping. I went long 5000 shares for the heck of it. Didn't really care about this position, I was just trying to extract some revenge on WMT. Oh well. I got out as follows: 4-cent loser (1000 shares), 5-cent loser (4000 shares) ($240 loser before fees ; In: 3:26:28PM ; Long 5000 shares @ $48.35 ; Out: Did not record...was too pissed off)
  • Just another revenge trade...I was actually preparing to go long another 10,000 shares when I saw prices going 5-cents against me (all I had to do was press "Enter"), but thought better of it
  • This was just pathetic...the last two days I just blew myself up and threw all my discipline out the window.

9 Comments:

  • I would like to know for August, your total net was $5,085.23. Do you keep all of the $5,085.23 or do you still have to split that with Swift trade?

    Trading Statistics For Month Of August

    Total Gross for Month of August: +$9,218.82
    Total Net for Month of August: +$5,085.23
    Total Fees (Gross - Net) for Month of August: $4,133.59

    By Anonymous Anonymous, at September 21, 2006 8:18 PM  

  • .

    By Anonymous Anonymous, at September 21, 2006 8:56 PM  

  • From SF, hey, take a break, dude!!

    Do something totally different to use another part of your brain - like see a movie you did not expect to like, read some strange book, take a walk to a totally new area and eat some different types of food. I like to read economic history, I have a fine two volume set of the Rothchild's history. Sometimes I read other people's blogs to see how other - very different people - feel about life.

    By Anonymous Anonymous, at September 21, 2006 9:43 PM  

  • Sorry if this has been asked a bunch... where do you get your futures data? Thanks, and I really enjoy your blog, it's inspiring.

    By Anonymous Anonymous, at September 21, 2006 10:23 PM  

  • In the scheme of things, a couple down days will pay you back for your losses many times over, if you learn from them. Besides, by my count you're still up for the week, so you haven't done near the damage that most daytraders do to themselves when they have a couple bad days.

    I don't know if this is feasible, or even desireable, for you, but the smartest thing I ever did was stop trying to hit $ targets. Of course I still have a rough idea of how I'm doing, by the way my trades go. But, checking the number, and trying to reach some other number, just got in the way of making good decisions, for me. Seriously, I sometimes don't even add up my total $ performance until the end of the month. That number's like poison to me.

    And some questions:
    I wonder why not look for a better trade, if the two-step check fails? Do the subset of trades where zero or one of the two checks passes make enough money overall to be worth it? When you say trade a small size, that makes me think they lose too often to be worth it.

    Also, do you find that trading ahead of the break makes more money overall than trading just after? When I scalp a break of support, I can usually get half the initial pop, and it's pretty darn reliable. Like, if it pops from 40.00 to 39.90, I usually can get filled at 39.95 or so, you know? It was much more hit and miss for me to short 40.01, hoping to hit 39.90. Like you said, sometimes the failure pops back in the opposite direction. Maybe you'd have trouble getting 10,000 shares filled after the break, but I routinely do 2000 on a fast moving break.

    Best of luck, tomorrow! We won't think less of you if you only trade 75 times! :-) Just do what the market calls for.

    By Anonymous Richard, at September 22, 2006 1:19 AM  

  • All in all, your providing valuable insightful documentation of the life and emotions of an independent trader. I for one appreciate that and hope you maintain your project through thick and thin. Thank you.

    By Anonymous Anonymous, at September 22, 2006 9:25 AM  

  • "Good trading should be boring, like doing the same thing over and over again. If there’s one thing I guarantee in trading, it’s that "thrill seekers" or adrenaline junkies get their accounts grounded into tiny bits and pieces."

    By Anonymous Anonymous, at September 22, 2006 2:34 PM  

  • To all,

    Thanks for your comments.

    Anon@8:18PM,
    The nets that you see is pre-split (now you know why I've been complaining about not being able to survive!)

    Anon@9:43PM,
    You are absolutely right. I sometimes focus too much on the markets and as a result, I really beat myself up on the bad days and I may tend to overanalyze things. Perhaps if I take a break every now and again, I'll come back refreshed. Maybe I should start studying for some certifications or CFA or something just to get my mind off things....hrrmmmmm.....maybe that might not be a bad idea!

    Anon@10:23PM,
    Our company has a connection to the CME so we are able to get the Level II, Time and Sales and charts for the ES (eMini S&P Futures). If you are trading out of your own account, you'll most likely have to pay extra to get data feed from the CME, so check with them to see how much it costs.

    Richard,
    You've always given me great advice and your comments have done it again. Trying to hit a daily target always spells doom for me. Next month, I will not have monetary targets (like trying to have 5 $1000+ days) - instead consistency should be my #1 goal.

    As for looking for better opportunities - I'm constantly checking my regularly traded stocks for opportunities (by flipping charts, etc), but I will usually avoid thin stocks or stocks with a big spread (simply because my timeframes for my trades are small, I don't want to take the risk of taking a big loser if prices don't move).

    As for the breaks in prices - I'll usually want to make sure that the stock itself has a good solid trend (either up or down) and what I'll try to do is I'll scalp it on the way up or down. I'll hold on to my positions for longer if the Futures are also moving in the same direction. The reason why you see me always trying to get in at round, half or quarter numbers (at .00, .50, or .25) is because usually there are a lot of shares available at those prices which would allow me to get into larger position. But I am starting to scale into my positions more and more often (like getting in 2000 shares here, another 1000 there).

    And I CANNOT believe you mentioned trading only 75 times because today I DID JUST THAT! Richard, you should go and play the lottery!!! :)

    Anon@9:25AM,
    Thanks for the support. In the past I have mentioned that I have thought about taking this blog down several times because hardly anyone was visiting and I was finding that it was taking more time out of my schedule. But I'm glad I stuck with it (I'm learning a great deal about myself by doing this blog). I sincerely hope I can continue to do this, so stay tuned!

    Anon@2:34PM,
    You are exactly right! I remember seeing or reading something like that and I really believe that to be true. I've seen so many people at the office who have been tremendously unsuccessful because of their "thrill seeking" and not focusing on that high probability trade. I'll keep that in mind and I hope to be improving soon!

    By Blogger J.C., at September 22, 2006 9:02 PM  

  • Goog trading blog!!! New Stock trading software stock trading
    Thank you

    By Anonymous Anonymous, at September 28, 2006 8:22 AM  

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