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

Tuesday, October 31, 2006

My Self-Sabotaging Mentality

Gross: +$655.92
Net: +$455.49
Loss From Top: 0
Trades: 109
Shares Traded: 186792

Stocks Traded Today (net profit/loss):
Walmart (WMT): +$254.55
Corning (GLW): +$186.59
Home Depot (HD): +$58.13
General Electric (GE): +$32.96
Advanced Micro Devices (AMD): +$11.46
Exxon Mobil (XOM): -$2.48
EMC Corp (EMC): -$3.79
Motorola (MOT): -$11.58
AT&T (T): -$75.32

Did you notice it?

It seems like every time consistency begins appearing in my trading, I start complaining and whining. I complain that I don't make enough money and I start whining about how I need to do more to make more money.

And what usually ends up happening?

I start changing things to my trading plan and strategy and over the next few trading days, my profits begin to suffer. As this continues on for a few more trading days, I then start beating myself up for making mistake after mistake and I begin to mentally break-down.

Then over the next couple of trading days, I begin losing focus and my trading suffers even more until I force myself to stop, scrap my new plans and strategies, and then go back to the way I traded before.

It would then take a few more trading days just to get myself back in the right mindset again before consistency re-appears.

BUT, as soon as consistency appears or a string of good days appears, the vicious cycle starts all over again - I start complaining and whining once again.

Some of you have been following my blog for several months now and I'm sure that you folks are starting to see the same complaints, the same problems, and the same mistakes being repeated over and over again as the months roll by.

As a result, I never seem to achieve my goals and when I DO appear to achieve the next level in my trading, my mind thinks I could do better and as a result, I seem to chase unachievable goals. Even if I started making $1000 a day, my mind would probably be disappointed that I'm not making $2000 daily. And when I do make $2000 a day, my mind will be still disappointed because I'm not making $3000 a day.

And so, here I will make a stand. In reality I am actually quite happy if I make $500 daily and so I should see if I can maintain this for at least a month (in case you are wondering, I do not look at my P/L during the course of the day....well, ok maybe once during the lunch hour...). It just seems like everytime my eyes start swelling up with $ signs, that's when I start losing money.

What I've been doing in the past was that if I had a string of a few good trading days, I'd be disappointed that I was not making more and then I'd start making changes in the way I trade. When I start making changes, my trading begins to suffer and my mind begins to fill up with self-doubt until I cannot take it anymore and I go back to what I do best.

In yesterday's post, Stockroach left a comment and in it he stated "Keep doing what continues to work for you". I don't know why, but that single statement made a light bulb turn on in my mind and made me realize what I was doing - my mentality of always going for more was sabotaging my trading.

I also really appreciate the advice and suggestions that other readers leave - and don't think I'm ignoring your advice - in fact, it's far from it! Once I've got more stability in what I'm doing, I'll seriously consider what has been offered (so keep those suggestions coming!!).

Anyways, today I did what I know best - just scalped. I found that there wasn't much follow through on a lot of the moves made today, so I didn't take any big winners nor were there any big losers.

I'll try to post up my October overview either tomorrow or the day after (tonight I may be a little busy - I'm sure you all understand :-)).

Geez...for a moment there I was beginning to sound like a shrink....

Good Trades

Bad Trades

Monday, October 30, 2006

Stuck Between A Rock And A Hard Place

Gross: +$841.88
Net: +$658.33
Loss From Top: 0
Trades: 94

Shares Traded: 159200

Stocks Traded Today (net profit/loss):
Motorola (MOT): +$356.17
Advanced Micro Devices (AMD): +$189.28
AT&T (T): +$156.60
Walmart (WMT): +$62.69

Micron Tech (MU): +$32.66
Exxon Mobil (XOM): -$2.66
Citigroup (C):
Home Depot (HD): -$110.05

It felt good to get back on the trading floor after a week of vacation. In fact, I couldn't sleep at all last night...all I could think about was trading!

Anyways, my mind was fresh and alert and I was careful in not making too many mistakes. I stayed for a little while after lunch (I had intentions on staying the whole day), but by 2PM, I could already feel myself becoming mentally fatigued and I decided to leave after 2:30PM (before I made any mistakes!).

I still feel as though I'm on Las Vegas time and over the weekend I had a tough time trying to re-adjust.

Anyways, before I left, I had a brief discussion with one of the other traders. I mentioned to this other trader that I wished I was pulling in profits like some of the other traders in the office (who can routinely pull in $2000 - $10000 in a single day).

This other trader pointed out that those who are making a killing put on huge positions (20,000 or 50,000 share positions) and that their profits fluctuate quite a bit - one day they'll be up big, another day they'll be down big. These guys also don't mind holding on to severe losers and often times the stock does come back for them.

The other type of traders that were making good money were the ones who had the patience and often held onto positions for a long time, capturing a good portion of moves made by stocks (I'm talking about taking 50-cent or maybe even 100-cent winners). These kind of traders can easily hold on to positions for hours at a time.

But here's my dilemma...

Those who follow my blog daily know that I don't have patience and I feel extremely uncomfortable holding anything for more than 10 minutes (believe me, I'm really trying to work on this).

Those that follow my blog also know that I'm a fairly conservative person when it comes to trading and I tend to be risk-averse when it comes to putting on big positions. When I decide on putting on a position, I usually want to be protected if the stock goes against me (i.e. I adjust my position size depending on how easily I can exit my position should it go against me).

I am starting to believe that in order to up my profits, I'll have to do one of those two things (increase my share size, thus increasing my risk - or increase my patience and hold positions longer, thus also increasing my risk).

On my way home, I was thinking about this and I thought that my situation was like being stuck between a rock and a hard place - on one side was taking more risks, on the other side was having more patience.

Both of these things are hard to come by (for me anyways). I'd like to take more risks...but whenever I do, I start getting punished and end up losing a lot (I can't even believe that before the summer I was talking about putting on 20,000 and 30,000 share positions!).

I'd also like to be more patient and I believe I've made good strides in becoming more patient, but I've still a long way to go. I'm stuck with taking 5-cent winners here, 10-cent winner there when I could be taking 20-cent winner here and 30 cent winners there.

What I'll have to do in the next little while is to see if I can bump up my risk and bump up my patience if I truly want to become the trader I want to be. The next little while should be interesting indeed!

Anyways, 3 good trades versus no bad trades.

One more day and October is done...

Good Trades
10:32AM - Motorola (MOT) looked like it caught some support while the Futures were uptrending slightly. There was some good support on the bid at $22.84 and when the Futures popped up, I went long 10,000 shares at $22.85. Motorola seemed reluctant to go up, so I started exiting my position. I got out as follows: 1-cent winner (5000 shares), 2-cent winner (5000 shares) (
$150 profit before fees ; In: 10:32:58AM ; Long 10,000 shares @ $22.85 ; Out: 10:35:33AM)
10:36AM - Motorola (MOT) looked like it was moving up off support while the Futures were moving up. After I got out of the previous trade (see the 10:32AM trade), MOT kept going up, so I tried to get long 10,000 shares again, but got partially filled for 5400 shares. I got everything out for a 3-cent winner a few seconds later ($162 profit before fees ; In: 10:36:54AM ; Long 5400 shares @ $22.87 ; Out: 10:37:08AM)

2:17PM - Walmart (WMT) was uptrending and so were the Futures. There was some significant resistance at the $49.60 level and when it broke, I got long 3000 shares. WMT just exploded up and I was a little too impatient and took everything for a 5-cent winner ($150 profit before fees ; In: 2:17:16PM ; Long 3000 shares @ $49.60 ; Out: 2:18:28PM)

Bad Trades

Saturday, October 28, 2006

Posts Of Interest - Part 1: The Way I Trade

Since I use Blogger to blog, it makes it very difficult to categorize and sort my posts. This blog is coming up to 200 posts and so I have gone through all my posts and sorted them out into categories that may be of interest to readers.

Over the next four weekends, I will be posting "Posts Of Interest", which is simply a collection of posts that I thought would be helpful for readers to see what mistakes I have made (and continue to make), and to get a better idea of how I do things (without having to click through the archives).

Part 1 is entitled "The Way I Trade".
Part 2 is entitled "Trading Principles".
Part 3 is entitled "Self Assessment".
Part 4 is entitled "The NYSE".

This weekend in "The Way I Trade", I have collected several posts that give you an idea of what I look for in a trade and some of the things I avoid when I trade. Since I have yet to post up my methodologies and my trading strategies, this post is probably the best way to find out how I trade.

I have listed these posts with the oldest post first and the newest post last. And so, here is "The Way I Trade":

The Dreaded "One Print Break" - posted on Feb 23, 2006
  • This post describes one of the things I avoid trading when I see it
  • in my experience, when I do see a "One Print Break", the probability of the trade working out for me is much lower than regular level breaks

The "Ball Buster" - posted on Apr 26, 2006
  • In this post, I describe a trade that ruins your entire day - usually occurring near the end of the day
  • In the past, a "Ball Buster" caused me to lose concentration and/or result in revenge trading or trading on pure emotions

A Psychological Barrier Broken - My First $1000 Day - posted on May 12, 2006
  • A post that describes the slight tweaks to my trading I did to achieve one of my goals I had set up early in my trading career
  • This trading day was interesting because in the post on the previous day, I was complaining about how long it was taking me to have a $1000+ day

Anticipate More, React Less - posted on May 25, 2006
  • This post has several musings on what I should be doing with my trading and how I should approach it in order to be more successful
  • I made a note that in order to make more profits, I had to anticipate more and react less - the more I react, the less I'll be able to make

Big Fat Juicy Level - posted on Jun 19, 2006
  • This post describes the type of trades I always look for
  • I also mention the great opportunity I missed because I saw a "Big Fat Juicy Level", but exited my position too soon - the trade resulted in a $460 profit, but could have resulted in a $2000 profit

A Complete And Utter Embarrassment - posted on Jun 29, 2006
  • A review of a terrible trading day I had back in June and one in which I discovered something about one of the stocks I frequently trade
  • Quite often, a light bulb goes off in my head whenever I have a really bad trading day - mostly because I have to review my bad days in this blog

Looks Like It's "That Time Of The Month" Again - posted on Jul 19, 2006
  • A post that explores a pattern I have in my trading that seemed to re-occur every month

The Trend, The Bounce, And The Momentum - posted on Jul 20, 2006
  • This post reviews some of the changes I made to my trading strategy when things didn't seem to be working out too well
Trying To Go From Scalper To Trader Overnight - posted on Aug 9, 2006
  • Another bad trading day that really forced me to review what was going wrong - in this post, I tried to identify my problems and laid out what I was going to do about it
Scrambling For The Exits - posted on Sept 11, 2006
  • A post that describes how I deal with getting out of a really bad trade very quickly
  • Though I had a profitable day, I could have had a lot more had I not resorted to "Scrambling For The Exits"

Friday, October 27, 2006

Delayed In Denver...

I'm back! Well - looks like I didn't get to trade on Friday afterall...

We had a flight back to Toronto via Denver, but getting out of Las Vegas, our flight was delayed because of all the snow that fell overnight in Denver and when we finally arrived in Denver, our connecting flight was cancelled.

We finally were able to get on a later flight, but by the time we got back home, it was well past 2AM.

I know from experience that I wouldn't be in good condition to trade, so I took today off to rest up a bit (it was an extremely long and uncomfortable day yesterday...).

That being said, hope you all have a good weekend and I hope you folks out there had some good trading this week!

Monday, October 23, 2006

Off To Vegas, Grand Canyon

I'll be stepping out the door in about an hour and heading to Vegas for a few days and a quick side trip over to the Grand Canyon. I will return late Thursday night and return to trade on Friday.

I hope for good trading for all of you over the next few days!

Friday, October 20, 2006

AMD Keeps Churning Out Money!

Gross: +$641.00
Net: +$542.73

Loss From Top: $6.00
Trades: 71
Shares Traded: 93400

Stocks Traded Today (net profit/loss):
Advanced Micro Devices (AMD): +$563.74
AT&T (T): +$20.79
Home Depot (HD): +$17
Exxon Mobil (XOM): +$13.18
Corning (GLW): +$10.58

Motorola (MOT): -$20.43
General Electric (GE): -$62.20

Ok - this morning I woke up in a much better mood and I actually felt like I was alive today.

And look at AMD! This stock has just been tanking real hard the last two days and has been a very good short (though I lost some big money on it yesterday because I was trying to get long on it!).

I mentioned in a previous post that AMD had been really making some money for me (well, except for yesterday when I didn't have a clue as to what I was doing) and today was no different.

It's kind of weird to see that the stocks that make me money keeps rotating...a couple of months ago Citigroup (C) was my big money maker, but then I kept losing money on it, but then Walmart became my money maker...recently I haven't been able to make a dime on it, but here comes AMD to the rescue. I don't know if others have the same experience or not...Oh well, I'll just keep trading AMD as long as it's making money available for the taking.

Anyways, I tried dabbling in some of the other stocks today, but none of them seemed to offer as many opportunities as AMD, so I made it my focus stock for today. All day I just scalped it here and there.

As the morning rolled along, I began slowly reducing my share size to protect the profits I made and after lunch was said and done, I was out of the office by 12:30PM.

This week I got to see the Hybrid market in full swing - however I still haven't really traded the stocks involved. I tried trading some EMC Corp (EMC), but I find that this stock moves a little too slowly for me and as a result, I find very few opportunities on this stock.

I traded a bit of AT&T (T) today (it's also Hybrid), but I didn't not really focus on it enough to get a sense of what kind of impact Hybrid will have on my trading.

No doubt that next week a lot more stocks will be going Hybrid.

Below is a list of stocks going Hybrid on Monday (Oct 23):

And below is a list of stocks going Hybrid on Tuesday (Oct 24):


The interesting one for me will be Corning (GLW), which is going Hybrid Tueday.

I'll be away for the better part of next week because I'll be on vacation and I'll return on Friday. And I think I need it too - I need a bit of a vacation to get my mind off things. Hopefully I'll come back all refreshed and ready to get my trading back on track.

In the meantime, I wish all of you good trading next week!

Good Trades
9:48AM - Advanced Micro Devices (AMD) was downtrending and the Futures were also moving down. AMD reached some support in the form of size on the bid at $20.90. Then suddenly the Futures started tanking real hard and size was about to break so I went short 2000 shares. At first AMD didn't really move, so I got half my position out for a 1-cent winner. But then the Futures tanked really really hard and AMD went tumbling as well. I got 500 shares out for a 15-cent winner (and held 500 shares, but felt like it could still go down again, so I went short another 500 shares (I was short 1000 shares total). AMD seemed to sputter along, so I got out everything. I got out as follows: 1-cent winner (1000 shares), 2-cent winner (500 shares), 15-cent winner (500 shares), 16-cent winner (500 shares) ($175 profit before fees ; In:9:48:42A
M ; Short 2000 shares @ $20.90, short 500 shares @ $20.75 ; Out: 9:49:33AM)

9:53AM - AMD was downtrending and so were the Futures. The Futures suddenly tanked really h
ard again, so I went short 3000 shares at $20.70. AMD followed suit and I got 2000 shares out and held the rest. Then suddenly I saw a big sell order come in, so I exited my last 1000 shares (it was price improved). I got out as follows: 5-cent winner (2000 shares), 10-cent winner (1000 shares) ($200 profit before fees ; In: 9:53:09AM ; Short 3000 shares @ $20.70 ; Out: 9:55:03AM)

Bad Trades

Thursday, October 19, 2006

A "Fuzzy" Day

Gross: -$325.00
Net: -$479.61
Loss From Top: $623.69
Trades: 96
Shares Traded: 137800

Stocks Traded Today (net profit/loss):
EMC Corp (EMC): +$193.31
Home Depot (HD): +$46.49
Exxon Mobil (XOM): +$21.17
Corning (GLW): +$13.31
Walmart (WMT): -$108.48
Hewlett Packard (HPQ): -$175.34
Advanced Micro Devices (AMD): -$291.63

I don't remember getting up and getting in to the office this morning. I also don't really remember how I got home either.

It was one of those days where your head wasn't really in it - and it had a disastrous result.

I've had a lot on my mind lately and all through the morning my mind kept wandering and it started thinking about this and thinking about that. A lot of the times I automatically reacted to something I saw without really assessing why I was trading.

In the end, it was just one bad trade after another. I took one big hit after another and the funny thing is that I was just too tired and fatigued to get emotional (ha! fatigue overcame emotions today! it's probably a good thing!). There was no revenge trading or anything of the sort - just more of a "oh - I lost money *yawn*.

Because of this, there were some trades I hadn't a clue as to why they were put on (in my trading journal there were a few times I just sat there, not knowing what to write as to why I got into the trade). And a lot of my positions had sizes that were nonsensical.

In fact, as I review my day right now, I don't really remember much of it (do I have a hangover or something?). It's as if the whole day was a blur or a dream and I can't recollect most of my day because it's all "fuzzy" and not too clear.

Oh well - right now I'm too tired to really get upset about what happened today. Looks like more trading tuition money today - boy do I have a lot to learn...which is not a very good thing - it means there's going to be a lot more tuition money I need to give up...

Lots of bad trades to share with you today. I'm not going to bother with charts for today - yesterday it took me 15 minutes to upload that one chart (it was probably something wrong with Blogger - AGAIN).

I'll hit the bed early tonight like an old man and hopefully I'll be more aware of what I'm doing tomorrow.

Good Trades

Bad Trades
10:08AM - Hewlett Packard (HPQ) was moving up and reached some resistance at $39.50 while the Futures were also moving up. I thought the level was going to break so I went long 5000 shares. It eventually chopped me out of the positions and I got out as follows: 1-cent loser (1000 shares), 3-cent loser (2000 shares), 6-cent loser (2000 shares) ($190 loser before fees ; In: 10:08:59AM ; Long 5000 shares @ $39.50 ; Out: 10:10:34AM)
  • I guess if I held this, it would have been a winner, but that was one severe chop on HPQ and I just couldn't bring myself to hold on to a potentially bad loser
11:30AM - AT&T (T) was moving sideways while the Futures were moving sideways. I don't know why, but I went long 3000 shares at $33.85. Just then, the Futures tanked hard, so I bailed out for a 4-cent loser ($120 loser before fees ; In: 11:30:59AM ; Long 3000 shares @ $33.85 ; Out: 11:33:35AM)
  • Don't know what to say - AT&T wasn't really doing anything...I think my mind was wandering when I thought I saw something and went long (I think)
12:42AM - Advanced Micro Devices (AMD) looked like it caught some support at $21.50 while the Futures were moving down. I don't know why I decided to go long 5000 shares at $21.52 - I guess I was thinking "Hrmmm...$21.50 is holding up pretty good, time to get long!". Well Futures tanked more and I got out as follows: 2-cent loser (3000 shares), 3-cent loser (2000 shares) ($120 loser before fees ; In: 12:42:31PM ; Long 5000 shares @ $21.52 ; Out: 12:43:17PM)
  • Don't know what I was was after this trade I decided I'm not of sound mind and I shouldn't be trading so I went home.

Wednesday, October 18, 2006

A Big List Converting To Hybrid Tomorrow...

Gross: +$546.60
Net: +$470.71
Loss From Top: 0
Trades: 50
Shares Traded: 62600

Stocks Traded Today (net profit/loss):
Advanced Micro Devices (AMD): +$337.56
Motorola (MOT): +$51.60

Home Depot (HD): +$42.80
Walmart (WMT): +$28.06
Exxon Mobil (XOM): +$18.17
Hewlett Packard (HPQ): +$0.72
EMC Corp (EMC): -$8.22

Another (half) day, another dollar.

This morning there were some big massive moves, but I was slow and missed quite a few of them. When Motorola (MOT) opened up for trading today, it was complete chaos! It announced earnings this morning and I really wanted to get in on some of the action, but I couldn't "see" what was going on as the Level II was just a complete mess.

I've noticed that Advanced Micro Devices (AMD) had been really a money machine for me lately. There seems to be more follow through on it's moves and since AMD is one of those stocks that really moves when it moves, there's been some great trading on it lately.

Unfortunately I cannot say the same for one of my favorites Walmart (WMT). Lately it has become a lot choppier and more difficult to trade. It's longer term chart shows that it's flattening out and not sure which way it should go.

I caught a nice move made by AMD in the morning and that was basically the highlight of my day. I just wished I was filled for all 4000 shares instead of being partially filled for 2800 shares.

Anyways, I just traded until lunch and called it a day just to put the money I made today in the bank. I'll do this a few more times so that I can get my shutdown higher (shutdown is the maximum I'm allowed to lose before the system automatically shuts me down - it's calculation is based on how well you've done the last few trading days...right now mine is abysmally small).

Once I get my shutdown higher, I can then use bigger share size more comfortably (without having to worry about getting shutdown if a position goes against me severely).

Now - on to another topic...

I must admit - I am a virgin when it comes to posting charts and pictures in my post. In fact, that diagram of the trading floor layout is the first time I ever posted an image in my post!

And so, I'm asking you readers out there - where can I find free charts that I can use after-hours to post up some of my charts. For now, I'll use BigCharts to post up a chart of stocks I traded today. Unfortunately the charts at BigCharts are not very good at displaying intraday stuff.

Of course, there won't be as much for me to tell you about the charts technically (unlike some of my fellow bloggers out there). But I think it may help some of you out there just to see what I saw and why I made some of my trading decisions. Check out my "Good Trades" section today for my *gasp!* first post with a chart!

Anyways - to the point of this post. Tomorrow there is going to be a whopping 50 stocks that will "Hybridize". There are some big names on this list and several stocks that many of the traders at the office trade. It will be interesting to see how well we all fare tomorrow.

The ones of interest to me will be AT&T (T) and Ford (F), simply because I trade both of these issue a great deal. And so, here is the list of stocks going Hybrid tomorrow (note: I left out different classes of stocks and I have also left out PFD's, which is why this list isn't quite 50 stocks).

Stocks going Hybrid tomorrow:







The NYSE is now starting to rapidly move all stocks over to the Hybrid system - a lot quicker than I was expecting. I've really been trying hard to trade EMC Corp (EMC) (which is already Hybrid), but I've had only limited success.

I just hope my results on EMC doesn't reflect what my profits will be when all stocks are finally Hybridized...

Good Trades

10:20AM - Advanced Micro Devices (AMD) was downtrending while the Futures were moving down, but had bounced up briefly. AMD was approaching the $24.65 level, which had some relatively big size on the bid. Just then, the Futures started tanking really hard, so I tried to get short 4000 shares on AMD, but got partially filled for 2800 shares. I got some of my position out prematurely when AMD stalled for a bit, but got out the rest for a good winner. I got out as follows: 2-cent winner (1000 shares), 13-cent winner (1800 shares) ($254 profit before fees ; In: 10:20:56AM ; Short 2800 shares @ $24.65 ; Out: 10:25:53)

Bad Trades

Tuesday, October 17, 2006

Wet, Tired, And Cold

Gross: +$301.58
Net: +$100.02
Loss From Top: 0
Trades: 131
Shares Traded: 181000

Stocks Traded Today (net profit/loss):
Advanced Micro Devices (AMD): +$200.69
Walmart (WMT): +$66.67
General Electric (GE): +$58.46
Hewlett Packard (HPQ): +$31.05
Exxon Mobil (XOM): +$6.51
Motorola (MOT): -$14.87
AT&T (T): -$23.52
EMC Corp (EMC): -$91.68
Home Depot (HD): -$133.30

I'll keep this post short as I need to tend to a few things tonight.

This morning I got off to a terrible start and I started the day with a string of losing trades. These losing trades were not big hits, but nonetheless added up and by 10:30AM, I was down close to $400.

I don't know why I kept trying to trade EMC Corp (EMC) during this first hour. This stock was flatlining for the first hour so I don't know why I even tried to trade it. I must admit I came into the office a little late, dead tired, and soaking wet from all the rain out there. But still, that's no excuse to try to trade something like EMC when it's moving sideways.

By the time I realized what I was doing with EMC, I had lost $200 on EMC alone!

I went to get some coffee, woke myself up, and basically had to really work all day to get back into the green. And that was the problem today - it really felt like work. I guess when you are winning, it's all fun and games, but when you're losing and you need to get back into the green, it feels a lot like work.

In all honesty, I really felt like going home as soon as I came into the office this morning. All that walking in the rain and the cars splashing you with rainwater and lack of sleep (I stayed up to watch an AWESOME Chicago Bears vs. Arizona Cardinals game!) and the rather cold temperatures and having a bit of the chills will have that effect.

I ended up staying the whole day just chipping away at my loss until I finally got back into positive territory.

Lately I've been harping on the fact that I have trouble in the afternoons. But it also appears (to me anyway) that it depends on my situation - if I'm up in the morning, then I'll lose money in the afternoon (possibly because I take more risks to try to make more money??), but if I'm negative in the mornings, then I'll make money in the afternoon (possibly because I'm more acutely aware of my situation and I try harder to ensure the next trade isn't a loser??).

I don't know...I'll sit down and try to figure out this afternoon trading thing...

Today I didn't any good swings, nor did I take any big hits.

Good Trades

Bad Trades

Monday, October 16, 2006

My Trading Cocoon

Gross: +$473.20
Net: +$404.19

Loss From Top: 0

Trades: 53
Shares Traded: 61192

Stocks Traded Today (net profit/loss):

Advanced Micro Devices (AMD): +$286.30
General Electric (GE): +$39.17
EMC Corp (EMC): +$37.91
Micron Tech (MU): +$23.48
Home Depot (HD): +$13.70

Hewlett Packard (HPQ): +$5.74
Exxon Mobil (XOM): -$0.32
Corning (GLW): -$1.81

I'm not sure if most of you readers know what it's like to be a trader in a room full of traders. At times, there's a lot of noise, swearing and banging on desks, and at other times the room is filled with silence (with the only thing we hear is CNBC and "Sqauwky" - the guy in the S&P futures pits telling us what's going on).

Unfortunately, I sit in a relatively high traffic area on the trading floor. Let me try to show you visually where I sit. Firstly, there are about 50 or so traders and we all sit in rows and everyone faces the front. Below is a diagram of sorts and each "X" indicates where a trader sits and please note that this is only one portion of the trading floor.

You can see that immediately to my left, there is an "alleyway" that allows traders from the first two rows to get up and leave the room. Since I sit right beside this "alleyway", there are always people getting up and walking by me. And since I sit at the back row, there are constantly people walking behind me as well.

When I was first assigned this spot on the trading floor, anytime someone would walk by, I'd look up, nod or say hi. But the longer I stayed there, the more I found that this actually distracted me a great deal. I would say that every 10 to 15 minutes, someone would walk through this allyway. Often times, I had the feeling that traders that want to exit the room simply just want to leave the room without anyone acknowledging them (i.e they need to get to the bathroom or they are hungry).

And so, I had to learn to ignore people walking by and to ignore practically everyone around me. By doing this, I could concentrate on what needed to be done and I wouldn't have to worry all the time whether I should acknowledge someone as they walk by.

Don't get me wrong - if someone came up and said "Hi", I'd gladly stop what I was doing and have a chat. But in order for me to get myself in the right state of mind, I had to setup my own trading cocoon - a kind of barrier to the surrounding environment. No - I NEEDED to set this up, especially in a hectic environment like a trading floor.

Everyday this cocoon is automatically established and it was actually a lot easier to do than I had originally thought it would be. Sometimes my trading cocoon is soo air tight that there were times the trader who sits next to me asked me something or said something to me, but I did not respond. He'd have to say it again before I realized he was talking to me!

I have a feeling that some of the other traders where I work think I'm unfriendly because I don't say "Hi" to them or even acknowledge them when they walk by. But it's not that I'm unfriendly - it's because I'm wrapped up in my cocoon! Just knock on the door and I'll let you in!

Anyways, today I just traded till lunch. Caught a nice move on AMD early in the morning and just took small winners here and there for the rest of the morning.

Also - the following stocks were added to the Hybrid system today:

Countrywide Financial Corp (CFC)
Proctor & Gamble (PG)
Labranche & Co (LAB)

The last two trading sessions I've been playing around with EMC Corp (EMC) because it was added to the Hybrid system on Friday. I'm still getting used to it, but I can definitely feel the difference the Hybrid system has.

No longer are there delays in filling prints and prices just seemed to move more fluidly. Too bad EMC is one of those stocks that doesn't really go anywhere for most of the day. I'll continue trading this stock and I'll share more of my thoughts later in the week.

Now if only I could effectively establish a trading cocoon within my own mind as easily as I did with my trading environment...

Good Trades
9:32AM - Advanced Micro Devices (AMD) had turned down and started falling while the Futures opened up and began to fall as well. There was some size on the bid at $25.40 and when it broke, I tried to get short 2000 shares, but I got partially for 900 shares. AMD just tanked from there and I rode it until it's downside momentum seemed to tire out. I got out as follows: 15-cent winner (100 shares), 23-cent winner (800 shares) ($199 profit before fees; In: 9:32:05AM ; Short 900 shares @ $25.40 ; Out: 9:36:04AM)

Bad Trades

Friday, October 13, 2006

I Just Don't Know When To Quit

Gross: +$364.94
Net: +$187.59
Loss From Top: $428.22
Trades: 95
Shares Traded: 158600

Stocks Traded Today (net profit/loss):
General Electric (GE): +$156.29
Exxon Mobil (XOM): +$97.07
Motorola (MOT): +$80.94
Home Depot (HD): +$56.96
EMC Corp (EMC): +$25.83
Advanced Micro Devices (AMD): +$1.22
Walmart (WMT): -$47.44
Hewlett Packard (HPQ): -$58.03
AT&T (T): -$125.33

I'm such an idiot.

I wasn't supposed to stay after lunch because I had to go out to the mall and pick up a gift. But for some damn reason, I stayed. I had over $600 net profit before lunch and now look at what I have left. I lost $428 during the course of the afternoon (again!).

I don't know why I stayed - I kept thinking "Just a little while longer..." and so I just kept trading and trading and before I knew it, it was already 3PM. I just didn't know when to quit and the longer I stayed, the more I lost.

And the funny thing is that there were several signs that told me to quit and go home while I was still ahead.

During the afternoon, my trading platform crashed twice - once when I had about $450 net profit and another time when I had $250 net profit. But yet, I didn't take this as a sign to go home - instead I kept trading and now I'm left with a measly $187.

At around 3:00PM I was so pissed I just stormed out of the office (I seem to be saying this more and more often when I trade the afternoons) and it was a good thing I left while I was still ahead - on the last few trades when I was exiting my position, I was trying to get overfilled (i.e. if I was short 2000 shares and the position went against me, I'd get upset and I'd put in 4-2000 share orders to cover, crossing up the Level II, hoping I'd get over-filled and reverse my position into a net long position)

I just don't understand afternoon trading. I was being very patient and I was obeying my rules, but for some reason almost every damn position went against me. And it was not as though the markets were flat or moving sideways - there were some nice moves to the upside (around 1:30ish) and nice moves to the downside (around 2:30ish) and many of the stocks I followed were having the same trends - yet I still managed to lose.

Afternoon trading for me just sucks (or maybe I suck at afternoon trading).

I'm going to re-define what I consider a good trade and a bad trade. Since I'm not doing 8000 and 10,000 share positions as often any more, I'll consider a good trade anything that makes $150 or more and a bad trade anything that loses $100 or more.

That way I can share with you more of my trades (instead of constantly saying "None" for my good trades and bad trades).

With this new definition, I have 1 good trade and 2 bad trades.

This must truly be an unlucky day. I was supposed to leave at lunch - I didn't and I lost money. I decided to go home via a different route today - bus was 30 minutes late and I had to cram into the bus with noisy teens and the bus was too hot and it took me almost an hour and a half to get home.

At the end of the day, I didn't get the gift and I don't have that extra $428 I lost. I am such a stupid idiot.

Good Trades
11:15AM - General Electric (GE) was moving up while the Futures were moving sideways. The $35.70 level was proving to be a good resistance level and so when it broke, I went long 4000 shares. Once GE broke the $35.70 level, it shot right up. I got out as follows: 4-cent winner (2000 shares), 7-cent winner (2000 shares) ($220 profit before fees ; In: 11:15:28AM ; Long 4000 shares @ $35.70 ; Out: 11:16:57)

Bad Trades
1:25PM - Motorola (MOT) was uptrending and so were the Futures. MOT was making intraday highs when it hit some resistance at $26.10. When it looked like it was going to break, I went long 4000 shares and the Futures also ripped up. MOT ends up going down as soon as I got long. I got the entire position out for a 3-cent loser ($120 loser before fees ; In: 1:25:49PM ; Long 4000 shares @ $26.10 ; Out: 1:25:49PM)
  • Ehhh - just following my rules - this trade just didn't work out
2:55PM - AT&T (T) was uptrending and reached some size at the $33.45 level while the Futures were starting to move up after tanking hard. When the $33.45 level broke, I went long 4000 shares. Just then, the Futures started tanking hard and I was forced out of my position for a 3-cent loser ($120 loser before fees ; In: 2:55:26PM ; Long 4000 shares @ $33.45 ; Out: 2:56:16PM)
  • Maybe this trade was out of frustration - I don't know, it just looked good at the time
  • The Futures looked like it was going to start an uptrend and so I took this position - not expecting the Futures to tank hard like it did

Thursday, October 12, 2006

The Path To Success...Is A Very Bumpy Road

Gross: -$367.20
Net: -$446.80
Loss From Top: $446.80
Trades: 43
Shares Traded: 56238

Stocks Traded Today (net profit/loss):
AT&T (T): +$105.50
Exxon Mobil (XOM): +$66.16
Advanced Micro Devices (AMD): -$44.88
General Electric (GE): -$50.33
Home Depot (HD): -$112.09
Hewlett Packard (HPQ): -$156.85
Walmart (WMT): -$254.30

Ouch! Not a very good day at all. I did as I promised and I only traded until lunch. This hurt real bad...after two very weak performances, this was one of the last things I needed to see today.

This morning I was ready to take on anything and my spirits were high (for some reason, I feel like this everyday - which can't be a bad thing!). However, I just took too much risk in a morning market that was very reluctant to go anywhere.

All my small positions went for great winners, but every single big trade I put on really went against me. I never got to see green at all today.

A couple of things that went wrong today:
  • All of my big losing trades today were put on without much confidence and hence I should have used smaller share size
  • I broke a few rules - one trade that hurt was on HPQ - this one had a major level break, BUT it was one of those "One Print Breaks" that I'm not supposed to trade
  • I was being more risky today - however it was more like taking risks blindly ("let me get into this position and hope it goes my way") instead of taking a calculated risk; the Futures and overall markets just didn't go anywhere, which means that there were no good setups
  • Perhaps knowing I'll only trade till lunch really forced me to act because time was running out - I actually sat and watched the market go by for the first hour without trading at all (no good setups); not too sure if this was a contributing factor, but keep in mind, I was prepared to stay the whole day if the markets looked good
It was just one of those days where you flip and flop all over the place and you fall flat on your face right out of the starting gate.

So, I've just got to acknowledge what went wrong today, make a mental note, and then try to forget that this day every happened.

My path to success has been a little longer than I had originally expected and there were (and still are) many bumps in the road. I just hope I can survive these bumps that lay ahead and I hope there isn't that one big huge bump that will forever block my path.

As long as I know that this path leads to my ultimate destination, I will continue to follow it until I no longer have the strength to do so (or until my wife gets fed up and tells me to get a job - just kidding of course!)

Anyways, I also wanted to post up a list of stocks that were included in Phase III of the Hybrid market starting today. They are:

Banta Corp (BN)
Chesapeake Energy Corp (CHK)
Freddie Mac (FRE)
Mastercard (MA)
Office Depot (ODP)
WPS Resources Corp (WPS)
Canetic Resources Trust (CNE)
Chevron Corp (CVX)
Goldcorp Inc (GG)
Noble Corp (NE)
Novelis Inc (NVL)
Toyota Motor (TM)
Agilent Technologies (A)
Cooper Companies (COO)
Texas Pacific Land Trust (TPL)
Willis Group Holdings (WSH)
W Holding Company (WHI)
Enterprise Products Partners (EPD)

Tomorrow (Oct 13, 2006) the NYSE will be adding the following stock to the Hybrid market:

EMC Corp (EMC)

Hrmmmmmmm...EMC eh??? That one's interesting...I shall try my hand at trading this tomorrow. Two days ago I had a taste of the Hybrid market when I traded American Express (AXP) - and it did not taste good (I lost money).

I also want to note that starting today I'm reducing the font size of my posts. My posts are starting to get fairly long now and I get fairly tired of having to scroll down and down and down so much.

Good Trades

Bad Trades
10:47AM - Walmart (WMT) made a near vertical move up while the Futures were moving up slowly. When WMT got to the $48.55 level, I punched in long 4000 shares when I thought it was going to break. Well, after a near vertical move made by WMT, you know what will most likely happen next - it went down and I had to get out as follows: 1-cent loser (1000 shares), 5-cent loser (2000 shares), 6-cent loser (1000 shares) ($170 loser before fees ; In: 10:47:22AM ; Long 4000 shares @ $48.55 ; Out: 10:49:16)
  • For the last little while, the price action on WMT has been horrible - I should have seen this one coming
  • Again, this was another stock that had a near vertical move and here I was trying to get long at the top of the move - not good!
11:01AM - Hewlett Packard (HPQ) was uptrending while the Futures were sideways. HPQ reached significant resistance at the $38.50 level. Just then, the whole level was taken out in one print, and I went long 6000 shares on some left over ECNs. Well, there's a reason I'm not supposed to get in on "One Print Breaks" and this was a prime example. I got out as follows: 2-cent loser (4900 shares), 4-cent loser (1100 shares) ($142 loser before fees ; In: 10:01:50AM ; Long 6000 shares @ $38.50 ; Out: 11:02:23AM)
  • Well - what else can I say? I already have rules about One Print Breaks - why didn't I follow my rules?

Wednesday, October 11, 2006

Hate To Say I Warned Myself So...

Gross: +$293.84
Net: +$116.27
Loss From Top: $234.34
Trades: 111
Shares Traded: 151800

Stocks Traded Today (net profit/loss):
Hewlett Packard (HPQ): +$426.84
Corning (GLW): +$66.55
Walmart (WMT): +$11.59
General Electric (GE): +$8.37
Citigroup (C): -$34.08
Home Depot (HD): -$69.80
Motorola (MOT): -$90.66
Advanced Micro Devices (AMD): -$202.55

If I only took my own (as well as some of you reader's) advice and gone home after lunch. But, I insisted on sticking around for the FOMC meeting minutes.

This morning I took on more risk than usual (which we all know I'm trying to work on) and I know I had big swings in my profits, but by lunch I was up a little over $300.

I traded lightly before the FOMC meeting minutes were released and and when they did come out, I managed to lose some money.

Then the plane crashed into an apartment building on East 72nd Street in Manhattan, which caused havoc with our trading system.

Somehow in the chaos, I lost a lot of money on AMD. Our system lagged so much and things would freeze and execution slowed to a crawl. I got in a couple of times on AMD at what I thought were the correct prices, but instead they were delayed quotes. I went long when AMD was tanking hard on one of the trades...good thing I only used 1000 shares.

And there were a couple of other trades on AMD during that volatile period in which I thought were good, but ended up being losers because what I was seeing was not really there.

Looks like the news reports that Yankee pitcher (and one-time Blue Jay) Corey Lidle was in the plane crash. His passport was found on the ground near the crash and the plane was registered to him. Wow - how unfortunate...

At our office we have an audio news feed and we did get the news about the plane crash maybe about 1 or 2 minutes before it was broadcast on CNBC. I should have been able to make some money at that point (markets were just beginning to fall when we heard the news), but I didn't.

But because of the multiple problems with the system, I made some profits, I lost some profits, but in the end, I lost more than I gained.

And I knew something like this was going to happen. I was already starting to "feel" like I didn't want to be there immediately after lunch, but somehow I decided to stay.

There were some good comments in yesterday's post and a lot of good suggestions. Richard (from, you know where - Move The Markets) pointed out that having monetary rules (like if I make $700 before lunch...etc) is probably not a good thing - and I totally agree with him. This will probably lead to the kind of days when I aim for a $1000 day, but end up losing almost everything.

And StockRoach also mentioned that it's probably better if I just left after the morning was done no matter what my P/L is. I like this idea simply because there are no monetary targets involved.

But in the end, I should just see how I feel after lunch and what I feel about the markets after lunch. It also could be just that I'm plain tired (perhaps not enough sleep?).

So what I'm going to do is that for the rest of the week I'll pack up and go home after lunch UNLESS the markets are moving real well (unlike today and yesterday).

If only I had left after lunch, I would have been $200 richer, and a whole lot happier...

Good Trades
9:55AM - Hewlet Packard (HPQ) was uptrending and the Futures were choppily moving up. HPQ reached the $38.00 level that had quite a bit of size on the offer. When it was about to break, I went long 6000 shares and I waited for HPQ to finish moving up and I got most of my position out after the upmove was over, but I had to chase prices back down to get the remainder out. I got out as follows: 1-cent winner (1200 shares), 2-cent winner (800 shares), 4-cent winner (2000 shares), 8-cent winner (1000 shares), 9-cent winner (1000 shares) ($278 profit before fees ; In: 9:55:35AM ; Long 6000 shares @ $38.00 ; Out: 9:59:43AM)

Bad Trades
10:30AM - AMD was moving up sloppily while the Futures were moving sideways. AMD reached some resistance at $23.50 and when it broke, I went long 4000 shares. The position went maybe 1 or 2 cents for me, but then came back down. I basically got chopped out of this position as it continued upwards after I got out. I got out as follows: 2-cent loser (1000 shares), 3-cent loser (900 shares), 4-cent loser (1000 shares), 6-cent loser (300 shares), 7-cent loser (200 shares), 8-cent loser (600 shares) ($167 loser before fees ; In: 10:30:04AM ; Long 4000 shares @ $23.50 ; Out: 10:31:36AM)
  • I guess I could have held this position as it was trending, but looking at a loser this big was hard to take, so I bailed
  • The Futures also weren't really helping and as a result, I should have reduced my share size on this position
  • For most of the morning, AMD was moving fairly choppily and so I should have known that if I got into a position, it may try to shake me out of my position (which it did)

Tuesday, October 10, 2006

Have I Found My Kryptonite?

Gross: +$296.80
Net: +$125.28
Loss From Top: $592.03
Trades: 86
Shares Traded: 155310

Stocks Traded Today (net profit/loss):
Exxon Mobil (XOM): +$144.81
Corning (GLW): +$118.53
Advanced Micro Devices (AMD): +$102.19
Ford (F): +$42.91
Walmart (WMT): +$42.19
Home Depot (HD): +$8.68
AT&T (T): -$37.15
American Express (AXP): -$46.19
Hewlett Packard (HPQ): -$57.73
General Electric (GE): -$59.50
Pfizer (PFE): -$132.97

Was I ever pissed when I left the office today! But sometimes it takes days like this to discover a problem and perhaps even do something about it.

So what happened that got me all riled up?

Check out my "Loss From Top"...I lost almost $600 in the last 45 minutes of trade! This is not the first time something like this has happened. In fact, this kind of thing has happened to me many many times before.

On my way home after my anger dissipated, I started thinking how or why this keeps happening to me? And I think I have a solution/answer.

I don't know why it never occurred to me earlier. Afterall, I've mentioned it several times in past posts, but for some reason I could never put the pieces together. So what is my problem?

I suck when it comes to afternoon trading!

How many times have you seen me mention in my posts about how patient I was in the morning, how good I was following my rules in the morning, and how good I was at preserving the profits in the morning?

And how many times have you seen me mention losing a lot of money in the afternoons in my posts?


I don't know what it is - perhaps it's my inability to concentrate or remain focused. Maybe the stress from the morning leaves me exhausted when the afternoon rolls around. And no matter how much coffee, how long I go out for a walk (today I actually went out for a nice long stroll at around 1PM), or how much time I kill doing other stuff, it doesn't seem to help my trading in the afternoons at all.

Quite honestly, I can sort of feel it too. In the mornings I'm usually excited to get the day started and I'm full of energy, but by the afternoon, all the waiting for good setups and all the excitement of the morning has me mentally exhausted and I find myself giving big sighs (those "I'm bored" type of noises) a lot in the afternoons.

From my trading results and my trading journal I can see that in the afternoons I will either:
  • lose a lot of money
  • make very little
  • I'd lose a lot in the early afternoon and I'd have to spend the rest of the afternoon trying to play catch up
Of course, there is the occasional afternoon where I make a good trade here and there, but these are far and few in between.

And so with that, here are some new trading rules I will add to my "Trading Rules and Strategies" document (one day I'll post it day...):
  • If you have a net profit of $700 or more by lunch, take the rest of the day off
  • If you have a net profit of $500 or more by 2PM, take the rest of the day off
  • Reduce your overall risk (reduce share size) as the day goes on - by 2PM or later, you should be trading 1/3 to 1/2 your normal trading size; this is to preserve whatever profits you may have accumulated
  • If you are net negative, the above rule does not need to be enforced
I know some of you out there may disagree with some of these new rules. But my take on this is that I just want to stop the bleeding and string together at least a few decent trading days. I cannot tell you the countless $1000's I have lost in afternoon trading.

Hopefully this also gives me more time to myself - there are countless things I would like to do (read some books, work on other blogs, continue my learning of a new language, etc) that I have yet to find sufficient time to do.

I'll give these rules a trial run in October, since I'll be missing several trading days this month (I've already missed one and I'll be missing another 5 trading days later in October).

Today, I also have to blame myself for taking too much risk in the afternoon. The one trade that killed me was on AT&T (T) at around 3:48PM (see bad trades). There were several things wrong with the trade that made me feel uncomfortable, but yet I put on a relatively big risk (big share size).

There was a "Master Trader" (a trader who nets $120,000+ within a calendar year) in our office that would come in in the mornings, trade for about 2 hours, then go home. He'd net $800 to $1200 in the mornings, then call it a day. I guess either he'd rather do other things in the afternoons or he sucked at trading in the afternoons.

Hrmmmm....maybe he and I share the same affliction to the same Kryptonite...

Good Trades
11:21AM - AT&T (T) and the Futures were trending upwards. AT&T (T) was testing some resistance at $32.50 when suddenly the Futures ripped up hard! I quickly went long 10,000 shares and got out a few seconds later as follows: 3-cent winner (2800 shares), 4-cent winner (7200 shares) ($372 profit before fees ; In: 11:21:13AM ; Long 10,000 shares @ $32.50 ; Out: 11:21:45AM)

Bad Trades
3:48PM - AT&T (T) was strongly uptrending while the Futures were testing some resistance. AT&T (T) just looked so strong that I wanted to get in on the action. I went long and got partially filled for 8700 shares @ $32.80. Unfortunately, there was hardly any size backing up my trade and the Futures could not break resistance and AT&T (T) fell. I got out as follows: 2-cent loser (4000 shares), 6-cent loser (4700 shares) ($362 loser before fees ; In: 3:48:26PM ; Long 8700 shares @ $32.80 ; Out: Did not record)
  • First of all, AT&T (T) had just finished a near-vertical move straight up; I should have been cautious with this one
  • Another thing was that the Futures kept bouncing against some resistance and it couldn't break - I knew that if the Futures could not go further up, it'll come screaming back down; I should have waited for a clear break on the Futures if I had wanted to get long
  • Position size was way too big on this one - there was hardly any size behind my trade and if this position went against me (which it did), I'd have trouble getting out (which I did!)

Monday, October 09, 2006

Happy (Canadian) Thanksgiving!

No trade today. I guess you can say I'm celebrating two holidays today - Columbus Day (US) and Thanksgiving (Canada).

I had a little too much turkey and a little too much wine last night and I couldn't get myself together this morning, so I decided to celebrate these two holidays today.

This also gives me an opportunity to warn all readers out there - advertisements on this site will be coming soon! I know I can hear some moaning and groaning about this, but I will try my best to place advertisements so that it will not detract from this site. In other words, I will try to place them in the most "tasteful" way I can.

I also spent the better part of the day today going over my blog site and made a list of the best posts and I have categorized them under "The Way I Trade", "Trading Principles", "Self Assessment", and "The NYSE". I will be posting this "Posts Of Interests" list sometime in the near future, so be on the lookout!

Until tomorrow....

Friday, October 06, 2006

Welcome To Phase III

Gross: +$554.66
Net: +$432.20
Loss From Top: $0.22
Trades: 86
Shares Traded: 105400

Stocks Traded Today (net profit/loss):
Walmart (WMT): +$185.71
Hewlett Packard (HPQ): +$153.27
Citigroup (C): +$117.87
Advanced Micro Devices (AMD): +$73.45
Exxon Mobil (XOM): +$32.40
General Electric (GE): +$16.60
Corning (GLW): -$4.77
Motorola (MOT): -$41.03
Micron Tech (MU): -$50.57
Home Depot (HD): -$50.69

Well well well. What a day to start showing all the benefits of the new Hybrid system - one filled with choppy sideways action. If you haven't heard, today was the start of Phase III of the Hybrid system that the NYSE is introducing.

Phase III began today on two stocks: American Express (AXP) and the Equity Office Properties Trust (EOP) and more will be added until every stock at the NYSE is included by the end of the year.

All the benefits of the Hybrid system (faster execution, more electronic component, the lifting of auto-ex restrictions) were on display on these two stocks...but trading on both of them couldn't be more boring!

Both of them were too thin to really take advantage of the new and improved auto-ex and both traded in a fairly small range. I had originally wanted to trade either of these today just to give the Hybrid system a test drive, but I found no opportunities at all.

Hopefully the next batch of stocks they put in Phase III will be thicker, more interesting stocks. We'll have to see.

I hope none of you lost big money on GM this afternoon...or maybe I should re-phrase that - I hope some of you MADE big money on GM this afternoon! When the news broke, I watched this sucker tank $3 within a half an hour.

I had wanted to get in on the action, but that stock was just totally insane! I heard one of the traders at another branch lost $12,000 within a few minutes on GM! Dang!

Today I didn't really do much. I didn't really like the way the markets moved for most of the day. After working on that list yesterday, I found myself really focused and I was really more conscious of some of the things I mentioned in my post yesterday.

I was a lot more patient for trades to show themselves (another day with low # of trades), I didn't automatically jump out of a position as soon as it became a 1-cent loser (though I had to stare at a 1-cent loser for a long time - it was really painful to hold!!!), I was quite surprised I was a lot more patient when holding on to winners (though the day was up and down a lot and so I didn't really have any good swings), and I really managed to take more risks today (though GM was perhaps a little TOO risky).

It was very hard to find opportunities today and so I just did what I could do and very few mistakes were made today.

No good trades and no bad trades today - just a lot of choppy sideways action and I found I wasn't able to take many good swings.

This weekend is the Canadian Thanksgiving (it's turkey time!) long weekend and I may or may not come in on Monday to trade.

With that, I welcome Phase III of the Hybrid system to the NYSE!

Good Trades

Bad Trades

Thursday, October 05, 2006

Why I'm NOT A Good Trader

Gross: +$682.00
Net: +$565.64
Loss From Top: $67.26
Trades: 80
Shares Traded: 113200

Stocks Traded Today (net profit/loss):
Motorola (MOT): +$633.85
Corning (GLW): +$199.04
Walmart (WMT): +$85.99
Home Depot (HD): +$8.88
Exxon Mobil (XOM): -$33.47
AT&T (T): -$90.64
Pfizer (PFE): -$97.69
Advanced Micro Devices (AMD): -$140.30

There are lots of resources out there that tell you what a good trader should and should not do as well as lots of info about how a good trader should and should not think.

I would say that most dedicated traders know what they should and should not do/think, but yet why is it still so hard?

Well, I was thinking about my trading problems late last night and I thought to myself that instead of focusing on what I should or should not do/think, why don't I focus on the trader that I am and work on the weaknesses that are part of me.

I vaguely know what my weaknesses are (they're all in the back of my mind somewhere) and I have a vague idea of what I should do about them (like devising a trading plan that works with your weaknesses).

But I have never really physically put them down on paper (or electronic form), and I thought it would be a great exercise for myself so that it all becomes much more concrete and hopefully it really forces me to actually think about them.

I believe if that I acknowledge these problems, only then can I begin working on correcting them. It's very similar to an alcoholic - they first have to admit they have a problem before they can begin working on it (otherwise they are in denial).

And so, without further ado, why I'm NOT a good trader and what I'm doing about it:

1) I don't have patience. I don't have patience when it comes to riding winners and I don't have patience to wait for good setups.

What I'm Doing About It
  • I must follow my trading rules - these dictate when I should get into a position and when I should get out
  • If I'm in a position, take a deep breath and slow down - it seems like everytime I'm in a position, time seems to be stuck in fast-forward - just slow down and keep assessing and analyzing the position
  • Patience is a virtue and can be difficult to come by; by far this one is one of the more difficult things for me to obtain, but I will work hard at achieving this

2) I don't like taking risks. Often times I don't act on my gut feelings and as a result, I miss great opportunities. I also don't put on position sizes big enough.

What I'm Doing About It
  • I just have to realize the difference between taking a risk blindly and taking a calculated risk
  • I should know by now what kind of trades have higher probability of working out and thus I should adjust my share size accordingly
  • I must also acknowledge that trading will involve losers and the sooner I accept that fact, the sooner I can accept risk
3) I don't like change. I don't do enough to change the way I trade for the better and often times I just do what's comfortable. Doing what's comfortable leads to unimpressive results and won't lead me to my goals

What I'm Doing About It
  • From here on in, I must make a conscious effort to change or even try new things and strategies
  • I must also take a more active part in education and learning new ways to do things

4) I worry about what others think of me. I worry about what my family, my friends, even co-workers think, especially since I've been at this for more than a year and a half; I think they all expect much more of me

What I'm Doing About It
  • I will leave all worries at the door and focus completely on trading during the trading day - results will come if I just focus
  • I should think of the entrance to the office building as a barrier - once I enter through it, I become Trader JC, when I exit through it, I become regular JC. All worries and problems will stay on their respective sides of this barrier
  • One of the reasons I started this blog was to have everything out there for everyone to see - I had hopes that by doing this, I would become numb to what others think (i.e. I was hoping that eventually I didn't care what others think)
5) I get bored easily. I tend to trade when the markets are flat which leads to losses and overtrading.

What I'm Doing About It
  • I'm starting to bring more things into work - MP3 player, books, newspaper
  • When the weather is nice, go outside to do something
  • I've taken Richard's example (from Move The Markets) and I'm learning a new language during quiet periods of the trading day

6) I worry or think too much about my trading problems. I'm sometime overly critical especially when I have a bad day. All the worries add more stress to the trading day.

What I'm Doing About It
  • A reader left a comment mentioning having balance in your life - which I believe is essential
  • I'm doing more to get my mind off things when the markets close - I need to do these things to release stress
  • These things include: exercise, learning Mandarin by watching movies, TV show and by listening and learning lyrics to music, and watching sports
  • I should start looking for other hobbies

7) My mood is too coffee dependent. If I haven't had my morning coffee, I'm moody and irritable when I'm trading and if I don't have coffee during the day, I get sleepy, have trouble concentrating or I get headaches. This ultimately affects the way I trade.

What I'm Doing About It
  • One thing I've done is I'm exercising again - I feel as though I have more energy and my mood is lifted and I do not feel as tired without my morning coffee as before
  • Have all my coffees without sugar (I think I was taking in too much of it) and use small cups at home and use the small styrofoam cups (instead of the big cups in the office)
  • Reduce your intake gradually - currently I'm down to three cups a daily (from 6 cups daily)

8) I trust the Level II too much which causes me to exit early. The setups, the charts, the Futures - everything could be going my way, but I get spooked and exit out of a great position because I saw something on the Level II

What I'm Doing About It
  • I am currently working on relying more on charts and what the Futures do instead of what I see on the Level II
  • I should make more of an effort to know exactly where I want to get out and stick to your trailing stop loss - don't jump out of your entire position just because big size suddenly appears

9) I hate losers too much - perhaps a little too much. I estimate that about 70% of my 1-cent and 2-cent losers eventually go in the direction I originally had intended. I'm jumping ship too early without giving the position time to work itself out.

What I'm Doing About It
  • I've really become more patient with my positions and really do give it more time to work out
  • One thing I should do is really stick to my intial stop loss. I always have one in mind when I enter a position, but for some reason I keep jumping out of my positions once they've become a 1 or 2-cent loser

10) I get too emotionally involved. I take offence personally when I take a string of losers and I tend to spiral out of control.

What I'm Doing About It
  • After every single trade, just forget it ever happened
  • Hide your P/L so you don't really know what kind of damage a loser had on your profits
  • If you feel like you are getting frustrated, take a break
  • Do not reverse your positions because you are angry - if you find yourself doing so, stop and think back to all those really bad days and all the profits you lost and remember how you felt at the end of that day - you never want to feel that way again
Wow! This took me a long time to write and once I started I kept thinking of more! Obviously this isn't an exhaustive list, but at least it's a start. I hope with time I can eliminate some of these items and I should review this every once in a while.

Now that this list is in front of me, I feel much more comfortable and I now have a clearer idea of what needs to be done. I shall start working on all of these things tomorrow. What better place to put these things in than in my diary!

Anyways, this post has become huge and I've had to reduce the font size.

Quick recap for today: I found it quite choppy today, but I managed to catch a good trade on Motorola. One good trade and one bad trade. I really focused on taking more risks by increasing my share size on my positions today.

And of course any comments are welcome!

Good Trades
1:00PM - Motorola (MOT) had a strong uptrend going while the Futures were flat. MOT reached resistance at $25.50 and since MOT was uptrending strongly, I went long 10,000 shares. I got out as follows: 5-cent winner (7700 shares), 6-cent winner (2300 shares) ($523 profit before fees ; In: 1:00:09PM ; Long 10,000 shares @ $25.50 ; Out: 1:02:25PM)

Bad Trades
12:52PM - Advanced Micro Devices (AMD) was downtrending while the Futures were flat. AMD reached some support at $24.90 and when it looked like it was going to break, I went short 3000 shares. I probably held this position for a little too long and I was forced out. I got out as follows: 5-cent loser (1000 shares), 6-cent loser (1100 shares), 7-cent loser (900 shares) ($179 loser before fees ; In: 12:52:36PM ; Short 3000 shares @ $24.90 ; Out: 12:55:12PM)
  • AMD was giving me troubles all day long and everytime I got in it always seemed to chop me out - I should have stayed away from AMD for the rest of the day
  • I shouldn't have gone in with soo many shares - it was AMD (thin, choppy stock) and it was the tail end of lunch
  • The Futures weren't confirming the move either