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?

Plenty!

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 up....one 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!)