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

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


  • It's an addiction man...we live for this stuff, that's why it's so hard to get away from it. It's so bad that I don't even fight it anymore.

    BTW...good stuff on your blog...and I'm glad that you're not one of those R people.

    By Blogger boogster, at October 13, 2006 5:41 p.m.  

  • JC,

    Just found your blog a few days ago and it has already become something i look forward to reading at the end of the day. I too decided i had to give this trading thing a go fulltime - though it was Nov 04 and I traded nothing but futures since then. This afternoon was a pretty cruddy environment. The index futures (ES,YM,NQ,ER2) were all in a pretty tight range today and this morning were out of sync. This put me in a small size mode early on and as a matter of fact I took no trades this afternoon as teh ER2 (which is what I normally trade) was in terrible chop.

    So my question is this - and i may be totally off base - have you thought about refining your anaysis of the futures markets. Instead of looked like trending, quantify what they need to be doing specifically relative to your equitiy trading.

    Again, sorry if off base. You may have all the info that you need. Just the obsevation of someone staring at these futures markets all day.

    Once again, thanks for the great blog. Most who are trying to transition into the world of serious professional trading are fighting the same demons - good luck.

    By Anonymous Anonymous, at October 13, 2006 7:02 p.m.  

  • Boogster,
    Hehehe - you said it man! If I'm down for the day, then maybe it's easier for me to leave, but when I'm up and in the green, I just want to make more! But I should realize that I just plain suck in the afternoons, so I should take it easy and just trade half day. Keep up the good work on your site as well! There is another thing I suck at - and that is: picking the winning NFL team that covers the spread! I'm somewhere down near the bottom of the list at your NFL challenge - I suck! :-) I also hope everything pulls through with your Boogster site

    Thanks for the compliments and thanks for visiting! Yea - this morning the 5-minute ES chart just looked sooo horrible - I'm just glad that at least some stocks were trending! As for refining my analysis of the futures market - yea, I think I should really take a more serious look (technically) at it. One of the main things I usually use the Futures for is to make sure that it isn't going to go severely against me when I'm in a position (because most stocks tend to follow the Futures movements). Also, since I'm in and out of a position fairly quickly, I try to take advantage of quick moves made by the Futures (usually stocks will also make a quick move). The only thing that I use is the daily levels on the ES (support and resistance) - we also have "Squawky" piped in throughout the trading floor (a guy in the pit of the S&P Futures pits at the Merc), who is pretty good at letting us know who is doing what.

    But aside from that, I think I really should incorporate more ES analysis in my daily routine as I too wish to trade the ES one day. Good luck to you and your trading and maybe sometime in the future, I'll be asking you for advice on trading the ES!

    By Blogger J.C., at October 13, 2006 8:09 p.m.  

  • Sorry about the ruff luck today buddy. I'd like to say thank you though for the great work you do on your blog. I'm a new trader myself (futures) and it helps to see others have some of the same problems and face the same demons. I also keep a journal everyday and many comments read the same. Except when I trade outside of my method I call it rouge trading! It has eaten me alive the past couple days and finaly today i stuck to my method and got some of it back. I wish you continued success and keep at it!

    By Anonymous Anonymous, at October 13, 2006 8:14 p.m.  

  • JC you won today, be proud of that man. Others (me) struggle every damn day and do not even come close to what you are doing.

    Greed is the answer you are seeking. You love trading, and you don't have to stop trading in the afternoon, and you shouldn't as you have to be the one in control not the time of day, just change it up, smaller size, different strategy, test stuff, try for a .20 or .30 gain rather than a .02, set an account stop loss, same as pokher. In your down time, help others if they need it or go watch that grand master guy trade if he'll let ya.

    You will get the same feelings trading 100 shares as you do 10,000, well maybe... I wouldn't actually know what the f that is like haha :)

    By Blogger Glenn, at October 13, 2006 8:21 p.m.  

  • JC,

    "I was being very patient and I was obeying my rules"

    I thought one of your rules was to leave in the afternoon :)

    I'll consider a good trade anything that makes $150 or more and a bad trade anything that loses $100 or more.

    Sometimes trades don't work out, that's a painful fact of life. Doesn't make them good or bad. A good trade can't just be one that works out, and a bad trade can't just be one that loses. "Good" or "bad" should be qualities that you (in an objective frame of mind) could assess before getting into them. A trade is good if you follow your rules, and a trade is bad if you don't, regardless of the outcome.

    The rest... much of what you're saying reminds me of many traders that I started with. I'll try to find something that had helped them and come back when I find it. Hopefully get you something to read over the weekend :)

    By Anonymous Anonymous, at October 13, 2006 8:34 p.m.  

  • JC, Don't know if you use any oscillators or not. On my charting I use a %K(14)%D(3) stochastic on a one minute chart. I've noticed many of your "bad trades" longs lately have occurred at or near a 100% stochastic. For instance, on today's trade on T, the 14:55 candle occurred after two quick 100% stochastic peaks. This candle also was above the upper bollinger and made a double top with the 12:26 candle. The 14:56 candle confirmed 14:55 as an evening star. However, since price was still above the 200 period EMA, the stock still appeared to be in an uptrend. The 15:05 candle appeared to find support at 0% stochastic, lower bollinger and Macd mid-line. Probable good entry here. By 15:13 candle, SAR flips. Stock then begins to move up until it hesitates @ 15:22 candle, double-topping with 11:15 candle @ $33.50. Candles then go sideways but don't flip SAR. The 15:37 candle finally breaks $33.50 resistance and races to $33.67 @15:50 double-topping with early morning high occuring @ 9:48. By 15:53 SAR flips, move is over. Seems like you like to play longs going thru resitance. Maybe for a change-up, (and since you are a scalper and move fast to exit bad trades), you could try trading long off support (0% stochastic,lower bollinger etc.), especially in an up-trending stock that is above it's 200 period EMA on 1 minute chart. Just a thought.

    By Anonymous Anonymous, at October 13, 2006 8:53 p.m.  

  • JC,

    Finished an article on my blog with some thoughts and collected some links for scalpers and tapereaders on my blog. Hope it comes across as helpful and not attacking. I like your blog and can sympathize with what you're going through (though I don't envy you :) )


    By Anonymous Anonymous, at October 13, 2006 8:53 p.m.  

  • Anon@8:14PM,
    Thanks for your comments. Yea - I guess all traders have to go through this and face all the demons that the markets can throw at you...some can take it and learn from it a lot faster than me...But I will keep trying and I'll try to keep my emotions in check. Good luck to you and your (futures) trading!

    I guess I'll just try to change things up a bit to see what works for me...I kind of like the idea of having half the day to do other things, but at the same time, I don't really like the idea of NOT trading for half the day...I'll have to find a balance somewhere. I would love to have a chance to watch one of the grand masters trade - knowing him, he probably does 50,000 and 100,000 share positions! Hehehe - I too thought that trading 100 shares and trading 10,000 shares would have the same feeling, but the first time I put on a 10,000 share position, I literally pissed my pants!!!! Currently when I put on 10,000 share positions, I piss my pants only half as much now :-)

    I just went through your blog quickly and all I can say is "Why didn't I find it sooner?"! Seriously, you've got some great posts and links there! You don't need to find me something to read on the weekend - I've got your blog! And don't worry - I don't take offense or feel you are attacking me with your post - in fact, it gives me something to think about (so you're an ex-swifty eh? I'm just counting the days till I get out of there!) and I know we're all here to help each other out. Great work and I'll be poring over your blog this weekend!

    Any help is well appreciated! That was a very good analysis of T - I think I've just got to find the right combination of technical indicators together to get them to really work. Currenly, I just use bare charts and a 20-EMA line (just to determine trend). The other things I look out for are support and resistance. But I would love it if you could provide more analysis of my bad trades at the end of my trading days (if you have the time) and post it up as a comment - that way I can have better ideas of what I should be looking for.

    With that, I wish all of you happy trading!

    By Blogger J.C., at October 13, 2006 9:15 p.m.  

  • Hello, Friday 13th, I made good money all week and lost it all in a bad badly-managed trade at noon Friday, no following of my rules. I have had a thought: When I need to drink another cup of coffee in the morning, I should realize that I should stop...drinking coffee...and maybe I am too tired to trade. So, I think that there is a 'stress-meter' that should govern my trading...and I just need to define it more closely. Maybe I will take Friday off. This week I have been very tired, the ppl in the apt above have been very noisy in the middle of the night 2-3am all week and I am very very tired....So I am going to make a 'trade checklist' to define each trade. Next week we will all make money, have a good weekend.

    By Anonymous Anonymous, at October 13, 2006 9:20 p.m.  

  • Anon@9:20PM,

    Thanks for your comments. Ahhhh - the coffee factor...I should keep an eye on this one as well. Also - after lunch I always start feeling sleepy, especially if it's been a heavy lunch. I hope the ppl above you will keep quiet - then again, you could always call the police :-) Get some good rest this weekend and like you said: let's all make money next week! Have a great weekend (and get some sleep!)

    By Blogger J.C., at October 13, 2006 9:33 p.m.  

  • Boogster said it all - addiction. We just love the market and love the action. When my son was born, I said to my wife and myself that I would take 4 weeks off. Guess what? I could only push myself away for 4 days. One thought for your afternoon trading, instead of taking whole afternoon off, you may want to use that afternoon to search for ONE great trade.


    By Anonymous ZBS, at October 13, 2006 10:36 p.m.  

  • JC, addendum to 8:53 comment. On oversold 15:06 candle volume dried up to 14 thousand shares. On 15:07 candle, volume is 1.5 million shares. As they say in Sherlock Holmes, "something is afoot". On 14:53 candle volume is 1.52 million shares in overbought conditions, selling or selling short? (perhaps some to you, no offense intended). Is it the same 1.5M trader? Who knows. But I would rather follow high volume in at oversold than high volume in at overbought. Just a thought.

    By Anonymous Anonymous, at October 13, 2006 10:51 p.m.  

  • I guess one possible reason that you perform worse in the afternoon trading is that you count your P/L on a daily basis. In the morning, you are relaxed and focused. When a stock goes against you, you cut loss quickly because you know you have enough time to earn that back. But in the afternoon, you feel more pressure because you have less time to prove yourself if you did something wrong (and of course, everybody is watching your daily P/L on the blog)

    Sure you can quit afternoon trading all together. Another way is that you can count P/L on a weekly basis, and regard afternoon trading just as the premarket trading of the next day. Quit Friday afternoon though.

    BTW, a quick question for you. At your firm, shouldn't the firm be responsible if your loss is huge? So the worst thing can happen is that all your money in your account is wiped out and you are fired. Knowing this worst scenario, you should not be afraid to trade large sizes (with risk control of course).

    By Anonymous Anonymous, at October 13, 2006 11:04 p.m.  

  • You are still making money during difficult times, things could be worse.

    You know what you need to do young like a Master.
    Success is in your blood!

    By Anonymous StockRoach, at October 13, 2006 11:24 p.m.  

  • ZBS,
    Thanks for your comment. I agree - it's a bit of addiction, and a hint of greed (I wanted to make more $). I really got to work a little bit more on my self control.

    I love it! Keep it coming! This was something that never really entered my mind, but now that you pointed it out, I could have been more aware that this could have happened. These are the kind of things I would really like to incorporate into my trading decisions later on in the future.

    I think you hit the nail right on! In the morning if I put on several trades that lose money, I don't really think much of it...but if the same thing were to happen in the afternoon, that's when my blood begins to boil! I really don't like pressure to do something and when I know that time is ticking, the added pressure sometimes leads me into making mistakes. As for who is responsible for a huge loss - yes the firm will have to eat it...thus you are correct, I shouldn't be afraid to use larger shares - but I think the recent market action has really knocked my confidence level to a new low. Back in July I mentioned in my posts that I was going to start trading 20,000 and 30,000 share positions (back then I was putting on many 10000 share positions with ease), but then I had terrible end of August, and a terrible month in September and so I reduced my share size. I hope one day I will get back to the 10000, 20000, and 30000 share positions again soon!

    Yes - it's true, things could be a lot worse...I'm hanging in there! But the dark side is powerful indeed and I still get swept up in it from time to time...don't worry, the dark side may be strong, but I am stronger! :-) I should spend the weekend just trying to lift objects with my mind...that will strengthen it!

    By Blogger J.C., at October 13, 2006 11:44 p.m.  

  • Hi again, thinking over why I am able to trade well often and then blow it occasionally, and reading your blog daily and thinking it over, I remembered something I read: someone on a blog or website about trading quoted Karen Horney, a shrink of some sort, who said that under extreme stress, people stop being their 'idealized' self and other parts of their personality come forward. So that whereas most of the time, I am rational and business-like in my trading (and succeed for a newbie), by week's end when I am tired, my emotional impulses take over and I make stupid moves. (I think I have this right) that my view of my behavior while trading has to include this factor. In other words, I find that I cannot rely on my 'rational' self but have to (1) acknowledge my emotional impulsiveness consciously as a part of my personality and sometimes this is good (2) build safe-guards into my trading operations to take it into account and counter-check this tendency.

    Looking around the web, I found this book by Trader Vic that includes references to Karen Horney's work and may offer some useful viewpoints.

    Actually for me it is good that this comes up early in my trading life so that I can deal with it before the numbers get too big. For you, I think it is still early also and your very honest blog has been very helpful for me .

    By Anonymous Anonymous, at October 14, 2006 12:54 a.m.  

  • ...(continued) the book by Trader Vic is "Methods of a Wall Street Master" - have a good weekend.

    By Anonymous Anonymous, at October 14, 2006 12:57 a.m.  

  • I am only beginner.

    IMHO, you are overtrading. I think you should focus more on sector movement and setups.

    Considering that you can watch market full time, you should really extend your time frame and
    do swing setups.

    Even if you do long/short intraday scalp, sector movement can give you more favor.

    For example, today you can short the gapped down "housing sector" CTX...

    short steel sector NUE X STLD
    long oil refiners VLO MRO an OIH
    or even short the oil sector after oil future drop before closing at 2.30PM.

    Those are the nice setups you can do and have more edge.

    I did steel sector short when NUE reached daily chart resistance
    and oil shorts (OIH MRO) after MRO reach daily chart resistance.

    IMHO, sector and gap movers give you more reward/risk.

    By Anonymous Anonymous, at October 14, 2006 1:48 a.m.  

  • IMHO, you are way overtrading, using big size on too short timeframe.

    I know you may disagree, after reading your interview on stocktickr.

    But I do believe that with your dedication and effort you've put in,
    you will be rewarded much bigger with longer timeframe.

    Good luck.

    By Anonymous Anonymous, at October 14, 2006 2:00 a.m.  

  • sorry for being verbose here.

    you might already known the following references
    but I thought it might help just in case:

    Behavioral Patterns That Sabotage Traders

    Also "Master the trade" is a nice book in case you don't have.

    By Anonymous accipiter2006, at October 14, 2006 2:19 a.m.  

  • Anon@12:54AM,
    Some great advice and great words of wisdom! I can totally relate to what you wrote - often times I feel myself being a different trader across different time frames (morning trader vs afternoon trader, early week trader vs. late week trader, early month trader vs late month trader). A lot of these emotional outbursts have started occurring only within the last two or three months (quite honestly - I've very good at keeping my emotions at bay) and is something that is starting to cause me great concern (it has been a very difficult couple of months and frustration is starting to show in my trading). I've heard a lot about Trader Vic but have yet to read his book - thatnks for the recommendation! I'm glad you find my blog of some help to you, but I am even more glad that you're offering advice on how to improve the way I do things. For that, I thank you!

    Thanks for your comments. Yes - I will agree with you that I'm overtrading and I am really working hard to move up to being more of a swing trader. I'm currently working on my patience (holding on to my positions) longer and with time I hope to utilize some of the things I've learned (and some of the advice of you readers out there) and I hope to slowly get to be the trader I want to be (fewer trades, longer hold times). I'm slowly showing improvements on hold times (in the past, I used to hold positions for only a few seconds, maybe one or two minutes max.), but I am starting to see some of my hold times get into the 10 minute or more time frame. I hope you can follow along to see if I can one day achieve this!

    Thanks for the encouraging comments. One thing that can probably help me in extending my timeframes is scaling into positions. You can see that most of my trades, I'm going all in, then scaling out. Perhaps if I want to take more of a swing to capture more of a move, I should get in with smaller size and continue to add more to the position if it still looks good (that way, I won't lose too much if the position goes against me). I'll try hard to work on that.

    No problem - I love all the comments - it forces me to really think about how I'm doing things and what I can do to better myself. Thanks for the link - I'll check it out. Also thanks for the book recommendation - I'll check it out as well.

    Have a great weekend all and I will try to focus and will try to be more disciplined in the coming weeks!

    By Blogger J.C., at October 14, 2006 9:51 a.m.  

  • You are doing the great thing as a trader to "fearlessly review what you did wrong".

    By the way, the last 3 comments were all from me, Anon@1:48AM,Anon@2:00AM.

    Sorry to be blunt. But I think you have a lot of performance anxiety (as we all do).
    It is a mental game after all.
    I don't think "big position scalping" is the way to solve your fear or losing money.
    It can be profiting but you have potential and to be a better trader using >=30min charts,
    tracking sectors, and reducing size on each position.

    NYSE stocks are much harder to scalp than NAZ stocks, IMHO.
    Sector rotation gives you better edge.

    By Blogger accipiter, at October 14, 2006 11:37 a.m.  

  • Accipiter,

    Thanks for your comments.

    No need to apologize for being blunt - sometimes bluntness is what's needed to get others to see a different point of view. In fact, I welcome it! It gives me new ideas on how to improve and it also gives others an opportunity the voice what they think I'm doing wrong. I can then assess if I can use it in some way and in the end, I better myself as a trader.

    At this point, I could go one of two ways to increase my profits: I could maintain my current position size, but take bigger swings (i.e. capture more of a move made by a stock), or I could increase my share size and continue to scalp for pennies. Honestly, I'd much rather take bigger swings than to increase share size - I'm still working on my weaknesses as a trader, but one day I'll get there.

    Also true about the NYSE and the NAZ, but with the new Hybrid system coming in, I can possibly see more opportunities showing up on the NYSE.

    Anyways, have a great weekend and I'll see what I can do next week!

    By Blogger J.C., at October 14, 2006 10:31 p.m.  

  • You obviously are able to make profitable trades. You're not alone. I've done the same thing many times. Greed and addiction set in.

    Try this:

    Set yourself a realistic goal for the day. Once you make the goal, stop trading and leave.

    Set yourself a dollar stop loss point for the day. If you reach it, stop trading and leave.

    Do this consistently for the next 30 trading sessions. If you can't, go to an AA meeting (yes, I'm serious) and get the AA books. Substitute the word 'trading' for 'drinking'.

    By Anonymous MrMike, at October 14, 2006 10:32 p.m.  

  • MrMike,

    Thanks for your comments.

    Some great advice. I just want to string together a few relatively good trading days in a row and then I think I should be able to calm down a bit. It seems like the longer I struggle, the tougher trading seems to get. I've got to break the cycle and build up my confidence again...we'll see how the next few trading sessions goes.

    Good luck to you and your trading!

    By Blogger J.C., at October 14, 2006 11:01 p.m.  

  • Great blog!

    I have a question about the new Hybrid system and an earlier post you wrote about the different personalities of each specialist for different stocks on NYSE.

    On your earlier comment "but with the new Hybrid system coming in, I can possibly see more opportunities showing up on the NYSE."

    My question is: With the new Hybrid, does it mean the specialist is not involved at all in the electronic trades. If that is true, does it mean the specialist's personality for each stock will no longer apply. So, the NYSE will trade more like the NAZ and reading the tape will not be that useful anymore.

    Thanks for your time.

    By Anonymous Anonymous, at October 15, 2006 10:24 a.m.  

  • Anon@10:24AM,

    Thanks for the compliment!

    In short, yes - the personalities I described in an earlier post will probably no longer apply (as far as execution goes). However, the specialist will continue his/her role of dampening volatility and possibly provide price-improvement opportunities. The specialist will also have opporunities to add liquidity when necessary, so the specialists' role will not be completely eliminated.

    This will mean, however, that we will not be able to take advantage of the "slowness" of the specialist as much. More electronic execution means that we will have to react a little quicker. If you are a longer-term trader, it probably won't make too much of a difference, but if you are a scalper, execution is everything.

    The new Hybrid system does have it's advantages and disadvantages and the "possible opportunities on the NYSE" I mentioned will only come with time (i.e. I'll have to discover them!).

    Good luck to you and your trading!

    By Blogger J.C., at October 15, 2006 6:51 p.m.  

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