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

Wednesday, January 17, 2007

4 Mistakes

Gross: -$432.00
Net: -$582.82
Loss From Top: $1,048.05
Trades: 74
Shares Traded: 122800

Stocks Traded Today (net profit/loss):
Health Management Associates Inc. (HMA): +$242.43
AMR Corporation (AMR): +$121.88
JPMorgan Chase & Co (JPM): +$83.18
Southwest Airlines Co. (LUV): +$9.87
Lear Corporation (LEA): -$47.68
Mellon Financial Corporation (MEL): -$63.06
Advanced Micro Devices Inc. (AMD): -$65.57
Equity Office Properties Trust (EOP): -$84.24
Corning Incorporated (GLW): -$96.93
Caremark Rx Inc. (CMX): -$105.86
ConocoPhillips (COP): -$200.68
Time Warner Inc. (TWX): -$376.65

My goodness gracious! Absolutely terrible!

Today was definitely not my day...perhaps almost getting hit by a car twice while coming into the office should have clued me in on what kind of day I was up against.

In all honesty the losses today were just a lack of focus and poor decision making.

In fact, the morning went as per usual...I was up close to $500 heading into lunch.

I wanted to take the afternoon off because I wanted to get some errands done (which I missed doing yesterday)...

BUT, in a near repeat performance from yesterday, I would lose it all...only this time I wasn't able to pull myself out of the hole I dug. I would end up staying for most of the trading day.

Over the course of the afternoon, I lost over $1000 (see my loss from top). I just couldn't believe how almost every trade I put on went against me. All afternoon I'd either get out of a trade too early (the position would have gone my way) or I'd give the position too much time, hoping it would eventually go my way (which they didn't and I'd end up having to eat a big loss).

I think I've really got to re-consider trading in the afternoons. For the rest of this week I will refrain from trading during lunch and once lunch is over, I'm going to force myself out of there (whether I'm up or not). Yesterday I lost almost $500 in the afternoon (though I made some back) and today I lost over $1000 in the afternoon.

I was really pissed off when I left the office, but after coming home and calming down a bit, I really thought long and hard about how this could have happened.

Let's see....what did I do wrong....well, there were a couple of mistakes...

Mistake #1 - I traded aggressively during lunch
I don't know why, but for the second straight trading day in a row I tried to trade aggressively during lunch. It was perhaps my push to make more money or perhaps it was one of those "one last trade before I leave" kind of deals. Well that trade during the lunch hour turned out to be a bad one (again it was on ConocoPhillips (COP)), which would lead to mistake #2...

Mistake #2 - I tried going for some fast money to recover what I had lost
Even after I identified this as a problem in yesterday's post, I tried going for a cheapie trade again (I'm really starting to hate Mr. Cheapie). It was almost like an automatic reaction and even though I knew I shouldn't do it, I did it anyways (talk about lack of self control). Maybe I was upset that the previous trade put my afternoon off in jeopardy or maybe I was just flat out upset. Anyways, I quickly found myself in a Time Warner (TWX) trade on 10,000 shares. While in the TWX position, I was thinking to myself "WHAT THE HELL AM I DOING!!!". Well I'd end up losing $350 on the TWX trade

Mistake #3 - My emotions took over my trading
Shortly after that TWX trade, my emotions took full control and I found that I was not able to fully assess my trades nor did I seem to have the power to control what I did. I just kept swinging from one losing trade to another. I also kept flipping stocks (as you can see by the number of stocks I traded today) and even if the trade didn't have a good setup, I found myself taking the position anyways.

Mistake #4 - I relied on "hope"
As my afternoon went from bad to worse, I was finding myself in bad losing positions and "hoping" that prices would come back to at least break even. I held onto some bad losers that I would have normally exited for a small loser...but I just couldn't believe how everything wasn't working and I started "hoping" the position would turn around. Obviously it didn't help one bit. Not believing the kind of luck I was having, I found that I was saying to myself "I cannot believe that this is the 10th trade in a row for a loss....come on, just come back so that I can break even...I simply refuse to believe that this day is going to be this bad...".

So there you have it. It was almost the same sequence of events as yesterday...only yesterday when it came to Mistake #3 I caught myself and I managed to turn it around before Mistake #4 took over.

I'm usually fairly good at controlling things like Mistake #3 and Mistake #4, but I think having two frustrating trading days in a row just aggravated everything and it all came out today....as a result, I just blew myself up.

Overall the day was a roller coaster ride for me and as a result, I didn't clearly write out my good and bad trades (some info missing from here and there).

I know there was one good trade, but there may have been 3 or more bad ones. Unfortunately most of the details were sketchy and some of them I didn't record the times or the prices or the share size. Thus, I'm not going to review the good trades and bad trades tonight.

To tell you the truth, I was really upset about today's trading and I really didn't want to review it....but after writing this post out, I'm feeling much more comfortable about what went wrong and what I need to be more aware of to avoid this kind of day.

So I hope all you readers take away some lessons from today's post....I lost $1000 today and I hope the lessons I learned today can help you in your trading.

Good Trades
There was one on HMA this morning

Bad Trades
There were a couple...unfortunately I didn't really write out the details clearly.

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5 Comments:

  • what's your strategy? size strategy is not reliable for certain stocks such as TWX and EMC. if you enter only when the price reaches break-out, you could get much higher winning rate.

    By Anonymous Anonymous, at January 17, 2007 7:48 PM  

  • Are you mainly entering long trades after lunch? London stops trading after 11am (and as a result so do other traders) so maybe this is detrimental to your trading style (reduction in liquidity, less traders etc.)

    By Anonymous Anonymous, at January 17, 2007 7:50 PM  

  • Anon@7:48PM,
    Thanks for your comments. My strategy at the time was....there was none! I think at the time I was just thinking I needed to capture a 1-cent winner on anything so I wasn't really looking for setups. Today I went long TWX at $22.88 at around 1:30PM when I thought size broke...obviously it didn't work. If I was of sound mind, I wouldn't have traded it.

    Anon@7:50PM,
    Thanks for your comments. Yesterday I probably did about half and half (half longs, half shorts). Today I mainly stuck to shorts in the afternoon, mainly because the overall trend in the markets were down. I'm finding that trades that would have worked in the mornings don't seem to work as well in the afternoons...it may be as you stated that there are fewer traders...I'll try to stick to trading mornings from here on in.

    Good luck to both of you and again, thanks for your comments!

    By Blogger J.C., at January 17, 2007 8:01 PM  

  • I lost about $1,000 in the first hour and it has been messing with my head. Actually this has been with me for a few days now and I can't seem to shake it. I know you get hit by emotions too but you can bounce back. I admire it, and wish I was so strong.

    By Blogger Tyro, at January 18, 2007 1:09 AM  

  • Everybody makes mistakes.

    By Anonymous QUALITY STOCKS UNDER 5 DOLLARS, at April 11, 2013 12:34 AM  

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