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

Monday, February 05, 2007

Best Of Both Worlds

Gross: +$866.00
Net: +$794.59
Loss From Top: 0
Trades: 57
Shares Traded: 73400

Stocks Traded Today (net profit/loss):
Triad Hospitals Inc. (TRI): +$386.55
EMC Corporation (EMC): +$210.52
United Technologies Corporation (UTX): +$83.91
Motorola Inc. (MOT): +$46.19
Hanover Compressor Company (HC): +$41.47
Time Warner Inc. (TWX): +$24.90
United States Steel Corporation (X): +$18.22
Salesforce.com Inc. (CRM): -$8.27
Herbalife Ltd. (HLF): -$8.92

The problem with focusing the entire day on thicker, slower moving stocks like GE, MOT, and EMC is that sometimes you end up taking too many trades on them or maybe even fall for some tricks on the Level II every now and again and you find yourself dying a slow death as your position slowly moves against you. But if you time it right, you can easily make some decent money trading big sizes and taking a few cents here and there.

The problem that I have if I focus the entire day on the thinner, faster moving stocks that are in the news or that are gapping up or gapping down is that when the markets are moving sideways, I end up trying to trade what I think are level breaks or I get into a position because I think it's going to break through a trading range....this often results in losers...sometimes big losers because these thinner stocks can turn on a dime and really run against you. But, if you catch a good move, you can make quite a bit of money, even on a smaller position.

I think for me, what I've got to do is trade so that I get the best of both worlds.

In the mornings I focus mainly on the stocks that are gapping and try to capture good moves being made. But as the day wears on, I'm starting to find that these gapping stocks end up making limited moves or their charts don't show me any really good potential trades.

So when things start slowing down, I can begin taking a closer look at those slower moving stocks...the profits made of off these types of stocks often compensate for the lack of opportunities on other stocks.

By constantly flipping between slower moving stocks and the faster moving stocks, I find that I have to keep myself on my toes and helps me focus throughout the day. What I look for and what I expect of a slower moving stock is different than what I look for and expect from a faster moving one.

The last few trading sessions, you can see that my profits are about 50/50 between the stocks in the news and the slow moving stocks. If I had disregarded either type of stock, my profits the last few days would have been halved.

What I've got to do now is continue working on strategies (exit strategies in particular) related to the faster moving stocks. Once I get that down pat, I'm sure my daily P&L will grow, but until that time, I'll need to continue trading stocks like EMC and TWX just to pull up the slack.

Anyways, today I found that if you weren't able to catch a good move in the morning, you'd probably have a tough time trading these markets. I traded the whole day, but I couldn't believe how flat we were during the whole afternoon.

Yet again, today was another day in which the afternoon yielded very little in the way of profits (everything was made before 11AM today).

But I was glad I held back a little in terms of the number of trades...I could have very easily done a lot more in the afternoon, but I caught myself several times and refrained from trading such a market.

As a result, very few mistakes were made today.

Two good trades and no bad ones. I admit that the last few trading days I haven't posted charts (most likely because of laziness :) ), but a commenter mentioned this to me over the weekend, so I'll start posting up more charts.

Hopefully tomorrow will yield some better moving markets...

Good Trades
9:42:01AM - Triad Hospitals (TRI) was moving down and I had initially gone short. But then the Futures started ripping up, so I quickly reversed my positions from a short positions into a long positions. I managed to reverse my position and went 1400 shares long at $49.54. I was really patient with this trade...held it for almost 18 minutes...it just seemed to keep going up and up. When TRI started moving back down, I started scaling out of my position. I got out as follows: 25-cent winner (400 shares), 30-cent winner (500 shares), 31-cent winner (500 shares) ($405 profit before fees ; Long 1400 shares @ $49.54 ; Out: 10:01:06AM)


10:16:39AM - EMC Corp (EMC) was downtrending and I was watching the $13.65 level because there was some support (big size) on the bid at that level. Unfortunately when it broke, I was a little too slow and I didn't get any shares. So I went short 5000 shares @ $13.64 as it looked like EMC was going to follow-through on the break of the $13.65 level. I got out as follows: 3-cent winner (1700 shares), 5-cent winner (3300 shares) ($216 profit before fees ; Short 5000 shares @ $13.64 ; Out: 10:20:30AM)


Bad Trades
None.

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2 Comments:

  • JC

    What relevance do you put on the futures when trading? Don't news stocks defy what's happening in the overall market?

    Is this something instilled in you? i.e. only trade the direction the S&P futs is heading.

    By Anonymous Anonymous, at February 06, 2007 4:25 AM  

  • Anon@4:25AM,
    Thanks for your comments. I usually don't pay as much attention to the Futures when I trade stocks in the news...but as you can see today, it did have an impact on the TRI trade...at the time TRI was moving down, but then the Futures started moving up rapidly, thus moving TRI up rather aggressively. I will, however, use the Futures to base my trades on the non-news stocks...in particular, the thicker, slower moving stocks. However, one must be careful when doing this (i.e. one should make sure that the non-news stock has been moving well with the Futures). Since I've started trading, I've always used the Futures as sort of a leading indicator for all my trades (and for the most part, it has worked well)...but with the change in my trading strategy, I don't have to use it as much to determine my trades. Hope it helps!

    By Blogger J.C., at February 06, 2007 6:53 AM  

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