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

Wednesday, February 21, 2007

Less Fat, More Action

Gross: +$655.82
Net: +$504.31
Loss From Top: $55.10
Trades: 73
Shares Traded: 180000

Stocks Traded Today (net profit/loss):
Hecla Mining Company (HL): +$538.58
EMC Corporation (EMC): +$189.62
El Paso Corporation (EP): +$116.67
Hewlett-Packard Company (HPQ): +$103.32
Medco Health Solutions Inc. (MHS): +$13.69
NovaStar Financial Inc. (NFI): -$41.16
Motorola Inc (MOT): -$60.63
Medtronic Inc. (MDT): -$92.47
General Electric Company (GE): -$263.32

I've noticed that for the last few trading days, my trading has been focused mainly on those fat stocks I always talk about (stocks with big sizes on the bid and ask...names like EMC, TWX, MOT, GE, ALU).

Over the course of those few trading days, I've had less than stellar trading results.

So why have I been so intent on trading these fat stocks?

Well last week I started having trouble making profits on those faster moving stocks in the news. It seemed like for several trading days in a row, I just couldn't pull out any money from the thinner in-the-news stocks and that the profits from the fat stocks seemed to pull up the slack.

At that point, I started paying less and less attention to those stocks-in-the-news and tried to trade the fat ones exclusively.

Well, as you can see from the last few trading days, it hasn't worked out as planned.

The reason?

By focusing mainly on the fat stocks, my opportunities were limited. You see, these fat stocks hardly move at all during the day. In fact, sometimes they make only one good move for the entire day and if you miss it, well...too bad.

However, since I focused all my energy trading these fat stocks, I found myself trading them too much. I traded them when nothing was going on, when they weren't trending, or when they didn't follow the Futures.

As a result, I'd either take a lot of break even trades or a lot of 1-cent losers and all the fees just racked up.

This morning I started the day off just trading these fat stocks....without any success.

Halfway through the morning, I found myself down over $300.

Then I started thinking and asking myself why my trading has been so lousy the last few trading days when the above thoughts came to me.

At that point, I began looking at stocks in-the-news and this time, they were the ones that pulled up the slack.

Though I didn't really take any good winners, the collection of a good trend on these stocks along with the patience to wait for the opportunities added up quickly and I got myself out of the hole and came away with some profits today.

What I've got to do is to keep a balance between the fat stocks and the action stocks. I've got to keep this in mind as I continue forward with my trading.

Good Trades

Bad Trades



  • i am interested in knowing what you look for on those fat stocks? Are you removing liquidity just buying it as it breaks a level hoping for 1 cent?

    Or are you adding liquidity? Because it takes a lot of time for a level to break on EMC and if you remove liquidity you got the ball against you (since you'd be 1 cent offside plus paying ECN fees).

    As for the news stocks. You should try dummy trading. Search for it on site. You'll use 15 min candles and you'll have a "defined" risk (the size of the inside candle). This way you may not feel so jumpy.

    Use ISI load as your stop if you are at Swift.

    By Anonymous Anonymous, at February 21, 2007 8:40 p.m.  

  • Anon@8:40PM,
    Thanks for your comments. What I usually look for are the breaks of rather significant levels and/or getting into the stock as it trends up. I usually remove liquidity (via ISI to save on fees) and I try to add liquidity when getting out.

    For these thicker stocks, I usually aim for 2 or more cents and I'll take the 1-cent winner if I feel as though things aren't moving any further.

    As an example, I took a trade on EMC today around 10AM (take a look at a chart for EMC). EMC was testing the $14.70 level and when it broke, I went long at $14.70...I punched in for 20,000 shares, but only got 3700 shares. As you can see from the charts, EMC quickly moved up 4-cents from there. Had I gone in even with 10,000 shares, there's a quick $400...with 20,000 that's a quick $800.

    I find that with a stock like EMC, it tends to have support and resistance at every 5-cent level (take a look at a 1-minute chart of EMC), so I usually aim for a 2 or 3 cent move (about the middle of the support/resistance levels).

    Hope it helps! Good luck and good trading to you!

    By Blogger J.C., at February 21, 2007 8:55 p.m.  

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