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

Thursday, February 01, 2007

Smoked By Eli

Gross: -$125.00
Net: -$258.93
Loss From Top: $266.49
Trades: 60
Shares Traded: 133800

Stocks Traded Today (net profit/loss):
Time Warner Inc. (TWX): +$185.25
Starwood Hotels & Resorts Worldwide Inc. (HOT): +$99.32
Titanium Metals Corporation (TIE): +$43.44
Valero Energy Corporation (VLO): +$25.14
The Allstate Corporation (ALL): +$17.99
Archer Daniels Midland Company (ADM): +$13.45
The Western Union Co. (WU): -$5.28
The Estee Lauder Companies Inc. (EL): -$47.33
EMC Corporation (EMC): -$148.91
Eli Lilly & Co. (LLY): -$442.04

I came in this morning as determined as ever to get this month off on the right foot...by being aggressive (in terms of share size) and by working the courage to hold onto those pesky winners.

I waited longer than usual before I put on my first trade of the day, mainly because the Futures just seemed to move so erratically...the Futures would pop up, then quickly retrace, then pop down, then quickly come back up. I couldn't get a good read as to where the markets wanted to go.

Then I saw Eli Lilly (LLY) move up to challenge resistance at $55.00. The size on the offer started to get hit and it looked imminent the level was going to break, so I hit it and went long 3000 shares. Well no sooner had I gone long, the Futures started to tank hard.

At that point, LLY just started to collapse with the Futures...as a result, I got smoke by Eli Lilly to the tune of a $432 loser before fees (see bad trades below)....prices fell fast and hard and I probably hesitated a little too long in getting out of that losing position...this was not the way I wanted to start the month....

After I got out of that LLY position, I sort of felt myself go in a panic...a panic to try to make some of my losses back and I quickly jumped from position to position, losing each time as I moved from stock to stock.

Very quickly I was down close to $600...and it was only 30 minutes into the trading day!

Well that basically set the tone for the rest of the day...I was very close to my shutdown level (the maximum I'm allowed to lose during the day before the system shuts me out from trading) and I had to be very cautious if I wanted to avoid getting shutdown so early in the day.

As a result, I traded the rest of the day in fear and with lots of hesitation. Not that the markets helped at all....it felt as though the markets kept chopping every which way...as if the markets were actively trying to shut me down for the day.

All afternoon it seemed like there were no good trades out there and I had to resort to scalping those thick stocks (TWX and EMC) just to see if I could quickly make some profits (without much luck).

At one point during the day, I found myself getting upset at the markets...for always making me lose money whenever I worked up the courage to try to take my trading to the next level...for always scaring me back into the type of trading that gives me mediocre results.

But then I snapped out of it (it was one of those sleepy daydream kind of thoughts while I was waiting for the market chop to stop)...I'll continue to look forward and I'll to continue to try to take my trading to the next level because it's now or never...

Anyways, I couldn't get much headway in terms of profits and I was constantly making money, then losing it.

One bad trade today (the LLY trade) and no good ones.

Yesterday I talked about how my profits slowly decayed if I start the week off on a good note...and today just seemed to reinforce that fact....let's see if tomorrow I can break the cycle and at least come away with some profits.

Good Trades
None.

Bad Trades
9:44:11AM - Eli Lilly (LLY) started moving up and began testing the $55.00 level. The Futures weren't really doing much and when the $55.00 level started getting hit, I hit it with 3000 shares. Well almost as soon as I went long, the Futures started tanking. At first I froze, not knowing if LLY would follow the Futures...then it quickly became clear that it was. LLY just started dropping like a rock and in literally a few seconds I was looking at a few-hundred-dollar loser. I would have to exit my position as follows: 6-cent loser (200 shares), 7-cent loser (300 shares), 8-cent loser (500 shares), 15-cent loser (1000 shares), 21-cent loser (1000 shares) ($432 loser before fees ; Long 3000 shares @ $55.00 ; Out: 9:44:38AM)

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7 Comments:

  • Your comment yesterday hit home, week after week I noticed that my days would slowly degrade til friday.... This week was the same, today, I hit a nice 32 cent gain on BA scalp at the start of the day only to end up in the hole..... I was thinking for me, to pare back my targets as the week progressed, Im going to try that next week, nice blog and thanks

    By Blogger bp, at February 01, 2007 10:10 PM  

  • bp,
    Thanks for your comments. Yea, I also noticed that whenever I get back from a vacation, I tend to do well for the first few days I get back, but then my profits slowly come down. Perhaps we are both mentally drained as the week goes on and I always notice that towards the end of the week I feel more and more tired. I had considered maybe taking Wednesdays off to rest up a bit, though I'm not sure if that would work. One thing that I'll probably continue doing is to just trade the mornings and call it a day after lunch. For most of this week I've been staying and trading the whole day...as a result, I feel dead tired once I get home. Hopefully we can both figure out how to make it through the week! Good luck and happy trading!

    By Blogger J.C., at February 01, 2007 10:27 PM  

  • You obviously ignore the fact that future had jumped too much yesterday afternoon and it would certainly drop later this morning...so the best strategy for today is to short after future makes any high in early morning...

    By Anonymous Anonymous, at February 01, 2007 10:35 PM  

  • Anon@10:35PM,
    Thanks for your comments. I hadn't thought of that...I think that's why the Futures seemed to move soo erratically - every time it moved up, it was met with move down and the morning just felt like a lot of shaking and baking. I'll definitely keep that in mind next time. Good luck and happy trading!

    By Blogger J.C., at February 01, 2007 10:44 PM  

  • Hello,

    Just started reading your blog 2 days ago and enjoying it. Did you mean options when you said futures? Thanks,

    By Anonymous Anonymous, at February 01, 2007 11:45 PM  

  • Hi JC

    I used to suffer from what you are going through. Rested up at the weekend, Monday comes, have a big day then each day things my PnL suffered due to tiredness. that was until I started going to the gym, eating healthily, stop drinking coffee. It really makes you have more energy and I feel good about myself. Not lethargic like I used to feel.

    You have to make a conscious effort to look after yourself to be in tip top shape. Remember, you're an athlete, a trading althlete, competing against world class competition.

    All the best JC.
    Love your Blog
    From a UK Trader

    By Anonymous Anonymous, at February 02, 2007 3:34 AM  

  • Anon@11:45PM,
    Thanks for your comments. When I say Futures, I'm talking about the eMini S&P Futures. I usually use the S&P Futures as a gauge to see where stocks are going. Many stocks (but not all) will move when the S&P Futures move, so I try to take advantage of that fact. Hope it helps!

    Anon@3:34AM,
    Thanks for your comments. Some great advice. The one thing I've really got to do is to cut down on the coffee. I also find my mind start to wander a lot in the afternoons, either because I'm usually waiting for something to happen or because I start feeling sleepy after lunch. I'll try some of the things you mentioned and hopefully it helps! Thanks!

    By Blogger J.C., at February 02, 2007 6:45 AM  

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