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

Wednesday, March 07, 2007

Accelerating The Downward Spiral

Gross: -$396.89
Net: -$490.22
Loss From Top: $531.82
Trades: 64
Shares Traded: 172600

Stocks Traded Today (net profit/loss):
Motorola Inc. (MOT): +$121.54
Helca Mining Company (HL): +$97.87
Hewlett-Packard Company (HPQ): +$88.10
Advanced Micro Devices Inc. (AMD): +$41.08
Pfizer Inc (PFE): +$5.78
Micron Technology (MU): -$11.65
EMC Corporation (EMC): -$11.69
New Century Financial Corporation (NEW): -$102.23
The Goodyear Tire & Rubber Company (GT): -$105.75
Corning Incorporated (GLW): -$171.98
Taiwan Semiconductor (TSM): -$193.51
Payless Shoesource Inc. (PSS): -$248.38

A typical month for me will consist of a few days in which I end the day in the red. I would have to say that most of those negative days always seem to occur in exactly the same way with the same sequence of events and under the same circumstances.

And today, that same sequence of events and the exact same circumstances led me to a rather bad day for me.

So when I got home today, I looked back at all those bad losing days I've had, trying to find the connection...trying to find out what they all had in common.

So why does this keep happening? Why can't I seem to learn my lesson? What can I do to avoid this kind of day?

First, let me review with you my day today...in fact, this review could probably be used for all those other bad days I've had in the past since most of them always seem to follow the same sequence of events.

When I got in this morning, I found it rather difficult to trade. The whole day seemed rather choppy and in the morning, I just didn't seem to time any of my trades right.

I put on a couple of losers to start off the day and realizing what kind of markets we were having today, I took a little break and tried to re-gain my focus. At that point, I was down quite a bit (about $400).

I scaled back on my position size and I sat, trying to be patient and wait for the good trades to show themselves.

I slowly got back in a groove and managed to string together a couple of winners. I was slowly chipping away at my loss and wouldn't you know it, I eventually found myself in positive territory.

But then I put on a small loser....no big deal - it wasn't too big and I could still bounce back from it.

Then another loser. Ok - still no problem, I was thinking that I could probably make it all back.

Then I get hit for big loser (see bad trades below).....

That's when my frustrations begin to mount....I had worked so hard to get back to being positive on the day and just like that I'm in the hole again...I was also starting to get upset because nothing seemed to have any follow through on it's moves and the markets just seemed to be meandering around and stocks just kept rolling back and forth....

I then start looking all over the place for the next trade....then...

Another loser.....OK - at that point I was thinking that this was beginning to suck and this was getting extremely frustrating....I found myself getting mad at the markets for not doing anything....

I then went on to put on riskier positions...which also ended up as losers....I found myself over-trading - jumping in and out and each loser just made me even more frustrated.

Time was ticking and I felt the need to make money.....fast! Every time I had a loser, I'd go into the next trade with a bigger position.

As 2000 share positions turned into losers...I got frustrated...I went into the next trade with 4000 shares....dammit...another loser....fine, I'd smack the next trade with 6000 shares.....what! Another loser! Now I went to try to make a quick buck by trading those slow moving stocks for 10,000 shares....dammit! A break even trade!

My frustrations basically led me to impatience, to over-trading, and to bigger share size. All of these things just didn't help me out at all and it just accelerated my downward spiral.

Finally, at around 3PM, I was just fed up with what I was doing and I was fed up with stocks just meandering around. My mind wasn't in the game and I really didn't feel like being there.

So I packed up and called it a day before I could do any further damage.

And so, there it is. This exact same day has been repeated many times before and yet somehow I seem to repeat it a few times during a typical month. It's these mental lapses that have really been holding me back from achieving great consistency.

And it always seems to be that same combination of choppy markets with a bad start in the morning, coupled with a bit of a comeback, only to lose everything again in frustration, as I curse the markets for chopping every which way.

It's not that I can't make money in a choppy market - in fact, my trading sometimes thrives in choppy markets and some of my best days have occurred when the markets are choppy.

But I think the real difference is my state of mind. When I lose money in the morning, my thinking somehow changes. The reasons for getting into a trade is somehow different and that drive to make money is more urgent. As the day wears on, I lose more and the urge to do something to make money becomes even greater.

Had I made money in the morning, perhaps things may have turned out differently. I would feel more patient to wait for trades and I would not be in a hurry to put on another trade.

I just have to remember to mind the markets and to not let frustrations get the better of me. I also sometimes need to suppress the need to make money...this kind of thinking usually forces me to over-trade by taking bad setups and by using the Level 2 to trade.

In that past when I've had this kind of a day, I usually review it and make it seem as though it were an isolated incident. I would correctly identify that my frustrations eventually led me down a path of destruction, but as the days go on, I forget the lessons I had learned and I find myself repeating it all over again.

Today is the first day I have tried to connect all of these losing days together and if I can keep a level head throughout the day, I'm sure that 2/3 of my losing days will either become winning days or I won't have lost as much.

So the next time I find myself in this exact same situation, I have to remember what has happened in the past in the hopes that I do not repeat it and so that I don't drown in my own sea of frustration.

Good Trades
None.

Bad Trades
12:56:57PM - Payless Shoesource (PSS) was moving up and making new intra-day highs and I went long 2000 shares when I thought the $34.50 level was going to break. It quickly went against me and I had to get out as follows: 10-cent loser (300 shares), 11-cent loser (200 shares), 13-cent loser (1500 shares)
($244 loser before fees ; Long 2000 shares @ $34.50 ; Out: 12:57:52PM)

Labels:

10 Comments:

  • "...so that I don't drown in my own sea of frustration." This is a great post since it reads like a vivid novel where you are spinning out.

    Try meditation - there are lots of varieties...for tranquility, calm and non-reactive-ness. What is to lose?

    By Anonymous Anonymous, at March 07, 2007 8:37 PM  

  • I know this gremlin well. It can really screw with your head, because you end up asking the market to end your account on a +ive note. And it doesn't have to be much, just a small profit is all. But the market doesn't take requests. Personally, when I trade with an objective like 'to break even' or 'to show a profit', I lose track of the real objective which is to find good trades, and I conveniently forget that just because I am sitting at the screens it does not mean there are profitable opportunities abound at all times. On this note, I think it's important to always ask why we are trading.

    I am very competitive and I know learning to lose is an imperative in this game, but I also find it hard to do. A goal of mine is to feel as good about a 'good loss' as I do with a 'good win', but I have much to learn. Reading your post, it looks like we share in some struggles, but it also looks like you are working through them.

    Wishing you well JC.

    PS - If you want to try meditations, try the link on my blog to the meditation rooms at lime.com. I find they help in focussing on 'doing what is right'.

    By Anonymous Caravaggio, at March 07, 2007 8:43 PM  

  • Anon@8:37PM,
    Thanks for your comments. I've been wanting to find out more about meditation and relaxation techniques for a while now, so I'll probably looking around this weekend. Hopefully it can help me regain some of my perspective from time to time. Good luck and good trading to you!

    Caravaggio,
    Thanks for your comments. Thanks for some great advice...I think it's that shift in thinking that often messes my trading day up. I'll also check out those meditation links over at your blog! Good luck and good trading!

    By Blogger J.C., at March 07, 2007 9:09 PM  

  • hi, j.c.,

    I still think it's the way you trade. Scalping is hard. As long as you scalp, you'll always have bad days.

    Recently you traded MA and was a bit scared. On that day I congratulated you for trying something new. IMO it's better if you move in that direction.

    Trading 5000 shares of a dead stock for a penny or two isn't much safer than trading 200 shares of MA for $1. IMO, trading MA type of stocks is actually safer and more predictable.

    By Blogger wincity, at March 07, 2007 9:20 PM  

  • No doubt you get little pleasure in relating these bad days. When my mind gets so messed up, I just want to run. But you said this:

    "I would have to say that most of those negative days always seem to occur in exactly the same way with the same sequence of events and under the same circumstances."

    That's pretty amazing stuff. If you're right and you know that there's a specific pattern which is responsible for your losing days, you have the power to change it. Not that it will be easy, but identifying the problem is the first step. Now you have the easier task of identifying it earlier and earlier, so you can take action to at least walk away if not make changes.

    Very hopeful stuff, JC.

    By Blogger Tyro, at March 07, 2007 10:42 PM  

  • 明天會比校好。

    每個人會有一個不好一天。

    By Anonymous Anonymous, at March 08, 2007 2:44 AM  

  • hi jc,
    you have almost said that I want to say.when I feel I must make quick money,losing money always impact me.yesterday I made the same mistake ,my loss from top was &700 ,and lost $350.
    Try meditation ,I need!

    By Anonymous wj, at March 08, 2007 4:38 AM  

  • hi jc,
    Read your bio, like it! If you don't mind, I want to know what your goal is trading at the prop firm. I think if you stay with your computer job and trade part time, you probably make more than what you are making now. Obviously in that case you won't be able to trade full time, which you enjoy.

    By Anonymous J. Li, at March 08, 2007 9:19 AM  

  • hi jc,
    Read your bio, like it! If you don't mind, I want to know what your goal is trading at the prop firm. I think if you stay with your computer job and trade part time, you probably make more than what you are making now. Obviously in that case you won't be able to trade full time, which you enjoy.

    By Anonymous J. Li, at March 08, 2007 9:19 AM  

  • Wincity,
    Thanks for your comments. Yea, lately it seems as though I'm moving further and further away from what I wanted to do. Thanks for the reminder!

    Tyro,
    Thanks for your comments. I think the hard part will be trying to take action and trying to do something about it...I'm hoping too that I can make the necessary adjustments and I hope to turn everything around soon!

    Anon@2:44AM,
    Thanks for your comments. Some great words of wisdom...as long as I try to learn from them, hopefully I can turn it around.

    WJ,
    Thanks for your comments. Yea, I was checking around last night for some meditation techniques and I checked out the3500 blog. I also ordered a book about Zen so hopefully they help!

    J.Li,
    Thanks for your comments. My goal at the prop firm is to try to learn how to be a good trader so that one day I can do this on my own with my own money. Hopefully I can make all my mistakes at the prop firm before I do them with my own money. I had been considering taking up a part-time job, but for now, I'll stick with it full time.

    Good luck and good trading to all!

    By Blogger J.C., at March 08, 2007 5:48 PM  

Post a Comment

<< Home