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

Thursday, March 08, 2007

It's Not The End Of The World.....Yet

Gross: -$437.00
Net: -$475.40
Loss From Top: $475.40
Trades: 34
Shares Traded: 60800

Stocks Traded Today (net profit/loss):
Pfizer Inc. (PFE): +$105.02
Advanced Micro Devices Inc. (AMD): +$5.51
Ford Motor Company (F): -$66.61
The Goodyear Tire & Rubber Company (GT): -$84.17
Alcatel-Lucent (ALU): -$97.04
Fremont General Corporation (FMT): -$101.50
Wal-Mart Stores Inc. (WMT): -$103.79
Companhia Vale do Rio Doce (RIO): -$133.40

These past two weeks of trading has left me battered and bruised.

Now, more than ever, do I feel like my trading has sunken to a new level of inconsistency.

In a near repeat performance of yesterday, I came in this morning unable to time any of my trades right. I started the day off with a couple of losers and perhaps I came in a little more aggressive than usual....as if I wanted to right a wrong from yesterday.

Needless to say, it didn't help.

I just couldn't seem to book a winner and again, I was feeling as though there wasn't much follow-through on some of the moves out there.

I kept reducing my share size and I kept losing and I kept reducing my share size even more. I was never able to get back into a trading groove like yesterday and it just seemed like I was booking loser after loser.

It got to a point where I was trading only 200 shares and yet I still had trouble booking winners.

And it seemed like on the trades that I gave plenty of room to work, ended up reversing and I'd have to exit for a loser. And on those trades that I gave little room to work, it stopped me out for a small loser, but continued going in the original direction of the trade.

My day was done even before lunch and I left around 11:30AM.

As I made my way home via public transit, I hung my head low. I felt lower than dirt and I can't even express into words what was going on in my head.

As I sat there on the bus looking out on the busy streets with all these thoughts and frustrations milling around in my head, I saw a guy trying to keep warm on an air vent all bundled up in dirty blankets.

All those thoughts suddenly stopped and another thought raced into my mind and it said "it's not the end of the world". I don't know why that little phrase just suddenly popped into my head like that, but I immediately felt a lot better.

Once I got home, I went to work right away.

I started going through all of MaoXian's Dummy trades....
I went to see how PinoyTrader does things...
I checked out Trader-X's trading style....
I looked through Estocastica's trades...
I viewed the charts of ZBS's trades...

Then I checked the comments left on this blog and Wincity left this comment on yesterday's post:

"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."

And I think he's right to a certain extent....don't get me wrong - I'm not going to completely change the way I trade, but Wincity just reminded me of where I wanted to go with this and I guess lately I've found myself steering down the wrong path....the "old" path if you will.

My trading should involve less of those slower moving stocks when it's dead and more of the stocks that are indeed moving. Oh sure, I can keep an eye on those thicker, slower stocks, but I'll trade them only when they are moving (after all, they've provided me with the most profits).

When I left the office today, I had no intentions of going in tomorrow to trade. But after giving myself some time to think it over and after reviewing all the charts and all things things I have been doing wrong lately I feel as though I want to get back on the trading floor to try out a few new things.

I'll watch to see if there are any good setups made by some of those high-fliers like MA, ICE, and NYX tomorrow, but I'll only go in with 100 shares...just to test the waters.

More importantly, I'll start the day by trading small....the last two days felt like I needed to warm up first before going full steam ahead in my trading.

It's not the end of the world....yet.....

Good Trades
None.

Bad Trades
Probably most of my trades today

Labels:

23 Comments:

  • Don't beat yourself up too much,I have the same tendency to do so on the bad days.Breaking the pattern is tough enough.I had a very similar day to yours today.Just kept fighting direction when it really only takes one or two trades to tell what's going on.We get caught up in that need to make money mode and it can really mess with your better judgement.Better to sit back and wait for the low risk/high reward setups and realize when it's just not working for the moment and step back for a few,than it is to just revenge trade.I'm finding my best days are when I have been patient and focused on only one or two great setups and my worst days are when I try and trade mediocre breakouts and pay too much,giving myself little room for error.Hope that made some sense.Sorry about writing a book here.Good luck,I've been reading your stuff for a while now,your a great trader,just take it easy a bit.

    By Anonymous Doug, at March 08, 2007 6:47 PM  

  • Your description of the street guy reminded me of a day I had. Years ago, I worked for a software company in downtown Toronto. Because of a deadline, I had to work overnight. In the morning, I was tired and exhausted. I felt life was so hard being a programmer. Then I saw a barber getting his shop ready. God how I wished to be a barber instead of a programmer. Life would be so much easier.

    You're right about using small size for the big movers. Don't look down upon the 100 shares. I made decent amount of money today shorting BONT, 100 shares a time.

    By Blogger wincity, at March 08, 2007 7:00 PM  

  • Was a very choppy day for me as well, is there a better style of trading for this type of a day or is it just better to play it low and let the market digest it's recent move. I'll do some reading on other blogs and see if i can find something useful to report.

    Abe

    By Anonymous Anonymous, at March 08, 2007 7:10 PM  

  • JC=
    Your trading is like the weather we have been having, Feb was relatively hot and your March is cold, its time to step back and look at the forest, you have been concentrating too much on the trees, the forest is that green list down the right hand side of your blog. I wish I could have a tenth of that.... relax my man, you are the best....

    By Blogger bp, at March 08, 2007 7:20 PM  

  • I'm dummy trader and I used to be a scalper like you. But then I began to realize that to make money as a scalper you need large share size and really I was risking more than what I was gaining. Trading with 5000 shares to get 1 cent, with a 1 cent stop is still risking $50 for $50. When you realize that 500 shares with a 10 cent stop is still risking the same $ amount.

    I don't think you should abandon what you are doing because clearly you are very good at scalping. I think whether you change your strategy or stick with your current one, I think you just need to ask yourself 4 questions (slighty stolen from TraderX)

    1. Why am I entering this trade?
    2. What price is my entry?
    3. What is my stop?
    4. What is my target?

    As long as your can answer those and mentally prepare yourself for the risk of that trade you'll do fine.

    By Anonymous Anonymous, at March 08, 2007 7:25 PM  

  • JC,

    You are awesome for using large size like that. My max is 1000 shares at a time, but I say if you have guts to go 20,000, than you can use that to your advantage by pushing little guys around. For thin stocks, with light volume, you can get short a few hundred shares and offer 20,000 shares 1-2 cents above your short. This will scare any buyers to death if the stock is week and sellers will be all over this. Make sure you have a nice level of resistance to do this as well as a weak market. Vice versa for longs.

    By Anonymous Anonymous, at March 08, 2007 7:53 PM  

  • 1)is there anything you could have better chance to get profit than burned? if so, how many traders or programmed trading would catch this chance before you could realize it?

    2)if there is a chance you could win $10k while the risk is only $1k, is that real?

    it's normal you have losing days. if not, you will be God :)

    By Anonymous Anonymous, at March 08, 2007 8:00 PM  

  • As long as you stick to you trading plan and don't break your rules, win or lose, you did exactly what you are supposed to do. That's trading. Some days are great some are not.

    Scalping is a difficult and short lived career, too much risk and stress involved. Your idea to look at other trading strategies will be well worth it.

    You're doing well so take it easy on yourself. You will find your way soon enough just keep your head up.

    By Anonymous StockRoach, at March 08, 2007 8:00 PM  

  • well said stockroach, 'Scalping is a difficult and short lived career'. it damages your health invisibly and significantly. just think about the pressure and depression it caused everyday.

    By Anonymous james, at March 08, 2007 9:41 PM  

  • Doug,
    Thanks for your comments and some good advice. It's usually after I blog about the day that I feel a little more at ease, especially when I've had a tough day...I'll get back on track soon!

    Wincity,
    Thanks for your comments. Yea, that comment you left yesterday really hit the mark. Sometimes I'm just too engrossed with what I'm doing that I don't see where I'm going with it. Thanks for reminding me to "get back on track"!

    Abe & BP,
    Thanks for your comments and thanks for the support!

    Anon@7:25PM,
    Thanks for your comments and thanks for the advice. I've got to remember to think of the 4 points you mentioned before each trade (instead of always thinking about making $).

    Anon@7:53PM,
    Thanks for your comments. I don't know if I would resort to scaring the markets to move in the direction I want it to...I've seen big size that suddenly appears, then actually gets hit - especially on some of those thinner stocks....and you know me - I'm fairly conservative and I like to play it safe :)

    Anon@8:00PM,
    Thanks for your comments. Thanks for your support..I'll keep some of those points in mind when I trade.

    Stockroach,
    Thanks for your comments. I've just gotta keep evolving into the trader I want to be....sometimes I just need a nudge in the right direction....I'll get there soon.....hopefully :)

    James,
    Thanks for your comments. I think it's true...I've seen some of the other scalpers who have been doing this for a while and you can just tell that they are aging three times than normal!

    By Blogger J.C., at March 08, 2007 9:58 PM  

  • I've had a similar last two days as you if it makes you feel any better JC.

    Have you seen yet how much you're paying for trades that NYSE is routing out this week? My shop told us we won't know until the end of the month. Makes me wary of using NYSE until I know.

    By Anonymous chud, at March 08, 2007 10:00 PM  

  • Chud,
    Thanks for your comments. I've heard that the NYSE routes only about 3% of the orders that go directly to them, so I'm not sure what the numbers will be....which reminds me to check my P&L from Monday as my prop shop said they'll update our P&L in about 3 days to reflect the charges...I'll let you know what I find (otherwise, drop another comment to remind me!). Hopefully tomorrow goes a little smoother for the both of us! Good luck and good trading!

    By Blogger J.C., at March 08, 2007 10:20 PM  

  • with an aging speed of three times than normal, it would be a question for prop traders that what level of salary/output could compensate the sacrifice of health. triple average salary or 30 times?

    By Anonymous wiifi, at March 08, 2007 11:34 PM  

  • J.C.,

    Do not give up! I know you have what it takes to succeed! I have faith in you!

    Just take a step back... take a breath.

    The market will always be there when you get back.

    And remember that the sun always shines somewhere. You will find your rays, I know.

    :)

    By Blogger TradingGoddess, at March 09, 2007 12:09 AM  

  • Maybe it is just time to short?

    By Blogger jharr, at March 09, 2007 3:08 AM  

  • Wiifi,
    Thanks for your comments. You would think that they would be making tons of $$, but no...I guess all their screaming and all of their pounding on the desk means they're losing money :)

    Tradinggoddess,
    Thanks for your comments and thanks for the support. It's the comments like those that keep me afloat when times seem dire. Again, thanks!

    Jharr,
    Thanks for your comments. I usually don't like making predications and I'll usually just play it by ear. There have been lots of swings to the upside and downside lately though, so anything can happen.

    Good luck to all and good trading!

    By Blogger J.C., at March 09, 2007 7:17 AM  

  • Hey, losing $400 in the grand scheme of things isn't so bad.

    And I'll tell you what... just reading your blog has inspired me to start my own. I've been in an 8 month slump... a blog could be a great way to really examine what's going on.

    So, thank you. You've inspired me. I hope it brings you some luck.

    -Dinosaur Trader

    By Blogger Dinosaur Trader, at March 09, 2007 12:59 PM  

  • I wouldn't recommend you start going to stocks like MA, ICE, LVS, etc. They're just too hard to make money in. A guy I know from the floor says that the specialist on ICE actually loses money; think about that. If the specialist can't make money trading it, why would you?

    At the same time, trading massive size in thick slow movers is a very limited strategy, as you're seeing. But I think you're taking it a little too far in trying to trade ICE, MA, etc. - there's a whole universe of stocks between the most volatile, craziest names and the slowest, most boring stocks. There, I believe, is the best edge for scalping.

    I can't give you specific names that always work, because many names I trade depend on what's in play. BAM (Brookfield Asset Management) I could make money on almost every day for a few weeks; now the volume has dried up and the 3 point daily range has become 60 cents.

    RYI was a great name for the last two weeks, and may offer interesting trading opportunities in the near future. BDC, BGC, RAI and PSA are names I've had luck with lately. GME is a shitty name that I like quite a bit, for some reason....

    Try playing more of the names that have $1-3 daily ranges and trade between 500,000 and 3,000,000 shares. The best edges are there, I think, and fewer professionals are trading them. There are times when those stocks are abundantly, overwhelmingly, almost laughably clear and easy to read. (knowing when to exploit those opportunities and make a killing sizing up is something I need to work on). You'll see trades where bids chase each other driving the stock up 50-60 cents, and the leading bid gets taken out, so you sell your stock to the bid behind it, and in the trade you knew your risk was 1-5 cents with massive reward.

    On RYI in the week, there was a simple pattern: aggressive buyers would print massive size and take out huge offers (3000-5000 shares) every few cents, and there might or might not be a big bid to lean on, but it wouldn't matter... and you could keep staying in the trade , even if the size on the offer refreshed, because it would get taken out. However, once the size on the offer stepped down, even just a few cents, the buying was done, you exit the trade, and then go short... I had something like 8 or 10 winning trades on that stock following that pattern Wednesday, netting 15-35 cents... my biggest loser was 4 cents. Patterns that clear don't show themselves on stocks like GE but you also won't see them on stocks like ICE.

    (Don't look for this particular pattern in that stock, because on thursday it was much more erratic and hard to read... but that's just an example).

    By Blogger William, at March 09, 2007 10:23 PM  

  • Dinosaur Trader,
    Thanks for your comments and thanks for the well-wishes! Hopefully things will turn around for you soon! Good luck!

    William,
    What an excellent comment indeed! I think what you're saying is absolutely right...I was finding that Goodyear (GT) and Cooper Tire (CTB) was fairly good to trade last week and the week before. It was as you said - things just seemed soo clear and it seemed easy to trade. But things seems to have settled down now and I'm finding it hard to find opportunities on it. I think it's as you said...sometimes for a while they're good to trade and then interest in them slows down and that's the time to look for other interesting names.

    I've been looking for more stocks similar to CTB. I just have to keep an eye on stocks that have a good balance of movement and some size on the bid and ask. In fact, this weekend I'm going to spend some time looking for stocks similar to the ones you've described and the ones I've had great success with in the past. Again, thanks for the great comment!

    Have a great weekend!

    By Blogger J.C., at March 09, 2007 10:52 PM  

  • Just make sure you don't focus too much on size... obviously you don't want to get plugged, but the less size you can see on a stock, the more room it can move when you're right. As long as you keep it tight when you're wrong, the occasional hit of 10 or 15 cents will be acceptable. I'm friends with a bunch of Swifties who came to similar barriers in their trading strategies as you, who thought some of the names I gave them to trade were too thin... failing to realize that in the thin names, every single print counts, and if you watch it and really study the name, you can figure out if there's a buyer in control, or a seller, or if neither side is in control... when I say "a buyer", that's what I'm looking for a lot of the time... when I can recognize the pattern one buyer is using to work his large order, I can know when it's done, or when the easy money is gone, at least. And even if there is no one in control... boy can you use your buying power and have some fun, you can play games, force people out of positions, and otherwise be one of the assholes who forces pikers like me to puke my stock up as the worst price because I just can't hold a long position against me 10 cents with a huge offer stepping down... even if that offer pulls.

    If you'd like, I'll share after a trading day some of my trades with you - I make a video recording of my LII and TAS, so you can see some of the easy money available.

    By Blogger William, at March 09, 2007 11:44 PM  

  • playing buying power with thin stock sometime likes driving SUV without belt:
    http://video.google.com/videoplay?docid=-6049052762724590595

    By Anonymous cafiti, at March 10, 2007 12:47 AM  

  • Haha that video is awesome...

    playing it in the wrong situation can be that bad, yeah... but sometimes the risk of getting plugged is worth it, especially when you can plug someone else... like a black box that's putting fake size on the offer and backing it off... putting in a big market order and whacking the black box, forcing the box (or a trader) to be short and have to cover... there are lots of opportunities on thin stocks to really fuck people, so long as you don't get overly confident and can respect risk.

    By Blogger William, at March 10, 2007 12:59 AM  

  • William,
    Thanks for both of your comments and thanks so much for your willingness to help....it's times like these that I could use all the help I can get. I'm also sure that many readers of this blog appreciate the advice you are giving as well. Let me know when you have that video ready!

    Cafiti,
    Thanks for your comments. My goodness! :)

    By Blogger J.C., at March 10, 2007 8:28 AM  

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