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

Wednesday, April 04, 2007

The Battle Within

Gross: +$433.07
Net: +$412.89
Trades: 75
Shares Traded: 33400

Stocks Traded Today (net profit/loss):
USEC Inc. (USU): +$158.91
Altria Group, Inc. (MO): +$57.29
Monsanto Company (MON): +$54.01
Continental Airlines, Inc. (CAL): +$51.91
Hewlett-Packard Company (HPQ): +$37.65
The Mosaic Company (MOS): +$29.60
MEMC Electronic Materials, Inc. (WFR): +$26.36
Jackson Hewitt Tax Service Inc. (JTX): +$24.25
ConocoPhillips (COP): +$24.05
Big Lots, Inc. (BIG): +$20.22
Mobile TeleSystems OJSC (MBT): +$18.45
CF Industries Holdings, Inc. (CF): -$5.78
KB Home (KBH): -$32.47
Companhia Vale do Rio Doce (RIO): -$51.60

Yesterday I noted how almost every position initially went my way, only to turn into a loser.

So today I just got in and out fast. I'd dump half my position at the first sign stalling and I'd dump the other half whenever I just didn't feel comfortable with the position any more.

And it resulted in booking way more winners than losers today...and I was just as content to keep doing this all day long.

Yes, there were some positions that continued going without me, but the vast majority of the positions would have eventually turned into a negative one.

For the past couple of months now, I've been trying to incorporate more longer-term strategies and I really tried to hold onto positions longer.

But I have a feeling that my entries were probably less than ideal for that kind of trading and as I tried to mix things up and change multiple things with my trading plan, I eventually found myself using scalping entries/setups (things I see that I know have a good probability of moving for me in the very short term), but not ideal for longer-term trades (trades in which I hold for 30 or more minutes).

For the past little while now, I feel as though I were caught like deer in the headlights whenever I put on any position.

Once in a position, my scalper-self would scream "Take the profits while they are showing!"...

While this new trader-self-I-really-want-to-become tells me "Whoa there....let's practice patience and let's see how far we can ride this winner!".

While the voices in my mind battle it out, I freeze...not knowing really what to do....and more often than not, I end up taking a loser (more because of the setup).

And after every loser or lost opportunity, the battle in my mind rages on.

If I get out too early because of my scalper instincts, the trader in me yells at me saying "See? I told you so! Why can't you even demonstrate at least some inkling of patience!!!".

And if I get into a position that is initially profitable, only to see it become a loser, the scalper in me yells at me saying "What are you doing? You had profits and you refused to take them! What's the matter with you? Why are you soo greedy?!?!?".

Either way, this battle that rages on in my mind is a lose-lose battle.

If I wanted to change the way I trade, I have to change the whole strategy....

I cannot keep my scalper entries and try to mix them up with longer term exit strategies...these will most likely lead to profitable positions turning into losing trades.

And I cannot keep my longer term entry strategies and mix them up with scalper exit strategies...this will lead to lost opportunities and a mountain of frustration.

So today, I just went back to my roots....back to good old scalping.

Honestly?

Today was probably the least stressful day I've had in a long time. Everything seemed to be on auto-pilot and I wasn't fighting myself on every single position I put on. I just did what felt appropriate and all the winners added up.

I still kept my position sizes small (averaging about 500 share positions), but taking a 6-cent winner here, 10-cent winner there, 4-cent winner here, 20-cent winner there all really added up.

And I didn't really care about how many different stocks I was trading...as long as the stock was moving, I'd look for opportunities to profit off of them.

Like I said earlier, I'd dump half my position when I felt that the immediate momentum stalled, and held the rest....if the stock continued going, then great! If not, then I'd take my profits as the stock was reversing towards my entry.

I'll continue to keep my position sizes small for now until I string some more positive days to get my confidence back to where it was before this whole trading slump started....

Oh and by the way, I've added back the "Shares Traded" stat back on the daily posts...hopefully this will give you a better idea of how aggressive or how conservative I traded today (i.e. lots of shares traded = bigger positions sizes).

Good Trades
(trades in which I make $200 or more)
  • None

Bad Trades
(trades in which I lose $150 or more)
  • None

Labels:

10 Comments:

  • can you give some insight on how you trade multiple stocks. Do you trade them simultaneously and monitor them or do it with stops? any insight is appreciated

    By Anonymous Anonymous, at April 04, 2007 6:35 p.m.  

  • You are scalper, you got that skill. Trying to trade just a bit longer place you in a newbie position, because you just simply don't have that skill. In the end do you need any other skill than scalping? It's a little tuff thing to learn while you parallel provide yourself with income. Learn it when you are on holidays, you are working now. My two cents.

    By Blogger FX, at April 04, 2007 6:39 p.m.  

  • Congrats... I have dreaded opening your blog, hoping to see a positive day, afraid of a losing day... and finally! Welcome back....

    By Blogger bp, at April 04, 2007 6:42 p.m.  

  • Did you read this ?

    http://traderfeed.blogspot.com/2007/03/trading-and-information-processing-why.html

    By Blogger NoGreedNoFear, at April 04, 2007 6:51 p.m.  

  • JC, I have been reading your post for about 6 months. your daily really help my trading. I have the same problem recently as you do. Mixing up btw scalping and holding positions. it is my first time to leave you a comment. I have something want to ask you privately. Can I send you an email?

    By Blogger Danny Liu, at April 04, 2007 7:14 p.m.  

  • To all,

    Again, thanks for the comments.

    Anon@6:35PM,
    I'm usually flipping through various stocks on the move and since I'm in and out fairly quickly, I'm usually only in one position at any one time. My typical hold time may be a few seconds to a few minutes. I usually nurse my position from beginning to end with no stops (well, I do have mental stops). I basically go through the charts and if I see anything interesting, then I'll watch it for a while to look for opportunities. Hope it helps!

    Danny Liu,
    You can reach me at:
    jc_at_trivita@rogers.com
    and I'll gladly answer any questions you may have!

    By Blogger J.C., at April 04, 2007 7:43 p.m.  

  • Nice job!

    By Blogger Dogwood, at April 04, 2007 8:42 p.m.  

  • Good work JC. Sounds like this modified approach is more profitable.

    By Anonymous Caravaggio, at April 05, 2007 6:16 a.m.  

  • It's definately difficult to watch a scalp entry hit your profit objective and keep running. But its easier to make a small profit consistently than to seek homeruns with a methodology that is not suited for seeking homeruns.

    It sounds like your getting back on track.

    By Blogger Lord Tedders, at April 05, 2007 11:43 a.m.  

  • hi J.C. ....

    this is vishnu. i have come to know about ur blog through digg. i am trading since two months without much success. i have stated to read ur blog. i hope i will learn something from ur experience. at first i thought to contact u by e-mail, but it may be intruisive. i need some help. i hope u will help me, i need some input from u. as i read ur blog in detail i may need some insight. bye.

    vishnuvardhan.

    By Anonymous vishnuvardhan, at April 05, 2007 2:28 p.m.  

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