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

Wednesday, April 25, 2007

Making It, Losing It, And Making It Back Again

Net: +$530.37
Trades: 65
Shares Traded: 34000

Stocks Traded Today (net profit/loss):
AFLAC Incorporated (AFL): +$319.00
Eastman Kodak Company (EK): +$240.24
Parker Drilling Company (PKD): +$202.37
Koppers Holdings Inc. (KOP): +$144.60
Tidewater Inc. (TDW): +$64.89
International Business Machines Corp. (IBM): +$51.72
Capital One Financial Corp. (COF): +$6.99
Equitable Resources, Inc. (EQT): -$13.70
Suntech Power Holdings Co., Ltd. (STP): -$40.29
Apache Corporation (APA): -$51.29
Alcan Inc. (AL): -$81.07
Cypress Semiconductor Corporation (CY): -$95.26
Eastman Chemical Company (EMN): -$96.15
Teledyne Technologies Incorporated (TDY): -$121.66

Right off the open I was keeping an eye on Aflac (AFL) and managed to catch a good swing on it (though it could have been much much more).

AFL would open, take out the $52.00 level (at which point I got long 500 shares), and when it did, it sat there briefly, but then suddenly I saw a lot of out-of-the-money prints several cents higher.

I decided to put out an order 40-cents out of the money for about half my position, hoping more out-of-the money prints would take me out....unfortunately, I didn't know that it'd get hit and AFL would run up very quickly.

I let AFL run up a little where it seemed to stall briefly again and then I put out another order at least 30-cents away from current prices....and again, all hell broke loose on AFL and it would run up even more, taking me out even before I could cancel my order.

The reason I put my orders out there is because I try to offset my trading costs by adding liquidity and I'll usually try to cancel orders if prices come up rapidly. Perhaps I should stop trying to do this as the credits for adding liquidity on such a small position is probably not worth it.

Anyways, I had a relatively good start early in the morning, but then at around mid-morning, I began losing it.

I put on a a few losers and I suddenly felt an "eagerness" to trade to try to quickly make back what I had lost.

This only compounded the problem as I jumped-the-gun on several trades and I ended up losing even more. I started over-trading and put on many bone-headed trades that shouldn't have occurred.

As lunch slowly rolled around, I found that I had completely lost everything I had made in the morning....and I wasn't too happy about it.

Luckily I caught a part of a huge move made by Eastman Kodak (EK) on a volume spike....and again, it was another trade that could have been had for more.

I would eventually make everything back again and finish the day at where I was at before I started losing everything at mid-morning.

I find that I'm usually too quick to unload a part of my position for a winner when I could have held it for a little longer before unloading my position....this is something I'll have to keep working on.

What I can tell you is that I'm rather quick to book a part of my profits because lately I find that there are a lot of moves without much follow through. In fact, lots of my losers during the mid-morning was because I held onto a position that initially showed me a winner, but I decided to hold it for more and would eventually turn into a loser.

So I'd have to say, yes - I am unloading some of my position way too soon, but I'd also have to say that by doing this, this may have saved me more times than not in the event of a failed move.

I'll continue to try to work on this to get a better and clearer way of exiting my positions.

I also found that today, every time I decided to up my position size to 1000 shares, I'd get hit with a loser and every time I used 500 shares, it'd end up being a good winner....can't really explain it!

This is partially the reason why I didn't put on too many 1000 shares positions (because most of them went against me!).

I would eventually like 1000 share positions to be the norm for me, but for now, I still feel the most comfortable with 500 shares.

Two good trades and no bad ones today.

Maybe tomorrow I'll up my share size to say something like 600 or 800 on most of my positions....

Good Trades
(trades in which I make $200 or more)
  • 9:40:39AM - Aflac (AFL) gapped up and started moving up rather aggressively when it came up to the $52.00 level. Once it broke, I went long 500 shares. I put out an order to exit 40-cent out-of-the-money and I was surprised prices suddenly jumped up there and took me out. I held for a little long and placed an order to get the rest of my position out at a price that I thought was rather far away...but AFL suddenly jumped up there and before I could cancel, I'd been filled. I got out as follows: 40-cent winner (300 shares), 75-cent winner (200 shares) ($270 profit before fees ; Long 500 shares @ $52.00 ; Out: 9:43:22AM)



  • 11:51:47AM - Eastman Kodak (EK) started running to the upside and came up to the $25.50 level. When it broke, I went long 1000 shares and for a brief moment there, I thought it was going to fall back down, so I got half my position out. Well after I got half my position out, EK just started to run to the upside and I got the balance of my position out as it started falling back down. I got out as follows: 5-cent winner (500 shares), 55-cent winner (500 shares) ($300 profit before fees ; Long 1000 shares @ $25.50)



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

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3 Comments:

  • it's actually showing that past prop trading model has died, i.e. huge size with small profit model has died.

    By Anonymous Anonymous, at April 25, 2007 5:07 PM  

  • Anon@5:07PM,
    Thanks for your comments. Yea, I'm starting to see a lot of folks at where I work that are suffering because they are trying to stick to their guns and continue to trade things like MOT, GE, and EMC and it hasn't been pretty for them the last little while....

    By Blogger J.C., at April 25, 2007 7:16 PM  

  • Adding liquidity for credits is really not worth it unless you're trading stocks like GE, F, MOT, ,etc... on stocks where you can catch a 30 or 60 cent move in a few minutes, that .002 credit can so easily cost you .20. It's best to limit on the NYSE anyways so you can get filled with market orders that sweep the book. It's best to have limits out at absurd prices, and to pull them as they become less absurd. If you use a program like macro express, you can very easily make a key that puts a limit out 30-50 cents away... and just constantly pull it. If the stock goes super plus tick bid, or super-minus if you're short, you have a better chance of getting a great print that way.

    By Blogger Will, at April 26, 2007 10:32 PM  

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