Thursday, February 25, 2010

Rules are not bad.

Looking back at a few trades -- I think my rules are actually quite good and effective.

 Just need to actually -- you know-- follow them.

Tuesday, February 23, 2010

not my market:

It seems I am struggling to figure out how to trade this market.  It's probably best I step aside then.  My focus on the 20 day MA is a good rule -- it seems all the strong stocks move above the line.  Below is a time of consolidation and danger -- and that's where most of the stocks I follow are.

 However, the HAO is above its 20 and consolidating there -- this may not be such a bad time in a few weeks.

 I need to relax.  Observe more, trade less.  See what is working.   IPXL was one I bought and it immediately went up.  Those kinds of over-the-20-day stocks are working still.

 You can't always win when the markets are not moving.  So stay focused.

Monday, February 22, 2010

trade: ENDP

Lost a little -- stop was hit.

 ENDP was up on earnings - above all MAs -- thought I saw my pattern.  Stopped out for smallest loss possible (now even lower).

 I guess this was a good trade... I'm okay with it as I did what I thought would work and protected the downside.

 Today I see the market as choppy so not really much to do.   I think my read is right on.

Sunday, February 21, 2010


The easiest trade from last week was JCOM -- I picked it because it was above its 20 day MA, its 20 day MA was sloping up.  This stock was already heading up.  All I did was ride the wave.  The other easy trade was DLM.  It was also above its 20 day MA.  Its 20 day MA was heading up slightly (in a long base).  It broke out the next day for a quick, easy, fast gain.

The worst trades were shorts going against the trend.  Whenever I bought a stock that was down for the day, below its 20 day MA -- it kept going down.

 What worked, and what didn't work -- was so obvious it is stupid.   The market has a very one-way mentality.

 For next week -- I'd like to continue buying with the trend.  One short would have worked out much better had I waited for my clear 3 bump pattern to emerge. I think this pattern is still highly effective -- but in an uptrending markets, it would have required greater patience as it wasn't there on the short side until Friday.

Nonetheless -- no matter what -- it pays to go with already trending up stocks rather than fishing from weakness.

Friday, February 19, 2010

20 day MA

Can swing trading really be as simple as waiting for the 20 day MA to turn upward and riding the wave?

 Well, yes and no.  The 20 day MA must turn up for a rally to happen.  But some stocks jump way above an others linger for weeks.

The other signals would be to watch underlying indexes and most importantly, doing some good value research.  Many small caps blast off way too fast when they finally rally.  But it's a good start to a system for swing traders.

Wednesday, February 17, 2010

position size

As a longer term investor:  It's important to keep position size small to withstand drawdowns.

 Watching the market and raising cash at extreme levels and rebuying is easier.

 But also knowing there will be times of drawdowns.  You have to lose sometimes in order to win big later.

 Not being overly concerned during the down times is part of the game.

 Being patient and waiting for the fat pitch is the other.

 I took a few small trades and my position size now is very small.  I need to refocus and revive my confidence so I can be successful for the long term.

Thursday, February 11, 2010

trade: ATPG

did a quick trade for practice --  bought strength on the open... also saw my pattern and saw volume.  Bought it and it was up right about from the start... never dropped more than .10 from the purchase.  Sold it too early most likely for .20 profit...   (sold because market is red and very weak).

 Key was:  found strength, bought strength.  

Tuesday, February 9, 2010


Having given back all gains from the beginning of the year then taking losses, I feel like I am stuck.  The emotional toll of being a value trader -- and then deciding to cash out to protect losses (and thereby selling near the bottom) has hurt my confidence.

I am quite sure I have solidified my trading strategy as a swing trader, using charts to denote times to enter or exit the market.

I did not use clearly defined risk management skills.  I remained far too complacent as the signs stacked up for a correction.

I need to let the past go and not fear missing out on a new rally or remaining in cash until signs show I should reenter.  I need to be willing to put cash to work as the signs emerge that the markets can push forward.

 This is  a long race.  The main thing is to learn from each new mistake and rise anew.

It's time to focus on the next step now.

don't give up:

I went back to ERY and bought again...

 Made 8x my first loss with a bigger position.  Right idea, bad timing the first time.

 Now ERY is once again dropping fast.  Definitely played it much better the second time.

 I see confusion today so hard to pick a side.

fighting daily

I tried to short the counter rally and got stopped out --  market up 154 points here...

 Too early to attempt to catch the roll over... got squeezed out for -$200.

 This was not a good trade because I was fighting an incredibly oversold market with all sectors green.  I was going counter-trend which rarely works.  Especially with no 3 bump pattern to show the bulls are tired.

 Chances are this short will work later in the day.  Maybe I will watch for that.

 Pro traders went long today on strong names and won.

Monday, February 8, 2010

taking it slow:

Well, there was a small bounce in HAO but I'm not taking any chances.

I attempted two daytrades and pocketed a grand total of $58.91 -- about the usual take.

 The market is mixed so it's not like there's any strong trend.

 Both trades were buys on strength (news related), both China names I follow (CTFO, HOGS).  The HOGS would have been good but I bought very little and sold it too soon. It moved about .50 from my initial entry which is excellent.

 I did earn over $500 on HOGS in a managed account.  With the market in a downtrend, I feel good being mostly cash now.

 Not having any stop losses in place on the correction was simply... well, that's a mistake I will never repeat again.  All stocks are deadly in a weak market.  And now the weakness is starting to strengthen as the day goes on.

Sunday, February 7, 2010

Hope is for the Unprepared

Sometimes you hope the markets will go up or a stock will do this or that.

Hope is for the unprepared.

If you're trading for a living, you can only control your own actions.  So if a stock moves down, where do you plan to limit losses?  What signals will indicate the environment has shifted?

When will you switch from offense to defense?

A trader must always be prepared to go over the scenarios and diligently watch for the signs of shift in investor confidence.  A trader must always have an actionable game plan that covers every scenario.

If not, the trader will inevitably start hoping -- a sure sign that one's strategy is closer to failure than realized.

Saturday, February 6, 2010

Cashed Out:

Starting over... again.

Working on developing a system to get me out of weakening markets and completely out of corrections.  But went to cash (90%) to preserve capital in this new treacherous environment.

Rule #1 is don't lose money.

Once you start losing big hunks of money... there's not much else to say.

So the first rule of the new trading I will implement is starting with the question:  How much are you willing to lose on this position?

Once you can define your risk, you can start to trade.  If I don't know how much I'm willing to lose, it will always be much more than I think.

So this will involve proper position size and identifying a support level that must hold.

And secondarily, it involves identifying a benign vs. hostile market.

Tuesday, February 2, 2010

Relief Rally: New Beginning

My portfolio is back to break even after being up 12% -- then losing it all and more in 8 days of huge losses.

So a fresh beginning.  That's okay.  Especially if I've learned from my mistakes.

Taking profits is part of the game.  Sure, the stocks I own should be much much higher, but the market cycles and will regularly selloff after extended runs... consolidate, run some more.  Not taking profits when they come fast and furious is foolish.  Making money is easy... keeping profits is not.

I will be much more observant of charts going forward... using them to make occasional sells when they get extended.  What works with value stocks is simple:  sell when they are the must-own exciting names... buy them when they are being tossed in the garbage heap.

To succeed, it is critical to do the very opposite of normal human behavior.   Good times should bring on fear and concern of loss.  Huge drops should be welcomed and embraced.  And always keep proper position size and cash balance to take advantage.

You can make money in the larger swings... but you must have the patience to hold, the ability to let go too early, and not fear the panic lows that bring the most opportunity.