Maine $treet

morning

2012-02-01T08:36:00.002-05:00

watched two good setups - didn't take them -- both winners - no heat

then took 2 trades that failed -- so bad mental state -- need to clear. Need to be willing to take the instinctively good ones. But positive side: small losses --- took action. (Just not good action.)

trades

2012-01-30T17:54:00.001-05:00

PTEN: stopped out --- small loss

reenter PTEN -- small gain -- but was good for .30 - sold too early

HES: enter on pattern - was good for .30 - sold too early

ATPG: weakness -- bot it at lows and still could have gotten a dime -- closed weak. So the only one that should have been dumped early.

also traded NBR which was showing strength and caught a nice .80 move in managed account -- finished at the sell price... best trade -- focus on what was strong.

/zb -- great entry with less than 2 ticks heat -- would have been great for 10 ticks -- sold out too early.

sold/held YHOO (loser - finished at lows...)

overall -- should have been a very decent day. But it wasn't. Have to accept uncertainty. Selling winners is just too expensive a habit.

trading specifics

2012-01-28T09:35:00.000-05:00

watched /tf sink on the open -- bought the first break off the steep early selloff -- sold much too early as it was pretty much lows of the day... NEED TO HOLD early winners

also bot YHOO and sold for small gain -- it was a winner off the bat

i need to accept losses -- setting stops and accepting that to win - i must lose small and I must allow the winners to grow and they will overcome the small losses.

I am sabotaging myself with fear of taking trades.

I also tried shorting /tf -- despite the strong market and did okay hitting tops. I didn't take a clear trade in /cl which was a perfect entry with no drawdown... again, too fearful to take a chance.

I see good traders buying support / selling resistance and holding for much longer.

I also see these patterns -- channels or ranges and when they resolve.... that's often a good time to enter as you will either catch a big trend or get stopped out quick. Usually the market signals are pretty clear which way it'll break... especially after 10:00.

I need to write down my trades more often. And catch more 'in play' names -- get in them with small stops of .20 losses or less. Three big losers have thrown off my entire confidence and that shouldn't be such a big deal. I never should have allowed big draws... set stops... take losses and take gains.

I need to focus on EXECUTION of clear entries and set stops with proper sizing.

uncertainty

2012-01-23T23:02:00.000-05:00

dealing with uncertainty.

1) the only thing i can be certain of - mostly - is how much I will lose on each trade. Once I give that up by 'hoping for the best' or 'relying on valuation' -- I will always -- always end up selling for a much bigger loss than intended.

I also fear losing a small gain and hence rarely make large gains. The correct strategy is to raise the stops on swings and daytrades.

It is not enough for a stock to stop going down to buy it -- it must be GOING UP. This means there must be some kind of base pattern or   news/catalyst/volume surge to suggest a sustained move that can generate reasonable profits.

Confidence comes from following rules.   Losing trades is not a confidence buster ... not following a strategy is.   Follow charts -- to establish support levels. These levels are all that matters. Trading is primarily a psychological game -- not a math game. Once you give up your psychological edge -- by falling into feelings of fear/regret... you give up everything.

Try talking out loud -- establishing what you see from a different part of your brain to avoid allowing emotional trading (fear) take over.   A trade has a clear plan and does not need to be extended (to avoid taking a loser) or ended abruptly (after a quick/small profit). Let the market dictate the appropriate end of the trade.   You can only control the first loss and the entry. (

why rush?

2012-01-05T19:54:00.000-05:00

saw that MRVL -- cheap stock was gapping up due to news tied to GOOG. Bought premarket. Bought for myself -- got a bad fill. Started rising and I immediately sold it for chump change... watched it rise the rest of the day even though I knew it was 4 points undervalued. Why the fear? Why not just hold? Why not trust your valuation / market? Fear is the death of all trading. Sold DWA from fear. Good stocks will rise. GDXJ -- sold too early.

Please give me the faith to hold winners longer. Trust the universe a little bit. Let go of your fear.

ripper trend down

2012-01-03T16:22:00.000-05:00

market gapped up huge but it was actually a trend DOWN day intraday despite TREND UP day internals. Thus -- selling the open was the right call.

I sold STJ/HAS which both closed lower and got out of DWA after a bounce instead of selling the open. Easy money should be taken because there is no easy money.

Stocks like GDXJ -- were up 3 points from my original entry last week. Biggest problem is being patient. I took the heat. Take the reward too. The market will mean revert and you must trust yourself and the mean reversion process.

I did not trade futures although I made a few nice calls. It was hard to go long since most of the day was trend down. So patience is okay. There were big moves in commodities/ferts. Trust your valuation process.

Probably 90% of my buys end up going green but I probably sell half for a loss. Think about that. The key is to keep position size smaller to hold on.

gold miner:

2011-12-30T08:26:00.000-05:00

after gapping down -- bullish engulfing candle with follow-through today... good read on sentiment -- turned 100% negative at the bottom.

Need to hold through the final plunge... though.

falling:

2011-12-29T06:24:00.000-05:00

/gc -- morning - in freefall down 30/oz. /gc finally crashes to 1525 -- nice round area of support and bounces 10 pts. -- safe to enter on downtrend break near 1528 for 5 or 6 pts.

When trend is strongly down -- wait for washout -- drop to 1525 was huge candle. Exact bottom at 1525 good clue there's too much demand / covering and may see bounce.

trend down day trade:

2011-12-12T16:21:00.001-05:00

internals - strongly bearish... the key was to do nothing -- and wait until 3 pm when the cover trade comes in --- /tf moved 10 pts -- no way to fight it. Getting long early won't work. but end of day will likely be a very easy trade with confirmation in bonds getting weak and -- like today - the euro bottomed off an old low established on Oct. On Twitter, permabears were covering with glee -- so it was clear the trade just needed the last half hour for the move.

VRUS:

2011-09-06T11:52:00.000-04:00

good choice -- strong name...

weak market required a longer waiting period after gap up -- dropped to near gap fill then bounced, higher low -- and then easy entry for 1.20 or more.

opportunity for bounce was again at whole hour (11 am -- a bit earlier than that).

goal:

2011-08-25T06:50:00.000-04:00

identify support level.

enter trade
set stop
raise stop as trade moves green

HOLD trade for target area. Do Not Sell unless target or stop hit.
Focus on ETFs. do not micromanage the trade.

daytrade:

2011-08-23T10:50:00.001-04:00

pick strong stocks in strong sectors --- on strong signals. Don't overthink

best trades:

2011-07-18T16:11:00.000-04:00

only watched half the market but the market was deep red and TZOO, CHKP, AAPL were up strong... so these were the ones to trade for a squeeze and indeed -- they all jumped into the close, SINA too.

With TZOO, and CHKP --- vol. was particularly strong -- there was little risk here ... and lots of upside despite entering extended conditions.

IWM was down big and had a feeble bounce.

main ideas: 1. You can't control what you'll make. You can control how much you'll lose.

2. Trend trading must focus on strongest stocks always -- regardless of your feelings on value.

mistakes

2011-07-06T16:04:00.000-04:00

was attempting to fade the market after 3 bump set up in TZA emerged -- kept a wide stop and took bigger than normal loss.

attempted TZA again end of day --- stopped again.

Almost took SODA on breakout -- was the leading IBD name... but chickened out.. ran 2 pts. in a hour after I saw it move.

Will need to be willing to go with strength... keep the stop tight... it'll work or it won't. But contrarian fading is no good intraday. failure...

triple sets:

2011-06-21T21:54:00.000-04:00

some triple touches work, some don't.

You won't know until

a) they touch
b) you connect with market action. GDX failed a few days ago - but its plunge to the bottom corresponded exactly with a plunge in the indices. When the indices bounced, GDX bottomed as well and went on to make a huge move 3 days later. (GDX outperformed on the big rally day.)

These set ups often take time to form and time to push out and extend. I need to take more positions and hold... as long as the market is doing okay -- hold on. And wait for the touches. The best entries are markets that are holding up well during corrective times.

trend trade? no

2011-06-16T13:59:00.001-04:00

GDX formed triple bottom at support - entered on upside break which failed, hit new lows...

GDX was down 2% at the time so trend was down , market was weak. This was a contrarian play instead of an actual, bull flag or 'rest' to a new level.

Market still weak...

continuation patterns - easier to go with the flow. TZA broke pullback and ran 1.40 in an hour.

1) identify 10 day trend, wait for pb, trade in direction of major trend.

gap up bounce

2011-06-14T14:01:00.000-04:00

very strong bonce...   IWM , QQQs break thru top of channels   (key sign to avoid shorting today)

I shorted anyway - small loss.

AAPL and many others gapped up big to top of clear channels... GDX.

IWM - magnet to top of 5 day range.

Clear sign: 99% IBD names green... huge 11:1 up/down NYSE vol.   Squeeze day.

IWM is climbing despite negative MACD signals.

-- set up was to buy o/n -- many stocks hit highs by 11 -- window of movement is very brief. Now it's likely all churn until next stretched conditions.

watchlist 100% green -- covering day... low vol. riser day... lot of junk up big.

channels broken... oversold conditions gone now.

had SLV pegged -- dumped it instead of holding on for .60 gain... need to be patient with winners.

today's easy trade:

2011-06-13T14:33:00.000-04:00

IWM starting sinking but bottomed out right where it touched an extended trend line... then bounced for easy move.

Or, entry on MACD cross and vol. would have gotten in .50 higher.

Signals were very clear -- no reason to be early.

QQQs touched 200 day MA and that was near the time bounce started.

Fri: Market Profile

2011-06-10T13:14:00.000-04:00

terrible internals...

the game is skewed with downside risk... bases form but break easily

-1100 TICK readings confirm sellers want out.

strong stocks are: FDO, OPWV, YHOO (flatish), TSLA, LGF, UNG.

to be CP -- must maintain the same focus on each trade... first determining a Market Profile to determine probability.

MACD very good indicator

enter

2011-06-10T12:22:00.001-04:00

need to wait until setup is crystal clear. Early entries are losers -- always...

Need to develop market profile to determine how far to let it ride. And then let it ride.

stop rule:

2011-06-07T13:12:00.001-04:00

no need to ever risk more than $150 or under $200 with commissions/slippage

value traps:

2011-06-01T09:12:00.002-04:00

RIMM
MSFT
NOK
ARO
SVNT

same

2011-05-31T16:16:00.000-04:00

set stop too tight on TNA -- missed 1.80 upside

PBR -- caught excellent entry.... right on established trendline -- took .10 heat.   exited too early -- gave up .20 upside for .10 profit -- total waste.

got killed on NOK -- value trap.

did not enter EZPW -- showed early strength... missed 1.00 upside.   Should enter strong names.

Need to take losses and hold the winners longer.   Need to focus morning and last hour.

setups:

2011-05-27T08:22:00.000-04:00

the basics of a set up:

market drops... it falls... settles... but no, breaks support keeps going... now oversold... but STILL dropping...

Then: we see a reversal candle... a first push... but it fails... drops back... but turns again -- this time making a higher low. now we see a base.

Next day: yep, there's a rally and it too falls back ... marking 3rd higher low where it bases..... and NOW: NOW -- on the next push we often see a sustained rally, if not multi-day to top of channel and maybe beyond as sentiment shifts. <--- goal is to enter around this area and not participate in the consolidation phase.

missing:

2011-05-26T11:25:00.002-04:00

UCO : stop was TOO TIGHT -- stopped out 3 cent from lod.... ran .60 after that.

TSL - entered and sold for gain too soon -- had target which it hit (missing .35 upside)

MSFT: sold in morning... gave up .20 upside --- at target...

SAME STORY -- no patience... too tight on stops.

fear:

2011-05-25T12:11:00.000-04:00

entered TNA -- set $100 loss.

but when it ran -- took $100 - instead of raising stop as per my plan. Trade would have paid out over $500 with patience. On SMALL size.

There is only one plan that works and it involves letting go of fear.

lost on winners:

2011-05-23T16:04:00.000-04:00

USO -- bought too early -- hit support 20 min. later -- then moved .50 -- small winner but lost.

MOS: noticed strength -- bought it but sold for tiny gain instead of waiting -- would have had another 1.00 upside -- too much fear on one that was working.

Both of these ideas finished higher from my entry on a weak day. Respect you intution. Don't cut yourself off (raise the stop instead).

Key for the small pop was the standard 3-test touch on IWM -- a small rally fizzled but the entry would have been right on. Confirmed within 15 min. of 3rd touch by vol. increase.

ideas:

2011-05-16T12:03:00.001-04:00

ZSL -- on 3 bump support -- was correct.

SCO -- deep pullback -- ran .60

IWM -- topped out after cutting above relative high (stop orders) -- reversed fast. TZA was correct. All trades had less than .20 heat.

GDX trade:

2011-05-10T08:49:00.000-04:00

broke downtrend... but retested to gap fill -- from there... 3 bump trendline formed and it was possible to enter with tight stop as new line held and gapped up next day.

Key was to wait for downtrend to break AND trendline to form. -- Once uptrend is established -- about a point above the lows from 2 days ago.

right trades:

2011-05-03T17:02:00.000-04:00

MCP - heavy vol. from open -- ran multi-points... easy trade

INCY - heavy vol on ER. Ran hard for 1.50 after consolidation.

USO - 3 bump weakness... finally tanked... SCO ran 1.30

First two - heavily shorted names, highly extended charts.... show strength early on (gap up opens)

trendline breaks:

2011-05-02T16:10:00.000-04:00

TSL - broke -- ran 1.70 then faded

IWM broke line --   TZA ran a point

SLV broke trendline (set up 3 bumps descending) dropped 6% intraday.

These are the best intraday trades to take.

Also CCJ - ran a point, ANR   1.50 -- all on trendline breaks. The stop should be right under as there should be no weakness when entering.   Should take 1/2 position then add.

Market is now broken and all swings are traps.

intraday plays:

2011-03-31T16:48:00.000-04:00

FNSR -- was strong at the open.. Traded heavy vol. Could have entered midday and still gotten a point.
Strong, story name, volume, strength

IPI - traded 2x normal vol. Created classic 3 bump pattern over multi-day -- 3rd bump was low of day for .80 move. Big vol. bar hit on low of day - 5 min candle.

Key is to go with trend.
Don't be afraid to buy in.
Set stop tightly -- will not get hit if you buy right.

recent trade notes:

2011-03-26T12:07:00.000-04:00

GCI -- .30
SVNT: .70

AEO: .60

TSL: 1.00
SANM: .50
TZA: too soon. waiting for 3 bumps
SCO: too soon - needed 3 bumps. stop too tight
F: did not enter
MSFT: .50

goal: hold positions longer/overnight
establish 3 bump entries -- when in doubt, unclear, do not enter.

accept losses.
patience on winners is a big drag.

Listen

2011-03-10T09:06:00.000-05:00

The market is always giving you information. Just not necessarily in a language you're familiar with. Your job is to listen carefully.

Do it long enough, and you'll start to hear what the market is saying in bits and pieces.

Time of Day

2011-03-02T08:56:00.000-05:00

Once again - market began its downtrend at PRECISELY 11 AM - then it was an easy - hold all day short.

Need to relax when trade goes my way...

goal: stay in the trade with raised stop along the way... patience with winners. Do not be afraid. Keep position size small. Gain confidence.

Take it one day at a time.

Listen to the market. Search for relative strength.

tza:

2011-02-28T16:07:00.000-05:00

hypothetical trade:

gap down --

wait....

starts to recover, pulls back
at PRECISELY 11 AM - creates a 3rd touch on lower trendline -- possible entry with .10 stop - goes on to move 1.30 - with no pullback

key: waiting for 3rd touch, waiting for 'on the hour' moment.
also: internals were mixed -- leadership was notably weak - to support going short. Gap up open (in IWM) exhausted buyers.

inverse

2011-02-25T11:32:00.001-05:00

wait for whole number area to break - then some kind of dragonfly candle - or enter later at trendline break. Should be fast and immediate - no heat / no waiting.

mistakes

2011-02-23T12:22:00.000-05:00

mostly the same:

every trade must have a stop that limits losses -- my worst trades are my 'highest conviction' ideas. I need to prevent myself from talking myself into holding for extended losses.

We are now in a correction so technicals won't work.

Must avoid holding thru these times -- fear taking over.

I have the capacity to rebuild... must be slowly. Must not add to losing positions. Must see the market structure.

Learn from losses. Only way to move forward.

missed runs

2011-02-11T08:01:00.001-05:00

AGYS
SKX
TNDM
AEO
GCI
IDT

why: too fearful, wasn't patient enough to wait for the big up candle. All were acting well.

Solution: start with smaller position. Maintain stop area (break of clear support) then add as strength is seen. Accept slightly larger drawdown.

Must accept losses to make gains.

twitter quote

2011-02-05T09:35:00.000-05:00

You can't stop the waves, but you can learn to surf.

This is the essence of technical trading. You are very much a surfer on the ocean, waiting to catch a big wave. Sometimes you are carried far, sometimes you fall off. Sometimes the wave dies as soon as you get on. But you accept the (hopefully small) losses and keep trying.

The waves that will carry you far are the strong stocks with powerful volume. Volume is key. There are other elements like a small float and sometimes a high short interest that can create a powerful move (see SFLY). Hot sectors can also push stocks. ARMH sells components for iPads -- the stock trades at over 10x revenues but it won't slow down. It will of course, slow down eventually -- but this is the nature of the ocean -- always changing.

You never get attached to these stocks. How do you attach to a wave? You ride the wave, you stop riding the wave, you ride the next wave.

Changing, changing, always changing. But done right, your portfolio moves in a single direction.

overthinking:

2011-02-05T00:54:00.000-05:00

daytrade:

except for Monday's small win, I did not accomplish my goal despite many opportunities. I had candidates lined up each day. High volume story stocks like RAX, SFLY, CRUS --- these are the kind of hot stocks that are safe to trade intraday since you can easily risk $100 to make $300 - $500 on each trade. These trades are actually quite safe -- the strong volume is the wave of power that keeps them moving up on each breakout.

They appear unstable -- and they will be -- but for the day, the only way to make money is to go with the trend when the volume is there. Instead, I dabbled in TZA and gave away profits. I shunned strong stocks.

This market is currently in a bubble. The hot stocks are very very hot. The rest are not. Money keeps searching for a home and cash is not king. I am probably early in being short with TZA. I knew the first week of the month would be strong -- it always is.

The negatives are creeping up but not there yet -- the volume is light. A few leaders are really broken like AMZN. OIH is overextended. The dollar has woken up. Nonetheless, there is hot money pouring into tech, software and chips in particular. Valuations are beside the point. QQQQs hit a new high but AAPL peaked in mid-January. The light volume is the issue -- all good waves require power and without more power, the danger of a fast and sudden pullback increases dramatically.

My plan now is to remain heavily in cash and trade power stocks intraday. I get the sense most people are happy to be long -- fear is gone... and there's plenty of stocks to play. But I remain cautious until we see more participation from the market. Breadth is bad which is another warning sign. But waiting for a correction is futile. However, I think the dangers of a pullback now have increased greatly so I will not hold positions either.

Next week - I want to again attempt to make more money daytrading. This means:

having a short list of hot stocks that are moving with heavy volume. Buying these stocks on trendline breaks - just like on a daily chart. Key is:

1) Story stock in strong sector
2) tight float
3) HEAVY VOLUME
4) expensive price -- will seem ridiculous in value
5) up day in market.

today's weakness

2011-02-01T21:47:00.000-05:00

I bought AIG after noting a 3 bump support pattern. I bought, set a tight stop -- waited... stock began to break out. I grew fearful since the move took a while to materialize and didn't want to get stopped out. The entry was correct and I gave up 1 point upside.

I bought AMSC -- based on volume / ER positive guidance. Waited for pullback. Entry was okay. Stock stalled and I sold before it hit my stop. The stock did indeed pullback through my stop but eventually ran .80 from my entry. The stop was a bit too tight and I was far too fearful of getting stopped out.

I bought CYOU yesterday and sold too early and did not hold through strength. Stock ran 5 points beyond entry.

The fear and lack of confidence is costing me big gains. Meanwhile, I patiently sit on losers. I got out of SOL for a gain but first took a large drawdown with no plan.

I feel comfortable daytrading as I don't have to hold overnight. However, I need to be able to let winners run and let go of the fear. The plan is the plan. My losses are always contained but I still don't want to lose. I need to accept losing so that I can allow winning big.

The other thought is to accept what you see. Strength pays -- strength always pays and a trend follower must follow. Accept what you see. Allow the market to call direction. Ride the wave without emotion.

CYOU later

2011-01-31T17:35:00.000-05:00

Well -- mission accomplished.

This morning I noted that CYOU reported strong earnings and was gapping up. I saw it had a small float and so I targeted it for a daytrade.

i waited for CYOU to attempt to fill the gap and then I got in as it began to bounce. It dropped again and I was close to being stopped out but it recovered and it ran pretty fast. I was trading small so I got out with an .80 gain. Then it dropped and I bought it back about .40 lower than my exit. It traded flat all day but near the end it picked up again and I sold it for a small .22 gain. However-- it went on to close at the highs. I was far too cautious -- but I correctly found an 'in play' stock -- made a decent entry -- and easily made some money. Not much -- but you could make a living if you could do this every day.

So my goal is to hit another 'in play' stock again -- I will increase my size just slightly. Overall - today bounced like I expected and the beginning of a new month is usually strong. The only weak stock I saw today was SKX which lost the 20 day MA -- but on light vol. so I'm not too worried.

BIDU posted some strong numbers as well (note: CYOU is kind of in the same sector). Oil stocks were raging and unfortunately, I have no exposure.

I did have a winning month which is good. And I think I beat most of the indexes as well. Nonetheless, it could have been better. I plan to be more cautious in Feb. and look for more in play daytrades to add to gains. Swing trading does not seem to be working right now.

Since the market is full of one day story stocks -- daytrading the strength seems to be a better way to manage risk. We shall see.

ARAY - 5 min Candlesticks

2011-01-30T10:23:00.001-05:00

I have seen several big one-day winners in the past week and they all seem to follow the same script. The open is always a gap open which most traders are afraid to buy. The gap never closes and the stock runs almost the entire day, usually providing at least 2 ideal areas to add more and raise one's stop to protect against failure. I have annotated the last story stock. Next week, my goal is to participate in at least one big one-day runner. Now that I know what to look for, I have a specific plan to enter and manage risk.

ARAY - 5 min Candlesticks: "

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"

and just gets worse

2011-01-28T16:41:00.001-05:00

Let's just say - I"m glad it's Friday.

Slumpage:

2011-01-27T16:18:00.000-05:00

I was all over the place today. Bought weakness in CEDC and it got weaker. And all day - I knew exactly what was going up.

Volume makes the world go round and today the volume was in CRUS and CCME -- these trades were easy but I could not get comfortable finding an entry and just watched them climb all day.

But I can see there's something odd going on. The market is in love with a few stocks far too much -- like NFLX and CRUS and AMZN and that usually ends in tears. Case in point: AMZN just reported and just got clobbered, losing all its wonderful gains for the day in 4 seconds.

Meanwhile, the gold, silver, oil names are weak and getting weaker. The market perhaps is thinking about rate hikes in the future (as well it should). Record food prices is not good for any economy.

Well... it's been a weird month. I did great the first 2 weeks and then it went quickly downhill. A lot of second-guessing myself.

One thing I did right - sort of - is take a lot of these losses quickly. I gave back a small piece of the gains so it's good to remember what is correct thinking and maintain that. What I need to do more of is: Buy Strength. That's what worked the first two weeks.

At the moment my best holding is PLNR and I like what SKX is doing. I added some GCI which was acting strong but I managed to pay the high of the day (one penny less) and then it dropped back. So let me be an example of what not to do as you progress to master trader status.

The other thing I did is sell my YHOO position as it ran very fast and I made the huge mistake of buying too much. I got out at a very small loss and now I will rebuy it but maintain a proper stop.

So overall - it's been another week of pain. Hope your day was better.

SKX - Daily Candlesticks

2011-01-27T00:56:00.001-05:00

I like this company's fundamentals and the chart is now creating a bowl-pattern with the 20 day MA - I often find this pattern forms before a big move. Either that or the bowl breaks down and it's a good time to exit. I'll try to post more charts here. If all goes well, SKX target is low 30s.
SKX - Daily Candlesticks: "

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Disappointing Day Of Disappointments

2011-01-26T16:16:00.000-05:00

There's something particularly humiliating when you lose money on a day everything is going up like gangbusters. It was a full on Costanza day with YHOO, SKX, SVNT, AGYS all moving south as the Fed took the OIH index (index!) up 5%

Does the market care that Yahoo has Internet holdings worth the entire market cap? Of course not. The purpose of the market is to remind me every day I have no idea what I'm doing. And it does a great job of this.

Remember my last post - i was so smart to get out of HTCH, right? Oh, except right after gapping down on the crappy earnings report, it moved up over 10% intraday -- my $180 loss could have been a $600 gain. It only wanted to be weak long enough to suggest it might go down -- and then it went up.

I did notice on Twitter that quite a few people I follow got faked out. So perhaps I'm not alone. I knew the market was going to be tricky here. I just didn't think it would go ahead and rally big -- but STILL show me losses. But of course, I will live to fight another day.

Today pretty much erased a lot of negative technical signals. Bernanke has promised to keep the party going and the dollar is sinking to oblivion -- and this naturally is always good for stocks, particularly metals and energy. However, it's no time to be complacent. AMZN finished red. SBUX is down after-hours. NFLX on the other hand - is ripping the faces off shorts. So you got to be nimble and perhaps a little lucky. I was neither today. I was George Costanza today. YOU HEAR ME, JERRY???

Losing can be winning

2011-01-25T22:30:00.000-05:00

Today I lost about $185 on a daytrade and it was easily one of my best trades of the day. Someone I follow likes HTCH which I did some research and I liked it as well. I traded it a few months ago and made some money.

I bought a little HTCH on Monday and then today, I added a little more... it was holding the 50 day moving avg. and I knew they were reporting after the close today. However, about half an hour later, I got a bad feeling. The stock was now trading below the 50 day MA and I realized, looking at the chart, the stock was being dumped right into the earnings report. The more I looked, I quickly realized that someone must know the results of the upcoming earnings report and they were terrible.

I didn't hesistate. I quickly sold my shares and took a loss. About 5 minutes later HTCH was trading even lower. The stock was weak all day and finally, after hours, the results were released. A total miss. HTCH gapped down almost 10% from my sell price - saving me at least $600 in losses. This was a good read. I was looking at the HTCH yahoo! board where one poster said he added more because it was now a lot cheaper. I used to do that too. Adding to losers is a natural instinct but it rarely pays. The earnings report stunk. So why should the stock move up any time soon.

Being impatient with losers requires practice. And a willingness to admit you were wrong. It's okay to be wrong. As long as you don't end up really wrong, you can survive to fight the next day.

surprises:

2011-01-25T12:07:00.000-05:00

I sometimes like to trade surprises. Today I bought some SVNT when it was announced they have a new CEO. The CEO used to work for Lilly and may be a good guy to help sell the company. SVNT chart is very weak -- so it's not pretty. I'm already losing money... However, volume is strong today so I'm going to hold on -- assuming some bigger institutions are going to get interested. SVNT has a huge short position -- so they may be forced to cover. Either way, I have set a stop to limit my losses. I thought LGF was a great buy when an insider bought over $5 million worth at 6.50 -- LGF now trades for 6.10.

If you assume things are going to go wrong every time, you'll likely minimize the loss when they do go wrong. SVNT seems like a great idea -- down at the bottom, with a surprise CEO and shorts trapped. And yet... don't ever assume the market will do something. It's built to fool expectations. So always expect the worst. Then you can never be disappointed.

chop day:

2011-01-24T16:10:00.000-05:00

Mostly took this day to reduce risk. Took losses in ARAY, LGF and MLNK. Made a little in AMED, CEDC, and GCI.

I added to PLNR which closed at the lows on low volume. I can live with that for now.

The market was very mixed. I became concerned when I noticed the steep fall in AGO -- suggesting there's some distress in municipal bonds but there was no news.

YHOO started out weak and finished strong. They report tomorrow. I still think there's a lot of value there, regardless of earnings.

With the Dow so close to 12,000 -- chances are it crosses the threshold, but then what? Based on the people I follow, caution is warranted. I'm getting some confusing signals so it's not as if the market is about to correct but it's not necessarily strong.

When in doubt, protecting profits is top priority. I also took a loss in LGF which had insider buying.... but it closed even lower. As much as I like fundamentals... I find I do better to listen to charts then fundamentals. So with all my sells -- I got rid of several weak names and no longer have to spend time worrying about them. Having this psychological burden of holding losers is very helpful -- allows me to focus on the next winner.

Value buys:

2011-01-23T16:28:00.000-05:00

Two recent buys -- BBND and TNDM are both owned by ValueAct. I have a little BBND to start at 2.63 -- ValueAct bought a lot at 2.80 and higher back in June 2010. These kinds of value plays usually take a long time to work out but can often be very rewarding when they finally pan out. BBND in particularly is one of those companies that looks terrible and has weak management.   TNDM chart is much stronger and may be in play soon.   So BBND is more of a tuck it away for later.

I'm still not sure what the market will do here... it should drop but then again. GE and AXP look good, REITs look good. JNK (corporate debt) is very healthy. The tech names are very pricey and deserve a correction but this may not cause a major selloff.   Breadth has been weak for a few days but this can turn on a dime. The McClellan Oscillator is nearing major lows at -50.    In June, Aug. and Nov. of 2010 -- the market bounced when $NAMO (McClellan Oscillator for Nasdaq stocks) hit around -58 give or take two points.

Many technical traders I follow have gone to 40% to 100% cash levels and have 'sell' warnings on. So there's plenty of cash out there that is waiting for a home. So it's a little unclear what's coming. But more importantly, it doesn't matter what's coming as long as you're prepared when what's coming comes along. The issue I have with pure technical traders is, they never ever get to buy really cheap stocks when they selloff sharply because other technical traders are selling.

Perhaps I'm wrong. But for example, I am holding the technically weak YHOO because I think the Street is not fully appreciating the balance sheet and that can change quickly. But understandably, cash is a very good position to have right now. Ultimately though, traders must embrace risk in some form. The main problem is how do we protect against large losses that devastate an account. As I've posted before, holding a loss until it becomes huge simply to avoid admitting a mistake can be devastating. I think men, in general, tend to be terrible at admitting mistakes. If you have trouble admitting you are wrong, to yourself, or your spouse, or in general, it would be good to keep this in mind and perhaps seek to let go of this fear. Once you let go, I doubt very much you'll be any worse off. Quite the contrary.   Fear is a big big issue for traders -- in all its permutations. I've been thinking about fears a lot and how to overcome them. Perhaps I'll post some more on this later.

a real post:

2011-01-21T16:44:00.000-05:00

from the Yahoo! MLNK board:

During the tek bubble about ten years ago.
(couldn't get out at the time)
As this turd evolved into its present MLNK many promisses were made when a reverse stock split was pumped to where we are know.
Its taken a long time to get to this point with this and other investments.
I will use the sale of this LOOSER to cancel out my other gains this year.

FYI-The sale of this LOOSER will represent a loss of ~150K. Lesson Learned !

Imagine holding onto a stock for a $150,000 loss. And the thing is: This happens all the time. This is a natural instinct -- avoid pain by not selling and "taking the loss". This investor has been taking the loss for years. Imagine what that investment could have been had he taken say, a $5000 hit and reinvested somewhere else. Being patient with losers (aka LOOSERS) is how the average investor behaves. Don't be average.

new trades:

2011-01-21T12:34:00.003-05:00

added GCI -- on strength - bounce off 50 day MA, value -- stop will limit losses well

added MLNK and AGYS - old favorites on big dips -- may take lots of heat
LGF and YHOO -- down badly holding value names (rejected buyouts)
added TNDM - strong 20 day MA hold - wider stop
added GRS - at 50 day MA weak (tight stop)
most confidence in: TNDM, GCI

edit: sold GRS for loss. Holding others. GCI and TNDM finished the best. PLNR which I'm holding also finished well. In fact, I think I should add to PLNR immediately. MLNK and AGYS are the absolute worst (technically) and I'm thinking I should take the loss and rebuy later. LGF also finished terribly on strong volume. Fundamentally I love them all but fundamentals rarely helps with technical trading. They all have problems and the Street does not like these last three. And there's no catalysts to turn them around. So stick to what's strong and that's PLNR and possibly TNDM going forward.

defense:

2011-01-20T17:39:00.000-05:00

I took profits on many names once I saw the weakness in major indexes. I ended up starting new positions in YHOO and LGF -- both co's that rejected buyout offers and are much lower. My strategy here is to take a lot more heat because I know the value is there. One stock I took a beating on is LTON -- another value name that I let slide and I ended up taking far too big a loss because I thought it was cheap. Big mistake. I had bought ERY as well and ended up selling it far too quickly, giving up over 1.30 in upside instead of letting it go. The key was that it went green immediately and that's always the first sign the trade is going to be successful. My sale of OPWV at the first hint of trouble was the best loss I took so far -- saving over a grand and a lot of heartache.

Taking the quick loss is a very important strategy. To hold on is to fail. Always remember to bail on the first sign of trouble. You will be happier.

What's working:

2011-01-15T16:56:00.000-05:00

Finding high volume plays like CPE and SANM -- also some daytrades likes ALXA, BPAX for small easy gains.

What's not: Selling partials on winners like SANM instead of adding even more. Buying weak names on pullbacks like GRS (although remains to be seen if this plays out).    Still being too cautious.   Still hanging on to missed entries. Let them go -- the market will always provide, providing you are prepared.   Focusing on strong stocks in strong sectors with strong vol. tends to lead to instant profits... very effortless once the correct thinking is in place.

Do not be complacent. Do not become excited. Trading is not supposed to be entertainment. It should be hard work that is rewarding because it's done well. Exciting/speculative ideas are bad ideas. I want big movers, instant movers.

Another thing I did right was take a loss on a strong vol gainer that turned into a big vol. loser the next day. I simply took the loss and it was small and easily wiped out with a few of the quick daytrades.

My motto for 2011 is "If they want it, I want it."   I feel like I have simplified a lot of my trading process as well and that's a good thing.

Also want to remember to take it one step at a time. I am on pace right now to be profitable and sustainable -- no need to go for homeruns if this can be replicated month after month.

things to work on:

2011-01-13T21:52:00.000-05:00

searching for volume. Holding strong volume stocks longer.

Taking less weak stock trades... waiting for fatter pitch.

Taking more size in high volume / strong set ups.

Doing well: Identifying strong stocks/set ups a little better. Entries are not bad. (Exits too quick) Exiting losing positions quickly though -- definitely not sticking around on weakness.

mistakes were made

2011-01-11T17:00:00.002-05:00

took a big loss in NEWN today - far bigger than I should.

What did I learn?

NEWN has no institutional support, so I never should have bought to begin with. Today the stock broke down on heavy volume... but my position was too large so the loss was bad. It closed near the lows. Also - it's a China name and those stocks are just too full of dubious people to be safe. Otherwise, it really wasn't a bad day.

can't stop this market:

2011-01-10T17:25:00.001-05:00

It's difficult to stay long in this market but it's difficult to short too.

Far too much strength. The CCME gapped up today but closed much lower -- always good to take profits on choppy names.

I need to develop the patience necessary to wait for the right set up. The solar sector has finally caught fire. I bought AEIS to participate.

http://stockcharts.com/h-sc/ui?s=AEIS&p=D&yr=1&mn=0&dy=0&id=p21731511329&a=220334771

ups and downs

2011-01-07T16:13:00.000-05:00

Well,

there was good and bad today. My best idea, CCME paid off and I decided to take all the profits and raise cash as the markets began to tank. The close was much stronger than I thought... but then -- that's nothing new.

I decided to listen to the indexes and play defense... raising cash on the extended market. The last 3 candles are identical to the April highs. So that was what really got me defensive. If it plays out the same way, it'll be a brilliant call. Most ppl are not defensive yet.. So front-running a panic may save the day. Either way - I can daytrade strength. I just don't want to hold much here until we get a correction.

fear

2011-01-06T07:48:00.000-05:00

fear is a nemesis.

I make the right trade... but taking profits too early is a big drag on performance. Patience with winners is critical.

Yesterday the market started weak but immediately turned very bullish. No reason to sell when risk is properly managed. Sometimes there will be a drawdown. If it's managed, it's managed. Trust your research and yourself a little more in 2011. The market speaks in price action and volume. Listen to the markets, not your feelings.

difficulties

2011-01-04T17:09:00.000-05:00

Attempted a few daytrades to no avail. The market was very weak and I did not pick up it fast enough as the open slipped quickly to red.

A trade in TSL was entered too early -- and it was 2 cents from stop out but I managed to exit for slight gain. SKX was traded twice - ended up losing $20 overall.

When the market is weak... it pays to be very patient. Two positions were stopped out as well. I guess that's how it goes. I decided to bottomfish WDC and that worked for managed account.

I should have focused on obvious runner SHZ or MCP -- the vol. was strong and both had big runs after setting up. I do not like the names but that's just me being judgemental. The market likes what it likes. And there's a reason drek rises. Value names SKX and WDC were punished. It's not a just market... it's just doing what it does. For a daytrade, MCP was strong and SKX was weak. That's all you can say. Whether you accept it or not, this is what is. I did fortunately sell one position on the gap up so I had some gains for the day but paper losses overall.

Good Start

2011-01-03T20:22:00.000-05:00

A lot of stocks I've been holding began breaking out today.

I'm glad I've been patient. I sold a few stocks that ripped that I felt were extended. I probably should have just held. Now I'm out of them. However, the ones I sold mostly finished lower. It's okay to take profits.

I bought a few new positions and I feel good in that I kept the positions small and I know exactly how much is at risk. I won't let them spin out of control. The market is extended but the action is strong in many individual names.

I made a few daytrades in TZA which were pointless. Shorting is not my strength. Or rather, the market was way too strong... and that ticker is very tricky -- so avoid because the swings are too volatile. Make the easy trade always or do nothing.

four strategies for 2011

2011-01-02T19:57:00.000-05:00

1. 20 day MA bowl: This is an entry as the 20 day MA carves out a bowl pattern, often in a value play. The bowl represents a basing/accumulation period that will lead to a long swing or a quick stop as the 20 day MA is broken. These require a lot of patience.

2. Trendline entry. When a clear trendline develops (3 touches), buy on the trendline, especially if volume is light. Looking for candlestick confirmation. Exit is top of the channel -- since chances are this stock is not ready to break out. Trendline is often not connected with moving averages, usually below them).

3. Breakout of trendline. Simply entering on a breakout. Must occur with HIGH VOLUME. Good for daytrades. Stock should have news/catalyst and/or be in strong sector. Works best with high institutional participation. These stocks can and often will be 'expensive'. Ignore valuation. Price action only.

4. Intraday / short term swing 3 bump pattern. Often a strong stock having a bad day - or taken down by shorts. The entry will occur after 2 higher lows have formed. Entry on the 3rd swing -- hopefully the 3rd higher low. Stops will usually be no more than .20 from entry. Position size can be large for daytrade, smaller if holding overnight. Works best if pattern forms near previous support area.

notes for 2011 strategies

2010-12-31T14:09:00.000-05:00

when there is light volume -- find the support lines and buy those (i.e. buy on weakness near trendline)

when stock is strong, look for breakout and buy on strength.
Buy momo stocks on 3 bump pattern and breakout (set tight stop)

on intraday weakness: look for 3 tight higher lows to enter.

Your Edge:

2010-12-31T10:02:00.000-05:00

My greatest edge, which I can use or not use, is my patience. If I know a stock is worth more, I have no pressure to sell it until it reaches my price.

And my second edge, my small size, allows me to exit my entire position for the top price.

My edge crumbles when I lose patience and want to exit a temporarily losing position, or take profits too early.

thinking back:

2010-12-31T09:02:00.000-05:00

First thing I want to remind myself of is this:

Many trades I made that I eventually sold went on to become winners. Many were based on value. They just took longer.

Many I bought too early and got trapped too long. I didn't wait for a clear - 100% clear support line to enter on -- so that the position didn't drop too far.

Many the size was too big so the drawdown was too uncomfortable.

When I look back -- I think I have more of this mistake -- selling too soon. Always selling too soon. Especially with winners.

My edge requires letting profits run. Think about that for 2011

market breaks

2010-06-01T15:57:00.000-04:00

after being up intraday -- market sinks to lows on heavy -$tick readings...

key indicators: terrible adv/dec. ratio -- oil/oih sector decimated all day...

lost money trying to fight an obvious trend.

would have done better to do nothing until afternoon when trend resolved to downside. I shorted 3 times -- but did not hold on.

sellers swamped all buyers.

Trade in direction of general trend. Brief green markets were opportunities to short all rallies now. Leadership names AAPL and GS were all alone (GS faded to red) -- so market had nothing to support cascade.

Poor job managing risk. All losers hit stops, all winners -- sold too early

RIG

2010-05-24T11:02:00.000-04:00

fair value $125

AT 57.77 -- this is a long term buy. It will be very volatile with BP news but the market no longer looks out 5 or 10 years. So it can trade down to 50 I'm sure. Still worth $90 - $125 long term. So the only winning strategy is to do nothing. No stops... just hold -- for a long time.

Market conditions still bearish... Need to stay mostly cash unless buying super long term positions.

Never Say It's Over

2010-04-19T16:45:00.000-04:00

Big bounce today.

I watched GS all day -- as I should have, being the 'in play' name -- today's open was low of the day -- eventually going on to push up about 8 points.

MON had buyback news -- up 2 points.

It really helps to be in news-driven stocks as that's where the volume is.

Overtraded today with nothing to show for it.

I am mostly in cash, no big blow ups. I can continue on next week. Focusing on

1) support/resistance
2) order flow
3) market signals
4) risk management

Today I did well not to lose a lot. I did poorly not letting the one main winning trade move up. My initial ideas - -HUM and MON were good. So just need to follow through with picks like that.

keep missing:

2010-04-19T12:30:00.000-04:00

I flagged HUM and MON as longs -- they both went higher.

Then I played around in SRS - got stopped out twice, third time WAS the charm - but I didn't hold long enough to offset the losses.

What I could have done better was look at the chart and define resistance - it topped out 4 cents above the 20 day MA -- a simple backtest. That would have gotten me in perfectly.

leaders are weak, XLY is weak -- this is a corrective market. The best ppl I follow are raising cash. I will not fight the trend.

not holding long enough

2010-04-06T22:06:00.000-04:00

mistakes: buying weakness

selling out winners too soon -- over and over again -- not having the confidence to hold through.

Need to keep position size smaller.

Keep gravitating toward weak names -- which will require more time.

Entries often too high -- selling on pullbacks...

Need to have more conviction, smaller size -- and simply hold the best idea.

Overtrading into 3rd tier names. No need.

Need to focus on just a few names each day. Don't be afraid to do nothing. The moments of profit will be quick and violent. If it doesn't happen immediately... it's a sell.

one step at a time

2010-03-30T16:14:00.000-04:00

Trading well past few days....

Taking very small gains... but they're adding up -- instead of watching long positions chop around for no gain.

What's working is -- being patient... assessing strength, particularly by watching volume and also, the overall markets for sentiment.

I am achieving my daily goals. I am managing risk well... the key was simply -- keeping track. It keeps you honest.

It's easy to buy stock dropping -- but the weakness rarely pays off. See how SKBI just kept going? Buying into strength is much harder than it looks.

Today was a particularly difficult day in the markets and I managed quite well. And there's lots of room to improve as well.

goals

2010-03-26T13:58:00.001-04:00

Listen more.

Wait for the stock to tell you what it will do.

FOLLOW a PLAN, stick to it.

Buy strength: volume or above 20 day MA or both.

  Enter / set stop - as it begins to move your way. Keep trades that immediately work.

  Take profits.

  Listen to the whole market before entering.

no edge

2010-03-25T10:50:00.000-04:00

I have one account that is profitable:

I have made very few trades in this account.

I bought the best ideas.

I held through volatility and took big draw downs.

I held through large moves. I did sell one name for a big gain, one for a small loss.

Value investing has worked for me.
Daytrading has been mostly awful.

It's clear what will work in the future.

It may not be what I thought it would be. But it's what works.

chopped

2010-03-22T16:34:00.000-04:00

Made many trades, had nothing to show for it.

Really gave it back by shorting... which I have sworn off many times. I am terrible at it. They are almost 95% losers -- every single time.

My winners were value names I know and trust, like YONG and ALJ -- both were bought on pullbacks. I know these stocks well. They were instantly in the green. I was comfortable with them the whole time.

This is my edge: buying value stocks using TA -- knowing the names well. This is what I learned. It's harder to trade names you're not familiar with.

I thought the markets would have turned today -- but I thought wrong. So I took many small losses that added up. Overall, I was up a tiny amount. With two trades in play (one down a bit, one breakeven).

I am now keeping track of everything carefully on a spreadsheet. I wish I had done this a long time ago.

trapped:

2010-03-22T13:16:00.002-04:00

I put on some short positions -- and lost on all of them again...

Market gapped lower and then went shooting higher -- trapping all the shorts -- who obvioulsy are being squeezed to death again.

I'm not sure what else I could have done -- I oversized the shorts and also did a few long trades which mostly worked out.

I think I recognized the squeeze early but it was a slow squeeze. The daily charts looked broken. Maybe it'll die end of day here. But IYR ripping to new highs.... all on low volume. Every sector is green but utilities.

SPY now at top of descending channel.

INDEED: today's lesson -- watch $TICK -- there's no readings below -300 -- buyers are still in charge and that's the first sign there's no selloff coming.

I hold TZA and SPPI now -- having traded all day for small loss. I'm probably overtrading. I don't see an edge anymore, long or short.

So that's why you leave stops... market can keep going anyway.

I don't understand what's going on but I guess I don't have to... Charts broke back up. End of story.

Shorts are probably trapping themselves on low volume. A break to new highs will force massive covering.

Trade: DHT

2010-03-21T20:01:00.000-04:00

I bought DHT on Friday based on my usual swing pattern.

I will sell immediately if it moves below the 20 day MA.

It is important to constantly monitor trades and take losses immediately as they move against me.

ADY chart

2010-03-16T09:12:00.000-04:00

ADY has been trending down a long time. If you use charts, this was an avoid. Today ADY is down 16% on a bad ER to fresh lows.

The charts once again were crystal clear. The key for microcaps is buying the breakout -- like CHGI.ob, which did nothing for 7 mos. As soon as it cleared its last high of 1.90 -- it ran up around 75% in 6 days... more or less. The key was just stalking it and buying the volume breakout.

sticking with 20 day

2010-03-15T14:56:00.000-04:00

so far: whipsawed out of XIDE

lost on CMTL, STP -- overall indexes extended so not much upside.

the 20 day breach works best after a correction or longish base. Otherwise, the stock is probably not ready to trend up.

I'm now short... but market now pushing back up end of day. I feel I should hold for multi-day selloff rather than take quick profits... but I might get stopped out. Well, I have always taken quick profits before and it's never amounted to much so may as well leave the slightly green positions alone.

Game Plan

2010-03-09T08:39:00.000-05:00

I feel more comfortable buying swing trades. I need to focus more on swings. I also feel more comfortable buying stocks near the lows -- but the caveat being -- I need to wait for the first sign of an impending new trend.... whether it's a sign of volume. or a 20 day MA break or other.

Then -- I can always start with a small position and add - since the swing will last many days.

The trades should come in chunks. First profit taking... then getting in, then scaling out. But all over a fluid process.

Too much focus on daytrading is a distraction and hardly profitable.

Rules are not bad.

2010-02-25T09:05:00.001-05:00

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

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

not my market:

2010-02-23T08:32:00.000-05:00

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.

trade: ENDP

2010-02-22T12:19:00.000-05:00

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.

review

2010-02-21T15:08:00.000-05:00

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.

20 day MA

2010-02-19T08:46:00.000-05:00

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.

position size

2010-02-17T20:35:00.000-05:00

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.

trade: ATPG

2010-02-11T10:38:00.000-05:00

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.

Trauma

2010-02-09T21:32:00.000-05:00

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:

2010-02-09T11:35:00.000-05:00

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

2010-02-09T10:27:00.000-05:00

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.

taking it slow:

2010-02-08T13:15:00.000-05:00

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.

Hope is for the Unprepared

2010-02-07T10:18:00.000-05:00

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.

Cashed Out:

2010-02-06T09:27:00.000-05:00

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.

Relief Rally: New Beginning

2010-02-02T19:37:00.000-05:00

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.

What Did I Learn?

2010-01-28T21:57:00.000-05:00

It's hard to protect profits AFTER a correction has started.

Sentiment is everything in the short term. Your profits can be generated by selling joy and buying grief.

There is a time to be a turtle and a time to be a tiger.

Proper set ups take longer than you think to emerge but the swing itself is often shorter.

On the Sixth Day of Painmas

2010-01-27T17:57:00.000-05:00

Well, there goes 2010.

Profits completely wiped out. Losses now growing. Sitting through a correction is a bad idea.

What I did wrong: I quickly added to declining positions instead of observing that a major shift was taking place. Had I simply kept my 25% cash position alone for a few days, I could have added at much much better prices instead of being helpless today when finally, some actual bullish, bottoming signals showed up for a variety of stocks.

In a correction, trendlines will definitely be tested and violated. It's best to let the first wave get crushed by the fear than enter headlong. This was a huge learning experience in impatience and stubborn belief. When the markets want to correct... the entire world of technical analysis changes. Stocks don't just bounce... they fall fast until exhaustion.

Some of the signs of a bottom (if this is indeed a bottom -- it probably isn't ) are: strong buying vol. intraday. You can clearly see the green bars showing buyers are coming back in. Dragonfly/hammer candles form at old support levels. A glimmer of hope from the msg. boards. I added way too early and now I am 100% helpless should the markets continue to correct lower.

Should I survive... I will remember these six days forever.

need to learn from this

2010-01-26T16:24:00.000-05:00

I just don't think I can go through a drawdown like this again.

Value investing is not always fun or even tolerable. Sometimes it is just pain.

Five Days Down

2010-01-26T14:54:00.000-05:00

Making money should never be easy... yet it was the first two weeks of January. I made a lot of money. But I didn't do anything about it.

Now -- in five days, I have given it all back. What the market gives, it takes back twice as fast. Had I been listening to my inner voice... I would have taken more precautions to lock in the gains. The market is a beast that can turn on you in a second.

It does not care about value or anything else. When it wants to drop, it will drop through all your fancy plans and charts.

If I'm really an investor then days like this should not bother me. But the fact is -- I think I need to be more of an active swing trader and take the profits as they roll. Staying long and giving everything back on each and every major correction is too hard to deal with. I did quite well taking profits. It's the ones that I held onto that returned back to their trendlines.

I did buy a lot of names on trendline support today. Small caps are broken now. And I'm still losing huge chunks of money every day.

I wish I could be a daytrader and be in cash all the time but I am terrible at that. That only guarantees I bleed to death slowly.

I still have not lost money for the year but tomorrow it goes red. Hard to keep going after five days of this.

Correction Continues

2010-01-26T07:44:00.000-05:00

Taking more heavy losses -- now four days in a row.

My tolerance for pain is reaching maximum.

The market has decided there is too much risk in owning China names and I have suffered by holding on. The market is saying get out but the market is impulsive.

I learned that the market can turn on a dime and not look back.
I learned that my habit of taking profits is a good one -- one that I need to do more often when I feel like the profits are coming too fast, too easily. Always recognize that feeling. Locking in profits is always a good thing.

Don't be in a rush to put cash back to work. If you ever feel rushed, fearful, giddy, or greedy -- you are about to make a big mistake.