Your Edge:

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:

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

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

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

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:

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

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.