Momo Stock Trader

New rule

2010-10-14T08:17:00.001-07:00

Have a new rule - if Stewie sells his stock due to profit and I want to hold, I need to move my stop up to break-even (without comissions) at the very least.

On about Day 120 of not overtrading

2010-10-13T22:25:00.000-07:00

Wow. Haven't updated in a while and I made it through 90 days of not overtrading! Geez I actually only traded a bit here and there - but now talking small losses (or gains) feels normal. For now. Got a little excited yesterday and had a minor issue which my uebersponsor will treat as an error. But it makes me realize just how easy it is to slip up. Gotta stick to my rules or modify them formally. Have I made any money? Not really- have some gains, some losses. But that's not the point. I now know I can stick to a system. Onwards.

On Day 40 of not overtrading

2010-07-12T11:53:00.000-07:00

Ok well I haven't updated this blog in a while. I determined to never again trade emotionally, and try to get to 90 days of NOT overtrading, similar to my Overeaters Anonymous program, in which we must be abstinent from overeating for 90 days. I started on May 23, and I am only counting days that the market is open. On every day that I don't overtrade, I am considered "abstinent" or within the rules. This can include NOT trading at all, which is an active decision to stay on the sidelines. In fact currently I am on day 40 and I have made only 2 trades, both within my rules.

Here are there rules for me:

- Only trade Stewie alerts during this period.

-          ping Stewie on email or chat for the grade on any alert
-          If it is GRADE A (includes plus or minus), and market conditions seem favorable, I will take it.
-          If thinks are rocky/violent/choppy/turbulent I’d rather not take it.
-          I will put stops in as suggested by Stewie ( not the % loss thing).
- I will use just <= 3k of capital (my emotion threshold)
-          I will sell when Stewie sells. If away from computer, must be within 5-10 minutes and max 10 minutes (use iPhone to trade ThinkOrSwim if on the road).

- Today was tough - I had to talk a very small $24 loss and I was fooling around with limit orders, then had to ping Stewie if really should sell as I had missed the alert, he said yes, and I did it will on the chat. The total time was within the 15 minutes. In the past, not selling very small losers has been by nemesis, as they always get worse. So I need to really watch this. I need to graciously and willingly accept small losses, ALWAYS. Winners will come if i trade by the rules.

Sell in May sure was true

2010-06-02T19:08:00.000-07:00

Well I hate to state the obvious but "Sell in May" sure was true.. the flash crash and the week after caused me to do emotional trading and need to reset my days again to zero. I am now on Day 6 of NOT OVERTRADING. I've managed to do it by actually not even making ANY trades for the last 6 days. Hey if that works.. As an outsider, it sure looks very choppy and basically untradeable. Will sit out the rest of the week. Momo.

Takin it easy

2010-05-17T23:03:00.000-07:00

I've got a lot going on at work and I realized that it is hard to play in the current environment without trigger fingers, so I am trying to take it easy and just not touch my accounts too much. I got stuck in one long position that I am waiting to get out of when we get a short-covering rally sometime this OPEX week, and then I've kept my now nearly useless LVS puts just in case we have another black swan event before Friday. You never know what can happen - we could be shooting up or down ...

Rules & Suggestions Updated Again

2010-05-12T17:44:00.000-07:00

OK communicated with Stewie and I've updated my rules again:

1. no more than 2% risk per trade.
2 if using options must have 300 or more volume.

Suggestion:
1. try to move stop up as soon as break even.

The problem with moving up your stop to break even as soon as possible is that it may cause you to stop out especially if the stop is at an unnatural point. As long as you are comfortable with your per trade risk and your stop is in, you should let the trade work. It is still nice in concept to move your stop to break even, but it may reduce the effectiveness of the trade. Therefore making this a suggestion, not a rule.

2. - is a rule because I am still tired of dealing with market makers that want to screw with you when you try to exit out of an option - lowering their bid when you lower your ask etc - as happened to me yesterday in HOG. In fact after talking to Stewie I am going to use options for now because I am trying to get back to basics here, and there are all these other factors with options: expiration, time premium, delta etc. are a lot to handle in a market that has so much volatility anyway.

Ok doing well, passed Day 4 of not overtrading. This was hard as both NETL and LULU and others such as NFLX ran up and were tempting to chase. Even the SY buyout rumors were hard not to chase. But there will always be opportunities.

Updated Rules

2010-05-11T17:25:00.000-07:00

1. risk no more than 2% of the account size on the trade
2. if using options can't buy any with less than 300 volume on that strike and that day.
3. only stewie alerts for 87 more days (completed day 3).
4. move up stop to break-even as soon as you can.

This game isn't fair

2010-05-10T22:47:00.000-07:00

A fellow trader told me he suspects there was no computer error on Thursday - it was just Wall Street as usual playing their games. They play the music, and when it stops we scramble for the chairs, but we don't get told in advance when the music will stop. I had sold out of my LVS longs which I would have loved to have back to sell at this mornings gap up, and I am now holding some LVS puts which are ridicuously worthless unless I have the courage to hold them until the next "Black Swan" event probably coming in a few days - hey OPEX is coming up! In any case, I can complain all I want - I am choosing to swim in this wave pool -- so it is my fault for trading emotionally, hence no more non-Stewie trades for 90 days. Technically this is day 2 so about 88 more days.

The Great Canadian Minebuster

2010-05-06T22:20:00.000-07:00

When I was a youth I would visit Canada's Wonderland (the Canadian equivalent of Disney World) and the meanest, baddest roller coaster was the wooden Great Canadian Minebuster. It was terrifying then, and was terrifying a year ago, when I went back at age 39 to do it again with my 8 year old sun. That is what it felt like today in the stock market. As we approached the cliff I sold out of my LVS and RIMM calls at a total 80-90% loss just so that they wouldn't go to zero. I made a few bucks buying and then selling a MOS put as per an alert. I flipped into some puts (the stock didn't matter at that point) as the big drop happened and they went up over 100% -- but then I didn't sell because I was out of daytrades in this account - I'd have to wait for tommorow. No problem-- this drop was was so big we'd be gapping down tommorow. But no---- all of the sudden the market rebounded just as fast as it had dropped. By the end of the day my puts were DOWN. In my other account where I had bought some puts at the bottom, as the rocket up happened, the big money I paid for the put evaporated and it turned negative. Oh my goodness. Well I should have sat out or not reacted or gone back to work (I tried) but anyway.. this sucks. I am now seeing if my broker will cancel one or more of the trades due to the fact that the nasdaq is cancelling trades as it was all related to some computer glitch. We'll see what happens. From now on, for the next 90 days, I 'm back to day 1 starting tommorow and trading ONLY stewie trades. He will also help me decide what do do in which account - I don't have any ability to decide this myself anymore - whatever I do doesn't work. Arhgghghhh.

Chopfest!!! Feel like you've been on a rollercoaster?

2010-04-30T20:57:00.000-07:00

You have! This picture says it all!!

Day 2

2010-04-30T19:07:00.000-07:00

Made it through Day 2. Respected my stop on VECO and got taken out. Took it like a man. This was very puzzling, VECO was up in the after hours but opened mediocre and then got taken down with the market. Oh well. I didn't lose sleep over it.

I am also still holding my options from this past week in my other account trying to get out of them without losing too much money. I refused to sell today in this chopfest although there was a point at which both positions were less than $30 away from break even, and in retrospect I should have closed them out then. Oh well. At least I didn't put in a liberal stop that then got taken out.

Down to One Single Rule, and I made it through Day 1

2010-04-29T21:52:00.000-07:00

I've decided that my list of rules is too long (see somewhere below). I've decided that I have only 1 rule. Whatever trade I put on, I can risk no more than 2% of the liquidation value of that account. So if I have an 8k account, I can risk $80 x 2 = $160 per trade. If I have a 2k account, I can risk only $40 per trade. Not sure how I will trade a 2k account, perhaps scalping only. In any case, this is my 1 rule.

I can still risk this money in different ways. For example I could go long stock, and set the stop so that I lose max $160 on whatever position I take. For example buying 100 shares of a $30 stock with a $28.5 stop would lose $150 max and even provide a few bucks for commissions. Or I could buy an option worth $320 and set a stop on it to sell automatically if it touches $160. Or I could spend the whole money on one option for $160, or hopefully very rarely, buy 4 "lottery ticket" OTM options for $40 each.

If I need to lower/loosen the stop, well then I need to reduce the position size accordingly. No matter what I do, the risk can absolutely not exceed that amount of max loss. 2% is ok. It is sad when it occassionally hits that stop -but I can sleep at night. The past 48 hours have been horrible. I am still holding some options in the "hope" they recover, right as we go into "sell in may" and as Goldman Sachs gets investigated criminally tonight... I hate hope. Hope is not a strategy. Prayer is not a strategy. You can't control what the market is going to do, so all you can do is control how much risk you are going to expose to it.

Also here is a good article from a guy on stock twits on trading rules:

Joe Fahmy's trading rules

Back to Day 1

2010-04-27T22:31:00.000-07:00

Well tommorow will be day 1. The day started off fine. The problem started when I failed to take a $50 profit in a RIMM that I quickly made, shortly after the opening bell. The profit dropped and I could have still made $20, but I did the dear-in-the-headlights thing, and soon it turned into a $50 and then $100 loss.
Then the rest of the day during the sell off and again near the close I did the unthinkable: lowered my stops, several times. The first big bounce seemed like it was going to end OK, but then we bounced again and ended up closing on or near the LOD.

During the late-day bounce I even added a long position in this account because I figured it was a Stewie alert, but I had already played the Stewie alert in another account and didn't need to add more risk to this one. The problem with this account is that it is only 2k and I am down $300 from where I started and constantly fighting to get back. I've got several (option) positions going, also XRTX and LVS from the other day. I figured this week was going to be a blow-off top, super-strong, etc, and THEN crashing next week, but hey what I think doesn't matter.

So now I am in a position where I am "hoping" for a rally (dang) going into the morning. I do think it is possible, somehow I think this whole thing is related to Goldman Sachs and NOT Greece, and is their way of punishing America while their CEO is being interrogated on television. Isn't it funny how the one good trade today would have been to be long Goldman Sachs! In any case, I broke all sorts of rules, from alllowing more than 2% risk on each trade (technically in this smaller account I should only be risking $40 per trade, and if I can't do that...don't trade).. and I am even afraid to look at my rules to see what else I broke. Human emotions are a powerful thing, and I am still being affected. Wouldn't it be nice to be able to sleep pretty knowing that in the absolute worst case, I'd only lose MAX 2% on each trade.. it works nice in theory but in such a small account, again, you need to try to use options and do miracles with them (maybe trade the qqq's a low priced option)-- or maybe trade penny stocks with a tight stop.. or just not trade. Fortunately more money (about 3k) is coming into that account sson so it will be a 5k account.. if I can just preserve the money in there now....

Was having a good run of trading and BLEW IT TODAY

2010-04-16T20:20:00.000-07:00

Well, I had carefully avoided the market for a number of days or traded very lightly and prudently, and then today had a bad day. It started off by having a lot of work stress Thursday night, staying up late, and having a late shower. I got to my computer as the market opened. I tried to sell my SPG 80 call for $5 and no one would even take it, no big surprise. A few days ago the REIT's looked good but this option expired worthless today - no big deal, I risked $45 on purpose. Then my fellow comrades in the Stewie service sell VMW for a profit, and I get upset because I was being conservative, didn't want to risk holding the option, so I sold it yesterday for a $30 loss when I could have made a $100 profit if I had kept it until today. Well I didn't know that, so I probably did the right thing, in fact I still believe I did the right thing. Then today, I kept getting drawn to the idea of taking something and buying a cheap option and wacking the market with some major profit. All of the sudden AAPL was headed to 250. I hesitated, the 250 strike option was only $75 and if I grabbed it I could make a lot of money if AAPL later headed to 260. This was all after the market had its usual early pullback, and AAPL was leading the way up. Well there was all this excitement, and I saw this option get more and more expensive and bought it at $140. OK fine, if AAPL was still going to head up to the moon (260) at least I got in, right? Well all of the sudden AAPL fell back to $250, then $249, then someone in the chat room said "Something Happened!!" and I should have sold there. In fact I was putting in an order to sell at $79, and hesitated, thinking we'd get a bounce (as we often have in the last few weeks). Well that was GS getting sued by FC and it was only downhill from there. Talk about losing time premium fast, I didn't want to take a $60 loss, then a $40 loss, then a $20 loss, well I finally sold the option for $13 and at least I didn't hold it until the end of the day letting it get to $0.00. Because this was a very small account ($2.5k) it was a 6% hit, violating my rules of having only a 2% loss. I had called my sponsor and asked him for an exception today to make this one trade even though I knew in my gut it was the wrong thing to do, but my emotions overtook me. We'll see what he says, whether we ignore this given that I had gotten an exception or what. In the meantime I am writing this down so I remember these days.

Reached 60 days of not overtrading!

2010-04-06T15:24:00.000-07:00

I am not just past 60 days of not overtrading according to my rules. It has been a little hairy and there have been some grey areas as well as honest mistakes but my sponsor has congratulated me on the success. In all of my financial accounts I am better off now than I was 60 days ago. Credit to Stewie who has acted as trading coach and advisor. On a sad note, my grandmother of 95 years of aged who survived World War II and raising 7 kids as a single parent starting in War time, passed away on Sunday, and I am taking some time off and going to the funeral.

Momo.

Added a blog of another trader on a journey

2010-03-29T11:20:00.001-07:00

Here is another great blog of a fellow learner posting their journey...

http://www.lauratrading.blogspot.com/

Having trouble again graciously accepting small losses.

2010-03-25T23:32:00.000-07:00

Today I was in MGM, had entered with options at about 12.50 from a few days ago. As this selloff hapened late in the day, I kept thinking it was a fakeout for a rally into the close, like it has been for some time. However this time, it was an honest-to-goodness selloff. MGM started breaking the good setup and while it did not hit my very liberal stop of 11.99, it almost did, and so I sold it manually. I lost about 40% of the value of the call, across 4 calls, and it hurt, after a good week of disciplined trading. If I had just been able to accept a $1 gain, or a $13 loss, I could have sold those options a day or 2 ago. No, instead I held, wanting to prove that I "WAS RIGHT" and I was excited that hey this was MGM, and I was going to Vegas soon, and isn't it cool to be in a gambling stock, it's just like gambling. Truer than I wanted it to be!! After summarizing my trades for the week and my various accounts a little early, I looked at my performance. I broke out trades as either "Stewie" (from his service/alerts) and non-Stewie (my own, or from his chat room for members). I think the problem is that I am not good enough with setting stops to set them tight enough on my own trades. I make them very loose liberal, so that they don't get hit, and then guess what ... they get hit anyway, and I get depressed. So for now, I need to follow others on no only the exit, but pay attention to their exit strategy. Foremost, just trade the alerts, but if I absolutely have to make a trade from the chat room, find out what that person is using for a stop point. Because it is the liberal stops and letting the losers run that is killing me in my own trades. I did more analysis and summarized the following:

STEWIE + MY TRADES IN 8K IRA: +2.9% SINCE DEC 11,2009
STEWIE ONLY TRADES IN 8K IRA: +8.0% SINCE DEC 11,2009

STEWIE + OWN TRADES IN 2K ACCT: -12.3% SINCE DEC 30,2009
STEWIE ONLY TRADES IN 2K ACCT: +01.0% SINCE DEC 30,2009
(TRYING TO GET BACK TO EVEN TO MANY TIMES ON MY OWN)

STEWIE ONLY TRADES IN 3K WIFE IRA: +2.8% SINCE MARCH 1
(I DON'T DO NON-STEWIE TRADES IN WIFE IRA-GOOD!)

BOTTOM LINE: I AM MY OWN WORST ENEMY. MY OWN TRADES SUCK.

LOOKING CLOSER, IT IS NOT THAT I DON'T HAVE WINNERS, ITS THAT WHEN I HAVE LOSERS, I REFUSE TO TAKE A LOSS UNTIL THEY HIT A VERY LIBERAL STOP OR REACH 2% of ACCOUNT SIZE. IT USED TO BE WORSE BUT EVEN WAITING TILL 2% is BAD!!! I NEED TO LEARN THAT *NOT* LOSING IS WINNING. IF YOU CAN'T STOP FROM THE ENEMY SCORING, IT DOESN'T MATTER HOW MANY WEAPONS YOU HAVE ON OFFENSE. I NEED TO GRACIOUSLY ACCEPT SMALL LOSSES. THAT IS THE KEY. IN THE MEANTIME, FOLLOW THE ALERTS SO YOU KNOW BETTER WHAT IS A GOOD STOP LOSS.

Just posted my review of Art of Trading

2010-03-23T22:50:00.000-07:00

Well I finished my review of Art of Trading tonight. BTW I am just a regular guy, not getting paid to promote this or anything. I hate how there are so many investment scams and shlocky services out there, even offered by the so-called gurus and pro's. I found out recently that even traders who write books often do it because they aren't good enough at trading itself, and/or weren't respected in the trading community. In any case Stewie has been a major factor in turning my trading around from non-profitable to profitable. It still isn't easy, and won't be, but Stewie really does accelerate your learning by leaps and bounds.

http://www.investimonials.com/blogs/reviews-the-art-of-trading.aspx#momostocktrader

Some setups II like

2010-03-15T21:03:00.000-07:00

ARII
CMA
CTXS
DIVX
HSIC
INCY
MSPD
N
OCLR
PEET
WFC
Y
T

Caveat Empor: Its quadruple witching on Friday, so beware!

Wierd day in the market

2010-03-02T20:47:00.000-08:00

Today was bizarre - took a lot of Stewie alerts and by mid-day everything was green by $20 - $80 except a bone-headed AAPL 210 call I bought at the open (me and AAPL, arghghgh) .. then in the last hour everything headed south. Sold two alerts alongside Stewie that were green but basically only paid the commission, and held the 3 he is holding overnight. Someone in the chat room thought something fishy was going on and I believe it. Almost like a bunch of hedge fund guys all called each other and said - "HEY GUYS LETS SELL EVERYTHING DOWN AND PANIC THOSE LONGS - HEHEHEHEH" . Who knows. All I can control is my own trades and my own risk tolerance.We'll see what happens in the morning.

Doing well - getting good at taking small losses

2010-03-01T20:09:00.000-08:00

OK I have stayed within my rules and I am doing well. Lately I have been getting really good at taking small losses. What broke the cycle is that I vowed to follow Stewie's alerts religiously for all of my trades, and Stewie has no qualms about jettisoning a stock the second he thinks it is going to lose him money. It could (and often is) well above the stop level - he does not wait until it hits the stop. The stock could start to bear flag, have poor price action, be too choppy, or WHATEVER - he doesn't care. In this sense Stewie reminds me of Larry Ellison of Oracle. Larry knows how to make money, and he buys companies, and makes decisions - all based on the BOTTOM LINE and the goal of MAKING MONEY - as soon as someone or something is not cutting it for that purpose, they get shown the DOOR.

We shouldn't get attached to our stocks - in fact that concept that Peter Lynch had about buying companies we know and admire can actually prevent us from parting with our winners. If you hold a winner long enough, it will become a loser. But today my old habits didn't prevail. I personally very attached to AAPL the company, but with some help from a friend holding my hand, I jettisoned 30 AAPL@209 before the closing bell. I had bought these shares at 189 and held them through the downturn last year, so I had enough profit and was relieved to get rid of them. It was fun to sell into strength, and be profitable. This frees up about 6.5k that I can now use in this same account to focus more on Stewie alerts, yeah!

Day 1 of 90

2010-02-02T22:10:00.000-08:00

Yesterday I violated a rule #19. So I am back to day 1 of my "overtraders anonymous" program. I didn't sell when Stewie said to sell. The trade was going well, and Stewie sold into the pop/rally (#16). I had $22 of profits (this was a very small size trade). Because I felt like I "needed" to earn more profit, as I had taken a $38 hit as part of a stop loss earlier in the morning, I was trying to push it and make back losses (#13). So instead of selling this stock at $54, I moved up my stop to $53.50. This would at least avoid letting a winner turn into a loser (#7), but OF COURSE my stop got hit and I only made $12.50 instead of $22. Moral of the story-stick with your system. If my rules involve following Stewie, then follow him. I've already done a comparison of my PnL for my own versus Stewie's trades-- and his are much better-- so I need to just stick to them.

I took my first SMALL LOSS graciously!!! Never been so excited!!

2010-01-27T13:10:00.000-08:00

Guys,

OK this was Day 1 of my 90 day period where I follow my rules. I was basically following my rules, but realized that in my smaller account, I had miscalculated my maximum risk as about 10% instead of 1%. The trade was not going well, and while it didn't hit the stop (which was 1.5 pts away), this was a call option and it would have been ugly. Towards the end of the day we rallied, and I decided to get out of this trade. I would lose a small amount. BUT I would get back to being in compliance with my rules. So I proactively sold at the small loss near the close. I have never been so glad to take a loss. But I am realizing that without the ability to take small losses like good medicine, I will never proceed as a trader. In my larger account, I am keeping this trade on, both because Stewie has not alerted us to sell, AND because I am comfortable with the risk (< 2%). If you keep your risk appropriate, then you'll never get too worked up about any one loss, you just move on. OK back to work.

My Trading Rules

2010-01-26T22:45:00.000-08:00

Today was a bad day. Took some heavy losses (2% in one account and 8.5% in another) buying AAPL calls (210 and 220) when APPL was at 212.50. AAPL reversed, hit my too liberal stop (210 instead of 211). Because these these were options, took a heavy hit. Note to self: if you base a stop on the underlying security it is OK, but try to at least calculate the maximum loss - and use it to so as not to exceed 2%. TOS does estimate it. And remember - options can move UP and DOWN really fast.. they are like a handgrenade and you need to get rid of them fast either way.

I do not want this to happen again. Last time this happened I worked on my rules but never posted them. Now I am posting them. I could not decide how to wittle them down, so instead I took every rule, do's / don't I have ever thought of and wrote them up. Turns out there are 37. Secondly I got a sponsor and for the next 90 days I will be checking in with him to make sure I am not violating these rules. The rules may evolve but at least this is a good start.

1. You MUST always trade with stops. If not an OCO order, enter stop within 5 minutes. Default target +3, stop between -.50 and -1.00 If using Art of Trading, go with Stewie’s stops.
2. Adjust position size so maximum 2% of that account size could be lost on any single trade.
3. Only 2-3 open trades at a time, simple BUY/SELL x number of shares. No scaling in our out.
4. Must have 50% of account in cash or long-term holds at any one time, so you could never lose > 50%-- even all of your trades got messed up / executed wrongly due to clerical errors.
5. Must keep a PnL spreadsheet/log for each trade. This serves as a sanity check also.
6. Never reconsider your stop and loosen/relax/lower it. Ever. Not at the open either.
7. Never let a winner turn into a loser. Raise your stop to break-even as soon as you can.
8. Take what the market gives you. Don’t get greedy.
9. Don’t revenge trade, either that day or next. It almost always leads to a series of bigger losses.
10. No adding to a losing trade (i.e. no doubling down).
11. Gracefully accept small loses. They aren’t bad. They are the cost of doing business. Even regular businesses have some days where they lose money instead of make money.
12. Get out of a losing (or neutral) trade. Closing a losing position is a good thing.
13. Don’t try to make back losses. Every trade is fresh and is its own trade.
14. Put the stop in a clear support so you don’t get stopped for random movement.
15. The above may mean WAITING for low-risk entry point (e.g. bounce of the 20 MA).
16. Buy during consolidation and sell into the pop / retail rally.
17. Buy at support, sell at resistance.
18. Capital preservation (keep what u have) is #1, making money 2nd. Live to trade another day.
19. For 90 days, from 1/27 to to 4/27, can only initiate new trades on Art of Trading Alerts.
20. During the 90 days, use stock to trade 80% of the time –but could use an option in special circumstances when circumstances warrant (keep the stop based on the underlying security ).
21. Not allowed to trade options past Tuesday of Expiration Week until you are good with them.
22. Always check/re-check your order before pressing enter. Clerical errors are killers.
23. Cut your losers off quickly and let your winners run. You can always re-enter the trade.
24. If you are thinking about whether to cut off your loser now, you probably should.
25. If you are thinking about taking profit now, you probably should. Take the money and run.
26. If your account is < 25k, don’t hold overnight just to avoid using up 1 of 3 daytrades.
27. Trade with the market direction. If you are trading against the overall trend, you better have a really good reason and you better get out quickly (for either profits or losses).
28. For the stock you are trading, can you describe the long-term (6 months) trend, the monthly trend, and the weekly trend, both itself and vis-à-vis the market in general?
29. Try to fight your bullish bias, and be objective. Good traders can trade in either direction, you just want to be on the right side of the trade.
30. A profit is a profit, is a profit, is a profit.
31. Patience is a virtue, except when waiting for the next rally as your account is bleeding dry.
32. Try to fight your bullish bias, and be objective. Good traders can trade in either direction. You just want to be on the right side of the trade.
33. Don’t chase stocks – i.e. don’t buy as the stock is shooting up. Wait for the retracement.
34. Don’t set your stops using zeros and even numbers (or you may get stopped out too soon).
35. Cut your losers off quickly and let your winners run. Both are hard. Remember: You can always re-enter the trade.
36. If your are bored, don’t trade. If you need some excitement, papertrade it instead.
37. Post your trades to keep yourself honest and accountable.

If you think we are a on a rollercoaster - we are:

2010-01-20T17:29:00.000-08:00

This is my first picture. I used the snipping tool in Windows 7 to capture my TOS (ThinkorSwim) Prophet chart graphs. I like to use 30 minute bars over 5 days to evaluate trends for short term trading.

The role of float size in explosive growth

2010-01-20T17:25:00.000-08:00

Found this interesting article and had to post about it. It talks about how Dan Zanger made a lot of money momentum trading with stocks that had a low float size, such as IBD-type stocks:

http://stockbee.blogspot.com/2010/01/what-color-is-dan-zangers-underwear.html

The markets are mucking with us

2010-01-19T21:53:00.000-08:00

I was at a work conference all day long and did not have a chance to look at the graph until the end of the day. Looks like it ended up being another "mutual fund Monday" - things drift gently higher and by the end of the day it looks obvious in hindsight -- but during the day itself at any one point it didn't look like a sure thing. I have some AAPL stock I need to sell soon and was going to just sell at 212.40 when I checked in but was glad I didn't when I looked later and it had topped 215.00. Anyway, it was early last week that I had anticipated this kind of a move on Monday, but alas just when everyone identifies the pattern as "mutual fund mondays" (e.g. on John Najarian on Fast Money) -- the pattern stops for a week or two, then comes back when everyones loses faith. Arrrghghg I am starting to understand why people like to compare the stock market to playing poker.

Art of Trading really teaches the Art of Trading!

2010-01-06T21:30:00.001-08:00

I have not updated in some time. Instead I've been focused on trading and not making mistakes-- rather than analyzing the momo's lately . The Art of Trading service is definately working out and is teaching me good habits. Stewie is just as much about teaching you to learn/improve as he is about the stocks themselves. He emphasizes cutting your loses quickly and taking steady, decent gains. I am learning not to strike out trying to bat a home run, but to take the base hit. So far it is working well. I sent in my testimonial and Stewie posted it here:

http://theimpatienttrader.blogspot.com/2010/01/great-art-of-trading-testimonial.html

Update and new Momo's emerging

2009-12-17T18:47:00.000-08:00

Well I'm back. I decided to follow both trading services, but currently I am focusing mostly on Stewie's Art of Trading service and his alerts. I started off papertrading the alerts, but then quickly started using real money, after being impressed. I am using small account sizes (and small trades) to start. For now, I'm going back to trading basics and trading straight stocks, not options. And I am finalizing a set of rules. For the week, I am in the black, albeit not by much-- in part because I ignored one alert to sell for a loss, and I was afraid to take the loss. I later took it, but by that time it was a bigger loss. I am learning to not be afraid of taking small losses, because if you don't they just get worse!

It's very interesting what is happening in the market. Some of the old leaders are still around, such as:

Cramer's 4 horsemen: AAPL, GOOG, RIMM, AMZN.
Ag's: POT, MOS, etc.
Medical: ISRG
Bank: GS

At the same time, new leadership is emerging. Hear are some of the new
momo's, many are in the IBD 100:

HEAT, PCLN, RAX, NANO, RINO

Check out this post:

http://stockbee.blogspot.com/2009/12/39-stocks-with-momentum_17.html

Also - get ready for the "Santa Claus rally" coming soon. Time for the fund managers to goose the returns and apply the window dressing:

http://www.crossingwallstreet.com/archives/2009/12/the_best_time_o.html

Deciding where to go from here

2009-11-01T18:25:00.000-08:00

I haven't updated this blog in a while. Part of it was depression, since I had to review my prior trading when filing my 2009 taxes by the mid-October deadline. What really hurt was all the work I had to do in TradeLog to get all my *LOSSES* accounted for. At least the total amount I have lost so far in the market is only about 7k, but I want that 7k to be the first and last "tuition" I pay. Some time ago, I switched to papertrading, and my initial ThinkorSwim Papermoney account is now at $166,000 from $100,000, mostly as a result of going long stocks at about the right time. In my "real money" and retirement accounts, I've done basically nothing - just too afraid to trade. I'm trying to come up with a plan of action, and at the same time following good traders, including Bo Yoder's cash bomb sequence, which attempts to help people with low account sizes explode their accounts into larger sizes.

We shall how the market goes this week. Most of this year, every time there is a panicy sell period, it turns out to be a fake-out and we march higher, probably due to large hedge funds finally buying in. I know from past experience that the 1st of the month is always interesting, expect the unexpected...

Goldman conspiracy theories/ talk won't die

2009-08-24T02:32:00.000-07:00

More good stuff from zerohedge.com

http://www.zerohedge.com/article/goldmans-selective-trading-disclosure-legal-way-preferred-clients-front-run-market#comments

Interesting indeed, and very depressing for the "retail" trader. I need to use thinkback to look at GOOG calls from last week before the conviction buy list got updated. I don't even know if regular people can access the conviction buy list at all, even *after* it comes out ;). Oh well. If this stuff is true it makes strategies that try to follow the "big boys" like the sizzle index and the options heat thermometer (at OptionsMonster) very prescient. Stay tuned.

Going for the Cash Bomb

2009-08-13T01:37:00.000-07:00

OK I've been following Bo Yoder's recent "Cash Bomb" project and I've signed up for the initial alerts and video modules to support it. The idea is how to risk under a thousand dollars (e.g. $600) and double your money (or more) to achieve a decently capitalized account --- an account that you can then trade using more traditional risk management rules (e.g. 2% loss maximum per trader). We'll see how it goes.

Here is the link: CashBomb Sequence

Zerohedge.com - Conspiracy Theories with Meat Behind Them

2009-08-06T22:20:00.000-07:00

I like reading ZeroHedge.com - it seems to be a credible site exposing market manipulation. Unlike other such sites it appears to be written by an heavy hitting anonymous insider. The site recently transitioned from blog to full-fledged site with forums. In the forums, I found a plausible account of how this fake rally may have come about:

http://www.zerohedge.com/forum/how-hank-and-ben-initially-rigged-market-rally

As individual traders, we don't have access to the kinds of inside information that would allow incredible guaranteed gains, but we do have access to volume information and price action, which don't lie. Well at least as long as there aren't too many "Dark Pools"!

A good example of the telling power of volume and price is in AIG this week. Some big players piled into this stock for some heavy hitting upside. It also makes me think of making more use of the Najarian brothers strategy, when they look for unusual call or put volume -- these kinds of things reveal the tracks of the "smart money", sort of reverse engineering what the big movers and the "people who know something" are doing.

Still Papertrading

2009-08-06T01:24:00.000-07:00

I am still papertrading. I think this whole rally since the lows of March is fake. The liquidity that the government pumped into Banks is being used to buy equities, so that banks can run up their own (now diluted) bank stocks. The media is in a frenzy about 'the recovery' - meanwhile everyday people like myself continue to struggle - they can't get a mortgage refi or modication, only those who have a clunker that meets the requirements can take advantage of "cash for clunkers" --argghgh. My neighbour had a vehicle to trade in and took advantage - and his property tax is next to nothing due to the flawed Prop 13.. arhgghg. Bottom line - sooner or later reality will set in, since the American Consumer is 70% of the economy.

I do intend to get back into trading heavily soon - I think the current environment with (surprisingly) low volatility is good for swing trading - finally. On Aug 15 I will be taking a local all-day options class from TOS (Think or Swim). Since no one is going to bail me out, I need to take control of my own future and nail this stock trading thing..

Bought some QQQQ puts

2009-06-30T23:07:00.000-07:00

Well I sold my QQQQ and bought some QQQQ puts today:
20 x 17-JUL-09 QQQQ 37 strike PUT, stop when QQQQ >= 37 (Paper Money Account)
1 x 17-JUL-09 QQQQ 31 strike PUT, no stop -risk entire option (Real Money)

This is based on my theory that after a good quarter, the market will drop down again in early July. In my paper money account, which is well capitalized, I bought at the money puts. In my real money account, I bought the highest strike that I could afford ;) Needless to say, we'll see if this hunch pans out. Yes I still need to review my trades, however, I've been so fearful of the market lately, it is good to get back into the market. We shall see.

Searching for stock charting programs for the iPhone

2009-06-21T01:17:00.000-07:00

I am looking into various ways to obtain live streaming stock charts on the iPhone. Unfortunately, iSwim, the iPhone app that my broker provides, does not have charting. If anyone has any information or suggestions, please post a comment or email me at momostocktrader "at" gmail.com.

Update: I was informed by TOS (Think Or Swim) that iSwim will be getting graphs in the next release. Looking forward to it!

Shelved the refi - Going back to Trading Soon

2009-06-18T23:07:00.000-07:00

Well I found out the hard way that banks are being a PITA - those good rates area nearly impossible to get, even if you have good credit etc. For me I have 5.875 and was trying to get to 4.875 ... but it didn't work as rates have gone up and property values have gone down. We'll have to wait until the FOMC meeting with Ben next week to see what happens to mortgage rates in the future. For now, slowly getting back to following the market, reviewing my trades, and trading.

Update: Tried a refi a second time with Fremont Bank (http://www.fremontbank.com) They lead me to believe they could use my prior appraisal despite the new HVCC rules, but when push came to shove, they wanted to redo the appraisal. In addition, the fees for the Good Faith Estimate came back higher than discusses on the phone. Various agents I talked to told me things I wanted to hear like the application fee was relatively easily refundable. However it took me two weeks of calling and bugging management until I could get my $495 back. Caveat empor, and definately avoid them.

Bo Yoder's latest project: "Cash Bombing" your account

2009-06-05T18:23:00.000-07:00

Bo Yoder, noted trader and author, has some new blogs and YouTube videos describing his latest project called "Cashbombing". Basically he noticed that many people following him were trading with accounts less then $5,000, and instead of just lecturing them on how this is wrong, he is attempting to devise a system whereby people risk a small amount (say $500) in a highly volatile environment (e.g. Forex) and with high leverage and risk, try to use that money to explode it into an account large enough for regular-type trading. The concept is interesting.

http://www.tradingaintpretty.com/

Update: Bo Yoder has removed some of his content due to regulations now that he is becoming certified but will be back up soon.

GM - Government Motors

2009-06-01T19:14:00.000-07:00

I've heard it said that the US is the largest hedge fund in the world. Well now we are going to gamble that the US government can run a car company. Good luck.

I personally am not doing too well - my father in law's funeral was a few weeks ago, and I am not over that. The mortgage rate I had tried to lock in never worked, and now rates are skyrocketing. The house appraisal I paid for out of my own pocket is now useless, and I am going to have to stop the process of finding another loan because I don't want to run up additional credit card costs, and the new HVCC rules require the consumer to pay for a new appraisal with their own credit card.

The good news is that I had the sense to not trade or do any stock market because I'd be too emotional. The recent rallies in the stock market puzzle me, even though I used to be the biggest bull. Very few if any business people I talk to can tell me anything good about the economy, yet the stock market is itching to go higher. I guess it is a trader's market for sure, and the old adage applies: "The trend is your friend until it ends." But watch out for that end. I just don't have a good feeling about the massive government debts, and the artifical reflating of all the banks - something in my things this will all end very badly.

I'll be offline for a while, until my lifes resumes normalcy and I am back to trading again.

Trying to lock a mortgage

2009-05-07T14:01:00.000-07:00

Hi,

I got back from Disney and had fun. My wife's father is not doing well and I've had to take care of the kids, so I am taking a break from trading. Still working on analyzing my past mistakes. One thing I am doing is trying to lock in a mortgage at a good rate. A friend who is a broker told me about the ticker that mortgage rates are associated with (at least partially): TNX. I am currently doing some plots and sure enough this seems to correspond with rates. I was trying to lock in a mortgage at 5.00 or less today for a super conforming, and rates gapped up badly, so waiting until tommorow.

On Vacation

2009-04-15T23:38:00.001-07:00

Doing Disneyland

In the meantime had bought some $9 and $10 BAC calls that seem to have done OK, deciding when to close them out. Will have some updates once I return.

Got chopped up

2009-03-26T22:30:00.000-07:00

After feeling good about my successful trade, dipped my tows in the water some more, buying some qqqq calls and a goog call. All were stopped out, which may be a symptom of my newfound interest in tight risk-management. In the meantime, I've gone back to completing once-and-for-all my analysis of my prior trades.

Also, a seasoned pro acknowledges that it's tough out there here:

http://hardrightedge.com/dor.htm

Made money on those calls from last week

2009-03-22T22:46:00.000-07:00

In the interest of transparency, I'd like to post the actual results of my trade from last week. Here it is.

BOUGHT WED 18-MAR-09 ORCL MAR CALL $18 STRIKE 2@ 0.05 ($ 5) + 3.00 comission = $13.00
SOLD THUR 19-MAR-09 ORCL MAR CALL $18 STRIKE 2@ 0.15 ($15) - 3.00 comission = $27.00

The good news is that I more than doubled my money. I risked $13 (the entire cost of the options), and I ended up with $27 after ORCL reported good earnings after hours, and the stock popped up overnight. To bad I didn't have like 5k in this trade.

The bad news? Well, this is really bad. In this particular account, this was the last $13 I had in my account. I risked 100% of my account because it was toasted anyway. The account started off at 2k. There is something psychological about not going to actual $0.00 from money that started off at 2k. I realize I will have to fund this account again - I am not under the illusion that I can trade my way back to 2k.

The other piece of good news is that I've been reviewing my trades. There is so much to report that I've been delaying doing a post. But to preview the bottom line, it comes down to this: avoiding the fear of taking a loss, and proper money management. What I've discovered is that I am not a horrible trader. In fact most of the issues I ran into came in the September - October timeframe when things tanked at a speed not seen in 80 years, and fighting the trend (going long) cost me dearly. A few big out-of-control losses will quickly ruin an otherwise decent trading account. If I had only been able to cut off a few medium sized losses before they became big losses, I would have been fine. From now on I am going to have one rule above all rules: decide in advance how much you are willing to lose (maximum), stick to that, don't move or take out your stop - and live with it. Even expect a lost, so that your positively surprised if you actually win. Controlling your loses seems to me to be my biggest problem and the biggest killer of my accounts. More details to follow.

Bought some calls

2009-03-19T01:00:00.000-07:00

Bought 2 out of the money ORCL 18 March calls late Wednesday for .05 ($5) each + $3.00 in commissions , making a $13.00 bet that ORCL will release good earnings. So far so good in after hours. Unfortunately I could only affor the 18 calls so I'll most likely be able to make back what I paid, but we'll see how much I net. At the same time the Fed announced a huge treasury buying plan that stimulated a closing rally. Let's see if there will be some follow through and the market can break through a lot of its overhead resistance. Triple witching is coming Friday so we'll see what happens. The more I learn the less I try to to predict what could happen, and only try to control my risk level.

Sucker's Bounce or the Big Bottom?

2009-03-12T23:58:00.000-07:00

Nobody knows. Place your bets. The media is going all ga-ga over the 3 day rally. But we are hitting major resistance on the charts tommorow, and it is Friday the 13th. We shall see.

Nationalization or Dow 4000

2009-03-09T22:57:00.000-07:00

It's funny - I haven't posted for a while and the "have we bottomed" post is still relevant. By the way.. the site I pointed to was a joke - it doesn't use artificial intelligence! Heck - no one knows when we will bottom - a bell won't magically ring. Traders are waiting for capitulation and it seems we just have apathy.

I think there is a reason though, why there is no bottom in sight. I have a theory that there are very powerful people, either bankers, friends of banker, and/or head of foreign states, that have too much to lose if the Citibank and Bank of America, our two toxic banks, are nationalized. A very intelligent person who has a background in finance told me today what amounts to the same thing - in order to protect the wealthy, the American taxpayer is going to have to pay 3x what it would normally cost before we heal. However in the process we all have to be boiled slowly like a crab being cooked. At some point even the wealthy and/or the government will realize this is all so bad that we have no choice but to nationalize the banks before the entire financial system goes to hell. At that point the damage will have been done. I hope to goodness I am wrong. The sooner this gets over with, the better.

I've been studying my trades and I have some preliminary findings. Will get back to regular posts on trading soon. In the end, the system is all rigged against individual traders, so the key thing is what rules & system can I put in place for myself to protect against loses, preserve capital, and make a few bucks along the way.

Have we bottomed?

2009-02-25T23:41:00.000-08:00

I doubt it. My take is that powerful people in the banking industry have successfully persuaded government that we can keep pouring good money after bad into our toxic waste dump known as BAC & C so that we can pretend for a while that they can survive some stress (haha). So, the latest "details" from our friend Timothy will merely prolong the pain.

In any case, I came across a website which can tell through artificial intelligence whether we have bottomed at any one time. Check it out! http://isthisthebottom.com/

Did make 2 trades but back to studying

2009-02-24T00:19:00.000-08:00

Hi,

Well I did make a couple of real trades during OE expiration last week. I bought a qqqq call earlier in the week, which expired worthless. But on a positive note, on Friday I bought a couple of BAC calls right before the mid-afternoon rally took off, and doubled my money (wohoo!). See my posts in the wallstreak forum. Unfortunately I was not playing with a lot of money, so it was mostly a psychological win.

In the meantime, I am back to studying. I feel that our 2 toxic banks (BAC and C) will be nationalized soon, apparently some announcement about the latest bailout plan is coming Wednesday, and if the government does what it needs to do, there could be a huge rally afterwards.

Thank you Tim Geithner for an easy trade

2009-02-10T21:35:00.000-08:00

Am I still working on reviewing my trades? Yes. But today I allowed myself to papertrade the Tim Geithner announcement. I did a bunch of things correct: 1) waited until after the announcement - don't be in a trade during the announcement , 2) waited until some time after the initial announcement (to avoid some of the whipsaw right after the announcement), 3) entered a short of BAC shortly after it broke resistance (used 6.00), 4) trailed my stop down, 5) declined to add to my position (of 10 puts), just in case it reversed on me, and 6) declined to follow 1 minute charts and get scarred out of my trade on little reversals, stuck with 5, 10, and 15 minutes instead. At the end of the day I am up $200 with my puts. I decided to hold overnight - that may not have been good but we'll see in the morning. The nice thing about the trade today is that Tim made it easy - the market reacted so bad that I didn't have to worry to much that my stock (BAC) would make it back up to resistance. The BAC chart is starting to look like the Lehman brothers charts, as John Carter pointed out in last night's free video.

Review or Bust

2009-02-02T00:41:00.000-08:00

Ok I'll admit that while professing to review my trades I have gotten diverted by other more "pressing" things, such as tweaking my son's wii, immersing myself in work, and other things. I've even managed to regular read WSJ and the IBD newspaper. Time to face the facts, and this week I will review at least some of my trades, and makes some sort of post here. BTW as I write this late Sunday night / early Monday morning, it appears that we could be headed a lot lower again. However, I won't make the mistake I've made before, and that is to put in some sort of a market order for Monday morning based on the news right now, because it could change a lot between now and then, and because I don't want to contribute to amateur hour.

More Study

2009-01-23T20:44:00.000-08:00

I'm taking time do serious study and analysis. I'll be getting to the analysis of my trades soon -- for now I am studying overall guidelines / principles. It seems that to become a good trader, you need to consider each trade a small "bet" and not hold to any preconceptions of what will actually happen. You expect to lose a certain small amount and set your stop and maximum loss BEFORE going into the trade. You place your best bet based on a setup, and move on, win or lose. The more you rely on things like hope, emotion, feelings of "it should to this", the more you will lose. You can't control the market, only your own (small) bets, and your own reaction to it. If you can cut off your losers quickly, you can survive even on a small % win ratio. It also helps to have a set of rules / indicators etc that are objective, not based on emotion or how you "feel". Most analysis / homework is done after the markets close, to keep objective. Some people I consider models are: John Carter, Bo Yoder, Linda Raschke. Good trading is non-emotional and should appear "boring".

AAPL - will it lead us lower?

2009-01-15T00:41:00.000-08:00

I am still in study mode, but this Steve Jobs news is disconcerting. The thing about cancer is that while it can be in remission, once it comes back, health can deteriorate really quickly. Tonight there are articles that the rest of Steve Jobs' pancreas may need to be removed. That doesn't sound good. While the "skinny Steve" trade has been around for a while especially to those who follow trading sites, tommorow's morning paper may cause a lot of regular people to sell their AAPL in a panic. In the after hours today, AAPL was in the 70's, busting through the previous support level of about 80 to 85. Then again, the more I learn about the stock market, the less I try to predict us, hence the question mark in the title of this post. Time to get to bed so I can get up early to see the open.

Study & Review Mode

2009-01-11T00:14:00.000-08:00

Well the end of 2008 came up too soon. It doesn't really feel like 2009 - more like the 13th month of 2008. Even more importantly, I haven't yet sat down to analyze what worked and what didn't in 2008. I also need to develop a strategy for 2009 and beyond, as others have done (e.g. see Market Monk's blog). I've put a hold on any trading (real or paper) until I analyze my past trades. I need to go back and see what worked and what didn't - analyzing individual trades as well as charting my own performance. It is going to be pretty depressing and not fun, but I need to do it. Apparently, many if not most traders do not review their trades and as the saying goes "those that do not learn from their mistakes are doomed to repeat them." So, while analyzing, I may not post for a while, but once I finish, I will have several big posts.

Progress

2008-12-30T00:33:00.000-08:00

I papertraded today, and this time followed my rules. One option only, daytrading only (no overnight holds), watching it closely, selling while I have a profit if I am unable to stay for the close, trailing my stop tightly, etc. I traded USO. The only downside is that I had put in an order to buy at the open, and bought high - and if it hadn't been for the rally late in the session, I may have had a loss. But otherwise everything was good and smooth. It is curious that USO did not move more than it did given the world events, but such is life. Oil could go higher tommorow, or it could go straight south. Interesting - the more I learn about the stock market, the less try to predict its direction. Maybe that is a good thing.

Nursing My Wounds

2008-12-24T00:09:00.000-08:00

Ok I'll admit it. I am still nursing my wounds from options expiration last week. I should never have held overnight. Then, after the gap down (instead of up, as I had surmised), I should have sold at the open. No, I continued to hold, hoping for a rally, and letting losses mount. Soon I found myself in that lonely place where I am seeing time decay tick away -- and I am still there like a deer in the headlights, hoping for a rally. About the only good decision I made last week was to take my losses like a man late Thursday, instead of waiting until late Friday. I learned that the hard way. I distinctly remember a day in January when my APPL calls literally went to zero on a Friday afternoon, while I was on the phone with E*Trade hoping for some consolation from the trading desk.

Psychological research states that it takes about 7 times of making a mistake over and over again until we finally get it. Well maybe more. I even some rules surrounding options week in my trading rules, but I did not actually consult my rules before trading last week. Well rules are no good if they are aren't followed.

OK well by now it is clear that I am no pro - this will be the blog of someone who is in the midst of learning. I got interested in stock investing for the first time in mid-2007, and then trading in the fall of 2007, so it's been about 15 months so far. I started off with E*Trade and no live quotes, and have since changed brokers to ThinkorSwim (TOS) which has free level 2 quotes and live streaming Prophet charts, as well as much lower commissions. I now have a set of stock-trading rules - even if I don't yet stick to them. I'm pretty determined, and once I get a lot better someone will be able to dig through these old posts and relate to all the newbie mistakes.

At some point soon, I'll start posting actual entry/exit points and profits/losses, but for now I will just describe things.

The Fed comes out swinging!

2008-12-16T17:56:00.000-08:00

The Fed came out swinging today. The the market reaction was positive. Well at least on the 5 and 15 minute charts! I was watching the 1 min charts and there were 3 sharp moves: up, down, and then up into the close. I bought some calls on the initial reaction, held through the down reaction (stomach churning), and ended up holding overnight. My intention is to sell in the morning on strength, or put a stop underneath any initial strength. I don't have any illusions this rally will last, but who knows. For all I know we could open down lower, and my decision to do an ONH (overnight hold) could be a bad one. From experience I've learned that if I am wrong, I'll need to sell quickly at the open before losses pile up.

The calls I bought were in AAPL, GOOG, and QQQQ. Unfortunately for me, today AAPL wasn't acting as a proxy for the market. We'll see what happens tommorow.

Sitting on the Sidelines

2008-12-16T01:28:00.000-08:00

Sometimes it is good to sit on the sidelines and just see what happens. That's what I've been doing lately. The market seems to be treading water, stuck in a range. Sometimes the smartest move is to actively...do nothing. Ive decided this is better than getting chopped up in the volatility.

Tommorow the Fed will most likely lower interest rates, despite the consensus that it is useless. Foreign investors holding a lot of treasury bills will get upset because they will soon earn negative interest. Banks will of course refuse to lower loans, instead using the rate cut to hoard cash and nurse their balance (and off-balance) sheets. And my personal mortgage and car loan rate will remain unchanged, preventing me from gaining any money back which I could spend on the economy. Oh well.. another day, another locked-up financial system...

The Automaker bailout is wrong!

2008-12-09T21:30:00.000-08:00

Today's post has nothing to do with trading stocks, but it is important. A number of these big-picture issues came up at our last Wallstreak meeting.

It looks like some form of automaker bailout is getting closer. Even worse, the CEO's and management who made poor decisions at the top will keep their jobs. The government will throw bad money after good, and use taxpayer money to prop up companies that can't compete. The UAW will remain strong, and be around to vex the automakers in the future. Why not let the Big 3 and their crappy management die, but bail out individual workers by paying for extended unemployment benefits and job retraining costs. If the US government really wanted to invest in the future, it would fund startup companies like Tesla Motors (http://www.teslamotors.com/), which make electric cars, and was about to introduce a series of family sedans , that is, until the price of oil began to plummet. And on the topic of oil, frankly, I believe that oil is being manipulated artificially downward by the very same speculators who manipulated it upward earlier this year.

The more I learn about the economy, the stock market, and how things really work behind the scenes, the more cynical I become. In the end, the rich and powerful protect themselves by working the system, and by screwing over the Average Joe. Wall Street CEOs are still going to get multi-million dollar bonuses, after running major financial institutions into the ground, and lopping off 35-40% off of most people's retirement savings in the process. Dylan Rattigan on Fast Money gets this, and won't stop his rants -- Go Dylan! Also, for a good cynical /consipiracy website, see Gaming The Market (http://www.gamingthemarket.com/)

Live by the Sword, Die by the Sword

2008-12-02T17:58:00.000-08:00

Well I am realizing the pitfalls of being a "momo" guy. Volatility presents opportunity, but you need to have time to wait for the right opportunity, jump in quickly, and the get out. For me, I have a day job and so I don't always have control of when I can trade. That used to mean I would try to swingtrade only, but in this environment it is still to dangerous to swingtrade for the momo stocks (maybe for the sleeper stocks). My whole philosophy is to try to capture money using short term movements in volatile stocks, but these gains can easily turn into losses, or easily be wiped out by the morning gap, as I recently learned for the umpteenth time.

To give a real example, last Friday I bought a QQQQ call. The day went great, and everyone was predicting a nice gap up on Monday. So I kept the trade on. On Monday, the market did exactly the opposite: tanked especially into the close. I had to go to the gym 1 hour before the stock market close on Monday, so I loosened my stop to just below recent support, and I went away. Bad move. My loose stop got hit as the market reversed hard and tanked in the final hour. To make maters worse, we rallied today, so that if I had stayed in, I might have been OK.

Lessons learned: (1) If you loosen up your stop to make it below support, you better recalculate the amount you could lose (your risk) -- and if you don't like the results - JUST DON'T DO IT.

Also, (2) the first and last hour are very important. If you can't be there for the final hour, don't try to "set it and forget it" or just "hope for the best." Hope does not belong to any trading plan.

That's why I am retiring my old username on Wallstreak: HopeToGetRich (HTGR). Bye Bye HTGR!

OK well I am taking a break for a few days . I need time to collect myself. Luckily it was only a very small amount of money I lost, but mistakes are good if you learn from them.

A Daytrader's Dream?

2008-11-23T19:13:00.000-08:00

I hate how the media goes around saying that in the current environment, with so much volatility, it is a "daytraders dream." Perhaps it is, for a select few, who have years of experience and can capitalize on very short minute-by-minute moves. But unless you are one of those select few, it makes sense to either stay out of the market, daytrade only if you must (no overnight holds), and you'd better be watching each bar tick-for-tick.

A good example is this Friday. I was papertrading on Friday. At 11:01 I bought 1 SKF call, for $5,680, and 20 minutes later, I got out at $5,060. I lost $620 (plus commission) in a very short time. I did several things wrong in the heat of the moment and volatility: (1) forgot to enter an OCO order, or even set a stop, (2) didn't get out when I was down only $180, and (3) walked away in between on an errand. And it was only because of my prior losses that I determined to get out fast once I got out, or I could have lost a lot more. Of course if I had waited until the end of the day, I would have made out like a bandit. In hindsight I still feel I did the right thing by getting out and trying to preserve capital. But next time I day trade I'll need to watch the bars closely and be glued to my screen.

Blog Initiation and Momo Trading Philosophy

2008-11-19T21:47:00.000-08:00

Hi,

I am starting this blog officially. I've had this blog in mind for a while, and I've learned that it's better to make progress than to come up with something perfect. Let me start by mentioning some of my favorite momo stocks that I follow:

Tech Names: AAPL, GOOG, sometimes BIDU
Ag Names: POT
Financial Names: GS
Health Names: ISRG

All or of these stocks used to be $100 - $150 or higher, and are quite liquid. My strategy is to capture big moves in these stocks, usually through options, over the short term. It remains to be seen if these Momo's will be the same names that lead us out of the current downturn.