040111 Friday's Journal Entry: Hyper-scalping back to flat

Oops I had one of those "falling off the wagon" days again. After 2 weeks straight of solid trading positive days I lost discipline on Friday and took way too many choppy trades. I missed the real moves and my goal deviated from executing good trade setups to staying flat to up. Luckily I was able to get positive for the day but broke rules to get there. So while I am happy that I overcame a loss I am not happy how I got into a hole and then subsequently the method I turned to to climb my way out. Not only did I break discipline but I racked up a ton of commissions and fees over-trading.

One Bad Trade Breeds Another Bad Trade

1. SPY knife catch: When we saw that late day selling come into the market I was licking my chops ready to catch this knife. I waited for the selling to slow to start buying SPY 133.2 with increased tier size but I failed to wait for confirmation (tail wick, candle, being able to get above a certain price, volume change, etc...).  6 home-run swings and misses in less than 30 minutes. Every time I got stopped out I could feel my blood pressure rising and my myopia increasing. I was in the red zone and it's hard to remember exactly what was going through my head but I think I had 2 predominant thoughts. One was that we were "supposed" to fry the shorts into the close so this dip was a shake and we would soon rip to new highs or test that 1338 level. The second was that this was my golden trade ticket. So these 2 biases translated into "get in bigger get in bigger get in bigger" which ultimately resulted in a nice hole for the day.

2. AAPL pin/over-extended trade: Yeah I know there is something not right about AAPL lately: market is ripping and AAPL not participating. A BIG problem I have is that I will turn to AAPL when I need to make "fast" money and get a P&L booster shot. In the past I have traded AAPL Friday pin in a strong tape with pretty good success (probably north of 70% win rate) so you can understand why I turned to this beast to recuperate my P&L. The first set of AAPL trades were somewhat in line with my trading: AAPL had a nice tail wick off 343.3 and the SPY had just tail wicked off 132.80'ish confirmed by the tape. I thought there was a few points in this trade up to yesterday's high or at least a VWAP test. I was willing to give it about 30c to hopefully catch a 1.5+ move. Well AAPL couldn't get above 345 so I figured that this was where the weekly pin action would happen. I noticed that 344 was holding so I got long a few times as momo trades & hit out if the tape slowed. The second series of AAPL trades were penny scalps trying to exploit the push to that level with 20c stops to catch maybe 30-50c. That's not sticking to a 3/1 or 5/1 RR and is breaking discipline to get back my SPY losses. Even though this strategy worked I need to avoid this hyper-scalping/revenge trading situation in the future.

Morale of the story reinforcement: 

1. Breathe and take a step back when you see a sharp sell-off

2. Check multiple time-frames for real support and then confirmation 

3. Don't over-trade into the afternoon

4. Stick to good R/R setups

5. Don't focus on P&L it's about the setups stupid

All the red brackets in the table below are trades where I broke my discipline and trading plan:

Time	Symbol	Side	Market	TIF	Price
9:33:25	EBIX	BOT	INCA	DAY	24.04
9:37:12	EBIX	SLD	INCA	DAY	24.39
9:42:30	NYX	BOT	INCA	DAY	39.05
9:43:17	NYX	SLD	INCA	IOC	38.95
9:44:25	NYX	BOT	INCA	DAY	39.01
9:45:02	NYX	BOT	INCA	DAY	38.97
9:46:48	NYX	SLD	INCA	DAY	38.97
9:49:03	NYX	SLD	INCA	DAY	38.99
9:50:01	NYX	BOT	INCA	DAY	39.05
9:50:23	NYX	SLD	SDOT	DAY	38.98
9:57:56	LVS	BOT	INCA	DAY	44.03
9:58:25	LVS	SLD	INCA	IOC	44.08
9:58:52	LVS	SLD	INCA	IOC	44.05
10:01:01	LVS	BOT	INCA	DAY	44.07
10:02:06	LVS	SLD	INCA	DAY	44.17
10:06:53	LVS	SLD	SDOT	DAY	44.095
10:15:00	NYX	BOT	INCA	IOC	39.14
10:18:32	NYX	SLD	INCA	DAY	39.16
10:22:28	LVS	BOT	INCA	DAY	43.93
10:22:34	LVS	SLD	INCA	DAY	43.89
10:22:48	LVS	BOT	INCA	DAY	43.94
10:23:26	LVS	BOT	INCA	DAY	43.89
10:23:35	LVS	SLD	SDOT	DAY	43.82
10:25:41	NYX	BOT	INCA	DAY	39.24
10:26:47	NYX	BOT	INCA	DAY	39.2
10:29:34	NYX	SLD	INCA	DAY	39.3
10:31:48	NYX	SLD	SDOT	DAY	39.24
10:34:38	LVS	BOT	INCA	DAY	43.56
10:34:56	LVS	SLD	SDOT	DAY	43.41
10:36:04	LVS	BOT	INCA	DAY	43.43
10:36:58	LVS	SLD	INCA	DAY	43.49
10:39:49	LVS	SLD	SDOT	DAY	43.48
10:42:53	LVS	BOT	INCA	DAY	43.6
10:42:58	LVS	BOT	INCA	IOC	43.64
10:45:22	LVS	SLD	SDOT	DAY	43.54
10:47:59	FCX	BOT	INCA	DAY	54.62
11:05:37	X	BOT	INCA	DAY	53.48
11:15:17	X	SLD	INCA	DAY	53.5
11:16:06	FCX	SLD	INCA	DAY	55.09
14:48:42	SPY	BOT	INCA	DAY	133.22
14:49:17	SPY	BOT	INCA	IOC	133.19
14:53:37	SPY	SLD	SDOT	DAY	133.18
14:54:39	SPY	BOT	INCA	DAY	133.21
14:55:53	SPY	SLD	INCA	IOC	133.13
14:56:52	SPY	BOT	INCA	DAY	133.2
14:56:59	SPY	BOT	INCA	IOC	133.21
14:57:50	SPY	SLD	SDOT	DAY	133.11
14:58:45	WYNN	BOT	INCA	DAY	133.22
15:00:47	WYNN	SLD	SDOT	DAY	133.01
15:02:30	SPY	BOT	INCA	DAY	133.1
15:02:33	SPY	BOT	INCA	DAY	133.11
15:04:34	WYNN	BOT	INCA	DAY	133.07
15:04:43	WYNN	BOT	INCA	DAY	133.13
15:05:10	WYNN	SLD	SDOT	DAY	133.0848
15:06:18	WYNN	BOT	INCA	DAY	133.1
15:07:05	WYNN	BOT	INCA	DAY	133.2
15:10:18	WYNN	SLD	SDOT	DAY	132.91
15:12:24	SPY	BOT	INCA	IOC	133.07
15:12:31	SPY	SLD	SDOT	DAY	132.97
15:12:33	LVS	BOT	INCA	DAY	43.39
15:13:02	LVS	SLD	SDOT	DAY	43.29
15:14:56	AAPL	BOT	INCA	DAY	343.73
15:17:21	AAPL	SLD	INCA	IOC	344.3
15:17:27	AAPL	BOT	INCA	DAY	344.3
15:19:28	AAPL	SLD	SDOT	DAY	344.11
15:20:04	AAPL	BOT	INCA	DAY	344.13
15:21:39	AAPL	SLD	INCA	DAY	344.44
15:22:11	AAPL	SSD	INCA	DAY	344.44
15:22:18	AAPL	BOT	INCA	IOC	344.39
15:23:20	AAPL	BOT	INCA	DAY	344.06
15:23:38	AAPL	SLD	INCA	IOC	343.86
15:25:36	AAPL	BOT	INCA	DAY	343.92
15:26:02	AAPL	SLD	INCA	DAY	344.03
15:26:25	AAPL	BOT	INCA	DAY	344.09
15:26:37	AAPL	SLD	INCA	DAY	344.6
15:28:29	AMZN	BOT	INCA	DAY	179.56
15:29:50	AMZN	BOT	INCA	DAY	179.34
15:31:28	AMZN	SLD	INCA	DAY	179.7
15:31:42	AMZN	SLD	INCA	DAY	179.68
15:31:55	AMZN	BOT	INCA	DAY	179.81
15:32:06	AMZN	SLD	INCA	DAY	179.88
15:34:21	BIDU	BOT	INCA	DAY	138.41
15:34:58	BIDU	SLD	SDOT	DAY	138.15
15:36:55	AAPL	BOT	INCA	DAY	344.62
15:37:23	AAPL	BOT	INCA	DAY	344.5
15:40:37	AAPL	SLD	INCA	DAY	344.77
15:47:13	AAPL	SLD	SDOT	DAY	344.365
15:48:15	AAPL	BOT	INCA	DAY	344.38
15:49:08	AAPL	SLD	INCA	DAY	344.49
15:49:13	AAPL	BOT	INCA	DAY	344.44
15:51:31	AAPL	SLD	SDOT	DAY	344.21
15:53:27	AAPL	BOT	INCA	DAY	343.93
15:54:12	TSLA	BOT	INCA	DAY	26.63
15:54:52	TSLA	SLD	INCA	IOC	26.65
15:56:08	AAPL	SLD	INCA	DAY	343.94
15:56:40	AAPL	BOT	INCA	DAY	344
15:59:17	AAPL	SLD	INCA	DAY	344.31

Weekly Swing Watchlist 032811-040111

A Watching Monday's open may take a feeler right here right now with max pain stop at 42.69 and an upside target of 48 (3.05 RR)

AGCO Watching Ag's to see what they do. AGCO looks like one of the strongest in the sector. At that critical juncture

APKT Looking at April 72.5/75 bullish call vertical, probably take it off if it lost 64

CACC Looking at 70.50 trigger with a 1 pt stop or maybe even tighter if it lost 70. This would be a pure breakout trade. 

DKS Stalking... ideal trigger would probably be around a 39-39.5 hold w/ 1 pt stop trying to catch a 42.5 upper TL res target.

KEX 57.44 is the trigger with probably a tight 50¢ or less stop trying to catch a breakout. Target would be 60.

LULU Like a dip below 78 with a stop under 20MA (less than 2 pts). May look at calls, vertical call spread, etc.. like this setup & stock has treated me well in the past.

MGM Watch for continued casino strength. Probably focus on LVS & WYNN first but have my eye on this one for sector sympathy.

MCP Already in REE but watching

REE

SOHU BIDU's lil cousin setting up here. Think it has a good shot of going. My April 85/90 vertical spread already in the money. May try to trade common on a real move.

X Already have a feeler position like this base being hammered out looking for 60 as target. Probably take it off it lost the 5/8 MA's around 54.50. Would be a 50c loss. @gtotoy pick www.daytraderbootcamp.com

032611 EXPE: textbook gap fill breakout day trade pattern

HT @gtotoy for having called this one out @ www.daytraderbootcamp.com

EXPE was setting up on the daily for a possible gap fill pattern on a break above 22 with more than 2 points in it. 21.97 was the high from Thursday (previous day) but 22 looked like the logical level where buyers had alerts set and shorts were defending. As you can see from the 2 minute chart there were a serious of volume spikes before 11AM that signaled a serious push imminent. Once the stock pushed and held above 22 you can see the real volume pour in and stock rocket 25c (see green zone below).

In hindsight you could have risked 5c to catch 25c (the ideal 5:1 R/R ratio). In the moment I was not prepared to assess the R/R because I did not have an upside target. It's a bit foggy but I think my quick dirty in the moment R/R analysis was that there was 30-50c potential upside and I was only willing to risk 10c or hit out as soon as the 22 level failed max pain 21.97. Now doing the work I should have before I took the trade I can see the 25c-30c resistance which goes back to as early as September 2010. I was able to catch a little less than 20c in the initial up move. I bought more when the 10c level held and sold some more when 25c resistance held.

When the 10c support held again I added more to my core but this time did not sell above 25c since I had converted the rest of my position to a swing looking for a bigger move. If I were still day trading my position I definitely should have hit out when the 10c level failed or when my core was flat or at the very max when 22 failed to hold (see red zone below). My stop is now 20.8 which was never violated but judging from the breakout failure/sell-off into the close I'm expecting to mark this as a good day trade that will turn out to be a losing swing trade.

2 minute chart

Daily chart

Fate is forcing me to focus on trading

Fate is forcing me to focus on trading.

As soon as I heard the crack of my shoulder against a shallow sandbar I knew that I was going to be relegated to a less joyous restrictive lifestyle, at least for a while. Until that point I had never broken a bone or undergone any sort of injury so my first predictable reaction was denial. As a glass is half empty person I spent a week dwelling on the things I would not be able to do.  

Ironically my Great Aunt who broke her shoulder from a bad fall a few weeks earlier was being released from the hospital. So being unable to do anything but relax and heal (thank goodness trading is a minimal physical activity) I was volunteered by my family to move in and watch over my frail Aunt.

Seems like fate was using these 2 auspicious events to force me to recommit myself to trading. I no longer have any excuses for not devoting more time toward preparation, homework, review, reading, etc...  Not to say that I wasn't putting in enough time before but I had become a bit complacent and had lost my forward momentum. I was looking for inspiration to rededicate myself I now have it. 

Now that I'm on the cusp of middle age I am finding it is more difficult to "find" consistent sustainable inspiration. When I was a kid and throughout my 20's I had no issues with dedication and discipline (at least that's how I remember it). Today I often feel less grounded in my pursuits than I did in my early years. This could be a result of constant self-analysis, awareness, etc... always trying to gauge "where I'm at" so drowning down the noise is a crucial skill I've had to work on. The goal is to sustain a Kobe Bryant or Peyton Manning work ethic (whether this is over-glorified or not doesn't matter it's the dedication & drive).

Here is an inspirational example of Kobe Bryant who stayed around to practice his shot after the humiliating loss to Miami: 

http://network.yardbarker.com/nba/article_external/kobe_bryant_stays_in_heat_arena_after_loss_to_work_on_his_jump_shot/4364093

A piece on Peyton Manning's well respected work ethic:

http://magazine.stack.com/TheIssue/Article/4717/Peyton_Mannings_Training_Routine.aspx

Now I have this time period documented for posterity.

 

*My Orthopedic doctor actually took pics of the surgery but I'll spare everyone the horror show.

Out of Commission for a while...

Be back post-surgery & move:

Stocktwits TV: SMB Pearls of Wisdom

As pertains to day trading, Steve Spencer at SMB reminds us to have a flexible bias and patiently wait for levels:

In case you missed it.

You probably already follow @smbcapital but here's @sspencer_smb

03/03/11: Day Trading Review: A Few New Rules

2 days ago I added a few new rules to my list:

2 Don'ts

1. Don't buy in the first 15 minutes *with the exception of opening drive setups. This rule is a no-brainer for the SMB trained but when you're from the school of erudite hard knocks like myself you need to burn yourself repeatedly (defining insanity/stupidity) before you adapt. A good example is ZAGG today which I bought at the open around 8.07 ask me why? Because the P/M tape looked strong and there were buyers not willing to drop the 80c level.  See that circle below that's me getting ripped. Getting stopped out around 7.8. Ouch almost a 30c loss on a $8 stock. Reviewing my trades for the past few weeks I keep getting caught being over-anxious. *On a side note that loss made me cautious to re-enter ZAGG when it hit the VWAP & upper TL around 11AM which in hindsight cost me about 40c.

2. Don't try to actively swing & day trade. I learned this valuable lesson during this most recent pullback (the one that preceded today's rally remember that one? Probably not after today's HUGE reversal) when I get clobbered holding too many longs & being too heavy. Watching my swings just sink deeper into the red was shell-shocking and threw my game way off. I began to blur the 2 styles hitting day trades with weight & then turning them into swings so I could rationalize holding them beyond my stops. Hello? "Losing"

2 Do's

1. Wait for triggers off key levels & confirmation & avoid "No Man's Land" trades. Because I'm a little hyper-active (blame my parents for giving me too much sugar as a child so my Pediatrician had to restrict my diet as a child) I tend to want to trade all day long. Patience is something I often struggle with especially when I'm in a hole and I engage in revenge trading. So now I make sure to identify "no man's land" where just because something looks set up if it's not near an intraday or long-term level then I need to set an alert and wait for the trigger. I need to review Mike Bellafiore's reasons to buy in his "One Good Trade" if I could remember where I packed it when I moved.

2.   Stay consistent with tier size. One pattern I've noticed is that when I'm doing well I tend to decrease my tier size because I don't want to give up my gains and yet when I'm down I am more apt to increase my size to erase losses. Hello? "Losing". Take for instance this most recent spanking when I went heavy and dug a nice .05% P&L loss for the year now I know that sting will inhibit me psychologically and as a result I'll use less size for fear of blowing up. Because I've identified this pattern I can deal with it and not shy away from adjusting my tier size. 

To end this on a positive note. Here's 1 trade that I managed well but given today's incredible rally can't give myself too much credit. DLB had some news about providing an audio accessory for AAPL's iPad 2.