RamtaJogi— Hacking Life for Money and Fame.

Last week, I was extremely busy because of my day job and could not trade till today. Even then, every morning I would get up, watch the chat room and see if I could find a quick opportunity. As usual, there were great alerts in the chat room and people were making money, I wasn’t feeling comfortable playing any of these alerts. I don’t think I can do my DD quickly enough after the alert, and by the time I analyze the alert and read to enter my trade, opportunity is already gone. I don’t think I can trade unless I have my watch list prepared the day before.

I was very happy with my last winning trade with ABK where my observation about ABK losing pre-market gains turned out to be true. It made me realize why Muddy is a very successful trader. I have been watching ABK only for few weeks and I could identify potential move for a stock, someone like Muddy, who is trading for 40 years, can definitely spot the trend with multiple stocks with ease. I guess this is the reason he doesn’t even use intra day charts. [I couldn’t believe when Laura told me that Muddy doesn’t use intra day charts. Now I think it’s possible.]

After that trade, I remember reading somewhere about a guy who trades the same stock every day. I found that discussion on Stock Fetcher Forums. TRO, The Rumpled One, taught Chip how one can profit even if they decide to trade only one stock. I think this is a GREAT idea. If you watch only one stock, day in and day out, you can become very good at spotting the opportunities early and making money off it. As noted in that discussion, if you can only identify 5 cent move (either direction) and trade 1000 shares, you can make 50$ per round trip trade. Let’s say you spot 2 opportunities like that per day. That’s 100$ a day, 2000$ a month. I know, I know, it’s not possible that you will have trading opportunities everyday but if you are able to capture some big moves, some small moves, it’s possible to make decent amount of money.

I decided to try this strategy on ABK as it has good day range with great volume. On Monday, ABK was moving up and it crossed 2.5 mark. Went to 2.6 and pulled back. It did that couple of times. I entered an OCO order for 1000 shares of ABK. Entry: 2.55$, Profit Exit: 2.60$. Loss Exit: 2.39$. Well, as soon as I entered my order, it decided not to touch 2.6 again! It started dropping and touched 2.39$ and I booked a 160$ loss!

Analyzing the order, I think that my Reward/Risk ratio was pathetic. To make 50$, I was risking 160$. My reasoning was that with day rangers like ABK, sometimes there could be a quick dip and it’s important that one gives some ‘room’ for the trade to work out. But seeing how it panned out, for scalping, I need to be bit more tight with my stop losses. Even though, the strategy didn’t work this time, I am definitely going to try again. Also, I think ABK is a PERFECT stock to try this strategy as it shows a sinusoidal pattern every trading day.

Today morning, I was again watching chat room and I saw TIM Alert about HSNI. He shorted 1000 shares at 7.86. I quickly looked at the chart and it looked like a perfect short setup. Stock has been moving for 5 days on no news. I used my co-relation calculator and found that HSNI doesn’t really follow the market. I decided to enter the trade. I did not have the courage to short 1000 shares. I thought I would short 500 shares but ended up shorting 300 shares as I wasn’t that confident after my loss in ABK. I entered OCO order as following: 300 shares at 7.5, profit exit: 6.5$, loss exit: 8.11. Let me explain my reasoning behind these prices. HSNI had already hit HOD of 8.8 during the day, I thought that if it went about 8$, it could move fast and I may get squeezed. But I did not want to enter exact 8$ as my loss exit because sometimes a stock touches these levels only to go down. I felt that 8.11 is kind of price level which confirms that stock is seriously moving up. For Profit Exit, I just went for 1$ profit per share. Nothing particular.

Later, Tim again sent alert saying he covered HSNI at 7.37. I was like WTF? I have seen how IL Torello has made great profit by shorting stocks over multiple days. I think HSNI could show similar pattern and I did not exit. After HSNI went below 7$, I moved my stop order to 7.03$ (3 cent room just in case HSNI touches 7$ briefly.) to lock in my gains while still being in the trade to capture more profits. Unfortunately, during the last 15 minutes of trading, HSNI went above 7$ and my position was covered. Total Profit: 126$ after commissions. As of now, HSNI is again below 7$ and I am going to short it again if it goes red. I think HSNI will give away some more gains it accrued in the last 5 days.

HSNI was not a bad trade but I could have done much better. JeePee shorted 1000 HSNI shares and made over 750$! I don’t know why but I have a real problem trading more than 2000$ on any given trade. Hopefully as I learn to trade better, I will be able to place trade of bigger size.

So what’s up for tomorrow? Well, my 4 day breakout filter has come up with 50+ stocks! As it’s already past mid night, I don’t have time to go through all of them. I already have HSNI in my watch list. And I really like how DIN looks. If it goes red tomorrow, I will short it. Also, it gives me confidence that IL Torello is already shorting it and he has 100% success rate so far! So I will keep it simple and watch DIN and HSNI.

Update:

IL Torello pointed out SPAR. It looks very similar to DIN but good thing is that it has easy borrows on TOS. I will be watching that as well. I also updated my trading journal. I found that I got charged 30$ in commission on my ABK trade! Looks like TOS did not use the fixed pricing. Will check with TOS support tomorrow.

Good luck with your trading!
RJ.

Status as of end of Oct 30th:

Positions traded for Gain: HSNI (126$)

Positions traded for Loss: ABK (190$)

Open Positions:None