Well, today is my 4th trading day and I think I screwed up COMPLETELY.
I was holding two stocks from last time.
CSK – Not much movement. Opened at .20 closed at 0.15 Down by 16$.
ABK – Here’s where I screwed up bigtime. My entry price is 3.68. ABK was hovering around 3$ with good support. I think if it keeps hovering around 3$, there is chance it will move up. Anyway, it broke the 3$ support mark and closed at 2.61! 27% down from my entry price! My mistake was that I did not decide upon a STOP order for ABK. I think a stop order of 2.98$, would have been a good idea.
I am really not sure what to do next with ABK. As of now, I am down by 270$. As I mentioned earlier, shorts will be back in the game from tomorrow and everyone knows what will happen to financial stocks once shorting is allowed again. On a side note, when shorting was allowed, ABK went as low as 1.04$ in July, only to rally up to 10$ in September. [I guess my mind is playing the game with me. It doesn't want me to get out of the stock and hence these 'rationalizations']. Well, I am going to watch ABK tomorrow. If it rallies up and at least gets close to my entry price, I will take a small loss and get out.
Next, I saw alert for ROYL in chat. It was moving up based on some news and it was testing 4$ levels. I thought it would be a good idea to enter at 4$ mark. So I entered LIMIT order to to buy 100 shares at 4.03$ Or so I thought. I had actually entered 4.30$ and what would you know, my order got filled at ROYL hit high of 4.38$ and then started tanking closing at 3.57$. Well, I don’t think ROYL will touch 4.3 anytime soon and I will have to take loss tomorrow.
Finally, I was watching SFI. SFI was trying hard to break 2$ resistance at good volume. I thought that if it breaks, I could make 10% or so. So I bought 450 SFI @ 1.99$. It did break 2$, went up to 2.10, couldn’t retain and tanked down HARD closing at 1.55$. Mistake on this trade, I didn’t get out when it was at 2.10. Currently, I am down by 174$ on this.
Overall, I am down by almost 550$ on my account. 
What am I doing wrong? I think here are my problems.
1. Not having a plan. I think this is my biggest problem. If I look back at the past 4 trading days, I have realized that I have entered trade without having a solid exit plan. The noob trader has outlined a simple plan in this post and I think I need to come up with something similar before I make another trade. Actually, if I think about it bit more, I have exit plan set for profit scenarios but not for loss scenarios. How should I fix this? I think I am going to use OCO order on TOS. OCO stands for One Cancels Other. So when I enter a trade, I would also enter two exit prices [one for profit, one for loss], whenever those prices are reached, my trade will be automatically closed by TOS. I think this will force me to trade as per plan. It might limit the profits but heck, limiting loss is much more important than limiting profit!
2. I am thinking way too much about my remaining day trades. If it was not for counting remaining day trades, I could have got out of ROYL and cut my losses. Somehow, saving a day trade is more important to me than saving my hard earned money. [Is it because I read too much of 'Welcome to Gutter'? 
] Either I need to get 25k in my account (by hook or crook) to get rid of this stupid limitation OR be ready for inability to trade but use day trade to cut my losses.
3. Not paying attention to the market. I can trade only from 9.30 till 11. At 11, I have to leave for work. This is the reason I could not watch that ABK broke the support level of 3$. Again, this could have been avoided by having stop order in the first place but overall, keeping a close eye on my holdings is important. I need to find some mechanism.
4. Not being able to short. For some reason, whenever I am looking at a play, I look it as LONG, not as a potential short. I don’t know if I am missing a part of the brain which can see short opportunity. So far, all my plays have been LONG and in this bear market when DOW is below 10,000, it’s not productive that I am not able to take short position. I need to take help from someone on this.
So what’s the plan for tomorrow? I will only watch my holdings and see if I can get out while minimizing my losses. Wish me luck.
RJ.
Status as of Oct 7th:
Positions Traded For Gain: None
Positions Traded for Loss: None
Open positions: ABK (LONG 500 @ 4.10$), SFI (LONG 450 at 1.99$), ROYL (LONG 100 @ 4.38$), CSK (LONG 200 @ 0.23)
4 responses so far ↓
1 matty84 // Oct 8, 2008 at 9:33 pm
Hey Ramti,
I can’t lie, I’m worried about you and your account to the point of bossing you around! Being a beginner, too, I have no business in telling others what to do, BUT…you have unrealized losses of 24%, 32%, 35%, and one at a 49% loss!!!
1. You need a set price at which you will exit, and you have to know what that price is literally the moment your broker flashes your fill price on your screen. You can not fudge the numbers, you have to get out after whatever it may be. On longs (different on longer term shorts a bit) try 3-5%. If there’s a key support point at, say, 6%, sure, use that, but don’t get tempted to go further down.
2. Take the stop price you found in step 1 and plug it into a stop order. Period. If it’s an illiquid stock or something with a bad spread, maybe look into stop limit orders if you’re not sure you’ll do it yourself when the time comes.
3. Never hold losses with the idea that they will probably come back and make you a profit.
Basically you should’ve been out of those trades a long time ago.
Also note that a lot of people in GOTS are day trading, and unless you have a giant account and are very experienced, there’s not a very big reward probability versus the risk in holding these things for days at a time. The reason Muddy finds high dayrangers is because they move a lot intraday, and the need to hold overnight is thus eliminated. He looks for stocks that move in one day what others do in months, one day is good enough! It may also be a good play the next day, but it depends on the price action.
I see you outlined some things you think you can do better to avoid this stuff in the future…that is great! I know how you feel about the PDT rule, it’s the toughest thing, it’s really getting to me, too.
Please be careful!!
2 YngvaiMalmsteve // Oct 9, 2008 at 12:47 am
RJ,
I concur with Matty. The most important thing for you to do is to take your losses more quickly. Don’t worry about the day-trades. Your capital is more important than day-trades.
While I had the problem of sometimes taking losses too quickly, you’re better off doing that than letting your losses get large.
I’m not sure how much capital you’re working with, but if you’ve got $7-$8K or more, try splitting into two different accounts so you get more day trades. That way you won’t be so scared to get out of a trade quickly.
Also, study intraday charts. Look at how these stocks move intra-day. Check out the 10/60 crosses that some of us talk about; those can make for good entry and exit signals. Also, try keeping your trades around round dollar marks…those tend to form natural levels of support and resistance.
Also, try getting more picky about the stocks you enter. You have 4 different positions right now which is too many for someone with a small account. I never have more than 1-2 positions open at one time…and it’s usually only 1.
3 YngvaiMalmsteve // Oct 9, 2008 at 11:16 pm
RJ I hope you got out of some of your positions after what happened today
4 Finally. Turning My Account Green. - RamtaJogi // Nov 15, 2008 at 3:24 am
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