Lost another 100$ today.
This confirms to me that the 700$ I made with DRYS was pure luck. It wasn’t because I was a smart trader.
Anyway, Micheal aka Reaper is writing a series on ‘You Want to Be a Trader?’ and in his most recent post he talks about having a trading plan and discipline to follow it. After reading that post, I realized that I don’t really have a trading plan. None. Nothing. I get up in the morning, see the pre activity and trade what I feel about certain stocks. No planning about entry, exit, stop losses, nothing.
I think I am going to go back to my earlier method where I prepare my nightly watch list along with my thoughts and ideas about particular stocks. I think I should focus on only those stocks which I have studied carefully so that I can make better decisions about entry/exit. As I have read somewhere, ‘Plan the trade, trade the plan’.
RJ
Status as of end of Feb 10th:
Positions closed for Gain: ARNA (68$), MMPI (26$)
Positions closed for Loss: BKUNA (-189$)
Open Positions: None
Well, after two GREEN days, finally a RED day for me. Lost total of 520$ today. Here’s what happened:
1. BAC – I entered in BAC few minutes after the market opened. BAC was fluctuating by 20 cents every passing minute, got scared. Did 3 trades and lost 80$ in total. I think I handled it reasonably well minimizing my losses.
2. DRYS – Shorted DRYS (1000 shares at 6.8$) at around 10:18 and was waiting patiently for it to crack up. It moved up till 6.9 and was bouncing off 6.80 repeatedly, so I closed my position on 6.8 in late afternoon. Just after 20 minutes of closing my position, DRYS tanked to 6.3! 
Total loss: 10$ of commissions.
3. C – My biggest blunder. Looking at how I screwed up BAC trade multiple times, I thought I would trade C. Seeing how BAC was moving up, I thought C will move up as well and bought 2000 shares at 4.08. Well, high of the day was 4.10 and then C was bouncing between 4.05 and 4.00.
As market close was approaching, I was wondering what to do with my C position. Generally, I am strictly against o/n hold but as I was down by almost 160$ and stimulus bill coming out tomorrow, I thought may be it’s worth holding C o/n. When C dipped below 4$ near market close, I bought 1000 more shares at 3.95$ bringing my average price down to 4.04.
I was watching aftermarket action closely and found CNBC news that there is no ‘bad bank’ plan in rescue package. C started drifting down in aftermarket and so did BAC. I closed my position at 3.91$ with total loss of 430$ inclusing commissions. Ouch.
Well, this is it. No more overnight holds for me. No more plays based on anticipation of news. I will either play the actual news or price/volume action.
Overall, I feel that I managed my BAC and DRYS well but screwed up my C trade completely. Since last two trading days, I was flying in the air and C brought me down to the earth (for my own good). As I wrote in the title of this post, trading makes sure that you stay humble.
Status as of end of Feb 9th:
Positions closed for Gain: None
Positions closed for Loss: C (-430$), BAC (-80$), DRYS (-10$)
Open Positions: None
Market was ripping today surging higher as if there is no tomorrow.
I was up by almost 1000$ for the day, turned it into 245$ profit.
What’s the lesson? Don’t try to short stocks when market is up by 200 points.
I will put up more details with chart as soon as I can log in to TWS.
Have a nice weekend.
RJ
No, I didn’t disappear after my last post. Once again, I had few personal things to sort out and I couldn’t trade. Additionally, I transferred money in IB to go past the 25,000$ mark and it was kept on a 4 day hold. [Can someone at IB explain to me why do you to keep the money on hold?]
Today was the first day I could trade without PDT restrictions and here’s what I did.
I got up early at 7 and was studying charts for dayrangers as well as potential short watches posted on InvestorsUnderground. At 8, started watching pre-market action to decide on what to trade. DRYS crashed by almost a dollar in pre-market and started moving up again. I kept it on my watch list. There were quite a few other stocks moving in pre but I could only play DRYS.
As soon as the market opened, DRYS tanked and I shorted 1000 shares 6.81. When it reached 6.70, I realized that I had 100$ profit, so I covered my position for 90$ profit after commissions. Looking at the chart and action on Level II, I decided to short again. This time I shorted 2000 shares at 6.60. I feared that may be I did mistake by shorting again, so I closed at 6.55 for another 80$ profit after commissions. After watching DRYS price action, I figured that it was a mistake that I covered. So I shorted 2000 shares at 6.55 again. This time, I covered only 1000 shares at 6.50 to lock in some profit. As I had to leave for work, I covered remaining 1000 at 6.30 (20 cents a share)! Total Profit So far: 400$. 
When I shorted DRYS at 6.55 and I was waiting, I saw BAC moving up after touching 52 week low. I decided to go LONG 1000 shares at 4.25. Covered at 4.35 for nice 90$ profit. I had no choice but to cover because it was time to leave for work and I didn’t want to leave my position un-attended.
At work, I was watching DRYS and I saw that it is hitting solid resistance at 6.60. I shorted another 1000 shares at 6.60. Covered 500 at 6.50, another 500 at 6.47.
Later during the day, I again shorted 1000 shares at 6.50, covering 500 at 6.40 and other 500 at 6.35.
I know, I know, you are bored by now but I couldn’t believe how easy it was. DRYS was bouncing between 10 cent range (6.60 to 6.50, 6.50 to 6.40) and I kept shorting it and printing my 100$ bills.
Yes, it was not that I didn’t do any mistake. I got carried away by my DRYS success and I shorted BAC at 4.75 (resistance during the day) and BAC moved up and I covered at 4.87 for 65$ loss. After that, I left BAC alone.
Overall, a fantastic trading day for me. I made total of 696$ after commissions! That’s more than all the profit I have made since I started trading in October.
The lessons learned:
1. PDT Sucks. It forces your mind to worry about things which don’t really matter. Trading with PDT Rule is like competing with other Olympic champions in 100m sprint with your feet tied up!
2. Interactive Brokers ROCKS. They are extremely cheap, I did total of 19 trades and paid 90$ in commissions. That’s less than 5$ per trade. Not only that, they have great borrows so that you can play in either direction without worrying.
3. InvestorsUnderground is an extremely valuable service. I signed up during the initial phase and it costs me 39$/month. For 39$ a month, you get to talk one on one with Muddy and other pro traders and pick their brain. Not only that, you get to learn about potential movers. ‘GS’ from IU has been sharing his knowledge about DRYS and how it is doomed and it might go bankrupt soon. He has been short DRYS from 80$. Thanks to this knowledge, I was extremely confident about shorting DRYS. Thank you GS, I owe you a beer buddy. Also, when you are just getting started in trading, you are not sure about whether to enter a trade or not. At this phase, a confirmation from Muddy and other pro-traders can really help you gain the confidence. Also, the owner InvestorsLive (dude, I hate calling you by the name IL, can we have your real name please?) is very diligent in updating pre hits, stocks from various scans etc. so you save all that time and can concentrate on trading. If you are serious about trading, signing up for Investors Underground is a no brainer.
Trade Well,
RJ.
Status as of end of Feb 5th:
Positions closed for Gain: DRYS (681$), BAC (15$)
Positions closed for Loss: None
Open Positions: None
I don’t know who reads my blog these days but if you do read, you may have noticed I did not put up a watch list before the trading session. As I wrote yesterday, Muddy thinks that pre market gainers/losers are the best stocks for that particular day and beats the pants off any other watch list.
So instead of staying up in the night preparing watch list, I decided to get up early and was watching pre-market action from 8AM. There were lot of stocks moving up/down based on drug news or earnings news. I decided to play the drug news stocks and set my mind on POZN and ANPI.
As soon as the market opened, I went LONG on ANPI. Because I didn’t want to miss the upswing, instead of doing LIMIT order, I placed a market order. So while Muddy got in at 0.44, I got filled for 5000 shares at 0.491. Once I entered the trade, I got nervous and I wasn’t sure if it would go much higher. I got out at 0.52, making 117$ after comissions. Not bad.
Because I was hasty about trading ANPI, I entered bit late on POZN at 8$. It dropped momentarily and I thought may be it won’t go higher than 8$ and I was afraid that I bought it at peak. I got out at 8.08 making 14$ after commissions. POZN did manage to touch HOD of 8.39$.
From today’s experience, I definitely feel that one can play right at the open. To do that, I must learn to use Trader Workstation effectively. I should have my orders all setup before the market open and should just hit one button to open any position. I am going to investigate in to how I can make my order entry more effective.
Finally, I traded FAZ. When FAZ was rising in the morning, I went long at 45.10$. Well, that was the peak and FAZ started tanking after that peak. It went as low as 42$ and then back to 45$. It went down and touched 45$ again. I thought may be it won’t break past 45$ mark, so I got out at my original entry price of 45.10$, losing 10$ in commission. FAZ went on to hit 47.58, closing just under 47$! Well, I couldn’t have figured that out while I was at job, so I am not too upset about this trade.
All in all, I felt that pre-list is all you need to trade these days when market is showing extreme volatility. Anyway, I will still try to study charts and post my watches. I think one of Muddy’s advantages is that he has studied thousands of charts which gives him the edge when it comes to trading a fast moving stock.
Right now, my money is on hold at IB, so won’t be able to trade till Tuesday. I will be puttig up my watches for next week over the weekend.
Trade Well,
RJ.
Status as of end of Jan 29th:
Positions closed for Gain: ANPI (117$), POZN (14$)
Positions closed for Loss: FAZ (-10$)
Open Positions: None
