Friday 26 August

I did well early in AAPL, likely due to the respect I afforded it. It is spready but I (perhaps erroneously) think I have a feel for it. I gave back my gains and them some.

I played SPY horribly, my bias was off and I got cut up.

TIF acted well and I saved my session with it. I got in and out and at good times and I felt it traded cleanly.

OVTI didn’t behave like I wanted it to (straight down) but I realised what kind of price action it was having and got lucky that the range held for as long as I played it (and not much longer).
Buy 100 AAPL @375.69 Sell 100 AAPL @376.07
Buy 100 AAPL @378.09 Sell 100 AAPL @377.99
Buy 100 AAPL @379.35 Sell 100 AAPL @379.71
Sell 100 AAPL @378.96 Buy 200 AAPL @379.16 Sell 379.29
Buy 100 AAPL @379.33 Sell 100 AAPL @378.96
Sell 100 AAPL @379.76 Buy 200 AAPL @380.33 Sell 100 AAPL @380.83
Buy 100 AAPL @381.11 Sell 100 AAPL @380.91
Buy 100 AAPL @381.24 Sell 200 AAPL @380.90 Buy 100 AAPL @380.83
Buy 100 AAPL @381.20 Sell 200 AAPL @380.69 Buy 100 AAPL @380.51
Buy 100 AAPL @381.37  Sell 100 AAPL @381.55
= -74
Sell 100 OVTI @17.45 Sell 100 OVTI @17.02 Buy 100 OVTI @17.03
Sell 100 OVTI @17.18 Buy 100 OVTI @17.05 Buy 100 OVTI @17.00
Sell 100 OVTI @17.16 Buy 100 OVTI @17.02
= 63

Sell 200 SPY @114.37 Buy 100 SPY @114.72
Buy 200 SPY @114.49 Sell 100 SPY @114.25
Sell 200 SPY @113.97 Buy 400 SPY @114.28
Sell 100 SPY @114.49 Sell 100 SPY @114.38
Buy 200 SPY @114.67 Sell 400 SPY @114.49
Buy 400 SPY @114.72 Sell 200 SPY @114.91
Buy 200 SPY @114.96 Sell 400 SPY @114.99
Buy 400 SPY @115.32 Sell 100 SPY @115.45
Sell 100 SPY @115.69 Buy 200 SPY @116.04
Sell 400 SPY @115.88 Buy 100 SPY @115.76
Sell 100 SPY @115.50 Buy 200 SPY @115.69
Buy 200 SPY @115.57 Sell 100 SPY @115.78
Sell 100 SPY @115.92 Buy 100 SPY @117.03
Sell 100 SPY @116.87 Buy 100 SPY @117.38 Sell 100 SPY @117.22
= -188

Buy 100 TIF @66.52 Buy 100 TIF @67.05
Sell 100 TIF @67.20 Sell 100 TIF @66.86
Buy 100 TIF @66.14 Sell 100 TIF 66.93
Buy 200 TIF @67.45 Sell 200 TIF 67.91
= 212

profit = 13

 

I definitely overtraded today, especially on SPY. I am learning how to treat SPY, sometimes I think I treat it as its own beast and not the index ETF it is. Risk management was a little poor but in the past I have not given trades the room they need to run. I was lucky to end up in the black.

Wednesday 24 August and Thursday 25 August

Wednesday

I picked a good level in SPY to get long at but then chopped myself up trying to buy a pullback that was a reversal. I failed to capitalize, I need to pay more attention to what time of day it is, mostly on the open.

Buy 100 SPY @116.80 Buy 100 SPY @117.51
Sell 100 SPY @117.43 @117.41
Buy 100 SPY @117.23 Sell 200 SPY @116.98
Buy 100 SPY @116.93 = 23

Gold came flying down so I got into it but the rejection from 171.82 was even faster, the bid ask spread widened  under 172 and it shot straight up. When it did it again I bought but then realised the freight train I was standing in front of and got out, which was not good because it destroys the risk reward ratio.

Sell 100 GLD @174.59 Buy 100 GLD @173.02
Buy 100 GLD @171.68 Sell 100 GLD @171.93 = 178

Profit = 201

Thursday

AAPL had a very strong opening drive and I tried to get in as it broke 370, I got in at 371.56 (seriously), it has some trouble at the 372.50 area so when it got to 373 I got out. I got one of few fills above 373, at 373.04 and the stock dropped four points. I knew I was stepping in the fire before I got in and acted appropriately. Obviously there was a lot of panic about Steve Jobs leaving but I already knew before gman said the play was to get long because the reaction after the downmove ghoul trade was to get long because Apple is just so dominant and Jobs is leaving on strength, unlike most CEOs who have to be pushed out of the plan with a golden parachute.

SPY
SPY came down from 118.50  to 117.70 and started to go back up, I felt 118 would be tested but wouldn’t hold in the SPY because of the market weakness I saw, especially since BAC (and XLF) started to come back down after a strong drive, so I scaled in short at 117.88, 117.98 and 117.08. While I was putting on more risk than I usually do I felt this was a good setup and that if I was going to buy at x.88 to make sure I got some before the run down I should sell at some better prices if the opportunity arrived. I was going to exit 2/3 of the position at 118.16 and the last 100 at 118.30. I got nervous with the price action and sold out 2/3 at 117.95 and a minute later it made the move down. I feared resistance at 117.50 and took off the remainder at 117.54. I got short 1 lot at 117.32 and sold out on the low of the wick at 117.04. I was very dissapointed with myself for this trade, I took on the risk and then didn’t hold for the gains. The play was to get to 117 flat and I wussed out, plain and simple. You can’t wuss out because when this play goes against you it will be cost more than you make if you pike.

I was looking for RIMM to magnet to 30 and bought in front of 28.50, what that broke I got out quickly (for once), short would have been the play but I wanted to get short nearer 30, maybe we will see that tomorrow.

Gold was similar, it had a big selloff the days prior and while I wanted to get in at 166.50 I wanted to see some strength, 167.50 didn’t look like that strong a level to me initally so I got out and watched it for a while, it tried to move back to 167.40 and 167.30 but the buyers arrived so I got back in at 167.64, wanted to get some more at 167.55 but didn’t get hit. The plan was to hold until 170 and  take it off when it approached the level and get back in above. It only got as high as 169.64 before moving lower, I got out at 169.21 and it struggled around the 169 area. Was tempted to get in just under 169 but my internet dropped out 3 times and I felt that this was not a session to be disconnected for 20mins, since I had made some decent gains I ended my night on that. GLD ran up into the 172 area later in the day. It truly trades like nothing else on the tape.

Buy 100 AAPL @ 371.55 Sell 100 AAPL @373.04 = 147

Buy 100 GLD @167.55 Sell 100 GLD @167.73
Buy 100 GLD @167.64 Sell 100 GLD @168.21 = 172

Sell 200 SPY @117.96 Buy 200 SPY @118.14
Sell 100 SPY @117.49 Buy 100 SPY @117.64
Sell100 SPY @117.88 @117.98 @118.08
Buy 200 SPY @117.95 Buy 100 SPY @117.54
Sell 100 SPY @117.32 Buy 100 SPY @117.04 = 16

Buy 100 RIMM @28.64 @28.55 Sell 200 RIMM @28.45 = -32

Profit = 303

I am now positive in the US market, even including data fees and positive 7 out of 8 of the last days. This is very pleasing, but I am aware that this is a small sample size and that I am by no means consistently profitable yet. I do feel like I now make better decisions and feel more comfortable and confident. I am aware that being overconfident after success is weakness that the market will surely exploit and am careful to guard against this.

Tuesday 23 August

I didn’t trade Monday due to an early morning meeting.

Tuesday I got into MPEL (Aussie Aussie Aussie oi oi oi) at 13.42 when it moved above 13.40. It went up ten cents and then back into the mid thirties, when it started to hold below x.40 I put in an offer to get out but was too greedy and hit out when it broke to 13.20, at 13.18. I should have paid more attention to the price action, it is important to define your risk but also to get out before the mental stop if your opinion changes.

112.50 was support for SPY, I got in at 12.75, willing to risk 0.30 and put in a bid for another lot at 112.55, it got to 112.57 and I should have gotten in again in the mid sixties. Took a few small scalps above 113 and tried to do another when it got above 114.30.  Sold out of the main lot at 113.94 but should have stayed in. Was very tired from a long day so ended it early, a pity as SPY got into the mid 116 area which would have been a very good result, but I was never going to last that long and I don’t like to put in orders and leave the screen.

PANL was good for a fade but I was looking for a momo move above 45.

I was waiting for GS to get below 105 and it didn’t happen until later in the session, down to 103.50 and back up, would have been good for a point plus.

FMCN opened just under 30 and was good for a fade but I was watching MPEL.

Buy 200 MPEL @13.42 Sell 200 MPEL @13.18 = -50

Buy 100 SPY @112.75
Buy 100 SPY @113.06 Sell 100 SPY @113.15
Buy 100 SPY @113.55 Sell 100 SPY @113.64
Sell 100 SPY @113.94
Buy 100 SPY @114.28 Sell 100 SPY @114.01 = 100

Profit = 50

The rich hedge fund types turned on Buffet after his NYT piece, dissapointing. Koch’s reply is similar to something the Goanna we once said, and it’s wrong because most “charity” is just as ineffecient as government, if not worse due to duplication of admin and is self agrandising. Gates et al are an exception, comparable to some of Rockerfeller’s early philathropy (I don’t know that much about what the foundations did later on, but since they lasted a long time I assume they are wracked by agency problems).

I am uncomfortable with the outright glee the investing/trading community has with respect to Paulson’s losses, it is jealousy plain and simple. Everyone knows he is into making big bets. I personally think he should have returned the extra funds raised to specifically bet on CDOs etc, as running tens of billions is a whole different kettle of fish from single bills and requires a different skill set. That said, who can blame someone for wanting the 2/20 on that kind of money. Even Stevie Cohen doesn’t personally manage over a billion (if we are to believe what we read).

It is amusing that Paulson has most(?) of his money in the gold denominated fund and the BBs sell access to the other ones. The futures of the IBs is bleak, but they have always bounced back. It’s got to suck if you worked 20 years to become a partner and end up in this mess – that said, they get paid too much to hire lawyers and make up projections. I think there is an opportunity to provide the same services much cheaper, albeit with less fat for those at the top to collect.

Yes hedge funds are concerntration funds, but to act like you think it’s a misnomer is to pretend you don’t understand the evolution. It will be interesting to see if 2/20 gets reduced, I’ll definitely manage your billion dollars for 1/15.

It’s a pretty good time to be a retail daytrader. It’s a horrible time to be an investor, oh look a bargain, oh look I’m down 10%

Friday 19 August

13.00 looked like a level in MRVL  on the level 2 so when it got above I got long, it failed and I got out. Later MRVL looked like it wasn’t going anywhere on the tape so I got short in front of the resistance of 13.20, it made a new high at 13.21 so I flipped my bias and got long there. It took a little while but eventually made the move up and tested 13.50. I took off half at 13.45 and then the rest at 13.30 when I felt the move had failed, lod 12.56. I didn’t want to get short at any point because it beat earnings.

Jesse Livermore talks about magnet points, stocks inevitably getting to big whole numbers due to market psychology. I felt SINA would get to 100 because of this and while I didn’t want to play the move the 100 because it is a spready stock that is recommended for experienced traders something else Livermore talks about is if a stock move through certain points (100 being the one in most of his examples) it is likely to move to 110. So when SINA got above 100 and held a bid I got in, it failed at 100.50 and I took a 0.40 rip. My profit target was $1.50 as I thought my risk was more like 0.30 but I realise now that I should have assessed it at 0.50 or so and my target should have been $2-$2.50, and SINA could have run even further. The reversal from 100 would have been a good play but it wasn’t in my plan so I didn’t get in. While I lost money on this trade, I felt it was one of the better ones I’ve made because I  had defined risk and reward and a clear plan. I like the level and if it is breached on higher volume I will be in it next time.

I traded alot of SPY today, more off of the chart than the tape. I felt uncomfortable today and was taking too many small gains and got whipsawed alot, especially around the 115 area. I did make an adjustment later in the session and gave my trades more room to move but again took the money off of the table too early. I didn’t have this problem at poker, I was always out for the big score, and that’s how both games should be played. I ended up in SPY by the end of the day but probably more due to luck than good trading.

BOT    100    SPY   114.04   SLD    100    SPY   113.85
BOT    100    SPY   113.55   SLD    100    SPY   113.80
SLD    100    SPY   113.93   BOT    200    SPY  114.01
SLD    100    SPY   114.42
BOT    100    SPY   114.26   SLD    100    SPY   114.42
BOT    100    SPY   114.54   SLD    100    SPY   114.48
BOT    200    SPY  115.04   SLD    200    SPY  114.91
BOT    200    SPY  115.31    SLD    100    SPY   115.44
SLD   100    SPY   115.86
BOT    100    SPY   115.09   SLD    200    SPY   114.96
BOT   100    SPY   115.01
SLD    100    SPY   114.97   BOT    200    SPY   115.11
SLD   100    SPY    114.87
SLD    200    SPY   115.07  BOT    100    SPY   114.8799
BOT    100    SPY    114.84
SLD    100    SPY    114.59  BOT    100    SPY    114.38   = 71

Buy 200 MRVL @13.03 Sell 200 MRVL @12.96
Sell 200 MRVL @13.18 Buy 400 MRVL @13.21
Sell 100 MRVL @13.45 Sell 100 MRVL @13.30   = 6

Buy 100 SINA @100.30 Sell 100 SINA @99.89   =-43

profit = 44

Thursday 18 August

The best thing about today is that I learned from BSCI yesterday and executed my gameplan well on JDSU. After a few minutes of quick movement on the open JDSU looked liked it had calmed down a bit, I tried to offer in at 11.46 but it fell into the 30s, I didn’t want to let it start going down without me so I got short with minimum size at 11.34 and then again at 11.43. The high on the open was 11.70 and the level from gman was 11.60, so when JDSU approached 11.60 I got short 200 at 11.58, ready to get out of 200 at anything over 11.62 and let the rest run until 11.71

I find it uncanny to watch some of the levels gman and spence call pre open act out perfectly, and this was one of those times. JDSU moved to the 11.teens and I had a buy order for 200 waiting at 11.04, knowing that when it makes a testing move to the whole it will be too quick to enter an order (for me, at the moment). I picked 11.30 as possible resistance on the 1min chart and put in an offer for 200 at 11.27 but it only got as high as 11.20 or so. When 11 was broken and holding I got short again for 200 at 10.92, it looked like it might go test or move through 11 so I took 100 off at 10.82 so that I could hold everything until at least 11.11. It didn’t but consolidated around the 10.60 area so I took another 100 off at 10.65.  It was time to finish up and I bid out of the remaining lots at 10.41 and 10.45. I felt like I managed my risk well and put on some decent size to get a good profit from the move.

The market gapped down and I thought it was weak, so I got short 100 SPY below 116 but couldn’t hold it and stopped out at 116.09, only a few more cents and I could have ridden the move all the way down to the high 113 area. I got short again in front of 115 at 114.94 and sold a bit early at 114.64.

I thought the IBs would be weaker than they turned out to be in the end and got short MS under 116, I thought it could deteriorate at least a dollar but it tested the 15.50 area and I got out on the way up at x.72 and then stopped myself out when it got above 16.03.

I find I trade better when I take some profits, I need to work on taking them at better times, ie when I see the support or resistance level on the tape. I am not married to this strategy, but I find it works for now. All my short trades today were helped by the Philly Fed Housing numbers being horrible, SPY was straight down at 10am when they were released. I didn’t have huge size on at the time but all the news has been “bad” lately and the trades I did have on were in the black so I felt I handled this ok.

SINA had some big moves today, but it is too advanced a stock for me at the moment. That said, it’s $10 range is actually smaller than the $1.60 range for JDSU today in % terms.

Sell 100 JDSU @11.34  @11.43 Sell 200 JDSU @11.58
Buy 200 JDSU @11.04 Sell 200 JDSU @10.92
Buy 100 JDSU @10.82 @10.65  @10.41  @10.45 = 327

Sell 100 SPY @115.92 Buy 100 SPY @116.09
Sell 100 SPY @114.94 Buy 100 SPY @114.64 = 9

Sell 200 MS @15.96  Buy 100 MS @15.72  @16.03 = 14

profit =350

Wednesday 17 August

Quite frankly, I traded horribly tonight. I panicked when BCSI went from 14.87 to 14.95 as I felt 15 would be broken quickly, it wasn’t and BCSI went all the way down to 13.00 in the morning session. When it broke 14 the first two times it wasn’t very convincing but the third time it looked good and I went short again, it was having trouble at 13.60/13.62 so I got out.

URBN opened near 18 and then was in a downtred all day and big relative volume came in when it broke 17.30 – once bitten twice shy for me on this stock. 17.30 is a level but offered next to no resistance, volume just appeared on the tape after it was broken.

SPY came running down so I wanted to get short a market stock, I chose GS and then didn’t like the tape and put in a bid a few cents below my sale price, as soon as it was hit GS went to 11x.20 and then to the whole. This was a bad play, I was ready to stop for the night and as soon as I got in I wanted out. And getting out for such a small gain was terrible risk reward.

Sell 200 BCSI @14.85 Buy 200 BSCI @14.97
Sell 100 BCSI @13.94 Buy 100 BSCI @13.64 = 2

Sell 100 FLO @19.88 Buy 100 FLO @19.62
Sell 100 @19.49 Buy 100 @19.63 = 8

Sell 100 GS @117.43 Buy 100 GS @117.38 = 3

profit = 13

I was very tired during the whole session but still very disappointed with my performance.

Tuesday 16 August

Wanted to get long URBN at 27.30, it jumped straight to 27.50, I got in at 27.51, stop at 27.30. Sold half at 27.74. Met resistance at 28 flat, should have gotten out in the nineties but rode it back down to 27.21 (low of wick was 27.20) on what I thought was a shakeout but couldn’t avoid. Chased it later at 27.60 and got burned for 0.20. The first trade was poorly managed and the second trade was rash and poorly reasoned.

Long RIMM 27.08 before support on 27 which quickly failed, out at 26.90. Tried again at 26.29, but should have been closer to 26 and stopped out at 26.10.

Was looking at HD but it didn’t do much all day.

NVDA had resistance at 13.40, got short at 13.36, lightened up at 13.29 and sold the balance at 13.21. Wanted to play the range more but time ran out. Only winner of the day. Got below 13 later in the day.

Was thinking of getting short CAT at 90 but conned myself into getting long at 90.03 when it looked like it was holding above, it went up for a few minutes and then brokedown and I got out at 89.94. Short would have worked but CAT got to 90.30 at one point. I put in a few orders to try and scalp the range but the market ran way from me every time and I didn’t want to pay up with a market order because it would ruin the risk-reward.

Buy 200 RIMM @27.08 Sell 100 RIMM @26.90
Buy 200 RIMM @26.29 Sell 200 RIMM @26.11 = -76

Buy 200 URBN @27.51 Sell 100 URBN @27.74 @27.21
Buy 200 URBN @27.60 Sell 200 URBN @27.40 =-53

Buy 100 CAT @90.03 Sell 100 CAT 89.94 = -11

Sell 400 NVDA @13.36 Buy 200 NVDA @13.29 @13.21 = 40

profit = -100

Monday 15 August

IDCC dropped from 76 overnight on a rumour that Google would buy them, Skynet bought MMI instead and IDCC gapped down to the 65 area. It moved up a few points right after the open and slid back down. SMB had 63 as an inflection point and I got short at 62.91. Bid was x.80 ask was x.99, I just wanted to get hit. IDCC didn’t get back above 63 until the afternoon session. Gman recommended this play for experienced traders and the chart was scary, so I wasn’t going to make this play. Then I was watching SPY ZAGG JWM and IDCC just looked the best. @InvestorsLive took an early profit from 66.80 but I wasn’t tempted at that level because it could surge to fill the gap, even on this kind of news. IDCC met resistance at 58.51 and the spread tightened, I was considering getting out here but didn’t want to wuss out and it moved back up to 59 and then quickly to 60, I got out at 60.24 for my best single trade yet. But I feel I left a lot of money on the table. I had minimum size in this trade, because of the spread and I feel this was prudent for my trading, but it is hard not to wish to have more in it.

I was thinking about getting long when I got out but decided I couldn’t be long in a dog like IDCC, which was saved by the short selling restriction, which is a ridiculous rule when a stock was 20 points lower earlier in the week and I will continue to look at IDCC to break down during the rest of this week as I can’t see why something worth 43 without a takeover offer, 75 with one is worth 65 when the offer disappears. 58.50 being the low of the day, I set an alert for 58.61 but it didn’t get hit. IDCC got back to 65 by the close.

I decided before the open that I wouldn’t play MA, but I checked it out a bit after the open when it was at 332.58 and considered getting in since the 330 level was broken. Twenty minutes later it was over 338 on a surge, it then faded back to below to nearly 326. I thought about selling at 337 but the bias has to be bullish for MA and anyway I had told myself to stay out of it.

ZAGG beat earnings and had a large short interest, it got above 17 briefly and made a bull pennant into that level, I got in at 16.79, setting my stop at 16.70, below the low of the flag (flag at the time). It challenged 17 for a period but couldn’t break it. It then broke the pennant and got back to 16.80 and once it passed 16.79 I felt the possibility for a move had dissapeared and got out at 16.73, it quickly dropped back to 16 after I did. I had min size in this play, and considering the stock price and the risk I was taking I should have had 3x the size and sold some just under 17.

LVS looked good and I got in using 45 as a level, it broke and I took a slightly bigger rip than I should have. It started to move from 45 so I put in a bid at 45.12 hoping to get caught on a downspike but when I got caught it moved back to 45 and then broke it.

Sell 100 IDCC @62.91 Buy 100 IDCC @60.24 = 265

Buy 100 LVS @45.12 Sell 100 LVS @44.86 = -28

Buy 100 ZAGG @16.79 Sell 100 ZAGG @16.73 = -8

Profit = 229

In this kind of market I think it the play of getting short after a long trade fails is better odds than usual as even when the tide is rising there is weakness everywhere. My sample size isn’t really large enough to be confident about this but I feel the play works in most markets anyway.

Two positive days in a row are encouraging but not enough. The best thing is that this gain is larger than my largest losing day. I may be under trading now, but I needed to take the foot off the gas and it has immediately shown results. That said IDCC wasn’t my trade idea so I can’t take much credit, I did try and make it my own and I did understand the trade (if not the level).

MMI is a good buy in my book (no opinion on the price paid, that’s fundamental not strategic) because motorola have a history of quality products, my high school science teachers revered it because they had used non-phone communications equipment made by Motorola that worked far better than the competition and they could see the quality engineering in it. This was a long time ago, but culture can be retained in a company even when staff are not. Also the other options aren’t as good economically, HTC is low cost channel stuffing manufacturing, Samsung is diversified electronics (and other) and is also a chaebol, Sony Erricson make horrible phones no one would want and has similar issues to Samsung, RIMM are in a different business and Nokia is taken (and their only upside is international brand recognition and domination of legacy handsets). It will be interesting to see how this pans out, they’re going to have to fire some people though, 19000 employees is ridiculous. NexusOne and whatever were pretty nifty, I expect the bar to be raised when the MMI stuff comes through. One of the main advantages will be platform control, Google will be able to demonstrate how Andriod should be treated, open and updatable. That and patent protection (I expect no movement on the patent reform front, too many lobbyists).

Mike Bellafiore has written two recent blog posts that kind of hurt: You should be making good money in market conditions like this, it’s a good time for new traders (who are killing it) and you should be trading more and with more size at the moment.

As far as the longer term S&P500 trend, my thoughts are fairly close to this blog post whose thesis (via abnormal returns) is that we have not yet reached a sustainable bottom. I think this is the beginning of a bear market, the stock market is viewed with abnormal skepticism (largely due to HFT scare articles) by the public (I wish they’d be skeptical about everything else) and the value I see growing in the economy is not in traditional sectors and those sectors are going to struggle for growth for the forseeable future and all that baked in growth needs to come off the price. This is the epochal shift from an industrial base to an information base, most of the value creation is via the internet and the water has risen high enough that you either adapt or die. Creation and destruction.

Of course I plan on profiting regardless of where the market is headed.

Thurs 11 August

Market opened above the close, I stayed out of it initially by design and because of the huge spreads. I was mindful of my tendency to overtrade.

I got in when I saw weakness on the tape, I was keen on the idea of an early downmove and wanted to be in a position to take advantage of it. When SPY held below 115 I thought it showed signs of being ready to move straight to 114 and lower and I got in at 114.92. As soon as x.98 was getting hit I realised that I was wrong but kept giving it more and more room until 115.32, very poor trading.

For my third trade SPY met resistance at 115.50 so I offered in at 114.47 and made my stop 114.65. Market fell and I got out of half at 115.05 on the way down, it couldn’t break through 114.80 and and I covered the rest at 115.08 when it was apparent there would be no breakdown.

I watched GS and SPY most of the day, I was surprised to see MA at 305 and it ended the day at 330 but I assume I wouldn’t have played it because the bidask is so large. 330 is where it was before the minicrash.

I made a mistake in letting my second trade run into a 0.30 loss on 200 shares, I should have gotten out when the 114.10 offer lifted and this cost me a good chunk of my PnL. I was however happy with the trades I stopped myself taking and I ended the day in the black for the first time, not because they would have lost money but because I recognised that they were bad trades before I got into them and that I incorporated what I’ve learned into those decisions. I also felt I read the chart (on SPY) better today with it’s lower highs and higher lows.

SPY     11:15:56   SELL SHORT     -200   115.24
SPY     11:17:00                  BUY     100     115.06
SPY     11:20:04                  BUY     100     115.32
SPY     11:26:4     SELL SHORT     -200   114.92
SPY     11:29:02                  BUY     200     115.22
SPY     11:31:20  SELL SHORT     -200   115.47
SPY     11:37:34                  BUY     100     115.05
SPY     11:40:39                  BUY     100     115.08
Profit = 23

There was a strong rally after lunch I felt I would have caught (it was super clean), just disappointed that I wasn’t there for it. There was then a quick dowmove into the close that was straight too. So on a general up day I made money going short only. I felt that getting in for 200 share and selling out 100 as soon as I got a little profit helped me psychologically and in this case materially. I’ve only read one book where this is recommend and I’m not sure if this is optimal strategy, because surely a trader’s overall profitability is dependent on the larger trade and this only hinders winners and doesn’t help when the stock goes the “wrong” way immediately. In choppy conditions and when used by less experienced traders it is in my opinion of some value though.

120 000 postal workers get fired and ppl are talking about getting long gun stocks…I assume they’re joking. I remember when Postal the game came out, I would never have bought it and then they banned it and it became easier to get.

Same again for Friday night, I’ll likely be out in the city after work and will just watch the market when I come home. I once read a story about a “trader” (read glorified broker) at an IB that went to some drinks, came back to work and made some trades drunk. The trades made a profit and he was fired. Also I’ve lost good money playing poker online with a few beers and it’s just plain common sense to keep your wits about you when playing the biggest game in the world. Some traders don’t like to call it a game, thinking that it denigrates their profession, I call a spade a spade and I think you have to embrace things for what they are in all abstracts.

Wednesday 10 August

I understand that generally you have to give to the market before you can take but I have been thinking of adjustments I can make. This tweet from @TraderFlorida reiterated something I’ve read and agreed with many times before.

• Predicting where the market is heading is not near as effective as having a proven risk / reward strategy to work with $study

Is this getting in the way of me becoming profitable and therefore consistently profitable? I definitely overtraded.

In the Good to Great video Steve Spencer talks about how he risks 0.20-0.30 per trade and generally makes 2-3 on the winners and has a roughly 50 50 win rate.

A very interesting commentary towards the end of the video, someone was talking about how having failed at a level XZY dropped sharply and when it got back to the level the next two times they got short and rode it back down, but when there are higher lows he said he got long at the level. The same thing happened in the SPY today, 114.60 was a level, the area was resistance before 11am and then came off at 12:30pm and 1:20pm and it made higher lows four times as seen by the circles on the chart. When got through 114.55/114.62 it had a clean move to above 116 and then downtrended into the close. The downtrend I was trying to catch all night (I was well asleep by this point).

I’m thinking of moving my blog over to tradervue because writing out the trades or even copying them in is become a timesink. I moved over $300k to lose a hundred bucks today.
Today:
SPY = -258
GS = 83
MCP = 79
profit = -98

I was profitable but kept ripping myself up in the SPY and then jumping back in to make my money back, Steenbarger talks about this and it’s obvious tilt (Captain Hindsight).

Some more advice I could heed:

• RT @TheMoneyGeek: @TraderFlorida On days like today, you could be up one second, turn away & then you’re down on the next. Without stops, you lose $$ quickly. > absolutely and I’ve been there too many times over the years BRUTAL SUTPID MISTAKES on my part
• RT @TraderOnTheLake: @TraderFlorida I would add that in order to do that, traders need a TRADE PLAN BEFORE ENTERING. Neutralizes fear & greed in my trading. > agree – if you don’t have a clear defined risk / reward strategy DON’T TRADE period!
• RT @TraderGeek: @TraderFlorida Usually don’t put trailing stops in the market, but they’ve been my friend over the last week or so. Profits & smiles saved! > smart man

Twitter is also good for entertainment, take these tweets from @Zerohedge

• If there was one thing that could make S&P look good…. It was Maxine Waters going after them. Gift from god
• Maxine Waters to S&P: “I demand you downgrade yourself immediately. Who is your CEO?”

Here is an article saying that the S&P is wrong on the downgrade because “[t]he rating agency’s job is historically to opine on the payback ability of various entities, and one thing seems fairly clear to me that the United States certainly has the ability to pay back it’s debts.. Obviously, Treasury Department can just run the printing press if it comes to that. So there’s no reason whatesoever to downgrade the U.S>. What S&P has really done I think is to opine on the value of the dollars on which you’re paid back, which isn’t really the firm’s job.”

I see where he’s coming from, you’ll get your USD and that’s what the agreement is for and that’s what the S&P is rating but I also disagree, I have no use for forty trillion Zimbabwean dollars and being able to pay back a loan and actually having the money ready to go are two different things. Would you rather a guy with a printing press that at the moment can print valuable goods or someone with various piles of valuable goods? You’re certain that they will both pay you back, but the guy with the pile of goods is of better credit than the one with the printing press. Also a revolution or debt repudiation (wouldn’t put it past some of the right wing nutters in congress) voids your printing press.

My bias is bearish until we get an upmove on volume, that’s what was missing on Tuesday. All the news is bad, value investing people are in but I don’t think fully invested and will be stopped out in the next few trading sessions.

You can feel the HFT algos characterised in this blog post in the market all day.