$200.00/day trader chronicles - Thursday 11Dec08 (Day 1)

[vleon1012]

Today was my first day as a fully capitalized Day Trader. I was extremely nervous but at the same time extremely determined to make this happen.

I currently work from home as a Software QA Analyst and wanted to learn something new that would help me make additional income. Granted, I get paid well and my position is very comfortable as I get to work from home -- but my long-term goal is to ultimately work for myself whenever I want and wherever I may be. No e-mails, no conference calls, no making money for somebody else. I get paid $55.00/hr but my consulting firm gets paid at least $150.00/hr for my work. That's not cool. Why not pay me $155.00/hour? I'm the one doing the work!

My initial goal is to make $200.00 / day as a part-time Day Trader using various financial instruments, primarily the ES and YM futures in addition to NASDAQ and SP500 stocks. Ideally, I would be done with trades by 11:30 AM so I can proceed w/ my QA duties.

I've been paper trading for about 90 days now and feel that I am ready to start trading market gaps and scalping futures points to make modest gains using Technical Analysis, trading the news, and lastly my instincts. My emphasis as a newbie will be on gapping stocks and news plays with technical analysis as support / confirmation.

I know this is going to be hard. I know this is not a get rich quick scheme. I know I am going to have bad days if not weeks if not months! I know that I could lose it all if I am not careful. I worked hard to set aside this trading capital. Believe me, I have no intentions of blowing up my account.

In the past few months I have come to truly enjoy "the markets" and everything they involve. The news, the expectations, how the markets interconnect, etc. I like knowing what the people on CNN and Bloomberg are talking about. I want to understand and be a part of this world that is always there trying to thrive. I want to suceed on my own terms and yet never forget that I am always at the mercy of the markets. My goal is to respect the markets every single day.

I am still very green. I don't like to make calls. I just trade what I see. I set my stops accordingly and aim to never risk more than 2% - 4% on any one trade.

As I've stated, my goal is to earn $200.00 a day. Today, on my first day, I was only able to make $100.00. I exited trades too soon out of fear because I wanted to experience the success of taking profits. At least today on my first day I could say "I made money in the stock market."

However, I can't believe and am actually surprised at how nervous I was going live versus trading on paper. On paper, I would have actually aimed to reached my targets. Live, I exited positions too soon IMO.

Journal Notes:
* I had a few successful ES trades to the short side at the 892, 895, 897 levels during * My first stock trade was URBN based on news of price reduction. It was doing well but I didn’t sell into strength .85 and see the stock dip around .75 and I sold probably too quickly out of fear.
* When I sold URBN, I accidentally sold 300 instead of 200 and ended up shorting 100 at a loss. This confused me for a good minute!
* Re-entered the URBN trade on bullish cross of EMAs and it went up.
* Entered CLF trade on dip of highs and sold + .50
* Sold URBN + .15
* Continue to look for "priced target reduced / increased" news for stocks trading >= 20.00 and play the gap. Pay attention to price action in two weeks prior to news as it could influence long vs. short. Note where it opened in the pivot points.

Trades:

Balances (after $100.00 gain):

 

[vleon1012]

$200.00/day trader chronicles - Friday 12Dec08 (Day 2)

$200.00/day trader chronicles - Friday 12Dec08 (Day 2)

If yesterday was the first day I could say I made money in the stock market, then today is the first day (of many I presume) that I can say I lost money in the stock market.

My big big big mistake here is that I tried to trade the futures before market open. Basically, I was shorting against the rising trend following the big over-night drop. I wasn't trading with the trend, who is my friend. I got suckered.

I opened the day with around a $674.00 loss in the futures!

I do take great comfort in the fact that while my futures plays were terrible, I've learned that my stock plays were generally successful and I will very likely decrease my futures plays in general and stick to gap plays for now.

Journal Notes:

1. I lost $649.00 on trading the futures before market. I WILL NO LONGER TRADE THE FUTURES OFF-HOURS. Consider focusing on stocks for now.
2. Fair GAP plays. This would have been a positive day if I didn’t play with the futures. UTX – If I had stuck to my $1.00 STOP I would have made much more throughout the day on UTX. The trick is to scale out slowly and increase the stop to break-even on remaining shares.
3. Tested the waters on very small lots with SSO instead of ES. I can short or long SSO just like the ES. The SSO tracks the ES but much cheaper. I can also long SDS to short the ES, but SDS is expensive. Better to stick with SSO and other "Ultra shorts" because they are cheaper and offer more manageable price action.
4. Stick to your stops!!
5. Consider going long on F on any pull back under $2.90 - $3.00. F is not going anywhere.
6. Add at least an extra $1,000.00 to account to remain over $25,000 at all times!!

Trades:

Totals:

 

[rathcoole_exile]

congrats on a great start !
despite the losses, your overall approach is well thought out. logical and your self-analysis should be an example for all newbies.
regarding the futures though, I would say don't dismiss them from your mind or plan to scale back on futures trading already - after all, you only took one day of losses, don't let that spur an impetuous decision.
I think, rather, that you've already identified the issue - don't try to trade the index futures outside of the cash session, there just isn't the volume.
and best of all, from what I can see, you've made no mention of indicators - none of the newbies usual guff about Stochastics, MA cross overs etc. So that's a great start already !


good luck with your new venture,
Garry

 

[rathcoole_exile]

I exited trades too soon out of fear because I wanted to experience the success of taking profits. At least today on my first day I could say "I made money in the stock market."

However, I can't believe and am actually surprised at how nervous I was going live versus trading on paper. On paper, I would have actually aimed to reached my targets. Live, I exited positions too soon IMO.

once you start to build up a cushion within your account, you could maybe look to trade multiple ES contracts (I try to keep mine in multiples of 3), so you can take a third off at a given target, another third off at next target to lock in your minimum profits, pay for commissions etc, then let the 3rd third "run"
I've found that doing this, about 2 times out of ten, I'll get a good runner that does super.
Even if the other 8 all scratched out at zero, you'd still be well ahead of the field.

 

[vleon1012]

congrats on a great start !
despite the losses, your overall approach is well thought out. logical and your self-analysis should be an example for all newbies.
regarding the futures though, I would say don't dismiss them from your mind or plan to scale back on futures trading already - after all, you only took one day of losses, don't let that spur an impetuous decision.
I think, rather, that you've already identified the issue - don't try to trade the index futures outside of the cash session, there just isn't the volume.
and best of all, from what I can see, you've made no mention of indicators - none of the newbies usual guff about Stochastics, MA cross overs etc. So that's a great start already !


good luck with your new venture,
Garry

Thanks for your wishes..! I can't wait until Monday. I like waking up early and reviewing the news, etc.

Honestly, initially I did try to work with the various indicators such as stochastics, MACD, RSI, Fib, etc etc but I didn't find them to be as reliable as establishing support and resistance lines and following price action and volume as secondary. Pivot points I find to be very useful which is basically support and resistance. I'm sure the mathematical indicators have their use but my interpretation of them is not consistent w/ the results I got on paper so I don't bother.

I do like EMAs in the sense that they display a moving support and resistance as well. But I don't really get into if one EMA crosses the other one, etc but I've noted too many times where the various EMAs will act as support/resistance.

Honestly, what I find works for me on paper more than anything is price action, support and resistance, and the news. But that's just me and I don't consider myself to be a pure TA as my experience has been that the market does not entirely discount the news.

But that's just me! I'm not an expert.

Looking forward to Monday.

 

[vleon1012]

I didn't trade today -- I am going to resume trading after padding my account with an extra 2K. Proper money management will not allow me to have $1.00 stop loss and still remain above 25K. Will likely resume next week after money is available as it takes a few days.

 

[timsk]

Proper money management will not allow me to have $1.00 stop loss and still remain above 25K.

Hi vleon,
Welcome to T2W.
Looking at the the trades you've done thus far, you appear to scalping for a few cents here and a few cents there with an occasional home run. This is perfectly fine if you have a tight stop loss. A stop loss of $1.00 is anything but tight - that's a swing trader's stop - not a day traders stop. With a stop this wide, I'd be concerned that you'll make small gains on 9 trades and then find yourself back to square one on the tenth losing trade. Hopefully, I've misunderstood what you're doing and my concerns aren't applicable to the way you trade.
Good luck!
Tim.

 

[advfntrader]

good luck. you sound in a similar position to me having a job and wanting to do something else. however, I have been trying for over 1 year now and have lost $25k account already by stupid mistakes. I wish I had your approach !!

 

[Pippy5000]

You're using too much money.. That $25,000 is likely to be all gone in 6 months.. Use the smallest amount of money possible for the next 6 months.. You'll be lucky to break even. There has to be losers for every winner.. You're a novice playing tennis against professional tennis players.

Just remember to tell yourself "it's foolish to believe that I will immediately find success"

So.. would you rather lose $2,000 or $20,000 while you're learning? It's up to you!

advtrader: about 50 people told you to chill out after you lost 10k pounds and almost lost your wife.. and here you are 6 months later down 25k.. You're not even 30 years old and you're ruining your life!

 

[vleon1012]

Hey Pippy,

You make good points and I appreciate the feedback.

Couple of things as I am constantly reviewing my trading strategy and stepping through the charts, I noticed that I did better when using slightly smaller positions and taking a few less trades, perhaps 100 lots instead of 200 or 300. I got used to those bigger lots paper trading.

The key things will be honoring my stops and looking to re-enter instead of dishonoring my stops and hoping for the best. Honor you're stops and admit you were wrong is my number one goal.

I'm not looking to find immediate success and I accept the realities of the game, but anyone who does this has to have the initial drive and hope towards success otherwise no one would ever even try.

Besides, if I do blow the 25k in six months -- it's cool. I am trading w/ money I set aside for this. It would suck to lose it, but it wouldn't ruin me. Not married, no kids, so I'm cool!

Anywayz, I'll be back in the game very shortly. Tennis novices can learn a lot from the pros.

Take care, appreciate the feedback, and see you on the virtual floor!

-vic

 

[vleon1012]

$200.00/day trader chronicles - Monday 29Dec08

Hi Everyone

Thanks for your comments.

timsk I found your feedback insightful and I had actually adjusted my strategy for it before reading it-- but it was good to see someone point it out and the fact that I caught it made me feel like I was doing my homework. Even though I didn't trade live, I still paper traded using an account that had my amount instead of the default 100,000 (I wish!)

When I switched from paper to live trading, it was a huge psychological difference and I had to adjust my position size from 300 to 100 size lots and scale in and out accordingly and only take the setups that had a high-percentage on paper trading. I kept a very detailed log that I can filter it by a column called "Trade?" so I am only taking those setups.

Today was my first day back after padding my account with almost an extra 1,500 or so and it made a difference in my willingness to pull the trigger. It was a good morning and I actually need to stop for now because it's time for my real job.

The biggest things I learned from my nightly reviews last week was:

1) Don't be afraid of a little consolidation during an established trend. Usually I would sell at the hint of consolidation and I kept leaving money on the table when the trend resumed.

2) Scale out slowly starting at half your target. Then consider raising stop to 25% of your target and repeat this incrementally if you hit more targets in the same trade. I think in the long run it's better than waiting for and possibly missing your target. Commissions are a concern when it comes to this approach, but I'm ok with locking in $25.00 of profit for $1.00 commission instead of sweating it out on all the shares. It also increases my confidence and it makes me feel "established" in a position. Everything could go wrong after hitting the initial target but I still locked in at least those $25.00 and if it breaks-even, it's ok.

3) Honor your stop loss. I had a stop loss .75 stop loss on a play and I chickened out when it hit .65 really fast. After I sold, the trend resumed and wow - it would have been an awesome trade.

4) No adhoc trades. This means no trades off my watch list which is established by 09:00 AM every trading day.

5) I sort of "discovered" something (maybe just coincedence) I will call "sub-Pivots". You know the regular pivot points, well I noticed a lot of times consolidation or reversals would occur MIDWAY between pivot points. Now I draw horizontal lines in the middle BETWEEN all pivot points and I take those into consideration as potential resistance / support / etc.

6) Review my trades every night AND review on weekends.

7) Have my longs and shorts tickets set up by 9:25. That way I'm not scrambling and doing fat finger trades.

8) Avoid thinly traded charts. There are a lot of stocks that have what I call "sprinkle charts" because it looks like someone sprinkled seasonings instead of nice bars and volume. I avoid these. They move erratically, don't make any sense from a TA view, or just plain don't move.

9) Avoid stocks trading under $15.00. This is just a guideline that seems to corrolate w/ #8. As you can see from my IBKR trade below from today, I might raise that to $20.00 stocks.

10) Respect the likelyhood that a gap will fill. Last week some stock had bad news and in my mind it was a sure short so I shorted it (on paper) at the opening. The stock kept on going up and eventually hit my stop loss. Then it passed it a little more and I was like what the hell, this goes against everything I believe in. Then, I looked @ the chart again and realized the stock had a destiny to fulfill - the gap!! I quickly realized this around reversal time (10:15 ish) AND it was at around R1 or R2 and shorted it all the way down to the ground. So definitely respect the gap players out there.

Today, I traded from 9:30 - 11:15 and that's all I have time for today as I am backed up on production tickets. I didn't make my $200.00 target but it's ok, profit is profit and I'll take $60.00/hr any day. I realized I can't be answering support e-mails AND trading at the same time. I need to dedicate my resources fully on trading, even if it's for 3 hours a day or less.

Results:

 

[chilltrader]

Nice going... you look like a very committed and passionate one (thats the only way to succeed at this!)

All the best!

 

[vleon1012]

Thanks chilltrader. I really do enjoy the markets. It's to me like playing chess and to be "right" in a moment in time when there are so many people out there also making their moves, it's very rewarding and I get to learn a little bit more of my personality and what I'm capable of, what I can do better, etc.

 

[timsk]

I traded from 9:30 - 11:15 and that's all I have time for today as I am backed up on production tickets. I didn't make my $200.00 target but it's ok, profit is profit and I'll take $60.00/hr any day.

Good going vleon!
If you can make $120 in two hours trading only 100 shares or less - you'll do fine. The trick - as you doubtless realise - is to do the same thing tomorrow and then the next day and the day after that etc. Once you can achieve that, then it's a case of scaling up to 1,000 share trades - and beyond - and then you're looking at $600 per hour which is when things get interesting! IMO, I fear that your target of $200 is too big when you're trading such small size. Effectively, you're looking for a 1 x £2.00 run or 2 x $1.00 run or 3 x $0.67 cent trade or 4 x $0.50 cent trades etc. The obvious problem here is that a $0.50 cent trade is a lot easier to come by than a $2.00 run trade, but you need four times as many of them. This can lead to over trading or taking less than perfect set ups. For this reason, I'm not in favour of profit targets - but that's not to say they're wrong or of no value. Hey - if it works for you . . . The problem I had was that I'd have a good day like you've just had one day and then give back my profit (and then some) the following day! Here's a hot Christmas tip from me: don't make the same mistake as me, stay consistent and grind out those profits day in and day out! This is why I so admire Mr. Charts - he does exactly this. And, like anyone who executes his or her craft with consummate skill, he makes it look easy, effortless even. Keep up the good work and the best of luck (not that you'll need it) in '09!

Tim.

 

[vleon1012]

$200.00/day trader chronicles - Tues 30Dec08

Today was not a good day. I gave it all yesterdays gains back and tomorrow's (hopeful) gains for a total of -$353.00. I really wanted two positive days before a loser but oh well. It was a learning experience and when put in perspective, I'm sure people out there have done worse in this market. Overall, I'm still relatively flat give or take a couple of hundred bucks.

"Tomorrow is a new day" (that's my mantra after a good or bad day) and I'm looking forward to applying a few main things I learned from today's experience.

Lessons
1) Consider re-evaluating position / stops if market open trade is still going against you after 10:15ish.
2) Stay away from the futures for at least 2 more weeks. Stick with SSO to long or short the futures.
3) Need to find a way to keep your cool after a bad play. Left a lot of money on the table after the first attempt at BRS went sour. Trust the Trade = “Y” setups.
4) Continue to pound Price Reduced plays.
5) Avoid worrying about double-tops, double bottoms, head & shoulders, wedges, stochastics, etc. All you need is News, EMAs, Pivot Points, and timing.
6) Consider tightening stops from $1.00 to $0.50 and look for re-entry.
7) Don't let a bad trade affect your execution on current and future trades.
8) Consider stopping for morning if you're down by $200.00 instead of $300.00ish. I quit for the day around $300.00 because it's a half-days pay.

 

[vleon1012]

good luck. you sound in a similar position to me having a job and wanting to do something else. however, I have been trying for over 1 year now and have lost $25k account already by stupid mistakes. I wish I had your approach !!

My approach is nothing special and it's fairly simple for my "simple mind". I feel strongly that it will work in the long run. I just need to get through the blows of the learning curve and I expect them --- and kinda look forward to them. In a few years I will look back and say, "Hahaha I got my butt kicked in the first year but then I got it together."

My approach is very simple: Picking news plays that seem to work all the time, news is primary to me, I feel news causes reactions that have a high probablity of predictability, and easier to follow than a lot of TA patterns (to me) and I feel news drives the markets a lot. Also, respecting the 20,50,200 EMAS for support / resistance, gap plays, and pivot points. AND TIMING!! But primarily news.

Personally, I am not a fan of double tops and double bottoms, heads and shoulders, rising wedges, penants, etc.. I feel that if I look hard enough, I can make my eyes see any formation and any moment in time can be a double-top if I scale far back enough. But to me, news is less subjective. If a company revises their guidance to be worse than it was, it is a very high-probablility short. If a company announces rumours or chatter of takeover, the stock is a high-probablity long.

Of course, only time will tell if I am right and I am trying to find a system that works for me and the hardest thing for me right now is the psychology.

But still, I respect the TA players that can keep up w/ all the patterns, etc.

Good luck to us all.

 

[jokepie]

My approach is nothing special and it's fairly simple for my "simple mind". I feel strongly that it will work in the long run. I just need to get through the blows of the learning curve and I expect them --- and kinda look forward to them. In a few years I will look back and say, "Hahaha I got my butt kicked in the first year but then I got it together."

My approach is very simple: Picking news plays that seem to work all the time, news is primary to me, I feel news causes reactions that have a high probablity of predictability, and easier to follow than a lot of TA patterns (to me) and I feel news drives the markets a lot. Also, respecting the 20,50,200 EMAS for support / resistance, gap plays, and pivot points. AND TIMING!! But primarily news.

Personally, I am not a fan of double tops and double bottoms, heads and shoulders, rising wedges, penants, etc.. I feel that if I look hard enough, I can make my eyes see any formation and any moment in time can be a double-top if I scale far back enough. But to me, news is less subjective. If a company revises their guidance to be worse than it was, it is a very high-probablility short. If a company announces rumours or chatter of takeover, the stock is a high-probablity long.

Of course, only time will tell if I am right and I am trying to find a system that works for me and the hardest thing for me right now is the psychology.

But still, I respect the TA players that can keep up w/ all the patterns, etc.

Good luck to us all.

vic,

I am doing something similar with life and i have my bad DAY so far after which it was not easy to come back and do this. One thing that other have pointed out as well is your stops, If you are trading 100 shares 1$ might be Ok, If scalping only till 11pm try to keep stops alot closer and just work on your timing of entry - use multiple time frames for example (10min-3min-1min etc but you get my point). risk management works well if you take ur targets (not close positions early) and respects stops.
We all newbies need to work on the first peice as after few big losses we all start repecting the stops.
Also, many will tell you DEC is not a good month to go live as you wont see much volume and most logical things wont behave as you would wish. I am sure 5th JAN and on will be more promesing.

hope this helps!

joker

 

[vleon1012]

Joker, I agree. After reviewing my trades -- I spend a lot of time reviewing -- I feel that it's time to make the stops tighter to around .50 depending on how the stock moves. Some stocks move @ .25 cents a point like Apple, some move like .04 like MSFT.

But still, tightening stops will be helpful.

Regarding multiple timeframes, I found that 1 minute chart works best for me and switching to a 5,10,15 minute confuses me once I am in the one minute zone. I feel like my mind is in the 1 minute zone and switching to 5 minutes will confuse my entries and exits --- but that's just me because I've tried that technique and I felt it was like the difference between jogging and walking, then jogging again, then walking.

In the end, I am feeling that there is no one system and you really have to find what works for you. If your mind can adapt to those different timeframes, that's great.

But again, I agree and have absorbed everyone's comments about the stops. Tomorrow I am definitely honoring a .50 stop instead of 1.00 stop.

Can't wait!!

 

[timsk]

vleon,
Knock trading on the head until next week. Go drink Champagne instead. Just as much fun and probably cheaper too as the market is likely to be very thin a fairly illiquid on all but a handful of really big stocks. I fear that trading the sorts of stocks that you tend to favour will require a lot more luck than skill and judgement in order to turn a profit.
Best of luck in the new year.
Tim.

 

[vleon1012]

Thank you tim for your comments. Today I am trading and at the moment I am thrilled to be at just about break even, +/-30, which to me means that I definitely learned AND applied something from yesterday's big (for me) loss after doing my homework.

Then I'll spend most of the weekend fine tuning even more.

Thanks to all the comments here regarding stop loss, I was able to minimize my losses by at least half and even attempted re-entry, but it wasn't successful, but still honoring the stop loss minimized the loss. Now I see that I can tighten the stops even more.

I'll be posting later today, good or bad.

-v