Hi. I tried to start a journal on ET last week, but kept having problems - I'd be typing for a long while, then accidently hit a button and would lose it all. At any rate, I decided to make a blog instead (see address below). But I would really like to get some comments from other traders, so I've decided to put my journal entries here as well. The blog is actually much better organized (not to mention prettier!) so please visit my site if you find this journal interesting. Here's my first post: In the past I have attempted to keep trading journals, but inevitably these attempts have petered out into worthless, half finished notebooks that lie on my basement floor collecting dust. I've decided that I need a harsher approach. I need discipline. I need the possibility of having someone say to me, "that was a really dumb trade and here's why". Right now, I don't have that. By keeping my diary private and my thoughts inside, I don't have that. I hope that the title of this post will entice other traders to read my diary and tell me what they think. People always say that you are your worst critic, but I don't feel that has been accurate for me lately. I feel that I've been slipping. Not just in my trading endeavors, but in my personal life as well. I was a straight A student in college and graduate school. I studied hard and I became a perfectionist in my field, but lately things have been getting me down. Doing a "good enough" job has been, well, good enough. I've lost my edge and my ambition. I need to get that back. I need someone to grade me. I need someone to criticize me and tell me what I'm doing wrong. I need the mentality that every trade I make is a test where professionals are going to grade me with either an A or an F. Everyone dreams of financial freedom - winning the lottery, making millions of dollars, getting to buy luxury cars, homes and vacations. I don't really care for all that. Oh, a swimming pool would be nice, but what I really want is freedom. I want to be able to work from home, have my kids with me during the day (or at least half of the day), and have the academic freedom to study the things that interest me. I'm not asking for much. I think to myself if I were able to find a reliable method of making just 500$ dollars a day trading the financial markets, then i could do all of those things. 500$ a day translates into about 120,000$ a year. A decent salary. Not a seven figure salary that some traders shoot for. Not the millions that some fantasize about. Just enough to supplement my income so that I can work part time in a lab and have the rest of the day to myself and my kids. Tranquility is what I want. I don't think that this is being greedy. I think that this is being reasonable, and i think that this is attainable. I know that everyone says, if it were that easy then everyone would be doing it, and they're right. But in the end I don't think that it has anything to do with becoming an expert at reading stock charts and knowing where to step in and where to step out. I think that it has a lot more to do with one's psyche. It has to do with mental awareness and self discipline. It has to do with controlling one's emotions, and not letting them control you. When you can do that, then you can conquer the market because you will know its patterns and movements, and on the occassion that it pulls the rug out from under you, you won't stare it down and try to fight it. You'll just nod your head, say "ok, whatever,", and move on. But getting to that stage is the hard part. I'm not there yet. I don't have that emotional control right now, but I want to get to that stage. Maybe by writing my thougths down in this forum, and taking the chance that someone will read it will get me to think more critically about the decisions I make. Maybe it will make me a better, more confident trader. I sincerely hope so. If the title of this post gets you interested in following me on my journey, then I encourage you to read on, check in with me periodically, and give me some feedback. Kae Also, please note that I changed my name on the blog (just to my middle name, no biggie). Thanks, Kae
me again. Journal entry #2 Before I get into telling you about my plans for the next six months or so, I think it's important that you know where I'm coming from. So now I'm going to tell you about my history in trading the equities market. I came into this endeavor knowing next to nothing about stocks. The Nasdaq, what the hell was that? A chart? Never saw one in my life. Wasn't even interested in it. It all seemed way too above my head, too confusing, and boring, boring, boring. Then, when I started my postdoc and had the opportunity to actually put money into a 403b plan, I started to do some research on mutual funds. It was still confusing, but it kind of opened the door for me to get interested in the details of individual stocks and trading in general. I did more research, and then even more, and one day for some reason I decided that it would be really cool to be one of those people who traded stocks in and out all day long - a daytrader. Still, I had no idea where to begin. So I bought a book on swing trading called "A beginner's guide to short term trading " by Toni Turner. I loved this book. I still do. If you haven't read any of Toni's stuff, then I would highly recommend it. She writes in a very easy to follow, conversation type manner that really makes you want to go out and start a trading career. So I did. In the fall of 2005, I started to swing trade in my husband's brokerage account. It was a very small amount, but I did start to make money, at least initially. But then a few trades went wrong, and i was essentially back where I started. I decided that Etrade's transaction fees were eating into my profits and I needed to increase my position size in order to get anywhere, so somehow I convinced my husband that we needed to add more money to the account. I think he obliged only because he was glad that I was finally getting interested in investing. At this point, I also bought a couple more books, one by Steve Nison (the candleman) and another by Alexander Elder, a psychiatrist who has a lot of interesting insights into the psychology of trading. I would recommend both authors. I tried more trading, but was coming out about even and felt like I wasn't really getting anywhere. It was at this point, early in the summer of 2006, that I convinced my husband we should put more money into our account. Again, he was surprisingly supportive. Now with over 25,000$ in my account, I was able to trade more freely, and I actually hit daytrader status. I started watching real time charts using Etrade's Power Etrade Pro platform, and I was in awe. It was so cool to watch the ticker tape, to see thousands of dollars pass before my eyes - to dream that one day I would be one of those people casually moving in and out of the market, taking profits with me as I went. I became addicted to it. Literally. To this day, I feel lost if I don't have the program on during the day so that I can watch what is going on. But last summer was something else entirely. I really felt like I could be a part of the trading world - like I could make it even when so many others had failed, and in doing so, I would make a wonderful future for my family. During that summer of 2006, I practiced day trading nearly every day. Most of these practice trades were on paper, and on paper I was doing really good. But when I actually made a trade, things didn't come out so rosy. I rationalized it was because I wasn't doing it enough. For every 4 potential trades that i saw, I only took the chance on one. I thought that I just wasn't making anything because it wasn't averaging out correctly. (Wrong!). I tried to make more trades, yet still I was just barely coming out even. One day I remember that I did three good trades, and I closed out the day 800$ richer. My husband actually praised me, and I felt good about it. Yet I knew that it wasn't really anything I had done. I didn't feel like I had done those trades correctly, and the truth is that I hadn't. If I had, then I would have made a lot more, and I would have continued successfully to see more profitable days. But sadly, that was the last big day that I had. After that, I continued to paper trade, and occassionally placed a real trade, but I wasn't doing very well. My account was quickly moving down, and I felt more and more lousy, especially since the markets in general were making a comeback rally (that we now know would last more than 6 months). I felt like a failure, and I think that this eventually caused me to completely lose it. I traded irrationally those last two weeks until my account fell below 25,000, and I got a margin call. I had already decided that if that happened then I would close up shop for a while, tuck my tail between my legs, and accept the harsh reality that I had failed on my first trading endeavor. And that's exactly what I did. That was six months ago. Early in 2007, I did a few swing trades, but I didn't make any money on them. I was really tired of my husband getting upset with every 200$ that I lost and trying to make him see that I knew what I was doing, which I wasn't entirely sure that I did. So I just quit altogether. What was left of our account, about 24,500, was put into a high interest savings account, and I haven't traded with it since mid February. All together, I lost about 5000$ last year. Sad story? Perhaps. The end of my story? Not a chance. I've had time now to digest what happened last year, and while I still don't feel good about it, I think that I have learned from the experience. Mostly I have learned that I got caught up in the excitement of daytrading. Although i was losing some money from swing trading, I think that my biggest mistake was trying to daytrade. I think that if I had stuck to swing trading, then I would have gradually made back what I had lost and I would still be doing it today. But I got greedy. I let the power of the markets hypnotize me. I've vowed that I'm not going to do that again. I'm going to take it slow this time around. and I mean SLOW!! Like I said, I haven't made a trade since February, but I have made trades on paper. I also have made a few real trades in my IRA account - it's a small account, so I haven't done much there, but I have had some success. I called the rally in the middle of March perfectly. I bought a few stocks (CELG, AT&T, and GS) and have been holding them as position trades (more on this in another post), but mostly I've just been watching, doing more research, more studying and taking what I have learned to try to predict what is going to happen next. My goal is to paper trade like this for a while longer -probably at least another four to six months, until I feel more confident about my abilities. I will continue to trade slowly in my IRA, but I'll do it cautiously. It may take me a while to reach my goal of becoming an active trader, but I think that I will eventually get there. It might take me two, five, even ten years before that happens, but if there's anything that I've learned since becoming a mother its patience. Now I just need to apply this to my trading habits, and hopefully one day I'll be able to say that I am a successful trader.
Journal entry #3 This is a description of the criteria that I have been using to paper swing trade for the past three months. I will note when I change any of the rules in this account and I will post daily and/or weekly updates to the account including my thoughts on particular holdings, when I buy or sell, etc. The account is set up for 25,000, which represents the amount that I am holding right now in a savings account. I have allotted myself 5000$ for each trade - hence there will be a maxium of 5 trades that i can hold at any time. The percentage profit that I make will take into account a 10$ transaction fee going into and out of the trade, which is the amount I will be charged if I decide to continue with Etrade as my broker (more on this later). I will try to do long positions on most of my trades for the time being since the market is in a long term uptrend. However, on occasion I will add a short position, particulary if I see that a particular sector is in a bearish condition. The criteria that I have set for each trade is as follows. You will notice that some of the current holdings I have violate these rules. This is because I'm still learning how to follow my plan! I will note these trades with an asterisk, and hopefully learn whether violating my rules is really what is causing me to lose money. Rule 1. Go long only on stocks that have good fundamental standing. Stock must be a recent listing on the IBD100 (Investor's Business Daily 100) list, or be in such a standing that its hitting or has recently hit its 52 wk MA and has pulled back slightly. This rule will ensure that I am only targeting strong stocks that already have a bias towards the upside. I will also check YAHOO's message board and any others that I find in order to get a feeling for what people think of the particular stock. Rule 2. Stocks will be bought if they fit one of two patterns. Either they are in a consolidation pattern and are breaking out of that pattern, or the stock is in an uptrend, has pulled back to its 20 day MA and closes that day either in a hammer or other bullish candle. I will also look at intraday candles to see if they reinforce the signal given on the daily chart. Rule 3. Stocks will only be bought or sold at the end of the day. The reason for this is two fold. First, it is important to wait until the end of the day to see how the candle forms. There might be bullish indicators on an intraday chart that indicate a stock could be bought earlier, but for now I'm going to stick to my end of day rule. The second reason is that sentiment at the end of the day is more significant than at the start of the day. If traders/investors are willing to hold a stock overnight it indicates that they have a strong opinion about that stock. Rule 4. Stock must have above average volume on the day it's bought. Rule 5. Resistance/ support levels must be such that at least a 2x profit can be made on the stock. Rule 6. My stop will be positioned either under support if buying a breakout, or just slightly below the low of the reversal candle for a 20 day MA rebound. If my stop gets hit during the day, then I will have to decide whether to sell it immediately or wait until the end of the day. If it looks very weak I may get out early, but if it looks like it could hold on support and move higher later in the day, then I will wait to see if it closes above my stop (hence above support). Rule 7. I am really bad at using indicators other than support/resistance, candle formation, and volume. RSI, OBV, bollinger bands, etc confuse me because I often get conflicting signals from these. However, I will try to use these indicators periodically to see if they are any help in my trading decisions. Rule 8. Follow the indices. I will keep a daily analysis of the three major indexes: Dow, SP500, and Nasdaq to determine how the general market is moving. I will try to trade only in the direction of the general market. In addition, I will determine what sector the stock that I am buying belongs to and how that sector is doing versus the market. I will pay particular attention to bullish reversal signals within these sectors to confirm my feeling about a particular stock.
you havn't mentioned what you trade, what you look for, what time frames. And true everyone knows how a traders psycology 'should be' but no one seems to follow it. edit: nevermind about first comment, rest of the posts were no there yet
guess the titles aren't showing up. Here's my roster of swing/ position trades that I've done in the previous month. Three of which are still open. I will try to post April's positions soon, but it takes a while to get it to look right (anyone know how to add an excel spreadsheet to a post?). ticker(short), entry price - exit price ,date, % gain/loss, total days held EDO 26.94 -30.41 Apr 10 -May 3 12.90% 17 days HOTT 11.7-11.24 Apr 26 - Apr 30 -3.90% 2 days AMR(s) 26.5 -26.65 Apr 27 May 16 -0.56% 13 days TXN 34.82-35.18 May 1 - May 7 1% 4 days ESRX 94.02-93.30 May 1 -May 9 3.30% 6 days WIRE 28.93-29.36 May 3 - May 10 1.45% 5 days ICE 137.05 May 4, am MFW 63.73 May 7 SIMO 22.7 -20.82 May 11 - May 23 -8.28% 8 days YHOO 29.22 May 16 AMR(s) 27.5-28.3 May 23-May 31 -2.9% 5 days Note: This is easier to read on my blog because it's color coded.
From 5/31 QQQQ's are setting up for a short day trading scenario. - Have moved up two days in a row. If it gaps up .3-.6%, short at the open. Take profits at .5% or at the close , which ever comes first. See thestreet.com for this setup. From 6/1 This worked fairly well. I missed the open, but assumed that if I hadn't I would have gotten in at 47.57 (perhaps higher). QQQQ tracked higher in the first fifteen minutes, and then moved lower. It bounced at the gap, but then moved lower again. It made a low of 47.37 at 12:24. Seven candles later it tested that point and moved back up almost making a hammer. I got out at this point since it doesn't look like it's going to go any lower. out at 47.42 - profit .315% not including commissions. If I had traded 1000 shares then it would have made me about 130$ including commissions. Note: I didn't add this to my May positions because it's a day trade, but I'm trying to see if this system really works. So far I've done it on paper 3 times and it's worked every time.
Comments from yesterday Indexes didn't move much today, most closed in small insignificant candles. Not too surprising considering the recent run up. Didn't buy anything today, will probably wait until the next time the indexes bounce off their moving averages or until something tramatic happens in the markets. It's getting into summer now, markets should start moving down or in a range. Will have to look very hard for opportunities. My holdings - ICE - moved down 2.5% today, seems to want to trade in a range for a while. It's making a very obvious trendline that is acting as support. As soon as it closes below this line I will get out. MFW -closed at an all time high today. Moved up significantly in the last ten minutes, but was already up for the day. this is a good sign that it will continue to move higher. I am up 7.7% on this one. YHOO - Moved higher today. Sort of thought it would because it held on support yesterday. I'm still at a slight loss with this one (2%), but plan to hold it yet to see if it will move higher or at least up to my buy point. AMR - covered this one at the end of the day. It gapped up in the morning and moved down slowly throughout the day, but it held above yesterday's close which puts it slightly over my stop. I was right in thinking that it had a bullish sentiment. Also airline stocks might be on the rebound because NWA just got out of bankruptcy and investors might see that as a good sign to jump back in. Still AMR didn't make it above its 50 MA, but I need to take a break from this one. It was a bad trade to begin with and not a surprising loss.
comments june 1 Market were slightly up and not making any significant candle signals - exception might be the nasdaq which made a gravestone doji (someone correct me if this is wrong). Uptrend still intact and expect at least the sp500/ Dow to move higher the next day or two before hitting the top of the channel and moving back down. Nasdaq might retreat faster. My holdings: ICE - Closed slightly below the trendline that I mentioned yesterday. I said yesterday that I would close out this position if it closed below this line, so I'm going to do that. However, I really don't know what the true sentiment is for this stock and I hope that I don't regret getting out at this point. It's still sitting above its 20 MA and perhaps that would be a better stop (opinions on this please). I think that the dealings going on between the CME and BOT are hurting it right now, and I really think that I should have gotten out when it reversed at the gap. Made 4% on this trade and this is disappointing since I held it for many weeks. MFW - closed lower, but seems to be holding on support from yesterday. I will hold this a little bit longer as I think it's still bullish YHOO - moved higher again today, but not making very positive candles. It also failed to close over the 20 MA, which is a sign of weakness, but I'm still in it for now. Will research some new stocks this weekend.
I just sat down and flipped an Oregon commemorative quarter. Within the first 2 minutes, I had a run of 7 heads in a row. Welcome to 'Fooled by Randomness'! I'd like to recommend a book, if I may: "The Psychology of Judgement and Decision Making" by Scott Plous. Best trading book I've ever read.