I see now you mentioned above your symbols you were trading them in verticals and I missed that. It sounds like a strategy I should be using as I am a fairly green trader and have been spending my acc't learning from my directional trading mistakes. The one thing I have learned is paramount in directional trading is play my expectations, not my hopes! But, I am still impatient, thinking I will take the fast track to riches and go the riskier directional, unhedged route. I could just have bought distant calls on something like GOOG with a trailing stop and watched my acc't grow, but I need to have my hands in there. It's not an investment acc't I want, though that might very well be better for me! Sold my DNA put late day, making only$4.75, though that's better than losing, seeing it was a down day. Will have to wait to see what the true trend is on this one now. I still think it will break through $95, but with how long and deep a correction is the question. Bought another overnight put late day on UARM, looks like it will correct some first thing, if not become a down day all day. I wish I had bought a call on PAAS or MOT late day yesterday, instead of DNA. But, I had to play my conviction.
Rob on Business, Having heard about Cramer. The top traders at the Las Vegas Expo laugh at him because his calls are usually an invitation for a stock to go bad. His timing is usually wrong. For all its worth, avoid listening to the guy except as a contrarian play. Got out of my NYT PF put today. Got in Dec. 19 at $3.00 and sold today 12/22/05 at $3.70. Just had 4 contracts so, $240.00 for a couple of days work. My past trade on ADQ MH was a big "titantic" loser. Lost about $950.00 due to being stubborn. Should have reversed course and bought calls earlier. One lesson learned!!! Still have one position at XTO AI bought 12/20/05 at $2.65. It went down today after being up slightly yesterday. If it goes bad tomorrow, I will go short and buy puts after selling XTO AI at a loss. One important lesson I have learned is if you are wrong in the direction----take your loss and go the opposite way!!!
I'm surprised they take such a hard line with him. He's a brilliant man, but I'll concede he's certainly not right all the time. And I say that as a swing trader, whereas his picks are intended for 18mos. or so, meaning I haven't ever gone so far as to check his picks long term. I look up his comments daily on the 'net because I know he's done a lot more homework than I have on the overall market during any given day, and I don't know how to recognize important info like he must. I must say, I'm surprised you're still playing XTO - it looks so unpredictable - it doesn't stay in any one direction for more than a couple of days! Nice play on NYT! You got in kind of in the middle - between the BB lines, and rode it til it actually broke through the bottom line - something it rarely does. I can't make sense of "ADQ MH". Is there a way I can find the underlying if I punch that symbol in somewhere? All my resources ask for the underlying symbol first. Taking my loss and going the other way immediately was something I was trying to learn on DNA, but it's a challenge when I can't daytrade on this acc't. Happy Trades...
Rob on Business, At the risk of a slightly long post I will give you a little insight into how I trade. Understand that there are many different ways to attempt to forcast stock movement. You can decide for yourself to agree or disagree with my methodology. I've been in your shoes and I've traded with your methods. I think that everyone should start that way because you learn very quickly the ins-n-outs of options. Many people say you should paper trade first. Not really my style. Paper trading falls somewhere between theory and real life, but it's sort of like watching the game show "who wants to be a millionaire". It's easy to come up with the answers when there is no pressure and no consequence for mistakes. Day trading is really easy on paper. Much less emotion, and orders are always executed perfectly. That is not real life. In options, a 10 cent difference in fill price on your order could make or break the trade. Anyway, I'll get off my soapbox after a couple more points. Just to relate to you WHY I trade this way. The bane of every traders existence is the compulsion to make a trade. You hinted at that in a recent post. No trader wants to be an investor. But to be a SUCCESSFUL trader one has to only trade the best setups in a given strategy. Maybe the person likes earnings announcements (been there done that). Delta neutral trading? Done that too. In each strategy I only choose the best setups. I have a preliminary list of criteria that must be met before I even consider a trade. After that I dig a little deeper and never trade on impulse. A while back I read the book "Options Course", written by George Fontanills. Everyone in options knows him. I'm not really a fan. He loves positions that allow for unlimited profit potential. So do I, but after killing myself trying to pick the stocks that might allow for that I realized that there are many better ways. To make a long story short(er) I developed a methodology that realied on PROBABILITY rather than POSSIBILITY. In other words, a 80% chance of making 100% gain. Rather than a 25% chance of making a 200% gain. Just throwing out numbers that aren't meant to be analized, but you get the idea. If you want more detail I will explain more accurately in later posts. Anyway, in regards to DNA, if I were to take a position in it I would use more than this to evaluate it, but I threw out a caution based on some quick analysis. The first thing to notice is that biotechs can be a bit dodgy. Anytime I trade a biotech I am extra cautious. Lost of news on them weekly, both good and bad. Then consider the big boys (institutions and others with more money than me) and how they are trading the company. On Sept. 1 it peeked for an all-time high at about 95. Then there was profit taking from what has proven to be an outstanding year. On 9/19 it closed below the 50-day MA, and again a couple days later. Notice what happened then, dramatic plunge. Then double bottom at 80 (= great time to get in for a 1-week huge profit). Then a big climb where the only resistence was again the 50-day MA. The next resistence showed up at just above 94 for a few days showing that there might be something to this 94-95 area. Momentum carried it through to its peak after which it settled back to where? Yep, 94-95ish. After 12/14 when it decided to stay below the 95 mark it fell fast then bounced quickly to that same level. If it closes above 95 for a couple days it will probably be a good call play but it looks like it will take a lot to do it. The $93 is the current 50-day MA. Today it hit it and then bounced right back up. If it closes below 93 I would be looking for a fast drop. $90 is the most recent bottom where it will likely find some support again. If it falls below that we have the beginnings of a bearish trend, that is why I said to reverse the position. Anyway, I typed it up really fast and the numbers aren't very precise but you get the idea. Any questions, just ask. About verticals. There aren't delta neutral, and they are directional, but they have a built in P/L. Have a very Merry Christmas. Oh by the way, since you mentioned you are a little new to this, be careful between now and the first part of January. Lots of people on vacation and the trading volumes get all messed up. You'll see a lot of companies making wierd moves on low volume.
Rob on Business, XTO has been good to me. The bulk of my profits have come from that stock. NYT PF (NYT ), I have already sold out at $3.70 after getting in at $3.10 for a 4 days swing trade of about 19%. ADSK (ADQ MH) has been probably my worst trade since, I started trading options. My friend is still hanging to QWSCV (QDEL) which doesn't look good. This one is probably going down lower. What Cache Landing said about, being selective in trading certainly applies. Have had only 23 trades so far, 13 winners, 9 losers and 1 even. Overall win loss ratio is 1.61 to 1, previously 2.71 to 1 but, the ADQ MH certainly gave back $950 in profits. Can't win them all. Do have XTO AI (XTO) , 5 contracts and down slightly and still holding. Away on vacation for a couple of days but, going to buckle down and find a couple of trades when I get back. Good luck to you guys.
Thanks guys, for the replies. I appreciate your kind attentiveness. I am drowning here, stuck in my last losing DNA call, my last trade if it doesn't pick up soon. The Nasdaq was down a good bit today, as I suspected over the last couple of weeks it would be. Truthfully, after the last 3 up days and the high early action today, I thought maybe I was wrong! Even though I keep thinking the QQQQ's will stay down, I tend to be bullish on DNA although I don't really know how to reconcile that with the bearish Nasdaq. That should tell me to stay out, and if things open low tomorrow, I will. Many $K's and hours and anxieties after I first started last Feb., I have learned it's not worth staying in an uncertain trade, even if it's exciting to stay in. Smallfil, hats off to you. I don't know how you ride that bumpy XTO, but good for you! I hope to remember to check in with you guys and see how your strategies are working out after I'm dead. I'm also sorry I have nothing good to contribute except to be an example of what not to do! Cache Landing, if I ever come back with another wheelbarrow of dollars, I will take the less risky road and play spreads instead of only buys on directional trades - even though I know it means less return. But for now, life calls and I have other things I must invest in.
Rob on Business, Guess I spoke too soon. Got trashed on my XTO AI and lost about $800.00. Still, XTO has been good to me overall. Lying low for now to review my trades and see where the mistakes are. Don't blame anyone but, myself. Buck stops here. The last month, my trading seemed out of focus. In retrospect, I have to be more quick to bail out. Been quite slow the past couple of trades and that has been a killer!!! Will definitely resume trading once, I figure this thing out. Time to view my other DVDs on trading so, it is time well spent. Good luck to you too. This trading thing requires a lot of effort education wise so, just keep reading and studying----it will come to you. I will do some studying myself.
That bane is right on! Patience, patience... I bought and started reading Options as a Strategic Investment by Lawrence G. McMillan, and have heard your mention quoted before as well. I use Bolinger Bands and the 20EMA to gauge habits and tendencies in stocks and find that the most helpful single tool. People have often mentioned RSI but it looks to me like its profile merely mimicks the stock movement. I'm trying to see how using your 50MA line suggests support or resistance but I can't see it on DNA. You mention following how the big boys are trading it but don't know how to do that. I also don't know where to find and track IV, delta, etc. on desired options. How and where do you do that? Thanks again so much for your support! Flipping in and out of calls and puts on DNA, I truly don't know how to read it. With my last few dollars, I'm going to sit out an OXY Jan85 call til it makes money, or bust. I got out of the DNA put this a.m., because it was shooting up past yesterday's close, yet it lost all that and then some, closing handsomely down for another bearish day, with me out. OXY has been mentioned a few times lately by Cramer to get in on this pullback, yet I don't have a lot of confidence in the crude prices going high anytime soon to fuel the stock price, as that's the only thing it seems to respond to. I missed a rocketship in UARM, trying to anticipate a pullback when it went out of sight, taking the Jan30 calls from $75 to now $1050. That really hurts. Happy Trades...
Well, went on vacation for a week. Still on vacation but figured I would post a short message. Rob, In regards to the 50MA. It is difficult to use it as a one or two day directional indicator. A lot of institutions use it as a buy/sell point for core (positional) trades. Some companies are heavily traded by institutions while others aren't. I wouldn't use it as an entry point on a 1-3 day trade. What you will want to pay attention to is when the stock breaks through it and closes above or below it for a couple days. It just did that this past week, adding a little more conviction to my bearish opinion on them. Notice the 20MA and 50MA converging right above it. This indicates that there are likely a lot of sellers lined up. On the flip side, if it does manage to break through both lines (and close above them) for a couple days, that would indicate that the resistance that was supposed to be there isn't. Which usually means that support will heavily outweigh resistance and it will likely make a fairly fast bullish run as short sellers are forced to buy back their positions. You might have noticed that I always leave my forcasting open to both possibilities. Contingency plans are a must in trading. This is why I trade verticals. I make sure that when I get into a position, if it goes against me that it will make a good run the opposite way so I can buy back the short leg of the vertical and let the long leg run to either the break even point or past it. Smallfill, You've got guts. Anybody that plays directional trades on oil stocks right now has more guts than me. Interesting thing about energy stocks is that the EIA reports every week. It's kind of like a mini earnings forcast every wednesday. Anyway, good luck on your XTO plays. Well, I will be back next week looking for some new positions. I only have the three mentioned trades right now because I didn't want to have to watch too closely while I was on vacation. If anyone would like to know what plays I will be getting into before I execute, let me know, I would be happy to share my strategy. If anyone likes a certain company this week let me know. Specifically bullish plays. I think it's gonna be really easy to find bearish plays for the next little bit, but I don't want to smother my account with bearish plays. As for my current plays. - Up 40% on DJX - About even on COF - Up 20% on PAAS
Rob on Business, I forgot to answer your questions. I forgot if you mentioned who you trade with. I use ThinkOrSwim. I've used others but TOS is by far the best for options. Anyway, you can find a lot of that stuff on their platform, and best of all it's $FREE.99 which is my favorite price. Although I mentioned that I'm not really a fan of George Fontanills, his optionetics platnum platform does provide that information in a very usefull well laid out manner. Best of luck.