Trading Stupid

Discussion in 'Journals' started by pattern traitor, Jun 26, 2011.

  1. Since my dividend stocks are likely near some near-term highs, I'm opening a day trading account separate from my investment account with enough equity to profit on one percent moves. I intend this to be fun rather than some get rich scheme, so I've put together some low-impact day trading rules to keep everything from blowing up:

    1. Nothing overnight.
    2. Nothing on margin.
    3. Volatility is my friend.
    4. One round trip per day... make it count.
    5. No loss too small, no gain too small.

    In an effort to do as little research as possible, I'm going to stick to high volume stocks at around one billion market cap. Momentum and market irrationality, ho! I'll post daily after my trade ends and we can all watch me develop an edge...

    ...or slowly fritter my savings away for no good reason.
  2. ...and for my first micro cap: MSFT

    Oh wait.

    None of the smaller stocks I was watching were going much of anywhere and I saw the big boy spike a percent, hopped on, and gained about 2% before I sold happy. Three cheers for up days.
  3. Grabbed one of the volatility stocks I've been watching, HRBN, in the middle of its opening spike and have been riding it around all morning. I'm exhausted and sold it with a 1.5% gain.

    I thought I'd avoid limits and stops but it seems in stocks like these they may be necessities. Since I'm not afraid of small losses and gains they're probably the wisest move.

    Less stress, certainly.
  4. SNX had a positive earnings report and then crashed on the open... usually good for a bounce. Which I missed by a few seconds. It didn't fall far after that, however, and I waited until it grouchily surrendered 1% and I got out with a pleasant profit.

    All this good luck can't last.
  5. It's almost a relief to get a loss!

    Again, all of my small caps were fading, so I tried to jump aboard EBAY's rise. It turned around and I sold after losing half a percent rather than playing the fool's game of waiting for it to turn.

    Better luck tomorrow, maybe.
  6. +1.5% riding DRI news on the opening.

    Which ends with me up a little less than 5% on the week with 4 out of 5 winning trades. What have a I learned so far?

    1. Beginners luck makes me want to trade more frequently and other catastrophic decisions. Already I can feel myself saying things like "if I make 5% a week every week that'd be..."

    2. I was shocked by the urge to hang onto something while it lost because I "knew it would go back up". It worked out with HRBN but at the cost of exactly the kind of stress I want this stupidity to avoid.

    3. I was less shocked but still frustrated by the urge to sell something as soon as the bid/ask spread yields a notable gain rather than waiting until it reaches a more obvious turning point. Psychology is a harsh mistress.

    4. My dividend stocks aren't doing that badly. Not as good as 5% a week, but possibly better than I'll do in the long term. This experiment is worth doing.

    Happy 4th of July! I'll enjoy the day off and be back bright and early on Tuesday.
  7. Got into OMG on the open, got out before it completely cratered, but not before I'd lost money... down about 1% today. Whoops.
  8. What a mess! All my potential targets are either frozen in place or whipping about like mad. Can't find anything predictable to latch onto so I think I'm going to skip a day rather than sticking my toe in. Good luck, gang.
  9. Grabbed recent microcap uptrender JVA on its opening climb, and got 3% out of it. Best one-day swing yet. Glad I didn't have a loss yesterday to take the shine off that.
  10. Grabbed JVA again on the open, but too late to catch a piece of the jump. Still took +1.5% selling at a short term top. I remain fascinated by how much I want to sell when the price goes up, and how little I want to sell when the price goes down. I'm clinging to some degree of discipline with my teeth, but it's hard not to kick myself for leaving so much "on the table".

    If I'd simply held onto JVA from yesterday I'd have been up 8% on the day, and even if I'd waited it out this morning I could have squeezed another half a percent from a higher high. Woulda coulda shoulda. I'm sure with a little searching I could find the right set of options to have made me billionaire by last Thursday. It's not worth thinking about.

    So, up about 3.5% on the holiday week, and a little more than 8.5% since I began. Stress is still higher than I expected, but so are the rewards.

    Big lesson: If there's no good trade, take a day off. That felt like such a relief.
    #10     Jul 8, 2011