Will's NYSE Scalping Journal

Discussion in 'Journals' started by FXTraderWill, Feb 3, 2007.

  1. Thanks to all who have chosen to take the time to read through my postings and to all who offer useful suggestions which can help speed up my road towards consistent profitability.

    I am posting this journal as a method of holding myself accountable to myself and so that Elite Traders out there can shove reality in my face in the event that I'm repeatedly making the same errors, deluding myself and ignoring evidence that my actions are not inline with success, or that I'm otherwise not acting in accordance with my potential.
    I also would like for others to be able to learn from this journal - about both the markets and themselves.

    Included with most my entries will be a list of the trades placed on the day, and some small video clips of my level II screen/open book/time and sales accompanied by pictures of charts so I can show what I was reacting to on my most important trades.

    I started in mid november on a simulator at a proprietary trading firm which provides extensive training and mentoring and actually cares deeply about producing successful traders (as opposed to mildly profitable, or money losing, churners). I started trading live on December 5th, and have since traded for 38 full days of trading (though three were half days - one day I left early and was sick, one day the market closed at 1:00, and one day I wasn't able to come in until 2:30).

    I trade mostly off the tape and open book, using charts primarily to guage volatility, range, and direction. I trade only NYSE stocks, with a very brief timeframe - I'm usually in a trade for a few minutes at most, scalping based on momentum - though I'll hold slower moving stocks for longer periods of times when I feel I have something good or it's a slower part of the day.

    Yesterday was a pretty good day, though I ended up in the red $30.

    What I did properly was identify situations where buyers were stepping up, chasing each other, and in control of a stock's movement and capitalize. Most of my losers were well contained, and the few that weren't were trades I got mostly fucked on and couldn't have done much to avoid and would take again in the same situation in the future, with a few exceptions.

    All the trades I took on ISE were pure shots - seeing a high volume bar that sort of looked like a hammer, deciding "eh, this should be the bottom, this stock has fallen a lot and the other exchanges are rising," and then losing money. With fees, I lost over $30 on ISE, my entire day. I took these shots when my P/L was negative by a few dollars in desperate attempts to make myself green; this doesn't work. This is the second time this week where, at 3:30-3:45 I was down $4-8 and lost another $30 chasing those few dollars to make myself green. I don't think this will be a habit as I get more and more used to having positive days, but at this stage, positive days are rare enough that I'll fight for them desperately - and foolishly. What's most ironic is that on both days, had I not taken shots, and just waited for good setups to appear, I would have finished positive.

    I'm also disappointed in the way I traded CEN - I had a bottom picked up on that stock perfectly, and bailed when the trade was 5 cents in my direction for no reason. I had an offer out at 30.49, which would have been hit. I also did this on MUR - the crude futures were rallying, XLE was was making new highs, and MUR had a seller holding it down. I held it through about 9 cents of pain, and when it came back to a little above my entry price and the seller was still there, despite crude being higher and the energy sector still rallying, I decided to sell off. I would have had at least 20+ cents on this trade. That, and the CEN trade, cost me about $40.

    The trade where I liost $5 on STJ ($7 after fees) was also a shot, calling a bottom, for no reason.

    I must remind myself that calling bottoms generally doesn't work, unless there's a specific reason; the CEN trade where I had it two cents off the low was a bottom because the behavior of the stock clearly changed, the thick offers cleared up and began to be taken out, and I saw HUGE prints (50-100k shares) at that level indicating that the seller was having his order finished off by a buyer who decided to step in at that level. The STJ/ISE trades were just "ehh... maybe this is a bottom, worst case I'll lose a littlle"... no reason at all for them.

    The WMS trades at the end were also error prone; I had a chasing buyer, but became scared out for a $4 ($2 after fees) profit; then I bought again, and lost $6 ($8 after fees); the buyer came back, and had I stuck with the original trade, I would have made money well, and I definitey wouldn't have lost the $8, since the buyer had a huge bid at $40.66.

    The final mistake was on IN - I hesitated in my entry 25.07, and ended up paying up at 25.10 - because I paid too high, I decided to bail out on the trade at 25.11 (for a 1 cent loss after fees). I then re-entered at a worse price, 25.15, and though I was in the green 17 cents, I jumped the gun by one cent on my trailing stop (I trail on the 5 minute bars when trend following - when a bar pierces the 5 minute bar's low, I exit, but it didn't pierce it, just touch it). Had I not exited at 25.26, and waited for 25.24, I would have made at least another 15-20 cents.

    Tuesday I will be sizing up to 200 shares, allowing me to kick half the shares at a small profit and let the other ride for either a big winner or until it reaches my break even price.
  2. A few things right off the bat.

    1. Scalping NYSE via the Open Book with buyers stepping up/sellers stepping down no longer works consistently. The OB is more or less a joke now, it cannot be relied on like it used to be. If you are gonna trade NYSE I suggest learning/focusing on intraday position trading. The algorithms implemented via the hybrid market make scalping the NYSE much less predictable and the Risk/reward is no longer in line. Trust me, I scalped the NYSE exclusively with good success for 3 years. I've moved on.

    2. You're WAY too P&L focused right now. Convince yourself right now that it will take you a MINIMUM of one full trading year to get consistent. Fully re-evaluate yourself in Feb 2008. Your main focus right now should be total immersion into learning what works and what doesnt and always always always learn from your mistakes and from your successes. I suggest not looking at your P&L until the end of the day.

    3. Dont size up. You're not ready yet. You should put together a month where you have at least 15 green days out of 20 before stepping up to 200 shares. No need to add more risk until you've proven to yourself that you can do well w/ 100 shares.

    4. Theres a time to pick bottoms and a time to pick tops. You arent ready for this yet. These types of trades are very enticing to all traders but only the experienced ones usually know how to nail these setups b/c...they are...experienced! Wait for some confirmation before entering. Catching falling knives and vice versa is a recipe for disaster for the rookie trader.
    coskinas likes this.
  3. Pm'ed ya

  4. May I suggest you to focus on fewer stocks.

    Start with 1 or 2 stocks that are in the same sector (avg vol ~3m). Read the news and what they do, and how they differ.

    And start to focus on the prints and where the size is when it take prints. Or try to get the general order flow. Is the bid moving higher by the minute? is the ask coming down and staying down?

    Watch the first move right off the open and compare that to the move it makes right after and rest of the day. Did the stock trend? Did it fade the first move? Did it move fast to close an overnight gap?

    You worry too much about P&L, worry about risk and reward instead. Put a hard mental stop order before you enter into a trade and stick with it.

    Even I couldn't jump around that many stocks and make money in everyone of them. Your job as a trader is find a good one and stick with it.

    Hope this help.
    coskinas likes this.