It’s been almost four months since my last post here on 10k, and as usual it has been work that has kept me away. Rest assured I have been trading, and if you are an Art of Trading member then you have seen me fairly often over in the chat room. If you aren’t a member of AOT, then you seriously need to check it out; it’s more than worth the money. As a matter of fact, Trader Stewie and the rest of the traders over at AOT are the main reason for my recent success in trading. I sent an email to Trader Stewie yesterday which he shared with the rest of the AOT members, and I want to share it here as well, with some additional information.
I want to start out by saying thank you once again for all of your help. I would still be a struggling trader if you hadn’t been there to mentor me and keep me from making stupid decisions. Subscribing to AOT is the best money I’ve ever spent on trading.
I mentioned in the chat room today that my account hit a milestone after my gains in STX, but I will get to the numbers in a minute. As you know (most other AOT members don’t know) I quit my job and started trading full-time back in November of 2006. I knew I didn’t know anything about trading but I was confident that I could learn to be a successful trader if I put in enough time. Over the 1.5 years that I stuck with trading I had some good wins and some bad losses. I was often discouraged and constantly tried “new” trading styles, risk tolerance adjustments, research systems, etc., all of the things that most newbies go through. I tried to trade everything, stocks, bonds, Forex, commodities, futures, options. I tried wide stops, tight stops, no stops at all, scaling in, scaling out, buying weakness, selling strength, selling weakness, buying strength. I wrote out a trading plan (probably 5 or 10 of them), I kept paper journals outlining all of my trades and even started a blog to talk about my trading in hopes that my honesty, and knowing other people were going to see my mistakes, would make me a better trader. I tried increasing my size, I tried trading pre-market and after-market, I even spent some time in “trading probation”, all in the pursuit of improving my trading.
After all of this I failed at getting the results I wanted. My need to have a steady income and to keep my wife from killing me forced me to give up my dream of being a full-time trader in May of 2008. Even in the face of my failure I found a friend who told me:
“Ben: of all the bloggers/traders i have known, i have never been so sad about someone leaving, except for now. I am truly sad, but i am sure you have given this idea much thought and you have made an intelligent decision. Trading is very tough and it’s a long learning process alas. It was a pleasure learning with you and getting to know you. You are a very special guy and i wanna wish you success in everything you do. good luck Ben!
Those words of encouragement meant a lot to me. The funny thing is, it wasn’t until after I left trading that I realized what I needed to help me be a better trader. It wasn’t a bunch of books, or charts, or strategies, or more time or money, it was a community, a connection with other traders. There is so much going on in the market every minute of every day that it is impossible to see it all. This is why your service is so important. Having your experience, the experience and camaraderie of all the other AOT members (both novice and seasoned) is what has turned my trading around.
With all that being said, here is how I use the AOT community in my trading now. I have resigned myself to the fact that with my daily job and workload I will never have the time to do research and find quality trade ideas. I rely on you and the chat room for 99% of my trades. I simply log into the chat room on days that I will have some time, click on the button to activate your alerts, and turn up my speakers. When the alerts come in, I usually don’t even look at the charts, I just calculate how many shares to buy, place the trade and set my stop. I try to do everything I can to take myself out of the trades.
I have gained confidence and I have been looking at your nightly Watch Lists and placing trades before you trigger an alert. For example, NUE, MOS, VALE, and STX. All of these were good winners that you never triggered, or I bought before you triggered.
I am up over $5,000 in my account since starting back my trading in October 2012. Now, $5,000 isn’t a lot of money, but when you consider that my account started out at $25,000 that is over 20% return in less than 5 months. What’s more is that I have missed many amazing setups because of work or hesitation/timing.
My recap for 2012 shows 63% winning trades and so far 2013 is at 65%. Again, I don’t have any magic other than looking at the charts you send, making trades once they trigger, and trying to manage entries and exits. The key, in my humble opinion, for the last couple of weeks has been trust and patience. Trust the setups you see, and have the patience to let the trades work. I hope this can be of some help to others.
One thing that has always been important to me on this blog is honesty. Whether I am trading well or poorly, I have always been honest and open about my results and my thoughts on my performance. Even in my worst times (How Quickly Things Change, January 2009) I have laid it all out there, which wasn’t always easy. Everyone likes telling about their winning trades while also enjoying reading about other traders’ losses; it’s just human nature. This is why there are far more “Fail” videos on YouTube than “People Are Awesome” videos; humans have a way of judging themselves by others’ successes and failures, mostly failures. Anyway, currently I am experiencing some much needed success and I wanted to share that here.
Here is a screenshot of IB portfolio screen after Friday’s trading session. The individual holdings don’t matter that much, but you can see my account value is $30,357 vs. $25,000 when I opened my account and made my first trade on September 26, 2012.
Overall today was my best day since being back in trading, which is nice, but once again I missed a huge move because of micromanaging a trade. I don’t have a lot of time to elaborate today, so lets get right to it.
I had three swing trades coming into this morning; AMZN and GMCR (which were TS Alerts) and CDE which was on our watchlist but not called out as a trade. The market opened flat and my holdings opened down ~$150. Amazon quickly started moving up to bring my PnL green and GMCR moved up a bit and stalled out. CDE also sold off initially, but then had a good move up for about 35 minutes.
All was well until about 9:00 when GMCR started seeing resistance around 22.50. Like an idiot I got impatient and tightened my stop just like I did on LEN two days ago and got stopped out. The only difference is that GMCR immediately went VERTICAL and melted the faces of shorts. At it’s highest point GMCR was up over 10% and I got shook out with a lousy $36.70 profit. My mistake was focusing on the minute to minute move and forgetting how perfect the technicals were on the daily chart. See below.
TS Alert #1: GMCR
Sell 300 like and IDIOT @ 22.39
As a small redemption, while I was tightening my stop on GMCR, AMZN was running away in the right direction. I trailed my stop with AMZN lot looser at 243, 246, 247 and 248 then finally taken out near the top at 247.94. This is what I should have done with GMCR. I should have left my stop at 22. I almost bought AMZN again when it retraced back to 246, but I was knee deep in CDE at the time.
TS Alert #2: AMZN
Sell 75 @ 247.94
My big redemption for the day was my swing trade in CDE, and what is most amazing is how I managed the trade. CDE sold off on the open for 10min then ripped up to settle under 30. It traded sideways and did NOTHING for over an hour. I was having flashbacks from GMCR and I made myself look at the daily chart on CDE to remember why I was in it in the first place. I saw the volume drop to nothing around 11:00 and I had a feeling that it would run if volume came in. I only had 200 shares and since I was out of GMCR and AMZN I had plenty of cash. So I started looking for another entry. At 11:30 I started trying for an entry at 29.85 but I couldn’t get it so I moved my limit up to the offer and got filled for 600 more shares at 29.89 at 11:31. Amazingly, less than 5 minutes later CDE broke 30 and kept running. I was making up for the missed trade in GMCR in a big way. I trailed my stop somewhat closely at 29.78, 30.11, 30.21, 30.23, 30.26, 30.33, 30.40, 30.46 and 30.48 where I was taken out at 30.47 just off the high of 30.60. NAILED IT!
Rogue Trade #1: CDE
Buy 600 @ 29.89
Sell 800 @ 30.47
I took two trades home today as well; CBG which was a TS Alert called out by another trader in the chat room and SINA which was a pure TS Alert. SINA closed down -$143 and CBG closed up +$73. Here are the daily charts for these two swing trades.
3 swings closed, 2 swings opened; 2,075 shares; +$746.81
As I mentioned yesterday, I came into the open holding onto 400 shares of FIO that I bought one minute before yesterday’s close. The chart below shows the good and the bad. The market opened up in my favor with a nice gap in FIO and since this was technically a Stewie trade (although my premature exit yesterday and then last minute re-entry wasn’t part of his trading plan) I followed his call to sell shortly after the open and book some nice gains.
In hindsight, and with the knowledge of yesterday’s LEN fiasco because of a close stop, I should have put a stop in place and let FIO play out. Of course, I’m not blaming Stewie for missing another 1.00 move in the stock – quite the contrary – I am blaming myself for not learning from my mistakes. Stewie will be the first one to tell you that you have to trade your plan, and if that means exiting before he calls it out, or holding past his exit, then by all means go for it. The red lines on the chart below is roughly where I would have put my stops in if I had followed my plan.
I didn’t stick to my plan of trailing my stop and for that I missed out on the opportunity to more than double my profit on this trade. I exited at 8:31 at 29.67 and booked a nice gain.
TS Alert #1: FIO
Sell 400 @ 29.67
The rest of the day was spent looking through charts and watching the moves I missed in QLD and FIO. I opened three more long positions before the close looking for an extension of today’s strength. Two of the swing trades are Stewie alerts and one is a stock that was on his watchlist but he didn’t initiate a buy on.
The first trade we opened was GMCR. This is a stock that has been beaten down this year with a huge gap down from 50.00 and went as low as 17.11 after a lot of bad news and honestly coming down out of the stratosphere to a more reasonable price. As you can see from the chart, GMCR has been showing support around 21.50 – 22.00 for a week or so and it looks primed for a move up. We’ve got a lot of lean candles and a falling bull flag that could act as a springboard for the stock. Target price is 24.00. This is only a HALF-SIZE trade.
TS Alert #2: GMCR
Buy 300 @ 22.19
Our second swing trade opened was in AMZN. Yesterday AMZN sold off hard early in the day and then reversed with the Nasdaq and closed very strong. Stewie called out the trade at 244.70 (yellow arrow) as it was moving up over the opening high. Before I could get to the trade it had move .75 so I decided to see if it would pull back instead of chasing it. It took me almost two hours before I got the price to come back down. I was going to take 100 shares but with my small $25,000 account that would have been my entire account (plus margin because of ~$5,000 in GMCR) so I decided to knock it down to 75 shares. I initially put in my limit order at 244.92 and I kept moving it down as the stock retraced trying to get the best price possible. I did get a price close to the initial alert, but I was not able to move my limit order quick enough to avoid a large draw-down as sell volume picked up. You can see my entry at 244.73 on the first chart. The second chart shows what we are looking at in the daily price action.
TS Alert #3: AMZN
Buy 75 @ 244.73
My last trade for today was in a stock that has been on Stewie’s watch-list but was not an official alert. I have been watching the price action in CDE for the last few days as it has traded in a range and consolidated. I was looking to get long with a break over 29.70 and about 3 minutes before the close this price was reached so I jumped in 200 shares at 29.74. Let’s hope that CDE works out tomorrow like FIO did today. If we do get a gap up, I will make sure to put in stops to protect the downside but give me the opportunity to maximize gains which I failed at today. Tune in tomorrow to see if I have the chance to redeem myself. Below is a daily chart showing the range and potential breakout.
Rogue Trade #1: CDE
Buy 200 @ 29.74
1 swing closed, 3 swings opened; 975 shares; +$254.25
Today was a position reversal kind of day. I came into the open short 300 shares of AKAM from 37.77 which was up $58 at the close yesterday. My stop was at 38.50 from yesterday but Stewie had us lower it to 38.05 shortly after the open. We had one rogue spike up then a huge selling bar and Stewie called the exit at 37.45. I didn’t cover immediately, instead I trailed my stop as it fell to 37.70, 37.55, 37.48, 37.35 and was finally taken out at 37.36. As you can see, I didn’t catch the LOD but AKAM did reverse like crazy shortly after. More on that later.Here’s the chart.
TS Alert #1: AKAM
Sell 300 @ 37.77
P/L: $65 and +$58 from yesterday = +$113
After getting out of the AKAM trade I didn’t focus on trading too much; I had a lot of other work to do. However, Stewie was keeping a close watch on the market and looking to get long, and he quickly started calling out long trades. His first call was QLD from 57.35 (yellow arrow) with a stop at 56.30 but as you can see from the chart below it moved quickly and I could not act fast enough.
Stewie quickly called out another long trade in LEN at 36.25. I was able to catch this trade fairly quickly at 36.31 with 300 shares. The QLD was ripping, SPY was ripping but LEN was just trading mostly sideways. I looked at TOL and it was moving much better than LEN and I started to get worried and cautious so I started tightening my stop as usual. My stops were 35.20, 36.08, 36.26 and 36.37 where I was taken out on a small spike down. After getting stopped out the stock kept moving up and closed over 60 cents higher. I missed about $120 on this one because of an unwillingness to lose.
TS Alert #1: LEN
Buy 300 @ 36.31
Sell 300 @ 36.37
Only ten minutes after calling out the LEN trade, Stewie called out another long in FIO at 29.03 with a stop at 28.30. Again, I was a little late on catching this trade therefore I had to put in a limit order and move it up until I got filled at 29.18. Again, the market was rallying hard for the next hour after my entry in FIO and I lost confidence in the trade so I moved my stop from 28.30 up to 29.07 and an hour later I was stopped out at 29.05 for a loss. As you can see from the rest of the chart, FIO did nothing the rest of the day and I was feeling pretty good about my small loss.
TS Alert #2: FIO
Buy 300 @ 29.18
Sell 300 @ 29.05
As we were getting into the last 15 minutes of the trading day I noticed that Stewie was still holding QLD and FIO as swing trades. I contemplated this, and the fact that he made such an aggressive switch from short to long, and came to the conclusion that I needed to be in something. Since LEN and QLD were up so much I figured my best bet was to re-enter FIO. So, at 2:59, one minute before the close, I took another position in FIO with 400 shares and got a better price at 28.91. We’ll see what happens tomorrow.
Rogue Trade #1 / TS Alert #2: FIO
Buy 400 @ 28.91
Sell 300 @ 36.37
If I could have been more nimble and caught QLD, and been more patient and held onto LEN, today could have been a stellar day. If you want to see what convinced Stewie to go from one short trade in the morning to three longs only an hour or two later, take a look at this video. Why We Went Aggressively Long Today
2 trades, 1 swing closed, 1 swing opened; 1,300 shares; $46.73
My day job kept me busy most of the day today so I didn’t do much trading as a result. This worked out well for me because I wanted to preserve my profits from yesterday and try not to go backwards. Last night’s watch list from Stewie was mostly long opportunities, but he also included a couple of short ides.
Rogue Trade #1: CRUS
Sell 300 @ 37.64
Buy 300 @ 37.14
I didn’t pay much attention to the market for the first two hours of trading. I had a free minute around 10:30 and looked at several ideas that were being tossed out in the chat room. Then I looked bay at Stewie’s short list and I found CRUS. I took a quick look at the chart and thought this was a low risk entry so I shorted it at 37.64 with 300 shares. As usual, I put in a tight stop at 37.80 and just waited around.
For 15-20 minutes CRUS just oscillated between .60 and .75 on low volume and then we had an abnormal spike down. On this spike I tightened my stop to 37.75 and shortly thereafter it began to fall. As the sell-off accelerated I continued to preserve my profits with stops at 37.40, 37.25, 37.15, and finally 37.12 and I was taken out at 37.14 for a .50 gain and $145.
TS Alert #1: AKAM
Sell 300 @ 37.77
P/L: $58 *at close; position still open
AKAM is a stock we have been watching for a couple of days for a short. As you can see on the daily chart above, AKAM had a good gap up back in June and it has been making a steady run ever since. However, it recently has hit resistance at 40.00 and has shown signs on weakness. The 20SMA has turned down for the first time since the gap up. We took this trade close to the EOD and it acted weak into the close, but it was a slow mover. I am looking for a move to 36.50 or 36.00 on a gap down Monday. We’ll see what happens.
1 trade and 1 swing opened; 600 shares; $202.50