I am back at my home office this week which has allowed for some trading time. I have recently started taking more size on my trades and my PnL is showing it. I haven’t noticed any heightened emotions with this increase in size, but I am keeping my eyes open for potential changes in behavior. Today was a rough day for me; partly because of positions going against me and additionally because of missed opportunities.

I got up at 5:00 this morning and scanned my watch-list and highlighted about 30 names to keep an eye on after the open. But my fist mistake came yesterday, by the way of not acting on my intuition. I emailed Stewie yesterday to ask him “Do you like GLD at these levels for a 1-2 week swing?” and he replied “tough call. stop at 110 if you choose to take it.”, which was exactly what I was thinking. I wanted to take the trade at $112.75, but I knew having a stop loss at $110 would mean an uncomfortable loss with 500 shares. I decided to hold off on the trade, even though I knew that if we sold off on the indexes that GLD could run. Well, I was right.

I didn’t realize that GLD had mad a run until Tradeitup and I got to chatting about some of his overnight holds. Missing this trade is made more bearable given the fact that I also averted disaster by not getting filled on 2,000 shares of MGM near yesterday’s close at $16.42. That trade would have been bad on the open.

On to today’s trades. One of the stocks on my scan list from this morning was CRM, which has been running like crazy since February. After a good breakout on Thursday, and two days of consolidation I was looking for a break of $90. I picked up 1,000 shares at $88.46 and had a stop in place at $87.40.

It wasn’t long before it became apparent that the gap-fill in SPY was a trap and the market took a dive.

After the sell off commenced, I tightened my stop on CRM to $87.65, which got me out before the first tall red bar at around 10:30.  Just before 11:00, immediately preceding the market sell off, I took a long in ESRX after looking at a daily chart on this one. It seems that as soon as I got long the bottom fell out and I had a $400 loser on my hands. Looking at the chart below you can see my entry on the white bar right at 11:00. What horrible timing!

My total loss today was $787 and change, which is less than 1% of my portfolio value, so I am not too troubled. I am now holding 1,000 of BCSI and 1,500 of SOA. Additionally, though most traders you ask would say to stay away from stocks that are reporting, I have 50 shares of FSLR as a interesting side bet. I am in at $128.96 with a stop at $123 in case they miss horribly. I am keeping my fingers crossed that we will get a pop on the open, but I am not going to loose any sleep over it.

If anyone that followed this blog in the past is still out there, I just wanted to let you guys know that I am still alive. A lot has changed in my life over the past two years with the move and change in careers, but it has been a great experience. For those of you that don’t know, I am no longer a financial advisor. I left Ameriprise Financial at the end of December 2009 and I will probably never get back in the finance industry.

I worked as an advisor for a year and four months, and although it was a struggle to keep up with paces the whole time, there were moments of triumph and excitement. I met a lot of great people and made a few friends for life. I learned a great deal about working with people and forcing yourself out of your comfort zone to get clients. When you are on the front lines in the middle of the kind of recession and market sell off that we saw, you get to observe the many ways people deal with stress and loss of capital and confidence in the system. Some people, both young and old, are calm and collected, while others will go to cash even in their 401(k) and wait until the market comes back to get back in. It is a fascinating study in human emotions.

As an advisor I didn’t have a lot of time to trade like I had hoped, and the commissions were so high that I had to hit a home run - which I had a few of - to even justify the transaction. My best trades were outlined in my post from August 2009, but let’s focus on the bad ones for now. My worst trade, and regrettably, one that I am still holding on to, was to buy VXX at $52. It is now trading just above $21.50, which is close to a 60% loss. Talk about a bad trade. Although I am down over $6,000 on this trade, and that pretty much wipes out half of my big winners, it’s not the money that bothers me. The fact that I have made the rookie mistake of holding onto my losers is quite frustrating. Despite this glaring faux pas, I am still confident that I can continue to be a successful part-time trader.

My strategy right now is to continue learning from Stewie by way of The Art of Trading subscription service and keep making cake on his calls. Stewie has done a great job in his first year of offering this trading service and he has helped me make a lot of money. You can see my review of The Art of Trading on investimonials.com.

You want to know recent results? On Monday I took Stewie’s alert on X, NETL and PEI. I exited the first two a few minutes before Stewie’s sell alert and I closed PEI right before the close instead of keeping it as an ONH. Since I am working from home most of the time, I can trade and work in tandem. Those three trades maybe took an hour out of my workday, we’ll call it my lunch break, and I came out with $878. And you thought lawyers made a lot of money per hour. Yesterday was not as successful due to stupidity on my part. I took on too much size on one trade that was my own idea. I got long 1,000 of COL at $62.73 after looking at the 30-min chart below and seeing the coiling action. I set my stop at $62.40, which was too tight, because I had too much size and couldn’t put it at $62 where it should have been. I got stopped on the sell off and ended up losing $330 on that one. I then redeemed myself by taking Stewie’s long on IVN. Again, I did not choose to swing this one and sold about 15 minutes before the close for $321 gain which nearly erased my COL mistake earlier. Lessons learned: don’t take too large of size when you can’t stand the loss at a reasonable stop level and stick with taking the alerts and stop thinking you are qualified to pick setups.

Again it has been over a month since I last posted on how things were going. The last few months have been great for me and the profitability came at a great time (the light at the end of the tunnel was getting very dim). This job is very hard even when you are profitable but almost impossible to endure at times when you are losing. I have been doing this full time for almost 2 years and am just now seeing my first consistent profits. I have questioned my decision to do this many times but the longer I do it the more it seems that it’s what I was meant to do. The more I do it the more potential I see in the markets and in myself. Nothing is written is stone, especially with this type of work, but I see myself continuing to build, continuing to grind it out, continuing to gain confidence. I have been profitable 9 out of the last 10 weeks and am averaging about 1,200 in gains a week. Seven of the last ten weeks I have have made 1K+ and 4 of those weeks have been 2K+. I have even had a few 2K+ days!! Although the profits are great that does not begin to tell the whole story. My one down week was a large loss, at 2,700, for the week. I lost most of the money in one really bad day where I was down over 3,400 before working the loss down significantly. I reviewed the week that Saturday and was confident I could come back the next week. The following Monday I lost 600+ and then proceeded to lose 1,200+ on Tuesday. So in the last 7 trading days I had lost 4,500 dollars and was well on my way to another big loss in the first two days of the new week. Instead of harping on the negative I stayed focused and was able to put together two strait days of 1,500+ gains on Wednesday and Thursday to end the week profitable. Early in October I had similar scenario where I was down through Wednesday of that week and then lost 900 on that Thursday. I was looking at a relatively large loss for the week and was down over 1,800 at one point on Friday but came back and made over 3,100 in GOOG and once again I was able to end the week slightly positive. Being able to take losses and come back to profitability is one of the biggest changes I have noticed in my trading. I can take losses now because I am confident I can get them back. Losing is a part of trading and you have to be able to take a loss and keep going. I recently bought a book called “Zen and the Art of Poker”. In the book there are numerous rules for playing poker effectively and profitably. The rules can very easily be applied to trading and #20 stood out to me. To me it defines trading to a tee. The rule says: “The true journey of mastery is in each moment”.  The gist of the rule is that poker, like trading, is a never finished journey. About the time you think you have it figured out new events and tribulations come along and prove you wrong. This continual learning process was defined by George Leonard as the “goalless journey”. There is no finish line: the journey itself is the destination. According to Leonard each minute, every moment, every day is the goal. I feel the same about trading: every trade, every minute, every day is my goal and I achieve my goal each day because I am a trader. I know this post is long but also wanted to post a few charts from the last few weeks:

I am back from vacation and getting back into the swing of things. Because my condo had no internet access, I did not trade last week and hardly even checked in to see how the market traded. It was a nice break from the markets and by far the shortest 6 days at the beach I have ever experienced. Usually, I am ready to be home after just a few days but I think I could have stayed another two weeks. I did spend some time thinking about my trading and how I had gotten to the point that I am at right now. I thought a lot about why I had chosen to attempt to trade for a living and about some of my original ideas about the market from years ago.

 Originally I approached the markets like an Investor looking for strong companies with good names (Read: GE, DE, IBM etc.) That approach lead me to study stocks on longer time frames and revealed why I wanted to learn to trade. Stocks that were in the middle of strong bull moves would always have periods where the stock would run hard for a few months but then there were always months where the stock would trade sideways. I thought that if I could figure out when a stock would run and when it would consolidate then the superior returns of long term Investing could be beaten. This could be accomplished by buying when a stock was running and selling when it began to consolidate and then moving that money into another stock that was making a strong move. This is not easy to do and would have been very hard to accomplish in the last 1.5 years with market conditions and my lack of real trading experience. But that very simple idea is what got me into trading and is still part of my makeup as a trader.

 Like I have stated on this site before, my trading approach has changed many times over the last 1.5 years, trying new styles and trying to adapt to a market that was noting like the one that I learned so much about from 2003 to the beginning of 2007. I don’t think I could have chosen a worse time to become a full time trader. I said all that to say this: I am still somewhat lost with my trading but I believe that being lost is part of the process. According to this link on HPT’s site there could be a whole lot more “being lost” in my future. But through all that there some signs of hope. Today I made one of the best trades I have made in a long time. Although I did not make a lot of money it was the planning, executing and confidence that made the trade so good. Over the weekend I came into the office and looked over some charts and updated my software. During my chart searching I came upon Mastercard and liked the daily chart setup. So I then switched down to the 30 min time frame and immediately thought that MA could run big on the open. The chart setups were very nice and I knew I would be buying MA on Monday. I came in this morning and looked over the chart again and thought that there could be a shake out move early and that I should wait for that and then buy. I executed the plan and entered MA at 289.50 with 100. My original plan was for 300 shares but MA turned around from my original entry so fast I could no pull the trigger on the other shares. My original target exit was at 297 but I never even got close to that. I exited the trade around 293 for about $375 in gains. Although I did not hold on long enough, have enough shares, and did not make the $2,000+ I should have, the trade felt really good and reminded me of my original ideas about the market. Research, Planning, Solid stocks with low risk entry’s, executing a plan with good money management, and having the confidence to hold onto a winner. Those are the things that helped me find good stocks and good trades back when I first got started with my $2,500 in 2003 and are the ideas that are at the core of my trading philosophy. I plan on focusing on these ideas and trying to find a way to apply them more actively in my approach to trading. In short: I plan on getting back to….. Basics.

Ah the joys of being an idiot from time to time. You know, after almost two years of active daytrading (only 1 year and 6 months full-time) you would think that those novice mistakes (like accidentally doubling down when you meant to close a position, or buying 1000 shares instead of 100) would be behind you. But today I proved that those mistakes will haunt you much longer than you think.

I came in today planning on only trading for a few hours in the morning and taking the rest of the day off. I got to the office 1min after the market opened and saw that CSIQ had reported earnings and gapped up. I had a good feeling that FSLR would be a good long given the right entry.

FSLR has had strong resistance around the $288-$289 level since the second test of $305 early this month. From the gap point on April 30 and the test of that level, sellers have been coming in and keeping FSLR in check. However, you can see a bullish setup in the MFI with higher lows for the first 10 trading day. A nice ascending wedge had formed coming to a point with about a $5 range. With CSIQ’s earnings release, FSLR gapped above the resistance level on the open which really made a strong case for the $300 level to be tested again.

Taking this into account, I was looking to be long on the open. I was given a beautiful opportunity when FSLR sold off from $293 to $290 and proceeded to trade sideways for a few minutes. I wasn’t getting much of a signal out of the MFI this time, but I knew there was a good chance for an early morning rally. I have been using Book Trader the last few weeks to try and get better limit entries, and this time it cost me. I waited for the right entry, watched the bid/ask and then quickly jumped in. Little did I know, I made the classic novice mistake of taking the wrong side of the trade. About 30 seconds after entry I figured out what I had done and luckily I was able to exit the trade with +$5. But it cost me. After making that mistake my confidence was a little low, and I couldn’t get myself to reenter the trade on the right side. FSLR quickly ran up to $295.50, leaving me behind. My last two trades were very straightforward, positive divergence on the MFI coupled with some sideways price action. I made around $275 on these. Here are the charts.