If you recall back at the beginning of this year, we kinda had a small blowup because of a couple of longs going into January. One of those longs was Mastercard. I had made good money daytrading and swing trading this name in December and decided to hold 200 shares into the new year. I was long this sucker from $214 and got out at around $195 causing quite a lot of pain. MA then went down to test $160 before slowly rebounding and trading sideways before exploding to $300. Ah! The bitter-sweet nuances of trading.

Anyway, yesterday I was looking at some different time-frame charts on MA and noticed a pattern that looked like a good short opportunity. I saw the daily chart and how MA had failed to get above $300, and I took this as weakness. I quickly formulated a plan to short the sucker at the open looking for weakness going into lunch. I was planning on getting a couple hundred bucks out of the deal with 50 shares. I decided that it could be a swing trade if everything lined up right. I got short at $290.

Now for the funny part. I know you’re thinking 50 shares, what a wuss ( I was thinking the same thing), but MA has a tendency to move around a bit to put it lightly. I was initially up about $100 on the trade, and then in true MA fashion it rips against me. I am down about $200 and MA starts to consolidate so I am thinking she could turn back down here. After a good hour and a half of consolidation MA rips again and hits $301 at which point I was down over $500 on 50 shares. Total crap!

I decided to hold it over night seeing that it tested $301 three times and never followed through. At this point I was just hoping to get out with a small loss and not even worry about trying to hold it into profitability. The market opens this morning and MA had sold off a little bit. My $500 loss was only a $200 loss but I didn’t cover as I was waiting for a larger retracement. What’d ya know, MA proceeds to rip my face off and test $301 once again and I regret not getting out at the open. Finally, as the market sells off hard in the afternoon session MA gives up the ghost and has a swift sell off between 1 PM and 2 PM. I exit at $292.93 down $147.50.

Now watch tomorrow as MA sells of 20 points.

I started a small (50 shares) swing position in JEC today. The stock had a large pullback from its highs around 101.00 in January. There was support around 70.00, which JEC only briefly traded through. The stock also has setup a pennant formation over the last month and has now broken out to the up side. There is also divergence in the stochastic (not shown on the chart) with strong volume. I also started a similar position in IBM with the same share size. I like the JEC setup a little better because it has less overhead resistance but they could both be good trades.

Update: As I was finishing this post I was stopped out of my IBM trade, at a price I am fairly certain will be the lows, since I entered at the highs. This is a good example of a good trade idea kicking your butt because of entry. I got in a hurry to enter IBM and did not wait for a good entry price. Then I let my stop go .50 cents further than I originally planned. I Lost $105 on 50 shares. Disgraceful.

The last two weeks for me have been tough. After the large January losses and a review of the month I felt confident that things would get better. I moved away from futures trading to focus on swing trading, which I think will work with my personality better. I have only been trading for a year and I am still very much a novice. I do not have 150 IQ and I don’t have 10 years of experience working for a trading firm(i.e.- I am not a trading genius and I will make mistakes). What I do have is a desire to trade and the willingness to take the risk associated with trading for a living. If I fail it is my fault, my time and my money. If you are a trader you know how hard this job is and if your are not you should keep your critical comments to yourself. Until you have put your ass on the line and tried to trade for a living I don’t care about what you have to say.

I know nothing is written in stone when it comes to trading and that there will be times when there will be losses. All I know is to do is try and preserve my capital, continue to work on developing a system, and try and move forward. This year will be my first full year of total focus on a single approach to trading. Last year was just a time to learn and I switched back and forth between different markets and styles of trading. I am trading without a complete system to some degree right now, but I am trading small size. In reference to my losses over the last two weeks, my biggest loser was BA with was a $600 loss and the rest were small losers. I closed out 8 short trades,on Tuesday, each losing between 100 to 250 dollars (two days earlier I was up over 2K on these trades). Even though each was relatively small, it adds up with so many positions. I got ahead of myself in my desire to get back to making money and had on to may trades at one time when the market conditions did not warrant. In my defense, this market has been nearly impossible to trade, for me and most other people and I have not learned when it is better to not trade at all. I know I still have a lot to learn and I’m willing to share my losses and gains with the trading world in an effort to better myself and maybe help others in there own quest to trade.

I personally have lost about $3,400 swing trading in the first 10 trading sessions of this month which equates to about about a 2% loss. Even though this is a small loss it is still a loss and I know that I either have to stop trading, cut the number of positions, or get back in sync with the market. There are some people out there who think that just because we have a blog and trade full time that we should never lose money. Every trader suffers drawdowns and times when it seems that the market is out to get them. We are no different. Right now things are hard and this market sucks. I will slow my pace and try get back to flat for the month. In the mean time I will try and stay positive and wait for times when the market is easier to read to trade aggressively.

I am currently reading Van Tharp’s “Trade Your Way to Financial Freedom” and Farley’s “The Master Swing Trader“. I think these books will help me get closer to having a complete swing trading system.

-Tradeitup

I started getting short on Monday and accelerated my selling on Tuesday. I also added a little today but will take a wait and see approach before I put on full positions. We are now down about 4.5% in the last 3 days and we will likely see some consolidation/reversal in the next 2 to 3 days. I will look to add to positions during this time given the right market circumstances. I am currently short BA, MMM, CAT, XLF, CAM, and ARG. I also have a few other names on my watch list that are also looking good. I will post an update if I start these positions. Here are the charts.

Coming into the end of December we were actually well positioned for the decline that came in the first two weeks of January. The only problem was that we closed out all our short positions the last day of December mostly to pad the month and our first year. (Feed the Ego) We closed 300 of SDS, 300 Short BA, and 100 Short GS all on the 31^st. Thinking that the first week of the New Year would be slow and uneventful I did not have a problem closing the positions. We also had both been planning on being out of town the second week of January on a trip to Texas and did not plan on having any positions on during our week off. Had that happened we would have avoided about 65% of our monthly losses which came during the second week of January. But, it just so happened, that Ainkurn’s wife had gotten sick and had to have surgery preventing him from taking the trip.

Positions were left on in MA and SPWR that no doubt came second to tending to his wife. The market got crushed along with our long positions and we lost about $5,800 on these two positions alone. We did let MA get away from us as our stop should have been closer than $195 and $192 with our average entry around $215. We intended to stay in the position if MA stayed over $200 which it had on the daily charts. The day we exited there was a massive move in MA, down over $10 in under an hour, which caught Ainkurn off guard and caused us to exit near the lows. The loss in MA accounted for most of our negative performance in the month. That just goes to show that one small mistake can case you a great deal of pain. We will have to pay more attention to our stops and not let trades get away from us.

Another trade that lost us a good deal of money was a long trade in RIMM. I entered the trade at what I thought was a good level and had a mental stop. The only problem was that it traded through my stop by about $3 dollars intraday and I did not realize it until it was too late. I ended up losing a lot more money than I planned on that trade and will have to be sure I stick with my stops even if I am hit intraday.

As far as leverage is concerned we were not over leveraged at any point during the month. We never had more than 50% of our capital invested at any one time. That leads to the final question of market trend. I felt confident we would go lower but was not positioned correctly to take advantage of falling prices. After my return from Texas it took a couple of days to get back in the swing of things. During that time the market had its huge drop over the holiday weekend and I put the brakes on any trades. From that point on I was behind the curve. I have been caught trying to short the market that last couple of days which added to our negative performance. I have had a handful of small losers and am still sitting on a few.

I also have been trading YM futures in an attempt to just add some small gains during times when I did not have on any swing trades, but I ended up losing almost $1,000 instead. In December I put on 15 swing trades with a profit of $5,000 and at the same time lost $1,800 trying to daytrade futures. I have realized that I do not have enough experience trading futures and cannot swing trade and trade futures successfully at the same time. I will be focusing all my time on swing trades from now on.

- Tradeitup