Tuesday, December 19, 2006

Learning how to trade again

This morning has not been kind to me again. Even with my small positions I lost around $90. I was worried that today might turn into a repeat of yesterday. Yesterday I started out with a small loss of around $100 which fattened into a $400 loss. I kept trying to recover lost money and ended up making a lot of bad trading decisions. Today I really checked myself when I went into a trade. I found two trades that brought me back to the plus side. I am up $55 today.

I have noticed a lot of slippage with my market orders and stops when I trade hybrid stocks. There are so many hybrid stocks now I probably trade some everyday. I can recognize hybrids by their speedy execution. I find it a lot more difficult in reading these stocks. I am always a split second too slow with my market orders. When I try to get in at a break of a level and miss I get spread up 5-10 cents at a time. Then the stock trades back down again or even below the level of the breakout. I have been trading poorly lately and I seem to be hesitating when I make trades. When I miss a move I start chasing and end up getting chopped around.

I have some ideas on overcoming this problem. I am going to wait for the stock to come to me. I will look for levels of support or resistance and enter my positions. I need to take smaller positions, use wider stops, and go for bigger rewards. It sucks to change my style but if my recent performance is a start of a trend then I got to do it.


3 comments:

wincity said...

I never use market orders. If I want a stock, I short at the bid and buy at the ask. I used to offer a few pennies better than the current bid/ask. I stopped even that because I do often get fills at my worse than market price.

onebadtrade said...

I like using market orders because I want too see where I get filled. When I want to go long and the stock is strong I should get filled near the offer. If I get filled near the bid that tells me the stock is weak. Now with the hybrid it doesn't seem to matter anymore.

Flatwallet said...

OneBad,

Change ain't so bad. You will adapt to new styles faster than you think you can. However, just maintain your discipline and money management. I'm sure you'll do well.

LP

About Me

I have been trading for 5 years. It took close to a year before I became profitable. I find that I am improving gradually each year. My method of choice is scalping. My edge lies in tape reading NYSE stocks and staying on the side of the specialist. That is the method I learned when I started. As I build up my capital I will try new styles and trade new markets. In late 2006 my trading hit a rough patch after the introduction of the NYSE Hybrid system. For most of 2007, I have been on a search for new strategies that would help me adapt to the market.