Tuesday, January 23, 2007

Self sabotage, will I ever learn?

I got slaughtered this morning. By 11am I was down over $500. I had a couple of stocks with earnings on my list today. During earnings season I usually trade stocks with earnings and I was consistent and profitable. I decided to trade the old way - scalping with tight stops and chasing momentum moves. That was a major mistake and I had 15 consecutive losers. I am through with my old way of trading. I guess this major blow finally knocked some sense into me.

I got a big hit in SMG when I chased a breakout. Here are the 5 min and 1 min charts.

Same thing happened when I bought TIN in anticipation of a break of 50.

I stopped an analyzed my trades after losing 500 bucks. I have succeeded in wiping out most of my gains for the month. I listed out my mistakes.
  • Focused on the money.
  • Held on to losers too long.
  • Failed to follow my plan to look for low risk entries and ride bigger moves.
  • I told myself that I would stick with 100-200 share positions until I get consistent again but today I increased my size.
I had to decide whether to stop or continue trading. I chose to keep on going. This time I followed my plan. I kept my size at 100-300 shares. I caught some stocks and managed to ride them a bit. I managed to make a decent come back. I ended my day down $90.

Here is an example of trades that fit my plan. Got 200 shares of NXY at the break of the 5th bar. Entered at 60.50 and 60.51. Sold 100 at 61.15 and 100 at 61.21.


Flatwallet said...

Live and Learn, but make sure you Learn. I haven't traded for a week and just watched the market and I've learned lot. Trust me, you have 5 years of experience that I don't have, take a step back and re-devploy your strategy. While you may be in a short slump, you have what I don't have, experience. Discover your true strengths and exploit them.

onebadtrade said...

Thanks for the encouragement.

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.