Wednesday, May 09, 2007

How do I want to trade?

+124
17800




In the past couple of days I feel torn between trading two styles. I want to capture bigger moves, but I am unwilling to risk more than 10 cents. Today I had a lot trades that would go in my favor 20-30 cents but I decided to let it ride. Most of them came right back and I had to get out with losses. If I had stuck to my scalping style I would have offered my shares out at 15-30 cents and kept my gains.

As the morning progress I had a few small winners and a bunch of losers. By 11am it seemed like nothing was moving and I thought of stopping for the day. I checked my pnl and found out I was down $178.

I think I got lucky today because TNH happened to be moving up so I bought 200 shares and made $160 on the trade. Later I had some gains on ESE which brought me some profits today.

I think in the coming days I have come up with a plan that would balance the two styles and fit my needs. Without that it would be hard for me to gain the conviction to increase my size.

3 comments:

Bill said...

When you come up with a balance that works, please post it ASAP.

The daytrades are small but profitable. The swing trades are just not working right now. The market is making new highs, but getting into the right sector/stock is tougher than it has ever been.

Me, I plan on increasing the scalping and cutting way back on the swing trades until we see a little stability. Unfortunately, this stability may be the result of a nice and much needed correction.

Bill

TraderD said...

OBAT,

I struggle with this dilemma every day. I find I take little scalps here and there but am frustrated at having to give up a piece of the bigger picture. It is also difficult to balance larger size with less volatility versus smaller size on the stocks that move 1-2 points per day. I think it all comes down do what we feel most comfortable with. The other option is to base your trades on the bigger picture but scalp a small portion with bigger size and leave a small piece of the position on for the larger move. Scalp with 1000-2000 shares on the breakout and hold 100-200 shares if it looks like it's holding well. This way your risk is covered and you are at least playing for part of the bigger move. It all sounds so easy! Actually, I think it is...it us humans that make it seem so complicated!

OBAT said...

traderd

It would be good if I have the confidence to grab 1000 shares on a breakout. With the hybrid I am a little scared to go in with size because it seems a lot of breakouts fail and the stock would quickly reverse. I guess right now I just have to keep improving my tape reading skills and until that confidence comes back.

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.