My first bear market

I started trading near the end of 2002 which was the start of the bull market. It is eye opening to see a bear market unfold. If the stock market is still around after this crisis I think the experience I gain will help me in the next cycle.

Another lashing please

Yesterday I nearly got whipped and I was lucky to come out unscathed. Today I was asking for another dose of pain. I was watching STP at the open and the stock looked strong. I was playing the stock from the long side but my entries were terrible. I went in small at first and then added more shares as the stock went up. I would have a good size position and be in the money only to watch it reverse on me. The stock would go through my average price and I would get out with losses. I had some wins but my losses far out number my winners and I lost over $200 on the stock alone. By 11am I was down over $300 again and I was pretty disappointed by my lack of discipline.

This is how my trades losing trades looked. Buy at the top and sell out at the bottom of a retracement.


My trades in STP. I traded 16000 shares in the stock.


I managed another comeback today with a short in CMI. After I came back I just stopped trading. Good thing I did because the market looked choppy and I would have lost money. I think I learned my lessons. I will have to see. If I were a candlestick maybe I formed 2 hammers this past two days and I should reverse to the upside.

Examples of impulsive trading

Average Jay asked me what's my criteria for entering my trades. Yesterday I had a bad start and was down over $300 by 11:30 am. Here is a screen shot of my trades and charts of 2 stocks that I traded.

In the first stock, I think I went long PX when I saw a bounce in APD. PX did not bounce and made new lows. I shorted at the lows and it bounced. After I covered, I saw it drop again so I went short and lost the 3rd time. If you look at the higher time frames, 5 min and above it was ugly. There is no reason to be in the stock yet there I was.

The other stock I have up is JEC. I had 200 shares and made some money on my first trade. My avg price was 60.10 and stock drops to around 59.50 and makes a bounce back up to 59.89. Since I was down over $200, I was trading my pnl instead. I wanted any little profits I could get and was afraid that I would lose it all so I covered. After I cover the stock goes lower and I thought I might break new lows so I shorted again only to get a 35 cent squeeze on 300 shares.

• I let my pnl affect my trading.
  

• I have not adjusted to the decrease in volatility. A week ago stocks would move down $1 or more with little or no pull backs. I still think I can get such moves out of the market. I have loosened my criteria for entries as well as my stops.
  

• No clear trading plan. When the market was volatile scalps and tight stops worked out for me. Now that the market slowed down I am getting chopped up by poor entries. I have abandoned my rules and acquired some bad trading habits.
  

Solutions

• Have a clear trading plan with entry and exit criteria. Follow the plan.

• Trade only when the criteria for the entry line up (confirming market action, supporting chart pattern, and tape action) When I do not see a trade I have to sit on my hands.
  

Bunch of toppy patterns on the MONTHLY CHARTS

I am seeing a lot of topping patterns forming in the monthly charts. These stocks could be making multi month down moves so there should be some good money to be made. Here's some of the cleaner ones. I am going to focus on these stocks on the short side. Looks like they have a lot of room on the downside if these patterns do confirm.

CHARTS:
BG, BGC, HSC, JEC, OII, UBB





Also check out EMR, APD, PH.

Chart patterns are improving my trades

I took some trades in AAP and made some money. By drawing some trendlines I was able to see a triangle forming. I bought after it broke out and made a quick scalp. It then consolidated and formed a box pattern. I bought some shares again when it broke and made another scalp.




The pattern that I didn't take. What a nice move. Next time when I see this I should grab some.

Not giving up my profits

Today I had a couple of trades that ran well. A little while back I really want to milk these kind of trade for big profits. Since I am trading small, 100-200 share positions, I always want to capture $1-2 moves. I usually end up giving back all my gains by holding too long. A lot of times the stock would pull back and stop me out before it runs again. In many of my trades I would be up over $1 if I had taken profits, but end up with only 1/3 of that. Now I am not going to be that greedy.

I think taking profits is helping me psychologically, since I am taking in steady gains during the day. I am able to see things more clearly and take more trades.

Here's a 1 minute chart a trade I took in EMN. The stock runs down over $1 and bounces $1. If I hadn't taken my partial I would probably punch out of all my shares near the top of the retracement.



I had a quick profit of $265 in ITT and I took it. If I choose to hold on for a bigger gain, I would have lost most of my profits.

The List - Tuesday 7/8

Did not trade today. Did some research and found some stocks for Tuesday.

Shorts

State of the market

The List

Shorts


I found some stocks that are not too over extended on the short side trading near important support levels. The bulk of the stocks are from the oil service and equipment sector. Maybe they will break them down like they did with the coals and steels.

I'm looking for XEC, FLR, and WHQ to fill the gap. FLR is a monster, maybe it can finally crack.

Longs

Things look ugly out there. I don't see anything that looks good on the long side.

Daily Summary

Yesterday I had a list of longs but none of them worked out. On the short side MT had a great move. I made some money in it but it was pretty sad. I think I only caught a $1 out of the $9 drop. I also made some money shorting BTU and ACI but again I only caught a small part of the move down.

Looks like a nice double top, stock quickly reaches target.

Daily Summary

6000 shares
+159

My 3 day break from trading was refreshing. I thought about taking the rest of the week off but I am starting to feel guilty for not trading. The FED meeting is out of the way so maybe there would be some good directional moves.

I felt a little lost today. I tried shorting DE at around 10am and lost money. I was down around 80 bucks. I made my money back later. There was two trades that could have been nice winners if I handled them correctly. I got a great short in AKS. I even told myself that the stock would be a big winner if I just hold on to it. Well I got took profits again and missed out on the big move. I had a good short in CRM and I wasn't going to let go of my winner so I held it when it retraced only to watch my 50 cent gain on 300 shares evaporate.



My thinking was right but I need to work on my trade management.

Daily Summary

7400
+228

I had messed up another play today. The market was moving up and I was late to CMI. I should have been in at the 15 min OR breakout. I went in on the 30 min OR break instead. The stock shoots up 65 cents from my average price of 72.85 and then pulls all the way back. I was scared of a reversal so I got out of 200 shares near break even only to watch it bounce strong. I added 200 shares at the break of 73.50. I sold 100 shares at 74 and held on to my other 200. Then it did the same thing to me again trading back down to my average price. I got out of 100 only to watch it bounce. I added 100 again bringing my average price higher. I got stopped out eventually and lost money with my higher avg price. When a stock already made a good move and I get a quick 50 cents I should take it. CMI ran from 70.26 to 74. That's a huge move. I wasn't looking at where it came from when I picked my profit targets. The 1 minute chart shows how this stock was messing with me.



RRC brought my pnl up. Nice OR breakdown. This stock was weak relative to the market. I had it on my watchlist for a daily range breakdown. It formed a narrow range doji at previous day's lows and broke down. Stock drops over 50 cents but I was greedy. It bounced and I ended making 30 cents. I shorted again near the 15 narrow range lows at 63.24 and rode it down for a $100 gain.

Daily Summary

10400 shares
+376

I caught a nice longs in UA and TK. UA was my biggest winner. I had a 200 share trade in TK at 52.05. I sold 100 at 52.70 and 100 at 52.03. I went into CCJ four times but got shaken out on all my trades and lost money each time. That stock had a nice move though on a break of 42.50.


UA 5 min chart

Daily Summary

7800 shares
+670

I had a nice trade in BWA.

Daily Summary

6200 shares
+1528

After 2 weeks of watching earnings stocks run up 2-3 bucks from the open, I finally caught one of them. I had the golden touch today and most of my trades are winners. My total losers only added up to $55.

ASF was my money maker. I took 400 shares and rode it up taking partial profits along the way. If all trades move this fast then trading would be easy. I made 761 in ASF on 400 shares.



I also made some money in TRN, MGA, MSA and N in the long side.

Daily Summary

10400 shares
+334

My trading was not going anywhere and I was up only hundred bucks at noon. I saw JLL break down to new lows. I was skeptical and have no conviction so I got only 200 shares. I made the bulk of my gains in this trade and called it a day.

Daily Summary

12600 shares
+520

I had a sloppy morning today. I got caught in a failed breakout in LTM. I was in 200 shares at 34.10 and the thing just reversed hard. I lost 80 bucks when I got out at 33.70. I went through a bit of a choppy period and lost $200. I made a come back and some extra cash later when I caught a short in WCC, longs in SSP, BCR, and a small pop in CMG.

Daily Summary

6800 shares
+215

There are a lot of earnings this week. Today I had a list of around 18 stocks. I had a long in R which did not reach my target. I was looking for a $1 gain. When the stock stalled at 66.50 and sold off I panicked and got out. I was scared of a reversal. I was down around 70 bucks until I caught LII and made a come back.

Daily Summary

10800 shares
-257

My esignal was slow during the open and I couldn't use my charts. I had CLF as a breakout over 134 so I hit the buy market button for 200 shares when it was breaking the number. I got huge slippage in the trade and was filled at 134.31 average. The stock immediately trades below 134. I held on briefly thinking that it would bounce back higher for me to get out but the stock continued lower. I ended up getting out for a $234 loss. I was too disgusted to even look at CLF again, and that is when it makes its move.

After my CLF trade, I took a bunch of small losers and was down $350 for the day. I made a bit back later but could not fully recover.

Daily Summary

9400 shares
+494

Some days I am impulsive and I keep rushing into trades right after the open only to get chopped up. Today I was patient and looked for good reasons to enter my trades. My two biggest winners were ACI and APD. I noticed that the coal stocks were strong so I took a shot at ACI since it had a little pull back. I got 100 share initially and added 200 more when the stock was acting right.



APD was one of the stocks I found last night when I did my homework. Usually I just try to wing it everyday and scramble to find something after the open. I am going to put more effort into finding stocks to trade the following day. Pinoy Trader and Market Speculator who are both pretty good traders scan through a couple hundred charts after every trading day. I can see why they do so well.