So many trading services are focused on enabling trades. I don’t know of any stock services that are wholly focused on keeping you from losing money. So, how ’bout this hypothetical service? The genius of it is, people pay for it with a fraction of the money that they would have lost if they didn’t have the service. So, from a certain perspective, it’s better than free for them while still making me truckloads of cash.

This is not real but a thought experiment! I’ll set up a service, where I’ll send out alerts on days when conditions are especially bad for small account daytrading. When the alert goes out:

1. The client goes out and enjoys life that day.
2. The client’s account is automatically drafted for 0.25 * their average loss
3. The client’s trading platform will only start in demo mode, unless the user manually dismisses a warning pop-up.
4. Dismissing the warning drafts another 0.25 * avg loss from their account

I think, this way, everybody wins. I help them enjoy some free time, and keep them from losing their shirts. They pay me far less than they probably would have lost if they had traded. If they are so sure the markets are right for them, they can opt to trade anyway with the burden of starting in the red by half of one normal trading loss.

The sad thing is, I could probably make a lot of money even if I dropped item #2, since so many traders can’t seem to stand the thought of not trading on a given day.

Of course, this idea isn’t very practical, because (1) studies show that nobody wants services for anything but trade entry ideas. Even risk management seminars have relatively poor attendance, compared to seminars on indicators and patterns. (2) without hooks into all the major trading platforms, it would be impractical to implement the locking and account drafting features, and keep people honest about what their average loss is.

A Twist
But, here’s a twist on that idea, which unfortunately doesn’t make me, personally, truckloads of cash. I think, deep down, most traders know when a day is not right for their trading style, at least some of the time. On those days, why not take 0.25 R out of your account, and go out and spend it on something fun rather than trading that day? Maybe whatever that activity is would be enticing enough to keep you from putting on bad trades just to fill your time. Think about it. What would you rather do… lose $800 in a long, frustrating trading day, or spend $200 on yourself (or your kids, or your spouses)? From a certain perspective, on top of the fun you had, you actually made $600 by not losing it on forced trades.

And of course I wouldn’t complain if you always donate to Move the Markets every time you stop yourself from making bad trades due to reading my articles… :-)

It’s hard to think of September without wincing. I thought August was a bad month for trading, but this month was even more difficult, in terms of good opportunities. On a more positive note, I think I responded to the challenge correctly. I made few trades, but they were of high quality from a win-rate perspective. I traded 3 of the 4 weeks (I like to count my months on week boundaries, so I consider September to be the four weeks from 9/4 to 9/30), and only found 10 trades I wanted.

Even then, I was taking tighter and tighter profits, so I was making less money per trade than I was in August. Here are the stats:

So, a 5R month. As a rule, I don’t maintain or try to work toward profit targets. I think that messes with my ability to make good decisions. But, to give you an idea of what it means, I can live a pretty austere existance on 4 to 5 of my-sized R’s a month. On the other hand, 8 to 10 R means I live comfortably, and possibly even put away some money.

So, 5R isn’t bad, but I spent more this month than I made. If there’s one thing I can’t do, it’s live austerely! :-) It’s not really a cause for concern, as long as that doesn’t continue. I’m always making improvements, and am generally ahead of schedule in improving my profitability (I had said in my StockTickr interview that it was my goal to consistently cover my living expenses by early 2007, and until this month I’ve already been doing that).

R Chart for September (click to enlarge):

Cumulative R Chart since returning to daytrading on July 12th (click to enlarge):

I am going to guess in print that I won’t be trading today. I was watching Ebay (Nasdaq: EBAY) for new highs, but it chose to roll over instead. Coldwater Creek (Nasdaq: CWTR) did the same, and Hansen Natural Corp (Nasdaq: HANS) didn’t even try to regain any of its lost ground. Maybe I will spot an opporutinity before the close, but to be honest, I’m not even looking that hard. Texas has about 5 or 10 days of fall weather, and I’m trying to get out and enjoy it as much as possible while it lasts.

Anyway, here are the stats for this week. Only 3 trades, just like last week, though these were not as profitable. I took Thursday off, due to social obligations, but I doubt it would have helped much.

So, depending on how you look at it, my winning streak from 8/22 on is now broken. I had that break-even trade on Monday, which I did lose commissions on. So, fine! No more winning streak. I didn’t like the pressure, anyway! :-)

Stocks Mentioned In This Article
Stock	Links
EBAY	| |
CWTR	| |
HANS	| |

The nightly ritual that prepares me to (usually not) trade the next day.

Basically, I run a few scans (one of them is posted to MtM every day, so you should know what they basically look like). I collect the picks from highchartpatterns.com, where I am a subscriber. I sometimes also collect some stocks from other blogs’ watchlists. Then, I put them all in a list on my trading platform and glance briefly at all the stocks. I just try to make an immediate subjective determination of how “clean” or “pretty” or “straightforward” the chart is. I jot down the ones I think are worth following. After 10 to 15 minutes, I’ve looked at around 50 stocks, and I’ve decided to follow probably 5 to 10 closely the next day.

I tend to use the 3-month daily chart for my initial look, but if I am worried about the horizon effect, I jump to the 1-year weekly chart to confirm that all is well with the stock. I try to only pick the clearest stocks from the set, that are generally trending in the direction that I think their technical patterns are pointing. Since, I’m daytrading, if the trend on the weekly chart is going against me, I don’t sweat that too much, but I’d rather everything be in synch.

Watch this post's video on Youtube

It’s partially goofy, but there is a serious message in this one…

The best days for small traders, are when there are sections of “big money” essentially moving in one direction on a stock or group of stocks. I think most of us operate like this: We sit around in a sea of turbulent speculation, and watch for the big money to move. The key clues that this is happening is higher than average volume, and a break out of a congested price channel. When this happens, we ride the momentum for quick profits.

But, there are plenty of days when a lot of big money players (intstitutions, hedge funds, and mutual funds) are all trying to reposition themselves. We see this on options expiration, and this window dressing time at the end of the quarter. When this happens, the big players are stepping on each others toes, but the small players (like you and me!) are getting crushed. So, what you’ve been seeing me do, and suggest, is not putting any trades on that aren’t just in-and-out quick plays. The markets are sometimes too turbulent for the types of small trader strategies that we’re most comfortable with, in my opinion. I talk a little about maybe being able to make semi-normal trades if you can identify a stable sector. Short of that, find a sector that happens to be surging at the moment, and scalp in it.

Watch this post's video on Youtube

We’re up. We’re Down. We’re up. We’re Flat. We’re Down. We’re Flat. We are the end-of-quarter september stock market, and we will shrink your account if it’s the last thing we do.

…Which is why I’m glad I sat this one out. I hope you all were careful today. I should get J.C. to give me scalping lessons. That’s the only kind of play I’ve felt like making in weeks now (and the only kind that’s looked particularly safe).

This is the less glamorous side of being a day trader… I don’t mind it when people ask me for stock advice. In fact, I rather enjoy it! But when people start using me as a crutch, the best help I can give them is to help them make decisions on their own again.

(if you prefer a video with a more serious message try “How to Play these Tough Markets” or “Trading is Not Boring”)

Watch this post's video on Youtube

Not sure why I posted this one, once I realized the camera was on. Seems kind of dumb to let the cat out of the bag like this.

Oh well, too late now…

Watch this post's video on Youtube

The weather in Dallas is too good to pass up today, and the markets were confusing me. So, I practiced what I preach, and I walked away.

I made 0.4 R on a break-even trade and a little scalp on OXY (I should have chosen XOM over OXY, though, in hindsight). Looks like oil and gold were good places to be today. The break-even trade was on RACK, which tried really hard to break out of its channel, and held up really well in the market downturns. But, at least while I was watching it, it failed to really go anywhere.

Keeping the IRS off your back isn’t easy sometimes, when you are a trader with principles…

… all in a day’s work at Move the Markets. (I know I overdid the titles, but it was an easy way to hide the fact that I inadvertantly used two camera angles for the two takes I shot. So, I had to put something between the cuts…)

Watch this post's video on Youtube

Just another day here at Move the Markets….

Watch this post's video on Youtube

Today was not the kind of market I’m very interested in. Gap up, fall down, crawl up, then flat, then up big, etc. etc. etc.

I can handle the gap up then fall down scenario. We’ve seen that a bunch lately. So, I shorted ENSCO International (NYSE: ESV) when it broke through some intraday resistance at 40.88 or so. After moving about 8 cents in my direction it kind-of paused, which bugged me. I normally like to see a more pronounced move on a break. But, I decided to stay in and wait for a continuation. While looking for more stocks to short, though, I noticed that everything was acting a bit strong, so I moved my mental stop to break-even, and within a few seconds broke even.

Here’s the chart, which shows I made the right decision (click to enlarge):

I somewhat wish I would have persevered and tried to capitalize on what turned out to be a big up move in just about every sector I watch. But, I just don’t trust markets that are all over the place like today. So, I kept my eye on things, but mostly got some reading done. Later in the day, I nearly shorted Swift Transportation Company (Nasdaq: SWFT), because the transports were not acting as strong as the overall market (probably because energy stocks were up), and it set up nice. But, at the price I was waiting for, there were more buyers than sellers, and it never made a shortable move until I got tired of watching.

Here’s hoping tomorrow is more straightforward!

Stocks Mentioned In This Article
Stock	Links
ESV	| |
SWFT	| |

A second try at video. No fancy editing, just cutting out as much dead air as possible! I don’t have much in the way of video editing software.

This one’s a response to all the references I’ve been seeing lately that say that good stock trading is boring. I disagree! I wonder what jobs these people have had in the past that make them think this way! Every job I’ve had before now has been a much worse form of boring. The kind that you can’t escape without quitting, or underperforming. Trading is a different and better animal altogether.

About Video
Video is certainly faster than writing… also certainly not as concise. I think I will see if I can strike a balance between video and writing that puts the most important information in print, and more of the day-to-day commentary in video form. I think I can get out more content, faster, that way. Lemme know what you think.

Watch this post's video on Youtube

I did a video to show what my trading environment looks like.

Obviously, I’m a total video amateur, and moved the camera from side-to-side too much. Hopefully no one gets sea sick!

Watch this post's video on Youtube

Yet another slow week for trades, but another 100% win rate week. So, hard to feel too bad.

I tried a number of other times (ok, maybe 5 other times) to enter trades, but wasn’t filled. Clearly, I’m being very cautious right now, and probably will until we see a few really good trending days. I’m also watching for new types of trades I would feel comfortable making, and trying to check on those ideas.