This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
Trade 1: Ford Motor Company (NYSE: F)
As I said on my twitter feed earlier, I tried to scalp F on Thursday. I saw it moving sideways in a channel about a dime under nice, big, round $8.00. I thought I could get another dime out of it if it popped. Here’s the tick chart I used:
Analysis
I entered too early. I should have waited for it to break $8.00. I was watching the channel (the white lines in my chart) and saw strong support at $7.92, so the stop was at $7.90. I couldn’t watch the trade (that darn day job thing again), so I left my stop in place and got nailed. If I was watching, I could have at least got out at breakeven. Being a geek, I did like my position size, though ;)
Takeaway
This is yet another example of the fact staring me in the face that I shouldn’t be daytrading unless I can watch it full time. I have a system I like, and it’s uncomfortable to leave it to try to find a new one. I need to force myself to refrain from trading until I have a new system. Since I love to trade, that should motivate me.
Trade Summary:
F Long 314 Shares
Entry: $7.97, Stop: $7.90, Target: $8.10
R: $20.41, Exit: $7.91
P/L: -0.85R, or ($17.27)
Trade 2: Mamma.com Inc. (NASDAQ: MAMA)
I saw MAMA pop premarket on Thursday, and it saw some good premarket support at $5.70. I bought as it broke $6.00, planning to hold it through the next day to save me a daytrade. That locks me in to the position, which is a very bad idea, also technically known as a ‘1D10T’ error. Here’s the charts, with premarket included first, and then regular market timeframe:
Analysis
Risk comes through your ability (or lack thereof) to liquidate your position in a market. Since I was locked into a position of illiquidity, I was at substantial risk. I never should have taken the trade, not necessarily because the trade was bad, but because I couldn’t get out if it moved against me (which it did). I was very lucky to get a chance to get out this morning at just a 1R loss.
Takeaway
I need to buy at the close or save enough daytrades up to cover the occasional swing trade that goes against me on the entry day.
Trade Summary:
MAMA Long 30 Shares
Entry: $5.99, Stop: $5.40, Target: $8.00
R: $17.70, Exit: $5.40
P/L: -1.00R, or ($17.70)