This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
Today my Zecco account balances were all screwed up. It showed I have a -$1000 market value, but I’m not holding any positions. I think they will get this sorted out, but it really makes me mad. I guess I can’t complain, because you get what you pay for.
Anyway, since Zecco was out for me, I decided to trade my TD Ameritrade account today to try to gain back my earlier loss. So far, so good. I was looking for base-and-break, OR breakout type setups.
Round 1
First trade was Newmont Mining Corporation (NYSE: NEM). I swear, every time I trade NYSE stocks, I get chopped out by their inexplicable swings:
I didn’t even want to take the trade! I set my buy stop at $43.62, and watched my Quotetracker integrated trading screen. I thought it would alert me if the order was filled, but you have to manually refresh the screen. So once price faded away from the buy point, I went to cancel the order, since I didn’t like the setup anymore. Can’t cancel–it’s been filled! Then it was at my original stop price, so I bailed. If this was a Zecco account trade, I’d be down like $20. In this account, I risked $90 (commissions are $19.98 of that). That is really hurting my psyche. Even though it’s only a 1R mistake, it’s a big dollar mistake (to me, anyway).
Trade Summary:
NEM Long
Entry: $43.62, Stop: $43.46, Target: $44.07
R: $0.16/share, Exit: $43.45
P/L: -1.05R
Round 2
THEN, I traded KLA-Tencor Corporation (NASDAQ: KLAC) to try to make up the last two losses. Bad idea. Proves how much of a n00b I am about trading:
This trade was good, and it went my way initially, but it stalled at the 119% extension and rolled over. There was a 125,000(!) share block that traded at the high, and price drifted away, then failed a retest. That should have signaled to me that it was excess supply, and I should have salvaged my breakeven, but when it dipped below my entry point I pulled the plug. Another big dollar, small R loss (~$29, $20 of which is commission).
The pros on Twitter (Ugly, Phileo, Zoomie, Richard, Eyal, etc) were all calling it a day and writing off the market right as I was fighting KLAC to keep going higher. If I were smart, I would have too.
Trade Summary:
KLAC Long
Entry: $55.08, Stop: $54.87, Target: $55.60
R: $0.21/share, Exit: $55.05
P/L: -0.34R
Today’s Trade Grade:
Summary
Even though technically these trades weren’t that bad, it was a huge blow to me that every time I touch the big account, I lose a lot of money. I am not ready to trade in size, since my psychology can’t handle the large dollar losses yet. Maybe if I made $300 on a successful trade it would give me confidence to lay the big dollars on the line, but two losers and a scratch have made me see how far from a pro I really am. I feel like I know so much, but I can’t seem to make it work out for me.
Maybe I’m kidding myself with my little Zecco sandbox I’ve been playing around in. Because I work, I don’t have the time or focus to trade intra-day, and even though my job sucks I still have to get it done to keep my family fed. I’ve been doing the Zecco thing to practice up to trade full time, telling myself that as soon as I’m profitable and proficient there, I can have more confidence in trading more money. But as of yet I don’t have the skills or the resources or the mindset to be a real trader. I’ve had some of my dreams die in my life, and I still hurt every day for them. Trading is one of the last dreams of mine, and right now it’s in the operating room on life support. I don’t want to turn into a work-for-the-weekend job-zombie, but it’s looking more and more like that’s what my future holds.
I’m going to have to give myself an emphatic
after this one.
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| NEM |  |  |  |
| KLAC | | | |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
April 4th, 2007 at 2:11 pm
Prospectus, I would track R numbers explicitly. A while back I was trading small risk( 0.17% of my account size)after a series of losses. I made a total of R 10 a target, of when I met, I would increase my size, until another R 10 and so on. One month I was break-even in dollar amount, but up R 11, as I had a few losers immediately after I increased size. The only thing that kept my confidence was tracking those R’s, and I stayed with the increased size! I did this incrementally until now, where I trade 1% of my trading account per trade. Hope this helps. Also, I stay away from gold and oil stocks. After being burned time and time again, I gave them up.
April 4th, 2007 at 2:31 pm
It can take years, you know, to learn what you need to learn. Especially part time. That’s no reason to give up! But, please, forget you even have the large account until you are ready for it! When zecco says you can’t trade, just… don’t!
On the trades: I know both of these were making new highs, but do they fit the “standard” base-and-break model? I admit I’ve never sat down and tried to learn exactly what people mean when they say “base-and-break”… but I can tell you that making a new high is not enough of a reason, by itself, to buy a stock.
April 4th, 2007 at 2:42 pm
@Zoomie: Thanks for the advice. I’ll use it when I am trading large someday (I hope). I just can’t daytrade anymore with my Zecco account and my job. I’ll have to go to swing trades only. Very depressing, because my trading is what gets me through the work day, if you know what I mean. :(
@Richard: The NEM trade was just an NR3 at the OR high. I was playing that as a Trader-X style breakout. On KLAC, it’s not really a base-and-break, as you showed it was more of a triangle. Jamie can probably explain it best, but base-and-break is more like your stalking of a round number breakout, but on a larger timescale.
I thought it might also help my daytrade availability to have two accounts and trade both, but I hereby forget I have the larger account until I am ready for it.
April 4th, 2007 at 2:51 pm
What’s funny is, I wish I had perfected a swing trading system, so that I could sleep all day. So, you may end up living _my_ dream.
April 4th, 2007 at 10:40 pm
@Prospectus: Following your trading plan is a pre-requisite, but in my opinion, it’s not enough to restore your psyche and confidence. If it’s any consolation, I can feel your pain, as I also went through a loss of confidence near the end of Feb. when I was in my trading slump.
How did I get out of my slump? Quite a bit of introspection, which eventually led to a change in mindset. And not just the kind of mindset that stays in your head but doesn’t manifest itself in actions.
Alan Farley says it best:
“Do what it takes to wait until the low hanging fruit appears.”
Following your plan is good, but it is not enough to restore your confidence. You need every single edge working in your favour - a high probability setup, something you know like the back of your hand, every single indicator lining up in your favour, eg. a stock that bases until it tags the 5d EMA, with the MACD X-over just before the breakout above OR, just as the TICK goes above +900.
Sure, it might happen once in a blue moon, but your choices are: not high probability setup, or high probability setup. Have you ever thought about signing up for the HCPG newsletter? I think that might give you another edge. I’ve swing traded their selections before, although right now is admittedly not the best time to swing trade their selections.
What I’m trying to say is that right now, you need the highest of the high probability setups to get that crucial win under your belt to restore your confidence.
Find your own path to practice patience until you find your low hanging fruit. I am still learning how to do that as well !!