What Goes Up, Must Come Down

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

I’m referring to my account equity, of course. You often see me post my icon whenever I’m on the net:

This of course is a Free Body Diagram, showing the effect of gravity on my center of mass, or the center of mass of my account, if you prefer. I feel like that pretty well sums up my trading efforts so far. I still keep working at it, though, and I look forward to the time when I get some lift to my account.

Remember my post lately, where I was happy with my trading? I’m still pretty happy with my trading execution and discipline, but the market sent me a big loser, a moderate winner, and a pathetic winner. So what’s my expectancy for the last two weeks? 0.04R. Yay! At least it’s positive, and my win/loss rate is 66%/33%.

Anyway, on to the trades!

Matrix Service Company (NASDAQ: MTRX)

I’ve been trying more position trades lately, and I often worry about how far to plan on a position gapping against me the next day. What can I say–Daytrading rules! The risk is so much better defined. Damn the SEC and the Pattern Daytrader Rules!!

I bought MTRX as a position trade, hoping to trail a stop under the breakout as we went up. Well, my nightmare came true in MTRX, as they lowered guidance for 2008–08!! and it gapped down to below my stop. Add some slippage and I get a -1.4R loss:

And the daily for the trade setup:

Premarket, I considered lowering my stop, hoping for a bounce, but I didn’t, and I’m very glad! Ugly chart! (No, not you) Stick to your trading rules, especially under duress.

Trade Summary:

MTRX Long
Entry: $28.27, Stop: $26.60, Target: ?? (Trailing Stop)
Exit: $25.74, P/L: -1.43R

Trade Grade:

Riverbed Technology, Inc. (NASDAQ: RVBD)

Bought this as a position trade along with PinoyTRADER on Wallstreak. As before, the idea was to buy it on a breakout and then trail a stop as we go on up. The chart follows (orange is entry, red is stop, blue is exit):

This daily gives it the right position trading perspective:

I departed from Pinoy’s trade management when I sold it today after the MTRX debacle, feeling the need to book the open profit on the trade. Good thing, too, as it tanked to $43.50 with the big market selloff today.

Trade Summary:

RVBD Long
Entry: $42.93, Stop: $41.93, Target: ?? (Trailing Stop)
Exit: $44.59, P/L: 1.22R

Trade Grade:

The Western Union Co. (NYSE: WU)

Saw a nice base forming on the 1 minute, and a very well defined downtrend line on the 5 minute chart:

1-min

5-min

I decided to play this as a short scalp, but in retrospect it was the 5-min that caught my attention, and I should have either traded a swing on that chart (which would have been good for +2R, as you can see on the 5-min), or really scalped with a stop of only about 3-4 cents (and a much larger position size) and closing the trade as soon as it stalled. In the end, I mixed the timeframes and ended up with a small position and a smaller profit. Richard had some good scalping wisdom for me after I closed the trade.

Trade Summary:

WU Short
Entry: $21.70, Stop: $21.84, Target: ?? (Scalp)
Exit: $21.66, P/L: ~0.2R

Trade Grade:

I have two reasons I post my trades to the blog. First, it helps me learn from my mistakes and cement my good behaviors by articulating my thoughts and recording them. That purpose is fulfilled by default. The second is that I live for comments and feedback! If you have a comment, any at all, please leave one for me. I love to read them and respond. :)

Stocks Mentioned In This Article
Stock	Links
MTRX	| |
RVBD	| |
WU	| |

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com