I think it was 6 trades. The first four were pretty disappointing, but the last two were great. I have found that I am getting very few trade-ideas alerts this week. Since I am mainly alerted about 3-day highs and lows on strong volume, that tells me that stocks are either stuck in their recent range, or dropping on volume that’s not too spectacular. A strange thing yesterday was that almost all my alerts yesterday were on NYSE stocks. Strange days…
Like I’ve mentioned before, I found myself mostly unable to participate in the massive drop at the end of the day. . . stocks are pretty much falling all willy-nilly and not in a way I can short them in a controlled fashion. Maybe I should consider trying to just scale into a move in progress if these days keep happening.
August 15th, 2007 at 6:26 pm
On that LEH trade, did you ever consider taking a partial at your exit point? When you’re scalping for 0.20 cents, I can see taking the whole position off, but when you’ve got 0.60 under your belt, there’s no reason to exit the whole thing just because of a moving average. You should have plenty of time to get out of the rest if it reverses hard, and with that much distance from your entry you should be able to see a reversal coming and salvage some profit before it even hits breakeven. If you take a partial on a big move like that, it’s like taking the whole profit on your regular 0.30 scalp, with an extra position that may pay off more. Just something to think about.
August 15th, 2007 at 7:44 pm
It’s funny you say that because I’m trying out ways of doing just the opposite! You may notice in recent videos that I am playing with taking half off when a scalp runs hard right away, to attempt to catch a second push. And, for a larger trade, I am trying to identify places to scale up my position rather than scale it down.
I am giving the T-3 line a try right now, as a target. And, sometimes it works well, and other times it represents as little as 1/2 of the total move. So, clearly I could do better, but I try pretty hard not to make micro-adjustments. To improve a statistical process, you need lots of data! So far, I think the T-3 effectiveness depends on whether the trend is continuing or changing. When the move I’m capturing turns out to be a pullback, then often price doesn’t even quite make it to the T-3 line (like, that ABK trade from today). So I’m currently always ready to get out anywhere near it.
August 15th, 2007 at 7:50 pm
The other thing to consider (in my case anyway) is that my position size on scalps is usually much larger than other trades, due to the .02 to .05 stop. So, taking off 1/2 of the LEH trade (which had a .20ish stop) at +.60 would not be equivalent to most +.30 scalps, in $$ terms.
August 15th, 2007 at 8:16 pm
I see. Difference in philosophy, I guess. I think that taking a partial profit and aggressively letting the rest run (unless it retraces to your entry point) in a trending market is a better way to press winners. Maybe in a choppy market, like we’ve had lately, your strategy is better. Now I have something to think about :)
August 16th, 2007 at 12:14 am
Wow, once again I think just the opposite! I think of it this way: if your trade turns out to be a home run, would you rather have on half your position size, or twice your position size? What sucks is that pyramiding turns a small winner into a double-or-nothing kind of proposition, so it can feel bad to throw away profits when it doesn’t work out. I found that out first-hand today.
August 16th, 2007 at 3:20 am
Well, I guess the most rational thing to do would be to take of bunch of stats from your trades and see which method would have served best, and keep populating the data as more trades check in. Of course I’d rather be bigger when I’m right and smaller when I’m wrong (like Phantom OTP says). However, you have no way of knowing beforehand which it will be, and since daytrades tend to be shorter in duration than a position trade, how do you tell that you’re correct and add size without taking on way more risk, as you say?
More interesting thoughts. I’d like to hear more from you on this, so keep the discussion going.