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

Here’s my trade from today in Continental Airlines, Inc. (NYSE: CAL) that was the final straw in my daytrading struggle:

The One I Missed

I was watching this setup, and then missed the entry due to a distraction. It would have been a great trade:

I was watching for a breakout of the base at $39.40. It went on to hit the pivot point resistance from a prior day, which was my target.

The One I Took

After missing the last one, I saw another base set up:

I picked a higher interday pivot for the target, and was watching the prior high just above $40 for potential resistance. At 39.90, price dropped on volume, but the bid/ask spread widened, so I took it as a cleanup of panic sellers. Price then retraced to my entry point and went on to hit my stop.

Mistakes: I keep messing up my entry, stop and targets. I pick a target that is too far compared to my timeframe and entry setup. I pick a stop that is also too far relative to my timeframe and entry setup. On short timeframe trades (1 min) I have taken, I watch price go up in my favor and then slide right back again for a breakeven or a loss. I don’t have a feel for when price is retracing or when it is reversing, so I either get spooked out, and the trade goes on for a win, or I hang on to avoid a whipsaw and price really reverses.

So there you have it. My last daytrade until I can get in a better situation through capitalization and skill. Thanks for reading, and thanks to all the truly great daytraders that have helped me. I hope to join you someday.

Stocks Mentioned In This Article
Stock	Links
CAL	| |

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

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

After another string of 1R losses, the most recent today in Continental Airlines, Inc. (NYSE: CAL), I’m finally giving up on daytrading. Even though daytrading fits my personality and my desired risk management style, it doesn’t fit my capitalization level or my current skillset. True, with Zecco I have no commissions, but with less than $25K I have the patter daytrader rules to deal with, which limit me to 3 daytrades every 5 days. This does not allow expectancy or a high Risk:Reward style to play out, and my profitability is completely a function of my win/loss rate, which is about 30/70 over the last few months. With the PDT restrictions, I’m not really daytrading anyway, since I can’t take a lot of positions (a lot to me being maybe 3-4 per day). If my trading skills were exceptional, I could trade consistently enough to pull this off under these limitations, but they’re not and I can’t.

When I started trading, commissions killed my expectancy, which was about -0.5R per trade. After the advent of Zecco, I thought I’d be able to overcome the commission drag I had from my old broker, and I did. But my situation hasn’t changed, as the PDT get in the way. Now I’m either at zero expectancy or slightly negative depending on how “lucky” I get with my 3 trades per week. Babak’s international option would help with the PDT rules, but then I’d have very large commission drag for my small account size. Even if I could get the commissions lowered, or trade higher priced stocks with a per-share structure, I still don’t have the time to watch all day, which is another of my problems.

My pipedream was to double my tiny account over some period of a year or three, to prove to myself that I can trade profitably. Then I would put more money on the line and go from there, possibly even full-time. I haven’t achieved anywhere near those results, and I’m net down since I started two years ago. So a combination of undercapitalization and lack of skill are forcing me to accept reality: I can’t daytrade anymore. Without better skills, getting more money won’t solve my problems. I’ll just lose it 1R at a time instead of 1r at a time like I do today. Seriously, I must just suck at the markets. I always hear people say that “it’s easy to make money paper trading, then you trade for real and lose money”, but I even lose money paper trading!

So what now? I have to move up to the daily timeframe and set my stops and risk level such that getting stopped out in the same day is highly unlikely. My daytrades will then become a safety net rather than my intended trade vehicle. Ideally, I shouldn’t ever have to use the daytrades anymore. If I can get swing trading skills such that I can grow my account, I can then consider rounding up more capital to risk. My NR7 scan results have been disappointing, so I think I’ll head in a different direction, but I’m not sure where.

I hope to return to daytrading someday, but for now I sadly bid it farewell.

Stocks Mentioned In This Article
Stock	Links
CAL	| |

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