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

I traded 11 positions today–4 wins for +4.9R, 7 losses for -5.1R, net -0.2R. I’m really shooting myself in the foot with some of the plays I take! Once again, I held losers too long, though I executed the winners well. AAPL spanked me three times! I’ll stop trading a stock if it gives me two losses in a day. If I get two losers, I’m not reading the stock right, and any more trades on it will be out of revenge to “get my money back”. So, with any one stock, it’s two strikes and I’m out of it for the day. That would have saved me 1.1R today.

Here’s a chart of my PnL so far as a Prop Trader (the area highlighted is today’s trading alone):

So basically, I’m flat. I have a few good trades, and lots of little bad ones. I need to keep away from “scalping” until I get it right. I had the idea to only scalp from a PnF chart, and my exit signal is if the column switches over. My natural sense of timing burned me a few times today, both on entries and exits.

Anyway, here’s the two good ones from today:

AMZN

SNDK

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

I traded SanDisk Corporation (NASDAQ: SNDK) from my retail account today. My prop account is not set up yet, so until then I’m taking only what look like very high probability setups, typically short timeframe and I’m being very aggressive with taking profit / setting stops. I also have to watch the daytrades in this account.

The Setup

I was watching lots of things today, as I called out on Wallstreak. I saw SNDK (after missing two good entries earlier in the day) setting up at the 138% fib extension:

I wanted to buy a break of the consolidation, with the exit strategy being a close below the 5-EMA on my chart. I wrote it off when the last candle in view broke down, and looked away. When I looked back, price had recovered and then some! I took this as a bullish sign, and bought at my original target entry price of $55.83 with my stop a few cents below the offending reversal at $55.60.

The Trade

Here’s the chart:

Some of the candles looked pretty nasty while they were forming, but I held as it didn’t close below the 5-EMA, which is Trader-X’s criteria for this setup. I managed the stops as noted. I decided to sell when I had to leave the computer for a while, and I didn’t want to leave the trade open–the declining volume was not encouraging to me. Turns out that would have been the more profitable thing to do, but it was the right decision for me to make given the info I had at the time, so I consider the trade and my execution to be a success.

Trade Summary:

SNDK Long
Entry: $55.83, Stop: $55.60, Target: $56.50
Exit: $56.33, P/L: 1.60R

Trade Grade:

Stocks Mentioned In This Article
Stock	Links
SNDK	| |

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

Here are the three trades from my second day of daytrading, March 28th, 2006. You can read the original post, if you want. Sadly, only one of these trades makes any sense to me today, and even that one appears to have been executed all wrong.

The trades were all winners, so it’s hard to be too tough on myself. But, it’s clear that I wasn’t taking much context into account back then. These decisions all appear to be very localized. Still no mention of my stop loss, though from the beginning I have always had a stop loss in mind. I hadn’t yet caught the “R” fever, so you’ll see no R-based profit reporting for a while, yet.

Trade 1, SNDK

For instance, take this short play at the open on SNDK (my original 2006 commentary is on the chart):

On this 15 minute chart, the trade looks ridiculous. I wil give myself the benefit of the doubt and assume that I witnessed what I thought was selling pressure at 57. Today, I would never short a stock that had been rising toward its fast EMA on high volume. It seems like I should have known that, even back then, as I made lots of decisions based on that EMA. Oh well.

Trade 2, DXCM

Speaking of EMA plays, here’s what I consider the “best” play of the three, on DXCM (again, with 2006 comments on the chart):

The stock was falling, but retraced to its fast EMA. Signs of weakness at this point would be a good time to short the stock. So, I think I had a decent trading idea, here. But, somehow, back in 2006 I saw fit to short near the top of the candle. Today, I would be looking to short the stock on the 11:15 candle, if it fell below the low of the 11:00 candle. Of course, the stock found its strength again, and I wouldn’t have made any trade at all.

Trade 3, SWN

This one looks like nonsense. The 1:45 candle had a surge of volume, and began an upswing, sure enough. I must have been convinced we would make new highs. But, if you look, we were making lower highs and lower lows at the time. The two candles after the 1:45 candle failed to break round number 34, and it would appear that some selling pressure stepped in after it tapped 34 during the 2:15 candle.

Yet, inexplicably, I went long in no-man’s land, on a red candle at 33.82. In my 2006 commentary, I said I got out because I felt the market tide had turned following a Fed announcement. Today, I wouldn’t need any news report to get out of this trade! It’s a bad trade! How embarrassing!

Well, my sleep schedule continues to morph into less and less fortunate-for-trading forms. Over the weekend, I slept from 7am to maybe 1pm. Today, I managed to get up by 11am. I found a short trade to make in Sandisk Corporation (Nasdaq: SNDK) pretty quickly. But, it suddenly surged up, so I jumped out at the market for a small loss.

… only, it didn’t surge up. It was my broker’s charting going nuts. Damn! I lost about $35 so it’s practically breakeven, but it’s still aggravating. Looking at other charts, I see the same kind of jumpy crazy prints. And, what’s funny is, they they all go against the trend by about 50 cents. Like, Microsoft (Nasdaq: MSFT) was up, so its crazy prints make it look like it fell off a cliff:

…and these aren’t the normal kind, that just leave a long wick on a candle. These look like steady market action, as depicted above. So, I may be done trading for the day. I’m not as brave as JC, who often trades through chart and quote problems. I will check to make sure NYSE stocks are also strange. Maybe I can just trade them.

Stocks Mentioned In This Article
Stock	Links
SNDK	| |
MSFT	| |

So, yesterday, I managed to stay awake until 9pm my time. I was planning to be up by 5am. Not ideal, but at least semi-normal (for a 70 year old!). Instead, I woke up at midnight, feeling good, even though I knew I needed much more sleep. I was too alert to sleep any more, though. I got up and did some food shopping (am very grateful for 24hr stores and supermarkets). It’s 74 degrees Fahrenheit outside right now, but tomorrow it is supposed to accumulate 1 inch of snow, and never get out of the 30s….. that’s just crazy. Then, I did some testing on a new StockTickr feature (have you checked us out yet? We are adding new features all the time, with a couple big ones about to be made public).

Then, I slept from 6am to 9am my time, which meant I missed the market open. And, this time, I feel groggy, like I could sleep on into the afternoon. geez… But, I don’t think I missed much in the morning market. I haven’t taken any trades yet. Here’s some example painful breakout reversals from today so far:

Potential short of Sandisk Corporation (Nasdaq: SNDK) around the horizontal line turned aroud (30min chart):

Potential long of Nutrisystem (Nasdaq: NTRI) failed. You might say, yeah, but it ran a point first. But, what you can’t see in the 30min candles, is that during that first candle, it dropped all the way to 67.08 after triggering the trade. Then it rose back through the trigger point and ran a point before falling apart again. So, maybe if you bought the second run you could have gotten out with a profit (or cancelled out your loss on the first run):

And now, Frontier Oil Corporation (NYSE: FTO) triggered, but at the top of a pretty big, sudden run (10min chart):

… so I didn’t buy in, but so far it hasn’t reversed. :-( Sometimes it seems like the bad setups work better than the good ones.

yes… time to look for a strategy that’s different than this one. Not that this one’s bad. But, I want something to do when this strategy is not working. No strategy is right every day. Normally what I do is scalp the high-volume weekly watchlist stocks. Trade-Ideas, for the past couple weeks, though, has been telling me that there’s basically no high-volume (5x ratio) action in my list. Like, today, the only alert since I drug myself out of bed was on INFA. 177 stocks on the list, and INFA is the only one doing anything with 5x volume today.

Stocks Mentioned In This Article
Stock	Links
SNDK	| |
NTRI	| |
FTO	| |

I’ve invited Zoomie to post his trades here if he should ever feel like it. Anyone else out there not otherwise blogging their trades, feel free to contact me if you’d like to get your trades posted on a blog that plenty of people read. And if we can’t find one of those, we can just post them here at MtM… :-)

Zoomie had a good week, and his trading style is somewhat different than mine, so it’s neat to have the contrast here. He won 25% of the time, but still came out winning 7 times his risk across 12 trades. Good job! He wanted to give Trader-X a shout-out for having such a great blog. He goes through X’s trades daily, as do I.

Here are the charts, with Zoomie’s annotations (click to enlarge). Feel free to comment or ask questions.

October 9th
DGX
CMG
GOOG
October 10th
AVZ
October 11th
SOV
October 12th
BMC
CKR
SIGM
October 13th
FCX
GOOG
RF
SNDK

[EDIT: 5/29/2007: I've reviewed these trades again, to get a fresh perspective on them now that I have more experience. These three trades really weren't all that great!]

Second day of profitable full-time trading! Two days is not enough to extrapolate, but if I extrapolate anyway, I am making about two-thirds of my old day-job salary. Not a bad start! I don’t feel overly stressed about trading for food, but I do think I’m being a bit more cautious than before. I need to work on that. As you can see, yesterday and today were mostly small scalping-type setups, and not bigger, more profitable moves.

I have started trading without Level II / TotalView quotes. I’ve read two books now (the second one being Elder’s “Come Into My Trading Room”) that suggest avoiding them. I have not noticed any ill effects yet, so I am going to keep trying it. An upside is that I am no longer as biased toward NASDAQ stocks. Before, I would stay away from NYSE because I didn’t feel right if I didn’t have Level II quotes (Scottrade doesn’t have NYSE OpenBook type quotes).