AbeSmith

Yo Nick, the commission is 2.13 per trade, 4.26 per round trip.

Today’s trading was very bad for me. I spend much of the weekend reading and studying. I studied 6 different charts of YM, from 6 months charts to 2 day charts, trying to identify areas of support and resistance. I looked at the economic calendar to see if there are any upcoming events. I read news articles about how the coming week would be like. The articles I read painted a bearish picture for the week. I also researched companies whose earnings were scheduled for today, but now I think I probably didn’t devote enough attention to these fundamentals. I heard an analyst on CNBC say today that fundamentals are the thing that moves the markets, and it made sense. So I’m thinking I should pay better attention to the major companies that move the Dow, especially if they are reporting earnings, because I think, I don’t know but I think that when a company reports earnings and there is major volume then it will have a significant impact on the YM. So shouldn’t I know which direction the volume is going? I’m wondering, and perhaps a fellow trader can tell me or lead me in the right direction, what is it exactly that moves the YM? How does my buys and sells of the YM affect the price? I know you might think that it is a stupid question, but if someone could at least point me to the right direction, like where I can go to find this out. So, now I will go over my trades. I was ashamed to mention today’s trading here and mostly tired, but decided to go ahead and do it. When the market opened I was feeling bearish given the articles and commentaries I read and heard. Psychologically I was feeling weak, as if something was in my mind and was pushing me towards failure, or rather, blocking me from success. As if my mind was not working the way I wanted it to. During the weekend I felt good, like a winner, because I had a winning day on Friday and so I felt really good about myself. I even showed off a bit to my family and said thinks like "A trader's life is not like everyone else because when other people go to work they know if they just do their job they will get paid. A trader goes to work and not only might he not make money, but he might lose money." So I was feeling successful, eventough I lost alot more money since I started trading then I won, after Friday I felt like I had made a major improvement on my trading, and ultimately my chance to make money. But the feeling of being successful soon faded as the market opened and I realized I have no clue where it was going to go. My trading plans seemed to have faded from my mind when the market opened. I had foreseen that this might happen, this forgetting of what I had planned. That’s why after I had once printed out charts and made plans and marked support and resistance areas, I went over the plans again Sunday night, and in the morning before the open I went over the papers again. My first trade was a short on the YM at 8:34CT, at 13980, but then I chickened out and bought it back for a 2 point gain at 13978 at 8:35CT. Then I shorted again at 9:20CT at 13972, but it was a wrong move and the market went up. I bought back my short at 9:59CT, at 14017, a 39 point loss. Now that I look back I’m not sure what was going through my head. I think the reason I shorted was that I was looking at a minute chart, which made things look more dramatic, and there was a dip with a lower low than the previous dip’s low. But when it was not going in the direction I expected, I though about what I should do. Now that I look at the charts I should have never let it go past just above 14000. I think I was hoping that it would dip back so at least I could even out. Maybe I even though that I was invincible and it would come down below where I shorted, or that my self awareness depended on me sticking to my position. A lot of thoughts were going through my mind and I don’t remember all of them. When it went to 14017 I realized it was out of control and bought back the short. Now I see that the price came back to just below 14000 around noon E.T. But when I saw it go up to 14017 I didn’t know if it was even going to come down again and I was already above 2% down and though about never risk more than 2% and so I decided to get out of the trade. At that point I was not sad, but disappointed, and felt out of the loop. Although I already had a mental stop in place at just above 14000, which was just above the previous dips high, I did not follow it. Then I shorted again at 10:03CT at 14020, but terminated the trade at 10:38CT on 14036. I though what if all these technical charts with support and resistance are worthless. What if it the market is moving simply because mom’s and pops are watching Mad Money and Fast Money and buying stocks. What if traders are simply watching individual companies and buying based on earning’s report and related news. Shouldn’t I be paying attention to these fundamentals that are moving the Dow? The reset of my trades today were overall losing trades based on some technical area, emotion, and self discovery. In total I had 18 trades today, 9 roundtrips, with no major gains. A loss of 81 points. Overall profit loss, including commission, was $473. In the past I would relish about my winning day and show nicely labeled charts and details. But I’m not feeling good and will only show my executions summary, which probably you are not interested in. I guess I’m just too tired, ashamed perhaps. I have read and heard from knowledgeable members here to place firm stops. But until now it did not register. I guess a man can only do what he thinks is best. Though I think that automatic stops might be good for some situations, I still plan on using mental stops, though firmer, because they are more flexible. I don’t mean to be a hard head and say my method is right and yours is wrong. Like you I’m searching for what works, and if your method works for you then it is right, and I’m always listening and open to new ideas about ways in which I can improve my trading and may one day adopt an automatic stop if my mind tells me to. But for now I feel more comfortable with this method.

Thanks Brownsfan. You are absolutely right. Thanks for the great help.

Brownsfan, you're probably right. I'm still trying to learn my style and mental stops seemed right at the time, but I'm probably wrong about that and the pull back strategy is probably wrong. So I will try to adjust my strategy by placing stops with a 2/1 ratio and try to do quality setups rather than the risky and less promising setups I've been doing. But I will keep everyone posted about my trades because it helps me to record the even and also get excellent feedback from knowledgable people like yourself. My analysis is based on my limited trading experience. So I was only stating what was going through my mind to see what other people think about it who have been studying and trading the market longer than I have.

Thanks Tony. What you say makes good sense, especially the 2/1 ratio. So I need to look for high probability setups with 2/1 ratios and over time it should be profitable.

Hey. Sorry if I'm making alot of incorrect conclusions. As you know I'm very new to this and don't want you or anyone to think that I'm making recommendations or pretending to be an expert. I'm only stating how I'm perceiving the maket and why I'm not using firm stops in my trading.

I had a mental stop in place. I had bad experience with firm stops before. I would place the stop firmly, only to see my stop hit and the price later pull back, but I could not take advantage of the pull back because the firm stop got triggered. So my current strategy is designed to take advantage of those pull backs in the hopes of losing less, evening out, or profiting from a imperfect entry. I place the initial mental stop or alert, in an area where if the price hits it means that my plan is not going the way I imagined, an imperfect entry but perhpas still it is a correct read on the overall trend, or the second possibility is that it was a completely wrong read on the market. In the first situation the entry was imperfect, but the price move against me is short term and the overall markt is still going in the direction I imagined. So that is not a problem and I can still profit if I hold on. In the second scenario, the market is going in a different overall direction and my read was completely off, so that means to get out, but even in this case, often it will not go straigh up but swing back significantly, unless the move is based on major news, then in those cases it will move against me quickly and with very minor pull backs. But if you're paying attention to the news and know when certain important reports are supposed to be released then you have a better chance of identifying those moves earlier. But in non-news based moves against my position I can more often at least reduce my losses significantly on the pull backs. But a firm stop can't take advantage of the pull backs. So my understanding is that even on clearly wrong reads, the price often pulls back, unless ofcourse it's based on some major news, then it might go straight in one direction with insignificant pull backs. The way I see it this strategy works better if used on non-news price moves, because those moves are less affirmative and more likely to pull back. If it is a news-based move against you then all you can do is pay close attention to the news and when economic data is to be released, and if you don't catch that then when the price goes to zone 2 very quickly then you know something is wrong and you will get out. But still, the way I see it there are alot of things that have to go against you for you not to be able to take advantage of the pull back. The firm stop is based on one factor and one factor alone, price move. It does not take into account other factors, like how is the price moving. Specifrically how fast is it moving, and is it news related or not? If it is not news related and relatively slow move then it is more likely that it will have significant pull back.

Thanks Tony. That was very helpful.

Hello. Here is the log for today. I know I said I would not trade for a while, but the forces telling me to trade are too powerful. So, um, here it is. All trades were YM, 1 contract per trade. All charts and times are central time. All except the first chart are 4hr charts, 3 minute candles: Today I turned on CNBC before the open and they said that Caterpillar and Google reported lower earning and that the Caterpillar would have a big impact on the Dow. Since I was planning on trading the YM today I looked for shorting opportunities. The Dow was already down before the open and I considered shorting before the open to get a head start. Turned out to be a short term mistake. I shorted 1 YM contract at 8:27 C.T. at 13998, because I was paying attention to the chart for a price drop before the open and at around that time there was a big sell momentum and lots of negative outlooks coming from CNBC about Caterpillar and Google so I thought it was a sell off so I though I will short. But right after I shorted the price jumped up and you can see that that same candle is now a green candle. Then right after the open there was a huge rise in price, so I panicked a little seeing the P&L drop. But I decided to stay in and get my money back on the dip. At this point I didn’t think there was going to be a huge sell off today because of that price jump at the open. So I waited and the price dropped and I bought my short at 8:57 CT at 13987 for an 11 point profit. I bought my short at 13987 because of the green pivot near, so I was afraid that it might be a support area. Also, that initial price surge scared me because I wasn’t sure what it was. The trend was clearly down from yesterday’s close and the Caterpillar and Google reports should have caused the price to drop not rise. Now I think that the initial price surge was mostly longer term investors or traders who had an automatic order that was planned to go in at the open. Is that right? So I missed the big move. Should have held on to the short, but the initial price rise scared me and so I decided to be cautious. Also, I didn’t know how how strong the CAT and GOOG effect on the market would be. So I stayed out. Here is the chart for that trade: But at 11:30 CT I got the trading bug again and did a couple of short trades for 2 points and 2 points. The latter short was at S3, which was approaching a pivot point just bellow 13950. So I decided to short at S3 at 13943 at 13:08 CT because I thought the pivot would be a resistance. But it broke the pivot. So I waited for it to pull back so I can get my money back. I did manage to pick up a couple of points on that short by buying my short at B3, 13941. But the trend was positive now because the highs were going higher and the lows higher as well, and the pivot was now significantly broken. So I decided to look for longs. Here is the chart for that trade (S3,B3) and the remaining trades for the day are also here: So since the trend was clearly up and the pivot was not proving to be a strong resistance point I decided to go long at B4, 13:32CT, at 13945. Sold at S4, 13:59CT, 13961, for a 16 point gain. Then decided to buy again on a dip, around the pivot, which was also a good buy point according to a trend line I had drawn, so bought at B5, 14:08CT, 13950. But then I saw that the price dropped below the pivot and bellow the trend line where I expected it to bounce from. When it dropped below the previous dip’s low I realized that it was a bearish sign and possible trend reversal, so I decided to hold on at least until I get my money back on a pull back. Then it went up all the way to 13960 and I though to sell it but decided to hold on a bit more for more profit, but it did not go higher but dropped down and this time I decided to cut my losses because the trend was clearly down due to the lower low and lower high. So I sold at S5, 14:24CT, 13953 for a 3 point gain. In total I had 34 point gain, 10 total trades, 5 roundtrips. Total profit today minus commission was $148. Some of the things I learned today: 1. Have a higher risk tolerance. Before I was too jittery and a $27 loss on my P&L would scare me too much and cause me to sell based on that and not on more objective analysis, and so I would lose some good opportunities because I was not risk tolerant and expected to make a perfect entry and exit. 2. Today’s sell off was not based on a major economic problem but rather caused by two big companies who had lower earning, and not necessarily due to major problems in their company but due to things like spending too much or not enough sales in North America. But nothing that would say that the economy is not good per se. So there was some panic sell off which is probably normal, but then in the afternoon it seemed that the big players and traders combined were moving their money from GOOG and CAT, if they had any in there, and other stocks that they may have sold due to the sell off, and they were moving this to other stocks buying them cheap, and causing a price rise. So, a weak non-economic sell off like today could have good buy opportunities in the afternoon. Anyways, just though I should share my experience and see what other people think.

Hey Stanly. Thanks for the advice.

Excellent advice Tony. Thanks.

That's an excellent idea brownsfan019.

Thanks studyolic.

Thanks Paul. You have sure read alot of book.

Hey Paul. I went to the Garland Central Library since I'm not a city of Dallas resident. Their selection was not impressive. Here is what they have for day trading: http://ipac.nmls.lib.tx.us:8080/ipac20/ipac.jsp?session=1O842A582479Y.40664&menu=search&aspect=basic_search&npp=100&ipp=20&spp=20&profile=nmlp&ri=&index=.SW&term=day+trading&aspect=basic_search#focus The books I got are: The Guts & Glory of Day Trading by Mark Ingebretsen The Day Trader's Survival Guide by Christopher A. Farrell How the Stock Market Works 3rd ed. by John M. Dalton To answer your question of the main reason I decided to start speculating, I can tell you that some advantages of trading are: 1. Freedom to work flexible hours from the comfort of home. 2. Freedom to move from place to place without turning in a 2 week notice or vacation request. 3. Freedom from constant interaction with the same people day after day, the typical 9-5 job.

Thanks Paul. The library is a great place. Maybe they have wireless internet too, for free.

Thank you all for the great advice and attention. It has been very helpful. Thank you Dogpile, Paul, dalby, brownsfan019, ItalianSharp, TinGull, cooter, thrunner, james_gsx, and Nick1984, for reading this topic and giving your opinions. And thank you to those who are contacting me privately to offer advice. I have read through all your posts and will come back to this topic and read them again. Clearly the theme of responses is that I have not invested enough time in reading, researching, and practicing on a simulator and perhaps later starting out with just one contract. You have also clearly identified that I’m being impulsive, impatient, emotional, and not having a trading plan. Caution is what I’m hearing, and what most or all of you have been telling me. The information that you have provided is excellent and I want to thank you again for it. Good luck to everyone today. And forever.

Excellent post Dogpile. Thank you.

Excellent advice Tin. Thank you very much.

I assure you gentlemen, and ladies if there are any reading this, that, um...this topic is not a joke. Let me rephrase, it was not meant to be a joke. The facts I have stated were all true. I would like to thank everyone again for their patience and above all honesty. I appreciate it very much and it has been a tremendous help to me. This site is filled with some of the nicest and intelligent people I have every come across in the internet. The combination of nice and intelligent is not easy to find, and I feel very happy to have found it.

Thanks ItalianSharp. It is very funny. I can't say that I'm sad. Actually I wasn't sad before, dissapointed and a bit frustrated, but sadness did not occur. Thanks again for the good advice. And happy to hear that you had a good laugh.

Thanks for the good advice Brown. You are absolutely right. I need more practice. I didn't know I was getting screwed by the commission. I use Interactive Brokers, bundled comission rate. I think I misspoken about my comission before. I said 4.26 per contract, but I was trading 2 contracts at a time, so it was 4.26 per trade for 2 contracts.

You are totally right Brown.

Hey Brownsfan. I'm not exactly sure why no firm stop loss. I think I felt I wanted to do mental stop loss, and because I felt it takes time to place those stop orders and cancel or modify them. Really I don't know why, and don't know if a firm stop loss would have turned out better or not. I see that my comission is 4.26 per contract, and thus 8.52 per roundtrip. Is that too hight? No backtesting was done. I'm not sure how to do that. And as far as a plan is concerned, I don't know what to say. I described my though process above, but there is no particular strategy or theory behind it that I can name. To answer you question about the simulator, unfortunately it was not on a simulator. I have a paper trading account and traded on it a couple of trades before but I found it more useful for learing the software rather than trading, because when there is real money on the line it is a different story. You know, I just don't feel that it was working out for me. But it may be better for me to trade 1 contract instead of 2 since I'm just starting out.

You are right. If you see my charts you can see that even I was correct most of the time with the overall trends, and that is not too bad considering that I had 12 overall trades. The problem was that I was too jittery...well one of the problems...LOL. I probably would have jumped back in the market during the Fed meeting for a short but I was feeling beat and also my internet connection was acting up.