Nerve Racking Experience

Lately, I have been trying to comprehend and control my hopes and fears of losing money. Although most of the anxiety was psychological, some of the severe anxiety I experienced actually manifested physically, i.e. pain at the back of the head, sweats and shakes. I was obsessed with every stock tick of every trade that I was in. While it is natural to not want to lose money, I seriously had a problem.

At the time of my last post, my excuse for not wanting to enter a live trade was that I was waiting for the FED announcement. The announcement came and went (what an over rated experience that was) and I hadn’t entered a trade. It took until the 10th before I was able to muster up the courage. The first few days were bad, I had been in the red (only a few hundred dollars, but in the red all the same!). While I drove to work today the DOW gapped up 60+ at open. This put me in an instant state of anxiety. I was invested in some option put trades and thought that all my fears had been realized and that I had just lost a substantial amount of money. When I looked at my account I found that both my hopes and fears were being realized at the same time. While two of the trades pushed deeper into the red, two others were performing well, putting my account into a positive position! I did not expect this.

I am reading ‘The Coming Economic Collapse” by Stephen Leeb at the moment. On page 58, he quotes Jesse Livermore (Edwin Lefevre’s Reminiscence if a Stock Operator):

“It is inseparable from human nature to hope and fear. In speculation when the market goes against you, you hope that every day will be the last day-and you lose more than you should had you not listened to hope-to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out-too soon. The successful trader has to fight these two deep seated instincts”.

While I cannot say that I am cured of my problem, I have reached a turning point in both my ability and attitude towards trading. Hope and fear will always be there, but I have started taking steps to manage and control these powerful forces.

Based on this learning experience I am training myself to think differently… My thinking should not be ‘how much will I gain today, it should be along the lines of ‘how much will I lose today’. I have come to learn that losing money is a part of trading and I MUST accept it if I am going to succeed. I need to accept loses and move on. The only caveat is that I need to make sure that my winning trades are greater than my losing trades.
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Below is a screenshot of my current trades (live). As noted above, I entered these trades on 8/10/06. I have contingent stops in place for each. I will not go into detail about the stops at the moment, because depending on PPI and CPI announcements over the next two days, I may chose to tighten them BMO tomorrow.

About Time!

It has been about a week and a half since my last posting. There has been no real reason for this other than being short of a little time (while I finish up remodeling my house and preparing for the birth of my first child at the end of the month!) and waiting for the damn obsessive FED announcement on Tuesday. I have managed to get on line and look at each day’s action, but finding the time to make a post have been difficult. I need to work on that.

On the last post, I said that I have been waiting for the market to tell me which way it is going to go. Revisiting the DOW chart that was also posted, we can see that it has completed its move to the drawn resistance line. On Thursday, the index broke through resistance to close just above. On Friday, It surged +100 points to a new high, it then dropped around -150 points to make the session low and then rose approx +50 points to closed just above resistance. What a couple of days!

$INDU 60d/60m chart

Looking at the chart, Volume appears to have been gradually rising over the last ½ a month. My Sto and MACD look to be getting ready to tip, RSI appears to be increasing and OBV downwards. The unknown – What the FED is going to say and how the market will react.

In my mind, The DOW has completed this leg up, but the index still does not give me any clear indication as to what to do. I wan to buy some select puts, but I remain cautious until tomorrow. My expectation is that it will make another leg down after the FED announcement. Based on what I have been reading in the news media and on other blogs, the economic outlook is bleak and there is little reason for the market to rally.
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As for current trades, I still have the QCOM strangle. I added some DIA Puts last week. I am looking at entering a number of new trades after Tuesday.

Good Luck - David

The Straddle, I mean strangle trade...

Trade Update 7/27/06

As I have recently been saying, I have been waiting for the market to tell me which way it is going to go. For the last couple of months, the DOW has been trading between 11700 and 10650. I am waiting the market to either break through or bounce down from resistance on high volume. Interestingly enough, the market looks to test resistance on or about the next FED announcement date.

7/27/06 $INDU 60d60m Chart



Below is a screen sot of my current trade as of market close on 7/26/06



I only have one trade now. You guessed it, that (so called) straddle trade that I entered some time ago… I have actually been wrong all this time. It is not a straddle trade but a strangle trade. Investopedia provides a fine description of the strange trade. Anyway, as I have come to learn from this trade experience that this type of trade is only profitable when a large price movement is occurs. I have been in this QCOM trade since around 7/12/06 and there has not been one of those large price movement thing-a-me-jigs… This why I am yet to make and profit! I still have a few weeks until expiration, so I will see how it goes.

I lost RIG yesterday to my stop for a 50% profit.

Good Luck - David

Trade Update 7/26/06 BMO

Almost all stocks on my watch list appear oversold or neutral. I am waiting on the market to give me conformation of what direction it is going at the moment. Long Term – still bullish, mid term - cautiously bullish, short term… not to sure!

Below is a screen sot of my current trades as of market close on 7/25/06.



Below is a screen sot of my current trades as of market close on 7/25/06.

.EOGTN – Lost to stop on 7/21/06 for a profit of 51.07 after commissions. I could be still in the trade if the stop was above my resistance line.
.AAOHH & AAOTU – Straddle Play, still watching the numbers! The call is all but worthless now and the put has doubled its value. I am in the red by about $10
.RIGTQ – Hold @ 75.79 – I am still in the trade. My indicators are showing that the stock is moving from oversold to neutral ground.

Good Luck - David

A Pause in my Posts - Time is on my side

Sorry about the lack of posts since last Friday. Many things to do, so little time. I have managed to look at my positions each day and look at some potential new trades, but have not had the chance to post on the blog.

Update: I have lost all but three positions now and the market is in this frustrating state. All my indicators are pointing to an oversold state, but I don't have a bull feeling about the market. I am getting mixed messages and are not too sure what to do. As some one posted on a blog I read today, 'I want to go short, but all I see are longs. It is neither the right time to go short or long at the moment.' For me, a bullish sign is the Dow breaking 11248. A bearish sign will be the Dow falling below 10600ish.

I really really really want to get in some trades. I need to maintain my discipline and wait for confirmation. Time is on my side.

Cheers - David

Its Friday, I had to drag myself out of Bed Today

I slept in because I knew my trade review would be quick easy for me today. I am holding all my positions today with not stop changes. I have started looking at my watchlist for some trades to enter next week. I hope to post something about them on the week end.
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Below is a screen sot of my current trades as of market close on 7/20/06.


As usual, below are the adjustments that I made to my current trades before market open. I have adjusted them to lock in profits and/or minimize possible losses.

.DVNTL – Hold at 61.80.
.EOGTN – I stopped out of EOG yesterday for a 7% profit. Some of my stops are too tight. I still should be in this trade. EOG & DVN are trading very similarly.
.AAOHH & AAOTU – Straddle Play, still watching the numbers!
.RIGTQ – Hold @ 75.79 – My 2nd profit target for RIG is 70.04.

For anyone reading this, just remember that this is my personal trading journal. I do not recommend that you enter any of these trades or do anything that I choose to do. Theses trades and stops are based on my own analysis and conclusions. I recommend that you develop your own trading systems, strategies and rules, conduct your analysis, come to your own conclusions and get professional advice from qualified professionals persons before making any investment decisions. I am no way near qualified to make such recommendations.

Good Luck - David

Easy One Today!

Just a few trades now. I am looking forward to doing my backwards analysis of my trades. This should give me some good lessons learned and help refine my future trading strategies.

Below is a screen sot of my current trades as of market close on 7/19/06.


As usual, below are the adjustments that I made to my current trades before market open. I have adjusted them to lock in profits and/or minimize possible losses. The anticipated bounce on the major indices did not occur today, but the expectation is still there. I expect to be stopped out of many of these trades in the coming days.

.DVNTL – Hold at 61.80
.EOGTN – Hold at 68.56
.AAOHH & AAOTU – Straddle Play, still watching the numbers! Very interesting, it appears that the option value in both directions is decreasing. Looking at the chart, the stock has been in this 2pt+/- trading range for the last week or so.
.RIGTQ – Changed to 75.79. I have made my profit. From looking at the chart, the stock appears to have entered a – My profit target for RIG was 76.68. I passed my first profit target!

For anyone reading this, just remember that this is my personal trading journal. I do not recommend that you enter any of these trades or do anything that I choose to do. Theses trades and stops are based on my own analysis and conclusions. I recommend that you develop your own trading systems, strategies and rules, conduct your analysis, come to your own conclusions and get professional advice from qualified professionals persons before making any investment decisions. I am no way near qualified to make such recommendations.

Good Luck - David