Thursday Trading 10/06/05
The markets played out once again to the downside today.Once again there was a late day selloff across the board,with just a slight bounce up.I think a lot of people were expecting a bounce at the 1196 area on the S&P and markets usually overshoot,so they didn't get it.My trading went well today aside from the first hour,I had some good trades in A,YUM,and STJ.Yes these are not my normal stocks that I trade,but they all were trading at least at or above there average daily volume which is one of the things I am really focusing on now and is working out well.Hope everyone had a good trading day!There's some pretty good damage out there to many stocks and indices,but we'll see how it all plays out, I try not to form any opinions about the direction of the markets and only follow what I see in front of me in the moment.Good trading!
posted by txtrader @ 4:15 PM
7 comments
7 Comments:
Glad to see you back.
Have fun with trading (ofcourse money too).
Prathap
Thanks Prathap,good to be back to trading.
Prathap, how's the simulated trading going?Better?Cutting losses quicker I hope?Let me know if you have any questions about anything.Good trading!
Hi txtrader,
Good to see your messages and to know that you are making good trades right after the break.
I couldn't sit tight with simulated trading. So I started trading with real money. Initially I traded randomly on top gainers everyday, both on long side and short side. After making some trades I analysed how I was doing. To my surprise I lost my money on the long side and made profits on the short side. From then onwards I became aggressive on short side and cautious on long side. Last week was a blast and I had a winning percentage of 80. That made me feel like a pro and my ego broke out and raised to unreasonable heights. Guess what, this week I broke all the rules and traded like a mad monkey without proper risk management. I had a major loss on Monday and that set the tone for the rest of the week. I gave almost all the profits back to market. I can't beleive how I traded like that. Here I am back to ground zero and trying to set some new rules on my trading.
Apart from that, I had difficulty using both market orders and limit orders. Most of the time I used market orders as I had difficulty using limit orders for very volatile stocks. By the time I set limit order, stock always passes that level. So I have to change it again. I did that many times and finally moved to market orders. The reason I am comfortable with market orders is that I can order when I see good pattern and position. But sometimes market orders don't give me right entry or to paraphrase it they don't give my expected entry point.
I wonder how you enter limit orders so fast? How do you use them against highly volatile stocks? For limit order, we need to guess what would be good entry point. I have a hard time doing that. Does it come with experience or what?
have fun,
Prathap
Hey Prathap,
Sounds like you had some good trading last week and made some good decisions on direction,you need to build on that confidence.Don't let the bad week get you down,the good thing is that you realize you made the mistakes,now act on them and correct those mistakes,don't repeat.You "must" have discipline to be successful!
Sounds like the problem lies in your ability to cut losers quickly and also order execution.Are you determining your exits before you take the trades?What platform are you using to trade,and what's your average timeframe for trades? You may need to use a platform with Hot Keys where you can configure your keys to send different order types.If your time frame is short and you are trying to type in an order entry box I can see why you are missing price levels.Market orders can be dangerous if your trading volatile stocks.
There's no guessing on entry points I either take the shares that are there or I don't.Don't judge your entries on the type of orders you use.Many times if the spread is small I will just hit either the bid or ask,especially if I have indications that the stock is about to move quickly.
Build confidence on your winners,don't sweat the losers too much,but do keep them small.Let me know if I can help in any other ways.Isn't trading fun!
Hi txtrader,
Thanks for your suggestions.I appreciate your feedback. Yes, trading is fun.
You made a good point regarding entry points. I feel bad if I miss good entry point and try to chase it and put a market order. I think I need to let it go if I don't get any stocks with limit order.
Looks like I am making good entry points most of the time. But I don't think about exit point at that time. I will wait and exit when I think it is going against me. How can I set exit point before stock making the move? Are there any books or articles that you can refer to regarding the exit points? Or is it just common sense which I might be lacking :)
Also I don't use stop limit for cutting losses because If I want to put a market order, I ahve to remove that stop limit first and it takes time. So sometimes I wait too long in the hope of stock coming back and end up giving big losses. Do I need to put Right now I am using Medved QuoteTracker and Ameritrade Izone as a broker. I am comfortable with Quotetracker and seems to be reasonable. I will see if I can put some hotkeys for the orders. Probably I need to move to a more professional trading platform. What are the good trading platforms that you can think of?
have fun,
Prathap
Prathap,
I'm not sure what book would be best on exits,maybe Van Tharp,he has some excellent approaches to risk management and exits that you could use as a basic foundation.Also TraderMike.net has some good postings on exits.
I think you have to "always know where your going to get out if your wrong "before" you enter a trade.As far as where depends on your risk tolerance,how much pain you can stand for one trade.In my world I try to keep it minimal say .03 to .10 cents risk no more.If your using the 5 and 15 period moving averages you may have to widen that to say .15 to .30 cents risk.But at the same time you want to take trades where you see the potential to make at least 2,3 or more times the amount your willing to risk.
As far as knowing where you will get out for NYSE,you should be using either the nyse open book for depth and or the moving averages as exit points.For example, if using the 5 period ma then maybe say if it breaks by .05 cents you exit,or use the 15 period ma below that as exit.It depends on how far apart they are and if it fits your risk tolerance level.If your in a good trade and all the sudden you see something you don't like or your reasons for entry have started to change then maybe exit half your position just to lock some in.You have to obey your stops,the winners will be there.I use only mental stops,because of my quick in and out trading,I would never be able to enter stop limits,cancel and re-enter in time.Mental are good enough,you just have to be very disciplined at obeying them when they are hit,and don't be the last one out.Make sure the price at which you want to exit still has enough shares for you to exit on.Now sometimes these will get gapped thru,but you can't panic on those you simply treat it as a new trade in a sense and determine if the original reason for entry is still valid,if not you must exit.I think it all comes with a little time and experience,but it does come.
I use Assent,hammer or anvil to trade.I'm not really sure of others at the moment.You can email me if you have any interest in switching over. Email: txtrader91@yahoo.com
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