Trade Report 8 May 2018

Posted by BMoreTrader on May 9, 2018
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Swing Trades

I framed no trades for possible execution today. Eight positions hit their stops: FNV, EQR, USO PVG, BMY, MRK, XME(2).

Knowing XME was to be closed today and seeing gold down at the open, I probably could have cut PVG earlier in the day:

XME had met the criteria to be closed at the end of yesterday, but I missed closing it. I tightened up the stop on FNV and got cut out on the second test of the bottom for the day.

Moved the stop up and exited the second half of EQR today on general market weakness:

Could have cut BMY after the PSAR flipped, but I was willing to be patient for the huge upside back to the RL270. In a market with no clear direction though, it’s better not to hold on to the weak candidates.

Was playing MRK for a bounce off the Bollinger band mean, but all it seemed to do after I entered was go down.

I had entered the stop as a trailing stop instead of a hard stop on USO, so got taken out on the spike down today. Not what I was expecting for a 2ATR stop from my entry point just a day after entry, but oil can be volatile.

Total restults for today’s closed trades: +.61R (but that includes the full value of the EQR trade. Without it, -.4R.) There are 15 current open positions showing +2.39R.

Long: AEM, BMY, CAT, GLD, INTC, IR, KR, OXY, PFE, PYPL, RIO, TPR, TWTR.
Short: JPM.

Day Trades

I had no time today to sit and watch the market, so I was not able to make any day trades. I may be able to catch the last hour of the market tomorrow, but from the looks of my schedule this week, I don’t believe I will be able to place any more day trades this week. Perhaps I will load up the replay in a simulator to keep my game in shape as I do have some time outside of regular trading hours that I can devote to trading.

Reflections

The market seems indecisive. For yesterday and today, the major indexes closed very close to where they opened. With no clear direction from the market, it’s hard for individual stocks to move very far. My general observation is that when the market moves into a sideways quiet channel, I get chopped up and take losses looking for directional moves, whether continuations or reversals. These periods create my drawdowns. I’m still taking the trades as paper trades so that I can track where my equity turns around and learn more about what to look for when I will be trading real money. I want documented proof to back up my intuition of what happens to the systems I currently trade.

Trade Report 7 May 2018

Posted by BMoreTrader on May 8, 2018
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Swing Trades

Returning to the daily posts about my trades, I framed 10 possible trade targets today and received fills on 6 of those. No trades were closed today. There are 23 current open positions showing +5.34R.

Long: AEM, BMY, CAT, EQR(1/2), FNV, GLD, INTC, IR, KR, MRK, OXY, PFE, PVG, PYPL, RIO, TPR, TWTR, USO, XME.
Short: JPM.

Day Trades

Today, I only opened and closed one day trade. Net result: +1R. Today I chose to be more selective on my trades. My goal was to bank 1R and then walk away. I got lucky and happened to do this on the first trade, so I sat and watched several other moves throughout the day. Some I missed. Some would have chopped me up. I need the experience and comfort of knowing I don’t have to catch every move and that my account can grow slowly over time. Making 1R each day will generate a stellar annual return. My plan is to stick to the 1R cap for 30 days. I expect it will take more than 1 trade each day in order to do this. On the flip side, I will limit my trades to 4 losers each day.

In baseball terms, my goal is to get on base (+1R). I can swing at the pitch whenever I think best. A loss is when the bat doesn’t connect with the ball. Four losses (strikes) and I’m back on the sidelines. A small win will get me another chance at bat and effectively shorten the distance to first base. I don’t need to hit home runs, and I’m not looking to do that right now. My hope is that each loss will be less than 1R, so that my max loss per day is 2-3R. If baseball players can earn millions of dollars with a .300 batting average, even netting +2R per week should get me the returns I’m looking for.

Trade Report Week of 30 April 2018

Posted by BMoreTrader on May 5, 2018
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Swing Trades

Due to some circumstances to be commented upon below, I was not able to make daily posts this week. Below is the summary of swing trades opened and closed for the week.

Date 4/30 5/1 5/2 5/3 5/4
Framed 4 7 4 0 0
Opened 4 7 5 0 0
Closed 1 2 0 9 6
Return -1.02 -1.4 0 -2.34 +1.84

Remaining holdings are now:
Long: AEM, BMY, CAT, EQR(1/2), FNV, GLD(2), INTC, KR, PVG, PYPL(2), RIO, TWTR, XME(2).
Short: JPM.

Day Trades

I started well on Monday, but then my classic mistake occurred. Every time that I have blown up, it is because I have held onto a position too long, adding to it instead of exiting or reversing. This feeds into my desire to be right. There is also a touch of revenge trading when I do this in that I am usually looking to fix n earlier mistake, either missing a major move that I had framed properly but exited too soon, or if I get whipped back and forth changing directions because my position size it actually too large.

On Monday, I made a conscious choice to continue past my stopping point (unlike 25 April), and ended up suffering through the night and into the next day until I finally let the position go. This rattled me emotionally, so I basically made an effort to do the minimal amount of work necessary to manage my swing trades over the next few days. If I had been in a better mental state, I could have pared down some of the losses, or maybe even captured a profit, but those are only lessons I have learned after going through this experience.

On Friday, I started day trading again, and did reasonably well for the first two trades. Once again however, I missed a move and built up a massive position that was not moving in my favor. Strangely though, I did not have the same emotional connection to this position. Perhaps it was because I knew it was the paper trading account, but I also believe it was the dots I had connected during the few days off the screen.

As I mentioned in I am smart, I have a disposition to want to be right. I place too much effort and attachment to having each trade go my way, rather than a more healthy attitude of accepting what the the market gives and trusting my overall results to generate a positive bottom line. Wins and losses are like breathing in and out. They are a necessary activity for healthy living. This week, I believe I took a significant step towards wiring my brain according to the blue arrows in the diagram below as compared to the orange arrows which I believe have created many of my past disasters.

There is the possibility that this behavior will raise it’s ugly head again, but the re-framing and removal of the emotional charge gives me confidence that I can trade in a more healthy manner going forward. While there have been many psychological issues for me to confront on my trading journey (and likely more to encounter), I feel like this is the largest one I have yet to conquer. It set me back this week, but I believe I know more now about it and the feelings it brings on so that should it show up again in the future, I will be better able to act in a healthy and appropriate manner.

I expect to return to daily reports again next week.

I am smart

Posted by BMoreTrader on April 30, 2018
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Belief:

I am smart.

What this means to me:

This is not meant to be an egotistical post, but is a time to dive deeper into a point that Denise Shull made in Market Mind Games. When presenting her idea of fractal behavior, she says,

Since I have been consulting on Wall Street, I have yet to find someone who habitually fights trends that doesn’t ultimately reveal a very clear and specific reason that arises out of their personal and family history. The easiest ones are traders who can notice that they want to prove they are smart.

Knowing that one of the behaviors that can cause me problems is fighting a trend, this paragraph just leapt off the page at me when I read it.

As a child, I was tested and classified as a special education student. Not because of any difficulties, but because I qualified as gifted and talented. In 2nd grade I finished our math textbook a month or more before school ended. In 3rd grade, I went to the 4th grade classroom for reading. Eventually, I was accepted into a magnet school and surrounded by other “smart” people. We were very competitive, or at least some of us were. My weak spot was English, but in math, science, and even German, I was one of if not the top student in the class.

Both my parents were teachers, and my mother taught the lowest of the special education students that attended school. While never admonished for a “bad” grades or rewarded for “good” grades, I believe there was both encouragement and an unspoken expectation that since I could do much better than my mother’s students, I should do my best and earn the highest grades I could.

What this belief gets me into:

Being smart generally means I catch on to concepts quickly.
Trying to appear smart and educated.
A desire to improve myself.
A desire to present myself as a better trader than others.
It supports a competitive side of me that likes to win.
Connecting the dots of different ideas.
Relying on my intellect rather than being in touch with my emotions and feelings.

What this belief gets me out of:

Studying and preparing. I wish I still had the little sign I was given in elementary school that said “Genius is the ability to avoid hard work.”
Diving deeply into a task.
Giving proper weight and attention to my emotions and feelings.

Limitations of this belief:

It encourages me to present the best possible side of my trading. Being smart has meant getting in as close to the bottom as possible and out as close to the top if possible. After all, what could be smarter than selling at the absolute top or buying the bottom?

It has been closely connected to my trading results. My expectation has been that a smart trader makes trades that make money. Losses only appear smart if they keep me from losing a larger some of money. Relating being smart to monetary results instead of following trading rules is a real challenge. (There’s another belief that I am a creative person and don’t like rules hiding in there as well.)

If I understand a task intellectually very quickly, I may miss some of the important nuances and/or the impact it might have on my emotions.

Utility of this belief:

Believing I am smart encourages me to continue to grow and learn. I will fix mistakes and tackle new obstacles, always seeking to do better than my colleagues or my previous performance.

Conclusions:

There is definitely a utility to being smart. The catch is in how it tries to manifest itself. Trying to be a smart trader by only having winning trades is actually not very smart. Being a trader who develops a clear system and follows clear trading rules is a smart trader. Keeping those ideas from getting confused is the real task here. In the trading context, a losing trade doesn’t make me dumb. It can make me smarter if I choose to see it as paying for information about the market.

Not all trades are winners, and no one can pick even most of the tops or bottoms. Lacking those skills, I can still be smart by trading a system that fits me and my personality.

Trying to do anything else is actually pretty stupid.

Trade Report 27 April 2018

Posted by BMoreTrader on April 28, 2018
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Swing Trades

Today, I closed nine and a half swing trade positions. Some hit their stop loss. Some (including the half) were strikes to bank some profits.

First up is INTC. While I was writing my report Thursday evening, I noticed there was a major move up. Intel had reported earnings after the close. Since I had two positions on, I chose to exit one then and there. As you can see from the chart, the fill was well outside any reasonable range of normal. I kept the other position open on the chance that it might be a “gap and go” sort of move. Once it became clear that it was moving down from the opening gap, I closed the other half.

AEM, TSLA, and MO all hit their stop losses.

The next exits were more discretionary. The NYT short has been open 10 days, and while it is at the lower end of the range, I feel like it is money that might be better used in another trade. I also was not a fan of the fact that the stock only trades in .05 increments. Because of this, it will no longer be one of the targets on my radar.

The other trade that was both opened and closed today that will be removed from my radar screens is ESPR. It made it to +1R today, but the bid-ask spread was so wide that I couldn’t get a fill on my limit order. I finally got a fill for an exit at +.71R.

The long position in O moved +1R in my favor today. It touched the upper bollinger band, so while there might be more left on the upside, it felt wiser to take the money off the table.

EQR also moved more than 1R in my favor today. Rather than exit the entire position, I chose to exit half. EQR seems more bullish to me that O, so I’m waiting to see what happens next here.

I think that just leaves RL as the final trade I closed today. With two positions on and some indecisive back and forth sorts of move, I felt better reducing exposure here.

Five swing trades were framed for possible starts today, and four of them filled. As mentioned above, I closed out ESPR already. Net results for all closed trades today: +4.93R plus the half of EQR (+1R). There are 19 current open positions showing +3.44R.

Long: AA(2), AAPL, BMY, EEM(2), EQR(1/2), EWG, FNV, GLD, ILF(2), KR, LRCX(2), RL, WPM, XLF.
Short: PG.

Day Trades

I was much more selective in my day trade entries today and only took 9 trades in the morning. Friday afternoon can be a slow grind or have crazy swings, so I chose to stay out after lunch. The nine trades generated +2.5R and had only one small loser. This is definitely a step in the right direction. Be more patient and more picky about when to enter and make sure there is a reasonable reward target available for the risk. Current commission costs are such that I pay 1R for every 25 trades. Keeping my number of trades down will reduce my commission costs and increase what I get to keep.

Thoughts

All the trades I chose to close arbitrarily today were winners. What about the positions showing losses? Would there have been benefit to reducing my exposure there instead or as well? What about the saying to cut your losses short and let your winners run? I closed out the winners, not the losers today. Was that wise?

Trade Report 26 April 2018

Posted by BMoreTrader on April 26, 2018
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Swing Trades

I framed two swing trades for possible execution today. Both were filled: BMY and O.Three channel trades reach their exit point today, so were closed out (one was a double position). Charts for NKE, SBUX, and XRT posted below.

Two other trades hit their stop losses today: BABA and JNJ.

Net result for closed trades: +2.54R. Current portfolio has 24 open positions showing +4.7R:
Long: AA(2), AAPL, BMY, EEM(2), EQR, EWG, ILF(2), INTC(2), KR, LRCX(2), O, RL(2), XLF.
Short: AEM, NYT, MO, PG, TSLA.

Day Trades

I was not able to trade the opening hour, but did trade an hour or so before lunch and again later in the afternoon. I ended up taking 20 trades generating +1.55R. Slightly better results than yesterday, and certainly better on the loss side as my largest loss was -.73R. I placed orders in the market today to make sure if it made a new high and I was short, I changed direction. It meant I bought the bar with the morning high, but I also recognized this and exited that position fairly quickly. While the reversal there would have been a great longer term trade, I was on edge and ended up only claiming little bits and pieces of what could have been a +2R trade had I held for just one hour. Being able to hold a position like that is my goal and what I am working towards. It seemed the market needed just a little more patience than I had today as it often made a significant move in the direction of my trade just after I exited.

Trade Report 25 April 2018

Posted by BMoreTrader on April 25, 2018
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Swing Trades

Two trades closed today. WYNN closed for a 1R loss, but MRCY was closed at +7.82R!

Four swing positions were opened out of six trades framed for possible execution today. The only ones that were filled were those that were market buys at the open. That brings the current portfolio to 28 positions showing -.16R.

Long: AA(2), AAPL, EEM(2), EQR, EWG, ILF(2), INTC(2), KR, LRCX(2), NKE, RL(2), SBUX(2), XLF, XRT.
Short: AEM, BABA, JNJ, NYT, MO, PG, TSLA.

Day Trades

It finally happened.

I knew that once I started reporting my trades here, I would eventually have a loss greater than 1R to report. I missed the initial short today, so tried to pick the bottom. I ended up with two positions long and was not able to reverse quick enough because it has not been my practice to place my orders ahead of time. The market dropped through my reversal point and with the fills I received, those opening longs were closed at -1.96R and -1.56R.

I was not happy with this, but continued to trade, eventually placing 27 trades today and achieving a +1.53R return. The volatility of the market and those first two trades left me on edge, so I played more hit and run, grab what I can, and get out. I had to reverse directions three other times. One of those was potentially premature because of the morning experience, but I was keen on not repeating my earlier mistakes.

I expect to write another post about picking bottoms soon because that was one of my ah-ha moments from reading Market Mind Games by Denise Shull.

Trade Report 24 April 2018

Posted by BMoreTrader on April 25, 2018
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Today was an active day in the market. I had very little time to watch what happened, so no day trades for today.

Swing Trades

I framed 12 swing trade candidates for today, and all 12 fired. Some were framed both long and short, and one fired both long then short.
Eleven trades closed today. Three of those were opened today.

Obviously, the three trades both open and closed today were each -1R losses, so today’s net result for closed trades is -2.21R. For the trades opened today but not closed, the results currently stand at -1.23R. Total open trades currently stand at +1.7R for 26 positions.

Long: AA, AAPL, EEM(2), EQR, ILF, INTC, KR, LRCX(2), NKE, RL(2), SBUX(2), WYNN, XLF, XRT.
Short: AEM, BABA, JNJ, NYT, MO, MRCY, PG, TSLA.

Thoughts

Both DIA and SPY have been down six days in a row. If there isn’t a bounce or pause tomorrow, then look out below. I have the morning when I can watch and see what happens and will be prepared to trim the longs quickly if the market continues to fall.

Trade Report 23 April 2018

Posted by BMoreTrader on April 23, 2018
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All professional traders take losses.

Today was the day to claim mine. It can be tough to walk away, but that’s how I will live to trade another day and be a professional trader.

Day Trades

Today I took 13 trades during the first 75 minutes of the trading day. Net result: -4.3R. The last two entries were clearly revenge trades and exited as soon as I entered them. My first two trades were positive, but I missed the opening breakdown, This led me into a mental state of trying to play catch up and fill in the hole that only existed because my FOMO took over. This led me to be on the wrong side and holding onto positions that I should have exited much earlier. The largest loss was -.85R, so still within the professional 1R risk tolerance. I had the strength to walk away and stay away for the rest of the day so that today’s results didn’t morph into the psychological blowup days that have plagued me in the past. I believe the outward accountability of reporting here will give me the strength to keep any daily drawdown to a minimum.

Swing Trades

Two trades closed today: ABX and GLD.

Net result: -.53R A minor loss that certainly falls into the realm of professional behavior.

Thirteen new swing positions were opened today which brings the total number of swing trades open to 24. Currently showing net +4.98R
Long: AAPL, CBRE, EEM, EOG, GRUB, LMT, LRCX(2), NKE, RL(2), SBUX, V, WYNN, XLF, XRT.
Short: AEM, BABA, HSY, NYT, BMY, MRCY, XLP.

Market Fractals

Posted by BMoreTrader on April 23, 2018
Posted in: Trading Beliefs. Tagged: , , . Leave a Comment

In Market Mind Games, Denise Shull makes the observation that emotions and feelings share characteristics with fractals. What happens in one context may repeat itself elsewhere and in a smaller or larger variation. Having been exposed to Ken Long’s regression line fractal framework for trading, I’m certainly used to thinking of a fractal nature of the market. Van Tharp’s says that “people do not trade the markets; they trade their beliefs about the markets.” My a-ha came when Denise Shull connected these two ideas to demonstrate that traders have fractal behaviors, especially as it pertains to feelings and emotions.

Denise Shull starts with research that demonstrates that actions require feelings. No action takes place without some sort of feeling or emotion connected to it. For trading to be a psychological game, the psychologies driving the market must come from the traders. I’ve known and understood for a long time that my feelings and emotions influence my trading results. What I don’t think I appreciated until Shull pointed it out was how there is a much deeper crossover between my behavior as a trader and my behavior in other areas. Here are some of my own fractal behaviors that I spotted as I came to understand her point.

I am a musician, and my main area of interest in music is improvisation. I create music as I go. There may be a chosen theme, structure, or intention, but my primary goals are to create a competent, coherent, colorful, and convincing piece. I’m not looking for perfection and am certainly not stuck with following a written score. In trading, I recognize this as my reluctance and difficulty to write out a formal trading plan with hard rules for entry and exit.

Here’s another example of my resistance to formal rules. As an undergraduate, it was possible to take Music Theory 4 before Music Theory 3. The two classes covered different material, so while they had a normal sequence, it was possible to take them in either order. Because the best professors were teaching them in the same semester, I wanted to take them both at the same time. It made sense to me, but the Theory department wouldn’t allow it. Rules prevented me from doing what I wanted.

Someone shared the following on a Facebook post, and I resonated so much with it that I now have it posted on my refrigerator:

When I started to look for it, it became easy to see how my improvisation mindset manifests in not only a resistance to rules in music, but in many other areas of my life. Including trading.

Having gleaned this insight from Denise Shull, I’ll be watching and looking for other behaviors from my daily and professional life that might influence my trading.