VERY light volume, KILLER to one's PnL
The volume today was EXTREMLY light. I couldn’t find a reason why, but I noticed it within the second hour of trading that today probably wasn’t the day to get heavy shares....so...why did i? Well I guess I got stuck in my normal mode of trading and just forgot about my overall judgment of the market. Sometimes the best trade is the one you don’t put in. If me being able to read how the market was trading wasn’t good enough, having 10 losing trades in a row should have turned me off to the day. If it wasn’t for late day news in SHW that sent it thru its low i would have had a MAJOR losing day, instead I closed even for the day.
On days like today, I need to only trade the BEST and most probable trades that I can read. If I had traded this day that way, I would have had a couple of heavy share trades in the morning, 4 or 5 100 share trades in the afternoon, and the one SHW late in the day. I would have walked away with a good profit if I traded properly.
It seems my biggest problem now, so my boss points out, is that I micromanage my trades. The stock is near its low, so I short shares.....it ticks up and I figure the weakness is over. Now wait, maybe my exit is wrong, but my entry was likely wrong too. The question is, is the stock GENERALLY weak or strong. If I am able to read the broad attitude of the stock for this day and the open to the stock for that day coincides with this, I need to take some profit off the table and let a lot of the shares just ride, and I can baby-sit it thru the day. This seems to be the way to trade consistently profitable. It is less stressful because you are in the money a good amount, and worst comes to worst you lose your profit.... which you didn’t have when you sat down anyway.
Now, entries are important because even though I may read the stock properly, I can’t lose what I came into the day with. Capital management is very important, meaning if my timing is off, I may need to reexamine the situation. Some people say entry price is not too important, but I would say if you get a poor entry, you are already at a losing disadvantage to read the stock properly. You will be bias toward your side, leaning toward signs of your chosen direction.
Here is an example: You long YUM at 50.00, the stock trades to 49.85 because you bought at the high end of range. The market starts to pull it down to 49.75. you tell yourself, "well the stock is still strong, when the market swings up, YUM will come up too." Well if the market pulls down, or your entry was simply incorrect, you are getting out of the stock at 49.65 for a major loss. Now, if your entry was 49.75 and your read was wrong, getting out at 49.65 isn’t as hurtful to your bottom line.
On another note, I brought up the issue of commissions to my boss. Why are our commissions .01 when other companies are paying .003? Well sure, I got the answer I expected, we pay more because we are offered more, better leverage, mentorship premium, and such. But the overall answer which will stick with me is "if you are worried about commissions, it means you are trading like shit." I can’t say this is wrong. It really makes me think. Last month I traded 500,000 shares, the company made $5,000, I walked away with nothing. My boss tells me I should have made $15,000 if that is the case.
Better entries, more discriminative trades, and a broader read of the stock are what I plan to improve. If I can master this, ill be on the way to better trading.
BTW, i was in another MAJOR wreck this week. I was the passenger of my friend’s car getting totaled. My right mouse clicking hand is ok, and I can still see my screen, meaning I can still keep trading. I am still 100% determined.
~TraderDave
On days like today, I need to only trade the BEST and most probable trades that I can read. If I had traded this day that way, I would have had a couple of heavy share trades in the morning, 4 or 5 100 share trades in the afternoon, and the one SHW late in the day. I would have walked away with a good profit if I traded properly.
It seems my biggest problem now, so my boss points out, is that I micromanage my trades. The stock is near its low, so I short shares.....it ticks up and I figure the weakness is over. Now wait, maybe my exit is wrong, but my entry was likely wrong too. The question is, is the stock GENERALLY weak or strong. If I am able to read the broad attitude of the stock for this day and the open to the stock for that day coincides with this, I need to take some profit off the table and let a lot of the shares just ride, and I can baby-sit it thru the day. This seems to be the way to trade consistently profitable. It is less stressful because you are in the money a good amount, and worst comes to worst you lose your profit.... which you didn’t have when you sat down anyway.
Now, entries are important because even though I may read the stock properly, I can’t lose what I came into the day with. Capital management is very important, meaning if my timing is off, I may need to reexamine the situation. Some people say entry price is not too important, but I would say if you get a poor entry, you are already at a losing disadvantage to read the stock properly. You will be bias toward your side, leaning toward signs of your chosen direction.
Here is an example: You long YUM at 50.00, the stock trades to 49.85 because you bought at the high end of range. The market starts to pull it down to 49.75. you tell yourself, "well the stock is still strong, when the market swings up, YUM will come up too." Well if the market pulls down, or your entry was simply incorrect, you are getting out of the stock at 49.65 for a major loss. Now, if your entry was 49.75 and your read was wrong, getting out at 49.65 isn’t as hurtful to your bottom line.
On another note, I brought up the issue of commissions to my boss. Why are our commissions .01 when other companies are paying .003? Well sure, I got the answer I expected, we pay more because we are offered more, better leverage, mentorship premium, and such. But the overall answer which will stick with me is "if you are worried about commissions, it means you are trading like shit." I can’t say this is wrong. It really makes me think. Last month I traded 500,000 shares, the company made $5,000, I walked away with nothing. My boss tells me I should have made $15,000 if that is the case.
Better entries, more discriminative trades, and a broader read of the stock are what I plan to improve. If I can master this, ill be on the way to better trading.
BTW, i was in another MAJOR wreck this week. I was the passenger of my friend’s car getting totaled. My right mouse clicking hand is ok, and I can still see my screen, meaning I can still keep trading. I am still 100% determined.
~TraderDave
posted by TraderDave at
1:29 PM
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