A Good Imagination and a Pile of Junk

Mikey?

Yeah.

Mikey’s not that stupid and as such is markedly up on the day without having gone short.

Ha ha, I win ;-)

Well, I originally posted some of this over here. but…

If bernanke wasn’t such a damned pussy he’d have raised rates 25 basis points and undone some of his mistakes of last year to partially handle the inflation issue, showing full support for the dollar which would put downward pressure on crude.

But instead he’s hinting about leaning towards considering maybe perhaps someday thinking about raising the rate… possibly. What he did today was continue to try to be all things to all people instead of ending up as, as one commentator said in a stroke of brilliance today “being nothing to anybody.”

Where the hell is Greenspan when we need him. (Enjoying a well earned break I hope.)

*snicker*

Ric Romero reports:

Scientists find childbirth wonder drug that can ‘cure’ shyness

It can turn anything from job interviews to the most routine of family gatherings into a sweat-inducing ordeal.

But a ‘love drug’ produced naturally by the body during sex and childbirth could offer hope to the millions of people blighted by shyness, scientists have said.

Yeah, it’s called…

Attention Twitter peeples:

It’s a great idea, well implemented.

But if you have scaling issues that result in these retarded “over capacity” states that disable your service, it’s no good to me. I shouldn’t have to think about service availability.

Yes, I’d pay for one that had five 9 uptime. (not MUCH granted, but I’d pay.)

Ah, George Carlin, you’ll be missed.

ya know, beinghaving been a fledgling Extreme Programming coach for the better part of nine months, one of the thing I was really sure of was that ifwhen I stopped, that I’d be engaged in all the funky tools and practices. xUnit, resharper, Fit and FitNesse, eclipse, etc.

But frankly? I came across some rss subscriptions and came out with an audible “yucchh” noise.

couldn’t possibly care less.

First of an 8 part video series of an Ex-Scientologist.

I’ve only seen this bit but it’s pretty interesting.

Yeah, well we know who to thank for that…

“I’ll have those niggers voting Democratic for the next 200 years.”
–Lyndon B. Johnson

I’m pretty sure if you put a gun to my head and said “you can only trade one equity for the rest of your life” I’d trade US Steel and be one happy monkey.

I was three positions to the good on them.  Plus, I took some money from Western Digital, CLF, and TS.  I blew it on Cisco, but only to the tune of $0.08 on the share and I think I understand the problem.

One loss (of $0.01/share) was due to a bad trade entry on my part and the other loss (on ICE) was due to me not having my damn trading rules published (in this case, everything looked great but I forgot to check volume and the equity subsequently fell like a stone.)

Damn good day.

I’m going to increase my unit size again tomorrow.

So when I broke my eyes away from the tickers today at 4:01, I wandered around Brooklyn a bit, picked up a couple slices and saw that Indiana Jones was playing in 5 minutes.  So I figured WTF.

Holy crap.

Someone needs to take Lucas away and club him in the f’ing head.

(spoiler removed.  too soon.)

7 out of 11 positions were to the good. I had a couple finger-crossing plays that bit me in the ass uniformly. But I feel like I’ve been at this for 3 straight days. I’m moving back and forth watching a couple dozen equities at a time all day and good god is it exhausting. I made some points on all of those instruments mentioned in the title, sometimes more than once over the scope of the trading day. Out of all this I’m learning rather remarkably quickly. Unfortunately this is all taking so much energy and focus that this site has become a day-trading diary. I just don’t have the energy at the end of this to blog normally. I’ll share a couple of my new substantive rules (and the word “rule” is of questionable but significant strength.)

• Price increase on volume decrease is fool’s gold
• Never take two position in the same equity consecutively, unless you’re out and in to it immediately on the other side.
• Don’t play news stories. By the time they get to you, it’s too late.
• Ignore “The Cramer Effect.” If you know what that is, you’re giggling. Cramer’s awesome. But people jump on whatever he recommends at lightning speed. This is really the same thing as the previous rule. By the time it gets to you, you’re too late. It’s fun to watch though, and I may be developing a strategy to counter it to the good. More later… maybe.

The fun play today was UNP, Union Pacific. I don’t recall why it was on the watch list. But I bought in to it a little before noon. I have a trailing stop, but that’s just a protection measure. Usually I sell manually, then cancel the stop. I’m not quite that quick at it yet. I manually sold the UNP at $76.04, so I tried to race over and cancel the stop, but I replaced it with a sell (and I was flat) so I shorted it at $76.03. It was my first short position ever, so I was panicked. But I was only in a small lot so I thought I’d ride it as it really was going down. I bought to cover and ended up being a few bucks to the good. It’s like crack. It was an accident that turned to the good. But it did get me thinking along those lines, so I’ve got to start paying attention to the other side of these trades. How confident am I in my sell points? How often am I selling at the top of the move instead of just taking some money off the table as the equity goes north? Should be interesting. Unlike getting in to derivative instruments, I’m actually excited to get in to the short side. I just have to get used to seeing it correctly. So I’m 7 out of 11 positions to the good on a DOWN day. I’m getting better at this. My action failures are easily understood for the most part. My INaction failures are tougher to diagnose of course. If I was more confident (and subsequently made more trades) I’m not sure how I’d end up. But I do take notes on things I’m looking at while I’m looking at them so as not to salt the dig. (Any asshole can look at day’s top performers and say “I would’ve hit that”.) I’m not sure if I’m writing the right things down yet. So we’ll see. There are only two important things right now:

1. Recognize what’s behind both my successes and failures
2. Take concrete corrective action

And I think I’m doing both pretty well so far. The difference between now and a week ago is significant.

It’s like they have no other argument.

All week I’ve been hearing democrat bobbleheads say “but drilling won’t solve the problem so we shouldn’t do it.”

I don’t hear anybody on my side arguing against alternative fuels. Nobody. But there isn’t even a feigned counter against more drilling. The only thing they have to say is that it won’t solve all the problem so we shouldn’t do any of it.

It’s fucking weak and I don’t know why the hell people believe this shit.

Is it really just stomping and whining about the enviiirroonnnmeennntt? If that was it then they’d say it, believing their own bullshit enough to feel it should compel others. But they don’t.

It’s gotten to the point where they don’t even say it wouldn’t help; just that it wouldn’t help ENOUGH.

Stand aside morons. There’s work to be done.

One of the greatest resources online for business technical data, from fundamental statistics to historical stock data is Yahoo Finance. It’s got a truly amazing array of stats.

One of the things I do to pick my watch list for the day is to look at the leading industries by intra-day price movement. Yahoo has a wonderful page for that over here. But for the better part of the last week or so I’d been trying to figure out why the big movers weren’t really showing up there. I was getting to the best instruments a little too late in the game.

In order to chart a price change you have to decide what you’re comparing it with. For intra-day statistics that usually means you have to pick between yesterday’s closing price and today’s opening price.

The sensible number from 10,000 feet is yesterday’s closing price. But what happens is that after-hours trading can radically smack the price of an instrument around on very little volume, creating what look like large price moves, but ones that are essentially meaningless.

So the next day industries get ranked based on price moves that include these phantom changes. Again, this works itself out on the large scale. But when you’re looking at the market at a minute-to-minute time scale it’s utterly useless.

Fortunately I’ve realized it pretty early on. While it never really pushed me to a bad trade, it kept me from an awful lot of good ones.

So now I’m looking for another watch list seeding ground to add to my couple others and replace this biggie.

In The Before Time I shared a house with 4 other guys. No no, it was worse.

One of the things we did was play chess. We were all pretty much in the same league so it was actually a fair bit of fun (we weren’t really any GOOD at, but that’s a different issue.) As we were learning a couple of us developed some pretty particular affinities. I really loved working with bishops, for instance. I found that other beginning players had a bit of trouble with the diagonals and I capitalized on that relatively well.

Another guy who we’ll call Rob because his name is Rob loved making broad, dramatic moves with his rook or queen. Again, given the audience that was selectively effective at basic intimidation.

We figured out each other’s particularities and sort of stalled our progress.

But this morning I was watching RIMM take off like it was shot out of a canon. Eyes wide I pounced on it.

One problem I’ve mentioned is that I’m pretty grossly intolerant of drawdowns. When you’re in an equity for timespans of 2 and 3 minutes on average, red bars are panic inducing. It’s caused me to lose big pieces of moves, even when I end up out to the good. So I figured I’d take the hint and put my stop way down instead of a hugging $0.03 like I usually do.

Now, we all know where this is going. I lost $0.85 on the dollar as RIMM turned south just as I heard the “fill” sound effect.

So, no more of that.

I’ve made some lucky plays on pure momentum, granted. But without a preponderance of positive evidence, it’s a mistake. I shouldn’t ever have to cross my fingers when I hit buy.

The other thing that happens is that I start getting emotionally invested in the issue. So I’m considering enacting a “no consecutive positions in a single equity” rule. That might be a bit heavy handed though.

Once burned, I came back and made a nice, very well calculated move on Mentorgraphics, which does my geeky heart good and restored my standing on the day, which was generally flat overall.

Something I read on a trading blog after I made that mistake (it was probably Trader Mike) was that “increasing price on decreasing volume is bearish.” I looked back at the morning RIMM chart, laughed, and added a new rule :-) Turns out I bought on a truly solid sell signal.

Most of the day I spent (nursing my torqued neck) working on some custom indicators for the Think Or Swim platform. (Looking to graph correlating movement directions in price and volume as a 101 of writing custom indicators.)

Today was a pretty damn good day. In fact if I’d kept my head about me it would’ve been a far better day than Thursday. Unfortunately I was whipped up into a lather and made a couple bad trades.

The big wins were WDC and RIMM. XMSR was behaving pretty funny, but I ended up just a hair under flat on that issue.

No, it was RIMM towards the end of the trading session that had my head scrambled. I was taking their money again and again and again. The first couple were good solid moves. Sure, I missed some of the upswing by being a little tight with my stops, but I’m very happy with that. However, I was doing so well that I lost my head a bit and started making a few twitchy trades on very little basis and of course I got burned.

I’m thinking about ways to counter that impulse but my sense of it is that “getting burned” is really the best way to handle it. I do engage in the practice of writing out my thoughts on each position and trade event after I’m out of the position, then a bit more extensively at the end of the day; and it’s giving me some rules that appear to be pretty sensible.

One thing I’m finding (and I think what cause the XMSR trouble) is that the higher the share price the better. Well… perhaps that’s misleading. In general that’s true. Of course I only have so much cash to work with, so there’s an upper bound. But much to my surprise I’m really quite liking the kind of price moves in a volatile issue trading in the $100+ range.

I’m not really looking at “percentage” as a measure of trade success so much as flat dollar moves. A higher share price is going to support bigger penny swings per share than smaller issues. Combine that with a large trading volume and I find myself in a much more fluid, easy to work with environment.

I’m becoming noticeably better at this in short order.

Rough couple days.  I made some world class bad decisions on the market yesterday.  I knew they were bad decisions up front, but i was pissed about having been stopped out early and missed a great (read:  $1400) move.

Eventually I realized what I’d done and I stepped off for the rest of the day.

I’ve backed off of my trading unit size starting on Monday (I’m away for the weekend and off the desk) and I’m going back to some basics and re-establishing some of my hard overall rules.

No real details yet, but I’ll probably sketch something out.

I got an interesting comment on my previous post, about the day’s successes.  Go read, I’ll wait.

On one hand, it never occurred to me to “trade blog” past the point where trading was a decoration to my day that warranted relation here.  So the notion that someone would find or seek to find this stuff useful isn’t really one I thought about.

But it leaves me in this fairly strange position.

After years of reading and about 9-12 months of exceptionally successful swing trading (wherein you maintain positions for short but usually multi-day terms, 3 days to 3 weeks ish)  I thought that was going to be what I would be doing.

Somewhere in the back of my head though I know that I’m a remarkably twitchy fellow and that I have a temperament which just might be very well suited towards day trading which is a whole different beast.

Day trading, especially on a primarily technical-analysis basis, is very chart driven.  It looks from the outside like completely random black magic.  Frankly if you believe it thus, then trying to engage in the practice will lead you to predictable ruin.

I’ve found myself scalping three and four minute moves to the tune of $0.20 per share and being very successful at it.

But as for the specifics on what leads me to a particular equity and the formative criteria that rings the “buy now” bell in my head…

…well, you’ll have to just make your best guess.  I’m putting enough pressure on these things in their given timespan with the volumes I’m trading to actually move price.  It would be fundamentally detrimental for me to share my criteria.

But I’m a beginner at this level of microtrading, so I might have that wrong.  I’m rather inclined to share my thoughts (really, ask anyone whom I’ve been able to corner) and so the notion that this can become a useful resource for other people is an intriguing one; though I’ll have to dip my toe in gently as far as what I feel comfortable about and what would constitute tipping my hand.

“Besides, I’ve been through too much over this case already to just go and hand it over to your dumb ass.”

This is all an amazing process I’ve got to say.  I’ve paid more attention to what I’ve been doing in the last week and a half than I have had any reason to in the previous ten years of professional life combined.

So no, there will be no ‘retreat to safety.’  I will never work in a cubicle again.  No more fluorescent lights.  No more pretending to give a rat’s ass about how the company performs.  No more cell phone calls at odd hours by delusional jackasses who are laboring under some misunderstanding that they might have some leverage over me.

That’s not to say I’m afraid to fail.  I do have the contingency outline roughly drawn in my head.  But only roughly.

Because it’s not going to happen.

Yeah. With the exception of KMGB which was a dumbass play, I made money on all of those. I average about 4 minutes in a position. I ain’t tellin’ my ins and outs. My block trade size has been going steadily up for the past 3 days as I get my feet wet, so the return on these nickle & dime moves (literally) has been going up geometrically and will continue to do so for a bit.

At the outside of that I’ll run into an issue so I’m working on a couple multi-order triggers so that I can maintain more than one position at a time, which will be instrumental in diversifying into several equities with smaller stakes so as not to shove the market around (as I found even I have the capability of doing on low ADV instruments.)

To have made the amount of money today, on a day that was just down all over, well… yes it could be incredible luck.

But it ain’t.