Monday, March 31, 2008

moving towards the mini

i'm probably staying out of the market this week. i'm staying off the video games as well. i tried to stay off coffee today but i started a small batch of cold brew last night and it was too tempting to pass up a test of it. i stored most of it and there was just enough left in the press pot for one cup so i had to have one. it's so much better than regular brew from our coffee pot. damn thing has been burning the heck out of the coffee lately.

couldn't sleep to save my life last night so i stayed in bed till about 11:00 hoping for at least a couple hours, but i didn't get it. i'm dragging but i don't want to nap in case i can't sleep again tonight. so today is a tough day because i'd like to use the down time to read, study, and continue working on organization, but i can't think clearly enough to be effective in any of those things. i'm gonna give reading a try but we'll see how useful it is. i have to finish this book before i develop my trading plan because i want to approach the plan from a partially informed perspective, and i think there are probably some good tips on planning in it that i'd like to incorporate.

i opened an account with thinkorswim and have been testing the trading platform for a few weeks. it comes highly reviewed all over the internet, and so far it seems like a solid platform, i just don't like the charting capabilities. anyway, i'm thinking of switching out of scottrade because i need more tools than scottrade offers. lately i'm skeptical of the equities markets so i'm thinking about taking up trading the futures market. i'll most likely start with the e-minis and move into the agriculture or metals markets when i feel more comfortable. it appears easier and safer as long as one doesn't overtrade or trade beyond his capital level. part of my trading plan will be to limit individual positions to a small percentage of my account. something like 2-5% if it's feasible. from what i've initally read it's possible to trade futures with a lot less capital than the equities market requires, and the big plus is there's no pattern day trader rule. no need to worry about restricting my account for being under a minimum equity requirement.

hopefully i can use this week to get recombobulated and jump back in to trading asap. it's strange that i feel so scared to put my money out there now because i haven't even messed up all that badly. i was analyzing my performance since i started trading full time and i've at least beaten all the major indices. not that they've provided a great benchmark as they're all down by a couple percent, but to me it's a morale booster. my first six months in the market weren't a catastrophe and i guess that's all any new trader can hope for.

Thursday, March 27, 2008

never fails...

the uncanny likelihood of a stock dropping directly after a retail trader such as myself purchases it can also be applied in reverse. today, for example, i decided to cut my losses on etfc as i think the recovery will take longer than i first expected and it may test the mid-low 3s again. i got out at $3.94 15 minutes ago. the stock hit $4.01 about 2 minutes ago. that may not sound like much but with the position i had it would have been an extra $280. you win some, you lose some.

i began reading high probability trading a couple months ago, then stopped for whatever reason. i recently picked it up and started over and it's getting me back in the trading mode again. i can't say my decision to cut the loss on etfc was the high probability trade as i missed that about a month ago, but i'm flat now and it gives me a chance to put together an action plan and trading strategy to get things right again. my trading account is back at the level where i started six months ago, which i guess is a good thing if i'm understanding marcel link's philosophy of "trading tuition" correctly. at least i haven't completely blown up.

when i can break away from my new addiction i'll develop and post my trading plan. i think rule #1 will be no video games during trading hours.

Tuesday, March 25, 2008

stocks on the radar

since december i've mostly been watching financials as the word in the media is apocalypse everywhere. etfc has been my bread and butter during it's recent rebound from the depths of the low $2s, but beyond any specific trades in the financials i'm keeping a constant close eye on several different stocks in various sectors.

quotes for bqi, ncc, tma, sncr, panl, elon, gti, and most recently amkr are always up on my screen now. some of these i watch for the fundamentals of the company or its technology, but generally i like large cap stocks that have been beaten down, rightly or wrongly. generally such a stock will have high volume and be relatively cheap which provides for extreme volatility and subsequently large relative price swings. i guess i just like cheap stocks with high volume whether they've been beaten down or not.

the beat down was what initially attracted me to e*trade, and it paid off well. but i'll admit i spend a bit too much time on the yahoo! finance message boards and began to marry the idea that while etfc had serious problems with it's heloc portfolio its stock price was unfairly decimated. that led me to mix up marrying a company with marrying its stock. there's a difference between being a trader and an investor, and any experienced trader will probably tell you not to let your emotional connection to a particular company cloud your judgment of issues related to its stock price. i neglected to stay up to date with the technicals of the etfc chart and got stuck in a bad trade, which is finally turning back in my favor, but it was a good lesson learned.

i expect to regain minimum equity requirements for pattern day trader status within a week or two, at which point i may try to stop trading for about a week in order to re-evaluate my strategies and draw up a trading plan. when i first gained that status i thought i'd put off that plan until i reached a personal minimum equity level, and that's when etfc burned me.

risk management is of the utmost importance to preserve the capital that supports a trader's lifestyle, and i took a big risk one too many times. my fiancée, beth, gave me supplies for christmas to organize my trading and market education and it's about time i use them. i need to print a big sign to plaster above my trading desk that says some slogans from a few trading books i've read; "trade to trade well and preserve precious capital." maybe print and hide a few notebook cards in oft-accessed places that say, "i will slap you if you break the rules," or "lack of discipline will yield extreme pain."

shoot, trading is easy, but making money trading is tough. it's uncanny how often a stock will tank right after you buy it, but it's just as uncanny how helpful it is to be disciplined enough not to buy a stock simply because it feels right. studying stock, sector, and index charts to find specific indications of price direction is essential, but when you don't have a plan or criteria for what those indications are, then trying to be profitable in the stock market is about as safe as spinning around with your forehead on the end of a baseball bat before attempting to shoot an apple off your child's head from 20 paces with a sawed-off shotgun in the dark.

Monday, March 24, 2008

a dot on a very long line

my brother started Donde esta la biblioteca? several months back; a blog with which we wanted to (and maybe still will) do a collaborative study of just about everything with a focus on christian theology. we were excited about it (and maybe still are) but i'm pretty bad at being consistent with a journal and it sorta fizzled. i'm hoping that won't happen this time, although i have no reason to be hopeful on that front since i've never managed to keep a journal going longer than two months in my 25 years of life.

i would love to journal regularly but i'm fairly weary of the "blog." i don't mind that it's somewhat voyeuristic because i have no intention of posting overtly private information, but the motivation to blog is what concerns me. there are a myriad of reasons why a blog author would choose to journal publicly, some of which are less than appealing to me so i hesitate to embrace the format as a personal instrument in case my motivations are subliminally errant. i've enjoyed reading several stellar blogs from bright people over the last few years so i know it can be done well, but first i have to justify to myself why i'm doing it. this justification of basic issues may give the impression i'm a cave man who just discovered how to use a fork, but be assured i am not so far behind the thought processes can just be obsessive.

first of all, i spend a lot of time in front of the computer. this by itself does not provide justifiable cause to publicly publish a journal as i could just as easily keep a private archive of thoughts in microsoft word, but it at least makes a case to abandon manually writing a journal which i have tried and failed at several times. my handwriting sucks, pen is too messy and impossible to edit, and pencil marks smudge and fade over time. sadly, many pages of the notebook in my high school "calc bible" are nearly unreadable after seven years. usability, editibility, and flexibility--the pros of digital journaling need go no further for me.

now the public/private issue is one that gives me most pause. do i want strangers to have the ability to read personal information about me if i am wont to post such things? not particularly, but as i said i don't intend to post such things. everybody and their mom started a blog a few years ago and it came off as a huge cry for attention to me. i don't necessarily want attention but i do appreciate serious discussions when i read, hear, or partake in them. several blogs i read have provided that and been a great resource to me. i have no misconceptions that my blog will be a resource to anyone else, but it would be a pleasant side-effect if perhaps my considerations of life turn out to be mentally stimulating to somebody who could use the stimulation as much as i. if i believe i have something worth sharing--be it money, wisdom, food, or beefy biceps--then why should i keep it to myself? thus, a public journal full of non-private information seems like a great idea.

so that's a summary of how i convinced myself the blog is a good idea, but why am i journaling in the first place? basically, i need the mental exercise. i need the organization of my thoughts that good writing requires. i'm not a writer but i wouldn't mind being one. i only took two english classes in college and one was required. the other was taught by an awesome professor and robert frost scholar who helped guide me through the only blissful experiences i've ever had with the academic side of literature. the writing process helps me get the upper hand in my ongoing battle with life that can be mentally paralyzing. i would be thrilled to overcome the constant mental gridlock with some intense and regular mental (and hopefully physical) activity. college didn't quite help with that because my attitude and several tragic life events got in the way, plus i educated myself into a gaping financial and philosophical hole. i'm hoping some reorganization will help me emerge from my allegorical cave. though i look at life as akin to a singularity in relation to the eternal nature of existence, i'd rather this dot not be filed under "bum" in god's version of the dewey decimal system.

i don't really have any guidelines, but i hope to comment on current events, bible studies, conservative ideals, political issues, poetry, financial markets, technical analysis of stocks, beaches, science, music, depression, philosophy, dysfunctional family traits, food, coffee, wine, pipes & tobacco, scotch, razors, hand sanitizer, movies, organic light emitting diodes, money, friends, books, college, taxes, and a few other things. i'll see how it goes.