MGB, Breakouts can be very profitable if the trader has the temperament for them and the changing nature of the markets (i.e. more false breakouts these days). They just don't suit my personality. I prefer 'wave-like' trading as parameterised by stochastics or bollinger bands. It's just a personal preference, that's all. Its like I may have a better chance of picking up blondes in nightclubs and you may pick up brunettes better... i.e. no judgement is being made on the relative merits of blondes vs brunettes or on stochastics vs breakouts ... it's just a personal thing.
MGB...set up your positions using both a put and a call.No rules against that and you have better leverage without using margin.Sell which ever side you like when you like.
What a mess. Where do I begin? Just because a size trader put up some bullets doesn't mean you should do the same trades. A trader friend said his mentor is shorting a basket of six stocks right off the open today, and after further filters I liked CLS and COF from that list. The problem is I rarely trade those stocks and in the case of CLS it doesn't really follow any index other than the overall market movement. On a size day like this, what am I doing? I can't afford to mess around with new ideas, I have to attack it ferociously with my bread and butter style. I don't need gimmicks off the open, I have a solid game for that. As it went, I was churned to death in those two bullets I put up, and it leaked out to the third bullet which I put up with my own ideas, which was a much smoother trade, and I churned myself in that one as well because of the chops I took in first two positions. In the end, I wasted a golden opportunity on a super momentum day to make something happen, it is gut check time this weekend as I have to find an answer for this incompetence. When was the last time I was so desperate I had to ride someone's coat tail? His mentor did great, but he puts up the bullet on those stocks every day because they are his bread and butter, and he knows the specialist like his back yard. His execution in those stocks are likely to be vastly superior to me, as I am more comfortable with thinner stocks . . . 14600 shares on 5 of 8 shooting, the problem was that all of those winners were scalps and that one loser in COF was incredibly damaging for $400 thanks to extensive churning. +213 before commissions, -$263 after. Pre-Market: GPS QUAD downgrade, I immediately picked out 4 apparel shops to short via bullet. ANF, ANN, both gapped down too hard, but then there were TLB, CHS, opened nearly unchanged. Instead of doing those two bullets I took other people's idea that put me out of my comfort zone. COMPX's daily chart looked like it is wide open for a sell-off. 9:30: Every single index on my screen fell like pure heaven. It was a matter of picking fishes in the barrel. Instead of watching indexes, quickly put up bullets for stocks that didn't gap down much, I took CLS and COF instead. CLS was not a bad trade as I saw it gap down only a quarter point and my bullet was activated immediately. The problem was that I was sharing bullets with a friend and he was a tick or two slow on COF bullet, by the time he actually put it up and transferred it to me, the thing already went down more than half a point and because of the blue collar "I had the bullet I may as well sell it anyway because I spend money on it" mentality I sold anyway. Entered a short on CLS at 40.07, not an ideal entry point for me, but the COF entry was abysmal at 61.27 as it already moved half a point from the open print which was already 25 cents lower than yesterday's close. 9:33: Which means you will not be able to hold through the inevitable squeeze, and squeeze I lost 30 cents on 1000 shares of COF. Fortunately I made 40 cents on CLS but it was only 700 shares as I did not get my order filled. Market squeezed, many of those stocks kicked back violently, and you could hear a pin drop in my room, Mrs. D. and a few other traders chose to hold their shorts, and that was a do or die scenario. The market did appear to be very weak, there was almost certainly going to be another leg. I saw IUX selling off and PGR opening up almost a point on the day on weak volume, bullet activated and I was short 500 shares 5 cents below intraday high. 9:48: Saw futures holding up and CEX popping hard, took FMC for a 15 cents move as I got out as soon as I saw the first sign of futures weakness. Quickly sold some COF at 61.75, 15 cents higher than where I covered. Sold CLS 70 cents higher than where I covered. 10:04: There was one minute which the futures seemed to halted. I had close stops on for COF/CLS, and I pulled them, instead, I covered market despite of the fact that I thought the market will ultimately go lower! Just a few minutes after I covered, futures did what it wanted to do all along, a huge red bar in the face and COF went down 1.2 point from where I covered, CLS nearly 1 point. It was a Friday, it was a broad market sell-off, why did I get out? WHY? I was scared of losing after yesterday's silver bullet turn sour incident, guess what, a carbon copy. I am used to thin and smooth stocks and my tape skill for liquid stocks are sourly lacking. In disgust, I covered PGR for a 50 cents gain and watched it go down 1.5 point . . . I was up $93 on the day, on a day when I should be firing at will, raining down the bullets . . . By then I already missed the energy moves and everything else. It was a painful lesson, it really was, because while I have perfected my defense to get out of things at the first sign of trouble, a lot of times it was plain obvious that stuff are tanking WITH MOMENTUM and I am unable to hold. If there is no BID/ASK, you can not lean on it, use a looser stop and watch the damn thing tank! 12:00: What hell am I doing? A Friday in August and I started churning away. COF/PGR/CLS, why am I trying to make something out of my bullets when nothing is happening? What hell is this? The momentum is gone, now I am using looser stops and trying to make something happen out of nothing? What hell did I do in the morning? The game was already lost, after the open, and I knew there weren't momentum, but I was unhappy that I was up $100 on a size day, especially a day that provided a lot of opportunities and I didn't bring my A game. I even took a long in KMG and a short on NE on non-existent energy moves which turned out to be flat trades. 3:00: It can ALWAYS get worse. By now, I am down $400. Took IBM on a "bounce off the intraday support" play at 104.25 and lost 6 cents, hello? Back on my mind I knew on a Friday that saw COMPX breaking into new low's there will NOT be any support, that it should be a short day all the way until the futures squeeze hard thanks to short covering. It did, but by then I wasn't long anymore. Fortunately I took MMM for a 20 cents scalp on that short covering rally. Too little, too late. The only saving grace was that my bullets are finally lowered to $10 ticket and 3.8 cent per share, and my regular ticket is 60 cents ($1.2 per stock per day in addition to the cents per share charges). A 1500 shares bullet now cost me $67 instead of $100 just a month or two ago. With the market seemingly inevitable to re-test its lows, this will be a huge asset. I feel much more comfortable doing 2-4 bullets a day with this rate. If I rebate my bullet before 2PM I can get $7 back bringing the cost down to $60. Still, those bullets won't do me any good if I can't hold on to my shorts. Not to mention I really need to start short positions (and long positions for that matter) with a little bigger size, off the open. I am starting positions with 400-600 shares off the open AND into the close, a bad formula as I do not remember the last time I made money after the open since June (unless there is a gift run of some sort). Fire at will, keep the composure, Monday's game will be a huge test as I am down $500 for the pay period after a $1500 first pay period, $1000 a month will not get it done, especially considering the missed shots. I do not want to lose 3 games in a row for sure.
Psycology is the key to the game (not that this is any revelation) June great month July slighty profitable August going backwards August 16th &17th 1st 2 consecutive loosing days in 3 months.Both days I broke my own rules which I have not done in 3 months. Major violations last 2 days 1) Trading while tired. 2) Overtrading. Most profitable trading days had 2-3 round trips max.last 2 days had 12 round trips total. 3} forcing the issue on extremly choppy days Without breaking my rules last 2 loosing days could have easily been made up in 1 half decent day. Breaking trading rules is like a bad habit that comes to revisit you and extreme discipline is required to not let old nasty habits of the past infect you and your account.When they return "Just say no" as the commercial goes. Tymjr's post on MGB Journal thread 8/17/01 2:09 am right on target my trading improved also when living expenses were met thru alternate sources of income.
ABOUT F-I-L-M It amazes me how much money people are making in those days. FILM (Finance, IT, Legal, Medical) has long been regarded as the four most dominant career paths there are in term of maximum income potential. In New York, if you want to be top tier, 100K a year is hardly sufficient as a minimum requirement. Went out eating with a friend who I haven't seen since high school, his friend came out of Cornell (a very very good school) and is now making 55K a year with a 80% bonus as an investment banker! Throw in the sign in bonus that is 100K right out of college, first year, without any experience. Now add an MBA, and an associate position, 200-300K is right there. Granted, those people have to work as if they are prisoners, as the guy stays up until 3AM many days and haven't had a free weekend in a while, but this is the age to throw yourself on the line and fight it out for supremacy, not to mention it would be a great way to forget unpleasant personal issues. Any law school or medical school graduate are probably looking at 100K as a minimum wage. 150K - 200K are almost inevitable. Most IT guys work for 60-80K within first 2 years of graduation, and more experienced ones get 80-120K easy. If they choose to go consulting, 200K is certainly within the reach. While the bursted tech bubble put some serious dent into those numbers, it is still very very respectable. All that money, and we are not even talking management positions yet. 401K plans, full benefits, vacation pays, loads of perks, ZERO RISK. In comparison, in a firm with 500 traders, based on what I have been told, probably less than 15% of the traders are making more than 100K a year, less than 8% are making more than 200K a year. As I am a month away from being 22, without a degree, and up just 48K YTD, even less when you throw in the 94% payout, the lack of benefits, it is hard not to feel like an underdog. Although a true warrior's mental strength is fully tested only when the pressure is on, the game is on the line, the odds are stacked against him, and I hope this will bring the best out of me to not only finish the year strong but also take my game to the next level. I have worked for big name companies before, I know what the corporate ladder is like. I also know that as a day trader, it is like hit and run, gorrilla warfare, it is a tough battle every day, and the biggest piece of the pie will forever be in the hand of people with ivy league degrees working at the trading desk of the biggest insitutions. I like being an Robinhood, but he was an underdog. What are the biggest attractions of being a day trader? Freedom? Being my own boss? Perhaps, but I realized something this weekend, the biggest attraction of being a day trader is to make more money than I am capable of in any other job I am qualified for. To AVOID direct competition with the Ivy Leaguers, to find a battle ground where the rules are the survival of the fittest. It is an unpleasant feeling, because in reality, I am escaping from the challenge of climbing big name firm's ladders and contending for management positions. I am avoiding the office politics, backstabbing games, and "who is got the biggest degree" blahs. I remembered walking on Wall Street everyday in clean and comfortable casuals, and watch everyone around me in suits and ties, it was a funny feeling. While I consider the no dress-code rule at my firm a perk, I couldn't help but to feel that while I am working on Wall Street, in reality I may as well be doing this on an island, because I am not one of them. I am an underdog, a small potato day trader. Yet something makes me believe that I will find my own road to victory, that there will be a day I can be top tier, to stand on my own feet at a party of doctors, lawyers, bankers, consultants, knowing that I am just as good when it comes to making big bucks. ABOUT TRADING It is a dog eat dog world on Wall Street, and I want to be the bigger dog. There are many many things I have to do. My game is not pure yet, I still have way too many flaws when it comes to executions. When I can hit every single shot that I am supposed to make, like the ones on Thursday/Friday, I know it will be just a matter of bringing up sizes. Cover half, HOLD the other half as long as I am still in the money. I am also missing one more bread and butter setup. I have a strong top-down game (futures/sector/stock), I am far from perfecting it, but I already feel it is like fighting someone with one hand, I am missing a bottom-up approach, whether it is a go-to stock that I trade every day, a news play, a particular daily set-up, something that starts from the stock instead of the futures. When top-down is joined by bottom-up, my game will be complete, it will be pure. Speak of being pure, there are still some nervousness and anxieties off the open especially if I am down, in my heart, it feels like many ripples across a lake surface that is smooth as glass. My execution clearly suffers when I am in any kind of deficit. Rushed shots, trading during the dead zone, not being able to hold with confidence because of the fear factor that allows me to cut losses too fast. I am considering a certain mind ritual I need to perform before the game starts everyday, I want to achieve a true pure mind, clean as a spotless piece of paper, when I trade, pure as a saint, a trader saint. That is my goal for rest of this month, I need to further understand my emotional behaviors when I trade, and control it, suppress it . . . Once I can achieve that, I will finally be able to remove that underdog image.
Hitman, keep up the good work. I will be rooting for you. Trading is hard, and I hope you succeed to the fullest potential. I can fully sense your description of the cushy FILM jobs. Back in the volatile days when NAZ actually moves, trading profit came so easy that the idea go full-time trading even crossed my mind a few times. Now when I look back, I was too naive to assume the volatility will last forever. IMO, people who are employable in the FILM area should definitely stick to a job, and focus the trading interest on system development, then s/he can just follow the system and enter orders EOD if the system trades EOD, or pay a high school kid a few $$ to look after an intraday system. This definitely beats putting the pressure on one's shoulder with the need to put food on the table with trading proceeds.
"What are the biggest attractions of being a day trader? Freedom? Being my own boss? Perhaps, but I realized something this weekend, the biggest attraction of being a day trader is to make more money than I am capable of in any other job I am qualified for." I certainly found myself constantly evaulating my earnings against other jobs I could have had. I have been trading over 15 months now and I realize that: 1) Now that I have found my niche, Over the next twelve months I will make triple what I could have made at another job, after being out of college for twelve months. It hasn't been easy and I like your friend had no free weekends over the last year, because I was either working other jobs or I was in the city doing extra research. But... 2)I also realize that... even if I was only making the same amount of money, which I could earn at another job....It still would be no contest. because I love trading. Hell, I loved it when I wasn't making money..so now I am really enjoying myself. I think it was Confucious who said that he who loves his job will never work a day in his life. "It is an unpleasant feeling, because in reality, I am escaping from the challenge of climbing big name firm's ladders and contending for management positions. I am avoiding the office politics, backstabbing games, and 'who is got the biggest degree' blahs" How is corporate ass kissing(politics) more challenging than speculating for a living. " Yet something makes me believe that I will find my own road to victory, that there will be a day I can be top tier, to stand on my own feet at a party of doctors, lawyers, bankers, consultants, knowing that I am just as good when it comes to making big bucks." I hope I am not taking this statement the wrong way and correct me if I am wrong...But money has NOTHING to do with someones self worth. The sad truth is that many people do get caught up with who makes more or who has a better car. A persons self concept has to be separate from his bank account...But on the other hand...you can take comfort in knowing that there are more doctors in the world(or bankers etc.)than "SUCCESSFUL" proprietary traders.
Hitman, I enjoy reading your posts, and let me just say that your last post is the most profound and enjoyable that I have read on elitetrader for a while. I am a strong believer that a well-rounded capitalist should find a personality-specific trade-off between absolute excess material income and non-monetary gains. Definitions: 1) Absolute excess material income is the excess of income over and above your lifestyle requirements. If you need $2000 a month to live your life as you want to live it (in terms of eating out, girlfriend, rent etc) then any money above that is excess material income. So if you are netting $5000 a month, your excess material income is $3000. 2) Non-monetary gains. The downside of high excess material income in the corporate world is a contraction in non-monetary gains. Yes, if you are an Ivy Leaguer and work in corporate finance at Goldman Sachs, you will undoubtedly have a high excess material income. But what do you give up in exchange for this? And more importantly, does what you give up affect your psyche in any noticeable way? Consider the following downsides that are often associated with high excess material income in the corporate world: i) Your progress is at the mercy of your boss ii) You must survive on the basis of a subjective combination of merit and office politics, the adverse/positive effects (depending on who you are) of sexism, racism, old school tie'isms etc. Often merit takes second place to other issues that are outside of your control. iii) Your time is at the control of others iv) You do not have full independence of thought and action Things such as i) to iv) will affect the psyche of different people to larger or smaller extents. You must look into yourself and try and decide whether the following formula is positive or negative: Benefits of being a daytrader = (Excess material income of being a daytrader MINUS excess material income of the most feasible alternative corporate career) PLUS (Personality-specific non-monetary gains of being a daytrader over those in the most feasible alternative career) >>>>>>>> Does the addition of these two items produce something greater or less than zero?? For a rookie daytrader, the first item is likely to be negative and the second item is likely to be positive. Another issue that is of pivotal importance, is the rate at which excess material income of being a daytrader and being in an alternative corporate career grows. Several years ago I started with significantly less than the soon to be minimum of $25k. Initially I was making a subsistence McDonalds level of income and was barely surviving. When things clicked, my excess material income skyrocketed. Maybe some of this was due to the great market conditions, who knows? In the heyday of 1999-2000 I had many $10k days. My income is obviously much lower these days but the point is that when / if you make it through the rookie stage (and it will happen pretty suddenly without you realising it) your daytrading excess material income may match or exceed anything that you can make in the corporate world. Remember that, when it comes to trading, even a modest annual return on trading capital will do well, because the magical power of compounding will come into play.
candle, Personally, I want to make as much money as I can. I like EXCESS income. It creates wealth. Should you also like your job too. Yes, of course. But would YOU turn down an offer for a 5 million/year corporate job (in the unlikely event it should ever arise) because you don't like water cooler small talk or corporate politics? Not if your IQ is over 80. tradeRX candle, OK. Glad we agree...