2011: Rebuilding My Battered Account

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Quote from neke:

It all boiled down to one day: Wednesday 30 Mar. Faded a number of over-extended plays with PUTS, all of which closed out even more over-extended and cost me dear.

Looking at how to tighten the condition for those type of plays.
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Remind yourself of how easy money is made in the direction of the trend:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=187779&perpage=10&pagenumber=104

You bought a stock that gapped up 10% to open at all-time new highs. How crazy is that? :cool:


12-10-10 07:15 PM

Weekly Update for week 48/50 ended 12/11/2010

Great week, up 26K (8%). Very few trades, but great win rate (just one losing trade - an automated one losing $886).

Big winner was LULU which I accumulated from pre-market on Thur starting @ 61.70, closing later @ 65.30 avg.
 
Quote from neke:

Weekly Update for week 12/50 ended 4/2/2011

Ugly week, down 19K (5.9%).

It all boiled down to one day: Wednesday 30 Mar. Faded a number of over-extended plays with PUTS, all of which closed out even more over-extended and cost me dear.

Looking at how to tighten the condition for those type of plays.


Code: 
Opening Balance:                	327,160
Net loss for the week 		         19,140
------------------------------------------------
Net Balance:                   		308,020

Number of Trades	            	 19
Number of Profitable Trades    	    	 10


Since Inception of Thread   01/8/2011 - 4/2/2011

Opening Balance:                   	335,899
Net loss(Less Margin Interest)		 27,879 (Down 8.3%)
------------------------------------------------
Net Balance				308,020

Number of Trades	           	 193
Number of Profitable Trades        	 112



AMZNAPR12011180.0PUT	2011-03-30-09-31-58	2011-03-30-15-41-45	7000	20300	11900	-8505.2	AMZN PUT		
PCLNAPR162011500.0PUT	2011-03-30-09-34-15	2011-03-30-15-05-16	2500	35000	29500	-5547	PCLN PUT
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Neke, a few suggestions speaking from personal experience trading the high flying momo stocks. Focus only on the risk of the trade. Write it down BEFORE getting into the trade. You will be surprised at the size and frequency of the trades you will actually take based on that plan. The winners will take care of themselves based on your tolerance for holding things.

Trading is an addiction. The key is controlling it versus going over the edge.

Just curious if you ever looked at your stats of discretionary versus automated and where you would be if you simply let the automation be your bread and butter; especially since you already have a full time job.
 
Quote from mastacoli71:

Neke, a few suggestions speaking from personal experience trading the high flying momo stocks. Focus only on the risk of the trade. Write it down BEFORE getting into the trade. You will be surprised at the size and frequency of the trades you will actually take based on that plan. The winners will take care of themselves based on your tolerance for holding things.

Trading is an addiction. The key is controlling it versus going over the edge.

Just curious if you ever looked at your stats of discretionary versus automated and where you would be if you simply let the automation be your bread and butter; especially since you already have a full time job.
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http://pragcap.com/the-risk-in-risk-arbitrage

This is great advice. The link above is a great piece written by john paulson. know your risk and profits will take care of itself. Of course maybe you know your risk, but are taking those huge risks anyways.

The same wise gentlemen who told me “risk arbitrage is not about making money, its about not losing money” also told me, “if you watch the downside, the upside will take care of itself”. To manage the downside, one must first have a thorough understanding of the “risk” in risk arbitrage. Using that understanding, one must then construct a portfolio that eliminates poor quality transactions and focuses on high quality deals. To further manage risk within the portfolio, one must constantly monitor one’s positions for any changes, hedge all positions, limit position size, and broadly diversify across deals and industries. By implementing these criteria, the manager will be able to deliver the benefits of this strategy: non-correlated, low volatility returns.
 
Quote from NoDoji:



You bought a stock that gapped up 10% to open at all-time new highs. How crazy is that? :cool:
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He said he faded the gap up, not buying the gap (Now you are going to say: you fade a stock that gapped up 10%, how crazy is that?).

But that is NOT the issue with neke.

Sometimes, smart people are fully aware of their mistake and the cause, but they can do nothing about it, and they keep repeating it.

On the other hand, the dumb people just follow what they are told and they make money.
 
Quote from Notes123:

He said he faded the gap up, not buying the gap (Now you are going to say: you fade a stock that gapped up 10%, how crazy is that?).
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Accumulating in the 61.00's and closing later in the 65.00's is not "fading". It's buying the gap up and watching it go.

Some gaps close, others run. When a gap up has no definable overhead resistance, it's more likely to gap and go at the open than to attempt to close the gap. Why? Because everybody who's long is profitable, and everybody who's short is in pain. And how do shorts stop their pain? They BUY to cover. All you have is buyers.

That morning, all the hedgies who were short this "overpriced pig" that was already trading not far from its all-time highs, woke up to a nasty surprise as the all-time highs were broken and there was no overhead resistance.

I'm not sure why Neke bought the huge gap up that morning, but it was a technically and fundamentally brilliant play.
 
Quote from neke:

Faded a number of over-extended plays with PUTS, all of which closed out even more over-extended and cost me dear.

Looking at how to tighten the condition for those type of plays.
More...

In 2009 summer into the fall of that year I insisted on fading a number of over-extended moves in WYNN and GLD with puts, all of which closed out even more over-extended and cost me dear.

Looking for ways to tighten the condition for those type of plays, I stopped putting on those types of plays.

That was the summer I learned that my sense of "over-extended" and "overbought" mean jack squat. I just dont see fading a strong move based on a feeling as a viable long term strategy.

If you are going countertrend there needs to be a discrete reason that you should be able to write down or explain in detail to someone else for entering the trade, "it shouldnt've run this far" or "I have a gut feeling its about to turn" just doesnt cut it.

We are all rooting for you Neke. You are proof that it is possible for a small retail trader to find his path and stack some money away in this crazy lifestyle. I hope you find your way back on the path that doesnt have these hardcore drawdowns soon.
 
Quote from spd:

In 2009 summer into the fall of that year I insisted on fading a number of over-extended moves in WYNN and GLD with puts, all of which closed out even more over-extended and cost me dear.

Looking for ways to tighten the condition for those type of plays, I stopped putting on those types of plays.

That was the summer I learned that my sense of "over-extended" and "overbought" mean jack squat. I just dont see fading a strong move based on a feeling as a viable long term strategy.

If you are going countertrend there needs to be a discrete reason that you should be able to write down or explain in detail to someone else for entering the trade, "it shouldnt've run this far" or "I have a gut feeling its about to turn" just doesnt cut it.

We are all rooting for you Neke. You are proof that it is possible for a small retail trader to find his path and stack some money away in this crazy lifestyle. I hope you find your way back on the path that doesnt have these hardcore drawdowns soon.
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If you go long, the most you'll losoe is 100% (assuming company goes bankrupt).

If you go short, the most you'll lose is infinity x your position. (Imagine a halt -- news release -- then the stock trades 10x what it wass before the halt).

It is for this reason I stay on the long side of my trades only.
 
Quote from NoDoji:



I'm not sure why Neke bought the huge gap up that morning, but it was a technically and fundamentally brilliant play.
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No wonder Isaac Newton lost money.
I guess reading comprehension ability is not necessary in making money.
 
Quote from stockstalkerv3:

If you go long, the most you'll losoe is 100% (assuming company goes bankrupt).

If you go short, the most you'll lose is infinity x your position. (Imagine a halt -- news release -- then the stock trades 10x what it wass before the halt).

It is for this reason I stay on the long side of my trades only.
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And how often does that happen? :p
 
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