2011: Rebuilding My Battered Account

[neke]

Weekly Update for week 7/50 ended 2/26/2011

Awful week, down 36K (12%). Suffered severe losses with the market meltdown.

Was caught long in the market on Tues sell-off. Lost 15K. Then came Wed, and as the early morning weakness came, scooped up a number of names: NFLX CMG BIDU etc in stock and options, expecting a rebound, but was waaaaay too early. Witnessed as one stock after another kept collapsing, and at one point was down more than 45K on the day. Got a little bit of a reprieve later in the day, cutting the loss to about 20K. Thurs saw some modest gains of about 12K which was thrown away on Fri on CRM call.

Will be working on refining the oversold strategy that was employed on Wed. Part of this will be determining the formula for increasing size (via other long positions) in the face of such general melt-down. Size is being cut as I undertake further investigation/changes.

Opening Balance:                	307,979
Net loss for the week 		         36,184
------------------------------------------------
Net Balance:                   		271,795

Number of Trades	            	 19
Number of Profitable Trades    	    	  7


Since Inception of Thread   01/8/2011 - 2/26/2011

Opening Balance:                   	335,899
Net loss(Less Margin Interest)		 64,104 (Down 19%)
------------------------------------------------
Net Balance				271,795

Number of Trades	           	 112
Number of Profitable Trades        	 59

 

[neke]

Quote from walterjennings:

Hey Neke, I was wondering if you are trading leveraged at all.

I have normal retail buying power (2Xaccount value overnight, and 4X account value intraday), though most of the time I am using only a part of that.

 

[Red_Ink_inc]

Quote from neke:

Awful week, down 36K (12%). Suffered severe losses with the market meltdown.

Was caught long in the market on Tues sell-off. Lost 15K. Then came Wed, and as the early morning weakness came, scooped up a number of names: NFLX CMG BIDU etc in stock and options, expecting a rebound, but was waaaaay too early. Witnessed as one stock after another kept collapsing, and at one point was down more than 45K on the day. Got a little bit of a reprieve later in the day, cutting the loss to about 20K. Thurs saw some modest gains of about 12K which was thrown away on Fri on CRM call.

Your positions are too big. Your stops are too wide. You know this already. You've known this for sometime. Same old, same old.

 

[NoDoji]

Quote from neke:

Was caught long in the market on Tues sell-off. Lost 15K. Then came Wed, and as the early morning weakness came, scooped up a number of names: NFLX CMG BIDU etc in stock and options, expecting a rebound, but was waaaaay too early. Witnessed as one stock after another kept collapsing, and at one point was down more than 45K on the day.

I know you're not a technical trader, but learning the basics of technical price action will keep you in the right direction on days like Tues and Wed.

Tues the market moved up off the open and found resistance at Friday's low. Previous support became resistance and when it tried once more to break back up, it failed at a lower high and the pullback began. That was your signal to short those momo stocks. The first target was when the market hit the 20-day moving average which occurred around 1:00pm ET Tuesday. There was no bounce off that and price closed very near it.

Wed the market opened near the 20-day MA again and totally failed to rally there. Another signal to short things. The next target for price is then the lower trend line on the daily chart. That's where price found support around 1:15pm ET on Wed. That's where you'd finally consider going long. Until then, it was all short signal.

Just standard technical stuff, the stuff all the "bots" are programmed to do. Go with their flow, not what you think is overbought or oversold.

 

[007Arb]

neke, congrats on your honesty here. It's rare on these trading boards that anyone ever admits to losing or having drawdown. I always wondered if yours was a real money account or hypothetical/simulated where no real money is on the line. You appear to be the real deal.

You and I are like night and day. I have traded a $2300 account to $2.2 million but it has taken me 26 years! That's because I focus more on risk than reward and until 2008 my largest drawdown was under 5%. In 2008 it hit 12.8%. I also primarily trade mutual funds and junk bond funds (love those junk bonds) because I found the ride much smoother which allows me to trade much larger size. I trade individual equities but they haven't contributed near as much to my bottom line as the funds. In fact, at the present time, my largest stock holding is my only stock holding - QCOM.

Good luck in your trading endeavors.

Edit: I should probably add as a matter of disclosure that due to withdrawals for living expenses since 1996 when I went full time, a divorce settlement, real estate purchases, and taxes on my taxable account that my account now stands at $1.24 million. The smartest thing I ever did was to open up an IRA account, in addition to my taxable one, and place as many trades as possible in the IRA.

 

[rallydog]

Dang it Neke. Stop it! I don't know NoDoji but I can tell you that I agree with his/her posts. Fading is a tough game and you don't need to play it.

Anyway, I've seen you pull out of worse losses so I think you can do it again but you need to cut those losses down before before they deliver a fatal bite in the ass.

 

[spd]

Quote from neke:

Thurs saw some modest gains of about 12K which was thrown away on Fri on CRM call.

Re-read what you just wrote. 12k/day is modest? Are you trading out of pure compulsion right now? How much do you need to make a day to feel good?

If you can net 12k/day only 3 days a week you can scoop up 144,000/month. Wouldnt take long to rebuild your account and then some at that rate.

Your account is "battered" because you are greedy and revenge trading. Im tickled to death with 1000/day and you are pissing on 12k?

 

[konviction]

Quote from NoDoji:

I know you're not a technical trader, but learning the basics of technical price action will keep you in the right direction on days like Tues and Wed.

Well he's not a fundamental trader. With how fast he's in and out of stocks, he's gotta be more technical than anything. I suppose algo trading is a form of technical trading to some degree, yes?

 

[leonarda]

Quote from spd:



Your account is "battered" because you are greedy and revenge trading. Im tickled to death with 1000/day and you are pissing on 12k?

isn't this exactly why so many of us like watching Neke, that's the way he works and likes to trade. Most of us wouldn't trade like this as it's far too risky, but it's great to watch someone who does, he'll either be bust or a millionaire in a couple of years, either way we'll have had some great entertainment...

 

[guy990opl]

Couldn't agree more with the above post. Neke's journal is the best. Although I trade full time, ( I am a trend follower and an options seller, my gains/losses are a more modest and my trading is boring ), I could never dream to trade the way he does, can anyone else ?

Although I never met a trader who can make money consistently by buying options, he is to be admired admire him and wish him the best.

I tend to doubt he'll go bust, after last year he developed a solid instinct of self preservation.

He is the real deal and he has big brass balls, it's a pleasure to wait for the weekend and read his updates.