Chadwick's reach for success

C

Chadwick

I keep a lot of notes for myself and a few others, and there's really no better resource than ET to document these musings for potential criticisms, positive or negative. I'm hoping that others will derive value from my quest and that those knowledgeable will be candid in their replies.

I've been trading off several years, but in the past year or so I've taken a much more active interest. I trade mostly equities, but I have been known to hedge or speculate with options. I am a self-employed consultant (software), and I have a successful career. Why is that important? I'm not trading for a paycheck, and every trade I list in this journal will be real and with my money. I paper traded for a while just like others, but without the emotional involvement I found myself too removed. I actually wanted the torment and sleepless nights that drawdowns bring, and I've had my share.

My goal is, like everyone else, to be successful. How successful? I hate setting artificial limits, but my most immediate goal would be to double my money every three years. Not that ambitious for some perhaps, but with such a foundation it would allow me to take things further.

My style is likely best described as one who identifies trends, their accompanied momentum, and positions himself accordingly. I typically take position sizes relative to what I consider to be the strength of the trend, and I set my stops accordingly as well. I will explain my entry price, rationale for entry, price objectives, and stops for each stock I list.

Over the past few months I have started to develop an automated trading platform, and I typically use that to give me signals. At the moment I still enter trades manually, and I still review the charts to be certain.

That's all for now. If anyone has any questions please feel free to ask!
 
I am listing this past pick simply because it presented a learning opportunity.

Symbol: AA

Instrument: Equity

Entry:
Long 28.46 (on 12/20/05)

Rationale:
I found what appeared to be a strong intermediate trend that started around October of 2005, and I particularly liked that the trading range over that period was so tight; low volatility, or so I thought. Each period of consolidation in the trend was at considerably lower selling volume, and subsequent rallies were always on increased volume. My entry on 12/20 was after a period of extended consolidation. It looked as though it might trade sideways and develop another area of support/resistance, but the following day it rallied and continued the primary trend.

Exit:
28.41 (on 1/10/06)

Rationale:
I was up ~7.5% and an aftermarket earnings announcement sent it falling over 3%. I have moved up my stops to protect about 5% of my gains, but when the market opened it was too late.

Final thoughts:
I don't know what more I could have done. No one, to my knowledge anyway, anticipated negative earnings to such a profound degree. I will consider reentry if I see it stabilize.
 
Symbol: ICO

Instrument: Options

Entry:
January 10 Calls

Rationale:
I was on the short end of this stock for quite a while and managed to accumulate some profit. I had this one on my watch list and happened to notice the rally on 1/9/05. A little look at L2 suggested enough pressure for at least a scalp, so I got in on some calls.

I'm currently up 16% on my calls, and while I do indeed realize my choice to go with ICO was rather impulse and somewhat contradictory to my trading discipline/strategy, I am known to make some speculative plays.

We'll see how it plays out.
 
Symbol: RES

Instrument: Equity

Entry:
Long 27.71 (on 1/9/2005)

Rationale:
I've been following RES for a while and have made some successful plays in the past. I saw it develop an intermediate trend starting mid October, and over a period of a few months it developed a nice channel with nice volume on accumulation after a predictable period of support. I bought as momentum to the upside was increasing and I was seeking a ride to the next area of resistance in the channel, if any.

Exit:
27.10 (on 1/9/2005)

Rationale:
Yes, you read that right: I was stopped out the same day; in fact, it wasn't too long after I placed my order. There was some strong pullback in the early hours that later stabilized, but by then it was too late.

I had my stop at the trendline which represented the area of support in the channel. This was also ~2% as you can tell.

Final thoughts:
I entered another thread in the strategy trading area of this site. It seems I was too hasty in my placement of the order. I need to look for better entry times when the trading range for the day is more certain perhaps.
 
Symbol: NUS

Instrument: Options

Entry:
January 20 Calls

Rationale:
Something of a speculative play, I like the fundamentals of the company for the most part, and it's been trending very slightly since November. There was heavy selling yesterday (relative to previous days), but 50-day crossover along with increasing volume after periods of support lead me to believe we're leading for a breakout.

Again, pure speculation. I don't do this often, and it's more for personal enjoyment than anything else.
 
Symbol: SGTL

Instrument: Options

Entry:
February 15 Calls

Rationale:
I've made a fair amount of money playing this stock in the past and while it does appear that the prevailing primary trend is down there is a secondary trend that started after the drop in December. Over the past several days we've seen increased momentum to the upside along with a 30-day intraday crossover.

Pure speculation just like NUS. We'll see how it plays out.
 
Symbol: ICO

Instrument: Options

Exit:
January 10 Calls

Rationale:
Although probably too early to tell, I'm not confident in this stock's ability to recover, so I decided to exit after a hint of downside. It's down 1.18% at the time of this writing, so as it's all said and done I saw about a 12% return.
 
Well, overall not a bad day. SGTL kept holding intraday resistance at 13.78, but there was enough pressure to break out of the pattern and close up 4.34% for the day.

Following are my current short-term holdings and their respective P/L. All positions are long unless noted otherwise.

Symbol -- P/L

Short DXPE +2%
FMS +4%
LCUT +1%
NWRE +2%
SGTL Calls +25%
UNH -2%
APF +2%
NUS Calls 0%

Most of these positions were opened this week or late last week with the anticipation of riding the immediate trend with an expected entry at the support level in the channel.

If I had returns like these everyday I'd be exceedingly happy, but that's not been the case.
 
Symbol: BMHC

Instrument: Equity

Entry:
Short 78.39

Rationale:
BMHC has developed a channel since around November with a recent swing from resistance at about $82 in mid-December. Resistance was lowered to about $80, and so after a downday followed by an increase in selling pressure I decided to short it with a price objective of about $72. Overall trend of the channel seems to be down, so if we do get support at ~$72 I'll wait to see where we hit resistance; if we're less than the $80 that I shorted this time I might considered another long position. Time will tell.

So far up a point and a half. Looking good so far.
 
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