Day In, Day Out

Friday and Monday are always special. Friday is the day for short-term speculators, Monday morning is for the Average-Joe investors.

NASDAQ has support at 1900, but now it is very oversold, so tomorrow I anticipate a minor down -0.5% to a so-so up day like <1%, in the afternoon there is going to be sell-off to close the day. Then Monday is going to be violant and tricky, the scared investors who want out and the money on the side line who want to get the bargain will jump in all together in the same time, in the end I believe it is going to be a positive day Monday.

That's not all, I anticipate it is still going to 1900 before end of the month, then spike up because of the quater-end window dressing or the anticipation of it, which will form the first bottom. But first half of April won't make it anywhere other than forming a double bottom as the force of bull backed by good corporate earnings is cancelled out by the force of bear who is selling out to pay for last year's tax.

I load up 40% of my 401(K) just to get a spike of a couple percentage. May not get it, that is fine, I will buy more a few days later.
 
At the close of Friday my account long and short are evenly weighted. It pays out well today. But at the close today I have 4 longs, difficult to find anything to short.

My operating procedure is in a mess now - different accounts require different strategy, different strategy has different set of parameters and constraints.

EOD major index strategy.
once a quater major index strategy.
long only short-term penny stock strategy.
long only long-term normal stock strategy.
short-term long strategy.
short-term short strategy.


quite messy.
 
A number of my long alerts went off, I bought in and lost a few hundreds dollars from stop-loss. Really agitated me. They are good long setups. Solid support established by very strong volume days and weeks ago, but they don't stand.

Thinking about it, if I had some short to balance it, it would be fine. But I didn't get any alerts, my short alert typically require the price to go up close against a resistence. In this environment it is too good to ask for, I guess. In another word, now is a market where the benefit of doubt is with the bear.

What I should do is totally forget about the long setup until the market is on a good support like 1900, or have completed a bottom formation. Before then, short is the default.
 
CNET buy 600 at 9.15, stop 8.8, target 9.95
ACXM buy 400 at 20.1, stop 19.6, target 21.3
AG buy 500 at 19.21, stop 18.6, target 20
ASCL buy 300 at 20.6, stop 19.5, target 21.4
 
The unequal size of the position is my latest trading development, they are not calculated based on the total dollar amount as it used to be. They are now based on the potential loss given my decided stop-loss price. They are mostly between $200 to $300, which is my emotional threshhold. In breakout scenario there may be a much larger potential loss as I use the bottom of the range, from which it breaks out, as the stop, but the likelyhood is much lower. Anyway I keep it under $800 for any single trade.
 
I find myself constantly changing my trading process. Not really a good feeling. I imagine in the end it should be a well defined operating process, like running a copy machine, printing money one week after another.

During the past few years my trading procedure had gone through many changes, yes they are all good improvement, but when is the end ?

Take the procedure I used merely 2 month ago in January, the number of charts I need to review every night grew from couple of hundreds to near a thousand in a few weeks, quite exhausting after a full day of work on a salaried job. It is not just a matter of being deligent.

Getting tired results in bad execution on the trade level, and sometimes causes temporary gambling insanity like oversizing and overtrading as well as chicken-out too early in case the trade is doing well. Now I am mature enough not commiting the major evils of over-oversizing or blowing stops, those secondary evils still greatly enlarge the loss and cut the profit.

Every old procedure leave something good behind that I keep as key elements in the whole operation. In this sense, nothing is wasted, every effort I spent have to be spent anyway. I just wish I am getting close.
 
Two days ago I bought 600 CNET on 600 on 9.15, set stop at 8.8.
Today the same methodology bought 300 AFCI at 21.88, stop at 21.35.

The sizing of a trade is such a deceiving issue, but actually it is a critical consideration.

At first I find out my pain threshhold after many thousands dollars of loss. For my short term trading it is $300. If beyond that, my emotional stability is in question, it becomes difficult to think straight and logically. There is no easy or inexpensive way to find out this. So often I think I can take X $ loss, but in reality I can not, and I end up screwing up the execution.

Then comes in the true stop level of a stock. This is also seemingly easy but actually complicated task.
 
For almost two months from my last posting, I have been doing well, relative to my own past performance of course. NASDAQ went up 10% from 1900 to 2080, then came back down 10% right to where it was, and I have been making money up and down, day in day out, and it feels good.

During this period I have done 82 round trips, including commssions, I made $2400, win/lose is 3:2, so the win rate is 60%. Largest gain is +$808, 2nd largest gain +$442, largest loss -$296, 2nd largest loss -$216. Most of the gain/loss is small. Almost every days is positive.

My commission rate is $11 one trade from TDWaterhouse, so $22 a round trip. The total commission cost is about $1800. If I could cut this $11 to $5 a trade, that 'd be almost $1000 to the bottom line. I wish I could move the account, but my political influence over the matter is quite limited right now, I have to sadly live with the situation for the moment.:(

:)
 
Yesterday when I was writing the previous message, I had an eerie familair feeling -- I had felt this way before and as much as I can remember, what lies ahead is not going to be good.

So what is it ? After a few minutes in the bed, I see. I was too complacent and I carried an oversized position over night. Didn't I just pat myself on the shoulder that the right sizing made all the difference ? Oh, well.

Yesterday AQNT crashed through 10 and reached 9.37, then bounced back, I shorted 700 at 9.70. It is a reasonable size, as the violation line is 10.10 (1% over the $10 round number). So the loss potential is 40 cents, 700 shares gives me -$280. A little bit oversized, ideally it should be 500 shares as I normally try to keep it under $230, a suitable number if you take into consideration of the slippage. But I was kind of high after a few good days. What is worse is that I was so high that I shorted 700 more at 9.6, and carried -1400 over the night.

Wrong.

That size worried me. To prove that my sense was so correct and late, the market gapped up and climbed up non-stop. AQNT is up 5% nicely and ended at 10.00. (Some quote get screwed up and printed a 10.20, but it never gets past 10.02 so my stop wasn't triggered).

Yea, I thought about hedging the position by long QQQ but didn't put into action because I was too complacent and didn't think hard about the right exposure.

If tomorrow it is going to stopout at a loss, I am going to swallow it. One thing I won't do is blowing the stop. Oversizing plus blowing the stop is a deadly killer. And also they always seem to be attracted to each other.

CSCO reported and seemed that it "disappointed". Hope that will save me.
 
Think, think, think. On the way back home, I had an idea. I will hedge it with something, why not CSCO ? Cool, I bought 700 CSCO at 21.76 afterhours, 50 cents off the closing. Immediatly my account is $350 more. Speaking of instant satisfaction !:D

Just checked CSCO beta is 2.2, AQNT is 1.6. It is an OK short, it is just oversized. Let's see what is going to happen tomorrow.:)
 
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