DT1 Swing Trading Journal

Today I closed my positions on LGND and MCRL taking small gains of 17 and 53 cents per share.

LGND
It closed at the high of the day so I suspect it will move up tomorrow. But I followed my new trading rules and sold it because I have it for more than 2 days and I chose not to hold stocks for too long.

CMNT
It did not gap down as I expected. I prefer to close the position and take a small gain because I "feel" (I am talking like Tony Oz now :-)) it could move up tomorrow. Mike pointed out the fact that my 40% stop loss on this stock is a little wacky :). That's true. It is not the ideal position for me. The next resistance level was 4$ so I had bigger risk than potential gain: not very good. The thing is I expect stocks that traded on so high volume to gap down the next day. But I agree it is risky, this is why I do not hold the position. However my $ risk on the position was lower than 1% of my capital so I did not break my rule.

New trade
-100 MCRL @ 8.54 and STOP at 10.16
Breakout of the 8.7 support. The next support levels are 8 and 5.

I find it very difficult to find good set ups. I will have to work on that...

Good trading to all of you.

DT1
 

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DT1,
Great find on MCRL. It's a good thing your using a 1% stop rule. Probably the most important thing for beginners to learn.

You asked about routine in a prior post. I make journal entries of every single trade I make so that I can learn from them. Elder covers this topic in one of his books. Often when I review my trades, my loosers are caused by me not following my game plan.

I think you should review your strategy on getting out. I think it's a good policy to get stopped out at a minimal loss, but have the potential to ride the gains a long way. Of course if your proffit target is reached, take it. Sometimes I find myself saying I would be better off if I had just stayed in with my winning trade.


Nice breakout trade on MCRL, it should turn out good for you.

The guys at http://www.leavittbrothers.com are good at breakout trading. The site has helped me improve my trading.

Looks like my MACR short is gonna turn out good. :p

oh, yeah, I spend a lot of time on stockcharts.com public section looking at other peoples charts. I picked up some nice indicators from there. Plus a lot of people post great set ups.
 

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Quote from DT1:

Quote from Andre:

DT, do you mind if I post my trades as well?

>>> I think that if you get into a trade based on such fundamental analysis you have to give it some time. I only use technical analysis to trade
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Excellent point DT1
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Mike,

Dr. Elder recommends the following money management rules on Come Into My Trading Room:

1. No more than 2% of your capital at risk on any one trade
2. No more than 6% of your entire capital at risk at any one time.
3. If you lose more than 6% of your capital in any one month, close all your positions and sit out till the next month.

As to the book, I am really green at this so for me it was fascinating because he covers a lot of TA: EMA, MACD lines, MACD histogram, stochastic as well as what he refers to as the triple screen trading method. From what I have seen of mars22 I think he/she is the real expert on Dr. Elder and may be able to give a more informed opinion. As for DT, again thank you for your posting and I hope you don't mind my getting off the subject but I thought you might find the money management rules interesting.

Jorge
 
Quote from jorgemb:

Mike,

Dr. Elder recommends the following money management rules on Come Into My Trading Room:

1. No more than 2% of your capital at risk on any one trade
2. No more than 6% of your entire capital at risk at any one time.
3. If you lose more than 6% of your capital in any one month, close all your positions and sit out till the next month.

As to the book, I am really green at this so for me it was fascinating because he covers a lot of TA: EMA, MACD lines, MACD histogram, stochastic as well as what he refers to as the triple screen trading method. From what I have seen of mars22 I think he/she is the real expert on Dr. Elder and may be able to give a more informed opinion. As for DT, again thank you for your posting and I hope you don't mind my getting off the subject but I thought you might find the money management rules interesting.

Jorge
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Thanks for the info. Personally.. I never risk more than %1 of my account per a trade... 2% is a little too much for me...

As for exposing 6% total... I dont know where he gets this number.... but I would bump it up more to %10... Also assuming I am in 10 trades at once.. thus risking %10 of my portfolio.. and all 10 trades became profitable so I would move my stop to break even for all of them... Then I would not consider %10 of my portfolio at risk any longer... so I wouldn't be hesitant to increase more positions if I got more setups..

Also another rule of thumb for me is never to expose more than %20 of total account to one trade.. meaning if I had $100,000 I wouldnt put more than $20,000 into that position regardless of what the stop was.... this means that my stop generally should be greater than %5.

This is because.. assuming I was long a stock at 100 like IBM and used a 2 point stop thus betting %50 of my total account to that position... and IBM decided to gap down %10 at the open hitting my stop.. I would take a 5x greater loss than anticipated.... and have a %5 hit on my total account instead of a %1 loss.. You have to remember if you swing trade.. you will have a high frequency of trades.... which means you are highly prone to these gap against you in the morning scenario..

Also.. when I hit a string of losses and feel out of the zone.. I usually take off 2-3 days of trading... and I start with a %0.50 risk of my portfolio per a trade instead of the usual %1. When I get more confident I would bump it up back to %1. If this still doesn't work.. then I just take off more time.. until I clear my head.

THere is nothing like taking a string of losses.. it can be brutal sometimes.. not only are you losing money you are being consistently proven wrong.. Most newbies would start questioning there methods or indicators.. and look back at all there trades and see how they could have done it better. This is very dangerous and is what separates the pros from the losers... You just have to ride the drawdown.. lose as little as possible and be consistent with your method...

You have to have a cut off point like a %30 drawdown.. where you would say OK.. maybe I will stop trading my plan because in reality I have no edge... In my case its %25.... If I ever take such a big drawdown.. I would stop swing trading all together and reassess my plan.. and see if I really have a positive expectancy or just was lucky for a little while...

A classic example for a newbie that always happens is assuming they were long a stock at 100 and their stop was at 95 which is a logical point on the chart.. and the stock went to 94 taking them out at their stop for a loss.. then the stock reverses and goes to 110.. so then they look over the trade.. and say oh... I made a mistake from now on my stop will be a few ticks under my normal stop losses... this type of analysis is called curve fitting and is the most dangerous kind of mistakes... the only time you make a "real" mistake is when you deviate from your "original" plan.



--MIKE
 
Hi all,

Here are the news for today.

SWK was down more than 2.5$. I was following the stock. I did not short it because it has not broken down the 23.63 support level. I did not consider the hurge volume spike... big mistake :)

Therefore today I anticipated some breakouts when volume was high. This is why I sold 100 shares of PLAB at 11.20. I did not hesitate this time. My stop is at 12.71.

I also sold 100 shares of JCP at 19.01. This was long before the breakdown of the 19 support level. The graph looks nice but the breakdown is not on a volume spike. We'll see how it goes tomorrow.

My old position on MCRL is giving me a small gain so far. It closed near the low of the day so I will hold it until tomorrow. However I moved my stop to 9.41.

I have 3 short positions. I was looking to buy some stocks to hedge my position but I could not find any... with a reasonable stop :-). How do you guys do when you are net long or net short and you expect the market to move against you the next day. Do you cut your positions even if you feel good about every single trade or do you hedge with options, futures or stocks... Please let me know what you do or what your opinion is.

DT1
 
Hi Mike,

Your MACR set up looks like my MCRL one. I hope MCRL won't consolidate in the same way :)

I am not 100% sure about my exit strategy. I scrolled a few charts and noticed that generally stocks consolidate after 3 days of move in the same direction. Since I always get in when the move as started I think ideally I should get out 2 days after entering the trade. Sometimes I should probably stay in... but when? It is hard to say? I will learn from experience. What about you? What is your exit strategy? How do you know when to hold on or when to get out?

Good trading!

DT1
 
MACR isnt mine its Mars's setup.


The exit is the most difficult.. as you will experience in swing trading taking the profits is what seperates the pro from the beginner..

Taking the loss is usually easy.. just get stopped out and move on.. knowing when to book profits is the trick... You have to define what type of outcome you want to have per each trade...

For example.. If you trade a huge gap down on big volume.. and bet for a follow through down day the ext day... and the market is down in the AM and reverses completey.. usually you should exit... THe truth is each setup should have its own type of exit plan.... Before you actually take the trade... write down the exit strategy on paper.. and follow it exactly.. Dont let you emotions cause you to take profits early.. it will hurt u..
 
Quote from Trend Fader:

The exit is the most difficult.. as you will experience in swing trading taking the profits is what separates the pro from the beginner..

Dont let you emotions cause you to take profits early.. it will hurt u..
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Truer words were never spoken...

I think it's funny how most traders spend so much time worrying about stops and small losses.. but then have no idea how to run a profit when they are absolutely correct... and thus apply the same overly-fast trigger finger, to taking some...

That is one area I seek to master.

Ice:cool:
 
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