So Cal Prop Trader

3/30/11
Gross: +140
Shares: 8800
Net: ~ +83

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Second day in a row where I closed just near P&L highs. Of course, today is pretty much meaningless in impact to my overall P&L.

The stocks I was watching were highly uneventful. Hence, I knew today would allow me 3 options:
1. News (there wasn't any)
2. Good setups outside my lists
3. Level 2 scalping

I again made most of my money using the level 2.

I was going to have a pretty decent day actually. Keep reading

Notable trades:

1. CCI is extended on the daily chart, bouncing from its recent bottom. It was strong off the open and there was big NYS size at 99 cents just before the whole. At first, I went for the reversal. 500 shares at 97 cents. I did get a flutter down in my favor but it was very fast. I wouldn't have covered anyway as this had the potential for a nice reversal. When the size was broken I immediately flipped. 500 shares long. The trade worked with ease. Box was very bullish, not a lot of sweeping, just a lot of smooth buying. Unfortunately, I missed my outs. I got out of 100 at 24 cents. There was then a sweep up into the 30s. I did not take any off, and I paid for it. This was a trade that should have made a great day for me, though I did not take profits. Another lapse in execution. Ended up selling the rest way back down at 10 cents.

2. BIIB - BIIB was just a random trade someone called out. The market again taught me why I need to stay away from the random BS floating out there. Go look at a chart today of BIIB. It was your typical panic flush. Whole breaks, then we get a god damn 50 cent bar in the wrong direction. No chance to get out. This has happened to me twice before, both times the panic ceased and the price returned to the whole. However, I was too angry and fearful, I bailed at 60 cents.... It went back to the whole. After this I went for a walk I was angry, luckily I had no size.
Looking back, I had absolutely no reason to take this trade. It was called out, and looked at it and said, "alright whatever I'll try it." Lesson learned.

3. KV.A - KV.A offered the trade of the day. We bought in the face of the panic down at 4 bucks. Though, we had no idea if there was some major issue going down. I also had very light size due to how wild the selling had been earlier. Quite a move today. If you bought at 4 you had a fantastic day.

4. I bought the morning dip in MKC. Bought around 50 cents. My target was the 80s though I decided to exit at 75. I considered the short near the whole, though I did NOT expect the move that came next. Phew.

5. Failed breakout in ECA today. Had a nice flag pattern, strong off the open. Market turned against it just as it broke the whole. I had 500 shares.

Tried some late day imbalance plays and a bottom pick in CSX. No dice.

If you review my trade log you'll see a lot of small level 2 trades.

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I got larger size than I had the last 2 days today. One of the larger trades worked, but I missed my outs. The other failed.

I like what I did today, and I am comfortable with it.

However, I basically only have 2 tiers going. A+ trades, and everything else.

I want to get BIGGER on those trades like CCI and ECA, because there were other trades today that could have produced more profits with more shares (allowing better trade management).

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Today did not offer many great setups. Many stocks had great moves, but the setups weren't there. I was forced to take what was given to me and abuse the programs a little. They screwed with me in BIIB, well I screwed with them all day long.

Today could have been a $300+ day if I didn't miss my outs in CCI and get owned in BIIB. I can't be mad about letting CCI run, I AM mad, however, that I did not take some off when the trade changed character... (MA's were crossed, heavy bids were absent). I should have been out of at least half up in the 20s.
A guy across the desk from me was out on the sweep up to the 30s. Good for him.

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Tomorrow: I am not sure if I'll be trading tomorrow. I want to get some sleep. I have to work at my other job tomorrow and this chick I'm interested in wants me to go to the gym with her. If I trade and then work 8 hours there's no way I'll have energy for that. I know trading comes before women, but, the risk reward is too compelling. I need a girlfriend lol
 

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Quote from ksmetana:


3. KV.A - KV.A offered the trade of the day. We bought in the face of the panic down at 4 bucks. Though, we had no idea if there was some major issue going down. I also had very light size due to how wild the selling had been earlier. Quite a move today. If you bought at 4 you had a fantastic day.

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I know trading comes before women, but, the risk reward is too compelling. I need a girlfriend lol
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Unfortunately, I bought it wayyyy before that. I saw the seller(s) on on OB and on Level II. In all of my experience with aggressive sellers that constantly refresh after being taken out, then returning and stepping down, I knew the trade was wrong and I kept trying to big boy the fella and help take him out. Idiotic move and I know better. For the total amount shares that I had, if I had been more patient I would've actually made money. Being early = being wrong. I had huge size (14k shares) in that trade far too early. I actually had too many shares which was part of the problem. Wish I had bought it at 4. Nice job Kurt. Congrats on being net positive today too. Keep it up!

Having a girlfriend always helps in this business. Good to have a solid anchor in this business.
 
what are your commissions like? you seem to have a huge spread between your gross and net. i trade about 12000 per day and usually pay around 35$ at most. maybe try sticking with lower share size until you can reach a high level of consistency then start bumping up the share size.
 
Quote from ElecEquity:

Unfortunately, I bought it wayyyy before that. I saw the seller(s) on on OB and on Level II. In all of my experience with aggressive sellers that constantly refresh after being taken out, then returning and stepping down, I knew the trade was wrong and I kept trying to big boy the fella and help take him out. Idiotic move and I know better. For the total amount shares that I had, if I had been more patient I would've actually made money. Being early = being wrong. I had huge size (14k shares) in that trade far too early. I actually had too many shares which was part of the problem. Wish I had bought it at 4. Nice job Kurt. Congrats on being net positive today too. Keep it up!

Having a girlfriend always helps in this business. Good to have a solid anchor in this business.
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It broke 4, collapsed further. Finally it got a sweep up, and bids began stabilizing the price. The character shifted rather dramatically once it held the 90s and the sellers around 4 were taken out. I was astonished by how much it sold off. I remember watching this thing trade up to where it was. It was so strong. I knew people were shitting themselves. You gotta be careful fading panic sell offs, especially in these small cap volatile names. The better play, in my opinion, is to wait for a support area and find the character shift. I did not expect a push to 5 though. I piked out and expected another push down to 4 where I would look for buyers and consider more size as the stock shows the move is actually over.
After I got out, big bids started showing up, driving the price up. ACK. My "mentor" 2 seats away sold the last of his position up in the 80s! 20% move lol

Yeah I need a girlfriend. Gotta remember what it is to be a man so that I can load up on kv.a next time. If I lose, I'll go home and have her get me a beer and then... uhh. yeah....
 
Quote from JM1987:

what are your commissions like? you seem to have a huge spread between your gross and net. i trade about 12000 per day and usually pay around 35$ at most. maybe try sticking with lower share size until you can reach a high level of consistency then start bumping up the share size.
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I currently pay .004/share w/ a 90% payout.

Of course that amount will drop as I boost trading volume.

So .004/share + ECN fees.


I tend to always take liquidity on my entries, and I also take liquidity to exit on about half of my exits. I definitely need to work on adding more, on both ends, but I'm so meticulous about my timing. I like to limit my exposure as much as I can. The longer you hold out, the more information you get.

After the ECN fees my charges tend to range between .006 - .0066.

I assume a cost of .0065 in my net results, just to make it look as bad as possible.

It is a pain, but if you're profitable, you're profitable. Fees are just a tax. If you're not making good money, that's just that.

I DO trade light size, and THAT is the problem. My winners don't produce enough profits to offset the small losers + commission.
Quite frankly, I need to stop dabbling. I need to either be in or out of a trade. You can't properly manage a trade without at least 400-600 shares imo.

A good majority of those "level 2 scalps" could be extended for another leg if I had more shares to scale out.

Consistency isn't my problem. I feel I am really good at what I do. It is time to take my trading to the next level and attack. Stop being afraid. I've felt like this for the last 2 months.
 
What an ugly market, glad I didn't go in today.

Not sure how thin these are since I'm not at the desk, but they had interesting charts today, could be good to watch tomorrow.
NETL, CAVM, RBN, WOR

Looks like the agriculture trade was all over the place. Would have caused a nightmare for me. Dodged a bullet there. MON gave a sick setup to get long near the open. Probably had a lot of people getting short to follow MOS, and they all got squeeeeezzedddd.

I've been watching RHT every day, waiting for it to trade lower and then get another push back up.

I've also been waiting for ACN to make a move but this thing has been trading like absolute crap intraday, while doing exactly what I expect on a multi-day time frame.

DRI has been providing very interesting action day to day lately. Check out the setup today at 48.50. Free money.

CCI again set up today. 42.30, sick.

CSX bounced today, I waited for that thing all day yesterday. Bastards drove it down into the close. Buy the dip off the uptrend in the morning... CSX / UNP / CNI all had morning dips or flags that you could have played.

MKC set up at 47.75. Setting up at 48 as we speak, hopefully it waits for me. Just stay right there til I get in tomorrow thanks.

KV.A now at 6 dollars. LOL.

LOL @ BIIB. That is so damn typical. If anyone was shorting up at 72, this is what you deserve.

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So, while the market was a joke today, if you stuck to anything in play or anything with a running psychology, you could have found some action.

Honestly, with the setups I just showed, I would have had a great day. Now I'm upset.
 
what are your average winners like? i was in your situation where i thought adding more size was the answer, its not. Because your losers start getting a lot bigger and you get shaken out a lot easier when a trad doesnt immediately go your way. I'm not trying to criticize or bash your strategy by any means, I only started trading in sept '10 and i see you running into some of the same issues i had/have. For a while my net total was very whippy so i tightened down to 100 shares for a long time until my trading began working effortlessly, then i gradually started adding more size. What are your ideal trade setups like?
 
Quote from JM1987:

what are your average winners like? i was in your situation where i thought adding more size was the answer, its not. Because your losers start getting a lot bigger and you get shaken out a lot easier when a trad doesnt immediately go your way. I'm not trying to criticize or bash your strategy by any means, I only started trading in sept '10 and i see you running into some of the same issues i had/have. For a while my net total was very whippy so i tightened down to 100 shares for a long time until my trading began working effortlessly, then i gradually started adding more size. What are your ideal trade setups like?
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Maybe I haven't been clear.

When I say "GET BIGGER," I am referring to a position sizing issue I have.

I do not size up well on A+ trades.

My trading stats on light size show profitability. I am good at finding the right stocks, good at finding great setups. However, I get very similar size on great looking trades than I do on OK trades. Hence, through time, I end up gross positive and net negative.

There is OFTEN little difference in sizing between A+ trades, B trades, and C trades.

I lack that ability to trust myself and trade it like it is.

"Wow this stock has been strong today. Now it is pulling back into a 50 cent level with a large bid and a refreshing buyer. Offers that step down near the level are being aggressively taken out. The price is stabilizing. Related stocks are now beginning to bounce. Market just made a green bar. I'm in, 200 shares"

You are risking next to nothing in a high probability setup. Yet my fingers naturally tend to go for what feels safe. Oh I'll get 200 here and if it works I'll ADD. No, you need to get the majority of your position at or near the best price. You need to attack the opportunity. 800 shares.

So on this morning A+ setup, you have 800 shares. As the day progresses, and setups become weaker and weaker. You follow the market, and knock down your size.

How about a morning B setup. "Wow this stock has been weak today. Now it is pulling back into a 50 cent level, which happens to also be 5 cents below the 5 min 10 period. There is nothing different about the 50 cent area, though you feel that the current up move is slowing. The market is dead, drifting sideways. The stock reaffirmed guidance and met revenue. I'll put offers out for 100 at 50 cents, and 200 at 55 cents (10 period). I will risk to 66 cents. Current lows for the stock are at the 15 cent level. From my first entry I am risking 16 cents and my first target is lows, 35."

Look at the difference between the two trades.

One is CLEARLY better than the other.

And this is what happens:
1. The first trade works. I have 200 shares. It finds congestion after 25 cents, I decide to ditch half. It gets to my target, the whole, and I'm out of the rest. Then, the trade pulls in to 85, and then breaks the whole and goes another 50 cents.

2. The second trade reaches 22 cents, and bounces, forming a 1-2-3 pattern, and I am stopped out.

Trade 1 yields ~ $75. Trade 2 yields ~ -$38

Gross result: $37
Net result: about $30



Now, lets say you give that A+ trade MORE size. 800 shares.
Trade 1 yields ~ $300. Trade 2 yields ~ $-38

Gross result: +$262
Net result: about +$255

B trades are much more common than A+ trades.

Hence, for the sake of debate, I take 1 more A+ trade and then 2 more B trades, which all have the same results.
I end up +$36 gross, but only $19 net.
As you can see, there is no way to win. Because on a losing day, I'm screwed.

Then, on the first trade, with 800 shares, you can let a portion run and catch that extra 50 cents. Small size tends to limit you.

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So when I am speaking about size, THAT is what I am referring to. I am not referring to sizing up across the board. I am simply stating that in order to defeat trading costs I have to pay more attention to my position sizing, and give trades what they deserve.

Then, as the afternoon progresses, I am able to decrease my size, rather than keep it constant throughout the day.

You HAVE to have size to defeat the irrationality of small size.

The only time using the same size over and over and over becomes somewhat acceptable is when you are playing nothing but a proven odds game. But even then, the question comes, why are you getting the same size on trades with factors that build different probabilities.

Program Trader A puts the same size on each trade. His system has 50% success and 2:1 ratio. It averages 10 trades a day, and yields on average, $50 a day gross, using 100 share lots. Risking 10 cents for 20, very basic. Net his profits are $36.

Program Trader B. His system has 50% success and a 2.3:1 ratio.

Both strategies are identical. However, Trader B's system has an additional indicator that, when it signals, produces an 85% opportunity. The program triples size on these trades.
1 out of 10 trades is the 85% trade.
He gets gross $90. Net $74.
With just that one trade, Trader B more than doubles Trader A.

Program Trader B has a better program than Trader A, Trader B goes on vacations and when he walks in a room champagne flows from the heavens.
Trader A drives a Saturn and enjoys checking his blood pressure for free at Rite-Aid in his spare time.
 
Quote from ksmetana:


Yeah I need a girlfriend. Gotta remember what it is to be a man so that I can load up on kv.a next time. If I lose, I'll go home and have her get me a beer and then... uhh. yeah....
More...


question.
maybe its me. everyone has different methods. i make very few trades per day, but why trade 10k shares when you could trade 1000 of JPM or XYZ stock and catch a 30cent move for 300$?

find out where price is going. and why it is going there. every day. every time frame.
 
Quote from Builder17:

question.
maybe its me. everyone has different methods. i make very few trades per day, but why trade 10k shares when you could trade 1000 of JPM or XYZ stock and catch a 30cent move for 300$?

find out where price is going. and why it is going there. every day. every time frame.
More...


Are you referring to KV.A???
The reason to get a good position in KV.A, once you felt comfortable doing so, was because it was down like 40% that day.

You got a 20%+ move on that bounce depending how you played it.

KV.A was a very rare opportunity. There is no system to follow for it. There is no probability. A trade like that requires the ability to read the tape, and read the box.

In that one trade, you can make your month, if not multiple months. That is why you get big, because of the opportunity that presented. It is like when the nuclear BS was going down. You have to know to increase size when you know you are going to get good movement.

Or are you referring to my total shares traded?
10k shares is nothing. People in my office trade hundreds of thousands / per day.

I do trade JPM, I trade whatever I can find that fits into my risk tolerance and has a reason to move.
 
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