So Cal Prop Trader

Quote from jj90:

As I mentioned in my last post on page 6, anti-martingale scaling as meant there was not meant to indicate exit strategy although it can be applied to it. I was talking about entry points and referencing your HSFT trade, I noticed HSFT was setting up long before your entry, although your entry had momo behind it and and had a high prob of winning.

So say your max position was to be 500 shares and somewhere say 19.35 you take 200 and risk in absolute cents 2:5x more than you do on 500 shares. Then as it goes up you add more until you get to your max position. If it goes down you get out (simple) and gives you more breathing room in chop.
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Thanks, so you bought the dip? I caught this one too late. Though, you bring up a good point. Risk more with less size until more information presents itself.

I am worried, however, that my emotions seeped into my exit strategy. The charts said it COULD make a move to 50 cents. Though, it looked extended at 25. 25 cents brought a 45 cent move from my entry. I worry that this move made me too content with the trade.
 
4/8/11
Gross: +191
Shares: 8526
Net: ~ +136

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Today was my best day of the week, and all you have to do is take a look at the SPY to see that we just had a gentle down trend. I didn't experience heavy chop anywhere really. Had a little trouble finding setups beyond midday. I wish I was still short going into that late down move. Should have seen that coming. I would love to see this market fail right here. I want to get my 401k money back in the market.

I had a very mentally down week due to non-trading issues that were described in other posts. Today was a good way to go into the weekend. Today not only gave my best results for the week, but my stats were also up.
Positive Trades: 20
Negative Trades: 13
3:1 reward vs losses

I traded a bit less than previous days as well.

However, it could have been a better day.

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Notable Trades:

1. HOT - I am done with this stock for some time. I had a good run in these hotel names, but lately they are just pains. Market trading lower, HOT weak off the open. I was hoping for a bear flag play. A seller was selling at 60 cents. I shorted in front of him. I got stopped out of my first attempt due to orders printing through the seller. I hate that BS. Tried again, eventually they broke the guy and I got legitimately stopped out. This trade marked my morning lows at gross -40. It tried to work. HOT was not in play, not worth my time off the open. I had no actual reason to expect more downside. The seller preventing a bounce got me excited.

2. BBBY was one of my money makers today. BBBY was on my watch list for the morning, after they gapped up yesterday on earnings. Typical buyer at the whole and sellers hitting him. It was a great setup. I shorted 500 shares as the buyer flashed. Bastard got me. I was afraid of a bounce. I tapped out of my 500. Soon after he broke, and BBBY gapped down like 20 cents. I was pissed. $100 right there. I knew the box was bearish. Low risk.... The play was to hit the whole and let him break. Anyway, I shorted 300 as it gapped to the 80s, added 200 shares as it bounced against me. The whole held easily, and the trade was on. This one had potential. Market was trading lower, and I tend to have a negative bias toward retail names that gap like this. It made lower highs and new lows. I held my full position down to 50 cents. I really wanted to give it a chance to break. I set my stops above the 10 period 5 min as it began to narrow into the level. I eventually got stopped out in the mid 60s. I think my average price on entry was around 85 cents. I am content with how I traded this, except I should have been in the trade from the whole, for at least SMALL size. I could have added once it broke.

3. SSRI - Another one of my money makers today. Obviously, the metals were strong today. SSRI seemed to be lagging CDE and SLW. I bought 100 shares at the top of a silver wave. Woops. Anyway, it was still early in the day, so I added 163 shares on the dip. Original entry was 35.37. Added at 35.20. Silver went to highs and took the miners with it. SSRI made a nice move. Sold at 48 and the mid 50s. I missed about an extra 10 cents. Though, I'm not concerned, I got what I wanted. Size was at 60 cents, I secured profits, I did not expect much more room for silver.

4. EXK - EXK was another silver stock that set up at 12.50. I got 400 shares (this definitely called for more). Made a nice 12 cent push as silver went to highs. I did not take any outs, YET, at the same time, I DID take my outs in SSRI. Figure that one out. EXK retraced and stopped me out. Should have taken at least half off.

5. MON - Shorted MON today for continued weakness. The stock has been weak and I knew the market weakness could only help. Shorted 100 as it popped back up near 67. It held the whole. I added as I detected a weak moment approaching in the mid 70s. I covered at 66 cents. MON failed to break the 50 cent level as I had hoped. Market downside slowed. I held as long as I could to push for that 50 cent break.

6. CCI - Nothing spectacular, but it helped me close at P&L highs. Had a buyer at 42.75. Market made its big move down and they broke him. I got 300 shares, this trade definitely could have allowed for more. Could have had small size at the level itself and then added. Anyway, it did not have much energy at first, but I know that I had been watching it for like 30 minutes and people WERE selling to that buyer. I gave it time. Finally, it got a sweep down and pushed it 10 cents. My max target was 55 cents. Ended up covered 200 at 60 and 100 at 63. Just a simply late day scalp via a low risk level.


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Nothing spectacular today. But I was selective and I made sure I took outs when I felt the trade was changing.

Today definitely had potential though. If that BBBY broke that 50 it would have been a great day. If MON broke that 50 cent level earlier in the day, it would have been great.

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Next week:

I really want to try and string together a few good positive days. I am tired of the inconsistency. Don't get caught up in the need to trade.
 

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Quote from Builder17:

...if i may ask, about how many trades do you do per day and what is the avg size?
to me i see that number of shares traded and wonder if youre just spending commissions. i dont mean to be out of line. but where are the quality setups youre looking for and why arent they working out? or are you overtrading to cancel them out?
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ksmetana,

Please take the post above from Builder17 as constructive. As I've also noticed from my own experience when I first traded for a prop without developing a proper game plan to account for all of the commissions, and it was only after another trader pointed that out to me I began to consider how the fees can really add up over time.

Based on what you've posted thus far in April, your volume is averaging about 10,000 shares a day, and if you consider your total fees including ECNs at .006/share (from an earlier post), that math works as follows: 10,000 x 20 days = 200,000 shares x .006 = $1,200.

This means based on your current style of trading you MUST EARN AT LEAST $1,200 a month just to make up for the fees you're paying on commission! And that doesn't include any platform costs and/or desk fees you may be paying.

Prop firms make their money off the mark up on commissions, regardless if you're in a profit or not, so it's obviously in their best interest to have you keep trading until you deplete your capital contribution. However as a fellow trader I feel it's important to share insights and perhaps you may find the comments helpful.

Since you're profitable in April in terms of gross (I believe the amount is around $207 or so), I agree with Builder17's comments, if you can focus on building size with just the best quality set ups, rather than quantity of trades, then I'm sure you are bound to be successful over time.

Just my 2 cents...
 
Quote from ScalperJoe:

ksmetana,


Since you're profitable in April in terms of gross (I believe the amount is around $207 or so), I agree with Builder17's comments, if you can focus on building size with just the best quality set ups, rather than quantity of trades, then I'm sure you are bound to be successful over time.

Just my 2 cents...
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Yeah you are absolutely right.
I was having a talk with another trader about this today.
"We should just trade less."

I definitely have been keeping that more and more in mind. I try to stick with stocks that have news out today, or stocks with a running psychology due to news from previous days. If I can't find anything interesting, I move to stocks with interesting setups forming due to interesting supply/demand situations. Or I will look for stocks following moving averages or trading in clean waves.

It is more so the days / times where I can't find anything, or everything is already moving, where I fall into the bad habit of scrambling for trades.

I know the commissions seem to be such a huge problem for me, they are not the biggest problem. Quite frankly, I am not making enough money on my good days. Like today, 136 net just isn't enough. 200 net isn't enough. At my level, I need to be producing 300-600 dollar days regularly, with losing days between 0-150. I'm caught in this -150 +150 range.

Getting more size in the right trades will help this, along with allowing trades more time to reach reasonable targets.

I control my risk per trade very well. I do not control my risk well, however, by entering mediocre plays. I do not risk losing much, but rather I risk cutting into my profits and boosting my commission costs.

Point is, yes selectivity will definitely help with commissions. That is one of my current running goals. But, I am currently putting even more emphasis on getting size where necessary and producing home run trades. 300-600 dollar days with my buying power would solve my battle with commissions.
 
Ok sounds good. After all, you did write the following statement in your opening post in the journal. Best of luck.


Quote from ksmetana:



The goal of my journal is to help me prevent over-trading.
Knowing that my trades will be reviewed by others will put a little more pressure on my decision making.
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Quote from ElecEquity:

Kurt,

Are you originally from SoCal? How do you like trading those hours out there?
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Yeah born and raised. It is nice being done at 1pm, though if you don't get to bed on time, you're definitely gonna be tired at 6:30 a.m. East coast has an advantage as they get more morning prep time.
Off at 1pm, you can go to the beach, do whatever, enjoy your day. I wake up at 5 a.m., out of the house by 5:20 a.m., commute is 30-40 minutes. You get used to it.

Also, if I were trading on the east coast, I wouldn't be able to even have my second job due to the conflict in hours.
 
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