Neke are you cutting your losses short? if so theres no problem with having a losing week.
Taking 320K to 3.5million by Year End 2009
- Thread starter neke
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neke, what are you on?? SLM just broke out of a very bullish ascending triangle!!! What on earth made you short it?
There but for the grace of God (go I)
Iâm an occasional reader of this journal. I appreciate your sincerity and directness and truly wish you the best.
Your psychological motivation and technical or fundamental reasons for taking a trade must be examined.
A couple of your recent comments really stand out:
06-05-09 comments - Motivated by adventureâ¦..???
06-12-09 comments suggest casual and impulsive entries with little regard
to news events or technical analysis.....
Quote
06-05-09 08:35 PM
Weekly Update for week 21/50 ended 06/06/2009
The slump continues. Down 15K (5.7%).
The emphasis has been taking the automated set-up alerts, with minimal size (about 20% of what I would normally take with my pure discretionary trades), and was having a flattish week - until Friday. Saw the market opening up strong on Friday, and decided to be adventurous. Bought 300 SPY calls, and witnessed as the market collapsed thereafter. Got out less than 30 minutes later, down 15K in stock and options.
06-12-09 06:28 PM
Weekly Update for week 22/50 ended 06/13/2009
Lost for words for the downturn. Down another 18.5K (7.5%).
I guess I wasn't careful enough with my discretionary trades once again. The culprits were SLM on Monday, and NAV on Tuesday.
On Monday shorted 20000 SLM @ 7.24 pre-market, and added more as it rose. I just noted at the time it was rising as a result of a Cramer pump the prior friday. (Used to fade those pops on Cramers Mad Money a number of years ago when the show was relatively new, and his recommendations lead to big pops in after hours. Made quite some money, but left off when he didn't appear to carry much weight anymore, no more big moves AH. So was surprised to see his call rise so much in pre-market and decided to short). Little did I realise that two analysts had joined him in upgrading the stock (collusion or coincidence?) So instead of me vs. Cramer, it was me vs. Cramer + 2 analysts. OK they won, and I was hit with a 17K loss.
End of Quote
As an ES day trader I experienced a recent slump and retreated to a 3 month stint on the simulator.
The first thing I noted was that in live trading I was not doing a proper post trade (EOD) review and analysis of my losing trades.
Reflecting on this I realized that I had considered the losers too psychologically painful to study.
My simulated trading then became an exercise in thoroughly categorizing and understanding the nature and patterns of my losing trades.
Lo and behold I was consistently making the same error(s) over and over.
The simulation allowed for enough psychological detachment to see better who I was as a trader, what I was doing incorrectly and
then figuring out a new set of entry, exit, and MM rules that would compensate for my weaknesses and mistakes.
Thankfully I am now trading live again and my trading has vastly improved.
Every day the proper mind set and discipline must be re-won in order to be an effective and winning trader.
Iâm an occasional reader of this journal. I appreciate your sincerity and directness and truly wish you the best.
Your psychological motivation and technical or fundamental reasons for taking a trade must be examined.
A couple of your recent comments really stand out:
06-05-09 comments - Motivated by adventureâ¦..???
06-12-09 comments suggest casual and impulsive entries with little regard
to news events or technical analysis.....
Quote
06-05-09 08:35 PM
Weekly Update for week 21/50 ended 06/06/2009
The slump continues. Down 15K (5.7%).
The emphasis has been taking the automated set-up alerts, with minimal size (about 20% of what I would normally take with my pure discretionary trades), and was having a flattish week - until Friday. Saw the market opening up strong on Friday, and decided to be adventurous. Bought 300 SPY calls, and witnessed as the market collapsed thereafter. Got out less than 30 minutes later, down 15K in stock and options.
06-12-09 06:28 PM
Weekly Update for week 22/50 ended 06/13/2009
Lost for words for the downturn. Down another 18.5K (7.5%).
I guess I wasn't careful enough with my discretionary trades once again. The culprits were SLM on Monday, and NAV on Tuesday.
On Monday shorted 20000 SLM @ 7.24 pre-market, and added more as it rose. I just noted at the time it was rising as a result of a Cramer pump the prior friday. (Used to fade those pops on Cramers Mad Money a number of years ago when the show was relatively new, and his recommendations lead to big pops in after hours. Made quite some money, but left off when he didn't appear to carry much weight anymore, no more big moves AH. So was surprised to see his call rise so much in pre-market and decided to short). Little did I realise that two analysts had joined him in upgrading the stock (collusion or coincidence?) So instead of me vs. Cramer, it was me vs. Cramer + 2 analysts. OK they won, and I was hit with a 17K loss.
End of Quote
As an ES day trader I experienced a recent slump and retreated to a 3 month stint on the simulator.
The first thing I noted was that in live trading I was not doing a proper post trade (EOD) review and analysis of my losing trades.
Reflecting on this I realized that I had considered the losers too psychologically painful to study.
My simulated trading then became an exercise in thoroughly categorizing and understanding the nature and patterns of my losing trades.
Lo and behold I was consistently making the same error(s) over and over.
The simulation allowed for enough psychological detachment to see better who I was as a trader, what I was doing incorrectly and
then figuring out a new set of entry, exit, and MM rules that would compensate for my weaknesses and mistakes.
Thankfully I am now trading live again and my trading has vastly improved.
Every day the proper mind set and discipline must be re-won in order to be an effective and winning trader.
I want to help you. You have enough balls and have your own methods so you're worth helping.
First problem to be corrected. NAV. I looked at their report too. I'm shocked they went up like they did. I had an option on FRX once. They blew out earnings, everything was positive. I bought the option for an intraday trade after the first pullback that day. The stock ended down like 12+%. I thought it was ridiculous and kept my option. I got zeroed out even though there was time for the market to come back to it's senses before expiration. You should not try to predict OR CORRECT the market's reaction to your interpretation of news. True, it is extremely rare that a stock will do the opposite like NAV and FRX did, but it can happen. There's so much money to be made with greater certainty than prediction brings, it's just not worth the risk.
I see you grasping for straws. You have to remember that trading is a business and profits should be expected; not joyous. There is no getback. It's more mathematical than anything. The only joy should be from it making more money than expected. The problem I see with you right now is prediction. I still have no explanation for that reaction on FRX or for that matter NAV, so I write them off as rare anomalies. Don't put yourself into a position where you have to force your correctness on the market.
SLM-If you weren't predicting that it would be faded, you would not have lost money. Pre-market/post-market is the epitome of prediction, especially since you're probably betting on movement for only the following trading day. Don't do anything pre-market or post-market anymore. Period. I'm sure you were shocked at the run SLM did at the open. There was no need to endure it. It is far more rare that reversals occur in pre/after market than the direction continuing. You may be proven right eventually, but you may endure pain you don't want to take with trading ahead of the market.
I suggested that you only trade the sure thing a few weeks ago. That advice is still cogent. The case cannot be made that Cramer's recommendations make any fundamental impact on the company, so that cannot be a sure thing. You were right to look at earnings with NAV, but you messed up with your ahead of the curve approach. If you had waited for the initial run to subside and then shorted, you'd be flattish and possibly ready for the rollover. Simply correct that and be patient for some real fundamental news and you will righ the ship.
Wilt
First problem to be corrected. NAV. I looked at their report too. I'm shocked they went up like they did. I had an option on FRX once. They blew out earnings, everything was positive. I bought the option for an intraday trade after the first pullback that day. The stock ended down like 12+%. I thought it was ridiculous and kept my option. I got zeroed out even though there was time for the market to come back to it's senses before expiration. You should not try to predict OR CORRECT the market's reaction to your interpretation of news. True, it is extremely rare that a stock will do the opposite like NAV and FRX did, but it can happen. There's so much money to be made with greater certainty than prediction brings, it's just not worth the risk.
I see you grasping for straws. You have to remember that trading is a business and profits should be expected; not joyous. There is no getback. It's more mathematical than anything. The only joy should be from it making more money than expected. The problem I see with you right now is prediction. I still have no explanation for that reaction on FRX or for that matter NAV, so I write them off as rare anomalies. Don't put yourself into a position where you have to force your correctness on the market.
SLM-If you weren't predicting that it would be faded, you would not have lost money. Pre-market/post-market is the epitome of prediction, especially since you're probably betting on movement for only the following trading day. Don't do anything pre-market or post-market anymore. Period. I'm sure you were shocked at the run SLM did at the open. There was no need to endure it. It is far more rare that reversals occur in pre/after market than the direction continuing. You may be proven right eventually, but you may endure pain you don't want to take with trading ahead of the market.
I suggested that you only trade the sure thing a few weeks ago. That advice is still cogent. The case cannot be made that Cramer's recommendations make any fundamental impact on the company, so that cannot be a sure thing. You were right to look at earnings with NAV, but you messed up with your ahead of the curve approach. If you had waited for the initial run to subside and then shorted, you'd be flattish and possibly ready for the rollover. Simply correct that and be patient for some real fundamental news and you will righ the ship.
Wilt
Great advice from Wilt and LongScalper.
NAV broke through previous resistance Monday and that's a signal to wait for confirmation of a breakout or false breakout before shorting.
More importantly: News
You see the earnings capsule and make a decision based on "good" or "bad", but unless you're in on the conference call, you have NO IDEA what the big money is gonna do.
You reacted to a major earnings miss and lowered guidance, but you missed crucial info from the CEO that the institutional money is going to base its decision on when a stock is trading at a 42% discount to its 52-week high:
Ustian said Navistar has been cutting costs and gaining market share. The company's military truck sales, joint ventures with other vehicle makers and other sideline businesses are helping to offset the weakness in the commercial truck market.
On June 4, Navistar completed the purchase of recreational vehicle maker Monaco Coach Corp. for $47 million. The Oregon-based company, which had filed for bankruptcy earlier this year, is expected to contribute $600 million to $1 billion in revenue to Navistar by the end of 2011.
Navistar also noted that the U.S. Pentagon recently increased the anticipated order size for new armored utility trucks for U.S. troops in Afghanistan to as many as 10,000 vehicles from 2,800. Navistar is one of several truck builders competing for a production contract for the vehicle.
"This is significant amount of business for someone, and we know we're in the mix," Ustian said. Navistar expects sales of military trucks to generate at least $2.7 billion in revenue this year.
Navistar's robust sales of trucks to the military in recent years also is helping to drive revenue higher from replacement parts. Revenue from parts sales rose 32% in the quarter.
NAV broke through previous resistance Monday and that's a signal to wait for confirmation of a breakout or false breakout before shorting.
More importantly: News
You see the earnings capsule and make a decision based on "good" or "bad", but unless you're in on the conference call, you have NO IDEA what the big money is gonna do.
You reacted to a major earnings miss and lowered guidance, but you missed crucial info from the CEO that the institutional money is going to base its decision on when a stock is trading at a 42% discount to its 52-week high:
Ustian said Navistar has been cutting costs and gaining market share. The company's military truck sales, joint ventures with other vehicle makers and other sideline businesses are helping to offset the weakness in the commercial truck market.
On June 4, Navistar completed the purchase of recreational vehicle maker Monaco Coach Corp. for $47 million. The Oregon-based company, which had filed for bankruptcy earlier this year, is expected to contribute $600 million to $1 billion in revenue to Navistar by the end of 2011.
Navistar also noted that the U.S. Pentagon recently increased the anticipated order size for new armored utility trucks for U.S. troops in Afghanistan to as many as 10,000 vehicles from 2,800. Navistar is one of several truck builders competing for a production contract for the vehicle.
"This is significant amount of business for someone, and we know we're in the mix," Ustian said. Navistar expects sales of military trucks to generate at least $2.7 billion in revenue this year.
Navistar's robust sales of trucks to the military in recent years also is helping to drive revenue higher from replacement parts. Revenue from parts sales rose 32% in the quarter.
How can I get killed when expectancy is on my side? So let me pull the trigger once more... An unfounded application of otherwise rigorous mathematics is in practice as simple as proving that all cats are black using induction. Logic is indeed always impeccable, math sufficiently rigorous, and the only catch is the initial assumption. The first cat need not be black, returns continuous, defaults uncorrelated. Edge need not be stable over all time periods as the Kelly's static model implicitly assumed (kudos to OP for trying to repair this fatal flaw using moving edge estimates - which in themselves required an assumption of the decay factor - not high enough apparently). Generously granting that edge was positive in the first place rather than merely being an unhedged exposure to some risk factors (long vega is a strong suspect here). It is much better to merely guess about what follows from more-relevant assumptions than derive precise conclusions from less-relevant assumptions. Especially when relying on economic quantities which are so hard to estimate as the 'edge' or alpha ('our estimates of expected return are so poor they are almost laughable' - F. Black)
See, that's good advice, all systems have draw downs, it only becomes a problem if you revenge trade when you are down.
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