Yes it was FB again that tempted me so much to hit it heavily, I promised myself I will not trade after such a great day yesterday, but just could not stay away. In these case traded tiny size just to get it out of my system.
FB long 500 shares
FB sold 200 and 100 on the way up and closed the rest at break even stop
This is how SPY looked at the open
SPY
SPY opened with small gap up , extremely nice break out above the channel, entire all market was green , pure long opportunity
How do I not trade this ?
I used 15 min chart, the wicks were too nice showing the buyers were bidding the 110.50.
The high of the second doggy wicked candle was 111.06 risking the low 110.51 so risk was strictly 55 cents. I tried to resist not to take the trade but anyway did it with only 500 shares risking about $250.
When trade went in my favor these are the thoughts I am fighting with on daily basis. I'm sure many of the readers have same challenge, but have to somehow overcome it, there is no other way around it. And how will you overcome it? Easier said then done but you DO NOT THINK ABOUT THE PROIFTS !!! You must think ONLY ABOUT HOW NOT TO LOSE , OR HOW LITTLE YOU WILL LOSE if it doesn't do what you expect. Consider you will lose. Write this down and glue it to your monitor to be in front of your face if you are weak character like me. And place the order to take profit ahead of the time.
So here are my thoughts: ( part of your trading journal is to write your thoughts too, not only the entry points, so when you read your own journal after few months, you will clearly see what thoughts you had and what repeats constantly in your trading mind, then you can correct it buy creating rules)
- "Ok there she goes up... great,.. I am taking some off on the way up, to pay me ....hmm ..or maybe I shall just let it ride the whole thing for a home run ?!?....hmmm ...maybe not ..but wait a minute what is my plan?
- My plan is : risk 55 cents, take half of at 1:1 Risk: Reward, place break even stop on the rest
- So if my entry was at 111.16 taking off 200 shares at 111.64 and 100 at 100.83 is more then 1:1. So I did take it.
- Break even stop ( almost br. even) was placed and triggered, BAAAM a green trade.
- Did it go much higher later ? YES so what ? Did I lose ? nope !!
- Now what if I didn't take the 1:1 gains? I would have had a very very hard time to get out at break even , since I saw profit $250 which is what I risked , and seeing that profit how it disappears, will not make me get out at break even, wanting that profit to come back again,.. Sounds familiar?? ... and more often I would lose, I bet this sounds even more familiar ...he he... except today , since the market was so strong it took off to new highs for the rest of the day. But days like these do not happen very often. More often we get chopped up giving away the profits we made. Or it is just ONLY ME experiencing this losing scenario? Is it only me ? Write a comment let me know please ...
This is what I twitted before the trade took place
FB trailing the stop that was hit and then I stopped trading
And here is the crystal clear big picture clear FB breaking the major daily high
Hope you all have great weekend
I will, if anybody wants, write a post on swing positions, It is really up to you guys if anybody wants I definitely will.
Salute
@DaChopa
Great insight please post the swing blog. Thanks Dan
ReplyDeleteThnx glad you like the post. Swing: i called NBIX Jan 20 , see my twit, short at $50 and cover at $42 on Jan 28 for 19% gain in less then 10 days. My next call was GES Jan 29 short at $18.42 so let's see. These positions are 1/50th of acct size. Example : if acct is $50,000 allocated asset to each position is $1,000. I will write blog about swing trading soon. Stay tuned and thnx for your comment
DeleteNice post! Your losing scenario I totally relate to! Soooo many times I have been up several hundred $ only to take no profit and then watch it go down to $50.....$0.....then a loss! Then take the trade off for a $50 to $100 loss and goddam angry! Better to pay along the way and make $200 than risk losing it all just to try for a home run.
ReplyDeleteOh great... I thought it happens only to me :) So the easiest thing to do : place order to tske some profit 1:1 as soon as you get in position , and as soon as u lock in some profit place break even stop .
DeleteCan definitely relate to these emotions, hardest part of the game. Excellent walk through, interesting how you play the 15 min bars. Would love to see how you think about swing trades. I wouldn't be suprised if we have some great swing short trades on the horizon. Thanks D.
ReplyDeleteThnx glad you like the post. Swing: i called NBIX Jan 20 , see mty twit, short at $50 and cover at $42 on Jan 28 for 19% gain in less then 10 days. My next call was GES Jan 29 short at $18.42 so let's see. These positions are 1/50th of acct size. Example : if acct is $50,000 allocated asset to each position is $1,000. I will write blog about swing trading soon. Stay tuned and thnx for your comment
DeleteNice post Dan. Actually I have the same problem. When I enter any trade, I make sure that Reward:Risk is at least 3:1. When stock goes in my direction (short), I lock in some portion on the way down and keep the tiny rest to play out. The thing is when I lose my patience and lock in some right away (let's say 1/2 of position at 1:1 R:R) at the end, the rest of my position doesn't give that potential as my full size would have (had I had patience). Turnes out at the end of the day, my Reward/Risk on any trade is around 2/1, which is not good for me. I don't say it's wrong to lock in along the way. It's necessary to pay yourself, but at the same time I try to let the trade play out and not lock in some portion right away, because next time when I have 2 losing trades, they'll wipe out 1 winning trade. What do you think about this? And yes, I would like to see a blogpost on your Swing Trading. I'll have some questions to you on Swing Trading. Thanks Dan, much appreciated!
ReplyDeleteI totally see your point. It all boils down to be patient for the highest probability trades. Once you get into the right trade, paying yourself at 1:1 on half or some of the position , is not the end of the trade. Just because you took off half of the size it doesnt mean you shall not re-enter again with lets say the third of the original size and do a "continuation" trade.. This will often generate lot more profits then the losses that will take place on the full position rightaway when you get in the posituon. Another thing to keep in mind is : the original risk often can be even smaller. You do not have to really wait to hit your planned stop loss. Example: if the above explained FB trade started to go against me , and at the same time I saw SPY QQQ diving at LOD, i certainly would not wait for FB to hit my original stop loss, but would exit maybe with half of the originall risk which in this case was 55c devided by 2. However SPY QQQ were making new highs, were very strong coming out of channel break out, which was the actaul reasun why " I HAD TO TAKE" this trade. If you look at the same 15 min chart you will see clearly ( in hindsight though) that I could have add 200 shares on the new 15 min break out of the 15 min red candle and make super solid gains by simply trailing the exit based on candle by candle break down.. Meaning the first violated low of the 15 min candle woild have been an exit. If it was ao simple everybody would make monet trading; but the reality is most will lose reagrdless of how much knowledge thay have. Therwfore many say that trading is art as much as it is knowledge.
ReplyDeleteWhen you short the pull back or buy the dips ? how do you know that it will still go down/up and continuing downtrending? i just read your post, and you are saying you buying on the pullback, but how come do you know it will continue its fading ?
ReplyDeleteAlso, do you screen your stocks with Interactive broker. I'm with them and i'm struggling to create a good stock screener with good characteristics?