All in a Day's Trading

Gosh, my last day trading post was in APRIL

2006-10-11T19:20:00.000-04:00

Sara, can you tell this blog is basically dead?

What happened?

Oh Lord, do I hafta?

It's embarrassing.

I broke the cardinal rules of day trading and got CREAMED. BAD.

I bought a block of MSFT. And it did okay I made about $150. That's a great gain for me. And I saw how it was doing and thought I had another chance for a quick scalp.

It was Friday. It was 11 AM. But I thought I had time (Mistake #1).

So I bought a huge block--1000 shares--pretty much all the cash in my account (Mistake #2). And I sat. And I waited. I had my stop price in at $27.58. It would have been a tidy, but not greedy profit. The stock went down a bit during the lunch doledrums, but I knew it would rally towards closing.

But then it was time to go get my kids at school. I couldn't wait any more for the rally. I was still like $250 down. I didn't want another big loss--I tend to make $50 at a time and lose $500 at a time.

So I did what I had to. I left. (Mistake #3)

By the time I returned, I had missed selling by a SINGLE PENNY. The stock rose to $27.57. Had I been there, I would have avoided the pain to come.

And OH BOY DID IT COME.

After the market closed, MSFT released some super bad news and the stock TANKED in aftermarket trading.

$27

$26

$25

$24

IIIIIIEEEEEEYYYYYYYYYYY!

The shrieks of pain were reverberating from my office. I was sitting on like a $3000 loss. And over the next weeks, it kept falling, finally bottoming out around $22.

So I did the OTHER stupid thing that newbie day traders sometimes do. I sat on the stock. I'm in high tech, so I know MSFT pretty well. And I know it's a "good company"--not a wishful thinking good company, but rather one that can actually deliver. This could have been Mistake #4, but I felt that it wouldn't be--even if it meant not day trading for a long time, I felt that sitting tight--maybe even til Vista comes out--was a good idea. And the analysts agree. Something like 9 of them ratcheted MSFT from either hold to buy or buy to strong buy this past week (or so).

So I sat tight and didn't agonize over the ups and downs. I just let it ride--all 1000 shares--my whole portfolio. And lo and behold, a week or two ago, I happened to log in to my account and--

DAMN!

I was above water!!!

The stock buy-back really boosted the share price. I'm actually making a few bucks. Not enough to make th agony worthwhile, but still not too shabby. I should get out now. Make a little money. Don't be greedy. But, I think I am going to hold til Vista comes out.

Mistake #5?

I am not cut out for selling short...

2006-04-22T14:19:00.000-04:00

I decided today that I don't have the nerves for selling short. For some reason, maybe it's the reputation as being a fast way to lose money—though why it's any faster than having a stock you bought drop like a stone, I don't know—who knows.

This is my second foray into short selling. The first time, I made a small amount, which I then proceeded to wipe out in a spectacular loss later in the day. This time, I bought GKIS and held it for about 10 minutes, while it hovered around my buy price of $12.69. Finally, the nervousness—because the stock had been rising all day and because it was nearing 11:30 AM—got to me and I bailed buying to cover at $12.68... making $10, not even enough to cover the $14 in commissions the roundtrip cost me.

And then...

Of course...

Within SECONDS...

The stock dropped like a STONE, losing $0.07, which would have dropped me out with a small but tidy profit. And I missed it because I got scared. I will likely, tentatively, keep selling short... but I really need to control my fear.

Somehow.

A fool and her money...

2006-04-19T16:10:00.000-04:00

Hummm.

I feel a lot like a head with my chicken cut off.

No, not a chicken with my head cut off. When you slaughter a chicken by chopping its head off—grew up on a farm, I did—the chicken body flops around, flying and beating its headless body into the ground. The head just kind of lies there blinking like, "what happened???"

That's about how I feel.

As you noticed, I took a while off after my last loss—did a lot of other stuff, let the shock wear off. Today, I put a toe back in... and got creamed again. I'm still not sure what happened! One second, the stock was hovering around my cost basis, the next second, I was stopping out at like a QUARTER lower. In seconds!

I hadn't been greedy. I had missed a sell point because of slow fingers. But I wasn't making big mistakes. Then the bottom dropped out and I'm lying here without my body blinking. I begin to wonder if I am not cut out for this.

Down another $390.

Greed is NOT GOOD.

2006-04-10T16:01:00.000-04:00

In about 5 minutes, after my last post, I made $80 on a nice little breakout. Then, I got greedy. I mistook a sell off for a break out and lost $500. Sigh. It's not easy to be unemotional about $500... but I'm trying.

I'm trying.

My account is flat. I should quit when I was ahead.

Harsh lesson #5: Greed is NOT GOOD.

Bears on the Rampage

2006-04-10T14:40:00.000-04:00

I spent most of the day doing taxes for the AARP through their Taxaide program. Two days a week, I do taxes for low and middle income and the elderly. I came home to find the market bleeding red. There was nothing worth buying—nothing that I thought would make money at least.

So I am sitting here, with my heart in my throat on a short position. I was fortunate that my husband got home early and has gone to get the rug rats. So I can sit here and watch it. I sold short at a pretty decent point... right after a weak breakout (low volume) when the stock was overbought.

So far, it's down $0.02 and made about $10—not even enough to pay the commissions. I am hoping to ride it down another 5 cents. The 5 minute chart is just crossing the 10MA. The 20MA is below my stop. On the one minute chart, the stock is going sideways and it's way overbought again, without gaining any real ground. (10 minutes later) Yipes! Stock just crossed the 20MA on the 5 minute chart. I am sitting still, just ONE PENNY from my buy-to-cover price. I feel a little bad for the people who bought at $8.08 with the stock hanging in there at $7.95.

WHOA!

Back up to $7.98!

My nerves are FRIED. I'm bumping the stop price back up to $7.95. A few more nerve wracking minutes and I'm OUT with $20 after commissions. I'm not sure that was worth it. What a crazy making experience!

<PHEW> My first short sale.

Today's trade or Lesser Losses

2006-04-07T20:09:00.000-04:00

In case you can't tell from the title, I nearly got mauled by the bears today. I caught the fact that TMTA (a chip maker) was announcing a new deal with Sony. I read the chart and it looked good. The stock opened up quite a bit and was rising as I placed my order for 1000 shares. I got 'em too, at $2.20.

So, of course, the stock peaked at $2.22 and proceeded to fall literally with the next candle on the 1 minute chart. Darn thing huddled around $2.14 to $2.15 all day, until around 2 PM when it dropped a penny and stayed in that range. Now, of course, at this point, being a mom, I have to go get the kids at school and then my oldest had an appointment.

So I did what one should never do. I left the position, figuring (hoping) that the stock would recover when the bond market closed at 3 PM. I got home at 3:30 PM and found that the stock, ever pernicious and unpredictable, had dropped to $2.08. Then $2.07.

At this point, I'm wondering what the heck to do.... with a $0.13 loss per share. I did something kind of risky. I bought 2000 shares... first trying to get them for $2.07. I got it at $2.08.

What this served to do was bring my average cost per share down from $2.20—which the stock probably won't see 'til August, if ever—down to $2.12, which I could theoretically get. I say that I could theoretically get this by looking at how much stock was available for sale at the various prices between $2.08 and $2.12. It was possible to "make it back" to $2.12... whereas getting back to $2.20... millions of shares. Yeah, it could happen. But for me to make a profit with stock bought at $2.20 (say at $2.25) TMTA would have to breakout over a level that it hadn't hit since like 2002 (on the way down). $2.12 was possible. $2.25 wasn't happening.

So, for the next half hour, I chewed my nails, changed the sell order as the price rose. For a single moment, it looked like I might get $2.13 for the whole lot and actually MAKE money. But then the stock dropped back. Sold 1900 shares at $2.12 (breakeven not counting commissions). Then about 2 minutes from the closing bell, I gave in and sold the remaining 1100 shares at $2.10 for a $33 loss (not including commissions).

So, while I am still down on the day—and a heck of a day it was, at one point, the DJI was running at -$93—I am way less down than I could have been, $33 versus $120. But did I trade well? I can't decide. I suspect I should have known that a stock that gaps open on good news will fall. Of course, it didn't happen to AAPL, which I didn't buy yesterday. So, this must be one of those rules that are always true except when they aren't. But then, once I was in the bad trade, I held it. I don't feel great about that. Maybe I should have bailed earlier in the day. But then when the stock went down again, I did something really risky that paid off... but it was about the only thing that could be done, because sitting tight was a sure, big loss. And it paid off.

No, I'm not making excuses! I'm explaining what I did.

I lost $33 instead of $120 and was flat at $29,854 at the end of the day. It coulda been worse. Next time the bears are out, me and my Grape Nuts are gonna stay in the tent!

Harsh Lesson #4: Buying on a gap open can be a good idea. Buying on the dogi of a gap open (like I happened to do) is a WAY BAD IDEA.

What's a Stop Limit Order?

2006-04-07T14:29:00.000-04:00

Believe it or not, I looked ALL over and couldn't find an explanation I understood. So finally, I called the broker and asked. Turns out, it's pretty simple.

A STOP order is like this. Say you're holding a stock and it's going down. At THIS price, sell the stock at market. That's a stop order. The stop price is the price at which the system places an order to sell your stock at market, i.e. whatever you can get for it.

A STOP-LIMIT order is only slightly different. At THIS (stop) price, sell the stock at THAT (limit) price. So instead of selling your stock at market for whatever you can get for it, you try to sell the stock for a specific price. And if the stock you're holding is in freefall, you hope to hell that you can actually sell it for that price. Otherwise, you might be left holding it and unable to sell.

My First Day Trading

2006-04-07T11:28:00.000-04:00

My first day trading was actually Wednesday, 5 April. I had set up my account with a major online discount broker—felt that was the best way to go until I had a clue how this was going to work out. My account balance was $30,006 due to a bit of interest I got from set up to the day I began trading.

My first trade was a good one for GNBT. It's a small stock that was trending upward on the Most Active list. I bought 1000 shares on a limit buy for $2.62 each. I had a bunch of problems getting the sell orders in right as I could not get the stop order to work right. Need to call the broker about that. In the grand scheme of things, I should have a better idea how this system works before I buy stuff... and I know I'm being reckless, but I did it anyway. About 6 minutes later though, I had made my $0.05 per share and gotten out of the stock. It was a small scalp that grossed $50 (minus commissions of course).

My next trade was also a good one. I found that NVAX was also very active and trending upwards. So I bought 1000 shares at $6.62. Two minutes later, I scalped out of the stock at $6.67 with $50 less commissions in my pocket. Altogether, the net was about $77.

This was, I admit, really exciting. I was having early success. I kept telling myself to keep calm, keep calm. I decided to try one more trade. I had to leave to go to a meeting in an hour and a half. I figured that was enough time. After all, my first two trades had barely taken a few minutes each.

BAD MOVE.

DCEL was active. It was trending up on the 1 minute, the 5 minute AND the daily chart. It looked good. I bought 1000 shares at $8.80. And... watched it drop like a stone to $8.65. I waited. It passed into the lunch time doldrums. I waited. Selling down in the doldrums is always a bad idea. So I didn't. I held. But, time passed and I HAD to leave for my appointment. I couldn't just leave the position, particularly considering that I didn't know how to place a stop-loss order! Finally, the stock crept up to $8.75 and I bailed as fast as I could.

With that one fell trade, I went from $77 up to $96 down.

I quit for the day, not happy, but not overly unhappy. There will be losing days and gaining days in this. I accept that. Like Toni Turner says, I'm aiming to trade well. I made 2 good trades. The third trade looked good. It really did. But I knew very well that it was too close to lunch hour and I never should have placed it to begin with. It was the thrill. I'm a roller-coaster sort of chick and I need to be careful about giving in to thrill-seeking behavior.

It loses me money.

Harsh Lesson #1: Quit when you're ahead.
Harsh Lesson #2: Don't trade close to lunch time.
Harsh Lesson #3: Don't trade under time constraints.

Welcome to my Day

2006-04-07T09:55:00.000-04:00

This is my first post to my new day trading blog. The purpose of this blog is to track my success—or failure— as a day trader. I'm starting with US$30,000 in real money. It's my money. I can afford to lose it, but I sure as hell don't want to lose it. Don't ask me for money. I'm not giving it away.

Watch and learn with me.