Update 5/27/10

Today was a big upday in the Markets. I did not trade today cause I was too busy with work and took a loss of Approx $350 the past 2 days liquidating positions and bad trades entered due to not following my rules so I decided to take the rest of the week to regroup and watch. Following are the trades I did, the reason I lost and the particular rule I disobeyed:

- Bought $GS Puts - I bought the puts on a gap down day before 10:00am and did not wait to determine the direction the market would move in. Instead, the market opened down, I put the position on and the Market bounced. - Disobeyed Rule #1

- Shorted 1 $ES Futures contract - I shorted 1 contract effectively while working and made approx $90 on the trade. The E-mini's bounced a bit and I shorted it again. The second time I went short, my broker went into maintenance and I could not cover the short for about an hour. If I would have immediately placed a stop on the trade, this would not have happened. I gave back the $90 plus an additional $150. Disobeyed Rule #2 and maybe even Rule #8.

Back to the Market! The S&P bounced back today with Futures up in the early AM by almost 3% basically due to a bounce in Asian markets and news regarding Treasury Secretary Geithner pleaing on European reform to help stabilize the Euro. So far, the S&P has held the Feb lows mentioned in the previous posts and has bounced from there a few times. All indicators are currently pointing to an over-sold market thats ready for a bounce. I am not saying the market cannot continue to drop, I'm just saying, its due for a bounce. Even if its a small one.

The Market held the gains all day and closed stronger at the End of Day. This could be a positive sign but the over all volume was light and we are going into a long weekend on Friday. Many people dont want to hold into the long weekend taking into consideration the current uncertainty.

S&P Daily





For now, I'm sitting on the side lines and might do some virtual trading. I have to obey my rules!

Trading Rules

These are trading rules I have adopted over the past 3 years and I find my self to be much more profitable when I follow these rules. When I break them, I tend to have losses. Some of these rules I have adopted from experienced traders and have found them to be very effective once tuned to fit my own style. I continue to add, review and expand my rules as I find neccessary.

Trading Rules:

1) DO NOT trade before 10:00am. I wait until the market settles and I can determine the direction it chooses to move in. I usually end up loosing when I open a position between 9:30 - 10:00am due to the volatility and erratic moves during this time.

2) ALWAYS USE A STOP LOSS. This one always gets me... Its better to have a small loss than to take a big hit! I should always place a stop immediately after entering a position.

3) DO NOT OVERTRADE. Overtrading causes me to loose focus and I find my self breaking even or even losing $$.

4) DO NOT let a profit turn into a loss. Take profits no matter how small. Profit is Profit!

5) DO NOT do earnings plays (unless it is an options strategy and even then, keep it small)! Ive gotten burnt on a few but also have made good money on a few, but its best to avoid them.

6) I DO NOT trade anymore for the day when my losses exceed $300.00

7) Close out all positions at the End of Day unless the trade is a swing trade. I want to be mostly CASH. Day trades are Day trades.

8) Don't trade stocks just to trade. If there is no trade, there is no trade. Like my grandma used to say "If you don't have anything good to trade, then don't trade anything at all".. no, wait... You DO NOT have to trade every day! If you feel the market is choppy or just not feeling it, DO NOT TRADE! If anything trade smaller share or contract sizes.

9) DO NOT trade the same stock after having taken a loss on it that day. I will start to take it personally, chase it and end up loosing more on it.

10) Never commit more than your 20% of your trading capital on any given trade. Never!

11) Scale In, Scale Out. When trading Options, start small leaving room to avarage down. Options are more volatile and experience bigger % moves do to the levearage they provide. this call also be applied to Stocks but it would depend on the strategy.

12) Avoid Pink sheets and OTC stocks. There are very few exceptions but most of them are scams (pump and dump). Once in a while I disobey my rule and do buy one (ex. CMSI), but its basically a pure speculation play and I play it extremely small.

A look at the S&P 500 - 05/24

A look at the S&P 500

Today was a pretty choppy day in the market which ended with another sell off at the end of day. The S&P is currently trading at/near the Flash Crash lows of May 6th. The S&P currently has to hold the Feb 2010 lows of approx 1055. If by chance the market continues to fall, we could see a low of approx 960 on the S&P which is marked by the lower blue line of the S&P weekly chart below.

S&P Daily Chart




Weekly Chart




Today I was able to pull a profit of $92 bucks which is not so bad considering all the red. Traded $VXX, $HGSI and BP puts for profit and $STSA for a small loss. I was in and out for a few cents each trade and very, very small positions.

In my opinion, we will probably see further downside before we get any real bounce in the market.

BT

BT's Post #1

Waaaazaaaaa... Starting up a blog to start to track my trading in hopes to become better and more disciplined. I have been trading for approx 3 years on and off and have been mostly break even. Besides tracking my faults and achievements to go back and see what I did wrong and what I did right, Ialso thought it would be entertaining.

Gonna start trading live again soon. Have been watching the market bloodbath lately and doing some virtual trading in the mornings until about 12:30PM. I currently have a crappy day job which I also plugged into the market from about 2:30pm to 4:00pm.