Today I saw an opportunity with NVDA. Last friday, it closed at $8.72 and this morning it started out in the low $9s. Earnings are coming up on the 6th, so we have a few more days until this stock gets in risky territory. The rest of the market seemed normal, so my prediction was that the stock was going to head down from $9. It has had a runup from the high 6s, so the chances of it going down from 9 instead of upwards from 10 are pretty high during normal market conditions.
I get the feeling that Apple is waiting to see how NVDA's earnings go and then there may be enough momentum to break past $110. Right now the fluctuation is between $105 and $110.
11/3/2008 NVDA COVER 1000 $8.7788
11/3/2008 NVDA SHORT 1000 $9.005
GAIN: $226.20
Monday, November 3, 2008
Friday, October 31, 2008
Day 13
It's good to be back. I was really tired this morning. I think the day off yesterday derailed my body from it's usual schedule.
I want to point out that Apple didn't shoot up today. Thank god. I hate seeing stocks going against the market for days, because it dramatically increases the risk of timing them. I stayed away from Apple today because I feel like it is watching me watch it. I want the dust to settle for a bit before I get back in bed with it.
My new favorite stock is NVDA. I also have learned that it is more sensitive to bad news than Apple. This may be slightly inaccurate. It is representative to usual Apple, but currently Apple has been defying gravity. So what I should be saying is that NVDA is representing the old Apple I like.
Today I took on risk because I was a little annoyed about missing yesterday. Yesterday I kept checking my phone and cringing whenever I saw an opportunity. I was thinking of getting setup so I can trade on my phone, but maybe that is too crazy.
Anyways, back to today's risk. You have a much better chance of predicting a stock movement after you have watched a significant gain or loss. So if in the first hour of the day, the stock shoots up 4%, chances are pretty damn good it will at least dip to 3% at some point in the day. The higher the initial percent, the higher chance you have of profiting on the zigzag. This does not apply around major announcements such as company earnings (as well as other company earnings which have relationships with the company you are watching.... example would be Nvidia saying they trippled their sales of graphic chips.... then you can probably guess Apple has something up their sleeve so Apple will probably go up), currency fluctuations, market conditions, and fed announcements.
So today I saw NVDA hanging out around $8.38. From then it shot up to $8.50. I put a short limit order for $8.60. It got triggered. Then it shot up to $8.80. I decided to then buy even more to dollar cost average. I now had 3000 shares at $8.76. Eventually it went into $8.90s, but I knew it was coming down. The market has been shooting up all week. Yesterday, was kind of flat and today we have the Friday evening scare where no one likes to be in the market, which almost always means the price goes down right before close. Eventually it went down and I was able to profit.
10/31/2008 NVDA COVER 3000 $8.6698
10/31/2008 NVDA SHORT 2000 $8.8202
10/31/2008 NVDA SHORT 1000 $8.60
GAIN: $231.00
I want to point out that Apple didn't shoot up today. Thank god. I hate seeing stocks going against the market for days, because it dramatically increases the risk of timing them. I stayed away from Apple today because I feel like it is watching me watch it. I want the dust to settle for a bit before I get back in bed with it.
My new favorite stock is NVDA. I also have learned that it is more sensitive to bad news than Apple. This may be slightly inaccurate. It is representative to usual Apple, but currently Apple has been defying gravity. So what I should be saying is that NVDA is representing the old Apple I like.
Today I took on risk because I was a little annoyed about missing yesterday. Yesterday I kept checking my phone and cringing whenever I saw an opportunity. I was thinking of getting setup so I can trade on my phone, but maybe that is too crazy.
Anyways, back to today's risk. You have a much better chance of predicting a stock movement after you have watched a significant gain or loss. So if in the first hour of the day, the stock shoots up 4%, chances are pretty damn good it will at least dip to 3% at some point in the day. The higher the initial percent, the higher chance you have of profiting on the zigzag. This does not apply around major announcements such as company earnings (as well as other company earnings which have relationships with the company you are watching.... example would be Nvidia saying they trippled their sales of graphic chips.... then you can probably guess Apple has something up their sleeve so Apple will probably go up), currency fluctuations, market conditions, and fed announcements.
So today I saw NVDA hanging out around $8.38. From then it shot up to $8.50. I put a short limit order for $8.60. It got triggered. Then it shot up to $8.80. I decided to then buy even more to dollar cost average. I now had 3000 shares at $8.76. Eventually it went into $8.90s, but I knew it was coming down. The market has been shooting up all week. Yesterday, was kind of flat and today we have the Friday evening scare where no one likes to be in the market, which almost always means the price goes down right before close. Eventually it went down and I was able to profit.
10/31/2008 NVDA COVER 3000 $8.6698
10/31/2008 NVDA SHORT 2000 $8.8202
10/31/2008 NVDA SHORT 1000 $8.60
GAIN: $231.00
Day 12
I was out of town this day and couldn't be active on trading. I'm going to count this as a $0 day rather than skip it. The stock market doesn't get a day off, so today was a missed opportunity.
GAIN $0
GAIN $0
Wednesday, October 29, 2008
Fed Meeting Schedule
I found the schedule for fed rate meetings. These meeting dates don't guarantee anything, but should be known to have the ability to cause a market fluctuation. As you can see, they also appear to have unscheduled meetings. I don't have the experience, to know when these unscheduled events show up. If they show up after the meeting, then they may not help predict anything.
Anyways, this is another site that should be referenced.
http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
Anyways, this is another site that should be referenced.
http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
Prediction: Day 12
Before we get into tomorrow's prediction, I want to talk a bit about how today could have seriously been a disaster. I would have been in the negative today if it wasn't for the fact that scottrade wouldn't let me short.
I was lucky this time, but need to think through how to prevent this from happening again.
There was some external factor pushing Apple and companies related to it up, while the rest of the market was just acting normal. How can we catch this case? We need to look at pre-market for other stocks that follow Apple's usual trajectory. One of these is NVDA. Today NVDA was doing exactly what Apple was doing so we wouldn't have caught that.
Google, however was following the market trend today, rather than Apple. Normally, it is very similar. So if we looked at pre-market of Google, then we would have noticed that something was off.
The goal here is that we are trying to look for an indicator to prevent us from acting on our initial prediction, because something appears to be off balance.
With that being said, tomorrow just feels weird. A lot of stuff has happened in the past 2 days. The general trend still feels negative, so I am predicting that Apple will go back into the 90s at some point, however, I don't know when. We still have a lot of days left in the qtr, and now that this rate cut is over, where is all the good news? We need some good news or things will keep heading lower. However, I feel this burning in Apple to do just the opposite, but I don't think it will last long because eventually the bad news overcomes the hope during the waiting period for the next big announcement.
In summary, tomorrow feels very risky and I wouldn't do anything until I see how things are going. Today, I capatilized on sudden huge fluctuations, which always tend to go up a lot, then down a bit. So you can watch for those and profit there.
I was lucky this time, but need to think through how to prevent this from happening again.
There was some external factor pushing Apple and companies related to it up, while the rest of the market was just acting normal. How can we catch this case? We need to look at pre-market for other stocks that follow Apple's usual trajectory. One of these is NVDA. Today NVDA was doing exactly what Apple was doing so we wouldn't have caught that.
Google, however was following the market trend today, rather than Apple. Normally, it is very similar. So if we looked at pre-market of Google, then we would have noticed that something was off.
The goal here is that we are trying to look for an indicator to prevent us from acting on our initial prediction, because something appears to be off balance.
With that being said, tomorrow just feels weird. A lot of stuff has happened in the past 2 days. The general trend still feels negative, so I am predicting that Apple will go back into the 90s at some point, however, I don't know when. We still have a lot of days left in the qtr, and now that this rate cut is over, where is all the good news? We need some good news or things will keep heading lower. However, I feel this burning in Apple to do just the opposite, but I don't think it will last long because eventually the bad news overcomes the hope during the waiting period for the next big announcement.
In summary, tomorrow feels very risky and I wouldn't do anything until I see how things are going. Today, I capatilized on sudden huge fluctuations, which always tend to go up a lot, then down a bit. So you can watch for those and profit there.
External Factors
I learned yesterdays runup was related to Japanese Yen stabilization. That took me buy surprise. I haven't been paying attention to currencies, but clearly they can be a factor for market fluctuations.
http://finance.google.com/finance?q=USDJPY
The good news is that this is right on the front of finance.google.com, so we don't need any additional sites to monitor.
Another thing causing a runup is anticipation for a fed rate cut in about an hour. I'm not sure if there is a schedule somewhere on when these cuts are possible. I have been bit by this before and I need to make sure I figure out when to anticipate this type of external factor on the market.
http://finance.google.com/finance?q=USDJPY
The good news is that this is right on the front of finance.google.com, so we don't need any additional sites to monitor.
Another thing causing a runup is anticipation for a fed rate cut in about an hour. I'm not sure if there is a schedule somewhere on when these cuts are possible. I have been bit by this before and I need to make sure I figure out when to anticipate this type of external factor on the market.
Day 11
Well today was another interesting day. My advice yesterday was to watch out for Apple because something may be brewing due to the sharp rise. However, I said I still would short between $98 - $102.
This morning I tried to short, but scottrade said there were no more shares to short. I remember a month or so ago, when "naked" shorts were made illegal (something like that).
Anyways, this is kind of interesting because it means that you can't always short, unless your broker has shares to short. I need to look more into this.
So anyways I went back to bed and woke up 30 min later.
The market was level but Apple was shooting up. Some forum posts were saying that Cramer said to buy Apple. I'm not sure if I believe that. Sometimes what he says causes a fluctuation, sometimes it doesn't.
Anyways, Apple was up 6% after yesterdays 10%. Wtf is going on?
I have recently been following NVDA, which is a company that so far is mimicing Apple. They do video cards for computers (including macs). NVDA was up as well. I decided an additional 6% in about 30 minutes is a bit ridiculous. I shorted and covered 30 min later.
10/29/2008 NVDA COVER 1000 $8.6788
10/29/2008 NVDA SHORT 1000 $8.7601
10/29/2008 NVDA COVER 1000 $8.3188
10/29/2008 NVDA SHORT 1000 $8.5612
GAIN: $323.70
This morning I tried to short, but scottrade said there were no more shares to short. I remember a month or so ago, when "naked" shorts were made illegal (something like that).
Anyways, this is kind of interesting because it means that you can't always short, unless your broker has shares to short. I need to look more into this.
So anyways I went back to bed and woke up 30 min later.
The market was level but Apple was shooting up. Some forum posts were saying that Cramer said to buy Apple. I'm not sure if I believe that. Sometimes what he says causes a fluctuation, sometimes it doesn't.
Anyways, Apple was up 6% after yesterdays 10%. Wtf is going on?
I have recently been following NVDA, which is a company that so far is mimicing Apple. They do video cards for computers (including macs). NVDA was up as well. I decided an additional 6% in about 30 minutes is a bit ridiculous. I shorted and covered 30 min later.
10/29/2008 NVDA COVER 1000 $8.6788
10/29/2008 NVDA SHORT 1000 $8.7601
10/29/2008 NVDA COVER 1000 $8.3188
10/29/2008 NVDA SHORT 1000 $8.5612
GAIN: $323.70
Tuesday, October 28, 2008
Prediction: Day 11
Today had a crazy rally. Apple is kissing $100 now. The question is are we over this economic slump or is this just another zigzag of the market.
If this rally happened over a few days, then it would feel like just the norm. However, it happened very fast, which is definitely giving an indicator that we should be paying attention carefully.
I feel a little bit more comfortable with Rule #3 in place. If Apple is between $98 and $102 in pre-market, I will short. Anything else and I am going to sit back and see how events unfold.
If this rally happened over a few days, then it would feel like just the norm. However, it happened very fast, which is definitely giving an indicator that we should be paying attention carefully.
I feel a little bit more comfortable with Rule #3 in place. If Apple is between $98 and $102 in pre-market, I will short. Anything else and I am going to sit back and see how events unfold.
RULE #3
Never act on uncertainty.
Each morning brings new challenges, which can totally change the game plan you made for yourself the night before.
The night before gives you the benefit of having a clear head. You are out of the market and are not stressed. Think about which values in the morning make sense. Also think about which values give you mixed feelings. If the pre-market is showing unexpected movement, then go back to your original gameplan you had the night before. If you are in the uncertainty realm, then wait to see what direction the market takes. You don't need to make a decision at market open. It is better to be safe than sorry.
Each morning brings new challenges, which can totally change the game plan you made for yourself the night before.
The night before gives you the benefit of having a clear head. You are out of the market and are not stressed. Think about which values in the morning make sense. Also think about which values give you mixed feelings. If the pre-market is showing unexpected movement, then go back to your original gameplan you had the night before. If you are in the uncertainty realm, then wait to see what direction the market takes. You don't need to make a decision at market open. It is better to be safe than sorry.
Day 10
Today is loss #2 and again the root cause of it is uncertainty.
Yesterday, I made my prediction that a buy recommendation would be profitable if Apple started in the low 90s pre-market and there was no major news announcements. This morning pre-market was mid 90s. So what did I do? I went ahead with my recommendation, which was completely stupid because I was acting without any insight.
To make matters worse, Apple dipped down to $92 (which was my recommendation), and then shot up to $99. I sold on the way up back to $95 because I wasn't expecting the huge jump to $99.
Again this is a perfect example of having your timing off which results you in always being 1 step behind from the market.
I feel a new rule coming.
10/28/2008 AAPL SELL 100 $94.4624
10/28/2008 AAPL BUY 100 $95.15
LOSS: -$68.76
Yesterday, I made my prediction that a buy recommendation would be profitable if Apple started in the low 90s pre-market and there was no major news announcements. This morning pre-market was mid 90s. So what did I do? I went ahead with my recommendation, which was completely stupid because I was acting without any insight.
To make matters worse, Apple dipped down to $92 (which was my recommendation), and then shot up to $99. I sold on the way up back to $95 because I wasn't expecting the huge jump to $99.
Again this is a perfect example of having your timing off which results you in always being 1 step behind from the market.
I feel a new rule coming.
10/28/2008 AAPL SELL 100 $94.4624
10/28/2008 AAPL BUY 100 $95.15
LOSS: -$68.76
Monday, October 27, 2008
Prediction: Day 10
We are going to have an interesting morning tomorrow. The market did a sudden drop right at close and this affected Apple. Apple is at $92 right now, which means it roughly is at $82 when you factor in the good earnings report. Why is this important? It is important, because Apple hasn't dropped into the $70s yet (without the $10 price adjustment from earnings).
Let's look at other factors. Is there any exciting news lingering anywhere with Apple. Right now no. They only have some new laptops and ipods and it is pretty much a waiting game to get through this holiday season.
How is the market? The Dow is at $8175. Are we going to dip below $8000? I think so, but I don't think just yet. If we do it will be a blood bath.
So tomorrow looks like just another average day where both Apple and the market are on the low end. My prediction will be that a buy at open will be profitable, assuming pre-market is low $90s and there is no major news in the morning.
Let's look at other factors. Is there any exciting news lingering anywhere with Apple. Right now no. They only have some new laptops and ipods and it is pretty much a waiting game to get through this holiday season.
How is the market? The Dow is at $8175. Are we going to dip below $8000? I think so, but I don't think just yet. If we do it will be a blood bath.
So tomorrow looks like just another average day where both Apple and the market are on the low end. My prediction will be that a buy at open will be profitable, assuming pre-market is low $90s and there is no major news in the morning.
Fees
I wanted to talk about fees associated with day trading.
I use scottrade and they have $7 trades. That is $7 both ways. $7 when you buy/short and $7 when you sell/cover.
So you can think of it as $14 per opportunity. That kinda sticks in your side a bit. Today I made $135.89. After fees, I made $121.89. Am I depressed? Not really.
The goal here is to fine tune your day trading abilities and then move on to bigger transactions. Instead of working with $10,000, it would be $25,000. The good news is that the trading fees stay the same. The higher you go, then the less percentage they are of the total profit.
However, by no means should you be focusing on this. The important thing is the repeatable events you are able to take advantage of. Every day offers new opportunities. Once you have proven to yourself that you can reasonably predict these events, then you can start increasing your transaction values.
Depending on how aggressive you are with day trading (meaning almost always each day.... not once a week or whenever you feel like it), you may qualify as being a day trader in the eyes of the IRS. This means that your transaction fees are tax deductible. Again if you are really serious about this, you should be talking with your CPA.
I use scottrade and they have $7 trades. That is $7 both ways. $7 when you buy/short and $7 when you sell/cover.
So you can think of it as $14 per opportunity. That kinda sticks in your side a bit. Today I made $135.89. After fees, I made $121.89. Am I depressed? Not really.
The goal here is to fine tune your day trading abilities and then move on to bigger transactions. Instead of working with $10,000, it would be $25,000. The good news is that the trading fees stay the same. The higher you go, then the less percentage they are of the total profit.
However, by no means should you be focusing on this. The important thing is the repeatable events you are able to take advantage of. Every day offers new opportunities. Once you have proven to yourself that you can reasonably predict these events, then you can start increasing your transaction values.
Depending on how aggressive you are with day trading (meaning almost always each day.... not once a week or whenever you feel like it), you may qualify as being a day trader in the eyes of the IRS. This means that your transaction fees are tax deductible. Again if you are really serious about this, you should be talking with your CPA.
Day 9
I didn't have time to do my prediction the night before. I need to figure out a better way to do this so it doesn't take too much time. I like putting myself in split second decision mode and that is real easy to do when the market is about to open.
I will still talk about my thought process. This morning pre-market was $95ish on apple. Given last weeks upward trend through earnings and no bad news on my 2 favorite sites, I was convinced that we would see an upward trend, so I decided to buy in the morning.
Btw my 2 favorite sites are drudgereport.com and finance.google.com. Drudgereport is the most up to date site I have seen so far. It always has a single page with the most relavent information at the top. If there is a serious financial issue presenting itself, it will be here.
Google.finance.com is another great site, which has important investment news with a graph of how the market is doing for the day.
10/27/2008 AAPL SELL 100 $96.6124
10/27/2008 AAPL BUY 100 $95.2535
GAIN: $135.89
I will still talk about my thought process. This morning pre-market was $95ish on apple. Given last weeks upward trend through earnings and no bad news on my 2 favorite sites, I was convinced that we would see an upward trend, so I decided to buy in the morning.
Btw my 2 favorite sites are drudgereport.com and finance.google.com. Drudgereport is the most up to date site I have seen so far. It always has a single page with the most relavent information at the top. If there is a serious financial issue presenting itself, it will be here.
Google.finance.com is another great site, which has important investment news with a graph of how the market is doing for the day.
10/27/2008 AAPL SELL 100 $96.6124
10/27/2008 AAPL BUY 100 $95.2535
GAIN: $135.89
Friday, October 24, 2008
Day 8 - Timber!!! (Kinda)
Today started out in the shitter, but I made a serious comeback. Still a loss, but a worthwhile loss. I learned a lot.
First off, I decided I'm going to offer my predictions the night before and we can then see how accurate they pan out. Last night I was talking with my buddy and we were going back and forth about the market. The end result was that Apple at $98 was a screaming short for the morning. I was ready to short. I wanted to short.
So 6:25am I get on my computer and load up some finance pages. International markets got hammered the night before, so Apple pre-market is already at $91. Shit! I missed my short. This is another reason why you should never be in the market when it is closed. I could have lost 9% without doing anything (if I bought.... since I normally short I actually would have made a huge profit, but this is too much randomness, which is why RULE #1 exists).
I'll be honest. I didn't know what to do. I didn't know how to react. And I just went with my short recommendation from the night before and boy was that dumb.
I want to talk about why this was a buy opportunity instead of a short opportunity. If Apple is already down 8-9% right at market open, what do you think is easier to do: go up or down? Remember, the DOW is already in the 8300s and it swings back and forth between low 8s to high 8s. Having the 9% loss increase to 12~15% seems pretty unlikely. Sure it can happen. If we broke 8000 in the DOW, it definitely would happen. But I don't see that happening yet, and even if it did, we would be protected by the STOP loss and just call it a learning experience. Remember it is ok to lose. You can't predict this perfectly all the time. So going up seems like a much more reasonable task and it definitely was. The funny thing is that all of this depends on your perspective. Everyone else was in the market prior to Friday morning, so they are already bleeding. We however are thinking 9% loss seems like an overreaction and having that move to 5-6% loss is much more plausible. So they will continue to bleed, but we dive into this opportunity. The stock ticker is still in red, which feels like it was a bad day, however again that depends on your point of view.
So how did I turn this pile of shit into half a turd? First my STOP loss triggered. At first I was pissed off, but looking back I'm glad it happened. A STOP loss is a good mechanism to say "Hey you fucked up... take a step back and figure out what is going on." So I took that step back. I reshorted at 95.50 and covered slightly lower. This was great. I was coming back. Then it was hanging out at $93. I didn't like that. It could go either way. I said to my other buddy, if it goes to 92 I'm going to buy. If it goes to $96, I'm going to short. An hour or so later it hit $96. I shorted, then covered 30 min later and turned my $400ish loss into an $70ish loss.
If you are reading carefully you will notice that I first shorted at 91 then my stop loss triggered at 95. I then reshorted at $95.50. That sounds pretty dumb doesn't it? At first glance it looks dumb. I have been thinking about this all day. It actually makes good sense and I didn't realize this until now. If I didn't have a STOP loss, I would have kept the SHORT going because I wanted it to get back to low 90s, so I could profit. This would have been my down fall, because I wouldn't have been able to seize the moment and take advantage of these quick trades which saved me today. By cutting your losses with the STOP loss, you can now focus on the next task with a clean slate. Instead of begging the stock gods to bring the stock down, I am able to get back my control and make an educated plan of attack on how to continue upward! Thank you RULE #2!
10/24/2008 AAPL COVER 100 $94.8076
10/24/2008 AAPL SHORT 100 $96.0024
10/24/2008 AAPL COVER 100 $93.9963
10/24/2008 AAPL SHORT 100 $95.50
10/24/2008 AAPL COVER 100 $94.9505
10/24/2008 AAPL SHORT 100 $91.52
LOSS: $-73.20
First off, I decided I'm going to offer my predictions the night before and we can then see how accurate they pan out. Last night I was talking with my buddy and we were going back and forth about the market. The end result was that Apple at $98 was a screaming short for the morning. I was ready to short. I wanted to short.
So 6:25am I get on my computer and load up some finance pages. International markets got hammered the night before, so Apple pre-market is already at $91. Shit! I missed my short. This is another reason why you should never be in the market when it is closed. I could have lost 9% without doing anything (if I bought.... since I normally short I actually would have made a huge profit, but this is too much randomness, which is why RULE #1 exists).
I'll be honest. I didn't know what to do. I didn't know how to react. And I just went with my short recommendation from the night before and boy was that dumb.
I want to talk about why this was a buy opportunity instead of a short opportunity. If Apple is already down 8-9% right at market open, what do you think is easier to do: go up or down? Remember, the DOW is already in the 8300s and it swings back and forth between low 8s to high 8s. Having the 9% loss increase to 12~15% seems pretty unlikely. Sure it can happen. If we broke 8000 in the DOW, it definitely would happen. But I don't see that happening yet, and even if it did, we would be protected by the STOP loss and just call it a learning experience. Remember it is ok to lose. You can't predict this perfectly all the time. So going up seems like a much more reasonable task and it definitely was. The funny thing is that all of this depends on your perspective. Everyone else was in the market prior to Friday morning, so they are already bleeding. We however are thinking 9% loss seems like an overreaction and having that move to 5-6% loss is much more plausible. So they will continue to bleed, but we dive into this opportunity. The stock ticker is still in red, which feels like it was a bad day, however again that depends on your point of view.
So how did I turn this pile of shit into half a turd? First my STOP loss triggered. At first I was pissed off, but looking back I'm glad it happened. A STOP loss is a good mechanism to say "Hey you fucked up... take a step back and figure out what is going on." So I took that step back. I reshorted at 95.50 and covered slightly lower. This was great. I was coming back. Then it was hanging out at $93. I didn't like that. It could go either way. I said to my other buddy, if it goes to 92 I'm going to buy. If it goes to $96, I'm going to short. An hour or so later it hit $96. I shorted, then covered 30 min later and turned my $400ish loss into an $70ish loss.
If you are reading carefully you will notice that I first shorted at 91 then my stop loss triggered at 95. I then reshorted at $95.50. That sounds pretty dumb doesn't it? At first glance it looks dumb. I have been thinking about this all day. It actually makes good sense and I didn't realize this until now. If I didn't have a STOP loss, I would have kept the SHORT going because I wanted it to get back to low 90s, so I could profit. This would have been my down fall, because I wouldn't have been able to seize the moment and take advantage of these quick trades which saved me today. By cutting your losses with the STOP loss, you can now focus on the next task with a clean slate. Instead of begging the stock gods to bring the stock down, I am able to get back my control and make an educated plan of attack on how to continue upward! Thank you RULE #2!
10/24/2008 AAPL COVER 100 $94.8076
10/24/2008 AAPL SHORT 100 $96.0024
10/24/2008 AAPL COVER 100 $93.9963
10/24/2008 AAPL SHORT 100 $95.50
10/24/2008 AAPL COVER 100 $94.9505
10/24/2008 AAPL SHORT 100 $91.52
LOSS: $-73.20
Thursday, October 23, 2008
Day 7
Today was a weird day. I didn't like how the market was going and I wanted to get out. I got out too fast, but better safe than sorry.
Another thing is that I had one of those "oh shit" moments at the gym. I was looking at the news and it showed the DOW at 8500. Since apple follows the market, normally that means apple is in the mid 80s. However, they had good earnings so they are offsetted by $10, which means that I should be thinking of them at $85 and not $95.
This kinda surprised me because I was thinking of them at $95, which is an obvious short on an average day.
Another thing to look out for is when the DOW breaks 8000.
10/23/2008 AAPL COVER 100 $95.8475
10/23/2008 AAPL SHORT 100 $96.76
GAIN: $91.25
Another thing is that I had one of those "oh shit" moments at the gym. I was looking at the news and it showed the DOW at 8500. Since apple follows the market, normally that means apple is in the mid 80s. However, they had good earnings so they are offsetted by $10, which means that I should be thinking of them at $85 and not $95.
This kinda surprised me because I was thinking of them at $95, which is an obvious short on an average day.
Another thing to look out for is when the DOW breaks 8000.
10/23/2008 AAPL COVER 100 $95.8475
10/23/2008 AAPL SHORT 100 $96.76
GAIN: $91.25
Wednesday, October 22, 2008
I love bad news!
Sometimes. I love it when I can profit from the bad news. I definitely don't like it when the bad news concerns me.
The point I am making here is that when everyone thinks the sky is falling, money can be made because you can short stocks.
Shorting a stock is simply betting that the stock will go down and then you can buy it back.
The real advantage we have here is that people are scared to short stocks. Seriously. Go ask a group of 5 friends. Unless they are already into day trading, then chances are they are scared. It sounds scary. Technically you can lose an infinite amount of money. That sounds really scary. If I buy a stock for $100 and it goes to $0, I only lose $100. However, if I short a stock at $100, and it goes to $1,000,000, well then I owe about a million bucks.
The reality here is that since we are day trading and since we have insurance, the infinate loss isn't going to happen. (knock on wood)
The point here is that not shorting stocks is a missed opportunity.
Shorting is also very important, because it is easier for a stock to go down than to go up. If the stock goes up, it is most likely because of a company doing well or positive rumors. That is a lot harder to do than doing nothing or sucking. If a stock is stagnant for awhile, people can get tired of it and that causes the stock to go down. Did the company do bad? No, the buyers got annoyed with the stock, so the moved on. Another fact is that hedge funds love shorting the fuck out of stocks. They do this to manipulate the market and get investors scared so they sell their holdings. This is good news for us, because it helps keep this zigzag going.
Another major advantage right now is that our economy is doing really bad. This means it is MUCH easier to have stocks go down, than up. Seriously. Go look yourself. The evidence is staring you in the face. As soon as the DOW went back up to 9500 with all the good news, it took days to go below 9000 again because it is so much easier right now to have bad news.
Does anyone notice a pattern?
The point I am making here is that when everyone thinks the sky is falling, money can be made because you can short stocks.
Shorting a stock is simply betting that the stock will go down and then you can buy it back.
The real advantage we have here is that people are scared to short stocks. Seriously. Go ask a group of 5 friends. Unless they are already into day trading, then chances are they are scared. It sounds scary. Technically you can lose an infinite amount of money. That sounds really scary. If I buy a stock for $100 and it goes to $0, I only lose $100. However, if I short a stock at $100, and it goes to $1,000,000, well then I owe about a million bucks.
The reality here is that since we are day trading and since we have insurance, the infinate loss isn't going to happen. (knock on wood)
The point here is that not shorting stocks is a missed opportunity.
Shorting is also very important, because it is easier for a stock to go down than to go up. If the stock goes up, it is most likely because of a company doing well or positive rumors. That is a lot harder to do than doing nothing or sucking. If a stock is stagnant for awhile, people can get tired of it and that causes the stock to go down. Did the company do bad? No, the buyers got annoyed with the stock, so the moved on. Another fact is that hedge funds love shorting the fuck out of stocks. They do this to manipulate the market and get investors scared so they sell their holdings. This is good news for us, because it helps keep this zigzag going.
Another major advantage right now is that our economy is doing really bad. This means it is MUCH easier to have stocks go down, than up. Seriously. Go look yourself. The evidence is staring you in the face. As soon as the DOW went back up to 9500 with all the good news, it took days to go below 9000 again because it is so much easier right now to have bad news.
Does anyone notice a pattern?
Day 6
Today was the day after earnings. The stock jumped up about 10%. Missed opportunity? Hell no! Rule #1 says never be in the stock market, when it is closed.
Apple has been getting rocked for awhile. After hours trading yesterday showed that the stock was going to head up after earnings.
The thing here is that the economy still sucks and Apple tends to follow the market.
I was expecting the stock to do a jump within a few minutes of open and then come back down. My reasoning here was that this is the first serious good news that apple has had, so people are going to want to buy. Buying causes the price to go up and not everyone is up at the exact minute of 6:30am, so normally you can get the best price right on that second.
10/22/2008 AAPL COVER 100 $97.88
10/22/2008 AAPL SHORT 100 $99.0001
10/22/2008 AAPL SOLD 100 $98.35
10/22/2008 AAPL BOUGHT 100 $97.27
GAIN: $220.01
Apple has been getting rocked for awhile. After hours trading yesterday showed that the stock was going to head up after earnings.
The thing here is that the economy still sucks and Apple tends to follow the market.
I was expecting the stock to do a jump within a few minutes of open and then come back down. My reasoning here was that this is the first serious good news that apple has had, so people are going to want to buy. Buying causes the price to go up and not everyone is up at the exact minute of 6:30am, so normally you can get the best price right on that second.
10/22/2008 AAPL COVER 100 $97.88
10/22/2008 AAPL SHORT 100 $99.0001
10/22/2008 AAPL SOLD 100 $98.35
10/22/2008 AAPL BOUGHT 100 $97.27
GAIN: $220.01
Mistakes Happen
Be careful when you do your STOP loss.
On 10/16 I accidentally did a LIMIT order instead of a STOP. This caused me to cover my short instantly. Within this timeframe the stock moved 50 cents, so it was a $50 mistake.
Lesson learned. Be extra careful. This is real money.
On 10/16 I accidentally did a LIMIT order instead of a STOP. This caused me to cover my short instantly. Within this timeframe the stock moved 50 cents, so it was a $50 mistake.
Lesson learned. Be extra careful. This is real money.
RULE #2
Insurance!
It is ok to be wrong. Just make sure you plan for the possibility. You do this by insuring yourself.
Before you make any trade, make sure to setup a STOP loss.
Apple right now is around $100 a share. Right now I would consider 4% a loss I am willing to have. So that means if I buy 100 shares at $100, I will immediately set a STOP loss at $96.
If I short 100 shares at $100, then I will immediately set a STOP loss at $104.
This is VERY important. Most people can't do this as a fulltime job, so they need someone watching the stock market when they are busy doing something else (driving to work, at the gym, in a meeting, etc).
The one annoying thing about a STOP loss is that if you decide you want to get out of your buy/short, then you need to cancel the STOP loss first, then make your trade. Sometimes this can cause missed opportunity, since we are looking for a gain in the amount of cents to dollars sometimes, and time causes fluctuation delays in the stock price. I don't know of a better solution yet for this. Just practice and get as quick as you can at it. It is more important to be protected, than not protected.
It is ok to be wrong. Just make sure you plan for the possibility. You do this by insuring yourself.
Before you make any trade, make sure to setup a STOP loss.
Apple right now is around $100 a share. Right now I would consider 4% a loss I am willing to have. So that means if I buy 100 shares at $100, I will immediately set a STOP loss at $96.
If I short 100 shares at $100, then I will immediately set a STOP loss at $104.
This is VERY important. Most people can't do this as a fulltime job, so they need someone watching the stock market when they are busy doing something else (driving to work, at the gym, in a meeting, etc).
The one annoying thing about a STOP loss is that if you decide you want to get out of your buy/short, then you need to cancel the STOP loss first, then make your trade. Sometimes this can cause missed opportunity, since we are looking for a gain in the amount of cents to dollars sometimes, and time causes fluctuation delays in the stock price. I don't know of a better solution yet for this. Just practice and get as quick as you can at it. It is more important to be protected, than not protected.
Place that trade (cough) bet
The goal of the game here is we are trying to find a pattern in the emotions of people. People tend to buy or sell all at once and it comes in waves. Look at a stock graph and you will notice that normally it consists of up/down/up/down/up/down type movements. We are predicting those movements.
It is important to be doing this with a good solid company. I only say this because you want to keep milking this for as long as you can. If a great company has a bad day, it will come back sooner or later. What goes up, must come down. If a great company keeps being successful, it will eventually come back down. We want to keep that up/down movement going. If you pick a bad company, it might tank and then just stay steady for months to years.
Always be on the lookout for a good stock. Watch it daily over the years. How does it do with earnings? Do they guide low on purpose? Does it tend to go with the market? Does it follow any other stocks?
It is important to be doing this with a good solid company. I only say this because you want to keep milking this for as long as you can. If a great company has a bad day, it will come back sooner or later. What goes up, must come down. If a great company keeps being successful, it will eventually come back down. We want to keep that up/down movement going. If you pick a bad company, it might tank and then just stay steady for months to years.
Always be on the lookout for a good stock. Watch it daily over the years. How does it do with earnings? Do they guide low on purpose? Does it tend to go with the market? Does it follow any other stocks?
Day 1 - 5
I'll try to do this on a daily basis.
I want to document my success over the last 5 days. Again this is using only $10,000.
10/21/2008 AAPL COVER 100 $93.1475
10/21/2008 AAPL SHORT 100 $96.3201
GAIN: $317.25
10/20/2008 AAPL COVER 100 $97.0463
10/20/2008 AAPL SHORT 100 $97.3637
GAIN: $31.74
10/17/2008 AAPL COVER 100 $97.4199
10/17/2008 AAPL SHORT 100 $99.08
GAIN: $166.01
10/16/2008 AAPL COVER 100 $93.095
10/16/2008 AAPL SHORT 100 $97.67
10/16/2008 AAPL COVER 100 $98.08
10/16/2008 AAPL SHORT 100 $97.5501
GAIN: $404.51
10/15/2008 AAPL COVER 100 $101.84
10/15/2008 AAPL SHORT 100 $103.9912
GAIN: $215.12
I want to document my success over the last 5 days. Again this is using only $10,000.
10/21/2008 AAPL COVER 100 $93.1475
10/21/2008 AAPL SHORT 100 $96.3201
GAIN: $317.25
10/20/2008 AAPL COVER 100 $97.0463
10/20/2008 AAPL SHORT 100 $97.3637
GAIN: $31.74
10/17/2008 AAPL COVER 100 $97.4199
10/17/2008 AAPL SHORT 100 $99.08
GAIN: $166.01
10/16/2008 AAPL COVER 100 $93.095
10/16/2008 AAPL SHORT 100 $97.67
10/16/2008 AAPL COVER 100 $98.08
10/16/2008 AAPL SHORT 100 $97.5501
GAIN: $404.51
10/15/2008 AAPL COVER 100 $101.84
10/15/2008 AAPL SHORT 100 $103.9912
GAIN: $215.12
$10,000 (cough) $25,000
I just realized that a margin account has a requirement of $25,000. At least this is true with Scottrade, which is the broker I use. Other brokers might have different requirements.
The good news is that you don't need to maintain a $25,000 balance. You may need to borrow some money from a family member and then give it back. Be creative. I have had less than $100 in my margin account and I was able to keep it without any warnings or notices.
A slight bump in the road to get started, but a bump that can be overcome.
The good news is that you don't need to maintain a $25,000 balance. You may need to borrow some money from a family member and then give it back. Be creative. I have had less than $100 in my margin account and I was able to keep it without any warnings or notices.
A slight bump in the road to get started, but a bump that can be overcome.
Margin Account
You need a margin account. This is a special type of account, where you can take out loans from the broker.
Relax. You aren't going to be using this for betting on margin. You are in control. Not me. I'm not going to sneak into your account and bet on margin. The margin account allows you to day trade. Otherwise, you have to wait 3 days for the money to clear on your most recent stock trade. That is a major problem, since we need to be able to trade at a moments notice.
The reality here is that you actually still are following the 3 day rule, but because you have a margin account you take out small loans behind the scene to give you the illusion of having enough money to continue trading.
Relax. You aren't going to be using this for betting on margin. You are in control. Not me. I'm not going to sneak into your account and bet on margin. The margin account allows you to day trade. Otherwise, you have to wait 3 days for the money to clear on your most recent stock trade. That is a major problem, since we need to be able to trade at a moments notice.
The reality here is that you actually still are following the 3 day rule, but because you have a margin account you take out small loans behind the scene to give you the illusion of having enough money to continue trading.
$10,000
Everyone has $10,000. If you don't then work hard and get it. It is within everyone's reach even if it takes months to a year to get. If you don't have it now, don't worry. These rules of trading aren't going anywhere. They will keep working, when you come back to us.
Long term investments!?! Not anymore!
Take this with a grain of salt. Do not touch your retirement account. Keep that in mutual funds with a financial planner glancing at it every so often. You don't want to think about it.
The money you want to use to make some immediate money needs to be available to wake up each new week day and make even more money. It can't do that if it is tied up in a long term investment. Not only that it is against Rule #1, so throw it out the door.
But but but I think stock A is going to go to the moon in T-minus 5 seconds. Well, then if you know of such a sure thing then put your money where your mouth is and go do it.
This is exactly where people lose their ass. People also made serious bank here. There are always 2 sides of the coin. If you get stuck with the bad side, then you are stuck in the reality that you fucked up. There is no reset button.
The money you want to use to make some immediate money needs to be available to wake up each new week day and make even more money. It can't do that if it is tied up in a long term investment. Not only that it is against Rule #1, so throw it out the door.
But but but I think stock A is going to go to the moon in T-minus 5 seconds. Well, then if you know of such a sure thing then put your money where your mouth is and go do it.
This is exactly where people lose their ass. People also made serious bank here. There are always 2 sides of the coin. If you get stuck with the bad side, then you are stuck in the reality that you fucked up. There is no reset button.
RULE #1
Never ever ever ever be in the market when it is closed. Sometimes it pays off. Sometimes you get totally robbed. Sometimes it stays the same. The point here is that when the market is closed you are no longer in control.
You want to be in control. And you can accomplish this by only being in the market when the stock price is on a continuous path.
This doesn't mean that stocks don't suddenly drop or rise during normal hours. That is fine, because there are ways to protect yourself from that. However, if you are in the market over the weekend and a report comes out saying some company is committing fraud, then you are a sitting duck and can do nothing about it.
STOP BEING GREEDY. GET OUT OF THE MARKET WHEN THE DAY ENDS. NO MATTER WHAT!
You want to be in control. And you can accomplish this by only being in the market when the stock price is on a continuous path.
This doesn't mean that stocks don't suddenly drop or rise during normal hours. That is fine, because there are ways to protect yourself from that. However, if you are in the market over the weekend and a report comes out saying some company is committing fraud, then you are a sitting duck and can do nothing about it.
STOP BEING GREEDY. GET OUT OF THE MARKET WHEN THE DAY ENDS. NO MATTER WHAT!
OMG I LOST MY ASS!
This blog was created so that I can document my return to profitability. I love to day trade and yes it is a gambling addiction. I get scared to bet $100 in Vegas, but $100k in the market? Sure why not.
I recently lost a shitload of money and I am taking a step back and looking at where this went wrong. I have the ability to get on a serious roll with day trading, but then I get totally sideswiped and lose my shirt.
This blog will be used to create rules which will protect me from my own greed as well as others who follow.
I recently lost a shitload of money and I am taking a step back and looking at where this went wrong. I have the ability to get on a serious roll with day trading, but then I get totally sideswiped and lose my shirt.
This blog will be used to create rules which will protect me from my own greed as well as others who follow.
Subscribe to:
Comments (Atom)