Today was the worst day of my P&L ever!! This is very disappointing to me for a few reasons. One of them being I believe I am a lot better than how I did. The other, the main reason is that I got stopped out on every single trade. After I look at it all of the stops were in the wrong place or were placed to tightly on the trade. I traded LAZ and I had a very nice entry point right under R4 and I was shorting it. The trade was a low risk short right under the R4 pivot. I set my stop right above of the R4 pivot. If I would have been 5 cents looser on my stop I could have profited of at least a dollar decline on this stock. That would have been almost a 10 to 1 reward to risk on the trade which is phenomenal in all traders’ eyes. This same thing happened to me on 5 other trades throughout the day. The trade stopped me out, and then went against me a few cents more, than went in my favor greatly. If I had not getting stopped out I would have had 5 amazing trades but I did not get that because of a few lousy cents. If I had been willing to give up a few more cents on the downside I could have made so much more on the upside. I realized my entry points are very good, and I’m picking great levels according to the head technical trader on the desk, I just have to work on placing stops. Placing the stop is the art involved in trading and that is what I really need to work on.
James B. - Trainee
First Down Day of the Market
Today was the first day that I was on the desk when the market had a big sell off. I realized that I am around so many talented and bright people. Not that I did not think that everyone was smart on this desk, I just did not realize how everyone could turn on a dime and reverse their though process in a matter of millisecond. The fund was up substantially on the day. Then our senior PM’s and Traders realized the market was turning. Before I knew it we sold a lot of the long positions that we had and we were acquiring shorts. This was done to lock in gains. Our chief market strategist said that this day could have gone from up 30 thousand to down 5 or 6 thousand in a matter of an hour. To me the firm as a whole turning everything around this quickly and precisely was amazing. This is why we are a hedge fund not a long short fund. Making moves like this is what is going to separate us from our competition in this business. Being able to lock in profits when the market is turning against you is an accomplishment in my mind. Over time I believe this will improve our returns as to everyone else.
Flat On the Day
Today, my day started out bad. I had two loosing trades in the same name. During the lunch time break I was listening to one of the senior traders on the desk tell me that it should not be a game of emotion and it should be a game of arithmetic. I felt this hit home with me because I felt when I was using larger size I started to have worse entry points and tighter stops. The senior trader on the desk described it like this: if you make or loose minimal P&L using a small amount of shares and you do all the other things the same way you should double your outcome if you doubled your share size. This was not happening for me all of yesterday and in the morning today. I realized I had to get back to the trading that I was doing when I was making the small P&L and I did this. I made a trade the way I used to trade before I increased my size. I felt very confident about this trade and I broke even on the day on one trade after having 3 negative trades. I have to learn to keep my emotions out of my trading and just abide by strict trading rules.
Rallying Back
Today during the morning trading secession I was down a sizeable amount of money from what I am used to using. I was down more money in the first 2 hours of trading today then I was in my whole trading career. I realized that I had to find a great trade on almost perfect levels to redeem myself in my own mind. One of my names had a late day rally and I decided to short it against R4. This philosophy worked out great. I made a sizeable chunk of my P&L back. I realized that I am much more careful in picking trades and levels when I am down and that this is a good concept to know. Knowing how I trade when I am down I can convert that to how I trade all the time and this could help me by knowing what trades are my most profitable trades and which trades I loose on. This helps give me a better perspective of when to maximize my share size on what positions I see fit.
Stop.
This weekend as the first time I actually read threw my journal on trading. I realized that the few loosing trades that I did have, the losses have been due to not placing stops in the right place or not placing stops at all. The trades that I placed stops I got stopped out directly on the penny and then the trend reversed and the trade would have went in my favor. The other trade that I lost on was because I was not fast enough on the keys and the stock moved very fast and I did not have a chance to enter my stop loss. I realize now how important stops are and when to use them. I am just unsure where the best place to put stops is. One of the senior traders on the desk gave me some direction by telling me to set your stops at .08 or .09. This is because some stocks tend to move in ranges of 10 and when it hits the numbers with the zeros on the end the stock usually reverses. Stops are a very important part of trading and it is extremely important to have stops planned out before you ever enter a trade.
The After Shock
Monday we did yoga as a firm. It was my first time doing it in my life. I never knew how involved it was. I personally played college soccer and it was a work out for me. The next day when I woke up parts of my body hurt that have not bothered me in my entire life such as my butt, my abs, and my lower back. It was not like a painful hurt it was like the pain you get the day the day after I good hard workout. I have a totally different opinion of yoga now then I have ever had before. Being athletic and playing competitive soccer for since I was four years old I never thought of anything such as yoga or any other indoor meditation type of work out. I now have a different perspective on anything having to do with yoga. I would defiantly do yoga again.
Bernanke and Volcker Ruined Me
Fed Chairman Ben Bernanke testified yesterday during market hours a House Financial Services Committee Hearing on Capitol Hill. While he testified Paul Volcker, Chairman of the President’s Economic Recovery Advisory Board also spoke. I was in a trade during this time period which was around 2PM EST. The market sold off when they started speaking. The stock that I was in went down 10 cents and I got stopped out. I should have listened to the senior traders here at the firm; they were all saying that with them on CNBC the market would suffer. Now that I think about it I should have exited that position immediately as soon as Jeremy K and Mark M said that it was going to hurt the market. This kind of thing happens to inexperienced traders all the time, I’m glad that this happened to me early in my career instead of later when I would have been using more capital.
My First FED Day
Today was my first day sitting on the desk when there was a FOMC meeting. I never realized how many things can affect the market. Everything from the words that are used to the rate that is charged both between banks and between the FED and banks can affect the stock market. Today the news fell right in line of where it should have so the market only slightly rallied. So many different traders look at this decision in many different ways such as a portfolio standpoint and an intraday standpoint. A simple change in the language can greatly affect the market place. Today’s announcement gave a lot of comfort to the investment community and helps stabilize the market. Our Head Futures trader at The Frommer Group was so excited he was like a kid on Christmas, the best thing is he gets that feeling and excitement 8 times a year. Today could have been more exciting and the market could have been more volatile but it was a good experience for my first experience of being on a trading desk.
Thinking Differently
Yesterday I was playing videogames in the morning before I started my day off. I was playing Call of Duty online and I noticed myself thinking differently. By this I mean I found myself trying to predict what my opponents were trying to do. This found me as weird because I usually not play that way. I would try to out play people just on skill not using my brain to predict how they’re going to react to what I do. I never thought of playing videogames in that manner like I was playing chess. By the time I was done playing for the short period that I played I noticed my statistics were remarkably better than usual. I can see how thinking like this can help you out in everything you do.
Knowledge the Most Precious Commidity??
Knowledge is the most precious commodity. This is because in economic terms people will pay more for an additional unit of knowledge then they will pay for an additional unit of anything else (well that and sports playoff tickets). For example people pay more for graduate school per credit then they pay for undergraduate credits. This is why I will continue to keep reading and learning about trading. I feel I should involve myself with anything and everything that could help me in this quest for knowledge. It is a fact that people will never stop learning until you die. That is why I strongly believe why you should take in everything and everything of something that interests you.
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