New shorts: AFAM (38.06)
Playing the high volume sell-off.
Comments »Trade: HK, EDU, FXP, APWR
Completely sold longs: EDU ( -6.40% at 69.78, bought at 74.68)
Partially sold longs:
HK ( +8.15% at 28.70, bought at 26.51)
FXP ( +20.01% at 89.0, bought at 74.11)
APWR ( -19.20% at 20.44, bought at 25.20)
Averaging out of APWR. Which is my smallest holding.
Comments »White gloves?
Okay sir…
Fly is requiring us to wear white gloves today. Anyway, I’m over at WallStreak catching some waves. Carefully watching USO here. I may dump my HK soon if USO doesn’t get it together.
Meanwhile, does anyone know when Ping Pong comes on in the olympics?
Comments »Position and Sizing Part 2: From a Day Trader’s Perspective, by Stewie
I hope you caught Mac’s (a great chartist blogger) article on Position and Sizing from a Swing Trader’s Perspective. If you haven’t, you can read it here tonight. Well, now for part 2 which is for you day-trader’s out there. This was contributed by Stewie, from the Art of Trading, who has quite the reputation as a successful day-trader over at WallStreak. Big thanks for all your coaching and support!
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Position Sizing: Finding Your MAX Pain
Position Sizing(P.S.) is a very important part in trading survival. Improper P.S. can lead to overtrading, taking tiny profits while letting losing trades run against you and turn into huge losses. In short, if not done well enough to fit your level of comfort it will lead to EMOTIONAL TRADING. Which is the single most biggest enemy to a trader.
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In my opinion, P.S. is where trading becomes an art. Every trader has their own level of comfort and pain. If i am managing a portfolio worth $100,000 and i take a $5000 loss on a trade, then i will get emotional and start to notice changes in my behavior in front of my computer screen. I will start to curse, sweat from my forehead a little, pace around the room or start to desperately scan thru my stocks to find the next trade that’s gonna ‘get me out‘ of this loss. lol! Never ‘gets us out’ does it??!!
If anything, that loss will likely get bigger.
Position sizing is about treating every SINGLE trade on it’s own merit and you MUST have a MAX pain stop loss in mind before that trade is executed(and always have a profit target). Having said that, my max pain loss is different then yours. EVERYBODY’s MAX PAIN IS DIFFERENT!!!! Also, my max pain stop loss is different when i am in a winning streak(my max pain stop loss tends to increase after a nice winning streak) and vice versa in a losing streak(i tend to be very chicken and cut losses very quickly when i am trading like shit).
TRADING IS AN ART! Not a science in my opinion.
The key is to figure out a number, a stop loss figure, that once it gets hit, you’ll admit you are wrong, sell the position and move on to the next trade without affecting your emotional state of mind. If you feel emotional after that loss, then you have likely crossed your MAX LOSS PAIN you are now trading on desperation to recoup that loss and you are trading to get even rather then focusing on nailing the next trade and placing that ONE TRADE that’s making your mouth water.
During winning streaks where my mind is at ease, i am seeing moves in “3D” and i am executing trades when i am in “the zone” and i am moving from one winning trade to another with flawless execution then i will tend to get very aggressive with my position sizing as the market is likely VIBING WITH MY STYLE (I am trading in my comfort zone) and i can put up to half my account in a DAY TRADE. My comfort zone is a momentum market, a runaway market which is setting up Holy Grail Setups, Wedges/Flags patterns and volume is rampant and stocks are closing on their highs/lows on heavy volume.
I like to think of myself as a disciplined trader: when i am not vibing with the market and i am making bad market calls or choosing poor stock selection to maximize the current market’s behavior then i will stop trading all together. When i do place the trade, i will test out tiny positions to see if i am “seeing em right.” If not, then i will go on trading probation and hibernate until the tides turn back in my favor.
Personally, my MAX PAIN on any position is $2000. I rarely put more than $200,000 in a stock idea. I usually average between $100,000 to $150,000 on any single day trade, AVERAGE $125,000. So MAX LOSS of $2000 and an average of $125,000 in a single trade, you do the math. I can eat a $2000 loss and move on in a non-emotional state of mind to hunt down the next winning trade.
Obviously i am shooting to be down as little as possible. This is where THE IMPATIENT TRADER in me comes in. I know that winning trades work almost right away. A trade that is fighting me early on or is not moving within 10 minutes after my entry will likely NOT WORK and TURN INTO A LOSER! I repeat, your style and your max pain will be different! I CANNOT STRESS THAT ENOUGH. You need to find your comfort zone.
I am mostly a day trader but i do Overnight Holds on some trades. Depending on my confidence level, the size of this trade will vary greatly. Can go from 500 shares to 10,000 shares. This Is Where Trading IS an ART. Getting a feel for your trading will require you to TRADE and finding out what kind of trader you are, what is your MAX PAIN, what kind of market condition will make your mouth water. Trade only when you are thinking rationally, not emotionally.
Good luck. ” -Stewie
Surf report… LDK beats the street; China gets the gold, and the red
- Weakness in Chinese stocks: The9 Limited (ADR) [[NCTY]] , China Finance Online Co. (ADR) [[JRJC]] , Sohu.com Inc. [[SOHU]] , SINA Corporation (USA) [[SINA]] , Sohu.com Inc. [[SOHU]]
- LDK Solar Earnings Wave: LDK Solar Co., Ltd. [[ldk]] reported great numbers, I mean smashed analysts. Ragin and I were just talking about this play this weekend, and if you missed earnings, then look to play this either way tomorrow. 1) FSLR is still my benchmark, so, if FSLR decides to shape up and gets over 160 (yesterday’s high) + LDK squeezes up, then all solars are a buy. 2) If FSLR skids down, then fade the rallies on stocks up in empathy like Yingli Green Energy Hold. Co. Ltd. (ADR) [[yge]] , Canadian Solar Inc. [[csiq]] , JA Solar Holdings Co., Ltd. (ADR) [[jaso]]
- Short any team challenging the U.S. Men’s Basketball Team
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Vix under 20, USO at 92… big move coming up
I want to get bullish, but righte now I don’t see proper leadership in stocks. The only thingworking well is tech, as money flows out of energy into tech plays. This rally will come to a halt when energy hits a bottom.
Today was a good time to think about the medium-term outlook for our market. So, I compared the Vix with USO (market volatility versus energy) since I believe that is the main variable affecting the “no-fear” factor in our market (put/call ratio is low, and Vix is dead). It seems like the fall in oil + the rise in the $ is sucking in a lot of confident traders, and scaring off a lot of weak bears. That’s why you see some of the ugliest stocks out there rallying… like the airlines, and some food/restaurant stocks, blasting off their lows. That’s not what you want to see as a sign of a long term reversal in the markets. Right now, it’s okay to ride these bear-rallies, but just keep in mind, that the Vix is low and USO is approaching another support level, which is probably a good time to take profits in longs. I made a first entry position into some commodities on this move, and will add some shorts if the Vix gets to 19. I feel a turning point in this rally coming soon, so keep your positions small, and if a pick doesn’t work right away, cut it.
Where you gonna go Vix? The Vix has a wedge triangle (I didn’t draw it out), signaling a big move soon, but in which direction? I think it goes back up on an energy bounce, or down on gold’s drop. I’m leaning towards the bounce.
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