Zen sees possible “real” bullish harami in $DUST

Apparently, the bullish harami continuation pattern on my $NUGT wasn’t doing too well today.  I gave back all paper gain from yesterday and took a tiny losses for the work.  I also took a small losses on $ABX as well.

Not to be discouraged, $DUST now shows a possible bullish harami “at the bottom” of the trend with supports on the two moving averages lines.  Of course, the bullish harami will have to be confirmed tomorrow with price action taking out today close.

I bought $DUST this morning looking to see if this bet will pay off tomorrow.

My 2 cents.

Usually, a bullish Harami happens at the bottom of the trend to signify a bullish reversal.  In this case, a breakout of the Friday inside bar to the upside that takes out the previous high two trading days ago reflects a bullish continuation pattern.  Since it has taken out the inside bar from Friday, I will call the candlestick pattern “the bullish Harami continuation pattern”.   Don’t bother to google it; there is no such thing.  I just make it up.  Whatever works for me, eh? (grin).

Take a look at the daily chart below.  I believe gold minings and gold is heading up.

I like to see price action takes out the recent pivot high at $13.54 established in May 9th.

Yes, I bought back $NUGT and $ABX this morning.

My 2 cents.

Last time I talked about tilting and its severe effect on our trading mind.  While being wrong can stir our sensitive ego into an excited mode; there is nothing more inciting to tilting than a position size that is larger than you can handle.

And I’m not talking about the size of your wallet.  Sure, you can have a huge wallet but your mind may not be able to handle the psychological effect of the losses due to your position being too large.  What most people forget is that the size, like leverage, cut both way.

With a position size larger than you can handle, a small negative turn of the stock can appear to be quite large and uncomfortable to you in term of the losses or profit give-back you are witnessing.  Sure, it all looks good when the stock is heading in your favor; who doesn’t like to see the profit multiply in spade?  But the moment price action turns the wrong way and you don’t act fast enough, you will not only give back your profit, you will lose more than you are prepared for if you don’t have a hard stop to protect yourself.

The problem here is that the moment your trade has done well on the get go; most people cannot handle the give-back of the profit when the stock corrects.  They are seeing green, why should they close out their position to cut losses or break even when there is still possibility of green later on?

Mentally, it is much harder to take a small losses when you have already seen paper profit earlier.  There are two things working against you:

1. You regret not taking your profit when you think you should
2. You don’t like to take losses in such large amount (due to your over-sizing position) even though the stock only corrects within the daily ATR (average true range).

The first item is usually the most common and the remorse can be quite debilitating to your mental stage; sometimes to the point of impairing your normal trading process.

The second item above compounds to your mental stage from the remorse and may push you to tilting if you do not act to stop the bleeding when price continues to go against your position.

Over-sizing in your position can blind you to the true direction of the price-action.  By being more fearful when you normally would not when you are holding a normal size position, your emotion causes you to lose the objective observation of the price action.  You start to see thing that isn’t there.

From my experience on the SP500 trade I discussed last time, when I saw the losses that was six times more than my morning win, I couldn’t handle that sudden turn of event so I tried to double-down to make it right.  The interesting thing was that, hindsightwise, I was correct all along in the overall direction of the SP500 trade.  I was just wrong on the extent of the retracement.  If I had given my position more “room” to breath with a 2% maximum stop loss from my original size, I would have made a killing by the end of the day.  But my doubling down after seeing my third trade turned into a losses exceeded my comfort zone in the position size department, I lost my objective perspective of the price action.  Not only did I lost perspective, I lost my ability to apply money management by cutting my losses before it got me to tilt.  If I had just walked away from the losses even though it was six times my first win, it would still be a manageable losses.  Perhaps a 3% of the portfolio instead of 15% I ended up with.

But it is easy said than done when you see unexpected losses due to fast market or your hesitation to act that are larger than the normal losses you allow yourself.  If you happen to have a large position size when the sudden turn of event happens, you are one step away from tilting.

After I took my volunteered hiatus from trading to find myself, I realized that in order to play this market to win, I need to be honest with my strengths and weaknesses.

I see my strengths as:

• being quick to act
• finding stocks that fit my trading style

I see my weaknesses as:

• susceptible to tilting
• easily spook

So when I came back to trade, I began to tailor my trading style according to my strengths and weaknesses.  Knowing that I am susceptible to tilting, I swear off averaging down when I’m losing.  Knowing that I’m easily spooked, I will cut my losses quickly by taking advantage of my strength to act quickly.

I also started to build up my tolerance for position size.  In other words, I would start small and then build up the size in incremental level over a period of time so that when I was losing; it would not affect my objective observation.

Remember, position size is a very personal matter so you have to be truthful to yourself.  DO NOT ever compare your position size to anyone else.  What is big to me may be peanut to someone else and vice versa.

You have to find an optimal position size that will allow you to see the truth of the price action even though you are sitting on a loss.  Trust me, in time, your optimal position size will increase as you start to bank coin following your successful trading system.

For those who have been reading my ego series, you know there is a catch.

What is the catch?

Before you even get to the issue of finding your optimal position size for your trade, you need to do the following:

• master your thought process to develop your trading mind
• master your focus to help your trading mind overcomes your natural mind
• master your chart reading skills with the technical tools that fit your trading style
• understand your strengths and weaknesses so you can form a trading style that increase your ability to trade successfully

Only after you are proficient in the above steps do you even have to worry about your optimal position size.  In the meantime, trade small until you get the hang of it.  Otherwise, you may become another number that support the statistic that only a few percentages of the trader can ever win consistently in the market.

This is my final post on the Where Ego Dares series.

Ain’t you forgetting something?

Oh, you mean how can I forget to talk about greed when we are dealing with the subject of ego?

I’ve already discussed greed in my prior post so it will be redundant if I bring it up here again.  Please click here to re-read it if you want.

Hope you all enjoy it.

My 2 cents.

I’ve been notified by The Fly that I did not make the cut of getting 3% of traffic; therefore this is my last post as an Interim Tab Blogger.

It has been a privilege and pleasure to blog among so many great bloggers here so I’m grateful for the experience.

I’ll continue to blog at the blogger network when I’ve some new ideas.

However, I’ll post my daily portfolio adjustment at my own site if anyone is interested.  I learn that if you keep a daily journal of your trading activity everyday, you will see subtle improvement as a trader; therefore, I encourage trader to keep a daily journal either at your own blog or on your personal log book.

Bon Voyage to everyone and thanks to my loyal readers for reading my blog.

Zen out.

Today was a mixed bag of nuts.

Market opened negative but was able to come back up for air for a little bit before it sank back to the bottom of the sea.

First thing first, $UNXL was quite a disappointment.  On the bright side, I was stopped out for “another” losses in the morning for the nth time of trying to catch the falling knife.  The good news was that I stayed away from this lemon after I was out.  For those trying to catch the falling knife during the day day-trading this one will be getting deep cuts all over.  Not to mention traders getting “tilted” across the board.  Of course, only the ones who shorted this one would be walking to the bank.

With $NUGT opening down, I immediately reduced position size but later in the morning, I was stopped out of the rest of my $NUGT position which pushed me to give back my paper gain from my re-entry yesterday.  Good news is that I get to keep the profit I’ve made yesterday before the re-entry.

Having stopped out of $NUGT, I decided to add to $ABX as a substitute.  $ABX was doing fine in the morning when it took out yesterday high.  Unfortunately, by afternoon, it gave back all the gain and I was stopped out at breakeven.

I like $TBF price action and have added more today to round up my position size.  Let’s see if it can break out to the upside next week.

$CERS price action looked good in the morning so I added; but by the end of the day, price fell apart due to a negative DOW so I dumped my whole position near the bell to raise cash.  I like to take my losses when it is still small.

$CRIS was struggling all day so I dumped it near the bell as well.

$AMRN was doing great in the morning but was also affected by the negative DOW.  At least, it only gave back the gain and did not turn negative for the day.

$TINY, on the other hand, finally wakes up.  Several start-up technological companies inside $TINY portfolio are getting attention:

Metabolon, Inc. has launched a new blood test for stratifying prediabetic patients based on the Quantose(TM) insulin resistance markers.

D-Wave Systems that its new 512-qubit quantum computer, the D-Wave Two, will be installed at the new Quantum Artificial Intelligence Lab, a collaboration among NASA, Google and the Universities Space Research Association (USRA).

Bridgelux and Toshiba entered into a Joint Development and Collaboration Agreement for the development of GaN-on-Silicon LED technologies.

And $TINY owns quite a few shares of $SZYM which price action has been acting very positive recently.

Thanks to $TINY, my portfolio was up for the day.

I see $APRI, $DNN, $AMBA, and $BCRX  holding up all day without giving up too much ground so I decide to keep them.

Current holdings:

AMRN, LRAD, TINY, TBF, APRI, DNN, AMBA, BCRX and 33% cash.

Still holding my $TSLA put option on my other “day-trading” account.

@tradingmy2cents

The trades I made in the journal were time-stamped in twitter

Well, $TSLA finally takes out the low of Wednesday and drops below $99.00.  Does this correction has more room to go?

Stay tune for next week.

Yes, I still have my put option on, so I’m doing fine.  My target is low $80.00.

For those die-hard believer, please save your breath trying to convert me.  Believe me, I do believe electric car has a future; a distance future is how I see it.  But for now, what goes up can come down as well.

My 2 cents.

Is $TINY finally getting some attention?

From the weekly chart below, current weekly bar is making a new high for the last seven weeks.

Notice that the last drop in price bounce off the support and is not longer below the downtrend line.

Notice both momentum indicators are bottoming out and is heading back to the upside.

$TINY is the 3rd largest position in my portfolio; so I’m not adding anymore for now.

Btw, this is a low float stock, so volatility is the norm.

My 2 cents.

I’m referring to the long-term 20 years bond interest rate.

Take a look at the weekly chart.  With today being a Friday, the current weekly bar has the highest volume for the last two plus months so far and the day is not even over yet.

From the weekly chart below, price action is playing around with the resistance level @ $30.7x.  I’ve a good feeling that next week, price action will  break out to the upside and the long-term uptrend will begin.

Notice also that the momentum indicators are heading up and the 5ma average is crossing over the 15ma to the upside.

I added to $TBF today and may add more if price action continues to the upside next week.

This stock may not run like a rabbit but I’m quite content to see this tortoise move up in its slow steady pace.

My 2 cents.

Today was a gold fever day.

Market opened neutral and then took off afterward.

$NUGT gapped up beautifully and I waited.  After a couple of bars (5m chart), I decided to take profit before any possible retracement.  However, price took off not long after I took profit so I bought my shares back after the intra-day high was taken out.  Price was strong in the morning and I was quickly in the money on my re-entry.  Later on, I peeled off some shares to lock in profit but I also keep some for a longer-term play.  Price continued to stay strong all day.

As a result of my taking some shares off $NUGT, I decided to buy some gold minings stock for replacement.  I chose $ABX due to its large size.  The chart looked good for a possible near term breakout.

$UNXL was acting positive in the morning so I bought some shares.  Unfortunately, price action was not doing well later in the day.  I had a mental stop below yesterday low but price did not close below that today.  Instead, price recovered a bit so I decided to hold it for tomorrow.

$TSLA price action took out half-way point of yesterday bar, so I closed out my put option for a small losses.  Later when price action dropped below $105 (put strike price) and turned negative for the day, I bought the put option back.  I’m still holding it for tomorrow price action.

I was watching $CRIS and like the bounce-like pattern on the chart so I decided to buy some for the bounce.  I later added more $CRIS when price continued to climb up.

I believe long-term interest rate will continue to go up so I added more $TBF.

$BCRX had a big green bar yesterday but I was suspecting its ability to hold on to the price level.  Today proved that price could hold well and not dropped back to the low of yesterday.  Therefore I bought a starter position to see if it would take off from here.

$AMRN had a strong recovery today so I was glad to jump back in with my swing trade position yesterday.  Whew!

Current holdings:

AMRN, LRAD, TINY, APRI, CERS, DNN, NUGT, CRIS, TBF, AMBA, UNXL, ABX, BCRX and 21% cash.

@tradingmy2cents

The trades I made in the journal were time-stamped in twitter

Seeing that $NUGT has such a strong morning open and a follow-thru after the gap, I bought a starter position on $ABX to replace some of the $NUGT I sold this morning to lock in profit.

I like $ABX because of the potential breakout on the chart:

If price action can take out the early May high of $21.70, I will add more.  Did you see the higher low formed on May 17th?

The Fly has mentioned the seasonal down-turn of gold minings stock in June which is something not to be taken lightly; however, I feel that the severe downtrend since October of last year has thrown this seasonal pattern out of whack.  Nevertheless, I will be mindful of any sudden drop in price.

My 2 cents.