I don’t know if it’s worsened by the current market conditions and the really high volatility but I really feel like my stops are way too wide and my targets are too high. Look at this chart of a “successful” KTC trade(1), I noticed my stop could have been much tighter.

After analyzing several of my trades, I worry that my stop is way too wide. I was originally setting it much tighter but was getting annoyed seeing trends resume after I was stopped out and missing out on profits. But bottom line is my gains are fairly small, points wise, on each trade. If I only make as much as I risk on every trade, I am saying I can consistently make more winning trades than losing ones. Since I know this is not always the case and at times, I have only 40% winning trades, I might as well bring up my stop level to say 3%. Since I think I can capture, short-term, price gains of 4-6%, it puts me in place where even with 40% winning trades, I’m ahead of the game since I make more on a winning play than I lose on a losing play.

Those are all concepts I’ve read about over and over again but it’s never as clear until you recongnize them in your own trading.

(1) The chart is provided by StockTickr.com which is a great tool to track performance, adjust risk parameters and journal your trades.

I realize my last post was quite a while ago and I probably lost quite a few readers but I guess I will have to live with that. I have been incredibly swamped by work, making trading part-time a real challenge. I have been trying to stay on top of the game still but I am getting killed by the market still.

So basically I am being extra careful and slowing down, reducing my sizes until I can get back in the zone. Right now, I am still going forward and upgrading my system based on new input. But for the last 2 months it has been really really hard. I am about to go back to my notes for Jun-Jul-Aug to see what I was doing different or how different the market was that made those three months a lot easier than Oct-Nov-Dec.

I guess I am like a beginning swimmer. I am okay to survive in calmer waters but I start swallowing water as soon as it gets too choppy.

I have yet to finalize ‘The Plan’. Parameters are still changing very fast and I’m learning from all aspects at the same time: learning about the market, learning about the date and the indictators, learning about the tools, etc. It gets a little tricky when every piece is moving at the same time. Like doing filling-up and doing a tire rotation going 60mph down the highway.

Here is what I learned going over my TSN trade from earlier this month:

1. Keep your horizon to a size you can manage and try not lose track of current setups
2. Do not completely discard an idea because you have to get out now protect your assets. Hit the sidelines but keep watching.

Continue reading →

Well it has been a very very bad month and I am getting badly beaten up by the market. I am taking a breather for the rest of the week (today and tomorrow) to try and start fresh on Monday. I am learning a thing or two about my system though:

• I have lost over 20R in October and gained almost nothing (about 2 1/4 R).
• my win ratio is down below 40% but my average wins in $ is still double my average loss which helps.
• so even though picking winners has been a complete failure, risk management has prevented me from going down in flames.

I guess that’s why STOP-LOSS is an appropriate title for this blog. Speaking of which, another title hit the limit today:

Type	Sym	Date/Price In	Date/Price Out	R-Mult
	TSN	10/30/2006@14.54	11/02/2006@14.22	-0.19R

Again, the market takes a dip and a bunch of my stop-loss orders trigger:

Type	Sym	Date/Price In	Date/Price Out	R-Mult
	ET	10/26/2006@23.29	11/01/2006@23.19	-0.19R
	PBNY	10/30/2006@14.01	11/01/2006@13.92	-0.56R
	ULTI	10/30/2006@24.24	11/01/2006@24.16	-0.27R
	SFE	10/31/2006@2.44	11/01/2006@2.35	-0.42R

A few more stoploss order exits

Type	Sym	Date/Price In	Date/Price Out	R-Mult
	IDT	10/20/2006@13.12	10/27/2006@12.78	-1.11R
	RI	10/26/2006@28.49	10/27/2006@28.02	-1.17R

The beatdown continues…

Type	Sym	Date/Price In	Date/Price Out	R-Mult
	PBG	10/23/2006@32.30	10/26/2006@31.75	-1.50R

Actualy, one of those is from 10/24, I just never got around to posting it. I love how the market works, it’s the greatest taunter in the world. It lets you run with it for a while, making better and better trades. It lets you gain confidence a little bit and just when you start to get confortable… WHAAAAAPPP!!!

Type	Sym	Date/Price In	Date/Price Out	R-Mult
	CGNX	10/20/2006@22.81	10/24/2006@22.43	-1.37R
	CVH	10/20/2006@50.70	10/25/2006@49.23	-1.38R

Yesterday I posted my IMMU trade results (see below) and today I wanted to comment a bit.

Type	Sym	Date/Price In	Date/Price Out	R-Mult
	IMMU	09/18/2006@1.82	10/19/2006@2.35	4.75

I also have a chart available:

My biggest question on this trade is whether I exited too soon or not.

I usually set my stops based on prior days lows. My most common stop is one tick below the prior day’s low. But sometimes, specialy during steap uptrends, I will keep the low from a couple of days before in place. Yesterday, IMMU crossed below Wednesday’s low but not by much and I ended up bailing out anyway to protect my gains. Looking at the chart, I see the Stochastics still strong and very little volume support to the decrease in price. This leads me to believe in may be a very temporary situation and *not* the end of the trend up. The price may just pullback towards the trend line, around 2.25 and keep going up from there.

Either way I am out with my 4.75R banked in but I may have missed on more profits from this updrend by exiting the trade a little prematurely.