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Thursday, October 19, 2006

Trading Self-Analysis

I took a look at some of my recent trades, and boy, do they look messy! First problem is that my losses are all over the place. I've got anywhere from $1 loss to $200 loss. Clearly I need to improve on how I manage risk - think twice about selecting position size and stop loss points. My gut feel says to limit losses to $50 until I increase my equity again.
Second thing that I notice is after that blow up on Google options, my win rate has gone downhill. I think this is a combination of poor trade selection and poor risk management.
So, the second thing to focus on is trade selection - I need to be constantly vigilant about stalking only the best setups.
The third thing that I've noticed in my trading in general is that I haven't held longer than 2 days on most of my trades. I would love to hold a stock for a month and am always on the lookout for a stock that is making a run like how AKAM did back in Sept, or AAPL for the last 2Q's of 2005. However, my trades are suggesting otherwise. Sometimes I feel like I am a scalper, but on the hourly timeframe. I don't know, is there a technique that would allow me to capture all of AKAM's run in Sept? Or all of STEC's run in Aug-Sep? There were plenty of shake-outs as each stock grinded its way higher. With the way I have been trading for the past month or two, I would have surely gotten stopped out of these kinds of run-ups. It goes back to the burning question that I have asked in previous posts - focus on the trade/setup/process, or protect profit with tight stops ? Just some things to ponder, I guess, as I endeavour to find my own answer that works for me.

One other thing that I noticed with my trades - they are all longs ! Just like how traderZBS is comfortable with anti-trend plays, in all honesty, I have a natural preference to be in a long position instead of a short position. Case in point was this morning when SU presented a nice juciy short scalping opportunity:


Obviously I need to start learning how to short and short profitably if I am at all serious about eventually doing this trading for a living. So much to learn and so little time...... Fortunately, I enjoy learning (but not the paying tuition part of course!), and still am determined to learn to do this well.

2 comments:

zbs said...

Phelio,

Thanks for mention my blog here. Wish you best luck with your improved strategy.

ZBS

Phileo said...

Hi ZBS,
No problem, and thanks for linking my blog as well! I'm interested in your strategy, and hopefully I can incorporate some elements of it into my strategy.