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Wednesday, January 31, 2007

Review of January

This January marks the first month that I have been able to keep stats of my trading for a whole month (see System tab for the stats page).

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Where shall I begin? First is the format of these stats. These stats don't tell me certain information that I want to know. I will add some extra columns for next month's trading stats so that it will be more informative. I'm not sure how to record the average win and average loss in an easy and convenient manner for all of the different markets that I trade, so I will chew on that one for the next few weeks.

According to the stats, I made around 20 options trades, 21 US equity trades, and 31 Canadian equity trades, and 14 Futures trades. Sounds like quite the busy month, but there is no context to provide some meaning to this statistic. How many trades is too many for a trader with my kind of style and multi-market approach? I'm not absolutely certain of the answer, so I think I'll start with the highest numbers as a yardstick -

  • 8 options transactions in one day,
  • 9 Canadian stock transactions, and
  • 9 US equity transactions.
Let's see what happens in the coming months.

The next re-assuring statistic is that I made $3641 this month. Whoo-Hoo! It feels gratifying, comforting, and stupendously divine to know that I can make money doing this! That is the great news. Pat, pat.

The bad news is that I've made 9 mistakes this month, which is way more than the average. What's really telling is that these mistakes cost me $1756. Those are some very painful and costly mistakes. Usually I sell too soon and leave a lot of profit on the table when the stock runs up after I sell. In the GS option mistake, I waited too long and sold too late. I think what is happening is that there is still a lot of hope lingering around which causes me to make these mistakes. Some days I am mentally focused and resolve to sell according to my trading plan. On other days, everything is a grey area and I think everything should be given a bit of flexibility to move. Even so, there's just no excuse for leaving almost $1/contract of profits on the table. I may as well start using $100 bills to start a fire. It's frustrating to even think about it, so I'll just stop now - no need to build up excess negative energy inside of me.

The other thing is that I've stopped trading the Futures market. My style and approach to trading Futures required me to be in tune with the market, much like how a dance partner knows the other partner's idiosyncrasies, behaviours, and patterns. It worked for a while, but it was required all my attention (ie. I couldn't trade or watch other charts while I was trading ER2), and was hard to keep up the mental focus. In fact I remembered being quite drained at the end of the day. Until I can figure out how to trade the futures while I trade the other markets, or until I find someone who is willing to teach me how to trade futures and other markets at the same time, I will stay away from futures.

That's about it for now. My advice to myself is pretty simple. Start making less mistakes.

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Wednesday's Trading Results

Everything is sideways

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Pretty quiet today, and I was bored, but didn't try to force any trades because of the boredom. Instead, I changed my son's dirty diapers whenever it was time to relieve the boredom. I showed him a picture of Jesse Livermore, and he started smacking his lips, LOL!
Only two alerts went off today, one was DLB, but I didn't want to wait around for the entry, and the other, RTI, the price action got a little too whippy for me, plus I didn't go thru the daily, and didn't take the time to get familiar with its chart, so being bitten once before by the lack preparation, I decided to pass.
Instead, I stalked CYTR which I reviewed the chart prior, and got in @2.83.
I also took a stab at ITMN and AUY, but got shaken out for a small loss in both cases.
I also took a stab @HANS @38.02, and am still holding - will post chart once the trade is closed.
I'm currently holding SilverCorp (SVM.to), UrAsia (UUU.v), and am waiting for the other uranium stocks to start moving.
Also still holding CRVL, it went for a nice roundtrip to nowhere today. Of course, that was not a reason to sell, so I will continue to hold it.
Couldn't find any options to play today, not even good ol' MABC would offer me a spot. Oh well, hopefully tomorrow the action will pick up.

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Google Straddles

This is just a thought experiment, not an actual option trade that I have made, or will make.

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The premise here is that Google (GOOG) will explode for 30points up or down pending on a good or bad earnings report tonight after market close.
Google is currently sitting at 502.21

Possible Google Straddle as follows:
Buy GOPBO - GOOG Feb07 500 Calls (currently 21.01/21.20 (bid/ask))
Buy GOPNO - GOOG Feb07 500 Puts (currently 17.60/17.90)
Chart looks slightly interesting, but I don't know what to say about it, since I'm not familiar with the straddle play.


Upside Breakeven = 500 + 21.2 + 17.9 = 539.10
Downside Breakeven = 500 - 21.2 - 17.90 = 460.90
Max Loss = $3910 per straddle


These are not good odds. Probably would have been better to buy the straddle earlier, when the calls and puts were cheaper. And I've noticed that the breakeven points have moved farther out just now.
But I am curious and will check in on these options tomorrow to see how they are doing....
Also, BIDU will almost certainly move in sympathy with whatever direction GOOG takes, so BIDU should be worth watching as well.

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Tuesday, January 30, 2007

Chart Reviews

chart reviews of Corvel (CRVL), Forsys Metals (FSY.to)

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I bought CRVL when I saw that it refused to go down below 43.5-ish. Previous low was 42.5-ish, so this marked a higher low, a strong sign of a recovering stock. Initial stop was at 43.3.

What should the stop loss level be now?
First a look at the daily to get some clues:

If you take a look at the weekly, it looks even better.
A tag of the 49 level is looking more and more likely here. Here are the following possibilities:

a. Runs up in a panic to 49 and beyond, then does a head fake, and falls back down to 47-ish.

b. Runs up but in a more orderly fashion, and settles to some price level that is higher than today's close.

c. No run-up, but some directionless sideways chopping around 47 for the next couple of days.

d. Selloff, drops below 46.5

The easy cases to deal with are c) and d). In both cases, my stop loss will be just under 46.5.
If a) or b) happens, I will have to think a little bit more as to how I will play this.

Forsys Metals (FSY.to):

It's interesting to note that Forsys tagged the 20d EMA, the first time that it's done that in this current run-up. It might be worth a shot at taking a low-ball bid right at the 20d EMA, although I have no clue when is the next time that will happen.

Uranium stocks are far from being done, so I see this as a buy opportunity coming up, not a sell opportunity. The other one that I played, Strathmore Minerals (STM.v), I will likely play again.

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Tuesday's Trading Results

2 steps forward, one step back

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Well, I wasn't able to accomplish my mini, self-imposed goal of 3 consecutive days of profit. The bulk of today's loss was attributed to selling the CTRP calls at a lower price than yesterday's close. There wasn't too much more that I could do about the trade, except to go back in and start a new option trade when it broke above 73. In the afternoon, CTRP chopped its way up to 74.50. I just dropped the ball on that one, probably was distracted by looking for other trades to make and I didn't do an intraday chart analysis on CTRP.
So, I didn't make any mistakes today, but I didn't reach my mini-goal. Was it a realistic goal? Well, I didn't think that it was an unrealistic goal, but I will have to settle for the consolation prize (ie. mistake free trading) for now.

I'm still holding CRVL, which I picked up @43.63. I will have to do a chart analysis on CRVL tonight, so that I can figure out where to update my stop loss point. I will post it here later once I have finished the chart TA. Once I close out that trade, check MoveTheMarkets for a post-mortem of that trade.

The other thing that happened again today was my laptop getting bogged down. I'm going to have to start reducing the size of my watchlist, it seems to slow down the laptop's ability to update quotes in real-time.

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Options Trade: CTrip.com International, Ltd

Summary

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1. Why did I take this trade?
CTrip.com International Ltd (Nasdaq: CTRP) was a pick in the HCPG newsletter from a couple weeks ago. I decided to keep it on my watchlist because stocks from China have been hot recently. When it gapped up to 69 last week, I put it back onto my watchlist, with an alert level @71. It hit the 71 early in the morning and fell back down, so I started stalking it. The fourth time it broke above 71, I bought some Mar07 75 calls.
In retrospect, the Mar07 75 calls were not the best choice because of the low option volume.
I found out later that there was another trader, Russ, who bought CTRP @70.45.


2. What was the initial stop?
Initial stop was just below congestion @70.75.


3. Why did you exit where you did?
I was overly cautious to begin today's trading session. When I saw that CTRP was falling down from its opening price, I lost any interest in finding out where today's intraday support level would be, and promptly sold my calls


4. Is there anything you would do differently?

This question was tough to answer for CTRP in this particular scenario. It's the same as asking, "How much profits are you willing to give up in order to realize even more profits?"
Even though CTRP is currently at 73.63, it could just as easily have been testing 72 instead.
Under what conditions could I have seen myself holding? At the minimum I would want to see a green bar to open to at least indicate that there are buyers stepping up to the plate. Plus it would give me a possible intraday support level to work with. Neither of those happened in the first 15-min, so I wasn't willing to give up profits.
In other words, the break above 73 @ around noon would have been a new and separate trade from my point of view.
Note that the breakout above 73 was messy - that subsequent dip down to 72.70 took out a lot of stops I'm sure.

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Monday, January 29, 2007

Options Trade: Goldman Sachs Group Inc (GS)

This trade had a subtle mistake that I only realized after reviewing the trade.

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1. Why did I take this trade?
I bought Goldman Sachs Group Inc (GS) Mar07 230 calls because GS broke out of the morning pullback and looked like it had enough volume to break above friday's resistance @214.25. The Mar07 230 calls had decent volume in the past so I stuck with the same ones. I actually am happy with how I executed my entry.

2. What was the initial stop?
The initial stop was just below the low of the initial opening pullback @212.50


3. Why did you exit where you did?
No particular reason, other than the fact that I finally realized that this trade was not going to work out.


4. Is there anything you would do differently?
I did not honour my stop loss level and it costed me. GS actually offered me two chances to get out - the first was when it broke below 213.50 @1pm, the second one was at my stop loss level. I was distracted by fighting with the IB webtrader at the time, but I can't use that as a valid excuse. Just was not mentally focused.
I think I also started to lose my objectivity when I saw that it was trying to recover above the 214 level. Kind of subtle, but that was probably the turning point for me. The best thing that I could have done was simply to unconditionally honour my stop loss, plain and simple.

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Monday's Trading Results

Felt like I was a step behind in everything today.

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Right off the bat, CROX jumped up and I missed out on that trade.
Then I had trouble with gaining access to IB's WebTrader - now there's half an hour of my life that I'll never get back.
Then I had a couple of Canadian stocks that I have been watching take off without me. The problem was that I had forgot to workout alert levels for them, so that is my lesson of the day - a watchlist of stocks without alert levels is like trying to juggle with one arm behind your back.
I took another stab at some GS calls which did not work out - will post a chart shortly.
Anyways, I shouldn't complain, since I did catch CTRP and some of the uranium stocks. Will post charts on those once I have closed out the trades.

Tomorrow is a critical day for me - I have to prove to myself that I can put in 3 consecutive profitable days. If I get lucky I'll take it, but I can't hold back and be overly cautious just for the sake of being able to check off that item on the list of goals. Nein, it's all about following the plan, and remaining mentally focused and disciplined.

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Sunday, January 28, 2007

Ideas for the Week of Jan 29, 2007

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NBIX - one of the guys in the MSN Strategy Lab, Thomas Ko has issued a buy rec for this small biotech company. His last pick, MOBE, made a big pop when he announced it on Jan 11/07. I think it will gap up and then sell off for the rest of the week, but who knows.

FRG - if uranium buyers repeat the pattern of the past two weeks, this coming week should see at least one day where all uranium stocks go into a buying panic, and the rest of the time just going sideways. Plus with gold on the verge of a breakout, FRG should get plenty of "juice" to get it going.

CRVL - this was tradingGodess's favorite. I've mentioned it before, but it hasn't done much. This week may be different, so watch the 45 level.

KNOT - printed an inside day on Friday, and also printed an inside week last week. Chart looks good, look for resumption of uptrend this week.

AUY - This one will really depend on how gold will preform this week. If the gold rally shows visible signs of starting this week, then we will see new ATH's in AUY. Otherwise, step away from the mouse.

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Saturday, January 27, 2007

Options Trade: Bunge Ltd. (BG)

This trade actually took place on Jan 23/07.

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1. Why did I take this trade?
BG was a HCPG newsletter selection. It broke out of a textbook pullback from earlier this week. I bought the BG Mar07 80 Calls when BG broke above the mini-resistance @75.75. The timing of my entry was pretty good (IMO).


2. What was the initial stop?
Initial stop was @75.30.

3. Why did you exit where you did?
I had to think long and hard as to why I did not dump at least half of my position when BG failed to stay above 77. I think part of it is due to some lingering hope that volume would come in to drive the price back up. Also, because I bought March calls instead of Feb calls, the move up was not as much, and I was hoping for a bigger move. And I didn't want to believe how messy it became in the afternoon in contrast to how beautiful it moved in the morning. Unlike my options trade in MA, it just came down to a lack of focus on the execution of my trade. Although I did not physically lose much money on this options trade, seeing the potential profits disappear was a big loss mentally and emotionally.


4. Is there anything you would do differently?
Yes, consider selling at least half my position when the upward momentum shows visible signs of stalling out.

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Friday, January 26, 2007

Options Trade: Goldman Sachs Group Inc

This trade makes me wonder whether the pain of missing out on a run-up is better or worse than the pain of giving up profits....

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1. Why did I take this trade?
Goldman Sachs (GS) gapped up on Wednesday morning. The bullish price action led me to believe that it would break above the OR bar (first 15-min candle). As soon as I realized that, plus that there was enough buy volume pouring in such that it would never fill the gap, I decided to purchase the Mar07 230 calls when GS broke above 215.

2. What was the initial stop?
Initial stop was the bottom of the first 15-min candle, just below 213.

3. Why did you exit where you did?
I closed out my options when I realized that it was not even going to be able to recover above 217, let alone a recovery bounce back to 219.

4. Is there anything you would do differently?
Hope is bad, never hope for a trade to recover!
When it broke below the OR bar on Thurs., that should have been my signal to get out. Definitely I should have closed my trade when it broke below 218. It's just that GS was acting so bullish on Wednesday that it never occurred to me to plan out what to do if the worst case scenario (ie. giving back all the gains made on Wednesday) were to occur.
For me, the threshold at which the pain (of seeing real profits slip away) exceeded the emotional hope for recovery was when GS dropped below 217. I will definitely need to train myself to have a lower tolerance for such painful mistakes.

Note that the options (GPYCF) closed higher on Thursday than the price I initially bought it for (on Wednesday), even though the underlying stock closed lower on Thursday than where I had entered. This is the first time that I have seen this happen, and I'm not sure what it really means.

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Uranium Index, Week2

The biggest bull market that Wall Street doesn't know about, continues to outperform...

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The buyers decided to show up on Tuesday earlier this week. This is the second week in a row that this has occurred - all the buying concentrated into one day, and the rest of the time going sideways in general.

Index Value: 19,548.09
Best Performers: FSY, LAM, STM
Worst Performers: WNP, UMN, UEX

Performance

Week 2:          +2.6%
Since inception: +8.6%

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Wednesday, January 24, 2007

Options Trade: MasterCard Incorporated

Summary

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1. Why did I take this trade?
I bought MasterCard (MA) Feb07 115 calls when MA broke above 108.25 because the chart gave an indication that the opening pullback was finished. As it turns out, my entry was not ideal at all. MA started falling down some more not long after I bought my calls.


2. What was the initial stop?
Initial stop was at 107. Why didn't I sell before it dropped down to 107? Because the drop down to 107 was on low volume. Plus, the 10d EMA was creeping upwards on the 5d chart, so I was reasonably confident that there was buying support @107.

However, I recognize that this was not a compelling technical reason to keep holding instead of closing out the trade. In other words, I would rate my entry as a C+ in terms of risk.

3. Why did you exit where you did?
MA became overextended after it broke above 112.5. Everyone who bought in the past 2 days were now selling. I needed to follow the rest of the herd and capture and protect my profits.


4. Is there anything you would do differently?
Yes, the entry could have been timed better. MA turns out to be an example of buying support instead of buying the breakout. I should have been more mentally alert and focused on the 107 level more - it turned out to be a somewhat significant support level. Alternatively, I could have bought half of my position when it broke above 108.25 initially, and then buy the other half when it bounced back up from the test of the 107 level.

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Tuesday, January 23, 2007

Tuesday's Trading Results

It's good to be trading again...

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Yesterday I was not able to trade, due to, you know, the usual distractions like having a baby. And, the timing of my son's arrival could not have been better - I only missed one day of trading.
In all seriousness though, missing the day of trading felt weird. Hard to describe, but for those who have a daily routine, it felt like the routine was broken.

Today, I did well, but only because I followed my Trading Plan. I made 2 trades from the HCPG newsletter picks (BG, MDC), bought some MA calls, and also traded yet another uranium company - SXR Uranium One. I will post charts on them once I have closed out the trades.

I have noticed lately that I do well when the market is up. I'm not sure how I perform when the overall market is down. I think I will add that to my performance log to see if there is any pattern.

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Monday, January 22, 2007

The next Jesse Livermore?

Couldn't post on the weekend because of this.....

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This is my new addition to the family - my son was born 8lbs 10.5 oz on Fri. Jan 19/07 @855pm. I'm surprised that I still have energy to post this given that I had only 3hrs sleep yesterday nite.....

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Friday, January 19, 2007

Uranium Index, Week1

Results are in for the first week of the uranium Index....

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The uranium index started with a value of 17000. Uramin (UMN) was added on Jan 15/07 bringing the starting value to 18000. A lot of buyers showed up on Jan. 15/07, and just as quickly went back into hiding after that.

Index Value: 19,051.39
Best Performers: FSY, LAM, WNP, UMN
Worst Performers: CXX

Performance

Week 1:          5.8%
Since inception: 5.8%

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Friday's Results

Got a taste of what Paper Cut Trading is like.

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Aargh, I already said yesterday to be more cautious today. But I didn't do anything to actively prevent today's losses.
I actually did follow my plan, and took small losses when the trade wasn't working out. But that wasn't the problem.

If there was one consolation, I did find out another peculiar bad habit of mine. I found out that I get fixated on a stock sometimes. Yesterday night, I was thinking about how I traded Forsys Metals. This also had the effect of planting a sub-conscious thought into my mind. So this morning, when things slowed down, and my mind had a chance to wander, I went straight to daytrading that stock again. However, after the morning run-up, the setups after that just weren't there, and I wound up taking a series of small losses. Each small loss was like getting a paper cut. I wasn't aware of this fixation until it was too late, and by then, I was in pain from a series of paper cuts.

I will need to clear my mind and be more conscious of preventing it from happening again the next time. The way for me to prevent this from happening is simply to keep my mind from wandering during the trading session.

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Thursday, January 18, 2007

Thursday's Results

trigger shy today....

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There's not much to say about today, another quiet day, with barely any action on my part. Markets were either selling off or going sideways. To me, both RIMM and GOOG were easy pickings today. However, I was staring at the charts of RIMM and GOOG today, but unable to pull the trigger on buying any puts. The only explanation that I can come up with was that I was looking at the charts the night before, but failed to enter any alert levels on both of them. At least I didn't lose money.

Anyways, I took a couple of trades, one was a daytrade in a Canadian Uranium company (Forsys Metals) and the other in a thinly traded micro-microcap called Photochannel Networks (PN.v) - bought that one @4.45 and still holding.

I did notice from my Trading Performance page that I haven't had any 3 consecutive days of profit. It seems that once I go through 2 days of profit, the next one is always a losing session for me. It's been only two weeks, so I don't know if that is a trend or not. Regardless, I will be cautious (but not too cautious), and more importantly, I will be more conscious of following my trading rules.

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Daytrading Forsys Metals (FSY)

The charts never lie

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1. Why did I take this trade?
Because Forsys was breaking out of a mid-morning consolidation after huge volume buying in this morning's open.

2. What was the initial stop?
Iinitial stop was at 5.93. If the breakout failed, it would be pretty obvious.

3. Why did you exit where you did?
It first stalled for a bit after breaking above 6.10. After another surge, it stalled again near 6.20. I thought that was the end of the run when it stalled for the second time.


4. Is there anything you would do differently?
Forsys Metals (FSY on the TSX) got another surge of buying volume today. In retrospect, I should have been more focused and alert to that fact. I should have been more aggressive with the number of shares purchased, since there were plenty of buyers today to provide fuel for the run-up. It looks even better on the daily chart:

If there's any follow thru buying in the next couple of days, I will definitely jump back in, and probably hold longer.

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There's Always a Bull Market Somewhere

Markets are selling off, but not this guy

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I did buy Fronteer Development Group (FRG), but not in my trading account, so I won't log it in the Trading Performance. The above chart actually shows a hammer reversal pattern, followed by a nice V-shaped recovery from the selloff at the beginning of this month. FRG is breaking above the significant resistance level set back in Nov/06. Plenty of buy volume is coming in, so this should last at least another day.
A couple select (Canadian) Uranium companies are doing well today - LAM.to, FSY.to, both receiving plenty of buy volume.

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Jesse Livermore

I read the first 7 chapters of "How To Trade Stocks" that were actually written by Jesse Livermore (the remainder of the book was written by someone else). I'm starting to see why this guy is so amazing.....

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There is a scene in "It's a Wonderful Life" where George Bailey is sitting at Mr. Potter's office and listening to speech by Mr. Potter about a "once in a lifetime" chance at the comfortable, affluent life. In his diatribe, Mr. Potter guesses that George is earning about $40/week, and George immediately interrupts him by emphatically declaring that he actually earns $42/week. Mr. Potter is offering George a chance to work for Mr. Potter for the annual salary of $20,000. That amounts to over 9x the salary that George had defiantly declared he was making. To put that into modern day terms, that is about the equivalent of a CEO salary (on average, the CEO earns about 9x the joe average salary worker).

So, what does this have to do with Jesse Livermore? Well, George Bailey and Jesse Livermore both lived at approximately the same time period (Livermore traded in the late 20's and early 30's, while George Bailey's story took place around the late 30's). So where the average salary worker at that time made $2K or 3K per year, Livermore made trades of 2 or 3 Million ! To put it in today's terms, that is like trading 1000x your typical office cubicle worker salary - making a $50 Million profit (or loss) from a couple trades. I don't know about you, but I wouldn't have the guts to make a $50 Million dollar trade.

I know that "How to Trade Stocks" is not one of the better books on Jesse Livermore, but that was the only one available at the time at the library. However, I did come across "Reminiscences of a Stock Operator" online (check the link at the sidebar). I think I might skip the remaining chapters of Van Tharp's book and just start reading all about Jesse.

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Uranium Index update

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I started the Uranium Index on January 11, 2007.
On January 15, 2007, I added one uranium company which complies with my criteria: Uramin (UMN).
At a minimum, I will report on its performance since inception. If time permits, I will report weekly and monthly performance as well.
So far, the index is up +5%. I will post a chart this weekend.

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Wednesday, January 17, 2007

Wednesday's Results

Little more cautious today...

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I recovered from yesterday's loss and made some profit from closing out today's option swing trade in MA. I saw an opportunity in shorting GROW, but just decided to pass on it. Plus, GROW dropped $0.70 in literally one blink of an eye, pretty wild stock. It's pretty hard to get a good fill on GROW, because the bid/ask spread can get so wide so often.

I spent most of today's session culling my watchlist, and entering and updating my price alert levels for the ones that remained in my watchlist. Setting accurate price alerts, and then reviewing for an approximate stop loss point takes a bit of time. Luckily I have my desktop PC setup now, and 3 monitors to stare at !!!

I haven't been as active with my trading lately. Is the market taking a breather, taking a turn for the worse, or is it just me? Is there a blue moon out tonight? Am I reading too much of Van Tharp's book ? Yeah, that must be it, blame it on Tharp.... Man is that book a difficult read or what?

The next two weeks will be tough. I've already reached my (self-imposed) limit on the number of screwUps that I can make per month. I will need to be a cracker jack trader for the next two weeks. Never did like cracker jacks either......

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Options Trade: MasterCard Inc (MA)

Feels very good to bounce back with a win.

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1. Why did I take this trade?
Because MA was breaking out of its past 4-day trading range

2. What was the initial stop?
Iinitial stop was a break below 105.9. I was debating whether to sell for a loss when MA broke below 105.9 in the afternoon. But then MA bounced back up to 106 very shortly afterwards.

3. Why did you exit where you did?
When I showed my wife that we had recovered yesterday's losses and then some, she said, "don't go and screw up a good thing!" That was her way of telling me to sell - who am I to disagree with my boss ?
As mentioned in the chart, my entry point was not ideal (ie. higher risk), and my exit did not have a valid technical reason (selling because I want to protect profits is a reason, but not a technical reason IMO). It was only in retrospect that I found out that I sold pretty much near the top.


4. Is there anything you would do differently?
Probably the safest entry of all was when support @104.6 was confirmed very early in the morning session. Unfortunately, I did not take a look at the daily chart at the time I was considering entering.
But any profitable options trade is good enough in my books.

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Tuesday, January 16, 2007

Tuesday's Results

Another discouraging day....

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I feel kind of discouraged right now because I felt that I was on the right track last week, and then today, all of a sudden some of my old bad habits start showing up again. The biggest mistake was that I held onto a couple of losing trades too long today instead of cutting my losses short. Normally, at this point I would like to ponder whether the pain of missing out on a bounce/run-up caused me to hold on too long, but I'm going to stop with the psycho-analysis of my old bad habits, since I know what I need to do and just need to execute.

Probably the other biggest thing that I noticed today was that I strayed away from my normal routine. Also, I was trying to pull up too many charts on my laptop. When an alert went off, it would take me quite a few seconds to bring up the chart, because I had a few tabs going in my FF browser, which in combination with all the real-time charts that I had up, kind of drove the CPU usage to 100%. I didn't have a good sense of what was going on in the market today because of this nagging distraction. It got kind of painful trying wait fir the chart to come up and to see what had triggered, and broke my rhythm - the problem wasn't a slow internet connection, it was a slow CPU! Anyways, I had a desktop PC which was in another room, but moved it to my "office." I'll probably use the desktop PC for surfing or reading the news, and the laptop for watching charts and trading. Probably cutting down the number of charts I have up will help out as well.

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Monday, January 15, 2007

A Few Stock Ideas for this Week

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Zoll Medical (ZOLL): This idea came from the Motley Fool

MicroVision (MVIS): This idea came from TradingGoddess


Hansen Natural (HANS): This idea came from the HCPG for the 36 level last week, but I think it's still got some more upside left in it. Just for the record, I did put it into my watchlist before they made the rec in their newsletter last week.

Aeropostale (ARO): this idea came from BusinessWeek

CorVel (CRVL): This is another idea from Trading Goddess.


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Who is the top Stock Trading Blog?

The answer may surprise you.

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I randomly selected 10 stock trading blogs and took a look at their value based on three different references.



It would seem to me that one could make an argument that the most valuable blog belongs to ChairMan Mao, not Trader Mike. In other words, if Chairman Mao added a couple of tweaks and then tried to monetize his blog, there's a real good chance that he could derive more blog revenue than Trader Mike. And based on the above table, there's also couple of other interesting surprises:

1. Achieving the most hits (ie. highest Page Strength) does not automatically translate into a more valuable blog. I think page hits is the most important criteria, but there's a few other criteria that matters as well.

2. Domain name matters more than you think when determining a blog's valuation. KISS principle applies here. That big hyphen in my blog's name probably cost me a few points in value - lesson learned.

3. There's not many non-corporate stock blogs out there that rank high in monetary value. In other words, there are tons of tech gadget blogs, news blogs, political blogs, and even finance blogs, but how many stock trading blogs of the same calibre as tradeMike and Chairman Mao (in terms of traffic AND value) are out there? I think I have listed all the high traffic ones here.

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Uranium Index

I am creating the world's second ever uranium index.

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There's a newsletter which claims to be regularly maintaining the world's first ever uranium index. Well, then let me be the one to maintain the world's SECOND ever uranium index. My uranium index will be a tracking portfolio consisting of the following criteria:

1. Must be a pure play in uranium exploration, mining or production.
2. MarketCap must be greater than $200Million
3. Must trade on the TSX or the TSX Venture (don't want the hassle of working out forex in the index. Someone else is more than welcome to start an Australian or American Index ! ).
4. It will be an equal weight index, so a Strateco will the exact same influence on the index value as a Cameco.

The index will start out with the following companies:
1. Cameco
2. Aurora Energy
3. Denison Mines
4. Energy Metals
5. Forsys Metals
6. Laramide Resources
7. Mega Uranium
8. Strateco Resources
9. Ur Energy
10. UrAsia Energy
11. Uranium Participation
12. CrossHair Exploration
13. Paladin Resources
14. Strathmore Minerals
15. UEX Corp.
16. SXR Uranium One
17. Western Prospector Group

Initial value of the index is 17000. I picked a random start date of January 11, 2007 for the Uranium index. It is currently up +3.4% already, I will post a chart of the index periodically. For you American folks, Energy Metals and Cameco are dual listed on the NYSE. Fronteer Development group (which I have traded in the past) is also considered a play in uranium. However, they are not included into my custom, proprietary Uranium index because they have too many gold properties to be considered a pure play in Uranium.

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Friday, January 12, 2007

Options Trade Post Mortem: IntercontinentalExchange Inc. (ICE) Puts

I feel the need to record this so that I can learn how to improve upon my exits.

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1. Why did I take this trade?

I bought
ICE Feb130 Puts because ICE was showing signs of being overbought - RSI spiked up to +80, the gap between Thursday's price and the 20d EMA has been the highest it's ever been, and the gap between the slow and the fast line on the MACD has been the widest that it's ever been. Persistently overbought RSI is a sign of bullish strength, but ICE was at +80, and it had always pulled back whenever it reached this high of a level in the past.


2. What was the initial stop?

I bought ICE Feb130 Puts when ICE was unable to recover from the afternoon selloff, initial stop was @ 137.


3. Why did you exit where you did?
I had the right idea with the entry. Unfortunately, I sold out of fear of losing my profits. I again fell into the bad habit of looking only at the tape and
did not look at the chart .

4. Is there anything you would do differently?
Yes, trade the chart and not the profit! The 10 bar MA was a natural stop loss point.
Yes, trade the chart and not the tape !

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Free Real Time quotes on Google Finance

I just found out from TraderMike's links that Google Finance will be soon be offering free real-time quotes on all stocks from NYSE.

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This is very significant for Google. It means that they are fully aware that they do not have the lead in the finance portal arena, but have every intention to wrestle the lead away from Yahoo!Finance.
I don't really use either finance portals too much except for when I want to dig up some news behind a stock price's movements. However, I have been using Google Finance a bit more lately to look up what the blogs have to say about a certain stock that I am watching. I think that's a very nice Web2.0 feature to provide. And once
the free real-time quotes are in place at Google Finance, I can definitely see myself using it more often.
A couple features that I would like to see on Google Finance include:

1. Ability to move page elements around much like how it's being done in the new Blogger.
2. Ability to customize my Google Finance home page. For instance, I don't really care for the 10yr bond quotes and would like to be able to replace that with a quote of the TSX Composite index.
3. Link to the other Google services (Docs & SpreadSheets, Blogger, web search) so that I can move back and forth between the services easily. This would be similar to the link bar at the top left corner of GMail (once you are logged in).
4. Ability to add widgets to my Google Finance home page.

Anyways, Yahoo!Finance had better start doing something about this or they will soon lose their lead in the finance arena as well.

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Friday Morning Update

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Well, I feel well enough to write, but not alert enough to update my watchlist, so I'm pretty much taking it easy unless something really compelling comes along. But with the market pulling back right now, I can't see how anything compelling will come to me.
AMD puts are a possibility, but I will need to pull up a chart first to see what the chart is saying.

Anyways, I had the right idea with buying ICE puts yesterday, but again, I sold too soon @7.0, leaving $0.80 on the table just a few minutes ago. Aaaarrrgh, I hate it when I do that. It's like saying "No, thanks, I don't want that brand new, crisp $50 bill, I'd much rather take this old and dilapidated $20." Profits are hard enough to come by as it is, is it so hard to pull up a chart and listen to what the chart is telling me ???

Anyways, I've got some Canadian miners (UrAsia (UUU.v), HudBay Minerals (HBM.to) and Blue Pearl Mining (BLE.to)) simmering on the stove, they look like they might drift upwards, so I am holding them for now.

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Thursday, January 11, 2007

Thursday's Results

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Bailed out of my AAPL calls on that gap down this morning, and it never recovered. I wanted to personally thank Mr. John Chambers for this AAPL event, but the first habit of an effective trader prevents me from doing so. Dang, why couldn't I have written that post AFTER I send some hate email to Mr. John Chambers ???

Did a "probe" of Wi-Lan, and lost a hundred bucks. Looks like it's sell the news of earnings. Will wait for the chart of WIN.to to find a decent level of support before I jump back in.
Sold my BIDU calls for a nice profit.
Closed out SPWR for a nice profit. Of course, it had to bounce back up later in the afternoon, I wonder if it has enough follow through buying for a scalp tomorrow....
Closed out LTXX and LIFC for small profits.
Bought one ICE Feb130 Put @6.40 late in the afternoon.

Things went pretty slow in the afternoon. There's not much that looks interesting enough to buy right now, most of the momo leaders are in pullback mode. It does make me wonder how well my trading will perform in a bear market.
I'm also feeling an itchy throat coming on, which usually means a few days of a runny nose, headaches and general misery.......

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Wednesday, January 10, 2007

Nightly Review

Adjust stops on my existing positions, and looking at a couple of ideas for tomorrow.

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AAPL - move stop up to 96 (hopefully it will be able to weather the wave of sellers from the news of the CSCO lawsuit).
BIDU - move stop up to 126
LIFC - stop adjusted to 24.78
LTXX - stop bumped up to 5.57
SPWR - stop move up to 39.95

Will be watching how Wi-Lan stock reacts to the quarterly report due out before market open.
Check out AlphaTrends for some interesting ideas, esp the Bird Flu stocks.

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Who is Company XYZ?

I just finished reading up on some news about this company, so I imagined what a typical day would be like working for this certain company.
Can you guess what company this is ?


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I wake up, feeling a bit feverish, and not all too well. So, after putting on some clothes, gathering my clothes that need to be drycleaned, and getting my 3yr old daughter ready, we both head out and wait for the free shuttle bus service provided by my company. It comes at the scheduled 30-min. interval, and I hop on. The shuttle bus arrives first at the child care center provided by my company. I kiss my daughter goodbye for the day. When the shuttle bus arrives at my company building, I walk inside and drop off my drycleaning on the way towards the doctors office on the 3rd floor. Luckily, there is only 1 person ahead of me and the wait is tolerable. The doctor prescribes a couple doses of aspirin.
Since I am at work already, I may as well stay and get some work done. But first I grab a hearty company-paid breakfast at the cafeteria consisting of hash browns, scrambled eggs, sausage, and french toast, plus extra glasses of Orange juice (since I also have cold).
After breakfast, I feel comfortable enough to settle into my cube and get some work done. I periodically take a break by getting some additional cans of juice, pop, and muffins from the fridge nearby my cube. My Outlook reminds me that today is the day for my schedule dental checkup, also on the 3rd floor beside the doctor's office. So I head on up over there, and get my scheduled checkup and teeth cleaning done. But the teeth cleaning means that I cannot eat lunch at the regular noon hour time, so I while I wait the mandatory half hour, I go back to my desk and check up on my company shares (from my espp and stock options). I am glad to see that my company shares are climbing back to within 4.59% of its all time highs. That means a lot of R's for me. It's lunch time now, so I head down to the cafeteria for another company paid lunch - this time it is roast beef with scalloped potatoes, mixed steamed veggies on the side and a soft kaiser roll. That really hit the spot, I must remember to thank the chef. It's back to work, so I head back to my cube to do some more work. On my next break, I head towards the company gym to try and work off my fever. During the workout, I see that CNBC is on the monitor and immediately change the channel. After the brief workout, I go for a swim in the company swimming pool. Then I totally relax in the spa.

On the way back to my cube, a colleague of mine challenges me to a game of pool. I'm the kind of person who never backs down from a challenge, and this dude is just so uber-nerd, so we go to the company rec room and I hustle him for a few hundred bucks of profit. I evenutally return to my cube in time to answer a phone call from the HR dept. They have informed me that the friend that I referred to the company for a certain position was hired, so I will be getting a referral bonus. Sweet! After some celebration, I get some more work done, but not before my Outlook tells me that it is time to attend some company meeting where they will introduce the new Fuel Efficiency Vehicle Incentive program for all employees.
Tonight I will need to leave early from work in order to go and attend my company paid academic course titled, "How to DayTrade Your Way to Financial Feedom." But all it talks about is a bunch of "R" this and "R" that, so naturally I get bored with this course - luckily it's not coming out of my pocket !
All in a day's work.

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Wednesday's Results

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Bought AAPL Feb100 Calls @3.1 (stop loss on break below 15min OR bar)
Bought BIDU Feb130 calls @6.2 (stop loss on a break below 125)
Bought LIFC @25.03 (initial stop @24.80)
Bought LTXX @5.63 (initial stop @5.51)
Bought SPWR @39.29 (initial stop @39.1)

AAPL calls were poorly executed. I did not wait for the OR pullback to complete, and jumped in a bit early. Wasn't practicing patience in that particular trade, that's for sure.
Not really sure why I hesitated with ICE Feb130 calls - I'm reasonably confident that tomorrow will see some follow thru buying in ICE.

I am glad that I was looking at the right charts today, ie. the ones that were setting up nicely and had bullish strength. I will review charts of all 5 positions tonight and see where the stops should be adjusted.

Markets overall are looking a bit precarious at this point. I still have a bearish bias in my head, but so long as I am in the right charts (ie. ones that have plenty of buyers), and abide by what the
individual charts are saying, then it won't matter (not too much anyways).

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Wednesday Morning Update

I see stuff going up, but overall markets are down

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HANS, AAPL, SPWR, FMCN, are all up. Man, if I didn't take a peek at the Q's or SPY, I wouldn't have known that the overall market is down.
I didn't post any blurb on my trading results yesterday because I traded so little that there wasn't much worth talking about !
Hopefully today there's more tradeable "action" in the markets. We'll see.
I got out of my RIMM puts on that stupid gap up, we'll see if that gap gets filled or not... Or alternatively, a lower high would be nice....

UPDATE: I just watched ICE move up from 129 to 130.5, and I couldn't pull the trigger. Bleccchhh.... I guess I'll just watch it some more.... Maybe it can dip back down to 122.5 and give me a real compelling entry that I cannot not act upon, LOL!

I see RIMM now grinding out higher highs and higher lows. That's gotta say something about the health of this market. Markets overbought? Ridiculous. Correction cycle imminent? Try telling that to AAPL, ICE, RIMM, GOOG, BIDU, SPWR, NYX.


UPDATE2: I've said this before, but it's worth mentioning again - individual charts trump the overall market action, so in any kind of a market (bull/bear/choppy/boring), all you need to do is find the right charts to go long


UPDATE3: I put in a limit bid of 8.10 on some ICE Feb130 calls before I left to run some errands. I came back from my errands to find that my bid was not filled - because ICE ran up another 4 stinkin' points !!
Maybe I will drown the pain of missed opportunity in some AAPL Feb100 calls that I bought @3.10 earlier this morning......... LOL !


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Tuesday, January 09, 2007

The 8 Habits of a Highly Effective Trader

Steven Covey's "7 Habits of Highly Effective People", has been one of the perennial favorite books of many people from all walks of life. Although Covey is a religious person, the truths that he describes in his best-selling book are objective, far reaching, absolute, and applicable to anyone's belief system. I am using those truths as a foundation for how I am aspiring to operate as a trader.

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1. Be Proactive.
At first glance, reacting to market conditions does not sound very proactive. However, in the context of the highly effective trader, being proactive does not necessarily mean taking the initiative. As with all other aspects of your life, take responsibility for your trading, rather than blaming other people or circumstances, or the market for your trading results. Regardless of what the market has done, is doing, or will do to you, you always have the ability to choose your response to the markets. You create your Trading Results. The highly effective trader has an ever increasing degree of self-awareness, and an honest understanding of his/her trading behaviours and motivations.


2. Begin With the End In Mind.
Set and document a long term goal for your trading. Practice visualizing where you want to be with your trading in the next day, next week, next month and next year. Take time to write out a realistic road map for getting where you want to be, and what strategies you will use.
Good trading begins with good habits. Have a trading plan and a pre-defined set of trading rules. (How successfully you abide by them is a totally separate issue). Make a log of all (or at least most) trades for later review. Plan and prepare ahead of time for each morning's trading session. The highly effective trader has a vision of where he/she wants to be, and a good sense of what it will take for him/her to get there.


3. Passion & Committment
Avoiding the pain of falling down is not what’s the most important, what really matters is the ability to rise up after the fall. I believe the ability to rise up after the fall is derived from the passion and committment to succeed. Many professional athletes first got into their chosen sport originally for the love of the game. Without passion, the question of for what purpose are you really, truly doing this, will not find a satisfactory answer. Without committment, you will be prone to quit at the first sign of a fall. Without either, the habit of discipline becomes a difficult chore. The highly effective trader is always mindful of being committed to do what it takes to succeed.


4. Patience
Patience is the capacity to suppress restlessness when confronted with non-ideal market conditions.
Patience is the capacity to resist the urge to "do something" after something has already happened. In other words, the lack of patience is characterized by the inability to resist the urge to sell a winning position even though the chart has not yet given any indicators nor confirmation to sell, or the inability to resist the urge to chase a stock after it has already broken out.
Patience is like the leopard, who stalks his prey by lying in the shadows and waiting. When the antelope wanders close to the leopard, the leopard does not strike right away, because it knows that the antelope can run away much quicker than the leopard, and the antelope is not close enough to maximize the element of surprise. By waiting and waiting, the leopard is able to see the antelope wander closer and closer, until the conditions are so optimal, and the distance separating the antelope and the leopard is so compelling, that the leopard cannot stand the thought of not striking.
The highly effective trader practices the art of patience, just like the leopard.


5. Discipline
The undisciplined trader is characterized by trading on rumours, guesses, or the need for excitement. The undisciplined trader is susceptible to impatience (liquidating a winning position prematurely), hope (hanging onto a losing position too long), panic (adding to a losing position), anger (trading because of an argument with the boss or the wife), or arrogance (trading for the sake of trading, with no solid basis).
In the context of the highly effective trader, Discipline is all about:
Acceptance - acknowledging where you currently stand as a trader, acknowledging your strengths and weaknesses in trading, taking a true, and honest inventory of your personality as it applies to trading.
Hard Work - bearing down and putting in the time to work on the sometimes unpleasant task of finding out what kind of trading is suited to your personality, and then documenting that in the context of a trading system (trading plan, trading style, timeframe, your edge/strategy, and a set of trading rules) that is tailored and relevant to your personality.
Work Hard - putting in the time to hone your skills, to practice, practice, and practice following your trading plan and rules with the objective of improving your trading performance, and monitoring your own progress.
WillPower - execution of your trading according to your plan and your system.
Persistence - staying the course and diligently follow your Trading Plan, and abide by your Trading Rules, even when, and especially if you do not feel like doing so.



6. Confidence
In the context of trading, confidence is not about arrogance, self-centredness, nor pride. On the contrary, confidence is all about trusting in your own ability to perform. The lack of confidence is characterized by second-guessing your trade, and doubting the timing of your entry. The lack of confidence hinders the one's mental capacity to perform, because you no longer trust in your own ability to perform. Success breeds confidence, and the lack of success robs confidence. Successful trading cannot be achieved without a certain degree of self-confidence. But since successful trading is not guaranteed, how does one gain confidence, or practice confident trading? The answer lies in simply practicing the other 7 habits. After a series of demoralizing losses, clear your mind. Once your mind is cleared, go back to review the habits that made you a successful trader. And start practicing those habits all over again, beginning with the simplest habits. It is only by practicing these habits that you will begin to trust yourself again. Do the little things in order to regain your trust in your own abilities, and success will come back to you.


7. Control Risk
You cannot control how much profit you will make on any trade, but you can control how much loss you will take on any trade. The nature of risk is like trying to fill your bag full of marbles subject to the following hardened and stringent rules:
(Profit) - The market decides whether you're going to receive big marble or a small marble.
(Loss) - You get to decide whether you will give up a small marble or a big marble.

If you do not get into the habit of controlling risk, you will inevitably wind up always giving up your big marbles, and your bag will not only go unfilled, but the big marbles that you give up will soon become small marbles that you give up, and inevitably your bag will be emptied. The only way to fill your bag with marbles is to relinquish only the small marbles when it is time to do so.
The highly effective trader understands the nature of risk and consequently always controls the amount of equity at risk in any given trade.


8. Sharpen the Saw
Continually engage in the exercise of the body, mind, and Spirit.
Practice Meditation. Start running, biking, hiking, or take up a sporting activity. Regularly read a book, or even a book on trading. Learn from others in the stock trading blogging community. Learn a new trading strategy. Learn about a market that you have never traded. Play a strategy game (chess, Go, etc.).



Putting It All Together
The highly effective trader has vision of where he want to be, and works out a set of goals, system, and plans based on a steadfast understanding of who he is, and where is he is now. The highly effective trader chooses the moment to act based upon discipline and patience, and has complete trust in his decision. The highly effective trader is not swayed by the end profit or loss as a result of his decision, but instead is grounded in the commitment to practice his craft each day and continually learn how to improve.
These 8 habits work in harmony with each other. Mastering all of these habits simultaneously is a daunting task indeed, but working on them one at a time, and at your own pace, is not only doable, but a worthwhile endeavour.

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Searching for One Sufficiently Good Idea

I came across this interesting idea.

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I have a subscription to the Motley Fool Boards. This was a leftover from my days of old (when knights were bold) when I used to believe in fundamental analysis. Anyways, there are several boards that I still actively follow and one of them is a swing trading board. From that board came the following interesting idea:

What makes this stock so interesting ?

The answer can be found in this obscure but definitely interesting tidbit of news:
"Taiwanese media reports said that the Mac maker had placed an order for 12 million phone units to be built by contract manufacturer Hon Hai Precision....."
The top 2 holdings of EWT are: Taiwan Semi Mfg. (TSM), and Hon Hai.
Chart of TSM is here.
Chart of Hon Hai is here.
Both are looking decent - of course, TSM's movements will be largely influenced by SMH. However, since both trade on the Taiwan Exchange (which is +13 hrs ahead of New York time), there are arbitrage opportunities available here. EWT, since it is an ETF AND an ADR, will not follow the trading patterns of a regular stock. I will be looking at EWT a bit closer in the next couple of days.

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Closed out Wi-Lan Trade

Finally closed off my Wi-Lan (WIN.to) trade; this one felt harder than it looked.

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1. Why did I take this trade?
Because Wi-Lan was showing a nice, orderly, low volume pullback from the huge volume move up made back near the beginning of Dec/06. This could also be considered a play of the pullback pattern (first-thrust-pullback in Dave Landry terminology).

2. What was the initial stop?
I bought @4.92, initial stop was @ 4.75.

3. Why did you exit where you did?
I mentioned here that I would exit either today or tomorrow because of earnings due out on the morning of Jan 11/07.
In particular, when I saw that WIN had trouble staying above 5.60, that was my cue to exit.

4. Is there anything you would do differently?
No. I couldn't sell yesterday because I needed to give WIN a chance to run some more if possible. Today the chart told me that it was done running, so I listened.

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Closed out my HANS trade

The same problem is occurring again - I sell too soon....

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1. Why did I take this trade?
Because every momo trader and their grandma's pet amoeba was watching a certain price level, and I wanted to front-run that action.

2. What was the initial stop?
I bought @33.55, initial stop was @ 33.24.

3. Why did you exit where you did?
Because the market was selling off.

4. Is there anything you would do differently?
Individual charts trump overall market conditions.
This is starting to get a little discouraging. I will really need to work on finding a way to learn how to ignore my own market biases, and listen to what the individual chart is saying.
First thing is to start using the intraday trendlines more often - it hasn't become a habit yet, and today that cost me some profits that I left on the table.

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Another selloff test

Big market sell off occurring as I type this.

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Throughout december, the bears have tried to take the market down, only to be met in force by a horde of "buy the dippers." I also wrote about an impending market top, but it was a bit premature to call a top back in Dec/06.
Today, all the big names are going down once again - led by RIMM, AAPL, ICE, GOOG (though I see BIDU trying to rally - might be a good short candidate). Will the bears be able to finally overcome all those buy the dippers? I am doing my own "probe" to find out.
Bought RIMM Feb135 puts @5.70.
Closed out my HANS position @35.26.
Other than the puts, I am in mostly cash, awaiting for some confirmation from the market.
And in a selloff like this, I know that I should be jumping on some ER2 shorts, but I just don't feel I have the mental alertness and focus for that just yet. Still need to practice some more ER2 paper trades before I jump back in for real.

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Monday, January 08, 2007

Update on Wi-Lan

Still holding the position in Wi-Lan (WIN.to) that I bought last thursday.

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I found out that Wi-Lan reports quarterly results on Jan 11/07. So, that pretty much decides when I will exit my position. The question now is how to extract as much profit as possible before I exit my trade between now and Wed. close.
I'm setting my new stop loss to 5.44, and the worst case scenario is that Wi-Lan will show strong signs that it will hit my new stop loss, in which case I will sell before it hits my stop loss. Today's high was 5.89. The best case scenario will be a break above today's HoD, in which case my stop will be automatically moved to Monday's HoD. If WIN meanders somewhere between today's HoD and LoD, then it pretty much won't matter where I sell.

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Monday's Results

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Bought ONSM @2.95 on Friday, sold @2.99 this morning. I sold when it could not hold above yesterday's HoD. Not much interesting to talk about there.
Still holding Wi-Lan from Thursday. Will post an update once I work out a new stop loss level for this stock.

Market action was brisk in the morning, but then things slowed down considerably after lunchtime. Strangely enough, I felt no urge to overtrade, nor get into trades that had no good setup. In fact, today is probably the least active day for me in a long time. I think I am beginning to feel more and more comfortable with my routine. Probably the one tweak to my routine is to setup the stop loss and warning alert combo. That should enable me to trust my stops better. And from that increased confidence, I can turn my attention back to taking another crack at ER2.




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Closed out STEM trade

I bought STEM from last Thursday. Here is how the trade turned out...
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1. Why did I take this trade?
Because the stock was showing showing follow thru buying from the morning's base and explode pattern.

2. What was the initial stop?
Initial stop was @ 2.91. Later
I moved up my stop to 3.40.

3. Why did you exit where you did?
I exited STEM even though there were no indications that my stop going to be hit. In fact, STEM put in an inside day, where the whole session (except for the morning dip) was range bound to within the first 15-min OR bar. There was no technical reason to sell this stock. I think it was my bearish bias showing up again, and I was caught trying to anticipate a selloff that never occurred.

4. Is there anything you would do differently?
Yes, don't micromanage my stop loss @3.40.

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Monday morning Update

I need to learn how to manage my time better.

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I wonder if I am second guessing my stops. I need to start reviewing all of my positions once each night, and modify stops where necessary. It is essential that I have confidence in my stops, because that will free my time up to do other things (like re-visit the ER2). If need be, and to avoid tinkering with stops during the trading session, I can always set the stop and an additional warning alert level on my position PRIOR to the market open.

Watching ICE today, picked up some GS calls @2.90 (chart after trade is closed).
BRLC and STEC both look interesting..... not sure if I will bite, will see what happens.

UPDATE: Market is still sluggish from the lunch hour pullback. I went to the library and borrowed VanTharp's "Trade Your Way To Financial Freedom" and Schwager's "The New Market Wizards." Actually, VanTharp's book I had previously borrowed, but had to renew (because it was such nice light reading). Van Tharp is so analytical in his book, that I sometimes got the feeling that the guy is some automaton.
Example (paraphrasing):
"This section is going to be difficult to read, but you better read it if you want to be a successful trader."
"You call that a trading system? Wait till you read my next 5 chapters....." And yes, the next 5 chapters detail a better trading system (maybe too detailed), but man, it's not the most interesting read. I think he should talk to Victoria's Box, or Trading Goddess's bottom line to add some "colour" to his monotone descriptions.

Hopefully Schwager's book is a bit more "alive."

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Closed out RIMM calls

This one sucked.

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1. Why did I take this trade?
Because the stock was showing all the signs of a classic breakout pattern.

2. What was the initial stop?
Initial stop was to exit the calls if RIMM fell below 139.6.

3. Why did you exit where you did?
Because I was going into this morning session with a bit of a bearish bias. I was scared out by the morning selloff. I basically ignored the strength of Friday's move.

4. Is there anything you would do differently?

Forget about the opening selloff - that's just noise. Wait to see if RIMM would breach the 142 and 140 level. It just wasn't in my head to watch those key breakout levels, so I got scared out at the first sign of possible trouble. RIMM did break below 142, but that was met with a wave of buyers to push it back up above 142, confirming the strength of this breakout.

Although I did not lose money on this options trade, I left so much money on the table that I realistically could have captured
(RIMM calls were up to 8.6 at one point), that it has to be considered a screwup.


UPDATE: the stupid side of me made a brief appearance today. It made me go and buy RIMM calls (Feb07 150's) @6.5, when RIMM was near its morning highs and sell @5.0, when RIMM was near the low of the morning pullback. Loss was amounted to few hundred dollar loss.

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Sunday, January 07, 2007

Stocks of Interest for this Week - THI and CRVL

Two ideas for this week....

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Futures are printing red, and the bpcompq is still looking very toppy, so I am very cautious heading into this week. From Alan Farley's site:

"Downside volume overwhelmed the upside on Friday and the SP-500 index advance/decline ratio hit its lowest level since late November. It’s hard to escape the conclusion these numbers mark active institutional distribution."

If there are enough signs of a pending market selloff, I will not hesitate to turf all my existing swing positions, and start buying puts on the big momo leaders if the market really turns south.


First up is CorVel. I got this idea from TradingGoddess. I have no idea what the company does, but its chart sure looks nice. CRVL seems to be one of her favourite stocks, as she actually mentioned several times ever since way back in the beginning of Nov/06. Her blog actually contains a few good ideas that I missed out on (MVIS is another example). I will start cherry-picking some of her stock selections that she blogs about.

I like THI as a play that should do well if the tech stocks start to selloff. I think it has the potential to succeed where KKD failed. Oh, sorry, I'm talking too much fundamentals !

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Trading Updates: Wi-Lan and STEM

Charts of 2 trades that I am still holding.

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STEM
As previously mentioned, I bought some STEM. Here is an update on that trade:


For STEM, the initial stop was at 2.94.



WIN (on the TSX)
I am still holding Wi-Lan since the entry on Thursday.
I initially thought I had made about 7 or 8R thus far on this trade, but as it turns out, the market decided that my initial stop would be 4.75, so I'm making only about 3.5R on this trade thus far.

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Friday, January 05, 2007

Friday's Results

What a difference a day makes.

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Picked up some RIMM Feb07 145 Calls @6.6
Still holding my MA calls from yesterday, as I saw no reason to sell them today.
Bought MAMA but got stopped out - which is fine by me.
Picked up some HANS @33.55 - everyone is watching a certain level, so I tried to front-run with a small position.
Sold half of my STEM - will post a chart later.
Picked up some ONSM @2.80.

All in all a good day, not only because I did well, but because I followed my plan - I took my (small) losses where I needed to, and didn't chase (eg. ICE was very, very tempting to buy). Crikey, I hope this isn't tell me something about trading ER2......

It really is as simple as following your trading plan. Following your plan does NOT guarantee that you will be profitable, but I can guarantee you that bad stuff happens to me when I don't follow my trading plan.

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MAMA turned cold

MAMA ain't so hot.

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My trade in MAMA is considered a victory even though I lost money on it because I traded according to my plan. My original stop loss was near the opening low @5.6. When I saw that it made an intraday low at around 5.63, I moved the stop up to 5.64. I honoured my stop loss @5.64. Keep your losses small. Be glad to take losses when it is according to your trading plan.

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How to Catch the next STEM

Here's how I managed to catch the fast moving and elusive STEM yesterday.

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I was stalking STEM from back in Dec/06. I set the alert but it never got triggered. But I kept the alert around in my watchlist, because I knew STEM was very volatile in the past and had the potential to jump up in a hurry.
So the addendum to my routine would be that I not just keep alerts around in my watchlist, I accumulate them. My watchlist can get pretty big (right now it's at about 40 I think). Though I don't have any criteria for culling my watchlist down to a manageable size, any ticker without an alert is a pretty good candidate to get turfed.
Note that Dan Fitzpatrick, a technician that I respect, also talks about how to track many stocks at a time. His strategy is valid as well, except for the part about using email to alert you. I would rather stick to the alert feature from within my trading account, as sending email can take minutes to reach you. And in those precious minutes, many things can happen to the stock that you are trying to catch.

UPDATE: I actually have around 70 stocks in my watchlist. About 50 of them have alerts. I usually get at least one of them going off each day, so that keeps me from getting too bored.

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Morning Update: So Far So Good.....

Friday Morning is working out well so far.

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Sold GSOL into strength

With GSOL, I saw 99 appear on the ask so I sold half of my holdings. Then I sold the rest when it managed to break above 19. As it turns out, I should have held on to the remainder of my holdings, as GSOL is up to 19.40 as I type this. Oh well, maybe my fingers won't be so itchy next time.
Picked up some MAMA (5.8), and ONSM (2.8)
Looking at buying some FRG on the dip.

I'm actually too busy to look at ER2 today, maybe that is a sign.....
Nothing helps the psyche recover like a boost in account equity......

UPDATE: ICE sure looks very tempting right now, but I am not in any position to buy calls only to turn it into a daytrade. Will be waiting for a pullback. If ICE really is at the start of a serious uptrend, the pullback is the lower risk play, NOT on the 3rd consecutive up day (though the chart looks very strong right now).

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Thursday, January 04, 2007

ER2 Won this Battle

No, really, this time I will stop trading ER2.
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Today would have been a great day if I didn't succumb to the temptation of trying to capture a point or two on ER2.
Most of my other trades were working out well.
Caught GSOL @18.13
Caught MA Feb07 110 calls @3
Caught STEM @3.04
Bought some WIN.to @4.92
Bought ININ @21.25, stopped out @21.16

(Except for ININ, I am holding all of the above overnight; will post charts as soon as I have closed the trades.)
Even made some decent trades with Bracket Trader. I really wished that this was the end of the story, as it would be considered a very successful day by my standards.
Even tried to short NYX on the second break below 93 in the morning, but my broker told me it had no NYX shares available to short.

Alas, my mind wandered and I had to go and check ER2 live, and before I knew it, things just turned south. I caught the above 5 trades from simply following my routine. Why can't I follow the same routine (which I know works for me) in the case of ER2? I'm not sure I know the root cause answer to that. Perhaps it is a combination of things. I suppose the Futures Fever isn't quite completely out of my system just yet. Whatever....
I think I my frustration level with ER2 should be high enough now to will myself to take a break from trading ER2. It has won the battle for this round for now, until my psyche can recover.

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More Daytrading of the Russell 2K Futures

I am making my mandatory journal entry of my trading mistake. This one was in daytrading the Russell 2000 Futures (ER2).

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The first mistake I made was moving my stop loss lower on one of the morning trades in ER2. The reason that I did that was because I thought that there was a pretty good chance that the original stop was going to get hit. Of course, this begs the question, if you believe that the odds are greater than 50% that your stop will get hit, then why not sell before your stop gets hit, or even better, don't enter this low probability trade in the first place?? Because my first couple trades were small losses, and I wanted desparately to make back those losses. That was my second mistake.

One mistake led to the second mistake, and you can imagine how the story turned out for the rest of the morning. As luck would have it, the markets played nice to me in the afternoon, and I was able to recover all of my morning losses.

The probability of my stop getting hit will be something I will incorporate into my trading, especially for futures trading. As time permits, I will make a post about this in the context of risk.

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Wednesday, January 03, 2007

Blog Mergers 'n Acquisitions

The CEO of MoveTheMarkets.com has a secret plot to topple TraderMike for the coveted title of THE top dog stock trading Hub in all of the blogosphere.

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Move over Chairman Mao, the Chairman and CEO of MoveTheMarkets.com is starting to build out his empire.
First he recruited a retired jet fighter pilot who goes by the name of Zoomie. Not quite sure how he convinced Zoomie to sign on the dotted line, but Zoomie can now be found as a regular contributor to the Next-Gen (but soooooo Web v1.0) trading hub otherwise known as MoveTheMarkets.com.

Not satisfied with just one contributor, The CEO became much more ambitious in his next move - recruiting a rocket scientist who goes by the name of ExEngineer. This one was definitely an ambitious acquisition, because ExEngineer was convinced to euthanise his old blog in order to join the ranks of MoveTheMarkets.com.

And now, in his latest coup, the CEO of MoveTheMarkets.com has acquired Tale of the Tape !! This is clearly the boldest and biggest move yet, because Tale of the Tape had a tremendous and loyal fan base, and plenty of blog traffic. All of that has now been ingeniously assimilated into MoveTheMarkets.com.

And this M&A storm is gathering momentum. Already there are rumours that Victoria's Box, and Trading Goddess's Bottom line will be making appearances at MoveTheMarkets.com.

I am no jet fighter pilot. I am no rocket scientist. And heck, I clearly cannot compete with Victoria's Box, and I know I can't match Trading Goddess's bottom line. Those are some serious credentials associated with MoveTheMarkets.com. But by the power vested in me, and with every last ounce of breath, I will defend Phileo's Picture Windows, the last bastion of blogging freedom and unaffiliated and unfettered trading journalism.


So there.

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