I made one Canadian daytrade today:
Mega Uranium was one of the stocks that I had mentioned in my post yesterday. How bullish is the uranium sector? Hmm...... Let me put it this way:
I printed up the charts of those 18 uranium miners, closed my eyes while I spun it around a few times, and threw a dart randomly at the chart. It came up MGA, so I bought it this morning without even researching the fundamentals nor technicals, and flipped it for a +0.34/shr profit.
Okay, ok, so maybe not all of that was all true. I did keep one eye open when I threw the dart......
Monday, November 06, 2006
Daytrading Mega Uranium
RIMM call option trade
Made one American trade today, and it was in options:
In retrospect on this RIMM trade, it probably would have been wiser and lower risk to wait for at least one more, maybe two more candles to confirm uptrend. Not sure if I'll be able to hold my calls (RUPLD == Dec06 120 calls) more than 1 day. Will need to think more about my criteria for holding. Although the daily chart on RIMM looks encouraging, Tuesday is election day, and I'm not sure what kind of volume and volatility that will bring to the markets.
Sunday, November 05, 2006
Ideas for the Week of Nov 6, 2006
Many of the stock trading blogs that I have read have identified this current market as overextended, overbought and due for a pullback. Two market sentiment indicators that I regularly use, the NAA50, and the BPCOMPQ, seem to agree with that assessment. Adding fuel to this argument are the fact that both SDS and QID appeared to have broken their current downtrends.
Given the increased risk of the market rolling over, and the uncertainty surrounding the midterm elections this week, I wasn't surprised that I was not able to find too many decent ideas for this coming week.
Here is one that I did find with a decent setup:
Basically, if 13 can hold up as support, then a challenge of the high @14.4 will be in the cards.
In the meantime, while I wait for the direction of the market to assert itself once again, I will be looking at daytrading and swing trading some stocks that are in part of the biggest bull market rally that no one knows about. And yes, all of the uranium stocks that I identified are Canadian stocks which trade on the TSX (or TSX Venture exchange). Currently, the only American stocks that I know of which are involved in uranium are: Cameco (CCJ), Fronteer Development Group (FRG), and US Energy (USEG). There may be one or two others, but really, Canada is the premier market of choice for Uranium companies, and even mining companies in general.
UPDATE: In case there is any misunderstanding, Cameco and Fronteer are both Canadian companies that are dual listed (on both the TSX and the NYSE/AMEX). I think those are the only 2 Uranium mining companies that I know of that are dual listed.
Saturday, November 04, 2006
weekends are for housekeeping
First off, I will say goodbye to NeoWorx. The bells and whistles were fun while the free ride lasted.
Next, I thought I would just mention for the record that I am now a paid subscriber to the HighChartPatterns newsletter. This newsletter focuses on, and caters to daytrading setups. Since for now, I try to avoid daytrading US stocks (if possible), it would be nice for them to mention some stocks which are swing candidates more often. However, I still find their service useful enough for me to become a subscriber. This is because often I find enough of their daytrading recommendations to also be good swing candidates as well. If I make a swing trade from one of their daytrading stock recommendations, I will remember to note it on the chart. I think I did it once or twice already.
I also haven't been maintaining my performance spreadsheet for most of the latter part of Oct (although I started again for Nov). I overtraded in the last half of Oct, so that meant a lot of time and effort to record the positions into my spreadsheet. Plus, I ran into a bit of a rough patch around the 3rd week of Oct (I think it was just before my Google options trade), which left me too discouraged to maintain the spreadsheet. What was weird was that 2 days after the Google options trade, things started to turn around for me. It's almost as if a switch came on inside of me to compel me to follow my rules:
1. keep losses small.
2. take smaller position sizes if you need to take wider stops
3. Honour my stop losses (stops in green is way better than to hope for green)
4. Only select charts with well-behaved, good quality, high probability, low risk setups.
I feel I have gotten ***better*** at following the above rules. This has made a significant difference in my approach to trading. Of course, I still need to work on the periodic bouts of overtrading, and getting better at following rule#4 should be able to address that.
I also need to find a simpler way to maintain the spreadsheet (TraderZBS's P/L table comes to mind) and will be exploring this in the coming week.
I've noticed that I've been more active in swing trading options recently. I've enjoyed the profits from the options trades that I made, although I'm very aware of the potential for huge losses as well. The key for me has been to keep posting up those picture windows, aka. charts so that I can study and review them later to identify what I did or did not do right.
Friday, November 03, 2006
Fronteer Development Group (FRG)!
As mentioned in yesterday's post, I like FRG, and this morning, FRG broke out to new ATH's. FRG trades in both the American (AMEX) and the Canadian markets under the same ticker, so I bought FRG on the TSX Exchange @8.23 just before the breakout.
FRG is a play on both uranium and gold, and both are in the midst of a rally. I think we will likely see more upwards movement as more and more investors and traders alike start to "discover" this stock in the next few days.
Here's another reason to like FRG.
Thursday, November 02, 2006
The Glittering Gold Rally
In a previous post that I wrote a few days ago, I talked about watching gold for a possible breakout. Well, guess what I saw today:
Put your rally hat on, it's time to go digging for some gold stocks. And while you are mining for the gold stocks, watch for the USD$ to fall below 85.
I like FRG in particular:
Today's Bounce Plays
Taking a page out of Dan Fitzpatrick's insightful article on the bounce play, I made a couple of them myself today.
First bounce play was IAAC: 
With IAAC, I noted the sound of the toilet flush with that opening drop. Then I noticed that the stock immediately jumped back up above 26. When that happened, I tried a lowball bid of 25.82 (that was the bid before it ran above 26.2). I took a pee break and came back to find that my lowball bid had been filled !
This leads me to re-iterate Dan's Bounce Play rule#2: Buy as close as possible to the most recent low of the current uptrend.
Bounce Play Checklist:
IAAC's uptrend: intact
IAAC's most recent low in the uptrend: Oct23@25.5.
Profit taking: ended after the opening flush.
Next bounce play was GROW:
Bounce Play Checklist:
GROW's uptrend: Doubtful, hence my plan to bail at the first sign of trouble. However, note that GROW formed a nice hammer today.
GROW's most recent low in the uptrend: Oct23@28.5.
Profit taking: also ended after the opening flush, steady buying volume thereafter.
Finally, I daytraded some BIDU call options again:
With BIDU, I did get a bit worried when it came back down to test the 85 level after I had bought the calls. I was ready to hit the sell button, but lucky for me, BIDU never broke below 84 after I bought it (around 7:08AM PST). However, once it stalled @87.15, there was no longer any reason to continue holding it, but I made the mistake of holding it to the end of the day.
Dave Landry vs. Phantom of the Pits
I've only started reading The Phantom of the Pits recently. In Chapter 5, he states his first rule of trading:
"Reduce or close out a position altogether if it has not been proven correct. "
Closing a position because the market has not proven you correct is NOT the same as closing a position because the market proved you wrong. In other words, let the market prove you correct, but do NOT give the market a chance to prove you wrong.
IF I've interpreted and understand this rule correctly, what the Phantom is saying is that once a position has been opened, you are like threading a maze in the sense that there are only one or two scenarios where the position should be continued to be held, but there are very many, many "dead-ends" - scenarios where a position should be closed out. The rationale here is that the approach to the market should be from a position of pessimism, and that this the most essential way to keep losses small.
Now, If anyone has been following any of Dave Landry's webcasts, you'll know that he repeatedly advocates NOT micromanaging a position. I tried to describe in my own words what Dave Landry means when by micromanaging. Essentially, Landry advocates letting the market decide whether to take out your stops as a part of avoiding micromanaging your trade. Anyone who has closed out a position before their stops were hit, only to see the stock run-up dramatically right after exiting the trade will understand that micromanaging a trade will greatly increase the probability of missing out on such profitable run-ups.
How interesting.
So now I am looking at two trading rules that both make sense, but are in direct conflict with each other. The main conflict that I see here is that one is advocating quickly closing a position before it has a chance to hit your stop, whereas the other is advocating letting the market decide when to take out your stop.
So how can this be reconciled? I'm not sure that it can, because these two rules, I believe, address different styles of trading. Landry's style is to try to catch onto the multi-month run-ups like AKAM back in this past summer, or AAPL for most of the latter half of 2005. So, his rule of letting the markets decide whether to take out your stops is geared towards catching those multi-month, trending, momentum winners (with the occasional pullback here and there).
I haven't read enough of the Phantom of the Pits (POP) to understand what trading style he is describing with his rule. However, his rule#1 seems to suggest a trading style where winners are discovered by a continual process of quickly and ruthlessly eliminating the losers. This also suggests a capital preservation attitude governing the trade, as opposed to the capital appreciation attitude behind Dave Landry's stop rule.
At first glance, it may seem like the POP's rule seems to be more important than Landry's stop rule - after all, capital preservation is more important than capital appreciation. However, it should also be understood that these two different rules address different market situations. This is consistent with the fact that there is no one trading strategy which is applicable to all market situations. There will be certain situations and conditions whereby it is better to NOT micromanage, and there will be certain situations whereby it is better to close your position before your stop is hit. MAYBE in a trending market (which is not what we have this week), letting the market decide when to take out your stops MIGHT make more sense, and in a sideways, choppy market (which is what we do have this week), the POP's rule might make more sense.
Regardless of whether one rule is more correct or better or not, the bottom line is that it is actually good that we have two contrasting rules to study and digest - that's what makes a market! That way, we can use our own critical thinking ability to discern for ourselves when, whether and how to incorporate these rules into our own trading styles.
Sitting and Watching....
No American trades today - haven't done that in a few weeks now!
And a good thing too - market actually gapped up to open, trapped the last of the permabulls and then tanked for the rest of the day. If I had made a trade, I would have been one of those permabulls that got trapped.
I did make one trade in a canadian stock - it's a junior gold mining penny stock. Got some decent buy volume in the morning, but got stuck in the afternoon selloff and now I'm sitting on a $75 loss. We'll see if it can bounce back tomorrow.
I've been working on another article while I was watching the markets, but now I am too tired to continue writing.... Will finish off that article tomorrow.
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