A shorter's perspective in this Market
I read this guy everyday. I read the ENEMY! lol
From Chartswingtrader.com
January 30, 2009
State of the Market - 1/30/09
Do you ever feel like you are waging a personal battle against the market? Do you ever feel like whatever move you make, it will be the wrong one? That's how I feel right now after today. This commentary is going to be less market-based and more psychology-based. The market did break down early, but never really followed-through to the downside until the very edge of the day, and even then, it just kind of held there instead of really selling off. It was a difficult day to trade, at least for me. Not fun at all.
My frustrations with this market definitely continued today, as the early spike took me out of over half my short positions from yesterday with small losses. The frustrating part is that on a few, the stop was just barely hit and then the stock reversed hard without me for the ride down. That is probably the worst feeling as trader. I was away from my computer for most of the morning, so I had to set my stops and see what happened - I didn't have much choice. Let me tell you, it was not fun to see what happened.
My stop in UAUA was hit at $10.8999 (high was $10.908) and then it immediately reversed lower. I took a 3% loss on that one - not a big deal, but I could have been up around 12% later in the session. My stop in RRGB was also hit in the first minute or two of trading at $12.80 (high was $12.87), giving me a 2.2% loss. It reversed almost immediately without me. Again, the loss is not a huge deal, but again, later in the session, I would have been looking at a 7% gain. PNC was also hit at $35.11, giving me a 2.4% loss. That also reversed, although it moved higher at first. So once again, my read on these patterns appears to be correct, but this choppy market got me out of them prematurely and I did not benefit. I used trailing stops as well which supposedly can't be seen by the market makers, so I doubt they were trying to take stops out at the open, but who knows?
To add to the frustration, the one financial I did not get stopped out of only to see it reverse (JPM) just decided to stay higher all day. I was stopped out of that around lunchtime at $26.49 for a 2.7% loss. It was all over the place today - yuck.
Later on in the session, I did short ECA at $44.28 as it looked to be breaking through its 50 day moving average and a bear flag on its 5 minute chart. I once again got whipsawed there as it bounced right back up and stopped me out about an hour later at $44.77 for a 1.26% loss. It also reversed lower soon after my stop was hit.
The action of the past two days puts me down about 7% overall for the year - not a big deal and definitely something I can climb out of, but it is hard to deal with when most of my calls and reads on the market have been correct. It's not like I am shorting when I should be buying or vice versa - I have shorted when the market started turning lower and bought when the market started turning up and have absolutely nothing to show for it but losses.
Basically, this is the year has gone for me so far. Back on January 3, I was calling for a major pullback in the indices and told folks to not chase stocks. I went short some names along with FAZ at some point. I was stopped out early from FAZ and of the shorts I picked, only one worked (MR) while the others did nothing even though the market went much lower. Then around January 12, I was warning that a bounce was very probable based on what I saw, and so I entered both SSO and DIG at this time. My timing was a little off here, but the call was overall correct and we started moving higher a few days later, but I was stopped out of both positions way before that with small losses. Finally comes this week, when I have been clearly stating that we were due for a pullback here and here and that I wouldn't be chasing this government-induced supposed breakout. I got short some good-looking names yesterday that mostly did work, but I was shaken out of them early and now see only one out of six positions that gave me a gain.
As you may guess, I am somewhat frustrated right now. Honestly, days like today make me want to just quit this stupid game sometimes. I am not going to do that - I know it is all part of it and these things happen to every trader - but I may take some time off if it continues like this. My reads on the overall market have been pretty accurate I believe but I continue to carry this losing streak on despite of it. I don't know if there is luck involved in trading or not - probably a little to an extent - but if there is, right now all I seem to be having is bad luck, and I can't take that for much longer.
I know what I do need to do is look at how I am trading (specifically setting my stops in an extra volatile market) and change accordingly so that my correct reads will lead to profitable trades instead of frustrating ones. You never stop learning and growing as a trader, and perhaps this is my next challenge in terms of growth - how to manage this issue. I know controlling losses is the number one rule for trading, and I think I do a good job. My stops probably have been too tight on positions, but I do base them all on technical levels on intraday charts, so it is not like they are just placed randomly. What is happening is those levels I look at have been broken just enough for my stop to get hit, and then the action reverses without me. I don't know what to do about that. I think I need to figure it out before trading heavily again.
There is always debate about whether to use stops or not, or which type of stops to use. It is a tough question. It is easy in hindsight to just say, "oh, you should let your positions ride", but in this type of market, which is completely unpredictable, I can't do that. I would much rather wake up with a small loss of a few percentage points that have a loss of 10-15% after the market gets squeezed again on some new made-up rumor by CNBC. Days like today definitely suck, but I guess it is just part of trading. I am guessing I am not the only one who was stopped out of his shorts this morning - this market does a great job of frustrating as many participants as possible.
As it is, I am going to step away for a bit and not trade. As a trader, sometimes you have to be able to recognize this need and do it. I have one open short in ACM and will manage that, but I don't plan on adding any other positions for the near future. Basically, I think I've reached my breaking point. I don't know for how long I will stay away - I probably should step away for a while because with all of the rumors, volatility, and government interference, the game has become almost impossible to win in my opinion, at least for me. Maybe others of you out there are doing great, and if you are, congrats. Trading is a lot like poker, and right now for me, it is like trying to play a game of poker, but after each hand, the rank of hands change without the knowledge of the players that are playing. One hand, a full house is better than a straight, but the next hand, two pair are better than a flush. How could anyone be successful in that type of game? That's what we got right now in this market.
I need to let myself recharge, get some confidence back, and then maybe I will be ready to go again and get back to making money. But I kind of think right now if I try to keep trading, I will do nothing but pile on more losses and I definitely don't want to do that. Besides, my Steelers are in the Super Bowl so I can at least focus on that this week and hopefully enjoy a victory celebration for them (although I am worried about the game).
Sorry for the rant - sometimes it is necessary and theraputic to get thoughts out in words. I may be around and try to share some thoughts over the next week or so but if you don't see posts for a few days, you'll know why. This market isn't much worth writing a lot about for me right now. Take care and best of luck out there. Hopefully you'll have better luck than me recently.
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It is interesting to hear the other side, because they are hurting as well.
Tripps, should we send them foreign aid?
It is a good read daily. I subscribe at http://www.chartswingtrader.com
Not pimpin' just like to read him..........
