This past week was a pretty good one for me, maybe that's why I was able to come to a sort of revelation. Something I’m starting to finally come to the realization of is that though the trading system I’m using may be sound, if I want to be a successful trader (consistently) I need to work on my mental game. Since following @investorslive tweets and his watchlist, and then joining his chat I’ve found a trading technique that definitely works (specifically his 3 favorite setups that he details on the new member’s page). I have made money using his technique, however, I’ve also lost money because I have yet to master the mental part of this game.
At the end of each blog post I have rules posted to remind me of how to consistently be profitable. Unfortunately I seem to find a way to reason myself out of at least one of these rules which leads me to a losing trade. Probably the most violated of all the rules is keep losses small and, probably on the same note, take profits quickly. There seems to always be something in the back of my mind which makes me hesitate when deciding to close a position (for a win or a loss): am I closing too early; am I going to miss out on a potential gain if I close out right now?
To be fair, there is truth to that fear. Most recent was my POTG trade from Wed. I was in at .248. Plan was to sell into a gap in the am if it came. Fastforward to Thu morning and the gap came and I sold half at .31. I held the other half because, in the back of my mind I had that fear of losing the potential gain…later that morning it came back from the pull back and was lingering around .29ish. Volume fading I decided to let it go. Thoughts were that I gave it enough time. Well, within 10 minutes my “fear” was realized and POTG started inching and popped to new highs. Fri it closed over .4.
On the flip side I can point to my JAMN trade where I became a bagholder. I waited for an op to exit when I should’ve closed out…if I actually sold, not at the bell--but certainly not hold into the washout, if I actually sold when it first stabilized in the 2.20s before it began its real tank (talking the Thu before last) then when I bought the bounce at 1.82 I may have actually made a profit. HRBN is another example (see below), this time of not taking profits when presented with them because I was hoping for more.
The truth of the matter is that it can go either way, in my favor or not. The problem is I can’t predict with any certainty which way it will go, all I can do is control what I have in hand—which is either a profit or a loss. If a profit is there then I can either take it quickly or use it as a hedge against a loss and if a loss is there I can take it quickly so I can live another day. All this seems very logical and rational when reviewing—I just seem to become irrational when at the controls of a trade…and I think there is where the key to my success in trading is: the ability to stay rational and disciplined during the trading day.
POTG-had some nice profits from the Wed/Thu overnight trade, went back in on Fri for more overnight action. Grabbed some in the afternoon on a pullback and then again when it looked like support was holding, average in at .39. They had an afternoon PR and then some more newsletter releases over the weekend. I’m looking to sell into a gap again on Mon or a quick out if it looks to dump…I guess really looking to cut loose either way. If it looks like a slow start I may hold and add. Hoping this will really turn into another multi-day runner.
CELM-going to start eyeballing this one…halted sometime ago and relisted in the pinks last week Tue. Volume is nothing right now but might be interesting when/if it stays above .40.
HRBN-Made some great money from JUN puts I day traded on THU (.7 to 1.80), but that probably skewed my discipline on my JUL puts that I bought on the same day. Grabbed them when the underlying was tanking from 10 to 9 at 2.25 per contract. They went as high as 3.20 but I decided to hold overnight, even though folks in the chat were calling bottom at around 6…which apparently was right. Looking at the chart it was pretty clear that this thing was bouncing and on Fri it was looking pretty strong. If I could take Fri back I would’ve sold my JUL puts at the open when it gapped, pulled back but found support at the previous close (no crap). Ended up selling in the afternoon when it looked like it was inching up. In at 2.25 out at 2.50…and as I mentioned in my tweet, my luck, this thing will tank on Mon.
HOGS-another Chinese company, thinking its got more to give. Grabbed some puts as it was bouncing in the 10.40s…then it made a nice move back up to 11. Rest doesn’t look to hot for a short position…10.80 was support midday then it cracked, tried to bounce but looks like resistance held at 10.80s. I’d like to think the last few minutes will be forgotten on Mon, since it looks like lower highs and a double bottom with steady volume. Will have a better idea premarket.
MOBI-closed out Fri for a loss, in at 1.65 out 1.30 (calls). Was anticipating a big move, so when I when I had profits on 2 bounces off of 6 while I was holding I didn’t take them. The idea of selling and then rebuying if it went lower was in the back of my mind…need to start paying attention to the guy back there. Hit 5.75 on Fri…was thinking 5.70 was the support area. We’ll see what happens this week, might look to rebuy if I see some support holding.
NFLX-I’m seeing more downward. Probably test 235/6 then bounce. Interesting to see how strong that weekly chart is.
AAPL-wow, this doesn’t look too good for AAPL. 325 looked like strong support but it broke through again on Fri and actually closed under it…now at 320 support. Had to pull the 9mo chart out to see that if 320 doesn’t hold then we’re looking at 300 or 295 as the next support.
Follow the rules: Cut losses quickly; Don't overtrade; Take profits/sell into strength; Don't chase, watch for the pullback; Have a plan and stick to it
View my other posts/give me some advice at http://part-timepennystocktrader.blogspot.com/. Follow me on twitter @BNGESG.
At the end of each blog post I have rules posted to remind me of how to consistently be profitable. Unfortunately I seem to find a way to reason myself out of at least one of these rules which leads me to a losing trade. Probably the most violated of all the rules is keep losses small and, probably on the same note, take profits quickly. There seems to always be something in the back of my mind which makes me hesitate when deciding to close a position (for a win or a loss): am I closing too early; am I going to miss out on a potential gain if I close out right now?
To be fair, there is truth to that fear. Most recent was my POTG trade from Wed. I was in at .248. Plan was to sell into a gap in the am if it came. Fastforward to Thu morning and the gap came and I sold half at .31. I held the other half because, in the back of my mind I had that fear of losing the potential gain…later that morning it came back from the pull back and was lingering around .29ish. Volume fading I decided to let it go. Thoughts were that I gave it enough time. Well, within 10 minutes my “fear” was realized and POTG started inching and popped to new highs. Fri it closed over .4.
On the flip side I can point to my JAMN trade where I became a bagholder. I waited for an op to exit when I should’ve closed out…if I actually sold, not at the bell--but certainly not hold into the washout, if I actually sold when it first stabilized in the 2.20s before it began its real tank (talking the Thu before last) then when I bought the bounce at 1.82 I may have actually made a profit. HRBN is another example (see below), this time of not taking profits when presented with them because I was hoping for more.
The truth of the matter is that it can go either way, in my favor or not. The problem is I can’t predict with any certainty which way it will go, all I can do is control what I have in hand—which is either a profit or a loss. If a profit is there then I can either take it quickly or use it as a hedge against a loss and if a loss is there I can take it quickly so I can live another day. All this seems very logical and rational when reviewing—I just seem to become irrational when at the controls of a trade…and I think there is where the key to my success in trading is: the ability to stay rational and disciplined during the trading day.
POTG-had some nice profits from the Wed/Thu overnight trade, went back in on Fri for more overnight action. Grabbed some in the afternoon on a pullback and then again when it looked like support was holding, average in at .39. They had an afternoon PR and then some more newsletter releases over the weekend. I’m looking to sell into a gap again on Mon or a quick out if it looks to dump…I guess really looking to cut loose either way. If it looks like a slow start I may hold and add. Hoping this will really turn into another multi-day runner.
CELM-going to start eyeballing this one…halted sometime ago and relisted in the pinks last week Tue. Volume is nothing right now but might be interesting when/if it stays above .40.
HRBN-Made some great money from JUN puts I day traded on THU (.7 to 1.80), but that probably skewed my discipline on my JUL puts that I bought on the same day. Grabbed them when the underlying was tanking from 10 to 9 at 2.25 per contract. They went as high as 3.20 but I decided to hold overnight, even though folks in the chat were calling bottom at around 6…which apparently was right. Looking at the chart it was pretty clear that this thing was bouncing and on Fri it was looking pretty strong. If I could take Fri back I would’ve sold my JUL puts at the open when it gapped, pulled back but found support at the previous close (no crap). Ended up selling in the afternoon when it looked like it was inching up. In at 2.25 out at 2.50…and as I mentioned in my tweet, my luck, this thing will tank on Mon.
HOGS-another Chinese company, thinking its got more to give. Grabbed some puts as it was bouncing in the 10.40s…then it made a nice move back up to 11. Rest doesn’t look to hot for a short position…10.80 was support midday then it cracked, tried to bounce but looks like resistance held at 10.80s. I’d like to think the last few minutes will be forgotten on Mon, since it looks like lower highs and a double bottom with steady volume. Will have a better idea premarket.
MOBI-closed out Fri for a loss, in at 1.65 out 1.30 (calls). Was anticipating a big move, so when I when I had profits on 2 bounces off of 6 while I was holding I didn’t take them. The idea of selling and then rebuying if it went lower was in the back of my mind…need to start paying attention to the guy back there. Hit 5.75 on Fri…was thinking 5.70 was the support area. We’ll see what happens this week, might look to rebuy if I see some support holding.
NFLX-I’m seeing more downward. Probably test 235/6 then bounce. Interesting to see how strong that weekly chart is.
AAPL-wow, this doesn’t look too good for AAPL. 325 looked like strong support but it broke through again on Fri and actually closed under it…now at 320 support. Had to pull the 9mo chart out to see that if 320 doesn’t hold then we’re looking at 300 or 295 as the next support.
Follow the rules: Cut losses quickly; Don't overtrade; Take profits/sell into strength; Don't chase, watch for the pullback; Have a plan and stick to it
View my other posts/give me some advice at http://part-timepennystocktrader.blogspot.com/. Follow me on twitter @BNGESG.
