Trading Journal - 2023 - Take in the arts

There was some upheaval in the market that caused a lot of money to flow into the tech sector, mostly out of the financial and banking sector. Let’s call it the “Great Banking BooBoo of 2023”.

Silicone Valley Bank had just shat the bed. Credit Suisse quickly followed suit – and was subsequently absorbed by UBS. Politicians and central bankers looked for ways to make hay out of the whole ordeal – and everyone had a good piss about it.

MSFT went bat-shit. The price action was out of this world. It was an incredible opportunity to make a quick fortune for those who were properly positioned and had enough dry powder in reserve. NVDA, ADBE and several other tech names soon followed – and some rather anemic tech names were suddenly flush and fat.

A lot of people followed the money in. I knew it was a game of musical chairs. Get out at the top when everything traded sideways – because the money would go rushing out just as fast as it went in. Five days later it did. There was a nice bounce afterward – and I decided to go after MSFT and NVDA and ride them up the hill for the day, then jump off. I was going on holiday and didn’t want to leave the trades open while I was gone.

My order for NVDA filled – my entry point for MSFT got missed by one freakin penny… Go figure… I didn’t adjust up to follow it – and by the time I made up my mind what to do – the stock had moved beyond the point where I wanted to by it. So I let it go and rode NVDA for the rest of the day, topping off once on the way up and then closing the position. It was a nice day for a decent gain that ended up being just slightly under my targeted day rate.

Lessons for the day – were:

Don’t fiddle around with with a couple of dollars on an entry point when it costs you half your day’s worth of gains. Set your entry point where you know it’s going to get picked up.
If you’re not going to play the opening bell – then stay the hell away and wait until things settle down to get in – or you’re going to miss better entry points. Sometimes, even when you wait, you’ll get in too soon – and end up leaving money on the table by missing the bottom. Get used to it. It’ll happen all the time.

(These journal entries are for me to keep track of what goes on in an ordinary day. They’re not meant to be financial advice, or offer up any of my philosophy about trading, or whether or not I have an effective strategy. It’s just something for me to look back on, and for others to read for their entertainment purposes.)

Trading Update – 2

I had a terrible time trying to sleep. Too many things going on in my head. Coming back off holiday and walking into a market I felt disconnected from didn’t help. I didn’t really have much of a plan for the day – and only outlined a few stocks the night before to target during the trading day.

There was plenty of news in the air over the weekend. The talking heads were going on and on about banks collapsing and the FDIC all morning… Upbeat news concerning the banks and FDIC insurance coverage lead to a hefty sell-off in tech and most of the mega-cap names that had carried the load for the last few weeks. It was expected. But it was a bit more steep than expected – and turned getting good entry points into a game of catching falling chainsaws.

Bad entry points don’t make for losses as much as they make for lost days. Breaking even for the day shouldn’t really be considered a success.
“At least I didn’t lose.” is loser talk. We’re in this to win it.
As it turns out – had I gone against my own rules and traded the opening bell – my day would have been over be 10:15. As it went, it was an afternoon of watching tickers… Oh well.

On this day – I again stuck to NVDA, MSFT and AMZN. I have no real tolerance for anything but the mega-caps at the moment. I know – absolutely – that there are a multitude of really good stocks out there. But I like the idea riding the Titanic much more than I do the Carpathia.

TSLA has been doing a little dance for the last week – and that’s great. I just have no faith in the volatility of the stock, seemingly tied to the fickle nature of it’s investors and the air of meme-appeal which seems to surround it. I’m also not a fan of its petulant, rock-star leader who can move the price by farting. So I avoid it.

So – chainsaws aside…

Summary lessons for the day:

Be alert, patient and use caution when trading around short term trends that dramatically deviate from longer term trend lines and moving averages. Be particularly alert if those short term trends coincide with the beginning, middle or end of any major macro events or news. Odd movements – or bounces off support or resistance lines during these periods can be unpredictable – and increase your exposure to unintended circumstances. Don’t get to thinking that you know what those movements mean… Chances are – you don’t…

In pre-market – AMZN jumped over a former resistance line which began to show as a new support line. It was anomalous and an oddity – so of course I had to trade it. It’s a pretty dumb reason to enter a trade – purely speculative – and done on a hunch. That being said – it seemed like a pretty good setup for a stock that’s been trading sideways in a very tight range for many, many weeks.

It was a winning trade – but slow moving money – and I would have been happier being able to turn the money more quickly during the day and redeploy it on another trade. Instead – I sold it a little early and doubled down on MSFT to get the trade wrapped up – as it too was moving pretty slow on the day.

As it would turn out – I got crushed at the end of the day by some entity selling a massive position – pushing me up against the bell. No time to recover – so – it sat there overnight and sold off more. I’ll be spending the morning figuring out how to claw most of it back and pair the loss. Not massive – but – certainly not what I started with.

I’ll be the first to admit that I’m not the most sophisticated trader – by a long shot – and I have a lot to learn about moving in and out more efficiently. Planning on spending some time with paper money practicing me speed – as it’s already the 800lb gorilla in the room. The only way to get experience – is to get experience…

Trading Update 3

Yesterday was a screwy day. I sat around most of the morning and didn’t find any good entry points. A two day sell-off continued from the day before and most of the morning was lost to watching red candles all. I was ready to quit around 12:30 and pack it in for the day.

Around lunch there was a very small opening in price action and volume with AMZN and I saw an opportunity for a small gain. After entering the position things flattened out again (of course) and after and hour or so I averaged out of half the position and let the rest go to the end of the day – where my sale got bumped out. I put it into extended hours and it got bumped out of that too.

In the morning I pushed the leftovers into pre-market and it moved in minutes for a nice gain. I also had a few leftovers from MSFT that I was able to clear in pre-market. So – starting off day 4 with no positions in place – and a market that gapped by +2% overnight. Not sure how I’m going to play that.

One thing – I don’t trust the gap just yet. We’ll see what lunchtime brings.

Trading Update 4

One thing that always holds true for me – is that I make more in sideways markets than I do in daily rallies. Yesterday was no different. I was completely unprepared for the market to go on a day long run – after weeks of downturn.

I entered no positions. I had 6 orders in place – but the price action went entirely in the opposite direction – so none of them filled. Once the day ran away from me – I decided just to watch – observe – learn – study candles – and grunt like an ape… If I can’t get my desired entry points – I don’t play. Means I miss out on a lot.

One strange observation was watching several mega cap stocks trade in near identical patterns, percentages and prices. It looked very bizarre – and it was hard to imagine that there is so much money out there – that BRK/B, ADBE, MSFT, META were all moving together – as if in lock-step. Even AMZN got in on the game…

Not sure if it means a damn thing – but it was interesting to watch. I will not be left behind today. Not going to happen… I will make some trades..

Trading Update 5

It was a great day – and I was prepared. Of the 12-16 securities I watch – I decided to focus solely on AMZN. The second day rally was near the same as the first.

Once the movement was confirmed – I entered and exited by 10:30 and was done for the day. Then – like a moth to a flame – I went back in – a bit too early – and ended up riding the whole thing down – and then painfully back up again for the entire day for slightly less gain. I was aggravated by this considerably.

Every small recovery rally started by real humans – kept getting crushed by big high-freq sell orders – again – and again – and again. It took the entire afternoon to rebuild.

I got pushed past the bell and ended up having to liquidate in after-hours – where the machine trading continued and most people – tired of fighting it – left for the day. I carried over a small chunk into today – that might just sit there over the weekend.

So – Lessons on the day:

When you make your day before 11:00 – close out and go do something else. If you’re leaving your job to trade full-time – don’t swap one prison for another. The money will be there tomorrow for you to chase all over again. They’ll print more. Go work in the garden or walk the dog – or both…

Keep tabs on the correlation between the megas and futures – as they seem to march in step. Keep your US futures tabs on 1 or 5 minute setting when in the middle of an active trade. Until proven otherwise – when the futures dive – it’s time to close out. On wonky futures days – be really certain of your moves before going in. During strong rallies accompanied by rising futures – you should be in for a nice ride.

Trading at the end of a quarter can be dicey with the megas. Volume floods – particularly late in the day seem to arrive out of nowhere. There was so much automated selling action keeping price depressed yesterday – that if your sale got trapped on the wrong side of it – you’d never make your trade or close your position on the day without lowering your price.

So – that didn’t take long…

There’s no way I can do a daily update of the minutia which goes on day to day in the market. I’m simply whipped by the end of the day – and depending on how the day goes, I either have time and energy to write – or I don’t.

So – rather than try to maintain a steady drumbeat of blah, blah, blah – every single day – I’ll write when I can – and when I want. Mostly – I need to keep notes to remind me what I did – should have done – didn’t do – and wished I had… That makes for better stories…

And maybe – I should just start with the lessons of the day – the things I learned – before I forget them… Today – I remembered something very late in the day – which I really wished I had never forgotten. It cost me a day worth of trading – missing out on great rallies – but it saved me so much time and aggravation once I recalled the process… Of how I deal with bad trades – poorly timed trades – or trades that just go sideways and push you up against the bell…

When I buy something for long term holds – i.e. actual investments – I buy them in my retirement accounts – and usually forget about them… But when I’m buying “on the day” as I like to call it – my intention is to get in – make my moves – let it ride if the trend allows – and get the hell out before the bell. I do not trust stocks with my money any longer than I have to. Call me superstitious – but my day bank wouldn’t be my day bank very long if I was busy yolo-ing it into the market and going long in everything. I need my damn bank – and I don’t trust it with Mr. Market…

Rule# 1 – get your damn money out every day. Do not leave it overnight.

After a few trades last week went well – and I had the majority of my money back in Mrs. Money Market where it could rest for the night – I had some shares left over and had to move them in extended hours. The next morning – I saw that had I just left them alone I would have doubled my day take. By selling them the day before – so as not to break Rule #1 – I left a lot of money on the table.

So – enter the next trading day and I intentionally carried over 5 different positions – letting them ride into the next day. Upon getting to work the next morning – not much had taken place in pre-market and I decided to let them ride into the trading day.

Shortly after an early morning pop – they began to slide – all of them – and slide hard – taking a good chunk of my day bank with them. The ride down was brutal – lasted most of the day – pushed past the close and then sat flat over night…

So – I spent the better part of the next day waiting for them to come back – all the while missing out on a wonderful recovery – waiting for my positions to even out – or come close enough to warrant bouncing out for a small loss… It was just silly – and entirely unnecessary. I could have just sold out of the majority of the position and transferred the paper loss to some leftover stock that I would sell at a later point in time.

When you’re only buying top shelf stuff in relatively stable market conditions – this technique works out quite well… If you don’t do it – you’ll be forced to sit around and wait forever for your money to come back – if it ever does… If you pull this move on a regular basis – worst is – you end up with some orphan stocks to dump at some later date…

But sitting around watching tickers all day??? Total rookie move – and I am exactly that – a total rookie. But – many years back when I first started messing with stocks – I used to do it all of the time. Somehow I forgot about it. Until today when I remembered – and I felt pretty foolish once I did.

I get that I’m unconventional. I get that I’m probably doing this all backward – but I learn how I learn. I’m a hard-headed sod… and I’ve had to figure most of this stuff out on my own. Someday – I may get into writing about my educational limitations and the fact that when it comes to learning – I have an outstanding disability – possibly accentuated with overwhelming skepticism – to my own demise.

But trading? No one has ever taught me a damn thing about it. Some philosophy and guidance? Sure – lots of that from many, many very cool people. But how to actually trade – the function of trading – is something I’ve had to teach myself. It’s something I’m now teaching myself in ways I never saw as possible before… For years – I sat and watched – and saved – and watched – and saved… Now I get to learn during live fire exercises…

Maybe later – I’ll write about Rule #2 – Once I remember what it is…

Rule # 2 – Forget about Rule#1

After ping-ponging around for a few months and watching the success and failures of several trades – I realized that parts of my trading style made sense – for someone with 20-30 times more money than me. In short – I was trading with the bank I didn’t have.

I put way too much money out at any given time on a single trade – and usually ended up stuck there if things went in the opposite direction of my plans – which happened more than I care to admit. So – Rule #1 became kind of impossible – and I took some stupid daily losses that I otherwise didn’t need to take. I was trading with too much fear – unfounded fear – and it was costing me a lot.

So I settled on partial opening positions – and that seems to have (at least temporarily) cured my ills. If I open a position with 30-50% of my intended amount – I don’t get trapped if it goes south – but at least I live to fight another fight – open another position while I wait for that one to make whatever move it’s going to make.

A few statements came to mind; “Don’t enter your entire position all at once.” and “You may sacrifice some upside – but you’re in for 100% of the downside – so lessen your initial opening amounts.” The second one is mine – and I repeat it to myself all of the time. The 1st – I heard someone else say a while ago – but it took a while for it to make sense. Once I realized how nice it was to not get completely smoked by 9:45 – because I held some of my money back – it started to make more sense than ever.

Between the two phrases – I’ve had a much cooler head when it comes to my daily trades. I’ve managed to recoup all of my initial losses and still remain up for the year – and on pace to meet my goals. But it took a calmer head – the ability to get real with myself – and a willingness to examine my actions and decisions on a daily basis. Constant reflection is a valuable tool.

So – back to Rule #2…

I break Rule #1 all of the time now. Days and days go by where I leave my positions open. I can afford to do it because I open with smaller bets. If I go down right after opening – and stay that way for the day – I just leave it – and wait it out. It’s been working for me. And I still end up leaving a ton of money on the table most of the time. I still have to practice the part of patience – which would be easy if I had a bank about 5-6 times the size of the one I’m working with.
It would be a lot easier to park a chunk of money on a stock and leave it for a while if I had more to put to work elsewhere.

Any win is a win – but waiting weeks for a $100 return is not quite what I had in mind when it came to winning. If one trade turns out to be a dud – it’s always nice to be able to turn to the next trade and work it. Then the next one. The only way this has become possible is for me to take my tiny-ass bank and break it into smaller chunks to work more stocks at a time – to ultimately achieve the same gains. It’s a pain – and one I’d rather avoid – but when you’re starting off – it’s hardly possible.

One impossible task at a time.

Take in the arts

Trading Journal – 2023