BIGGEST LOSSES ON MY ACCOUNT.

Everyone has always said be careful o/n financials. Muddy goes even further to say he cannot do o/n longs. Well, GDP figures came out and sent shares of everything sliding down. My losses sum to ($1140) and I'm down 6.8% since starting to trade. This is my 3rd time ever going into losses on my account. I've recovered beautifully each time. I'm not worried  in that sense, I'm not even worried about making a bad trade for my entry. GDP fell 6.2 percent. How was I supposed to know revisions were coming out if it wasn't making headlines yesterday. In fact, I think getting out with 1k losses is good comparing to how large the implications of the GDP drop are. If you're unaware of how big of a deal this is, just read some articles.

There is one thing I did very wrong about this trade, and that is my exit. I've been great about not making exits during panics. Out of open, RF started to hit new LODS so I got out and "cut my losses." See, I never understood why people say that, b/c right after selloffs are bounces. If you just wait to "cut your losses" you will REALLY cut your losses. I recommend you take "cut your losses" out of your vocabulary if you trade. Its cliche beyond belief. It terms of numbers- I exited RF at 3.13. Right now it has bounced up to 3.66, thats $530 that could have been subtracted from my loss of $1140. 

So now, lets talk about recovery. Its strange, aynul, made a good post yesterday about some things he picked up about handling losses at the traders expo. I'm not sure what this weekend will procure from me. Perhaps some deep philisophical ramblings on my behavior are in order. What the hell, I do that everyday. Honestly, I'm just going to keep trading. I think i've got the edge already. Honestly, what just happened easily relates to poker. It's really like being Daniel Negrenau in this hand. 

Sometimes, probability pins you on the losing end up against a wall with hundreds of orcs glancing at you with their beady eyes through unwashed and tangled strands of hair, slowly approaching, mumbling incantations in foreign tongues while licking their lips as they stare greedily at their fresh supper. Ok ok, thats not how I feel, but its fun to talk about.

Really, its not the entry thats getting to me, its the exit. Right now RF has reached 3.78 meaning this is no longer a bounce, but a reversal. RF is a GOOD COMPANY. I'm serious. 

test done, market open

I think i'll do a minute by minute today again. I just got out of my Microecon test at 9:15 and being 9:36, i have all day to trade(though I really shouldn't). One day trade to use, and a 100% chance that it will be. I've already fought the urge to buy right off open, but I know better entries happen when volume settles. I should go find a book, or write in my journal until 10:30, but I'll probably keep the charts open just for the sheer enjoyment of looking at them.

No positions yet, updates soon.

Today's trade

In C, doubling up again, at 2.32. This is the first time i've bought right after market open-9:33am, It is a direct violation of yng's rules. We'll see how it goes... update later. 

EDIT: 4:20pm

First, It was a huge mistake to buy within 3 minutes of open. Right after I did, C tanked and I was down over $500 on my position. It was a sell off and I almost cut my losses. All in all, I held because I have a tolerance for pain when I know I might have simply been early to the party. But party there was. It was a roller coaster day, the chart says it all, I sold with about 45 seconds to market close at 2.58 for a nice $480

As you can see, I bought right at open, and held through a deep sell off. You might wonder why I held, and my reason is simple. A sell off or a buy run can happen really quick in BofA or C. A volume spike can make this happen and also, this was happening before 10:30 when volume is particularly high. It is a risky play, but I watched Bernanke's testimony real time with my trade. When he mentioned that nationalization of C did not imply a shareholder wipe, I had more confidence. This was when the first buying run of the day came around 11AM. From there, I was looking for a nice exit while checkings charts of the many other financials having good days. Since C was not hitting the same HODS BofA was, I knew it would come EOD.

Simple reasoning. Profitable trade. I'm not happy with the risk I took at 9:33AM. I'm tired of account fluctuations. I'm up 16.3% and don't want to give any of it back. 

My new hero

I've always thought traders had much to offer for economic input. Even day traders like myself. Knowing how the market will react is so much a part of setting economic policy, but traders all make up the "silent majority." Like this guy, the one reason I cannot see myself getting involved in American Economics is because a co-requisite for such positions is to be an fervent politician as well.

Rick Santelli is very emotional in this video. He sum's up what I believe much better than I could. His picture is my new desktop wallpaper.

I'm also short BAC at 4.01. Edit at EOD if i'm close or hold o/n.

UPDATE

($280) on BAC. Definitely let this one get away from me as I didn't update my position with the realtime chart patterns i saw.

I saw a reversal coming but I held. Clearly my own fault and this is why I am down for the day. Last two trades have now

been red.

-NIRAV

Yesterday.

Update.

BAC and C are plummeting under fear of nationalization- hmmmm, how did I end my last post?

My BAC short went brilliant, I covered at 4.28 from 4.73 up $485

I got ready for how stocks normal react from morning sell offs by going long on C since the pp/share was lower and I could double my position size. C did not bounce from the sell off. It continued downward. I was mad at my exit point. I lost ($380). I'm up from yesterday, but seeing my account break 6K only to fall below it again was thoroughly disappointing. 

I am, however, not mad about exiting BAC where I did, its currently at 3.20 meaning i could have had $1500 in paper profit had I held, but profit taking seemed completely reasonable way back in the 4.20's and I would not have anticipated this meltdown that has occurred.

Today I could easily trade w/ my remaining day trade, but I will restrain myself since this weekend will be big for BAC,C and the government. Right now they are both sideways anyway. It is difficult to see where things are going from here. My hunch is continued downward, but Im not sure enough to bet on things... yet.

Behavioral Trading, and my recent trades

I made a losing short on BAC friday. My loss was ($40). This was not a bad trade, it was a good lesson learned. A lot of times I may enter shorts because I for see EOD fades. This means waiting until definitively after 3pm but usually after 3:45 or 3:50. That I did on this short, and finally covered so I wouldn't have to hold over the weekend. Like we discussed in Financial Markets today, it helps traders to sleep better knowing their money is not invested in some far off land in some far off company. The funny thing about this EOD sell-off last Friday, was that it did in fact happen but not until around 3:59. Talk about pushing off the inevitable. Plenty might have jumped out like me for similar reasons for moderate losses. Smart money did not.

Smart Money is a term Robert Shiller uses to describe profitable traders. Tim Sykes always says 90% of traders lose money and 10% are consistently profitable. While the percentages might not be weighted this way, lets assume most people lose money- a fair assumption in my opinion. We could go into all of the market theory behind this, but I don't want my fingers to cramp in the morning.  I know the discussion would get lengthy. Anyway, I think Syke's profitable traders and Shiller's smart money are one in the same. If you are one of these traders then on most days, placed in the context of news and general market fear/glee you wait for the market to speak and simply react. In the future, I plan to compile a few charts and demonstrate how I trade and my candid reasoning for doing so.

Right now i'm o/n on a BAC short. I have large unrealized gains and my entry was 4.73. Its ridiculous that BAC has such large back to back red days, but when the DJI is testing new lows, its not a big deal as it would be otherwise. I'll post tomorrow when I close

I only watch C, BAC, and DJI these days. They have volume, I don't have to chat to borrow shares, and I get immediate and accurate fills. I'm not going to stop until these banks get nationalized... I hope I'm short on that day :)

5-1

I couldn't keep the streak going today. I am now 5 for 1 on trades. Saw a signal for a breakout and jumped on it. It wasn't more than a 7c movement from my long entry-so I know I read the chart right. I held too long, and what looked like a bad EOD selloff began, so I got out. 

-$144- Long on C

Holding till EOD would have been profitable as it closed indeed 7c up from my entry, but I was on the move to study in the undergraduate library.'

Today was definitely a day to sit out. The EOD of day buying spree would have been dangerous if I had gone short-- which was my instinct when I saw the chart for the first time.

In other news, I had a humorous thought the other day when someone mentioned Bernie Madoff. Could the government, in fact, be accused of running the largest ponzi scheme ever for the tax funds they are using and the returns they are promising? Think about it.

Note* I edited my last post after Hari brought to my attention the comments I made about Americans/people that defaulted on mortgages. But, I felt very vindicated today when a CNBC reporter asked Kyle Bass, a hedgefund manager that sold short (Mortgage backed) bonds in anticipation of the subprime crisis, how he felt about betting against America. Bass said the lenders of capital should have never met with the homebuyers and homebuyers should not have taken on such risk. There is nothing wrong with Bass recognizing this and trying to profit.  Some may argue traders are responsible for the moral implications of their trades. After hearing Bass speak, I am less concerned about this dilemma and how it applies to me. 

Trust me when I say, it gave me great unrest to short banks in the past!

C

5th successful C trade. Went short this time.

+$120 on the trade. 

+$100 from referrals on Aynul and Alex to TOS.

I'm going to count the referral funds as my own to bring my new yield on my account to:

+14.84%

I left alot of money on the table with this one. I was short. Chart was simply too easy to read. If you want an example of a purely downward headed chart, view C at 11AM. I got out after I made pinch on this trade, but If I had turned CNBC as I have on now, I would have realized that i was covering too soon. 

They even said "buy on rumor, sell on news"... lmaonade. 

Wow, I shorted C at 3.77 out at 3.67.... Right now its 3.47!

Its only 11:39. But this will be a hugely talked about today. Market hasn't reacted this violently in a while. Shows the fear that exists out there.

Today is a great day for shorting. I wasn't even supposed to trade this week, but when I see such an easy C chart, I'm glad I got in for a bit of profit off this mess. I called C a short since yesterday as it did a sideways all day around 4.00, but I would not have called this. This is just awful for the market.

now at 11:44, there is finally an end to this selloff.

In terms of where all of this trading is going, I had a good conversation with Prof. Vaidyanathan, about risk, leverage and where I think this crisis could spread: the retail sector. She warned me about greed, but pointed out that risk is a function of age, and I know I'm being risky with my position sizes and pennystocks in general. But i'm not trading a retirement account, this is mostly for learning but also because I really enjoy it. 

Also, it seems like both, Credit Default Swaps(CDS) and Collatoralized Debt Obligations(CDO) are becoming common knowledge for the havoc they created. My Micro professor spend 30 minutes explaining both to my completely indifferent classmates. 

WOW I left so much profit on this trade out there! Now I know I know how Aynul felt with BAC.

CNBC financial idiot just said:"We should see a reversal by July-August". These people are delusional. Do me a favor, don't be delusional.

My covestor chart, Sharpe Ratio, and Citi

I've made 4 trades with C in the past week and a half. I've played long and short. The trade I closed yesterday was my largest gain. All of my trades were positive. My total gain on C has been $1193.00

On that note, I am up 13.1% on the year. My Covestor chart will update soon to put me at up 50%. I'm not sure where the discrepancy is coming from. I wish I was up 50%.

Best for last! I just checked. I am ranked 63rd on the covestor top 100!!!!!! My Sharpe ratio is 1.57, probably the highest it has ever been. Check it out HERE

My focus from here will be to continue my streak of winning trades. No set backs. They take too much time to recover from.

EDIT** A friend of mine is now blogging his trading too. Check him out here.