Tuesday, March 24, 2009
Net Paper P&L: $965 (Good day, near objective) Caught 6.8% of $14,150
Activity Log
09:32:01 Ready to trade.
09:32:54 Sell 2 of SP500 at 80750
09:36:19 Sell 2 of AMZN at 7441
09:44:59 (AMZN) Trying LOD for 3rd time...
09:45:30 (AMZN) Breaking LOD
09:45:47 (SP500) Breaking LOD
09:46:16 Buy 2 of SP500 at 80625 net +$125
09:46:22 Buy 2 of AMZN at 7399 net +$840
09:46:33 I know, I know, first sign of weakness...
09:49:39 (SP500) Getting a bit wide.
09:51:19 (AMZN) Switching to 5min chart.
09:52:56 Fighting urge to leave desk...
09:55:41 (SP500) HOD, down trend NFG.
10:03:57 Testimonies starting on Capitol Hill.
10:07:13 (AMZN) Didn't break 1min trendline, going back down now.
10:17:56 A client needs me. Will see post-market how AMZN did.
10:17:58 Stop trading.
Commentary
On Amazon, I realize I was a little bit late to the party: I shorted the second LOD break at 9:36 where I should've shorted the first one at 9:32, about 30 cents higher. That's when the down trend started. The exit at 9:46 was premature: I was just happy to be back in the black. I had no reason to go long, therefore no reason to expedite my short covering in the black but not far enough from break-even to justify protecting the gain. I'm catching up with that common mistake though, and I kept monitoring the trend. On the 5-minute chart, the trend didn't break until around 11:00, 72.75 or so. Great that I caught .40, but this was worth 2.00 from the initial entry to the 11:00 5-minute trendline break. At 2000 shares that's $4000 vs $840, I caught 21%.
On the S&P 500, in hindsight we've had a clear-cut reversal at 9:45 from 805.50 to 814.25.
Note on Morgan Stanley: my paper trading note window was partially obscuring the chart and I didn't pay attention. It had a nice long setup at 9:38 at 23.75, which broke its 5-minute trendline around 14:00 at 26.25. At 4000 shares that's $10,000 I missed for a stupid reason. I had a financial up there specifically to catch this volatility...
Overall, we see that my day trading strategy is right for me. Essentially I enter positions on the 1-minute chart, and if/when the position gets good enough to warrant a break-even stoploss order, I switch to the 5-minute chart to follow the trend. It's now a matter of doing as I say.