Stock Rook

I don't need an extended cooling period to make the move...I'm going to stop trading and watching the markets for likely at least six months or probably at least a year. I'm thinking I should have my ducks in a row by January 2011. The main thing is family finances. My wife was laid off in April and I'm the sole source of income now, a big change from when I started down this path last fall. The time I was spending on trading, I'm going to devote to doing extra contract work. It will be quite a net gain when factoring in the elimination of trading losses and trading costs that I was incurring.

I also have to resolve some issues with my daily routine and living well. For me, to be a good trader, I need to be in top mental condition to be able to deal with the emotions associated with trading, and to have the focus and concentration to react to charts and make fast decisions.

I will miss trading, and know I am taking the easier path - though the more responsible one - for now. I have every intention to return when the timing is right. I will know when I get there.

I plan on leaving the blog public but will turn off the comments in 2010. Thanks for all your support. I will miss you all.

By the way, my new computer just had some BIOS coding that needed changing so it cost $30 to get it up and running.

Just for the record, for myself, and anyone curious, here is what the experiment cost me so far. I'm not going to factor in hypothetical opportunity costs, but I did turn away extra work in 2009 so I could focus on trading. I also bought a new computer and several wide screen monitors - my old computer has been converted to sole family use - and I'm using the trading hardware for my consulting practice so I'm not adding that as an expense.

TRADING RESULTS (includes commissions)
($912) Day Trading 2009
($683) Swing Trading 2008
($446) Swing Trading 2009
$746 Short Term Holds 2009 (Bottom Fishing Portfolio)
($1,295) SUB-TOTAL

TRADING EXPENSES
($559) Cy Data Fees
($230) Cy Account Fees
$100 Cy Referral Bonus
($198) I.U. Chat Room
($237) FinViz Screening Service
($180) Hi-Speed Internet Upgrade
($600) Back-Up Internet (12 month contract)
($150) Books
($2,054) SUB-TOTAL

($3,349) GRAND TOTAL SPENT

Well, it looks like the hard drive died on the new computer. I could of got the lap top going for trading using a one of the monitors, but before I knew it, the week was over.

In the meanwhile, this week I got the opportunity to take on several projects to make $3K-$4K between now and the first of year. For the most part, I've resisted taking on extra work in 2009, but the money would come in handy and make me very valuable to an ongoing client I've been somewhat passive with lately. Between that and the holidays, I will likely have trouble with finding more than a day or two to trade here and there.

The reality is that when I'm honest with myself, given that my wife is no longer working and not even looking for employment - staying at home with our baby and toddler - I should probably put trading on the back burner for an extended period of time and utilize any free work hours to earn extra money by taking on additional grant writing projects. But before I make that decision, which would involve cutting off my data fees, screening subscription, back-up internet service and turbo fast internet connection (which I likely do not need anyway), and withdrawing my money from the prop account - before I make that major step I want to have a cooling off period.

So if by Christmas, if it doesn't look like I'm going to have the energy and interest to trade, have not figured out the financial questions (risking money with trading versus earning guaranteed money through extra freelance work), and resolving some issues with my daily routine that would put me in the best mental condition to trade - then I'm going to shut things down to reduce my ongoing expenses, and commit to using the time to make some money the old fashioned way.

If that's the route I go, I will pursue this dream of trading again, when the time is right in the future. However, I think I will put the blog on private after saying goodbye if that's my decision, and open it back when I get serious about trading again.

Stay tuned...talk to you in 2010. Good luck with your efforts and thanks for your support.

On Monday, I finally got my work and mental worlds focused enough to get really motivated to do some paper trading...and the new computer I bought in April did not boot, not even in Safe Mode. I still haven't figured it out but should soon. It's funny, that's happened several times in this fall when I got all set to trade - one time my internet was down, another time a cold really started to get kick my butt (I laid down on my office floor and fell asleep for an hour between 11am and noon!). Maybe it's a sign.

When I do get my computer running again, my intention is to make 1 real trade every day with 100 shares and using a hard stop loss order all the time. I just can't muster any interest in paper trading alone. When I think about trading with money, there is at least a spark of excitement. Having a little skin in the game will help me to get going again. And the limits above will make it hard to lose significant amounts of money. After I make my one trade for the day, I will try to get some simulated trading in too.

I know this is like my 27th plan of action, change of direction and shift in gears I have announced on this blog over the last year, but I am NOT ready to walk away from trading yet. However, if I don't get back into things, I'm going to have to eliminate all my trading expenses (screening service, data feeds, higher speed and back up web access, etc.)

In the meanwhile over the last couple months, I have gotten really busy on house projects. I have restored 3 of the 11 old windows in the house. The three that are done are in the kids rooms, so the children are no longer exposed to the tons of paint chips that were so nasty anytime you opened or closed the windows . And nothing I have renovated (other than refinishing hard wood floors) has had such a profound effect visually inside and out! See photos below.

Somehow, I have lost 20 pounds since August too, I think because of the weekend warrior home improvement kick I have been on, between the physical work and keeping real busy so I forget to over-eat! I still want to resume the 5ks (and I have another 20 lbs to drop) that I blogged about earlier in the year as that's when I felt the most mentally fit and ready to trade.

Blindsided, I did not see coming - at all - my interest and energy for trading absolutely falling off the cliff. It was a year ago this month that I opened a TD Ameritrade account on a Friday and purchased $2K of GM stock because the price looked so "cheap". It was under $5 a share and I thought if I just held on to them for a couple years, I could triple or quadruple my money. On the Monday after, the markets soared and I made like $500 overnight, locking in my profit despite my long-term plan. That pure beginner's luck and the rush of what seemed like easy money sustained me for months as I started on the journey of learning about the markets. Before that, I literally knew nothing about trading, beyond the history chapters on the big crash of the 1930's and the headlines of the 1987 and dot.com crashes.

I started this blog on November 1st, almost a full year ago. Since then, fortunately, my consulting business has survived the economic downturn, and I just renewed all my service contracts, so things look stable for the future. While my wife lost her job, we've come to the conclusion it was a blessing as she would rather stay home with the two kids - the boy is three and a half, and the girl is now eight months - our family's newest member we were graced with in February. With some changes in the family spending budget, and if we are able to get the health insurance plan as we've been quoted, we should be fine monetarily.

I am torn, if I put some extra energy into my business I could grow it some, but I even have less interest in that than I do trading. Seriously, the only thing I have any excitement about recently has been house projects - over the last month, I fully restored one of the kids rooms from the hardfloor floors to the wallpapered closets to the pane glass wood window (which was the hardest item because it literally more than half filled a five-gallon bucket with paint chips). Finishing up the house is compelling as the results happen as you go, I can guarantee the outcomes (though I'm slow), the finished products can be enjoyed by the whole family, the financial investment is mostly very minor, and the end is near - I think I can get everything done by the end of next summer. So that's what I've been doing instead of trading recently...

...Ah, trading, the subject of this blog. I fired up the watchlist and charts this morning today for the first time in awhile. I tried last Monday, and the power went out at my office, and the week got crazy busy and I never got the chance to re-focus.

I'm at a cross-roads. I need to get back to trading, or start to reduce my reduce my related expenses, like the monthly data feeds, back-up internet cost, etc.

Trading has become like "working out/going to the gym" - a chore. However, it's a task that I know once I do on a daily basis, I will start to enjoy and have fun again, but it's going to take some time for the habit to feel right again. After a year of trading, I can sum up what I know for certain in a couple points:

1) I need to be engaged in the markets/trading everyday. Days-off and vacations are important too, no need to keep up a streak when it will feed into disastrous trading behavior, but extended breaks make me really lose focus. So I need to work everyday at it, and take breathers when needed.

2) I learn more with real money - the lessons have greater impact. I'm still still an advocate for paper trading but it has its limits.

3) Always immediately place stop orders 100% of the time on every position taken.

4) Reduce ordering mistakes - I am human, but this is an arena I can clearly control and improve in.

5) Use small positions - I have been trading with 200 shares, but 100 shares would reduce my risk by half until I show more consistent performance.

Yes, a year of trading and this what I'm sure of in less than 30 words: trade everyday but take short breaks, sim trading is helpful but get to real money ASAP, always use stop orders, reduce ordering mistakes and use small positions at first.

I'm sure I've read all those things dozens of times, but I'm not that bright.

So going forward, in any case, I'm going to invest time into every trading day, from at least 9 to 10:30am, in observing and participating in the markets. I'll start with paper trading and move to using my real account as soon as possible.

I'm going to try every day, and fake it to I make it, as they say.

Somehow I've lost all interest / energy to trade; I would rather do my day job or projects around the house, than to even paper trade.

Or go to the batting cages, or research blogs for my fantasy football team, or run errands to get out of my office away from my computer...

Made four sim trades today on CTAS, CTV, GIS, and XLNX - I shorted and longed them 50%-50%, but all of them hit their stops, each failed or had weak breakouts.

I used a trailing stop on one of the positions, but want to just use simple stop orders in the future.

Lately, breakouts seem not to extend much outside the opening ranges, and it seems more bounces / reversals within the range are more prevalent and more the major move of the day.

I did use stops on all trades and made no ordering errors, which is progress.

I'm having trouble getting back on track with trading. The break I took after my August losses has left me out of touch with the markets, and I can't seem to reconnect.

I'm going to continue to paper trade when I get the chance, but am not going to put pressure on myself to do it everyday. For the time being, I will discontinue posting my daily sim results, and try doing a weekly recap.

I'm going to experiment some with my approach in the next couple weeks. The main things I will be focusing in terms of my discipline will be not making ordering errors and using stops 100% of the time. Beyond that, I will be tinkering a little.

When I seem like I have things more together, I will likely start blogging again more regularly.

Today was ugly as I made lots of clerical errors, though it was technically profitable in terms of paper trades.

Orders: 25% - I exited two trades immediately by accident by putting in limit orders instead of stops, and I re-entered another position by not realizing that a stop had been filled. Very sloppy. I was trying to multi-task with some work assignments, but was not just not mentally fit to trade today.

Stops: 75% - On STEC, I had my first paper trade position in which the stock moved violently against me before I had a stop in place. I let the position breath like I did with my major loss days in August, and got lucky as I was correct on the trade. I just didn't make much money on the trade as it involved one of my errors. For stocks on the move like this (moving 20 cents in seconds), I need to have a wider stop (than my simple paper trading rules currently enable).

Entries: I entered all the trades that met my criteria without hesitating.

Exits: I let my stops get hit without exiting too early or too late.

Some comments on the trades:

STEC - Short of Opening Range Low Breakdown (ORL-BD). This set-up is what I like to call an opening anchor. When you see the profound falling 10 minutes in (long red candles), more often than not you can break enter as it breaks a whole number price like $35 and have a some probability of profit (but not always). I waited for it to pull back a bit to above $33, but made a bunch of ordering errors and very little profit.

MT - Long of Opening Range Breakout (ORH-BO). Entered on pullback but was stopped out when it dropped quickly around 10:24am.

ZION - Long ORH-BO. Entered and exited by accident immediately. Currently leaving a quarter on the table as it would not of hit my stop yet.

FWLT - Long ORH-BO - Pattern failed and I was stopped out.

I hope to clean up the ordering mistakes tomorrow. Starting on Monday, I'm going to return to paper trading a modified version of my trading plan, rather than the simple trading rules that I'm practicing with right now.