Back in Comission

Havent updated this in a while due to work, traveling, and being sick. The truth of the matter is that I havea job and it has limited my trading... I havent traded for almost a month due!!! Tried trading while in deal flow and I can't concentrate on two things that require high focus and attention at once. Anyways, I hope to be trading soon once again. Here are the last two trades that I have done since my post- tried to get a chart up but don't know how to get historicals on Think or Swim (yet).

UFI (10/17-10/21):

Got this one on a TimAlerts morning watchlist as a breakout-

• Buy @ 4.89 (10/17)
• Buy @ 4.78 (10/17)

I can't recall this one exactly but remember not trying to sell immediately when it showed some patience as in some of my previous trades I got scared out when it showed some negative price action. I had a last minute call to get out of town on business and set a stop loss at I think around $4.65 and see how it would ride from there. Given that this is not the smartest move, it worked out.

• Sell @ $5.29 (10/21)

(Side note- trying to monitor and set stop losses from your phone is not a great idea. I learned that it is not worth the hassle and stress... if I am going to trade... I am going to trade... with these volatile stocks it can't be managed away from the computer."

OCNF

Don't remember the story on this one. Once again, from a TimAlerts morning watchlist. I think there were some better plays out there, but couldn't reserve anything.

Here is what I remember (considering it has been a month since I did the trade):

• I had a tough time executing the trade. I had reserved, but when the price started to move like I wanted, I had to put the order in through the trade desk and lost some money having to get them online and then put it through the trade desk. Need to learn how to move quickly on the first trade for reserved shares- any thoughts on how to do this?
• The spread between the bid and sell was higher than I have dealt with in the past and freaked out when the price would jump around. Stuck in the trade though.
• Sell @ 8.01
• Buy to Cover @ 7.63 (Just checked the price... @ 4.06- but take a small gain in these markets any time.

Looking back at my trades the one thing that is eluding me is patience and discipline. I hate trying to stomach things out when the trade isn't moving my way. In additiion, I always think I have to make a full trade within the day or the next day. Never shorted over a few days when the trade could have been more lucrative.

Screening Stocks

Here are the variables I use to screen stocks:

I have one set up that I call "Day Movers"-

1. Price: $1-$10
2. Volume: min. 80,000
3. Net Change: min 15%

After that I start screening all the stocks that the screener pulls up. Look for the right patterns and add to my watch list. Once I have my watch list set, I usually check the internet message boards to see if there is any hype surrounding the stock and make plans from there. Furthermore, I get confirmation in the morning from my subscription to www.timalerts.com to verify what from my watch list is a solid play.

Another screener I made is called "5 Day Movers"-

1. Price: $1-10
2. Volume: min 80,000
3. Net Change: min 50%

Post coming up on UFI soon...

Amen

So long, suckers. Millionaire hedge fund boss thanks 'idiot' traders and retires at 37
Andrew Clark in New York
The Guardian,
Saturday October 18 2008
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Article history

The boss of a successful US hedge fund has quit the industry with an extraordinary farewell letter dismissing his rivals as over-privileged "idiots" and thanking "stupid" traders for making him rich.

Andrew Lahde's $80m Los Angeles-based firm Lahde Capital Management in Los Angeles made a huge return last year by betting against subprime mortgages.

Yesterday the 37-year-old told his clients that he had hated the business and had only been in it for the money. And after declaring he would no longer manage money for other people, because he had enough of his own, Lahde said that instead he intended to repair his stress-damaged health; he made it clear he would not miss the financial world.

"The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking," he wrote. "These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government," he said.

"All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."
Lahde became one of the biggest names in the investment industry when one of his funds produced a return of 866% last year, largely by forecasting the US home loans industry would collapse.

In his farewell letter, which concluded with an appeal for the legalisation of marijuana, Lahde said he was happy with his rewards and did not envy those who had made even more money.
"I will let others try to amass nine, 10 or 11 figure net worths. Meanwhile, their lives suck," he wrote, citing a life of back-to-back business appointments relieved only by a two-week annual holiday in which financiers are still "glued to their Blackberries".

Lahde's retirement came amid an implosion among the hedge fund industry - some 350 of the funds have liquidated this year, according to Hedge Fund Research.
His final words of advice? "Throw the Blackberry away and enjoy life."

YGE- Disecting me being a pussy

I did no research last night (10/7) and realized I had two day trades left under the NYSE ruling of accounts under $25k allowed to do 3 day trades in 5 rolling business days. My day trades get replenished tomorrow so thought I would try to use one. Got my TIMalerts (http://www.timalerts.com/) watchlist in the morning and saw some long plays on stocks that reached their lows and might be a good bounce back play...

Here is where everything went wrong... all premarket:

1. I just wanted to trade and try to make money when I didn't understand the stock fully enough.

2. I didn't understand the sentiment of its owners as in some previous trades.

Here is the trade:

Here it the take away:

1. I should have taken profits when it had an early market spike.

2. I wasn't losing that much money when I sold. But my lack of understanding of who owns this stock and getting it on emotion, I freaked and just sold it. That is a pathetic trade...

3. I fuckin re-entered for no real reason. I really don't know what I was thinking, but its sick how I re-entered pretty quick after I sold and the sold again pretty quick. That is a disgusting trade...

4. If I had a nut sack and could have waited just an 1:30 I would have been golden. If I could have waited towards the end of the day, I could have sold at a profit. Reverse everything I did as if it were a short and it still would have been a bad trade... because I had no reasoning really going into the trade, out of the trade, back into the trade, and then out of the trade.

So the small gains from DNDN were wiped out completely from these trades. This is by far the worst trade by far and lucky I didn't have that big a position in it.

Overall down 2.5% on my account.

DNDN- Disecting a decent trade

Unlike my last trade on QCOR, I actually had a story to back this up. DNDN was up on 10/6 on this news: http://biz.yahoo.com/ap/081007/dendreon_mover.html?.v=1. DNDN is some biotech company who had some numbers that were positive, but not good enough to pass FDA standards. In my eyes this looked like the stock was getting pumped up (up over 30% on the day)... therefore leading to a dump...





I checked the message boards as these are the people who truly believe in these types of plays. I feel bad for them, but in this niche someone has to lose in a zero sum game. The boards seemed divided, some were thinking this was the start of this stock going to astronomical highs, others pointed out DNDN has done the same thing in the past and then tanked... I believed the stock would tank the next day.





Reserved shares in the morning of 10/7. At first my broker (TOS- Think or Swim, http://www.thinkorswim.com/) didn't have any for me to borrow but magically found the amount I wanted. This stock came up in my TIMalerts (http://www.timalerts.com/) subscription and suggested being on the weary side as it had a high amount of volume the previous day so the pattern couldnt be as predictable. I used 2/3 of the shares I originally reserved. Here is the trade:

Here is the takeaway:

1. The stock tanked quickly in the beginning of the day (first circle). Anywhere in that area would have been ideal, but I had no clue if there was going to be a short squeeze or what it would do in the first 15-30 minutes. When it started to move sideways, I got in at $6.10. I could have got in at $6.15 but this was the first time trading with hard to borrow shares and didn't realize I had to actually place an order through trade desk via the chat sysyem. It was at $6.15 but it was going up and down so I told my broker to execute at $6.10.

2. The stock had trouble cracking the $6.00 and $5.90 level for most of the day. I sat patiently and waited believing this stock was no good. Looking back it seems like a risky play to make that bet since it lost a lot in the opening minutes. Also, had some small squeezes during the trade (second and third circle).

3. Waited patiently till the late afternoon where it started to gain speed fading and sold at $5.56 which was a pretty good exit point. Thought I could ride it down to $5.50 but took profits.

QCOR- Disecting a bad trade

After getting out of QCOR, I decided to get back in on 10/3 as I thought I could get in and sell around $7.80-8.00ish. This was based on pure emotion which was a somewhat costly mistake. I really believed this stock could keep going up and had potential, but in the end I should have stuck to my guns and stop playing in it:

Here are the lessons learned:

1. Once a stock stops showing potential... especially in the small caps, there is no reason to believe in anything especially without a story backing it up. Message boards had low volume of any responses and the movement was pretty indicative.

2. I could have taken a small profit when it spiked in mid day but got greedy for more and then held on thinking it could spike again... again without any real reasoning.

3. Held overnight (10/03 to 10/06 with the weekend) to save a day trade... this was a fucking horrible idea as it tanked right when the morning bell rang.

4. I am pretty sure the Level IIs were below the last... should have been a warning to try to put something in premarket hoping that it would be sold off and minimize losses.

Up and Running

I finally got my brokerage account (Think or Swim) funded last week. I have been in the simulator for the past 1.5 months learning the software and more importantly learning how to screen for picks and learn applicable patterns of my strategy (PennyStocking, see http://www.timothysykes.com/).

Thursday rolled around and I did my first dumb thing as a trader right out of the gates- I went outside my strategy and made some dumb play on Washington Mutual (WM) thinking that it had a chance to rebound on a buyout from a supposed private equity firm and the bailout supposed to be signed that morning- both were fucking jokes. So I was down pretty big in 3 minutes and left the position within 5 minutes. It was a stupid trade and I wasted one of my three day trades allowed under the NYSE day trading rules.

It felt like a punch in the stomach- going outside my strategy after being in a simulator for 1.5 months. Lesson learned. I made some of my money back by shorting Apex Silver Mines (SIL). It is apparently some silver mine in Bolivia that was up astronomically due to I believe the Bolivian government allowing redistribution to shareholders or something. The point is, it isn't a good company and was up on speculations. A lot of people subscrbing to the PennyStocking strategy via TIMAlerts got in on this play and rode the wave down banking on profits. Since my account was opened only recently, I could only catch the very tail end of this action but still made some money to recover from my WAMU trade. There was some downside left to take profits, but mentally I just wanted to try to regain some of my loss. Here is the trade:

Another stock under the rader that came from my alerts was Questcor Pharmasuticals (QCOR), The pattern showed strong strength and expected it to rise fast. Instead, it has been a pretty slow trade. I just got out of the position today, using a stop loss that I needed to put in as I was commuting back from a lunch break. The stock reached its 52 week high today at $6.65ish and then started dropping. It had trouble breaking the $6.25 resistance level on 9/30 (finally did at the end of the day) and then trouble breaking through $6.50 today. Here is my trade:

I was a huge pussy and sold around $6.8 when I purchased at $7.0 the day before. I still had that sick feeling about my trade with Washington Mutual and was trying to protect against downside. I could have prevented that loss realizing the chart pattern was strong and to realize there was some support at that level if I went back enough. After the small loss, I decided to get back in at 2 differnt positions, one at $6.94 and the other at $7.0 again. I was pretty happy that I got in at $7 again because the stock made the same pattern, dropping after making SLOW gains and I noticed the opportunity to get in. However, this has been a SLOW ride and with my day trades bumping back to 3 I need the liquidity in my account to jump on any opportunities that may come along.