I played two Rubber Band Morning Pops this morning: HOXL and DHI. DHI went against me immediately, HOXL went my way for quite a bit, then reversed. Stupid me, I sat and watched my loss on DHI mount and my profits on HOXL evaporate, wondering what was happening with my stops. I finally realized I had set my stops wrong - roughly twice as large as I had intended.
Yet another execution error. I have a spreadsheet setup that lists the various entry, stop loss and trailing stop points I intend to take. When I setup these two trades, I simply looked in the wrong column for the Stop Loss. This is primarily because I am still not familiar with this trade. Another day, another lesson.
I'm still in the Learner stage. Thank God that DR suggested we not adhere to Van Tharp's position-sizing rules until we had become competent traders. I took that advice and - as a result - am down a total of only $170, rather than several thousand I would have been were I using the position sizes I intend to once I become competent. That advice alone saved me more than the cost of the class.
Mark asked me where I got HOXL & DHI. I thought it was on the Stockcharts site listed on the blogroll to the right, but I may have gotten it off of the WSJ's Markets page. Yeah, I buckled to the pressure and got a subscription to the Journal. Actually, the Markets page is pretty cool. I recommend it. 99 bucks gets you a 1 year subscription to the paper and the online version. Not bad, especially considering the amount I have spent on books I have only partially finished reading.
Tuesday, October 2, 2007
Another Day, Another Lesson
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1 comment:
I have been having good luck with the RBMP (Rubber Band Morning Pop) trades. I have been trying to take all the trades that the system gives to get a sense of the performance. The one thing I do differently is that if I can actively watch a trade (usually when I have two trades or less on), then I switch to a discretionary exit, tightening things up once the trade is over 1R and look for momentum dying. Then I get out.
Over the last 4 days, the system is +6.59 R. Pretty good for 4 days. Here is the R distribution of the trades I have taken:
10/02
RYL, +3.56; LZB, 1.15; CENT, -1.38
10/03
BE, -0.14; SOMD, +2.09
10/04
CMED, -1.43 (should have been -1.0, execution error); CC, +0.92; RIO, +0.83; SID, +0.38; BBD, +0.61
One thing I have found is the stocks that are in the single digits in terms of price, is that the liquidity issue may pop up (usually trying to exit). So, for those positions, I usually only take half a position so I am not trying to sell 10,000 shares at a limit. I learned that on the CENT trade where every time I would put an order in on the bid, they would sell me 221 or 447 shares, and then walk it down a penny. It took me 7 trades to get out of 8,000 shares, and took about 3 hours.
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