-.40R Down - Slow Day

One of those days when the market fakes you out and no follow through, key is keep losers small and your good to go.  One of the hardest things to master is when not to trade. In my office I have REMINDERS on my desk telling me if your bored go on YouTube, go on Twitter, go stare at the wall but just don't trade. It's tough, you know you wake up thinking you want to make a trade and the market doesn't give you the right serious and the in between your legs gets itchy and then your hand gets itchy and then your index finger gets itchy and when everything itches your account balance also gets itchy and starts scratching and bleeding to death. (Sorry I took it over board) key point = just don't trade when your bored, today wasn't that of a boring day but small losers is key. 

Below is the place, I shorted 1000 shares  just below 12 PM and the price I got was 17.12 and then the stock just faked and went back up, I killed my position before hand and didn't take a full loser! I released 300 shares are pins 17.16 then 17.17 and last everything at 17.18. 

Internet Connection Failure, Range Plays and No Follow Throughs - 2.61R

Yesterday was an excellent display of maximizing gains to a certain extent. For me to get burned today on 3 separate plays is okay because I know I can pull out possible 1.5-2R+ from my gainers and to have 3 losers totaling about -2.6R is okay with me. At least it wasn't 1 trade, that's a total of less than -1R loser per trade. It's part of the game, key is winners need to be bigger than ANY of your losers! 

3 Trades made today, all three negative. 2 I didn't mind because I kept them small losers. There was one however which turned out to be a bigger loser than I expected because my internet failed. (Note to make sure no more trading with WIFI connection, I need a direct wire now)

Here they are and followed by the trades will be the P/L at the bottom. -2.61R

HOLY SHIT see while I was uploading my blog this happened! THIS IS WHAT HAPPENED WHILE I was trading and its HORRIBLE!

See image below!

LOOK AT THAT! I just print screened it right now

 -2.61R Loser

Cut Losers, Maximize Winners

So in my previous post Click Here to read it I talked about how in trading you don't have to worry about losers, you can choose how much you want to lose so it is totally in your control. The main goal is to manage your winning trades to ensure you PULL out nasty amounts of GAINS! Conclusion of today, look for RISK/REWARD and get an understanding of how much room you need to make money in your trades. Exmaple: Look for tight stops! See if the stock will allow you maximize gains!

Today is a great example:

Total R: +2.31R

Winners:

Trade 1: $AMAT + .59R Winner

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Trade 2: $NTAP +1.92R Winner

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Losers:

$DISH -.17R Loser

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I had another very small loser, it was only -.04R

Key to Success: Cut Losers, Maximize winners and honestly review each stock and ask yourself "it this stock worth my money?" "will it pay me out good or am I just forcing it?" If you feel like you are forcing then just don't take it, its not worth your money or your time.

Below is Profit / Loss for Today. +2.31R 

Trading is very very statistical!

Today was a pretty dry day for trading, the markets did a lot but for my trading setups not much really happened.

My per-trade loss limit is $70, what that means is if I lose $70 on a play then the trade went as planned. The trade made today was a -$70. I realized after that I made a judgement call mistake, I did not take the market into consideration during this play. The market had broke through the resistance and was just resting, not really going up but just resting. When I was looking at the charts it gave a small illusion of possibly going up but not a big one. So I entered the trade. It was a clean and quick loss. I feel like I disregarded the market during the trade to a certain extent. But honestly, consistency helps. One thing that I know is that I will not LOSE more than what I need to lose per trade. My losses will always be capped off to the AMOUNT I choose to lose. So If I am risking $70 per trade I know I won't lose more than $70, its nearly impossible. The only way I will lose more than $70 is if I don't follow my trading plan. It is easy to handle losers the most difficult part of trading is maximizing winners. Basically trade management. During trade 2 weeks ago I was down about -$250 in one day, now that is disgusting. That is when all plans, rules and everything else goes down the drain.

Here is how I operate: 

I have a $70 Risk per trade. I consider this my "R"

Which means if I lose -$70 on a trade I am down -1R for that trade.
If I win $70 on a trade I am positive +1R for that trade.

Below is an example of a trade I took last week displaying the R system. In this trade I made +2.11R which means if my R was $70 the trade would have been a +$147 trade in dollar terms. And these types of trades are the normal trades, if they are managed right it is possible to be pulling in 1.5R-2R plays at least daily. But it is all in the management.

This is where it gets FANCY: 

If I operate at a 50% success rate in my trades and I make about 20 trades a month here are the stats for
that:

So right away I know that out of 20 trades I am going to have 10 losers. Now if I cap my losers to $70 that means I lost about -$700 on my losers. That means on my losers I am down -7Rs.

Now here is where it gets fancier, if for example I have 10 winners and all of my winners are say average +$130 which is about +1.85Rs then my winning trades amount to +$1295 or +18.2Rs

Do the math I can operate at 50% success rate, with 10 losers and 10 winners a month I can still be in the positive: $1295 - $700 = $595 Profit or about +8.5Rs 

The thing with trading is you DO NOT have to be right 100% of the time, the stats show that I only have to be right 50% of the time and all I need to do is manage my winners and not worry about my losers because I know I will not lose more than -$70 ever on a trade.

Trading is very statistical, one must understand what level is he or she operating at and then develop a strategy.

Here is today's trade!

I tried to long it above the red line but the trade didn't follow through, so I cut it.

Trade tickets + daily P/L for today. -1R