April 1, 2008

Net: -$42
DD: -$70
Frame of Mind: Lose $50 and make $150.


Went long BAC .05 away from the top of the opening rally at $39.75. Almost got stopped out, but I held on. It rallied all the way back up to $40 where it met  some resistance.

On the second try of $40 I got chopped a little bit trying to play the breakout, but that didn’t happen . The third time I tried again but it fell back down to$39.90 where I cut finally cut my losses. Oh yeah, that was the last pullback before the run-up! I’m really good at catching the tops and bottoms!

At this point I was down $62, frustrated, wanting to get back into my stopped account to short this sucker and I was ready to lose $100, violating what I had said to myself earlier that I will only lose $50.

Fortunately I got my bearings right again and didn’t short the sucker. The sucker rallied .50 more, following a nice ascending triangle.

When I got back to my account I traded the oils and jpm, made a little, lost a little, then stopped trading at lunchtime.

Had I kept my initial $39.75 position, I would have been up $50, just sitting and watching the stock move.

It’s not the number of trades, but the quality of the trades.  Surprisingly I’m only down $42.

Whenever I have a hard time trading, I just have to use this thought process:

  1. If I can lose $50, I can as easily make $50 with a flip-a-coin approach.
  2. If I have a little bit of edge, I will come out ahead in the long run.
  3. If I subdivide the $50 into 5 risk $10 trades and hold it to the point of no return, I may lose $50 pretty quickly, but on breakouts I may bag $100 easily.

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