I’m going to try focus on the positive today. However, even though I’m just paper trading, I was full of doubt all morning. I was like – why am I wasting all my time on this pipe dream? Many people lose lots of money in the stock market, etc. I think it was the realization that learning to trade is going to be a challenge, and its not going to happen over night. I think you have to balance realism / humility with confidence / idealism. I was feeling low, even though I knocked out a lot of job related stuff to give me the time to watch the markets.
So I made two paper trades of the same stock today. I tried to long SRZ a couple weeks ago (I just re-read that post and I’m still struggling with some of the same stuff), so I was familiar with it and it was in my screener’s list of stocks. It was up significantly in early trading, and I made the cardinal mistake of chasing a stock. So I purchased it five minutes in at its peak at .84 – 2,500 shares, which means every penny movement is worth $25. This is great in a winning trade but makes you more fearful in a losing direction and I bailed out at .75 like 5 minutes later at a loss of $225. Paper loss but it still made me mad, largely if I don’t make any progress in virtual trading, I’m not going to put any more real money at stake. Later, I made a better call. Instade of chasing it when it spiked up .24 cents in like 15 minutes, it looked like it was stalling when it got over $1. Level II orders were in the .90’s and the bid spread was what Muddy call’s “jiggy” – bids were like 8 cents under the current price but asks were near the last sale. I figured the longs from the morning make take profit here, and the stock fell for a short bit. I was a little indecisive about it so my entry was a little late at .98, and I should of covered at .93, but it quickly went in the other direction, and I knew I had to get out as looked like it was going to pop again. This trade made $75 minus commissions.
So what did I learn today here in my little fantasy world:
- I got a better sense of a gutter stock with a wide spread (“jiggy”) in ask-bid can be a signal it may pop in either direction.
- I’m going to impose a 15 minute rule of not entering any positions in the morning until 9:45am. I need to see a little more on where things are going, I’m just guessing if I jump in right away, and I may have to extend this to 30 minutes wait in the mornings.
- While I was very productive with my real life work today, I didn’t have time to study the charts of 5 stocks to be on my personal watch. I just cut and pasted the lists from the blogosphere into my screener. I really need to have a smaller group that I’m really watching.
- I didn’t look at multiple-time frames today, pretty much stuck with the 5 minute chart. I could of seen a lot if I was looking at the 1 minute chart on SRZ. Just forget to switch around.
- I need to balance THINKING FOR MY SELF, and taking advantage of the alerts and learning opportunities in the chatroom at InvestorsLive. So I think I’m only going to hang out in chat every other day I paper trade to force myself to become more self-reliant in my chart reading and decision making.