I’m going to be taking a couple days off until Friday to catch up my job; good thing I work for myself, plus I teach on Thursdays. Today showed why this blog is called STOCK ROOKIE because I made all sorts of newbie mistakes, but I will focus on the positive stuff as much as I can.
Before going into trading, I wanted to really understand the SMA 10/60 Cross that Muddy talks about at the Green on Screen blog. Essentially, when these averages cross each other they can suggest buy and sell signals. To set this up, you want to be on a 5 minute chart, usually covering 2 1/2 days. I did this using TD Ameritrade’s StrategyDesk. These crosses accompanied with a spike can help signal an up or down swing. Muddy gave a little more insight in his comment on this post, suggesting the cross is even better for exits. In general, today it was uncanny how many times a change in momentum followed these crosses.
These went horribly and I am now down 10% in this account because of an ordering mistake and just thinking I was smarter than the market. Yesterday, I put in a stop order for my overnight position on SRZ. However, I put it as a Day Order rather than Good Until Cancelled. So instead of selling at $1.18, I sold at $1.09 for a loss of $408 – $150 extra because of the order mix up – and this is paper trading sloppiness. Then I bought F again at $1.87 thinking it would bounce over $2.00 again, instead it broke support and dropped to $1.72 low. This was obvious, because just as yesterday, GM was tanking again in the first 3o minutes, and the entire DOW was going down at the same time. By far, one of the stupidest moves I’ve made real or paper trading. I got out at $1.74, and in after hours this is up to $1.82. This is a fine stock to swing trade, I just need to better time my entries and exits. This was a $1.95 loss. Lessons: Pay attention to the indexes and the sectors, and don’t assume a stock will behave exactly like it did in the past.
One bright spot, I’m up over nearly 1K in my day trades:
I did find some major slippage in my paper trading prices today for the first time. VSE executed my INCY trade at $4.00 when it should of been near a dime higher. But several other trades were three or so cents in my disfavor, including GNW and SRZ, so in general, I think my results are averaging out. INCY was an alert on chat, and then had a SMA 20/60 cross along with a spike from 300K to 600K in volume. It slowly rose all afternoon, and it was the longest I’ve held onto a stock without panicking, so this was a psychological step in the right direction (yes, this is paper trading, I know). I also got out just in time as it tanked with many stocks in the last half hour of trading. GNW was another chat alert, but it didn’t have any of the signals yet and it never kept climbing, and I took a $225 loss. I had RDN ready to order at $1.40 and it closed over $1.90, but I got faked out by a small dip and distracted. Several stocks I wanted to short were not available with my coin flipping.
This is a bear market and it doesn’t make sense to buy and hold right now and this account shows it. I’m just holding on to GOOG, APPL, and BA for the long term and should of had stop loss orders for these stocks but didn’t. I have about an additional $3K to invest right now, but will keep it cash until things look to have more upside. The test of this account is if it will be higher in a year than my day / swing strategies. And in any case, the lesson is you have to be an active trader even when value investing.