I made four paper trades today and I didn’t follow my rules 100% on any of them! Mostly on the exit rules. I also found out that several of the rules leave some room for discretion and eventually some of them may need tweaking. I even found myself having to force myself to have the discipline to fill in my little worksheet.

Smart people like Jules and IL Torrelo sat on the sidelines today. I find it harder to trade when the market is choppy within a channel. The challenge is at the beginning you don’t know it’s going to unfold like that. Dr. Brett has a series of posts on how to identify and deal with a range day, which is so much different than yesterday with its dramatic one-way trend. It seems like some traders try to stay out on a market day like today, but you can still make money if you short at the top of channel and long at the bottom. The key is identifying those reversal points, and corresponding support and resistance. The other challenge is also finding the right stocks to play. The EFTs like FAZ and FAS move like that with the market.

I longed RF early in the morning, but that ended being the morning high of the day and the top of the channel. Took a $140 loss but that would have been less if I had entered without hesitating and followed my exit rules. Later in the afternoon, I shorted NFP at the ideal time and once had over $300 in profits. Again, I didn’t follow my exit rules – but in this case it worked out because it had a sharp bounce back up and I preserved a$215 profit. This is where I may need to add further exit thresholds for stocks that move in my favor very quickly – you want to be able to lock in profits while also guarding against the common kinetic bounce it will get from moving so fast in one direction. Waiting for the price to cross the 10 SMA on a move like that will eat your profits up quickly because it moved so fast. I shorted KEY and ARNA and neither of those worked out either. KEY just stayed relatively stable. ARNA I see several others shorted and it was a TimAlert as well. I shorted it at $6.69, it really looked like it was cracking after it’s multiday run up, but it popped a dime in like five minutes in the afternoon rally and bailed for a $90 loss. Down -$53 on the day, most of that in simulated transaction costs.