Patience

I think the best and most seasoned traders have been on vacation for the past couple months or more. When you read Market Wizards, and they ask these successful traders why they don't manage other peoples money, I recall the answer being that they did try it but their clients could not handle being in cash for extended periods of time. The clients would see the small picture (Headline: Market up 300 points!) but miss the big picture that it has also been down 400 cumulative over the past week, and is in a medium or long term downtrend. I am sure there are some trading geniuses out there, but for the most part only the compulsive, passionate, or foolish traders are trading now. I am one of those 3, or maybe all 3. I am making some ground, but it is like trench warfare, pretty ugly. I am keeping it small and tight, taking profits quickly. I trade because I love it and learn every day. Here is a typical gain/loss page for me, this one from today, Wednesday:

I posted some time back that my biggest mistake was not turning to the dark short side early enough. Better late than never. Here is a good one I got today:

Most of my successful trades lately have come not from my early morning homework on gappers, but from monitoring my scanner and see what is getting consistent heavy volume. I got a good one in NG the middle of last week from that. My biggest mistakes have been finding the right balance of position sizing vs room for stops. It seems like you either need to have stops very very tight, or very very loose, anything else gets stopped out. I tend towards tight. Remember, your bottom line tells you whether you are doing it right or not, very simple.

I have been very patient with trades, half to a quarter as many on a average day, and also waiting longer for setups. I have not been taking much in the first few minutes unless it is a very clear setup, the stock is acting stable (no whacky candles and stop probes), and I just scalp, trailing stops up the minute bars and getting out on any horizontal price movement.

I recall my post on the first day of earnings season. I had hoped I would be attacking the gappers the whole season, but I have had to turn to other strategies as the gappers have been weighed down by the market, and just slower to develop during the day , so I have been following the volume more to try and squeeze out more certainty in my setups.

Best and worst trades from November 1, 2011

My trading has been flat and uninspiring the last week. I have chopped about, and for every good trade there has been a bad one. Today is a perfect example. I caught a quick scalp in VRUS, only to go bottom fishing in MSFT (I know, I know, It is a POS but I am obsessed [warning] with this very long term setup on it and was going for an aggressive entry today).

Best trade:

Worst trade: