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After yesterday’s big rally, the general market dipped a bit today due to some bad news from Microsoft. But there were opportunities on both sides.

FAZ, a triple leverage Financial Short Fund is my new pet now since it jumps up and down very fast. As I repeated many times, I like volatility. Only volatility can give me big movers. Stocks like Microsoft, IBM or Walmart are for investors who like to study reports and throw around PE or PEG numbers. I used to do that.

So how did we do today? Day trading was fantastic. Swing trading was also superb since all the losers were cut. Let’s go thought all my trades today. Look to your right. You will find Twitter Updates. If you flip through all the notes I posted today, you will see that FAZ was my first trade. My profit target for this stock is 7-8%. So right after I shorted it, it tanked quickly to 62.05. There was a quick paper profit of 4%. So I quickly moved my stop loss to the break even point. It reversed quickly and took out my stop. Some people might say you could scale out when you have a profitable position. I agree that scale-out is a good exit strategy. But I do not use it. I use “all or nothing” exit. According to my experience and testing, these 2 strategies are the same. There is no scientific evidence to prove which one is better.

FAZ

There is nothing about GS and MOS. They never spiked after I took the trades. They were both losers. So after 2 losers and 1 break-even(a small loser if you count in the commission and slippage), I called it a day. I can not take revenge trades. The market does not owe me anything. But in the afternoon, a perfect chart formed right in front of me. I just could not let it go. That was CMA. The chart formed 2 very round bottoms. So I took the trade. It worked out perfectly. I caught the top. But it was a planed exit + some luck. I never know how high/low a stock can go. But I do know what my risk-reward-ratio is. For my day trades, it is 1:3. So my stop loss for CMA was 2% and the target exit was 6%. I use OCO(order cancel order) right after an entry.

CMA

So I lost 2% on MOS, 0.5% on GS, 0% FAZ, and gained 6% on CMA. Minus Slippage & commissions, I was Net Up 3% for the day just because of that one winner. To sum it up:

1. cut your losers
2. hold onto your winners
3. never hesitate when Mr. oppertunity presents himself.