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One Lot Trader Mom

Posted by Satuki On May - 13 - 2009

Yes the market tanked today. But it was an uneventful day since we had a quick drop in the morning and that was it.  There were no moves in the stocks that I was watching. I tried to short OSG and it just did not want to go down.  I scalped my perennial pet RIMM a few times.  Nothing substantial came out of them.

 

Yesterday, I bumped up my position size a bit and I lost around 450.   It was actually nothing because I outlaid more than 60k (500 shares of RIMM and 300 Shares of APPL) at a time.  If my positions had moved in my direction by 2%, it would have been a nice profit of 1200.  I will have to step out of my comfort zone or people would start to call me “One Lot Mom”.  Hahaha.  If I stay in my comfort zone (20000 dollars per batch), I could set a OCO (order cancel order) for each position and go to nap.    I will adjust my trading psychology so that I will feel comfortable with the new size.  Of course, I will only slightly increase the size.

 

I hope everyone is doing well.   It does not matter if the market goes down or up.  What matters is that you are synchronized with the market. Always put risk control before anything else.  Without risk control, it is just a matter of time your account will be wiped out. Profits will forever be secondary to your risk control.


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  • Btw, both my examples were shorts though I didn't make that clear. Can you tell where my tendencies lie?..LOL!

    <abbr>traderx’s last blog post..Week ending 5-8</abbr>
  • LOL I know. Same here. I short stocks regardless it is a bull or a bear market. I do not think my trading is very healthy. I need to go long more in a bull market
  • The dollar amount of the trade shouldn't be a factor for day trading.

    --Decide a dollar amount your willing to lose.

    --When you see a set up you want to trade first look where your logical stop would need to be.

    --Based on that do the math and determine how many shares to trade.

    For example, say I'm willing to lose $200 just to pick a number.

    I see a set up and the stock is $10.00/share and chart shows some decent resistance at 10.25 so I decide on a .25 stop. Thats 800 shares or $8,000.

    Later I see another set up and the stock is $90.00/share with resistance at 90.40 so I'm using a .40 stop. Thats 500 shares or $45,200.

    The second trade is 5X larger in terms of money but my risk is indentical either way. In other words the risk isn't how much money is in the trade but rather how much of it your willing to lose.

    Hope that makes sense.

    <abbr>traderx’s last blog post..Week ending 5-8</abbr>
  • It makes sense. Your dollar amount is based on your risk.

    Your second trade is more likely to die than your first trade though since the first trade has a much wider stop loss than the second one.

    In other words, to improve the probability of your second trade, you need to wait for a perfect set-up. No mistakes are allowed. Nevertheless your first trade might have leeway for some small mistakes.
  • Obviously these are just examples.

    The $90 stock could just as easily be much less volitile too therefore meaning .40 might be quite wide. Take SPY for example, I rarely trade it with more than a .30 stop and sometimes as little .10 and month in and month out SPY accounts for a large portion of my gains.

    <abbr>traderx’s last blog post..Week ending 5-8</abbr>
  • SPY is a totally different animal than regular stocks. It is very liquid, has very tight spread and moves slowly. So 40 cents might not be too bad.
  • Exactly.

    You've got to understand how the stock your trading behaves. Thats a good reason to not trade a stock until you've got some familarity with it.

    Knowing where that logical stop point is goes along way towards picking good entries too.

    Here's a perfect example:
    I went long SPY this afternoon when it broke the daily downtrend line.
    Thats as much of a time trade as a timing trade meaning it's gotta go right here, right now or the set up is killed.
    Therefore, I was using a .10 stop. If it reversed and fell back through support I wanted out fo the way in a hurry as it was probably headed back to the lows.
    Fortunately it popped and I took ,23 which is a pretty decent risk/reward for a scalp.
    As it turned out that pop was just an ugly headfake and and it headed straight back down but a great entry won anyway.

    <abbr>traderx’s last blog post..Week ending 5-8</abbr>
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