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Normally Fridays are somewhat flat because most traders are not in the mood for trading. I guess it is the same for most other professions. People start to plan on Friday for what they are going to do over the weekend.  It is not different for traders.  However, this Friday (11/13/09) was somewhat more active than usual.  For day traders, especially for traders like me who like to flip to either side of a trade(for example, short SUN now and long SUN 10 minutes later), volatility is key. I do not care which direction the market goes as long as it is not flat.  I heard you could even make money trading options when the market is flat.

So the general market was good for us on Friday. If you pull out the chart of SPY, a proxy for S&P500,  a decent rally in the AM and a decent drop in the PM were clearly visible. I pay attention to the general market closely because it has impact on a lot of stocks. However I do not trade the general market exclusively. Or I would go trade E-Mini. You have a lot fewer opportunities to trade E-Mini than regular stocks because stocks with significant news do not move with the market such as GENZ we saw on Friday. Of course, one good thing about trading E-Mini is that all you have to watch closely is the E-Mini Index.  Most stocks I choose to trade every day are news driven. I have subscribed to a few paid news services, which contribute a lot to my daily picks.

Now let’s have a look at the RHB long trade I took in the AM.  RHB, RehabCare Group, is a provider of rehabilitation program management services. On Friday, RHB announced that it would offer 5.4 million shares of its common stock at $24 each to fund its acquisition of Triumph HealthCare.  The market welcomed it by gaping it up.  In addition, the stock went up against the general market on Thursday, which implied relative strength. Here is the screenshot that captured my entry and exit.

Click to have a better view 

One of the screw-ups was my short in MOS. I waited long enough just to be shaken out right before it started a good drop in the afternoon. I waited almost 2 hours and it started to edge lower around 2 pm.  I thought my patience was paying off.  However, this guy shook me off of his back and started moving lower without looking back for a while.   What was the problem?  I was too eager to move my stop loss down. I take pride in my risk control, which backfires sometimes ^_^ .  At least 200 bucks were left on the table.

Another one was SUN.  I flip flopped this stock a few times.  If you followed my tweets or watched my portfolio closely, you know that I screwed up the SUN long trade before the close.  I dumped my long position around 3:40 PM and it started to move up 2 minutes later.  Another 100+ was left on the table. The day ended fine with 300+ in my pocket. But it could be way better (double) if I did this, that and such….    In the stock market (any trading market), we seem to have endless “ifs” and “buts”.

BTW, all these stocks are liquid enough for me to scale to a few thousand shares per trade. For example, the volume of RHB was 4.8 Million,  MOS 6.5M, CRM 2.4M, SUN 5 M, BUCY 3M.  I normally do not trade anything that has an average daily volume less than 1 Million shares and price lower than $25 (used to be 30). It would be much nicer if I had 2000 shares of RHB long instead of 300 shares. I do not have the confidence now. But I promise you it will not take too long before you see me hit that size.  That is exactly why I do not trade thin stocks. My trading is meant to scale.

Have a wonderful weekend.