Trader Mom @ Home

The market moved higher relentlessly and totally disappointed the bears, including me.  I have also been waiting for some kind of signals for a short term correction. No luck so far.  Therefore I have not had any swing trades lately.  Can you believe our beloved FAZ is almost a penny stock?

S&P has erased all the losses for 2009 and it actually has a tiny gain. The news behind today’s rally is from the housing sector.   And of course short squeeze also helped pushing the market higher.

80% of the trades I took today were shorts.  I shorted AAPL once and flipped to the long side right after I closed it.  If you followed my portfolio in which I post my day trades real time, you knew it.  This kind of flexibility is essential.  Of course, you will have to be careful not to get slapped by both sides.

The trades I took in RIMM and AAPL today were scalp trades.  I have no fixed targets for this type of trades.  Once they move in my direction, I will never allow them to retrace.    The first short I took in CYOU had a bad entry.  The second was fine. Since it was not a scalp trade I waited a little bit before I took profit.   CYOU was one of the stocks I mentioned on my mailing list yesterday.

I think I am back in the normal production mode.   What I mean by that is that I trade normal stocks now.  I had a lot of excitement trading those leveraged ETFs in the past couple of months.  But excitement is bad for trading.  Good trading is supposed to be boring.

It is very easy to make trading mistakes when you push for performance(trading these leveraged ETFs is one).  Avoiding trading mistakes, or reducing the number of losers is probably as important as every other fundamental trading rules. Assuming you trade 5 days a week and position size is about the same for each position, if you lose 2 days and win 3 days, I am not going to say you only have one winning day since there are some other variables.  But your total profits would be greatly diminished by those 2 losing days, not to mention that time and energy you spend trading, which is your opportunity cost. One of my new rules now is to try to stay green everyday even if I am up 1 cent for the day.  So far I have been green 4 days in a row since I went back trading those good old stocks.

My long time pets are rimm, aapl, gs, fslr and bidu.  I pulled out the charts of Drys I scalped like crazy in 2007.  On one typical trading day, I could go back and forth(short and long) on Drys a dozen times.  And the number of shorts and longs were very even.  I would long Drys at 11:00 and flip to the short side on 11:15.   I tried on AAPL today(shorted it first and flipped to long it later).   I believe this kind of mental flexibility is important. I sometimes sit in a bearish mode even though the market is trending higher.  This is very lethal.

AAPL is a very solid company. Almost every single line of its products is solid. I believe long term investors will benefit from holding onto their positions.

On the contrary, as a short term speculator, I closed my AAPL position today. Check out My Portfolio . Why did I do that? One of my rules is that I get out when a stock hits its target. There are no buts, ifs, this and that. No thinking is allowed once a trade is opened. Thinking is done before I place a trade.

My target for aapl was actually pretty low (8-10%) and stop loss was 3%. It had a pretty good risk-reward ratio (1:3) with high probability. The low target was due to the sheer size of appl, which takes a tremendous amount of money to move it.

I have no open positions as of now. I am closely watching a few stocks for possible short entries. Pay attention to FSLR, POT, MOS, X, GS and SHLD