Daily Wrap

I AM SERIOUSLY STARTING TO LOSE CONFIDENCE IN MY TRADING ABILITY. NOT GOOD.

I am quitting trading GOOG because I am not able to understand it's dynamics. Also I think the volatility is greater than my risk tolerance thus I get STOPPED all the time. I did not make a single penny on GOOG trades although I had been right directionally couple of times (of course I got STOPPED-LOSS at the peak of the reversal. May be I'll get back to it later.

I went back to my old hunting ground, GS, but instead of hunting, I got hunted. It seems that I have lost my midas touch. I am slightly superstious and I have inkling that my bad days are due to a curse of a Fidelity rep whom I scolded badly last week for his incompetence but whatever the reason since then I have not made a single penny on my day-trading account. My account balance has been saved by timely investment GE. I exited out my remaining GE positions yesterday assuming that the run-up was to too much too quickly. As usual, I could have waited for better exit point but in swing-trading I am not trying to time the daily move. Anyway, GE closed below my sale price. If I am right, it will go through consolidation as the market waits for the big news on Monday - that'll be the time to get in or out of GE.

Back to GS:

(1) I sold short at 89.66 because I thought that it was resistance at 89.50. Bought stop-loss at 90.97. My main mistake was that there was strong uptrend both in financials and the overall market I should have waited for the confirmation of the resistance. Moreover, I should have covered at 89

(2) Again sold short at 90.77 because of strong resistance at 91.00 BUT again stop-loss immediately at 90.85 because of my mistake in the order (instead of STOP-LOSS, I had LIMIT). Anyway, the I kept fighting the up-trend in the GS stock. GS had relative strength to the market and I thought that it would move with the market. I think I got too emotional.

(3) Finally, I make STOP order above 92.00 beliving that if GS was trading strongly relative to the market, any rebound in market will cause pierce through a strong resistance at 92. Instead, it just reversed immediately and I had to close it at 91.5. The mistake was that I should have waited for confirmation. This did happen later in the day. BUT I DON'T REGRET THIS TRADE BECAUSE IT WAS CONSISTENT WITH MY STRATEGY (favorable win-loss ratio).

(4) Finally, the trade I did not make which I should have was buying at 90.50. The 1M chart showed that 90.40 was the low-side. In risk-reward term, it would have been the best trade.

The lessons of the day are (1) not be too emotional (2) wait for confirmation.