The bad trade

October 6, 2008. Chart of YM. Dow opens gap down, going down over 800pts intraday.
I'll tell you what happened. I was long 4 NQ contracts and short 1 YM contract. I was short 2 contracts on YM but I covered the additional contract on YM in the morning. My internet connection went out a little after I covered 1 contract on YM short. I waited to see what was going to happen because the market looked quiet and we bounced off the morning lows. The market kept dropping so I tried calling my broker but I was on hold for 10min and then I got disconnected for some reason. One hour before the market close my internet comes back on and I was stressed out. I decided to add to the YM short right near the lows when the Dow was down 800pts(even though I had a buy signal- market internals were like 300/1 to the downside, so I said screw it). I thought the market was going to fall -1000pts for the circuit breaker to kick in. Well, we reversed and I took a big loss on my YM short that I just added to and I sold my NQ long a little too soon for a loss as we rallied before the close. Lesson learned - trade 1 instrument, 1 direction, unless you plan on doing a longer term pair trade. My original plan was to hold the NQ/YM trade for a bounce, with the ability to add to the YM short if the market kept dropping (my internet went out so I couldn't add to the YM short unless I called my broker, I should have called sooner). My original thinking was that NQ would bounce more than YM because there would be more short covering in Tech names as opposed to financial names because of the short sell ban.

I hate Comcast.

Overall, I let emotions get to me on this trade and I miss-managed this trade very badly and took a big loss. I was up 7k in the last 2 weeks, but I lost all that plus another 3k. It may not seem like a big loss to some of you or compared to my January blow up, but it was a mistake that really set me back because I keep losing weeks worth of profits from making the same disastrous mistakes on crazy trading days like Monday.

The bad trade

October 6, 2008. Chart of YM. Dow opens gap down, going down over 800pts intraday.
I'll tell you what happened. I was long 4 NQ contracts and short 1 YM contract. I was short 2 contracts on YM but I covered the additional contract on YM in the morning. My internet connection went out a little after I covered 1 contract on YM short. I waited to see what was going to happen because the market looked quiet and we bounced off the morning lows. The market kept dropping so I tried calling my broker but I was on hold for 10min and then I got disconnected for some reason. One hour before the market close my internet comes back on and I was stressed out. I decided to add to the YM short right near the lows when the Dow was down 800pts(even though I had a buy signal- market internals were like 300/1 to the downside, so I said screw it). I thought the market was going to fall -1000pts for the circuit breaker to kick in. Well, we reversed and I took a big loss on my YM short that I just added to and I sold my NQ long a little too soon for a loss as we rallied before the close. Lesson learned - trade 1 instrument, 1 direction, unless you plan on doing a longer term pair trade. My original plan was to hold the NQ/YM trade for a bounce, with the ability to add to the YM short if the market kept dropping (my internet went out so I couldn't add to the YM short unless I called my broker, I should have called sooner). My original thinking was that NQ would bounce more than YM because there would be more short covering in Tech names as opposed to financial names because of the short sell ban.

I hate Comcast.

Overall, I let emotions get to me on this trade and I miss-managed this trade very badly and took a big loss. I was up 7k in the last 2 weeks, but I lost all that plus another 3k. It may not seem like a big loss to some of you or compared to my January blow up, but it was a mistake that really set me back because I keep losing weeks worth of profits from making the same disastrous mistakes on crazy trading days like Monday.

CATASTROPHIC BLOWUP!!!!!!!!! (-$12,000..........)

GOT your Attenti0n?

Well that would have been today's headline if my prayers from the 12-0-clock reversal GODS didn't come true. I would like to thank the Traders in Citigroup and Maria Bartiroma for the last hour BUY programs that saved my ass.

Honestly, I shorted ZB twice today, getting a good winner on both.
On ER2 I went long from a BUY STOP getting hit right after the Bernanke speech(it was the high of the day before the huge selloff, my buy stop got hit 3 ticks out of the money and was red 7 ticks in seconds.....). I ended up adding to that long,,,,,,,,,,,,,,,,for a long,,,,,,,,,time. I admit, today I SCREWED UP BIG TIME.

I held my long on ER2 through the lows, while watching bond futures hit resistance during the mid-day,,,,which helped me UNDERTAKE IMMENSE AMOUNT OF PAIN as I watched my account take a STAGGERING HIT.

As my pain an suffering were at a threshold of around 8.5,,, I got software issues from IB. Thank you IB, for having another SPOOKY malfuncitoning,,,you guessed it, right around at the LOWS OF THE DAY.....Look at my workstation.............WTF?????????
(think to yourself, don't panic, this market will reverse.........)



If things couldn't get any worse I was getting calls from work, wanting me to come to work today because someone called out sick.....Meanwhile......

I left my account alone while we continued lower. I listened to the family members in my house argue about how the internet connection had stopped working,,,,that really got me stressing, however during the argument, I kept hearing in the conversation "just be patient with it, the internet connection will come back up", ,,,,,,,,,and that is what I did with my position, I was patient with it, and I let it come back up.

Today's total-
$1,300 on 60 contracts



I'm going to do some hard analysis of what would have occurred today if I had followed my trade signals. I'm sure the readers are just as disgusted as I am with reading how I almost screwed up big time today. I said in the past that I wouldn't let this happen. I blame it on my old intuition trades and not following the trading signals. Maybe today will be the last day I let this happen, I don't know, but I sure hope it is.

Now I'm off to the library to study for a test later this afternoon. My stomach feels bad and I'm light headed,,,time for some caffeine......

June 25 Trade Summary

Today was a battle up 1500 in the AM, down 2000 off the selloff, but I made it back in the last 45 min. AAPL burnt me bad, and I didn't see the drop coming. Only loser today was AAPL for a whopping $1,299. It was a scalp that I wanted to make $20 on,,,,,OOPS! I should have taken the $250 loss when I got the first bounce, NYSE A/D had a totally bearish setup for continuation to the downside and I felt frozen and stuck in AAPL, I waited for the 12pm reversal and scaled out on AAPL and got a winner on ER2 to make up for my humilating loss on AAPL. I usually scale out on my bad trades just like I scale in on my good trades, but today I totally screwed up by not watching the major market and NYSE A/D during the afternoon. I need to keep trend line alerts on the NYSE A/D. I was so focused on AAPL that I lost track of what the broad market was doing and I ended up losing what I made in the morning. I failed to use a stop on AAPL and was struck with "Deer in the headlights syndrome" (DITHS,,aka DIPSHIT without a stop loss)

P/L $1,638 net on 75 contracts, and 4,100 shares

Today could have been a good day but I screwed it up by not watching NYSE A/D. Oil popped today too, but XLE really didn't lift the market. I'm not sure if there was news out today besides the morning housing number that I missed, but it was yet again another good day full of volatility and I'm glad I came out ahead after screwing up so bad on AAPL.

June 22 Trade Summary $569

Not bad for 30min worth of work. My charts wouldn't load, so I traded straight from the book. Got work early this morning.Have a good weekend ya'll.

P/L= $569 (28 contracts traded)

You'll see I traded with no strategy this morning except to be long around the key time reversal period of 7:15-7:30. My goal was to make $100 before work, goal accomplished. NVDA sold off this morning as well as CAKE,,,,,too bad I didn't hold those shorts.

May 23 Trade Summary $2,018

It looks like volatility is dying and the market is going to go into chop mode. I wouldn't be surprised to see the market end near a high or low for the day. I'm more biased to the downside for YM, but we are still in the bullish zone for the NYSE A/D line, and ES is near its all time high so we probably won't see a selloff yet.

Trade summary-
I pushed a runner on ER2 this morning and got about 1.2pts on 9 cards. I stuck to my strategy of only taking longs on ER2 and shorts on YM, and things worked smoothly today. Later in the day I put a 10 lot short on YM for a 5 tick scalp, and did some trading in Crude oil and XLE.
YM continues to look pretty bearish to flat(I think some calendars calls were sold last friday), and the NYSE A/D is more bearish then the NASDAQ A/D.
During choppy trading(like the last hour), it is amazing to see how well block trade signals work.

P/L= $2,018

Market observations-
It's interesting to note which sectors are the ones responible for the tick extremes(which sector has all of the stocks hitting the bid/ask near the high/low of the day and what is the reaction seen in the futures indices and commodities like crude oil and gold. I missed a key time reversal on Bonds today, I'm starting to wonder when ZN well turn around. If your going to swing trade, bonds sure seem to be a good trading vehicle; a contract that I need to spend more time on learning. Although Time and Sales may be overlooked by some traders, I've been reading the tape much more lately and have been noticing an important pattern to when a breakout is going to occur and when it's likely that the price well be faded. Another interesting fact about today was that I forgot to turn on the TV to CNBC, maybe not hearing CNBC in the background helped me focus better today.

May 14 Trade Summary $512

The morning was difficult to trade and it wasn't until around 9am that I started making money. I initially went short in the morning, but got stopped out, so I went long and struggled most of the morning.There was a big divergence between YM and ER2, which had me trying to bottom pick during the morning. Finally I reversed to a short position in the afternoon and scalped a few pts. and made the bluck of my profits.

P/L= $512

Market Observations-
NYSE A/D started out neutral and went bearish in the afternoon with the corresponding selloff in the major sectors (XLE, XLF, SMH) after BUSH's speech at 9:25am.

I've gotta got to work, so can't trade the last hour and a half, but we could keep selling off by the looks of it. Watch for a possible time reversal at 12pm.

NYSE A/D Strategy

This is a rough draft of my NYSE A/D strategy. This will be an evolving strategy as I research it more.

I follow NYSE values to determine market strength and use it as an indicator to base my trades off of along with NYSE TICK, Volume, and price action.

NYSE A/D Values Observations-
Very Bullish: 3.0-4.5
Bullish: 1.5-3.0
Neutral: 0.6-1.5
Bearish: 0.2-0.6

When NYSE A/D opens on a large bar up between 0.6-3.0 look for a large and quick reversal bar within the first 5 minutes of market open for a potential short trade setup that may last for 45-60min (Time period of expected reversal 7:15-7:30am)

When NYSE A/D opens with and extreme value 3+ or less then 0.5 there is a bias to go in the direction of the extreme NYSE A/D value; moreover, if there is a gap in the morning, and the gap is not filled in the first 30min, look to trade in the direction of the NYSE A/D extreme value.(ie. If NYSE A/D is 3+ after 10min of market open on a gap up with no gap fill, go long and expect bullish trend day, the reverse is true for NYSE opening below 0.5 and not filling the gap in first 30min)

Other things I will look at in conjunction with NYSE A/D is relative sector strength in XLF, XLE, and SMH, as well as the volume seen in these ETF's and the Futures contracts ES, ER2, NQ, YM, ZN, 6E, and 6J.

Opening Short setup, NYSE A/D neutral value range-


Opening Gap and run, NYSE A/D Very Bullish Value-


Opening NYSE A/D extreme value gap fade, but still bullish bias from NYSE A/D Bullish value-


Opening NYSE A/D bullish value-


Opening NYSE A/D short setup, NYSE A/D bearish opening value-


Opening NYSE A/D short setup, NYSE A/D bearish opening value-


Opening NYSE A/D long setup, NYSE A/D very bullish opening value-

May 11 Trade summary $543

Trade Log


I traded the first 2 hours, and ER2 was difficult to trade off the open, however I held true to my long bias because of strong tick readings and NYSE A/D broke its descending trendline at the key time of 7:15. I did a little bit of trading in AAPL and C because I noticed some block trade fades. Should have held my AAPL short at 108.34 a little longer.

P/L= $543

I'll try to post some charts and analysis on yesterday and today's trading later. Time to go and eat breakfast now.

May 9 Trade Summary $115

Trade Summary-
Only trade the first hour, and it was choppy. Kept to quick scalps and now I'm done.

P/L= $115 (2 RT ER2, 2 RT NQ)

Market observations-
Time reversal at 7:10 volatility spike, met with block trades
NYSE A/D gave long signal after its strong opening reversal
SMH and XLF look bullish and XLE is currently bearish to flat
Bonds bearish, Euro bullish after yesterdays beating
Expecting slow trend up until FOMC announcement

I closed the positions on the trade expirement- P/L= $293

May 8 Trade Summary $823

Well today I sucked because I didn't use my stops wizely. I scaled into positions too soon and exited my NQ long too soon. I'm surprised I made money today considering I took a big intraday loss be averaging a loser on ER2's afternoon pop, which was a total screw up. THE NEWS messed me up (at least that's my excuse for screwing up so badly on that trade). CNBC was running that insider trading stuff on the DOW, and that's when the market popped, I was going to go long, but thought that it was just short covering from the news, and then the market was going to go back down. Well, that didn't happen. It was a buy program that hit all sectors. NYSE A/D started out extremely bearish today, and has now been crawling up all day after 7:30am, with a big pop around 10:40am. I was getting ready to quit trading around 8:30am my time with a P/L of $678, but I wanted to try and get $800 again today. I recorded today's morning trading.

P/L= $823 (25 RT ER2, 9 RT NQ, 2 RT YM)

Trade summary-
Morning gap and flush to the downside.
Extreme bearish NYSE A/D opening value.
7:15 reversal
Afternoon buy program
Creeper crawling action on NYSE A/D

Update on trade experiment with reverse positions current P/L $212

May 7 Trade Summary $804

Trade Summary-
Well Today I traded the first 2 hours, and I got a decent setup on ER2 based off of NYSE A/D and bearish divergence when compared to SPY. I scaled out a little too soon on my ER2 Trade. I exited my YM position 1 minute before it popped for the reversal (Idiot). I knew I should have held 1 contract at breakeven on YM and given it more time. I recorded today's trading on camtasia. We got a 7:15 reversal today and now it looks like the market is going to chop for the rest of the day,,,,,maybe chop until Wedensday's FOMC meeting, but hopefully not.

P/L= $804 (14 RT ER2, 2 RT YM)

If I got time I'll do my accumulated tick analysis later. I want to work on my recording right now.

Today I watched my SPY indicator chart and it worked well today; however I didn't take any of it's signals, maybe I should have.



This is a trade expirement I'm doing based on what I saw in the most recent COT report. LONG YM and ZN, SHORT ER2 and ZF.(A some-what hedged trade strategy). Hold time will be until Wedensday.

May 4 Trade Summary $677

Came back right after the drop, F'in pissed I didn't hold my short 1 min longer, and decided I wasn't done trading even though I felt light headed, and I ended up doubling my P/L.


This is CHURNING, I'm sure IB will be happy with the commissions, They'll need it with the drop on their IPO today:



Trade Summary-
Today's strategy was "add to losers and pray strategy", TODAY I SUCKED.
Major take away from today is, PRESS winners, have patience, and if your sucking, take a step back or reduce size. Should have made 2x as much if I had patience for my profit target, instead, ER2's bullish divergence had me scaling out what would have been a big winner, should have waited another 15min. NYSE A/D's pattern and value area this morning gave the setup to the downside along with the volume and 7:30 time reversal.

I should have been shorting ES and YM, because the last 3 days, there has been more of a bearish divergence in these contracts compared to ER2. I noticed once XLE and Crude oil went into bear country (the only sector keeping up the market this morning), the market turned the corner and dropped.

Today was a real wakeup call on sticking to the rules of position sizing. It looks as though I'm not ready to increase my size, because I was taking small profits when I had taken a much larger risk on the trade.

Here's the ES/ER2 bearish Divergence which had me scaling out of my short on ER2, TOO SOON!, All those dam shorts out there that keep covering from the massacre they incurred from 2 days ago is still having the effects today in providing support on ER2-

May 3 Trade summary $415

I could only trade the first hour and a half. Gotta go to work. The market was pretty easy to read this morning. I used my stops, and got hit a few times, and then watched the price reverse in my original direction, I didn't hesistate, and I re-entered to my original trade even though I just got stopped out. I got a pretty good runner on ER2, but I should have put limit orders at the highs for an exit on my last 2 contracts instead of trailing the trade with a stop.(I could have made an extra 100 bucks probably.) The highs were getting faded on SPY, so I should have put the orders to sell near the high. I think I may need to start trading larger size, because my consistency is doing well, but my P/L is being limited to around 4-500 bucks for the 1-2 hours that I trade in the morning. I think I'm going to become more agressive in pressing my trades with 5 contracts, instead of 3. YM looked like the best fade this morning.

P/L= 415

I can't do my analysis right now, gotta get breakfast on go to work.

Trade summary-
Looks like we got a 7:30 reversal today.
I didn't record today, and my computer was running much quicker, so I didn't hesistate on entering trades. I used stops to exit most of my scalps, and I noticed I should have put in profit target limit orders instead, because I could have made about 3 ticks more on the majority of my trades today. Reading the Time and Sales along with hearing my audible alerts is starting to become my backbone in trading. With Time and Sales I can see when retail traders are entering, and when I should look to fade. I can see when price is running one direction based off of stops getting hit and you should wait to enter, and when size enters and creates a breakout.

Thanks for all the comments guys.
I work 40 hours a week. I work the weekend and 3 days during the week. My shifts during the week vary in what time I need to be there, but I request for as late a shift as possible so I can trade. I have to be at work at 9am this morning so that leaves me with 2 hours to trade.

May 1 Trade Summary $208

Well, I didn't expect I was going to be able to trade today, but I got back early to trade the last hour. Today was good for the short time I traded and considering I'm not very good trading the last hour. I'm glad that I had 2 stops hit even though the price ended up reversing at this point and going back my way, because it is something I need to start doing to prevent big losing days, plus it is quick and easy to put in stops using Book Trader.

P/L= $208 (5 ER2 RT, 4 YM RT = 9 round turns)

Accumulated ticks scalped (First entry minus first exit, in sequence)
ER2= 1.7pts (-0.4 3min, 1.4 4min, 0.4 5min, -0.1 8min, 0.4 4min = 1.7pts)
YM= 12pts (-11 6min, 12 12min, 4 5min, 7 7min= 12pts)

I want to start analyzing my entries and exits to perfect my placement of stops and profit targets, so I'm going to try to add the "Acccumulated ticks scalped" as a part of my trade summary. I would also like to add the hold time on each trade as part of my analysis (I want to hold winners about 6min and cut losers by 3 min).

Here's another interview with Lee Leibfarth a professional ER2 trader, from Traderinterviews.com.

Market observations:
I never really looked at the value levels on NYSE A/D, I just looked at the chart patterns, but today I noticed that the market reversed again at the key time of 7:30, which corresponded to about a 0.50 value on NYSE A/D. It turns out 0.50 has been a good support and reversal area on NYSE A/D for some time now, and I will do some more research on this value area, as well as other value areas on NYSE A/D.

Today's Charts:

April 25 Trade Summary $239

I traded the first 2 hours, and now I'm done(I'm most productive during this time period and the market is looking a little choppy now).

P/L= $239

Good things today-
1. I'm trading more frequently like yesterday and gaining execution experience.

Bad things today-
1. I'm still making errors when exiting my trades using IB Book Trader.
2. I should have used a buy stop on my first YM short trade of the day, instead of going for a 5pt scalp.
3. I need to work on my entries when adding to a core position.(If your going to add to a long position, don't add by using buy stops placed a few ticks above the current price, instead buy when you feel its right, like right now, while the price is on a down tick)

Market Observations-
I'm going to make a new strategy that has a 80-90% chance of success during bull markets. It's called, "If new lows are being made between 7:15-7:30am with a decline in volume seen in ES,,,,,BUY!!!" Today we got the TIME REVERSAL of 7:15am on the dot on SPY,,,,YAWN... I should have held my long position,,,,,LONGER....
Also something I've noticed in bonds these last few months is ZN getting faded after a spike off of news after 7:30am, which follows in relation to JPY and EURO.

ER2 and IWM charts-


ZN/JPY/EURO-YM/ZG/CL


I'm thinking about imploying a new strategy on the currencies. I want to test on the simulator "how good of an entry" I can get using buy/sell stops on the release of economic numbers. When economic numbers come out that effect the currencies you will often see a spike in the currencies in one direction that lasts a good 20 minutes sometimes, where as ES may pop up then down, and then back up again before deciding a direction, which would end up chopping your position to pieces if you used this strategy on ES. I'm also thinking of doing a pair strategy on the currencies, where you enter a pair of currencies, 1 short and 1 long, with the more volatile of the 2 being the position you have a biased position on. This strategy would hedge your trade, and depending on how good of an exit you can get on your losing half of the pair, may be a strategy that has an edge worth trying. This might work on the bonds too, trading ZN/ZF/ZB. I remember Dr. Steenbarger had a post about a trading coach that did something like this, here is the article- Traderfeed: Dealing With Price Spikes: A Best Practice in Trading If anyone has any experience trading economic numbers on currencies or bonds, please leave a comment on your experiences.

April 24 Trade Summary $541

Today was a learning experience in trading with IB Book Trader(2nd day trading with it). Overall I did alright, but I really need to work on my execution skills. As you can see from my trade execution report I put on a lot more trades than I normally do.

P/L= $541

Today I recorded my trading and reviewed the tape right after I got done trading. Let me tell you, I suck. I made at least 3 execution errors, with 2 of those executions errors actually being helpful. The trading errors are due to the fact that I don't have experience trading with IB Book Trader. I'm a little pissed that I didn't hold onto my long position that I accumulated at the lows around the KEY REVERSAL TIME of 7:15-7:30. My audible alerts that I've created using ATT Labs Text to speech software has being very helpful.

I was watching my tape today and I couldn't help but laugh at the number of times I swore at the computer and called the market a number of different names when I had my position move against me. The tape was funny, but also shows that I need to become more disciplined in my stops and I need to work on my execution skills using Book Trader. If anyone wanted to watch the tape I would upload it to Google; however, the file would probably be about 1 gigabyte and take forever to upload for me and download for you. Yesterday's tape would probably be more insightful compared to todays tape. If I were promote an educational website with my videos, my promo would sound like this:

With High Probability Trading you can learn how to become a successful Trader, as high probability Trader guides you through his "actual live recording of trading each day" you will be a MASTER of the MARKETS in NO TIME.
HIGHLIGHTS OF VIDEOS INCLUDE-
1.How swearing at the computer doesn't change the price of the stock you are trading.
2.How adding to your losers while at the same time swearing doesn't help either.
3.How swearing at CNBC's broadcasters doesn't help, because LIZ CLAYMAN and MATT DILLON can't hear you.
4.How telling CRAMER to F#%$ OFF during CNBC's afternoon call doesn't help your trades.
5.How saying F#&$ IT and adding your loser trades sometimes works for a second, only to screw you 6 minutes later.
6.How not following your trading plan makes your account shrink in seconds.
7.How taking the reverse of your trade signals is the wrong trade.
8.How forgetting how many contracts/shares your trading causes a sudden increase in heart rate.
9.How drinking lots of water while in combination of trading increased size results in more frequent trips to the bathroom.
10.How sweating while in combination to swearing at the computer is a sign to add your position, to help decrease your account equity.
11. More to come...Please feel free to add if you have any ideas.

I have alot to say about what I saw today and how I traded, but I don't have time to write about it, because I have to go to work, so I will leave you all with my charts I saved.

Notice the ZN/JPY/EURO relationship, and the relationship between GOLD/CRUDE OIL/YM/SWISS FRANC.



ER2 Block trade Chart



ER2 Indicator Chart