Trading Journal Entry 5/07/2011: You Have To Be Hungry To Become Better

On silver’s surge to $50 and oil’s to $113, I took profits from many of miners and oil explorers. However, I loss money in $SLV and $AGQ as silver nears support of $34 because I GOT NERVOUS AND OVERTRADED! I usually do not worry about these losses as they are dwarfed by my mind-numbing profits on resource stocks. But that will soon change. I started shorting silver with $ZSL but it was late, should’ve done it at $48. But I was expecting silver to teases $50 again before correcting (instead $48). Lesson: markets do not necessarily move in nice round numbers.

Here, I made of list of mistakes I want to reflect on and improvements to my short-term trading strategy. Whether we know these or not, success will come down to removing our emotions from the trade.

1. Pay attention to small losses; every little bit helps.

2. Overtrading hurts not only in commissions, fees, etc… let our convictions run.

3. Pay attention to bid/ask spread. Saving money on the spread because of volume of the trade is better than commission.

4. Don’t chase markets but wait for opportunities.

5. Don’t forget that margin hikes on commodities (esp. silver) can occur at any moment, esp. when everybody is bullish.

6. I also noticed that, if any of my resource stock hits 5% on any given day, it will very likely run to 6% and beyond till close.

7. I need to have an ETF re-balancing plan.

8. I need to start using a Profit-and-Losses Excel spreadsheet.

9. As a positional trader, I use technical analysis provided by my trading platform. But I should better my knowledge of TA for better entry and exit points.

9A) If a stock is rebounding but with higher lows each bounce and less volume, the buyers are getting exhausted.

9B) After a cup and handle surge on volume, a base should form with low volume, showing that big investors aren’t dumping shares. Later stage bases are more prone to failure.

Profitably Yours,

Speculator99

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