Day Trading Notes

I have begun day trading the IWM ETF. As a novice trader, my initial focus is developing good methods for day trading. I will frequently chronicle notes on my market observations and performance to track my progress.

• Today flet better trading.  It was an up day with long tradeable trends, but I was nto able to capitalize on the trends as much as I wanted to.  My entries and exits are getting better and I feel more comfortable executing limit orders.
• I started the day with two losing trades trying to go long in the initial downtrend.  I had some signals that an uptrend may be starting, but the attempts failed.  I should probably avoid trying to call the bottom on a strong opening drive to the downside.  I was pleased with my ability to continue trading and rally from being down early to being positive.
• I try to limit my losses to $0.10 per trade, but Fidelity's Active Trader Pro platform has been giving my some problems.  It is hard to enter orders quickly unless they are prepared well before entry and exit.  The platform also froze for a few seconds during one of my trades so that I could not exit correctly.  I took a large hit of -$0.21 because of it. I need to find a better way to enter my stop loss entries.
• LET YOUR WINNERS RUN!
• There were a few great long trends to the upside today of more than $0.40.  I was able to get great entries at the beginning of the trends, but i would always exit well before I had signs that the trend was exhausted.  I normally determine levels for a trading range of $0.10-$0.20.  I set a limit order to exit at the upper range. Several times today the trend was powerful enough to plow through my upper limit and continue going for >$0.30.  I need to capture this move!  I noticed that these trends tend to stay above the 7 period EMA, but that could be coincidental.
• I need to learn to read the tape.  I recorded my entire day of trading using the SMRecorder software.  It worked beautifully!  I am looking forward to reviewing my trades and turning points in the price to see if I can identify what happen in the tape during reversals and trends.  I will begin posting some videos on the blog was I make some progress.  there seems to be very little information on the web about reading the tape.  I am hoping this will be a valuable resource for me as well as others.
• The volatility in IWM was greatest for the first few hours.  The volatility reduced signifcantly the rest of the day until the close.  I need to try to capitalize on the early volatility with as many winners as possible.  It would be difficult to dig myself out of a hole once the morning volatility wanes.
• My average trade length is about 2 minutes.  This is more likely a function of balancing my day trading while I am at work dealing with meetings, coworkers, phone calls, etc.  I still need to learn to hold my trades longer to capture more upside.  Perhaps I should try using a trailing stop in combination with a stop loss limit order.

Daily Trading Summary (08/26/11):

Number of trades (round trips) = 15 (8W, 7L)

Trade Size = 1 share

Average Win (Winning %) = $0.12 (53%)

Average Loss (Losing %) = -$0.10 (47%)

Average Return = $0.015

Total Return = $0.22