- Today I felt like I made a lot of progress when it came to letting my winners run during an uptrend. I had thought about my entry and exit criteria and made some improvements which turned out to be profitable.
- The 7 period EMA on 1 minute charts seems to be a good indication of the short-term trend.
- I was down early today as my first three trades were losers. Then I began to find my groove and out of my next 11 trades only one was a loser (-$0.07). I was able to capture most of a strong up move during this sequence with the three consecutive trades of $0.40, $0.17, and $0.02. I was able to exit near the top of the trend. I did miss some portion of the middle of the trend, but I can improve my entries next time. I closed out the day with two losing trades of -$0.02 and -$0.10.
- My last loss of the day was a very bad entry. The price shot up and I was afraid it would get away from me so I entered hastily instead of waiting for a better opportunity. My indicators even told me that upside momentum was at an extreme. I need to focus more on timing my entries at better prices. As soon as I entered, the price dropped $0.10 and I exited during the uptrend. Later the price ended up trading higher than my original entry, with several opportunities to enter at good prices.
- Today was a new personal best in terms of total return.
- I felt like I was able to understand the tape a little better today. I was able to make some timely entries and exits based on the tape. It seems that IWM normally posts depth of 1000 shares or less, but there were several instances today when the buying and selling came on strong and exchanges were posting orders of 10000-20000 shares. I was also able to spot could support and resistance points based on when the large order came into the tape. I will try to create some posts summarizing what I saw in the tape, which should provide some good learning experience.
- I use a ten period average true range to give me some idea of what I am risking. I know I have to be very careful when the ATR is about $0.20 and make sure my entry points are good. When the ATR is below $0.10, I usually look to scalp trades for a target profit of $0.05-$0.10 because the price is usually range bound and moving slowly. Fills are easier at my target prices with lower ATR.
- A vast majority of my trades were entered with limit orders. I am feeling more comfortable with my system of order entry/exit. I begin with 4 preset orders: buy limit, buy market, sell market, and sell limit. Once I have entered with a buy limit order, I then change the buy market to a sell market. This will be my emergency exit order. I also change the sell market to a sell limit, which becomes my target loss order. My final sell limit order becomes my target profit order. I adjust the limits on the profit/loss targets as the price moves. This systems seems to work well and usually gives me some good fills.
- There were a few times today that I would place a buy limit order and the market would come down just above my entry price, then take off. I spent the one whole uptrend chasing the price with my limit orders, which were never hit. Sometimes you just need to get into the trade and sacrifice that penny, instead of sacrificing a $0.20 move.
- I would still like to improve my average win to average loss ratio. It seems to be hovering around 1.4. given that my winning percentage is often around 50%, that doesn't give me much room for error.
Daily Trading Summary (08/30/11):
Number of trades (round trips) = 16 (8W, 6L)
Trade Size = 1 share
Average Win (Winning %) = $0.11 (50%)
Average Loss (Losing %) = -$0.08 (38%)
Average Return = $0.026
Total Return = $0.41
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