"Silly analyst, Trix are for kids!"

[ST Journal] Multiple Trade Postmortems: $EL and $AAPL

2011-11-22T13:53:00.000-08:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge towards being able to critically and objectively reviewing my trades.

Trade Summary
The Apple trade was getting short on weakness and the $EL trade was getting short on testing gap up support. Apple was a winning trade and Estee Lauder was a losing trade. See the trade notes for more details.

$AAPL Postmortem
$EL Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $CRM Trade Postmortem

2011-11-18T14:03:00.000-08:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge towards being able to critically and objectively reviewing my trades.

Trade Summary
An earnings play where I sold volatility anticipating that the earnings report would not drive prices higher than $145 per share or lower than $105 per share. I used an iron condor to limit my risk on the up and downside by purchasing puts. This reduces my profit potential, but also protects me from big down moves like yesterday's $YOKU strangle trade.

$CRM Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $YOKU Trade Postmortem

2011-11-17T14:17:00.000-08:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge towards being able to critically and objectively reviewing my trades.

Trade Summary
An earnings play where I sold volatility anticipating that the earnings report would not drive prices higher than $27 per share or lower than $18 per share. Earnings was poor and the stock traded down to the $16's in after-hours. This trade had no downside protection so I sold at the open instead of waiting for a bounce. This trade was a large percentage loser (50%), but I was comfortable with the dollars-at-risk.

$YOKU Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $TGT Trade Postmortem

2011-11-16T07:53:00.000-08:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge towards being able to critically and objectively reviewing my trades.

Trade Summary
An earnings play where I got long Target as its chart was bullish going into earnings. This trade was held over night looking for a positive earnings report with a follow through gap up in price. I was using the November expiry, which expires this week and I captured profits immediately due to theta decay.

$TGT Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $GS Trade Postmortem

2011-10-31T12:54:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge towards being able to critically and objectively reviewing my trades.

Trade Summary
        Goldman Sachs had a run-up in price and was stalling at a high around the $116.50 to $118 range. This trade was an anticipatory trade that Goldman Sachs would retrace lower and develop a bull flag. The charts I used to evaulate this trade (see here and here) indicated a $110-$110.50 price level. This generated a decent return and I took the trade.
        The trade was successful and I may revisit this trade again to play a gap fill to the $106.33 range. In the meantime, though, I will collect profits because a target hit and I am comfortable exiting the trade. Last comment, I was aggressive with a $116.50 stop price when I placed the trade (at $115.85) because I wanted this to be a "it works or doesn't" trade.

$GS Postmortem

        Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $TZA Trade Postmortem

2011-10-07T10:32:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge towards being able to critically and objectively reviewing my trades.

Trade Summary
This trade was fading the three, consecutive daily rallies. I was monitoring the $IWM chart (posted on chart.ly) and determined that $IWM was going to run into some resistance. When $IWM broke sideways out of the channel shown in the chart, I put on the trade. Heading into the last 45 minutes of the trading day I bought some $TZA puts to hedge downside exposure if the markets continued to rally hard off of strong non-farm payroll numbers. I did not exit the hedge side well and that ate into my profits.

$TZA Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] Projecting a Negative Trade Onto a Positive One ($STUDY)

2011-10-06T14:02:00.000-07:00

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(This is one of many journal entries where I articulate my notes from studying the vast content available within the StockTwits network. Previous entries can be found under the "STJournal" label.)

        Yesterday, Steve Jobs died and the NASDAQ futures ($NQ_F) dropped relatively sharply on the news -- down from about 2170 to 2150. I watched this decline and then faded the move by buying at 2150.25. The market had just finished a good day and I thought that this "sharp" move lower was unwarranted. I placed a sell limit order at 2170 and drove home from work. Watching the NASDAQ futures from home, I was nervous about protecting my profits as the contract was trading at 2162.25. I sold out for a profit and felt good about the trade, sort of.

        In the morning I turned on my trading platform and saw that the NASDAQ futures contract had tagged 2170 and exceeded it. I was disheartened because my original price target was hit. Reflecting on this I came to realize that a past after-hours futures trade (with no stop) hurt my PnL significantly enough that I projected that bad trade onto this good trade. Reading Mark Douglas' book "Trading in the Zone" has helped me to realize what I had done here.

        Each trade and each moment in a Market's time is unique. By allowing myself to worry about profits I missed the potential to earn twice as much money. To take it one step further, I should have placed the trade with a trailing stop and let the trade ride all night. I would have increased my profits many times as the NASDAQ futures tagged 2207 today. I left 80 percent of potential profits on the table.

        Learning how to fully accept risk and responsibility for that risk has been enlightening to me. I am also aware now that I need to be alert to projecting previous trades onto current trades. Consciously (or subconsciously) I could be hurting myself. That will only change by having a winning attitude as defined by Mark Douglas:

A positive expectation of your efforts within an acceptance that whatever results you get are a perfect reflection of your level of development and what you need to learn to do better.

[ST Journal] $TLT Trade Postmortem

2011-10-05T08:13:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge towards being able to critically and objectively reviewing my trades.

Trade Summary
The intent of this trade was to play a reversal in TLT. The broad markets had broken through the August lows and money was flowing into safe assets like long-dated Treasuries. Seeing that TLT had reached an all-time high and that a bear market reversal rally was likely I sold this credit spread. I exited the trade because TLT hit my 121 price target and showed strength off that bounce. I took the profits as the broad markets are not rallying hard and are still in a bear market trend.

$TLT Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $NFLX Trade Postmortem

2011-09-30T13:50:00.001-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge towards being able to critically and objectively reviewing my trades.

Trade Summary
The intent of this trade was to scalp theta under the premise that Netflix was weak and would continue lower. This trade was successful, but, in hindsight, I think I was too conservative. The SPX dropping and then have a "face ripper" rally concerned me. I was going to short the 140/145 call spread for a $0.37 credit, but ended up selling the 150/155 spread instead. I feel good collecting 4.8% for a one week trade so I will take it and move on to the next trade.

$NFLX Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] How I Left 70% of Potential Profits Behind in @upsidetrader's $FAZ Mobile

2011-09-27T15:18:00.000-07:00

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(This is one of many journal entries where I articulate my notes from studying the vast content available within the StockTwits network. Previous entries can be found under the "STJournal" label.)

        Below is the story about how I left 70% of potential profits on the table while trading the financial ETF "Direxion Daily Financial Bear 3X Shares" ($FAZ); affectionately known in Joe Donahue's (@upsidetrader) subscriber chat room as "The FAZ-mobile." While sharing this story with you I will be seeking to identify what I did wrong that left $1,850 of potential profits on the table.

Earlier in the Day
        It was a beautiful day outside with lots of lush green hills to look at (i.e., indices were up). The sky was blue and everything seemed well. Being long an Apple ($AAPL) ($CALL) calendar spread, I was monitoring Apple's price action. I was expecting it to pop up as the S&P 500 index was well into the green.

Storm Clouds on the Horizon?
        As the day progressed I kept noticing that Apple was not performing as I would have expected. I sent out a tweet:

Yes $SPY is hitting the HOD, but be cautious. $AAPL is not moving as strongly as I would like.

I also accompanied the tweet with a chart (click to see) showing Apple sort of underperforming while the S&P 500 gained. Concerned with this lack of performance I turned to $XLF -- the Financial Select Sector SPDR ETF. It had gapped up for the day, but was stagnating heading into the post-lunch time hour. Now suspicious of the green, up day I placed a $FAZ trade:

Fading $XLF at $12.50. Long $FAZ 57 $CALL for $7.

Trading the FAZ-mobile is one of the quickest (because it is a 3 times leveraged ETF) way to get home...with profits...if you know when to jump in. Seeing darker clouds on the horizon (i.e., lower prices into the close) I took the trade and was looking to race home into the close with some profits.

The FAZ-Mobile Stalls
Maybe about 30 minutes after I placed my trade, the FAZ-mobile stalls and I am left alone. Others in the chat room were stopping out of their trades. What were once lush, rolling green hills are now turning dark as the clouds roll in. Concerned the FAZ-mobile is dead I look at the dashboard and I am losing $650. To a trader like me, small fry, I was concerned. However, knowing that the FAZ-mobile is levered 3x I told myself to expect stalls (and swings in the PnL) like this and to stick with it until $XLF cleared $12.60. I sent out a tweet/chart of the $XLF and things still looked good. In hindsight, I realized that I had jumped into the FAZ-mobile too soon. I shouted out to others:

Was early w/ $FAZ 57 $CALL purchase ($0.40 cheaper now), but based on the chart I'm still holding. http://chart.ly/nm9f9b6

Fast-forward to the End of the Story
        As the day rolled on and I am racing home in the FAZ-mobile I see on the horizon the end of the trading session. Suddenly the XLF underlying financial equities are getting hit and the FAZ-mobile is picking up steam. The chart above that I posted looks good and XLF is rolling over. The options that I purchased are now worth $7.70 and I take the profit booking a 10% profit for the day.

Lesson to be Learned About Emotional Capital
        A 10% profit is something that I should be proud of, but I am also disappointed with leaving money on the table. At the end of the day, had I waited to sell, I would have potentially realized a profit of approximately $2,550. I actually took in $700, which meant that I left over 70% of the profit behind. I jumped out of the FAZ-mobile too soon.

        The thing that I could have done better to increase my profit on today's trade was: Wait longer to enter the trade. I almost closed the FAZ calls for a 10% loss (down $650) when they were trading for $6.35 (I bought at $7.00). My emotional capital was dinged and I felt like being up $700 was too good to be true. Swinging the PnL down $650 to up $700, a $1,350 range, I emotionally felt like I gained all that money. The first uptick on the 5-minute chart I saw I panicked and sold out because I was afraid to give all the $700 back (including the $650 of unrealized losses I recovered). Had I had a clearer emotional state of mind I would have realized that FAZ was merely pulling back. Nothing to be concerned about as prices do not necessarily always go straight down. The price trend was moving in my favor: down.

        In the end, I am pleased that I grabbed 10% of the capital I risked as profits and I will go home feeling good about that. Things could have been worse; I almost fully panicked and took the loss. This post would be about anger instead of feeling silly leaving some money behind. Lesson learned. The FAZ-mobile will always be around to drive later.
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[ST Journal] $GLD Trade Postmortem

2011-09-26T08:58:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
The intent of this trade was to scalp theta from gold's reversal late last week. I was looking for GLD to find support between $152 and $160. I closed this position because I was satisfied with the profits and also I am concerned about gold accelerating it's decline. This week I am expecting the market to bounce as the end of the month/quarter approaches and big money shuffle their holdings. I would expect gold to sell off further as money managers realize profits to help improve their performance numbers.

$GLD Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $MON Trade Postmortem

2011-09-20T12:56:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
This was a swing trade looking for $MON to revert lower at near the $71 price level. I purchased a put debit spread to control my risk to the upside. My price target range was hit and I took the trade to realize profits (see chart).

$MON Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $SPX Trade Postmortem

2011-09-14T12:27:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
Took a 35% loss because I was greedy. Notes are in the attachment.

$SPX Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $SPX Trade Postmortem

2011-09-12T10:11:00.001-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
Selling premium under the thesis that the market is heavy and will not retest the head & shoulders neck line around 1275. I closed the trade early to realize profits and roll down into a new 1200/1210 call spread; same thesis, but little with bolder strike selections.

$SPX Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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The Investing Food Chain

2011-09-09T10:20:00.000-07:00

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None of us should be surprised that the markets are rigged and that we are near the bottom of the food chain. That does not mean, though, we can not make money. Instead, we need to make certain that we have a clear sense of where on the investing food chain we are. Additionally, our investing strategy and personal financial choices should match our "food chain status."

(concept from Robert Kiyosaki's "Rich Dad, Poor Dad")

Related Post:
1) "The purpose of the markets is to redistribute wealth from the many to the few" by Peter L. Brandt
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[ST Journal] Training for a Triathlon is Improving my Portfolio ($STUDY)

2011-09-07T15:23:00.001-07:00

I am in a 13-month drawdown and have never fully digested that reality until now. I drove home from work that day in silence. Sitting in rush-hour traffic cursing my name and asking myself what have I done.

Today, I am pleased to share that I am healthier and happier.

Healthier
        I have been consistently journaling my trades, results, etc. and the common theme I discovered was a lack of discipline. I do not have enough of it. I violently needed to shake myself out of my daily rut. I did that by entering into a sprint triathlon, which requires me to train daily. Doing this has made me healthier because I am eating better food and exercising daily.

        My portfolio is healthier too. Daily I record (to the penny) every profit or loss I incur in my trading. I also write a three sentence comment about what happened that day. Doing this has helped discipline myself to trade cleaner. Before I felt like I would enter and exit trades with no plan. Today I have a plan and trade it. Sometimes I do not trade the plan well, but I am better off. Previously I had no plan; I had a hunch.

Happier
        I did not get taken out of the game. My equity curve is improving and I have cured 16% of my portfolio's drawdown. I am also happier because I am exercising more, which gives me more energy.

The Big A-ha
        Triathlons have multiple challenges: swimming, biking and running. Each of these components requires its own specific training. There are also individuals that I am racing against. That introduces a psychological aspect to the race; lets call that "racer noise."
        My conclusion is that training daily for my sprint triathlon is a physical reminder to me that my trading discipline needs training daily as well. I will never be able to complete the multiple challenges the Market gives me if I do not train daily. Training for the Market includes risk management, noise reduction and a plan for completing each "racing hurdle."
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[ST Journal] $SPX Trade Postmortem

2011-09-06T10:08:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
Selling premium under the thesis that the market is heavy and will not retest the head & shoulders neck line around 1275. I sold premium above the neckline. I closed the trade early to realize profits and roll down into a new 1230/1240 call spread; same thesis, but little with bolder strike selections.

$SPX Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $BAC Trade Postmortem

2011-08-23T12:03:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
This was a speculative trade based on Bank of America's weakness. In both terms of it's equity price and mortgage troubles. I sold the put today because Bank of America is reaching new lows and I do not want to be greedy. Pigs get fat, hogs get slaughtered.

$BAC Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $MMI Trade Postmortem

2011-08-19T11:39:00.001-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
        This was a speculative trade based on a pop in price, implied volatility and rumors about a patent sale. My trade plan was to fade volatility and I would see prices revert down from $25 to $22.

        August 12th, Google agreed to purchase Motorola for $12.5 billion. This is where risk management for this trade to the upside played in my favor. This trade was put on for a credit, which meant that I had no upside risk; excluding the opportunity cost for a play to the upside. During the trade, the stock did hit $22 (maximum profit) and lower, but, ultimately, it's at options expiration that matter. The stock, based on the purchase price agreement, trade around $38 at the close of this trade.

$MMI Postmortem

        Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] Captain Drawdown Rescues Complacent Citizen From Market's Clutches ($STUDY)

2011-08-16T21:01:00.000-07:00

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(This is one of many journal entries where I articulate my notes from studying the vast content available within the StockTwits network. Previous entries can be found under the "STJournal" label.)

The Scene
        Circa 2003. Citizen trades company stock. Catches the "Wanna Trade" bug. Citizen also trades an Apple (AAPL) option and earns another profit; leveraged. Circa 2010. Citizen begins trading consistently and the Market lulls him into believe that he is "doing well" and "learning."

Enter The Hero
        The last two to three months I, the Citizen, have felt something is not right. The Market has lulled me into believing that I am doing well and learning at a good pace. And you know what? I believed the Market too. I sincerely felt like I was doing well. I was a "student of the markets." My problem lately, though, was I felt like I was not doing well and that the pace of learning was too slow. Utilizing StockTwits, I tapped into some traders that I trust and asked them a few questions.

        To spare you the details the results of my conversations were, I need to journal and monitor my equity curve. The same day I got to work and journaled my day. I also dug up my previous P&L and have begun tracking my daily profits and losses since 2010. The results: a drawdown shock and awe bomb.

Knowledge is Power
        Captain Drawdown to the rescue. Sweeping into "PnL-ville," Captain Drawdown shines his beacon of knowledge on my trading accounts and reveals to me the Market has lulled me into complacency. I am in a 13-month drawdown and have never fully digested that reality until now. I drove home from work that day in silence. Sitting in rush-hour traffic cursing my name and asking myself what have I done.

        How could I have allowed myself to get into this situation? I did exactly what the Market wanted me to do. Give it my money and think that I was winning and participating like a winner does. Without StockTwits and it's community members, I do not think that I would have awakened in time to the reality of my drawdown. The Market almost took me out of the game.

Restoration
        I still hurt and feel awful at what I have done to myself (and family). I intend to push forward, though, and implement strict risk management controls. The Market will rob us all while we learn. Strict risk management will keep you in the game. I have always known and heard that risk management is critical, but I now have a renewed vigor for it.

        Sharing this new-found knowledge has been gut-wrenching and I am ashamed. I do, though, believe in myself and believe that I can overcome this setback. I will not let this drawdown define me, but, rather, inspire me to seek prudent risk management and trade setups worthy of my capital.
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[ST Journal] Journaling My Performance: Honesty Hurts ($STUDY)

2011-08-12T16:08:00.000-07:00

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(This is one of many journal entries where I articulate my notes from studying the vast content available within the StockTwits network. Previous entries can be found under the "STJournal" label.)

First, excuses. I have not been writing because last week I was on vacation and this week I have been catching up with work. My wife, kids and I went to Santa Cruz, CA to spend time with family. We were celebrating my wife's parent's 50th wedding anniversary. We stayed at a beach house and had a view of Santa Cruz Harbor's lighthouse. We had fun taking the kids to the beach everyday and visiting the Santa Cruz Boardwalk.

This week I resumed trading and I learned some important lessons; mostly about myself. This afternoon I sent a tweet that said,

Journaling. Finding that it hurts to be honest. I'm embarrassed with how I traded the second half of the week

Below are some bullet items that I will reflect on over the weekend.

I use market orders too much instead of limit orders. I am chasing prices instead of letting them come to me.
I usually do not have a plan before I make a trade. I tend to think of them on the fly. I am not skilled enough to do that yet.
The two times I planned a trade I had profitable days.
The times I did not have a game plan the day ended non-profitable.
I traded the ES futures overnight, which was stupid of me. That was my biggest losing day.
Twice I hit my daily profit target, but then kept trading and ended the day down.
One poor day of trading ruined my week of profits.
I did not exercise once during the week, and I ate fast food three out of five lunch days.

To summarize the bullet points above and my three pages of journal notes: I need discipline. I would have finished the week positive; a worthy claim given the 400+ up/down days of the Dow.
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[ST Journal] Lesson Confirmed: It's Okay To Be You

2011-07-27T13:37:00.000-07:00

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(This is one of many journal entries where I articulate my notes from studying the vast content available within the StockTwits network. Previous entries can be found under the "STJournal" label.)

Anxiety
        Last night I attended the StockTwits meet up in San Diego. I get anxious when I drive to these events because I feel like I do not have a good story to share. I am not an experienced trader with amazing P&L stories to share. Nonetheless, I still enjoy going because it is fun to meet StockTwits community members in-person.

Confidence Builder
        I met and spoke with Ivaylo Ivanhoff most of the night and then was called over to another conversation. Comparing my conversations I learned that it is okay to be me. I do not have great trading stories to share, but I do have other real, marketplace experiences to share. For example, I talked with Ivaylo about mortgage modifications (his summarized response, "that is bullish") and my current work; investing the cash assets of bankruptcy estates while the entity (or person) is going through chapter 7 or 11 bankruptcy. Ivaylo did not know that this world of cash existed and the timeline it takes for an entity to liquidate (current average is about 3.5 years). I left our conversation feeling confident because I educated someone on some of the lesser known details of banking.

B.S. Meter
        Comparing last night's experience to previous meet up conversations (where I am the listener) I learned that it is okay (and important) to be myself. I have heard lots of amazing trading stories and after a while I begin to wonder how much of it is true. I need to put aside the noise of others' supposed successes and focus on my own. If I do not own my real experiences, but instead supplement them with embellished stories I will soon be found out. I suspect that I will also damage my capital as I lie to myself about "good trades" when, in fact, they were highly risky and I just got lucky...this time.

I'm Me
        My name is Matt Mullins and I do not trade full-time. My desire, in due time, is to trade full-time for the benefit of my family. In the meantime, I have dedicated myself to starting over and learning from experienced traders. I am slow to speak "trader's jargon," but I understand it. When I do not understand something I write it down in my journal as an item to study. I have had many real-world experiences dealing with subprime mortgages, mortgage-backed securities, banking and bankruptcies.

Recommended Reading
1) How To Kill Your Trading Career In 4 Easy Steps by Darren Miller
2) Refer to the table in Peter L. Brandt's bootcamp post.
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[ST Journal] Trade Idea: Short $MMI Volatility With No Upside Risk ($PUT)

2011-07-25T03:14:00.000-07:00

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(This is one of many journal entries where I articulate my notes from studying the vast content available within the StockTwits network. Previous entries can be found under the "STJournal" label.)

Trade Thesis
Short Motorola Mobility's recent volatility increase based on the recent news that hit the wires. The news below is from the Wall Street Journal on July 22, 2011:

Mr. Icahn disclosed in a government filing Thursday that he is now trying to convince Motorola Mobility to try to generate value from its portfolio of 15,000 mobile-device patents.

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The trouble is, it isn't clear how the patents' value can be realized. The mobile-device business likely can't operate without its intellectual property, so one idea would be to sell the patents to a buyer that agreed to a perpetual license. A potential problem: Such a sale could run afoul of tax authorities.

The Trade
Sell volatility for a credit by using a put back ratio. The chart below shows the recent price action and historical volatility for Motorola Mobility.

(Click for larger view)

Below is the risk graph for this trade. Maximum profits will be reached if Motorola Mobility continues to fall as news subsides and volatility reverts lower. If we are wrong, though, and the price continues to rise there is no loss to us because the put options will expire worthless and the trade was initiated as a net credit. If the stock's volatility deflates too fast and crosses break-even at $20.85 we will start to incur losses.

(Click for larger view)

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[ST Journal] $AAPL Trade Postmortem

2011-07-22T09:59:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
This was a speculative trade based on a pop (up or down) in price due to Apple's earnings. I violated my risk management plan by placing this trade. I shared my full thoughts here.

$AAPL Postmortem

Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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[ST Journal] $IDCC Trade Postmortem

2011-07-21T11:43:00.000-07:00

I am sharing trade details because it helps me stay honest with myself.
Sharing also keeps me humble because it reminds me that I am a small account trader and need to manage my risk accordingly.
It helps me put my ego aside so I can learn disciplined habits.
Sharing forces me to articulate and review all my trades. Over time this process will sharpen and hone my knowledge for critically and objectively reviewing my trades.

Trade Summary
        This was a speculative trade based on a pop in price, implied volatility and rumors. The rumor was that InterDigital was put up for sale by its Board of Directors. Rumors also swirled around that Google and Apple were (or were going) to bid for the company; a battle of patents. My trade plan was to fade volatility and I would see prices revert down to between $60 and $65 as the bids play out.

        Today the CEO of InterDigital stated that neither Apple nor Google had made any firm bids for the company; confirming it was a rumor. My September call hedge was in-the-money. Considering I could exit the trade for a profit one day later and that this was a speculative trade I decided to exit.

$IDCC Postmortem

        Constructive criticism is appreciated if you see something I should improve on. Previous trade postmortems are available under the "Postmortem" label. I share my stock and option trading ideas on StockTwits.
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