DRAT! Electronic Arts (ERTS) jumped today.

That isn't the problem... actually there is no real problem here.

I had a position in ERTS, long, and I have gotten rather lax in checking the pre-market activity on my longer term holdings. I set a target exit and just let it ride.

Upon checking into my portfolio (I keep a tracking portfolio on a free charting site for quick reference as I don't need to log in to look at it) I noted that ERTS had a 15% jump.

DRAT!

I had a much lower target set and, had I been checking the pre-market, I most likely would have either raised my target or cancelled my order and set a VTSO after the open. I did get 15 cents over my target in both entries at least ($1.67 and $1.15)

Based on my entries I saw 5.8% and 8.5% returns... but I have held these since October last year. Compared to my 10 day, 2.5% trade in gold last week that's poor. But, a planned gain is a planned gain.

I am still waiting a setup to go long on a gold trade using IAU as a low priced proxy for gold. It doesn't track as well as I would like but overall I am expecting the trade to span at least a week, so a little off should be no big deal. This is actually a breakout move to the upside and I am using a stop limit entry to buy. Due to the tracking error I need to monitor the entry and probably manually enter it. Although if the price of gold gets close enough to the target entry I can estimate the correlated IAU price pretty close and enter an order at that point.

The variance is just not working out to be able to set this one on autopilot.

Jeff.

CMC trade closed and the next opened

As noted in my Live Trades window the CMC trade closed Wednesday for $1 and $1.50 targets for the two trades which yields a 6.9% and 10% profit.

I have been involved in regular meetings this week so I was not as on the ball as I could have been with the re-entry into this stock. My entry target was $13.50 (long) and I could have gotten in the same day as the short profit target was tagged but I didn't do so until today.

No big deal... unlike the IRM trade that I missed for the sake of an hour, I find that most trade entries, and exits for that matter, have much longer windows of opportunity.

I re-entered CMC long adding the profits from the short trade to compound the trade size.

A brief note on the compounding effect.

Something that I overlooked when trading options, which was ultimately part of my reason for getting out of option trading for now, was the method used to compound returns based on profits. I won't go into the details other than to say that not doing it properly can easily blow up your account due to not being able to change position sizing in gradual increments.

With stocks, compounding will allow gradual increases in absolute risk following every profitable trade and an easy method to downsize trades in order to minimize risk following a loss.

I'll put up some numbers in my next post.

Jeff.

PLCM profits $3.00 per share

Today I resisted the urge to alter my exit target on my PLCM position.

The setup and the execution:

- Buy at $26.00 (October 4th)

- Stop at $23.00

- Exit target $29.00

- Profit target $3.00 (October 18th)

Result = 11.5% gains in 14 days or 0.82% per day

I still check the daily ROI as my goal is still to hit 1% per day overall. If I wanted to spin the numbers a bit I could use trading days and count this as 1.15%... but calendar days are easier overall.

I watched at the open of market as the price brushed $28.93 and thought that I should cancel my limit order and look at changing it to a following stop once the price passes $29.00, perhaps just set it at $29 to start or see where it goes and set a VTSO for 25 cents or so. While I could have captured more, it did hit the $29.70's, I got busy and didn't look at it until after my limit order had executed.

Now the price is back below $29.00 anyway.

I would rather not have to feel like I need to watch the charts during the day to try to capture these sorts of moves so sticking to my rules and therefore the limits is the plan.

I would have considered leaving exit orders off of some trades in future and leaving winners run but the history on the trades indicates that I am still better in the long run to cut at my initial target. In some cases even lowering my target is prudent depending upon the price activity during the course of the trade.

It all boils down to both trading within the plan, obviously, but also not fighting against a tried and successful plan. This amounts to the tweaking that I am prone to perform once I get to the tried and tested stage which, as often as not, turns a plan with a definite edge into a marginal nightmare to manage.

Over complication does not make for a better trading system.

Over complication is just another side effect of greed.

Jeff.