Leaving money on the table... the prudent plan.

I posted my $3 profit (out at $29.00) on PLCM (Polycom Inc.) on Oct 18th.

Today PLCM jumps to touch $34 off the start due to a good earnings report and an upgrade from Wells Fargo.

While I considered holding it through and trailing a stop last week I chose to stick to the target. Sure, today I may mildly regret my decision, but that can be the nature of hindsight. Taking the profit when the target is reached is always the better choice in my current trading plan even if just to keep a level of consistency about the whole objective approach to the trading.

Besides, the stock price slumped a bit after the good report after hours and only jumped following the upgrade... what if the analyst decided to not upgrade or to even downgrade the stock? I'd be left holding a position in limbo... that is where the trouble begins as indecision can be a profit sucker very quickly.

In future, once my position sizing is larger, I may consider scaling out of trades differently. In this case I only had one trade in so there was nothing to scale with. Even had I had two I would not have tried to hold for a run. Seeing the activity this morning I would have sold off fairly quickly at anything over $33.00.

I did have a possible counter trend play to short this stock today at $31.00 but decided against it after seeing the price action... I only noted the reporting and upgrade after cancelling my order and this serves to show that following what the price says no matter the news is always the better option.

Basically, the price hit my stop for the short entry trigger pre-market which automatically negates my trade idea. This is not a subjective decision.

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.

Pretty Boring Stuff

Whoa! I haven't posted anything for a week... that's odd. I have been busy at work and getting all sorts of odd jobs and other procrastinated projects moving along now that I am not day trading and have lots of leftover time.

I now have 6 active positions and a few other orders in place now, so it's not like I have not been trading... just my tading is taking FAR less of my time that it previously was.

I have 20 stocks that I have worked up all my stats for from the last year's data and now I am just merging my current trades into the same rules based trade setups.

Actually, now that I think about it, it's not really that odd that there is not as much to write about. Sure I could go on about the trades, but just buying or shorting a few positions doesn't make for great reading. Due to my methodology there isn't much excitement either.

Trading goes something like this:

Choose a stock that is ranked high enough to consider.

The setup is to buy at $25 and again at $24... two entries perhaps.

Orders placed pre-market

Other in play positions checked, confirm that all stop or profit orders are in place correctly.

Re-enter any short orders to open positions (they are only good as day orders).

Check later in the day to see if they filled... although I like to watch the open.

Set stops for new positions.

Place profit limit orders where needed.

Twiddle thumbs, perform other work...

You get the idea. Pretty easy trading.

Of course the getting to this stage has taken a lot of time and effort and still takes more behind the scenes work. I will need to pare some stocks that are under performers or have gotten over priced and find replacements.

All in all, pretty boring stuff now.

Jeff.

Weekends and Websites

As much as I like trading I like the downtime as nothing can happen over a weekend other than activities that I may choose to do with regards to trading. In fact my current trading strategy has me doing a lot more relaxing when it comes to trading in general.

A bit of research, choosing trades for the next week, deciding on trade sizing, maybe running a few more numbers through the wringer.

I am putting some material together for a website now. I have done a few blogs to play around, this one is the only one that I really stuck with regularly, and I am finding it a different animal to get going. Blogs are easy, websites take more care and attention.

I guess a blog is sort of an informal medium while the website idea seems to be more intentional and formal... this just takes more time and is not to be done in half measures.

When I get it going I'll post a link for any that really want to follow along with my trades directly and not just read about the results.

Jeff.

Daytrading lament... or not?

Today I stayed at home and actually slept in... sort of.

After the kids got away to school and things settled down I did some thinking about the last few weeks without day trading, or, more accurately, without HAVING to trade the morning away. These days have been far more relaxed and less stressful.

As much as I enjoyed the trading while it was in progress I now realize that it was not really what I was looking for in my trading. Someday I may pick it back up or I might jump in for a day or two here and there but for now my current trading plan seems to be a much better fit... and seeing as it is all based solely on my ideas and strategies it is far more satisfying.

I have all my trade data from the stocks from over the last 16 months and change and the easiest thing to do is to continue with those studies while inserting my cash as the next trades come up. This makes a seamless move from study to reality and allows my mind to rest easy knowing that the statistical values will carry me through very nicely as nothing has really changed.

I am into three trades right now, as I already posted, and I am looking forward to more this week.

The plan is to have 20 stocks on my active hit list to start. Of those twenty I anticipate being in 1.5 trades per stock at any given time. That is from the 16 months worth of trade studies under my belt with my first batch of stats (I broke them up to make the number crunching easier and faster). Of course there would be times when that number might be a little low or a little high, it is an average after all. Oh, that includes first entries (67%) second entries (22%) and third entries (11%) into the same trade as the case may be depending upon the setup.

I ran the numbers based on only entering the first trades and found that, due to compounding, it was far more beneficial to plan to enter all trades as they setup. In fact, it almost doubled the profit potential of the account overall.

Well, that's all I have time to write right now.

Jeff.

CMC live stock trade and odd comments

I have been busy with all sorts of projects lately, not the least of which is getting my trading strategy tweaked and making sure that I am positioned where I want to be. It would certainly be a lot easier if I were just following someone else's plan... but wait.... I tried that already and none worked.

So, I have some new trades on the go and they are looking, well, traded. One took off out of the gate for me, which was nice. $1.50 in the first 30 minutes of trading after getting in on the first target price ($26.00) yesterday and seeing it drop by 50 cents ($25.50ish) into the close. Although it dropped that much I was allowing it $3 of room to drop right down to $23.00. Perhaps this will be a shorter than average trade... I always like those.

For my live trade that is posted, CMC, I am in for an average of $14.76. Actually it is only one position so it is hardly an average. I didn't manage to get in at $15 for the second entry (busy) so I figured getting halfway between first and second entry pricing was good enough. It sits at $14.86 right now.

I posted the stop for CMC at $16.00 but I am not overly fond of even dollar stops as they seem to get "just touched" before the price reverses often enough that, at this price level, I will change it to $16.15 or $16.20.