CONGRATS B's Well deserved!

If you take a look at the archives to the right you will see that the months of at least half a dozen posts came to a halt in June 2010 when I set off for a nearly 2 month vacation in which time I tried my best to cut away from the World Wide spider Web.

Upon returning, life took its toll and between juggling this, another part time gig, an internship, school and more I was spending over 14 hours a day even most weekends trying to run it all but eventually it was either my health or a few of my favorite things (such as investing and this blog) and thus began the almost dry run of no investing and no blogging (well almost none) from my return late August 2010 until now June 2011 where I have taken a part time gig into a full time Business and have eliminated the fluff.

I have made several attempts at coming back committed to the blog in August then September and continuing almost one post or so a month until it just wasn't worth making half-baked posts.

Corporate America is behind me for the time being and even though it was fun, having more time to focus on what makes me happy is a much better trade-off. I do lecture a Special topics class on investing at my University and therefore I have decided to create a "investing school" section in the blog which I will update with useful info for beginners. I know the page is blank right now but a few articles are written which I will be releasing slowly every few days in case i fall into a dry spell again.

To those that are still subscribed via RSS, come from referral sources or even have the site bookmarked and stop by I would like to say THANK you for hanging around while Investingfreak took time to "restructure".  The website has also been redesigned with the Green Money colors and with the simplicity in mind.

As always the moto or Mission Statement for us is:

"See it, Call it, Trade it, Bank it" -Investing Freak

At the time of this writing I have taken a 56% profit after commission on some weekly SPY 127 puts that expire today. Entered in at 0.16/contract and exited at 0.28.

As you will see in the chart included, I have placed my entry and exits with yellow stars and my ideal target exit with a green star. The yellow dots in between some of the candles are times where I created an order to exit the trade and cancelled. I wanted to exit twice when I had generated 20% profit and once when I had over 25% loss.

(Click Chart to Enlarge)

My Entry (first yellow star) was just where I wanted it (below the daily pivot). I am still working on my exit execution and controlling of emotions. I usually write out how I feel about the market action or trade via either sharing with another trader via text, chat, twitter etc. When those aren’t my preferred choice I write it down on a notebook. It’s not foolproof but it helps me personally stick to my strategy and most of the time a trade.

I will provide more info about the chart for the curious ones… The purple dots represent the daily pivot point. The red dots represent resistance levels and the grey dots are support levels. The two red lines represent yesterday’s highs and lows so I would have an idea when that tight trend that developed yesterday would be broken. Also the chart is 5 minute to show the entries better but I prefer to use 15 minutes when day trading.

This is mainly on here for me to reflect on as an online public journal, they say when you publicly share something you are more committed to keeping it (in this case sticking to my strategy that works for me and just working on getting better at exits and emotions).

Update: As of 11:35AM Eastern it looks like my ideal exit has been hit and the put options were worth 0.49 a contract. Had I executed that the profits would have been 187% after commission but that’s in an ideal world. Another influencer in my premature exit (pun intended) was that Obama was set to speak around 11:35AM and I wanted to avoid any spikes that would ruin my trade.

As of 12:50PM SPY hit lower than the second support line in my chart.  Emotions got the best of me and I did exit too early indeed (would have been 400% since my entry). Its hard to think of it that way. If i had exited at -25% loss (as mentioned earlier) I would be devastated for the day.

As the new InvestingFreak tag says:  See it, Call it, Trade it, Bank it.
I Saw the potential for a down day, Called it by texting a fellow trader (will work on tweeting realtime to share ideas), Traded it, and well... Banked it.

Make some moneyyy!!

-K

I hope to find the loyal freaks back and richer in August.

There is no lesson to learn here this post per se but if there was a lesson is "Stick to your plan".
My plan was to see AAPL close the April 21st gap and that turned out to play well. I could have locked in 200% last Wednesday but I stuck to my target and ended up getting almost 3x as much as I would have in the past when I let emotions cut winners short.

230 AAPL May 2010 Put  (click to enlarge)

Till next time.

-K

As I watched the price slide down like a waterfall I saw a reversal form. This reversal in candlestick patterns is called the Morning Star.
The patterns is a bottom reversal signal. It is most effective following an obvious downtrend (in this case from 6.50 to 2.20)

According to Candlestick Trading Forum:
The Longer the black candle and the white candle, the more forceful the reversal.

The Pattern psychology for this specific pattern says that when the price goes down fast sellers get panicky. They keep selling off and as they are doing that bulls begin to step in.

Now that I have explained the pattern I used time to explain the entry and exit signals.
Entry 1: 100 shares at 2.90
This was an initial entry to test the playing field.
Entry 2: 100 shares at 3.50
I was looking for price to close above 3.25 for 2 consecutive candles to buy into strength. 3.25 if you can spot it is a resistance from earlier candlesticks.
Exit 1:     100 shares  at 4.01
4 is a round number so that makes it psychological for people to dump shares
Exit 2:     100 shares at 4.53
Looking at the far left 4.53 is around where the 2nd large red candle begins. and if you look up further more candles tend to end around 4.75.
Initially I had the limit sell order at 4.74 but I then decided not to push my luck.

Conclusion: After concluding the trade I watched the price go at high as 4.90 then in one big swing it crashed back down to 4.
Overall it was a great risk reward ratio and a well thought out trade.  Morning star followed by an initial entry to test strength of the pattern and if it goes your way add another position which will allow you to scale out.  Now this did take 2 day trades out so if you have under $25k account you will only have 3 trades in 5 days so it's really not ideal to do every day.

Hope you enjoyed it and while I do understand this is not a stock pick because it is already gone I hope it serves as a teaching tool to how simple trading can be at times.
-K

The chart I will post below will reveal my true account size which to some of you will seem like spare change. (Click to Enlarge)

Here's to hoping for a good March Performance. (Be it in a bull or bear market)
-K

I bought DDM at 61.70  and i figured out it's volatility through Average true Range (ATR) was around $2.40      61.7-2.4= 59.3

I decided to give it a little more space so i set $59.

with 15 shares i held at 61.7 i spent $932.5 ($7 commission included)
i sold with a stop rule in effect at $59  so that is  $878 after commission is deducted.

I ended up losing $54.5 or about 5.8%. I'm fine with that as long as it keeps me out of trouble.

Remember!
Disciplined Traders Use Stops and Never go against their own rules.