Sometimes a trade exit isn’t so much about a specific signal showing up, or a specific target being hit. Rather it can be a lack of either of those things. When you get to know how stocks behave, how patterns repeat, and understand the fundamental meanings of certain price points, you can use a failure of those patterns or points as a signal that a move has come to an end. Such was the case with this trade on PYPL on Friday. A ten minute trade that put more than four hundred dollars in the bank, with an exit that will be obvious to anyone who trades my stocks strategy.
Another ten minute trade netting over five hundred dollars was this from WDC.
Again, an exit defined almost as much by something not happening than something happening. This one was very clear to see on the time and sales though — momentum swung around and it was obviously time to get out.
Yesterday I wrote a post (7 Reasons Why You Don’t Want My Daily Stock Picks) in which I mentioned that having a good list of reliable core stocks can take some of the pressure off building a decent watch list each day. Here are two trades from Thursday that were both watch list stocks.
The first is QCOM, a stock that has been putting food onto my family’s table for more than a decade. It took two bites at the cherry to get some profit out of it. The golden rule is to never let a profit turn into a loss. The first trade started out okay but momentum petered out. Rather than hold and hope, we exit with just enough to cover the commissions. As long as we’re not losing, we can take entries all day until we get a decent one.
As it happens, the second entry was decent, and netted $300 profit in under fifteen minutes. Now it’s fair to say that a good daily stock pick can net a much bigger profit, but my point is that with a few core trades a day you can make a decent living while getting better at picking daily stocks.
My second core stock for Thursday is AAPL. This can be a volatile beast, but if you can hang on for the ride it often puts in some nice moves. Once again I scaled out of this. Taking half off early means the other half is effectively running risk-free — it’s paid for. Yes, it reduces the overall profit, but it’s worth it for the risk reduction. $575 banked in about half an hour.
To re-iterate my point then: sure, core stocks rarely put in the stellar moves that you can find in good daily picks. But these two core stocks provided $875 profit between them, all before lunch. That should be enough money to keep most traders going while they get better at picking daily stocks.
I had another email this week (my inbox has been busy recently, probably because I’ve been posting more trades here since I restarted my blog). The gist of it was this: can I create a mailing list, exclusive to customers of my stock trading book, and send my watch list of stocks to all the subscribers before the market opens each day? My answer to this type of question is always no, and I wanted to explain why.
Sometimes you get to take more or less the exact same trade on multiple stocks at the same time. Obviously this is more likely to happen with stocks that are in the same sector. A nice example of this on Wednesday with these two from MU and QCOM. Same trade, pretty much the same time. Same signal, though the exit on MU was more clearly signalled by the price getting stuck at the previous days low.
Individually these trades aren’t huge winners, but stacking a few of these simple trades up can add up to a decent profit per day, with four figures very easily attainable.
No trades on Monday with the holiday, so here are three for Tuesday. As is sometimes the case after a long weekend, the market was a bit slow to get going. That meant I ended up taking some trades much later than normal. I generally like to be all done by lunchtime, but most of my trades were after midday. The first was earlier, and did not work out — a sign of the kind of day it was going to be. A quick exit when it was clear it wasn’t working meant getting out with a couple of cents to cover the commission. Trading funds intact, we live to fight another day.
Next up a late trade heading into lunchtime. Good signal though, and some nice momentum. Not a huge winner, but $280 profit in about ten minutes is better than a poke in the eye with a blunt stick.
Last one I’m posting is FB, which is volatile but often presents great opportunities if you can sit on your hands long enough to let the trade play out. Scaled out of this one taking half off in an obvious place, let the rest run risk-free. $570 profit in about fifteen minutes made up for having to ‘work’ so late into the session. There was plenty more to be had in the last hour, but I was long gone by then.
I had an email from someone asking me if I would give them personal one-on-one coaching in the practice of day trading. The short answer is, as it has always been, no. I’d like to share why, because it’s something that comes up every now and then, and it’s something that affects most traders learning their business.
This doesn’t happen every time, but it happens often enough that I’d call it a pattern: after a difficult day with not much around, there is often a great day with a ton of easy trades. It’s like energy is building in the market on the difficult day and when the next session opens it’s released. It’s a lot like when it rains and my daughter can’t go outside to play. As soon as the sun comes out she’s out there bounding around letting off all that built-up energy!
Anyway, that is to say that there was no shortage of nice, clearly signalled momentum-fuelled trades to be had on Friday, particularly on the tech stocks. Like this one on AMD.
I see a lot of traders dismiss a stock from their watchlist once they’ve traded it, but there’s no reason to do that. If a second entry comes along, take it. Especially when it’s as clearly signalled as this second trade that popped up on MU.
Funny old day, not so much around. Here’s something different — a trade I didn’t take. At first sight it looks like a good setup, but with volume dropping away, yesterday’s low hanging ominously just above the likely entry, and a general lack of momentum, I stayed out. As it turns out, there was a bit of profit on the table. Again, following the rules means missing out on some winners, but more importantly it keeps us in the game so we’re around to pick up easier, bigger wins (see below)…
Like this one on Facebook. A ten minute trade netting over $400 in profit. Could have been more, but a highly volatile price led to a conservative approach, scaling out half at a time. And yes, bars not candles for this one, because bars rule.
Also note that there was a great easy short available at the end of the session, good for another few hundred dollars profit. Personally I was long gone by then because, you know, I’m lazy. But it was clearly signalled and there for the taking.
Nothing spectacular, but there’s a good living to be made from quick simple trades like these if you stack a few up each day. Certainly possible to hit $1k+/day if you are consistent and above all, patient. Most aren’t, which is why most fail. Oh, and it’s another bank stock.
A couple of yesteraday’s trades. Funny old day. Trades often don’t go the way you think they will. QCOM, a staple of my core watchlist for longer than I care to remember, looked set to reverse within minutes of entering, so I took an early exit. Yes, holding could have produced a bigger profit, but it’s all about following the strategy. Better to put a few dollars in the bank and live to fight another day than hold out and hope it keeps going. Trading is not a get rich quick method, it’s a get rich slow one.
BAC did a bit better, making us a solid few hundred dollars profit with an easy trade that just sort of petered out at the end. That’s because it was a relatively late trade. Normally I like to try and be done by lunchtime. Like I said, funny old day.
Just a point of order, as I’ve only recently restarted this blog after the old one got lost in a server move: trades posted here are not a complete record of my trading day, only a selection to demonstrate what’s possible, what’s dangerous, what’s intersting, and sometimes what’s boring.