Friday, August 17, 2007

The "Throw Up" Trade Produces My Greatest Trading Day

When things were at there worst yesterday, besided feeling like throwing up, I felt the markets were extremely oversold and ready for a bounce. I entered seven short term positions which I sold into today's strength (please note that I posted tickers of my entries yesterday). The only thing that links these positions is that they were momentum leaders that had become extremely oversold.

When I say extremely oversold, I'm talking oversold levels that hadn't been seen in months or even years. Even in bear markets, when oversold levels reach these extremes, it's a good bet to position for a bounce. While this bounce could last longer, I'm content in taking my profits and waiting for the market to show it's hand.

I bought 250 shares of AAPL at $113.55 and exited at $121.80 for a $2075 gain (+7.3%).

I bought 150 shares of BIDU at $164.30 and exited at 178.84 for a $2181 gain (+8.7%).

I bought 300 shares of ZEUS at $22.26 and exited at $24.10 for a $552 gain (+8.2%).

I bought 300 shares of RIO at $34.83 and exited at $39.95 for a $1536 gain (+14.7%).

I bought 200 shares of LEH at $51.15 and exited at $58.41 for a $1452 gain (+14.1%).

I bought 200 shares of NOV at $102 and exited at $109.29 for a $1458 gain (+7.1%).

I bought 200 shres of CROX at $45.50 and exited at $50.60 for a $1020 gain (+11.2%).

Total gains (not including commissions): $10,274.

This is the best trading day I have ever experienced. I was feeling great about myself after I exited all of my positions, but upon further reflection, I probably should not have gone "all in." When I say "all in", I mean all in. I was trading on margin, so my $10,000 in gains could easily have been $10,000 in losses, had I been wrong. I usually am very good at position sizing and controlling my emotions. However, yesterday I felt like it was one of those days that only comes along once in a great while, and I wanted to take advantage of it. In my trading journal, I noted that today's gains were a combination of "good market intuition and luck." For the sake of my future trades, I hope there was more of the former.

Over the weekend I hope to provide charts and analysis of today's trades.

7 comments:

Russell said...

Wow. You got guts. Thursday really started to feel like Black Thurday.

Today was a good day too. Hopefully the bottom is in and we are on the way up aga

If you have a chance, tell me what you think of AKAM.

Anonymous said...

Nice trades! I don't know when placed your trades but many of those momentum stocks put in an intraday double bottom, yesterday. If you wait for the RSI to cross, you can usually expect another dip, testing the first bottom. This offers a low-risk entry, a trade I love to take. If you traded the first dip, then you were lucky, if it was the second, nice trade! In any case, you made money so good job!!! -TVH

carmichael said...

TVH can you elaborate on the RSI crossing?

The Market Speculator said...
This comment has been removed by the author.
The Market Speculator said...

I was not looking at RSI crosses. I made most of my trades after I saw that the Dow was -300 and sentiment readings were at extreme levels.

Anonymous said...

Carmichael, I meant to say MACD crossover not RSI. On extreme oversold or overbought conditions, I wait for the MACD to cross. I use 15-minute charts with a 15 SMA. Once I see the MACD cross, I'll place a buy-stop at the 15 SMA. I don't buy right away because most of the momentum stocks I trade reverse very quickly, leaving a $2-5 gap at the point of the MACD cross-over. I'll stay patient and let the buy-stop take over if the stock decides to test the intraday bottom. If it doesn't, I'll let the trade go and not chase it. I traded RIMM at $190 and AAPL at $114 using this setup on Thursday. -TVH

Anonymous said...

He was just lucky the fed steped in had nothing to do with ta. That day the market was down 100 points pre market and would ahve tanked 500point more had the fed not steped in plain and simple. what he did was through the dice sometimes you win big sometimes you lose.