Day 3

Here is the new Day Log:

day-log-9-13-06.pdf

After getting into some trades today and still a small question about this market I don’t see myself taking any new swing trades for a moment.

Recap

Well we had a busy day here. I took on several new trades. I looked to take a few days and never found my window until later in the day.

My watch list had a few no goes: VRSN, BOOM, MATR, and CMVT.

We also had a few big misses: PSYS & PNRA

I also took several swing trades: ANST Long, NITE Long, PTV Long, RIMM Long DT, WNR Short.
During the day I looked around for an article of “Gunning”. This turned out to be a hard search. My idea of “Gunning” is to add to my winning positions. No dollar cost averaging here, I only do it to positions that I’m profitable in. I first though about this concept can after I read a little free online book called The Phantom of the Pit. It basically stated that if you’re only right 50% of time then you must add to your winners to be profitable. Now, there is more to be profitable than just this, like risk control, but it is a point to be considered.I tried to add to my PTV trade today based on the 30 minute chart. Here was the set up. I never got the confirmation to go.

It looks as if ANST is giving a signal if it doesn’t gap in the morning.

After taking on a little more expose and capital use than I wanted, goal was 40%, and I’m currently at 93%. I’m going to go into the smaller time frames and get my risk level down to offset for the extra capital use. My starting risk expose to start is 2.91% of my overall account or 58% of my max allowance. After doing a little dancing around here I brought it more in line with my overall expose at 1.5% of my account or 31% of my max allowance. That make me feel a little better if this up move is not all it’s cracked up to be.

Stop Thoughts

I have always used stops based on some number, a low for longs, which I see on the chart. I have been rethinking this for a time now. The other form of a stop is one based on the ATR, or Average True Range. If you want to get real good you could use the Implied Volatility if your stock trades options. Either way by using this type of stop placement your stop should fall somewhere that is not easily identified on the chart itself. I will be doing some test on this to see where it will end up.

The big question I have is doing this should I use 2 times my ATR off the close or 1 times my ATR off the low?? The big change here is going to effect how many shares I can by, given this will probably end up being quite a bit looser. The other effect is going to be on my R distribution. All question that I’ll have to think about.

I wanted to look over a few trade ideas that I missed the other day to see what is happening.

CWTR – Triggered and still on a roll

SNDK – Triggered and flopping

FLSH – Triggered and flopping

UDR – Triggered and holding at entry point

All the silver stocks never got triggered, nasty day yesterday for all the metals.

After considering all this my big question is how long should I be at this point in the market. Everything looks good as of right now, but we all know how quick this can change. My gut says around 40% of my capital in play would be a good area to shoot for.