Monday, February 21, 2005

My Typical Trading Day Routine

I believe routines are important when seeking consistent results or evaluating performance. By following a routine, a trader can get involved in the process of trading each day, rather than getting wrapped up in analyzing results. Evaluating results certainly has its place, but it can be a hindrance to trading your best from day to day.

My routine begins in the morning about 90 minutes prior to the opening bell. I come into my home office and get my computers up and running. I have 3 PC’s and 4 screens which I use each day. I take a look at the news and see what headlines may have an effect on the day’s open (, as well as what stocks may be in play due to news on them (updated throughout the day at’s In Play page available from my CyberTrader brokerage account). I then start to load up my watch lists into quote windows, as well as into my Real-Time Streaming Stock Alerts windows. I use Trade-Ideas Pro, which alerts me the moment stocks hit new highs or lows, or any of a number of other criteria are met. It also helps me search for patterns or volume moves intraday, which I find useful for daytrades.

Once I have loaded those lists, I then turn to my primary brokerage account which is CyberTrader. I use the CyberTrader Pro platform, which has every tool I have ever needed to execute trades and monitor positions. I use the Market View windows for quote lists, but my favorite feature of this direct-access trading platform is their conditional alerts feature. So during the premarket, I set conditional alerts for my swing trading newsletter picks, by using time, bid/ask, and price conditions. I can set these to automatically generate live orders once they trigger, or simply to alert me once the conditions are met. I generally set them to get me into at least a partial position, and then I will monitor the pilot position and add to it as I see fit. Once I am in the positions, I then set automatic exit alerts as stop-loss orders to close out the trade for me if needed. This not only saves me valuable time, but it allows me to focus on remaining positions rather than second-guess whether or not I should exit. Let me say that many more times than not I am quite glad to have had an automatic stop order generated for me using these conditional alerts! Nothing is worse in trading than fighting a losing position and regretting not getting out at the originally planned stop-loss price. These alerts take that possibility out of play for me, and let me keep trading and looking for the next move.

Throughout the day, I keep tabs on the market in a few ways. I read some financial websites such as RealMoney to keep me aware of current and upcoming events, and it is always good to read trading articles from other traders. I also am on instant messenger with a few other traders which I have worked with for several years. We work well looking for intraday setups together better than any of us might do individually. As long as you can stay focused on the market and not get sidetracked discussing other topics, this is a good way to trade. I have never looked at other traders as competition, but rather as helpful resources to share ideas with and seek out new ways to profit. It also gives me interaction with people which is good when trading in a home office. A trading chat room can be helpful (but sometimes expensive) when looking for others to share ideas with, but I am not a member of any.

I probably place about 20 round-trip trades per day on average. I will keep stocks overnight, but I also daytrade. I don’t let commissions deter me from entering new trades, because they have become so cheap that only a very small move in the stock can more than pay for the commission. If I feel the market is on the move, I will become more aggressive in adding to open positions or seeking new ones. If the market is slow-moving and range-bound, I am reluctant to add new positions unless they are for swing trading.

Once the closing bell sounds, I get away from the computer fairly quickly. I do not stick around for earnings, as I never hold stocks going into the announcements. After staring at my screens so long, I want to get out of the house! About 90 minutes after the close, I begin my research and scan for stocks using my stock charting software. I run scans for custom criteria to narrow down the list, but primarily I am manually scrolling through hundreds of charts looking for chart patterns I like. This process takes well over an hour, and then I begin to compose my swing trading newsletter. The newsletter takes another hour, and then I publish it to my website and email it to subscribers. Now I have my swing trading candidates for the following day as well as some potential daytrades which I may have found while scanning the universe of stocks.

Finally my work is done for the day, and I can eat dinner and kick back for some serious reality TV! If you don’t have a DVR or TIVO, I highly recommend getting one!

Follow a regular routine and you will soon learn what things are most important to your own trading process.

Good night, and trade well tomorrow!

The Stock Bandit

Friday, February 04, 2005

Selling On The Way Up

An old friend of mine is just getting into the stock market after primarily being involved in real estate. Over the past week we have spoken a number of times about the market and trading. I told Brandon how one of the toughest things to do in stocks is to sell on the way up!

Stephen Covey wrote a book which was widely read called "The 7 Habits of Highly Effective People." The second habit he discusses is to Begin With The End In Mind. For trading, I equate this habit with planning my exit. If I am to be an effective trader (make a habit of profitable transactions), then it is necessary to know what elements would cause me to exit the trade. Regardless of which reasons you may set for exiting a given trade, once a profit target has been met, being disciplined means taking that profit. Sometimes this means a profit target is met exceptionally soon. It might also mean sustained strength in a position which would cause you to only exit most of your shares upon your profit target being met. The point is, you are selling into strength.

I told Brandon how easy it is to play "what if" as a trader. What if I had kept my entire position? What if I had been out of town or lost my quote feed and had no choice but to stay in? What if I had really been aggressive on that trade? These two words will bother you if you let them, but that may or may not positively affect your trading results. Be careful when playing what if! Psychological capital is of great importance. Preserve it!

My friend Steven says that "missed money is better than lost money." He is right. Let's take a look at the 2 scenarios which can play out when selling on the way up.

Last November I listed BOOM as a buy in my swing trading newsletter at $11.80. This stock rocketed higher over the following 2 days to the tune of 49%. This kind of move would have met most anybody’s profit objective in such a short time. Readers inquired when and where to take profits, and I mentioned how I sold into the strength while the party was in full swing as another friend Adrian would say. It was a good move.

Chart courtesy of TCNet from Worden Brothers, Inc. Posted by Hello

BOOM finished well off its highs that day and just a short time later BOOM had returned to its prior price level.

Chart courtesy of TCNet from Worden Brothers, Inc. Posted by Hello

They don’t all turn out that well, though, which of course is why I am writing this post! MSO was a long candidate in my swing trading newsletter which triggered just 9 sessions ago with a buy point of $29.00. I have been trading less aggressively during the earnings season, and therefore have been prone to taking profits more quickly. MSO worked nicely for a few days but then started to struggle two days ago. It appeared the party was over for this stock. Selling into that strength was a prudent thing to do. But, this stock jumped another 10% in the past 2 days since then, without me! Another opportunity to play “what if!”

Chart courtesy of TCNet from Worden Brothers, Inc. Posted by Hello

The point of my post is this: follow your game plan! If your trades hit your stops or your profit targets, follow your plan and get out, even if it means selling most or all of your position into strength. Yes, you will have the chance to play what if. Yes, it will be frustrating to see stocks sometimes go higher without you. But you will be practicing discipline, and discipline will likely make you many more dollars in the future than you will be able to make without it!

Good night, and enjoy your weekend!

The Stock Bandit