How To Eliminate Emotion From Trading

Early this year I began trading with a prop firm.  My focus is intraday scalps on volume laden movers. Here are the rules I’ve since enacted.  Some are newer than others:

-never average into a losing trade

-delay all entries until 20mins after opening bell

-no new trades unless there’s at least 40mins left in the session

-no shorts unless SPY trades below opening price for a minimum of 30mins

-average daily volume for eligible stocks must exceed 200k

-entry only if a given stock’s daily vol run rate clearly exceeds SPY

-NO SETUP, NO TRADE >> setup requires a compelling series of 5min candles

-be mechanical

-use 1.5% stop loss, no excuses

-permitted 2 losers per day, after which go have fun / regroup

-sell half of winners +1.5%, no regrets.. raise stop on remainder to entry price

-sell half again +3% & then assign 3% trailing stop to remaining shares

-nothing held overnight absent +3% cushion

-maintain daily diary / decompression

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Mayan Meltdown

Rough action out there as we peer into the fiscal abyss.  Somehow my main computer died on the winter solstice. Coincidental, I am sure.  The new rig is a beast and shall enhance both my speed and awareness. Still tweaking things, but Windows 8 seems adequate.

Charts are messy & SPY could drop fast to the 200ema, but strive to keep an open mind

PRGO short this drug maker below $102, contingent upon brisk volume

SN sad looking energy company with the potential to rollover soon

VMC if soft again early this week on tepid volume, monitor for bounce off $50 level

ALJ another strong stock in pullback mode.. eye towards entry near $14.5

DYAX nothing broken here & may present an opportunity at about $3.35

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Cliffmas Eve

SPY rallied past $143, but the old trendline off the highs did prove to be a stubborn hurdle

The market went on to close poorly, which then led to a rather nasty candle on the weekly

Volume is in no way supportive of a healthy market… all this cliff talk & it could manifest

CA only able to muster a sad bounce during the recent run up elsewhere, short watch

DVN also particularly weak, and looks susceptible to another bout of selling

ARNA has spent months consolidating that huge move… is it ready to rumble again?

SMBL nice handle after the cup that was November, monitor for breakout

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Change In Strategy

Wanting to limit my stock universe somewhat.  Making a couple small tweaks to the scans. Now requiring 100k average daily volume, and price over 50cents.  That’s not too stringent by most traders’ standards, but ought to save me about an hour a day, and will ultimately put a focus on more legitimate (actionable) setups.

SPY resilient yet & may pop the $143 level, but has trend line resistance soon thereafter

OIL weakest among commodities…breakdown here and folks will be targeting summer low

AMT advance over $76 on volume of 2.5million shares or better would be pretty

AL cup and handle…speculation that it might be added to the S&P500 index

CONN electronics retailer could get another push before the holidays are over

ABAX working on a range break with its all time high over $40 in striking distance

SABA too much time spent languishing under $8, looking for support failure

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End Of Year Outlook

Impressive bounce for SPY, but it is now nearing the prior breakdown of $143

https://i2.wp.com/content.screencast.com/users/chartseer/folders/Jing/media/291211c7-c089-4fbc-8fab-e0213e71b83c/2012-12-01_0214.png

I’m skeptical we’ll overcome it, and will therefore be keeping longs on a short leash

https://i0.wp.com/content.screencast.com/users/chartseer/folders/Jing/media/2e85be4e-95f8-4746-963c-9353e1e14cc3/2012-12-01_0219.png

TU is a Canadian telco nicely positioned for a breakout

https://i2.wp.com/content.screencast.com/users/chartseer/folders/Jing/media/fb8928a3-f0a8-486a-bdbd-b74a52374eb4/2012-12-01_0235.png

HIBB tops my list of short ideas / also watching MCRS SGY ONE SABA & BSBR

https://i0.wp.com/content.screencast.com/users/chartseer/folders/Jing/media/54d87cbd-8f1c-4b7c-a2a9-26475db9e289/2012-12-01_0314.png

AFCE if heavy volume again, buy above Friday’s high w/ stop below the same day’s low

https://i0.wp.com/content.screencast.com/users/chartseer/folders/Jing/media/c1ef5e2c-f0e4-45da-b650-cf1d46c32f08/2012-12-01_0345.png

COT hourly chart shows a closer look at this beverage company’s well formed bull flag

https://i1.wp.com/content.screencast.com/users/chartseer/folders/Jing/media/c027a662-b3e7-40e8-bd8d-1892df0ed59e/2012-12-01_0411.png

BPHX has my favorite microcap chart right now

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