Day Trade – The Day After The Trade

Day trading refers to the practice of speculation in securities, specifically buying and selling financial instruments within the same trading day, such that all positions are usually closed before the market close for the trading day. Traders who participate in day trading are called active traders or day traders. (Thanks Wiki!)

Yesterday I took a number of positions  – under the general premise that:

  • Risk on will continue.
  • Safe haven currencies  will continue to be sold.
  • Technical analysis suggested a reasonable place to enter.

A full day later and “good ol Kong” is clearly in the weeds on the trade. The USD has continued its upward move, and the Yen has clearly not “sold off” any further.

Reflecting on this we have much to learn:

  • My position size ( my entry position ) is so small that I could really care less.
  • If indeed I choose to remain in the trade ( which I do ) I will easily double my position at any given time…and then again double…and then again double if greater opportunity presents itself – If I choose.
  • I can easily enter new positions in other currency pairs to “off set” further downside, as I will have learned from this “poor entry” that other “good entries” must be available in the opposite direction.
  • I can blow the entire thing out – cry about it for about 10 seconds, and get my ass back at it as I’ve done countless times before.

Hmmmmmm…….decisions decisions……point being – If you swing for the fences and trade too large vs your actual account size / bank roll you don’t allow for this kind of scenario. Anyone who thinks they can pick a “magical entry”  time and time again – will be back working at McDonald’s by weeks end.

You get good at this by checking your emotions at the door – and trading within your means. I’ve got more options than I could imagine in a market that can only go up, down or sideways…..and we all know I hate sideways.

In a general sense I’ll give it another day or two in that…..I fully understand that pushing the upside here is exactly that – pushing. Frankly – I still don’t see a single fundamental change and have a hard time seeing the USD do anything more than this before rolling back over. “Tops” don’t just  flop over in a day – but I am very aware that the process is underway. I still think we see some kind of “euphoric blast” upward before this thing hits the skids as this just looks to easy. Wall Street needs to take things “past extremes” to get the last one of you off the couch and on the phone with your broker in fear you’re gonna miss it. That’s when we see the top.

11 Responses

  1. David February 20, 2013 / 12:31 pm

    Hey Kong, I like to accumulate positions at different levels if trades go against me, not to be confused with Martingale (I’m sure you won’t confuse it with that, but I mention it in case some of your readers do); I’m a counter-trend (day/swing) trader and this strategy works well with small position sizing; in fact, often times you actually hope the trade initially “goes against you”, as it is an opportunity to build a stronger core position (if you fundamentally and/or technically believe in the trade of course). There’s actually a very good book on the subject and the strategy can yield very profitable results if done right. It’s called “Bird Hunting in Lion Country”.

    • Pot Stock Watch February 20, 2013 / 1:11 pm

      Fantastic David.

      I for one couldn’t agree more – as I often look at price moving against me as an “opportunity”.

      For many this is extremely counter intuative and difficult to do. Thanks for the contribution!

  2. Warren February 20, 2013 / 2:28 pm

    I started an aud/jpy long position on the sell off stop is 95.50. Entry price 96.09. If we can break 97 then this will get some legs. Big time bs fed rhetoric that they will stop printing soon, they literally can never stop otherwise they can’t control interest rates which leads to the death of the dollar.
    I’m seeing this as a great time to go long commds and short dollar and yen.

  3. tfinavia February 20, 2013 / 3:45 pm

    Kong,
    Greetings! Are you still seeing USD to fall in coming days and weeks? It’s at 81.05 now, a full point or so higher than a week ago. If it’s going to start downtrending, what will be target level downwards? Many thanks!

    • Pot Stock Watch February 20, 2013 / 4:03 pm

      Tfinavia!

      USD appears to me to have made its “push” (and in turn likely rinse of a pile of EUR/USD trades) right into a very large area of resistance, where it was soundly rejected back in Nov. I assume it will turn downward here and find it’s way “back into the range” where it has been floundering for what seems like forever. I don’t have a specific level as a target as I trade the USD against individual currencies – so the $DXY is really of no value.

      If things go as I imagine – we should see the USD make it’s turn as stocks make their “blow off top” here in the weeks ahead. After that ( maybe mid March) I would caution to be very careful with positions – as I expect things to get tough….really tough.

      • tfinavia February 20, 2013 / 4:48 pm

        Thanks Kong! I knew your outlook from my reading here and I appreciate you confirming with me again, but I just wanted to check with you in the event of strong dollar rise which is what we just saw.

        • Pot Stock Watch February 20, 2013 / 5:20 pm

          Right on – that’s the outlook.

          Now…..if we see it play’s out that way.

  4. monstery February 21, 2013 / 5:38 am

    You got your 1.3170 on EURUSD. Long, no?

    • Pot Stock Watch February 21, 2013 / 7:57 am

      I am most certainly looking at it here this morning yes.

      I’ll let this USD strength play out here this a.m and see where the dust settles.

  5. PG February 21, 2013 / 3:02 pm

    Hey Kong, do you think the weakness in the Canadian dollar vs USD will reverse course soon as well?

    • Pot Stock Watch February 21, 2013 / 3:11 pm

      The USD action against a pile of the majors has been very interesting as of the last 2 days. As much as those viewing the $dxy might imagine that the USD is “blasting higher” – the move against the commods has been extremely small in comparison….which again leads me to believe this “sell off” is moreso a matter of EUR weakness / proft taking in risk …a bit of balance in JPY pairs – and in all really nothing to worry about for the time being.

      I most certainly expect USD/CAD to turn downward – as I am still holding short and looking to add on confirmation of the turn.

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