November R Review

I'm having all sorts of DSL problems tonight, so I'm gonna try and get this post out quickly. I haven't posted a full monthly review before, as I just started keeping a journal two and half months ago. I actually had a pretty rough summer as I jumped from strategy to strategy, straying away from my bread and butter swing setups. As my frustrations grew, I stepped back and reviewed dozens of trades. I noticed that I had some very good trades, but was throwing away money jumping on plays I had not prepared for and that didn't meet any of my "normal" criteria. I decided to truly focus on one methodology and not be tempted to jump all over the place. I also decided to start using stocktickr as my trading journal. While my methodology is still much a work in progress, I have been making consistent improvements.

Here is my R chart for November's Trades.

My major goal for November was to increase my Expectancy. I've commented before, that of the three ways to increase the bottom line, increasing expectancy is the easiest to start with. Increasing win Percentage and increasing R size are the others. I feel much happier with an expectancy of .64, but I think that I could improve on that, as I exited a ton of trades that just kept going. I had almost the same R's as in October with twenty less trades though, so I did do better. So how did I improve my expectancy?

The first thing I did was to resist the temptation to scale out a little early. I tend to take profits quickly and frequently, usually taking out some profits at 1R (and several times before that). I kept finding myself in good moves with little shares left to take advantage of the move. I think I did a much better job of waiting on my first scale out in November. Another thing I did, was to be a little more selective on my trades. I used to take setups that had pretty wide stops and I would just reduce my lot size to compensate, but I found that I would be in a lot of winners with a small R. I now wait for a setup that allows me to put on a bigger lot size with a smaller relative stop. My win percentage dropped a little as they are closer to the stops, but my winners more then compensate for it.

So here is an updated chart of my Total R performance. I was a little surprised to find myself at 74 R's so quick, but I think this market has to take some credit. I have found two things to be fairly consistent. Buying support and holding overnight is being rewarded, and shorting is getting punished. I think swing traders have an advantage in a trending environment as there are several gaps or morning moves that then consolidate all day. I have been lucky in that I have had a few gaps higher and only a couple gap down stop outs. I imagine my R performance will suffer once we enter a range bound market (We may already be there).



I have to say that I think I have been quite mediocre as a "trader" the past two months, but I am pleasantly surprised by decent performance numbers and my bottom line has shown it. My strengths by far are my chart analysis , ability to define support and resistance, and discipline in adhering to my stops. The key was designing a system that would hide my flaws and take advantage of my strengths. My goals for December are to keep my expectancy up and try and get my win percentage up over 45%, and hopefully near 50%. Another goal, is to try and sit on my hands if the trades aren't there.

Market Review
I was out most of the day and my DSL was flaky once I got home so I missed most of todays move. I noticed over the weekend that the Casinos were looking good, and boy did they move today. I see a lot of stocks on the move, so we may get some follow through the next couple days. I can't upload charts right now, but take a look at NVEC, CERN, QSII, GIGM, CAAS, CRM,and PHLY as possible long plays.

Good Luck,

DT