Citigroup is a beautiful stock. It goes up and down and then up again. If the market is down, you should invest in Citi. Then over the next 10 days, wait for the stock to go up - and it certainly does. Exit when the profits are decent and then wait for another down day. It IS that easy :)

I added eTrade and started investing out of it. eTrade is costlier than bank of America self directed investing, but it provides a lot of functionality which is very useful. I have also added more capital to my trading account.

I am getting the hang of swing trading - which is primarily what I described above with Citigroup. The investment is done with a view to catch on to 'swings' in stocks.

Over the next few days, I will also try my luck on market timing - i.e. being fully invested in the market during up days and staying in cash during down days.

Citigroups earnings

I am back after a gap of 6 weeks almost.

First of all, I realized that day trading cannot be done daily - at least by me. I am learning to sit on losses, which is key. The money for day trading should be thought of as a resource to make more money. Profit and loss are part of the game. I am getting to that mentality.

Second, there is money to be made before earnings announcements. Citi was widely anticipated to provide great Q2 earnings since Goldman and JPM had already done so. I brought Citi stock (5K) 5 days before earnings and it grew 20% during the days leading up to the announcement. To the surprise of many, Citi did badly and the stock was set to go down. I exited my positions before the plummet began. That is the good part.

Given I was following Citi for 4 days, I thought I 'know' this stock and can make some quick profits based on 1-2 cent trading i.e. putting in large amounts of money and wait for the stock to rise 2 cents and take all the money out. That was the bad part. I tried making a quick buck but the stock moved in the opposite direction and kept on doing that. I decided to hold on to the stock for a few days till it comes back to the same levels, which it did today. I sold off the stock fro exactly the profit that I was supposed to make in 1 minute - however, this trade took 5 days.

Overall, I am running at 27% profits in 3 months. Has been good for an iPhone, a camera and a laptop. Below is the total graph. I am using days of trading on the x-axis (before I was using actual dates of the trades) as there was a huge gap in between.

Day trading week 7

Total profits in 7 weeks: 18% of capital employed
Profit in week 7: 0% of total capital employed
No trading done

I didn't trade this week either. I sleep too late and always turn off the alarm before the market opens. 

Day trading week 6

Total profits in 6 weeks: 18% of capital employed
Profit in week 6: 0% of total capital employed
Rest week: No trading done

I didnt trade this week. Had a stressful work week and I saw last week how external stress creates a bad trading day. This is one of the few lessons that I really followed instead of just documenting.

Monday should be interesting as I cant wait to get back. The earnings seasons will also start kicking in and there would be a few volatile stocks waiting to be pounced upon!

Day trading week 5

Total profits in 5 weeks: 18% of capital employed
Profit in week 5: (3%) of total capital employed
Bad week: First week of loss

Perspectives on week 5:

Day 3 was that of a big loss. Put money in SAFM which delivered profits 3x of analyst estimates. You would think that a $42 stock would rise at least 10% with such great news. I put in money at around $45 thinking it would atleast go to $46 during the day. It ended up at $44. With no stop losses, I lost a big chunk there. I kept the stock overnight hoping (!) that it will jump the next day. It hardly jumped and stayed close to $44 at which point I decided to exit.

Day 4 was again a dissapointment but my mental state was also to blame. Some personal stress and trading suffers. Lost may 0.5% there.

Lessons learnt:

Companies like SAFM was "old school" (SAFM does business in poultry). Their stocks trade horizontally between big news events and big news events do not move them much either.

Learn to take losses and put stop losses. Day 4 was useful in that regards since for the first time I was ready to take a modest ($200) loss without hoping and waiting that the stock will rebound. I still hadnt put a stop loss but as soon as I realised that more losses may be ahead, I pushed myself to close the position.

Do not keep daily targets. The common theme in my mistakes has been the urge to get close to my daily target (~1% of capital). I am learning to remove this mental goal of that target. It was especially apparent when I took the first calculated loss (instead of hoping that the stock will turn around).

I also got upgraded to "Active Trader" status with my broker. Though I still dont have access to Level II qoutes, I have more technical analysis tools with me. Since I am accustomed to Google finance, I will have to break that habit and learn to move towards the tools provided by the broker. I will be able to momentum trade with information about bids and asks (though not as good as Level II quotes). Next trading session will be key as I will be prone to mistakes due to the new set-up with the active trader tools.

Day trading week 4

Total profits in 4 weeks: 21% of total capital employed
Profit in week 4: 1.5% of total capital employed
Bad week: overall gain gives some comfort

Perspectives on week 4:

As with everything, I got my big loss day on 5/19. Lost 7% of initial capital in one day. Thats the amount I usually gain in a week. Though, it wasn't all my fault - do I see myself falling into excuses?!

So, Morgam Stanley had decided to sell its stake in MCSI, the "index company". It was to be sold at $21.50. That morning, I woke up late to the alarm (being on the West Coast, I wake up 45 minutes before the market to pick stocks fro the day). That day, I woke up just 20 minutes before the market. In a hurry, I read the Morgan Stanley news as "MCSI decides to issue new stock in a secondary offering". Assuming that the stock will go down (as it does with all secondary offerings), I shorted some MCSI stock.

But in reality, the stock went up to match the $21.50 figure that Morgan Stanley had given. I noticed this up rally and tripled up on my shorts hoping that the rally would end and the stock would move in the direction that I want it to move. It never did.

I then looked for the reason and read all the news again and discovered my flaw. Immediately i closed all my open positions albeit at huge losses. It was a bad day.

Leassons learnt: Wake up early. If you arent up early, then dont trade. Read and understand news properly. Confirm news from a few other sources.

The next day however, was my best day till now. I gained 5% in a single day. I caught SAIC in an artifical 52 week low (on 5/20 SAIC started going down without any reason and reached a 52 week low - all this despite the news the previous day that SAIC had landed a $100MM defence order). The reversal took place the same day. From a 52 week low, the stock went up to a week high and a nice windfall for me.

Lessons learnt: Check google worst price losers - sometimes they are opportunities.

5/22 was an interesting day. Sears gave a profit surprise and Salesforce gave bad news. Ideal candidates. Sears has been volatile today and is looking to stabilize below the opening price while Salesforce is not going down as i had predicted. However, the early morning movements were in line with predictions and I was able to make some profits on them.

Lessons learnt: Big companies may not follow the initial morning trends through the day - especially when the total market is looking for a direction. Open and close positions quickly.

Day trading week 3

Total profits in 3 weeks = 20% of capital employed

Perspectives on week 3:

Healthy profits every day. Wednesday was a moderate day with a 0.3% profit. I had waited too long for a stock to fall before shorting it. Turns out it was done falling and was going to rise. While it started its long rise, I went under water. But I realised that Mr. stock here rose way too much. It was anotehr shorting opportunity. I was right this time. With the next few ups and downs I made five quick trades - shorting at the resistance level and covering at the support. With these five small trades, I was able to win back all of my losses in the first failed short. A long two hours in the morning - but I came out over water.

Thursday and Friday were nice windfalls - 2% and 3% respectively. Overall, a very good week 7% total gains.

Day trading

This blog will show my regularly updated day trading profits. First graph is for the first two weeks. Percentages with respect to day 1 are shown:

Total profits in two weeks: 12% of invested capital

Perspectives on week one:

Started day trading and made 7% gains in a week. A good confident start - hope to continue it.

Perspectives on week two:

There is a day of a loss in week two - $9. Although insignificant, it was a real blow to confidence of "gaining every day". The bad decision was shorting a stock which had "bad earnings news". However, the company had timed a "great news" (on a new business contract) and a "bad earnings news" together to create a volatile situation for its stock. I happily ignored the "great news" and expected the stock to go down. It went down a bit and then jumped back up a few percentage points - obviously buoyed up by the "great news". Without stop losses, I lost $900 on it, though I gained a similar amount on two other trades, I lost overall.

Lesson learned: Look for opposing news items which may have been (intentionally or otherwise) timed to be released together.