Trading Silver, Coffee and the "Chinese Youtube"

"Dinosaur Trader is a stock trader. He writes about the daytrading lifestyle, parenthood, marriagehood and the often combustible mixture of the three. He created the stock blogosphere in 2007."

I had a pretty rough morning of trading.

But before I take all the responsibility, I’ll throw a little blame towards my cat, for waking me up at 4:30. When I fell back to sleep, I had a strange dream about coasting uncontrollably down a hill on a skateboard. I say “coasting uncontrollably” because I wasn’t going very fast, but I couldn’t get off of the skateboard, and the hill was endless. I’m also not a very good skateboarder.

The result? I woke up feeling really strange and anxious.

Maybe that was a clue about how my day would go. Indeed, things started poorly right off the bat with a failed trade in GMCR..

This was an HCPG play on the trendline break around $42. It traded through that area in the first 5 minutes, but since these trendline trades are often more sloppy than straight up breakouts, I decided to give it a shot on it’s second time through because volume poured in around 9:47. I came pretty close to top ticking the mother.

But I don’t want to dwell on the negative. The good news is that I caught myself sliding and got myself out of trouble with a few smart short trades.

Silver has been a great tell for the market of late. When the market was hitting highs early in the day, so was SLW. It also had a little spot at $42. However, once it traded through $42, it sharply reversed to the downside. At the same time I noted weakness in some other leading stocks, namely WLT.  I sold the SLW, SPY, and CLF, and made back a good chunk of my losses.

Part of being a trader is envisioning yourself as a stock chart. I lost a little money both Thursday and Friday and really wanted to stop the bleeding today. After my bad morning and solid midday, I was hoping to put in a hammer. Stop the downtrend, squeeze the damned shorts.

Anyway, so late in the day I noted YOKU climbing back to its morning highs on volume. I recognized that not only was the stock extended on the daily, but it was also extended intraday. A disciplined trader might note these facts and have the following internal conversation, “I will wait until I put on this trade. I’m unemotional. A rock.” However, I was in full on, “Please God let me get back to green” desperation mode so I pulled the trigger. I knew it was reporting after the close today, and it had a nice round number up at $42 which I hoped would act as a magnet. So I bought super small hoping for a target trade.

This was another HCPG pick. As they noted in their newsletter tonight, it looked much nicer once the 9 ema caught up. But as I’ve noted, I was in desperation mode, so I overlooked their little ema observation. They also mentioned that GMCR was an avoid because of the awful setup.

It’s recognizing nuances like that and not trading desperate which make them good traders and me a better drinking friend. In the end I win because I have more soul.

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