Wednesday, October 04, 2006

Coaching Call Week 15

Just before Rob's weekly call I opened a position on MET. This was a classic swing entry following all of my rules and I triggered the entry manually by watching the intraday chart. It just happens that I caught a pullback that was 1 cent above the previous day's high. There was a deeper pullback later, but I was complimented on this being a good trade that followed my trading rules. In general, coach Rob was pleased with what he was hearing as I described the few open positions and trades that executed over the past week.

I was stopped out of my short position on TTI in a weird way. It seems I entered a bad stop-loss and bought it back for a very nice ~7% gain. I'm not really complaining, because that's a killer return in 2 days, but I would have squeezed nearly a percent more if I didn't accidentally violate my own management rules. We reviewed what happened there followed by other open positions and how they closed out.

I expressed some regret about not entering a trade yesterday on LNC, which had a very nice pullback and at this time it was going up very nicely. Coach Rob wasn't pleased with the emotion I was expressing on missing this trade on LNC. I can appreciate this, since there will always be missed trades and there's just no reason to be bothered by missed opportunities. The reason I didn't enter that position is that I was totally exhausted on Monday night. In retrospect I think I did the right thing by not trying to make such judgements when I'm unable to focus because of lack of sleep. I saw the direction, realized it was probably a good trade to enter and I was right. Cool. The fact that I didn't risk the entry under such a weakened mental state is probably a good thing. This is akin to not shopping or playing poker online after having a few drinks, no?

As pleased as Rob was with my progress, he remarked that that I was showing him the trades I wanted to show him. I quickly offered to show him the ones that went against me, started to pull up OSI & CEI, and he had a little chuckle.

After this run-thru of my current positions, coach Rob spent some time talking about Options. As you probably know from my previous posts, Rob is very knowledgeable with trading Options. The primary reason I'm focused on stocks is to reduce the complexity and practice all the good habits of a Professional Trader without having to deal with the additional complexities involved with Options. Options offer a lot of leverage, and good trading practices are essential in order to not have your account decimated by that very same leverage. Remember, the Bid-Ask spread insight I've offered in the past? When your trades come with a 5%-15% built-in loss, you better have your timing and discipline well honed.

Coach Rob covered how a Trader can leg out of an Option Spread depending on your outlook for a particular stock. He also went on to describe a way to aid in timing entry and exit based on the behavior of the Bid & Ask on a specific Option Contract. I'd describe it to you here, but why not sign up for coaching with Rob and get it directly from him? Tell him Mark sent ya! ;-) I can tell you that all such strategies are judgement calls and this is just another source of information to help you determine timing.

Before wrapping up this post I want to give credit where credit is due. Rob Craig has been a tremendous help in bridging the gap between the theory of trading taught in the classes to the actual practical application of that knowledge. My rapid progress is due in large part to the personal attention and feedback. If any of you are entering the Teach Me To Trade or Star Trader coaching program, I highly recommend asking specifically for Rob Craig. I inadvertently stole (or maybe borrowed) Rob's saying and titled a post last month based on it: Discipline, Patience & Timing! This was something that Rob ingrained in me right from the beginning and I didn't even realize I was quoting him when I titled my post as I did. Most of the practices and habits that I've formed have been forged out of Rob's guidance and I'm confident that if I consistently put all these practices together, I will be a successful professional trader.

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