1/28 trade summary

Yesterday, Amzn dropped to $165 after hour right after ER, then it stabled a bit and climbed back $168, some observed it always drops after January ER, and always drops big then slowly climbs back, good observation!

What a day it is! SPY openned at 130, and I felt the market would go down, so I bought 20 SPY weekly OE today 129 PUT for $0.04, I am kind of nervous to play this kind low winning probability bet, so I set an easy target at S1, which is 129.57. The sale order was triggered at 10:21, it was sold at 0.14 for $200 easy money. With this winning, I am kind of too excited and began to do trade blindly, I made a Future trade when /ES broken S2 and came back above S2, well, the real mistake was not set a stop as usual, maybe I thought I won a lot today, so I can take more risk than usual, but the /ES just kept going lower and lower without a small rebound, I ended up cut loss with 8 pionts! I gave up almost half of today's gain! What a big lesson!

Right before close, I did another two trades without much thinking, I sold GOOG 590/585 put spread and sold NFLX 225/230 call spread; Actually, I am not comfortable with the NFLX trade and may have to close it on Monday since it is in new high and it is an easy manipulated stock since no resistance above, why should I put it? because I won money today?;

I need further study and make myself more discipline.

1/27 trade summary

1/27/2011,
QCOM open at $54, obviously the Feb 49/47 PUT would expire worthless, but I still put a Z$0.05 order to close it so that there won't be too many option list showing there, I need focus to find new trade!

Here comes the new trade, AMZN would announce earning after close, when it climbed to $181, I sold an Iron condor for FEB 160/190. It is strong, 10 minutes before close,, it is 184.5 already, and my IC is under water. I am quit sure it will go down or at least not much higher even with a good ER, as today's strong is purely affected by NFLX's ER hike, so I sold a very RISKY next day expired weekly option, 190/195 call spread for $1.49

1/25/2011 and 1/26/2011, bought two option trade

QCOM bullish put spread bought yesterday is in money now, ER is good. Today bought SLV July 30 call for 1.17 before FED announcement, as SLV is at the support line. Would cut loss if break the line.

阿炳的名言

Let me try to lay out my trading philosophy one more time..

As you know, casinos always have an edge, though a small one, which is being exploited again and again and again -- by doing everything they can to attract people to the casinos. Thus, they are much less concerned with your winning big one night than your running away...

In a nutshell, I'm doing the same. I spend more than 80% of my time and energy looking for chart patterns, which provide me with "a small edge", which I then exploit over and over and over.. By the same token, I'm not concerned with any one trade, or even one day trades.. because I know.. I have an edge, as casinos!~~

Now you have it. KISS.

顺势 止损

有人说，不停止损，亏得更多，还不如。。

谬也！俺的理解：

1）止损 = insurance;

2）这里除如何设置止损点的小技术问题外，主要症结是木顺势。。

Kiss

It is absolutely necessary to have an edge

You can't win without an edge, even with the world's greatest discipline and money management skills. If you could, then it would be possible to win at roulette (over the long run) using perfect discipline and risk control. Of course, that is an impossible task because of the laws of probablity. If you don't have an edge, all that money management and discipline will do for you is to guarantee that you will bleed to death gradually. Incidentally, if you don't know what your edge is, you don't have one. (Jack Schwager)

[ZT]How to check the market is strong, uptrend at early stage?

Here is how I see it:

* Price breakout above the overnight trading range on good volume;

* Price staying above the overnight range on pullbacks;

* More volume transacted at the market offer price than at the bid ;

* Price consistently staying above the day's volume-weighted average price

* Accepting value higher by building volume at higher price levels within each bar;

* Repetitive breakouts above areas during the day where volume accumulates

* A very strong intraday advance/decline ratio;

* Persistently positive NYSE TICK, with few readings < -800 and many > +800;

* The vast majority of stocks and sectors trading up from their opening prices.

The earlier you can see these signs, the quicker you'll be able to identify the day structure and adapt your trading strategy accordingly.

Did you see today is a strong day? no.... when index made a new high, $tick chart has a negative divergence and so on...

1/21/2011, OE day summary

OE day, review this month option trade, I made 4 home runs at bearish 30/31 call spread SLV gain: $320, bullish 65/67.5 Put spread RIG $437, bearish AAPL 355/360 call spread $441 and iron condor 610/605 put and 645/650 call GOOG $540;

SPY 128 bearish spread would have been turned from a whole loss (-$650) to a slam +$350 if not adjusted on Wednesday morning, that is my worst trade this month, with a loss of (-$819), what a big lesson!

ADBE bearish 31/32 call OE trading was reduced loss (-$434) after covered the 31 call short, but if I kept the 32 call longer, I have turned it to 1K profit instead of loss, lesson is adjust at the time of break out and let the profit go without being emotionally affected by the previous failed trade!

Another lesson is to review the order carefully before send!!! Made three times opposite trade and had to close it ASAP. TD must be happy with my commission this month!

Overall, option is doing great considering it is my second month of doing spread trading, it is better than my short term trading of stock. Good thing is I started to get the habit of cutting the loss and letting the profit going, except my LDK trading, which my trailing stop is set too tight and was shaken out this big winner with $692 gain.

I'd better print this month's trade and do a full review to remember all the lessons and hopefully, reduce the same mistake next month.

1/9/2011 stock talk

1) Market view:

Earning week, watch the following stocks which may affects the big market:

AA

JPM

INTC

Jeff: Still believe the top would be around April. Richard: Watch insidercow.com for Morgan Standley and GS sell stocks during the peak time. A pulling back may happen after OE.

2) sector discuss:

Rare earth stock pick by Jeff: AVL Compared to MCP

Mengli, watch out: KBH， XHB

Most have positive view about Financial sector, all agree 50% position on Financial is okay at the current market, Leap Call can make real money if long term view is correct.

Sasha: Warren Wang recommended sectors: Financial, Gold, Tech

3) China House issue

Property tax implemented in ChongQing City, soon in Shanghai, details not sure.

4) Stock recommendation /watch list：

AVL, OPEN, LMT, LVS, MGM, KRE

Year 2010 World index return and Commodity return

So I missed Palladum and cotton, but I caught silver and rare earth.



Here is the world market index return for 2010, would it be a surprise that the engine of world economy, China, is at the bottom of the list with a return of -14%?

1/2/2011： stocktalk group meeting minutes

1) General market view
Mostly up trend with possible correction before 1/31/2011; 5% correction could be good entry point; Tom from investools thinks the coming correction could be 8 -20% according to his technical analysis.

Jeff believe April to May should be a time to exit most of stock position due to the QE2 phase out and possible next round of Europe crisis due to bond mature

For earning, possibly Q1/Q4 high, Q2, Q3 low, also some believes Q1 to Q3 strong, Q4 weak.

2) Sector:
Mid and small cap should have more up space than large cap.
Oil sector is steady up, good for bull market. It should go to 100 easily. Oil has 16 times correlation to gold price
Coal is still good (XLE)
high tech should be good for 2011, but QQQQ had 4 distribution days already, could be an omen of a correction (Carol)

Banking is good fro 2011, Bac could be a star. Watch out BAC fee charge in your banking account because it is crazy about earning money from consumers now.
Health care is started, ETF include: FXH, XLV
Defense stock should be good, utx ?

Carol provided five stocks for watch list:
WEN
CSR
FCL
LLNW
LOCM

3) China market
ETF: CAF (A share of Shanghai) and FXI (Hongkong traded 25 largest China Companies)
10% drop in 2010, worst of all world market; Might be value investing timing.
Bank sector has a PE of 8 to 10; But depends on Large capital.
Best sector may still be 有色金属。 Rare earth, Copper, Uranus could be the best among it.
watch out 包钢稀土，五矿发展，湖南有色，广成有色， 中核科技 in A share and MCP in US market。