PontusTrade: Paper Trades Only

This section keeps track of paper trades which is basically practice but using live data and fills. It allows me to test out and refine my strategy. So far it's working very well so the question is how well can I replicate the results in a live environment? The answer remains to be seen but it appears that the method works so the only area that can be at fault is my mindset. Also, there are no short selling trades only buying long.

June 1

Live traded today - see post here

May 31

May 30

Paper traded and live traded today. The paper made less.

May 29

Sloppier trading today than I'd like. First trade of the day was profitable but I held too long onto a loser and averaged down by doubling the size of shares to 400. I reasoned that since I had profits from the first two trades in the day I could bear holding the losing position a bit longer. It worked out this time around but it's risky and short sighted as it is always better to take the loss early on and reposition.

May 28

U.S. markets closed for Memorial Day.

May 25

May 24

Something didn't feel right this morning and it showed in my performance. On top of that, volume was very dry and coupled with whipsawing made it a poor environment to operate in. Not too happy about these trades because I mismanaged them quite a bit. Small position sizing made it safe to ride the price fluctuations and exit with minimal loss. I'll stop here for the day because I'm not in tune and there is no point in making suboptimal trades just for the sake of not missing a day.

EDIT: I came back for the afternoon and caught the up move into the close.

May 23

Completed in half an hour with a quick Facebook scalp. Finished day here.

May 22

Here is an nice Facebook setup from the morning. Price started falling on market open and selling pressure piled on. At 9:33 buyers stepped in and pushed the price up they but were overwhelmed by sellers and the down trend resumed. There is an important observation to make here. A widely held belief is that when price falls, it is because everyone is selling and that price will keep on dropping.

However, one should take note that if an investor with a lot of money reason to believe price will go up, he cannot just jump in and buy. The stampede will destroy his account. Instead, they will either wait until all the sellers have been exhausted or participate in the selling themselves so as to push price lower and get a better price.

Failure to do his job properly means he will be met with fresh sellers as price moves back up, impeding the momentum of the up move. In order to ensure his success he must then make sure that excess overhead supply has been cleared. Before the reversal can happen, the majority that wanted to sell would have done so already, the rest are in it for the long haul. The panicked sellers are more than likely long holders who lost hope. The "smart money" bought the shares from the weak holding longs at a discount and now when price is ready to shoot back up, the weak holders will chase to get back into the stock and as a result will up buying at a higher price than what they sold it for. Afterwards, the large trader can sell into strength which comprises of two groups:

previously weak hands who now chase after price
fresh or sideline buyers who are attracted by the price movement (think of the new buyers like mosquitoes and a zap light)

Note that these two groups now end up doing the trader's job as they participate in the illusion and help move prices up. With excess overhead supply cleared, price can now freely move up with little impediment. This repeats thousands of times over because the tactic works and is how a cunning investor with the right wallet size can ensure he makes money. Our job as traders is to lead, follow or stay out of the way. The best tactic is to keep an observant eye for this and join in for the ride but exit before the ride ends.

May 21

I need to let the winners ride more often. Entered TNA at 44.76 average but sold too soon. Price reached intra day high of 47.2 by 10:52 am whereas I entered at 10:18 am.