June Month In Review

Well, I've compiled my trading stats from June 10th to June 30th. I'll compare those to when I first started trading April 23rd to June 9th. I'm choosing that time frame because June 10th was the time where I felt like I started to turn my trading around.

While I'm doing better, I still have A LOT more improvement to make. The bottom line is I'm still overtrading and choosing less than ideal trades.

Here's my stats. Keep in mind that when I first started at the end of April, I had a smaller account. I've recently added more money to it. But I can still compare % changes and some other stats.

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June 10th - June 30th
Starting account value: $4823.46
Ending account value: $4856.64
Total gain: $33.18
Total gain (%): 0.69%
Total commissions paid: $635.95
Average daily return: .091%
Average daily P/L: $2.21
Annualized return: 33.22%
Sharpe Ratio: 0.56
Sortino Ratio: -.0017
Maximum drawdown: -10.26%

Total # trades: 32
Total # winning trades: 11
Total # losing trades: 21
% winning trades: 34%
Average # trades per day: 2.1
Largest # consecutive winners: 2
Largest # consecutive losers: 5

Positions held long: 27
Positions held short: 5

Largest winning trade: $292.10
Largest winning trade (%): 21.16%
Largest losing trade: $-265.64
Largest losing trade (%): -44.47%

Average overall trade: $2.66
Average overall trade (%): -2.18%
Average winning trade: $142.82
Average winning trade (%): 9.24%
Average losing trade: $-73.93
Average losing trade (%): -8.16%

Total # trading days: 16
# green days on account: 9
# red days on account: 7
% green days: 56%

Comments: The reason my average overall trade is positive in $ but negative in % is because of the % loss on some small penny stocks I played. On some, I didn't lose much $ wise because I took small positions, but I lost a lot % wise due to commissions. In fact, if you take out the abnormally large % losses on two penny stocks I played with small positions (BIHC and HTOG), my average losing trade is -4.39% instead of -8.16%.

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April 23 - June 9th (WARNING: PATHETIC STATS!!!!!!!!)
Starting account value: $4256.34
Ending account value: $2823.46 (Ouch!!!!!!!!)
Total loss: $-1432.88
Total loss (%): -33.66%
Total commissions paid: $1057.70
Average daily return: -1.2%
Average daily P/L: $-44.78
Annualized return: -438%
Sharpe Ratio: -6.12
Sortino Ratio: -.005
Maximum drawdown: -34.84%

Total # trades: 64
Total # winning trades: 18
% winning trades: 28.1%
Total # losing trades: 46
Average # of trades per day: 1.94
Largest # of consecutive winners: 2
Largest # of consecutive losses: 8

Largest winning trade: $238.02
Largest winning trade (%): 26.04%
Largest losing trade: $-304.30
Largest losing trade (%): -60.93%

Average overall trade: $-19.60
Average overall trade (%): -2.27%
Average winning trade: $66.69
Average winning trade (%): 8.85%
Average losing trade: $-57.86
Average losing trade (%): -7.28%

Total # trading days: 33
# green days on account: 11
# red days on account: 22
% green days: 33%

Comments: A huge chunk of my losses came on one play, MMGP, my first (and really bad) attempt at playing a subpenny. I ended up losing over $400 trying that play twice....mostly in commissions. In fact, a large portion of my losses were in commissions alone. Also, my average % loss on my positions, while not terrible, was certainly not good. On top of that, I just had too many losses, because I was choosing too many plays that weren't ideal. Another big loss came on JADE when I didn't exit quickly because I didn't want to violate the damn SEC daytrader rule! And the SEC thinks that rule protects us? YEAH, RIGHT!

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COMPARISON COMMENTS

Where I've improved:

1. Over half of the trading days on my account are green, compared to only a third before. However, this could improve more.

2. I finished the month slightly positive, versus immensely negative the previous time period

3. Maximum drawdown is much lower, although it's still too high

4. Sharpe and Sortino ratio are much better, but both can still be higher

5. Annualized return is now similar to some strong mutual funds, versus an extremely large loss. Still, this can be waaayyy better.

6. Average $ per trade is now green rather than red

7. Average winning $ per trade is double that of my losers

8. My average losing trade has dropped dramatically % wise, if you don't count two small penny stocks I played with small positions

9. I'm haven't lost money since June 10th!!!!!

Where I still need to improve:

1. My average winning % per trade is too low. I need to get it over 10%.

2. I still have too many losing trades compared to winners. This means I'm overtrading and not picking ideal plays

3. I still have too many consecutive losing trades (5 this time around). This means I'm overtrading and not picking ideal plays

4. My average # of trades per day actually went up. That's not good...I should be trading less. This means I'm overtrading and not picking ideal plays.

5. I'm still paying way too much in commissions, simply because I'm overtrading


THE BOTTOM LINE

I've dramatically improved as compared to my pathetic beginnings playing in the gutter. However, I'm still trading too much. I need to be looking for perfect or near-perfect setups. I shouldn't be entering any trade that doesn't fit in that spectrum.

My goals for July:

1. Reduce my # of trades
2. Increase my average winning % per trade
3. Increase # of winners compared to losers

The fact is that I know I can dramatically improve, because 13 of my losing trades were mistakes in some way (shouldn't have gotten in, bad entry, or bad exit). All I need to do is iron out the mistakes and July should be a good month.

A rough day in the gutter

Today was a rough day in the gutter.

It started out with my overnight holdings. BPG gapped up, only to immediately and very quickly sell off. I got out at 53 cents, ending up with a $45 loss.

Looking back, this was not a good trade. Yes, it was a breakout, but if you look at the 2-year chart, you see that it's simply a bounce on an extremely bearish trend. I should've paid attention to the 200 day simple moving average (sma, the blue line in the chart), showing a strong down-trend.

As Tim Sykes says, there's a lot of bitter shareholders in a chart like this who are looking to sell off during any bounce.

LESSON LEARNED: Don't buy breakouts into the close with decreasing 200 day sma's and bearish charts

Next came TIV, which opened below its closing price. It very quickly dipped below 8, where I sold at $7.89 for a $124 loss. Ouch.

Looking back on this one, I got in because I thought it was a G/STEPS Pattern. However, I was wrong. The volume on the pullback was too high. To fulfill the pattern, the volume on the pullback needs to be a fraction of the initial surge. Really, this was nothing more than a big bounce after a major sell-off. Thus, another bad trade and money that I shouldn't have lost in the first place.

LESSON LEARNED: G/STEPS patterns need to show a very low volume pullback

After two losses to start the morning off, combined with my 2 straight losses on Friday, I was feeling discouraged. Plus, I had way too many charts I was looking at. I ended up missing the breakout on GETG, which was at the top of my breakout watch list. I can't believe I missed this one....I had been watching it for this exact move for a few weeks now. It ended up going all the way to $3. But I was too busy looking at other charts that weren't nearly as good of a setup.

LESSON LEARNED: Don't watch too many stocks at once. Only keep an eye on the most ideal setups

I was also discouraged that I didn't buy into CNEH on Friday like Sykes, Fous, and other traders had. I missed a really nice gap-up because I was tied up in not-so-ideal plays.

HYGS was another breakout I missed on Friday due to being caught in less than ideal plays.

Another play that I actually was looking at this morning, but hesitated due to my discouragement, was HTOG. HTOG was showing the reversal step of a G-Pattern. I sat there at the computer, seeing it green at around .0055, thinking about getting in...but I didn't. It ended up shooting from just over .0005 cents to .0008 cents. Another missed profit.

I did try to play QTWW on the $3 break today. Got in at $3.02. It hovered in the low 3's for a while, only to dip below $3 where I sold at $2.97 for a $55 loss.

While it was a good play based on the chart pattern, I knew earnings were going to be announced after the market close. I should've avoided this play as you don't want to hold something into earnings. While I didn't hold it into earnings, it wasn't worth it to buy into in the first place because I wouldn't been able to hold it overnight if it had a strong breakout move. So this was my 5th losing trade in a row...a loss that could've been avoided.

I'm feeling a bit discouraged now, as my account is almost back to the $4823 that it was on June 10th. I should be up waaaayyyy more if I hadn't done so many bad trades. I need to refocus and learn from my mistakes. I also need to be way more choosy about my trades. I've had too many trades the past number of days because I was choosing less than ideal setups. I also need to cut down on the number of potential plays I'm watching, so that I don't miss great plays like CNEH or GETG.

So, tomorrow on my watchlist, I only have one potential breakout play....CSGH. I'm looking for the $1.50 break.

CSGH is a stock being pumped by Jonathan Lebed. Let's hope for a combination of a good chart, Lebed's pumping, and maybe some news to get this thing running.

I'll also be looking for any good prehits in Mike's chatroom.

Tomorrow is the first day of the month, so let's hope for a good turnaround in my recent trading as well.

Gutter Account Stats (all of these are my account values at the market close FYI)

June 10th: $4823.46

Yesterday: $5178.68

Today: $4856.64

Today's overall loss: $-322.04 or -6.22%

Gain since June 10th: $33.18 or 0.69%

Compared to S and P 500 since June 10th: -5.9%

Positions traded for a loss:

BPG: $-45.45

TIV: $-123.92

QTWW: $-54.90

How an Internet Delay Cheated Me Out of $1000

Once again, I missed an opportunity to make $1000 on a trade.

Mike mentioned JUHL as a prehit in his chatroom. It was right around the market open, and I tried to pull up the chart on Thinkorswim, but the chart wasn't coming up. I looked at some charts for some other stocks, and then kept coming back to check JUHL....still long delays in trying to pull up the charts (and I was getting delays in pulling up other charts as well).

F'ING THINKORSWIM!

I was pissed. I kept cussing at my computer as to why the charts were so slow at pulling up. I gave up and decided to look at some other stocks. JUHL opened at $4.10 and went as high as $5.40. If I had done a 1000 share buy order, I would've made at least $1000 on the trade.

AAARRRGGHHH!!!!!

LESSON LEARNED: When pulling up charts in Thinkorswim, detach the chart as a separate window so that you don't have to keep pulling up a new chart when you look at others

Another prehit that started off slightly in the negative was The Finish Line or FINL. They reported earnings today. I didn't get in on this one. Too bad I didn't, because this one went from $7.61 to almost $9. Another missed profit.



I did try my hand at shorting PMCS. I was looking for it to break $7.84 support, which it did. I shorted 500 shares at $7.7901. $7.50 was the next support level, so I got out at $7.5488 for a $106 profit.



Even though I profited, it really wasn't the best trade for me to enter. A 2.8% profit on a trade sucks. I should only be entering trades that I have the potential to make at least a 10% profit on my position. I really need to conserve my trades because of the utterly and ridiculously retarded SEC pattern day trader rule. This rule is so retarded that I've written the SEC twice about it now. If you have an account less than $25,000, the SEC only lets you do 3 day-trades (buying and selling a stock in the same day) every 5 business days. This is SOOOO retarded, because you basically get penalized for exiting trades quickly (like a good trader should). Talk about crapping on the small guys. I've been really paranoid this week about my account getting flagged for a day trade margin call.

Anyway, not a good choice of a trade despite the profit.

Then, I tried my hand in shorting Wamu. WM has a horribly bearish chart, and it was hovering just around $5. I figured if it broke $5, it would be a good short.



It did break $5 on some big sell orders, but I jumped in too fast. I should've waited for the bounce. I got in for 1000 shares at $4.92, only to see it head back towards $5. I got out quickly for $60 loss. It settled down, and I re-entered at $4.95. It teased me, looking like it might head lower, but then started moving towards $5 again. I got out at $4.96 for another $30 loss. Wamu did eventually hit a low of $4.65, which would've been a $300 profit for me, but I need to exit potential losers quickly.

Really, though, I should've only exited if it went back above $5 as that was the reason I got into the trade. But the more important thing is I shouldn't have gotten into this trade in the first place. I ended up wasting 2 day trades on it...I'm hoping that Thinkorswim doesn't flag my account for a day trade margin call They're pretty lax on it, but it sounds like they've been stiffening up lately. I do hear they're releasing software this weekend that will tell you how many day trades you have available to help prevent these calls.

I also shouldn't have done this trade because Wamu is not a smallcrap or microcrap, so it moves more slowly and is less predictable.

LESSON LEARNED: Stick with the smallcraps/microcraps!

In the last hour of the market close, there were breakouts/surges galore. I decided to buy 500 shares of TIV, which had a huge run today in response to news and oil being up.



Got my fill at $8.1052. It closed strong at $8.30. I'm looking for a gap-up on Monday to over $9 where I'll sell. There's obviously big-time resistance above that point so that will be a good point to get out. If it breaks out, I can always buy back in.

I kind of wish I hadn't put so much into TIV, because after I entered, I noticed BPG which was a strong breakout above 50 cents.




I had some buying power left, so I got 1500 shares at $.5479. This has a lot of room to run, and it's so cheap, I could've gotten more shares if I hadn't put so much into TIV. I'm looking for a gap-up on this one too. BPG closed at 56 cents and was up to 68 cents after hours, which is a good sign. Plus, TIV and BPG are both oil/gas/energy plays, which have been a hot sector lately and been regularly having big runs. So things look promising for a very nice profit on Monday.

Bottom line is, though, that I need to be more choosy about my trades.

Gutter Account Stats:

June 10th: $4823.46
Yesterday: $5073.93
Today: $5178.68

Today's overall gain: $104.75, or 2.06%
Gain since June 10th: $355.22, or 7.36%

Compare that to S&P 500 since June 10th: -5.9%

Positions traded for a gain:
PMCS: $105.65

Positions traded for a loss:
WM: -$59.90
WM: -$38.70

Positions held over the weekend:
BPG
TIV

A Bad Day In the Gutter

Today was my worst loss in the gutter since June 10th.

Before the market open, oil was up. That meant that a lot of the oil & gas stocks were probably going to run for the day. I had been looking at GCOG yesterday, and almost bought it in the last hour of trading as it had a nice 1 month breakout. It was also a good STEPS/G-Pattern setup.



I didn't buy it yesterday, figuring I'd wait to see how oil/gas was shaping up this morning. Sure enough, it was up, and I saw GCOG was up premarket. The market opened, I saw it go green, so I put in a 500,000 share buy order. Got my fill at .0086 cents. GCOG quickly pushed near 1 cent. I was up $400. That's where I should've exited, but NOOOOOO. I was greedy and wanted to see if it would continue to run higher. It quickly came back down. I then put in an order to sell, but with 500,000 shares....that's a lot to get rid of. I got 335900 filled at $.0085, but then the price went further down so I had to lower my limit order (which cost me another $50 in commissions). Got the rest filled at .0081.

All together, with commissions, it was a $265 loss.

Ouch.

It was a bad trade all around. I should've bought yesterday, not this morning. But the more critical mistake was my exit. I should've exited near 1 cent since 1 cent is significant psychological resistance. I was greedy because last month GCOG ran all the way to 2 cents.

The only smart thing I did was to get out as quickly as possible. Good thing, too, because GCOG ended up falling below .007 cents.

The funny thing was, I had thought, "maybe I should wait for this to break 1 cent before I consider buying". That's what I did with HTOG yesterday and I avoided a bad trade.

Would've, should've, could've.

Maybe I just need to avoid those subpennies, or at least less-than-perfect ones. This is the third or fourth time I've gotten burned on them. It's soooo tempting to play them because they can double, triple, or quadruple in a day.

My account is still up, but that was a hit. I CANNOT make such a mistake again.

A big part of that loss was commissions alone. That's the risk when playing these low, low pennies...if you're wrong, the commissions add to your loss.

LESSON LEARNED: When buying into a G/STEPS pattern, buy in the last hour on the first high volume reversal day, not the next day

LESSON LEARNED: Sell when near significant psychological resistance

LESSON LEARNED: Don't buy a stock that is already near psychological resistance

LESSON LEARNED: Only play sub-pennies if you have ABSOLUTELY PERFECT setups with little downside risk

No other plays for me today. There just weren't any good setups.

Gutter Account Stats:

June 10th: $4823.46
Yesterday: $5339.58
Today: $5073.93

Today's overall loss: $-265.65, or -4.98%
Gain since June 10th: $250.47, or 5.19%

S and P 500 since June 10th: -5.8%

Positions traded for a loss:
GCOG: -$265.64 (a trade I should not have gotten into, or at least exited earlier)

How I blew a chance to make over $1000 in a few minutes

Today was all about missed opportunities in the gutter.

Mike announced a VEXP prehit in his chatroom. VEXP had some solid news to go along with that prehit, and since the chart had shown little volume/price action for a number of days, this was primed for a run.

However, I was also watching HTOG for a break of 1 cent, figuring if it broke 1 cent, it would run like crazy. These subpennies can double and triple within minutes to hours.

I was going to take a large position, so the question was....which one? I was looking to take either a 5000 share position in VEXP, or a 1 million share position in HTOG. I figured HTOG would give me a better profit, so I decided to focus on HTOG.

Turns out that was a mistake. Right after the market open, VEXP zoomed from 60 cents to 80 cents.



If I had taken the 5000 share position, I would've had a $1000 profit!!!!! AAARRGH! Not only that....within a few hours, VEXP ended up going all the way to $1.23 before coming back down. I COULD'VE HAD A $3000 PROFIT OR MORE!!!!!

AAAAHHHHHHH!!!!!

And what happened to HTOG? Just touched 1 cent, only to come back down. I forgot that I had a small position in HTOG overnight, and sold it for .0087 cents, for a measly $19 loss after commissions.



Looking back, VEXP was the better play to take in regards to risk/reward. HTOG had already run up big the previous day, so the chance of a run continuing was probably 50/50. VEXP certainly wasn't going to go down, and had a lot of room to move up.

Would've, could've, should've. That's life in the gutter for you.

Oh, and you guys want to see a manipulated stock? Check out IDAE.



I thought about buying into IDAE, but was too scared to. You never know when the day of serious tankage is coming.

No other positions for me today. Tomorrow is a new day, and there will be more VEXP-like opportunities in the future.

Gutter Account Stats:

June 10th: $4823.46
Yesterday: $5348.60
Today: $5339.58

Today's overall loss: $9.02, or -0.17%
Gain since June 10th: $516.12, or 10.7%

Compare that to S&P 500 since June 10th: -3%

Positions traded for a loss:
HTOG: -$18.90

See you in the gutter tomorrow

Despite F-Ups, Still Green in the Gutter

Depite a trading day riddled with f-ups, I still finished the day green in the gutter.

At the open, sold off my PDO position as soon as it crossed $40 as I planned. Got my fill at $41....$260 profit after commissions....only to see it go to $44....leaving $180 on the table.




WWEI...that POS....gapped down to 16.8 cents on me at the market open. Rare for a breakout. Quickly sold for a $120 loss, wiping out almost half my PDO profit. Looking back, I kind of wish I hadn't gotten into this trade....too close to 2-year resistance and too much downside. Also didn't close near its high.



Next came SPDE....a premarket hit from Mike's chatroom.



I jumped in this one a bit too fast at 6:31 AM, getting a poor fill for 500 shares at $1.6732. It pulled back a bit to under $1.60 in the 1st 5 minutes of the market , then went up to $1.88. I was looking for a push close to $2 but it didn't happen. It came back down, and I got out at $1.67 for a $17 loss after commissions. A profit turned into a loss.

LESSON LEARNED: Wait a few minutes after the open before you buy any market prehits

BIHC was my worst trade of the day.



A sub-10 cent stock, had a nice surge yesterday. A lot of hype on the message boards. I was looking for momentum would continue. Somebody alerted me to it in Mike's chatroom, and I quickly bought it, not paying attention to the fact that it had gapped way up. Got my fill for 5000 shares at 3 cents, only to see it pull a gap-and-crap maneuver. I got out at 2.1 cents for a $65 loss. Stupid, stupid trade!!!!!

LESSON LEARNED: Avoid buying stocks that have gapped way, way up at the open...or at least wait a bit to see if it craps on you.

HYGS was on my short list, and it had tried to pass $1.35 only to come back down, consolidating in the $1.26-$1.28 range. Already way up in the past few days, I figured this would be a good short if it cracked $1.25 support. Sure enough, it finally cracked it, so I entered a short position of 800 shares at $1.2312. It fell down to $1.16, but then bounced and hovered around $1.20. I figured I'd hold the short position as long as it stayed red. However, a few hours later, it started creeping back up....$1.24....$1.25....$1.26. It was time to get out. Bought back the shares at $1.2676 for a $49 loss. Despite the small profit turned to a loss, not a bad trade for me in regards to risk/reward, and I was smart to get out quickly because the stock closed at $1.37. HYGS is still on my short list for tomorrow.


I thought I was going to finish the day with my account slightly red. However, around 11:45 AM PST, Tim Sykes made a post on his website that he was watching LAUD for a breakout. Sure enough, LAUD broke past its previous high of $3.40, and I jumped in for 300 shares at $3.47. I didn't have enough buying power for any more shares than that. LAUD progressively increased to near $4 by the market close. Within 5 minutes of the close, I sold at $3.985 for nearly a $150 profit. Not a bad profit in 1 hour!




Also, in the last 15 minutes of trading, I threw a measly $50 at HTOG, a POS sub-penny stock being pumped by Beacon Research. Got a fill for 5000 shares at $.0085, which is the price it closed at.



These sub-pennies can sometimes double and triple in a day or two, so I could turn that $50 into $100 or $150 quickly. At the most, I might lose $25-50 if the momentum doesn't continue, so it's not a bad trade for me given the risk/reward. I'm holding this one overnight.

Tomorrow should be a good day. My extra $2000 is now in my account (any stats I present now will act like I've had that extra $2000 in my account ever since June 10th), and my day-trade buying power is at its maximum at $5300. If I avoid any stupid mistakes tomorrow, I'm set up for some nice profits.



Gutter Account Stats:

June 10th: $4823.46
Yesterday: $5268.66
Today: $5348.60

Today's overall gain: $79.94, or 1.52%
Gain since June 10th: $525.14, or 10.89%

Compare that to S&P 500 since June 10th: -3.2%


Positions traded for a gain:

PDO: $260.60
LAUD: $144.50

Positions traded for a loss:

WWEI: -$119.90 (probably shouldn't have gotten into this one)
SPDE: -$16.60 (horrible entry)
BIHC: -$64.90 (stupid, stupid trade)
HYGS: $-49.02 (only smart trade out of the 4)

Positions being held overnight: HTOG

See you in the gutter tomorrow

Welcome to the Gutter, June 23rd '08

Started off the trading day as usual. Awake at 6 AM, hopping in Mike's chatroom to look for any market prehits.



First I bought WWEI near the open.

I had been watching it to break 18.5 cents. It had been consolidating in the 16 - 18 cent range. It broke it, and I put in an order for 5000 shares. Waiting, waiting, waiting....those damn OTCBB stock orders take FOREVER to fill. I didn't do more than 5000 shares because I would've paid a $20 commission. Plus, I don't like taking large positions on those low, low-priced pennies....too risky. Finally got my order filled at 18.84 cents.



Within 20 minutes, stock had climbed to almost 21 cents. That's where I should've sold, because it was nearing the 2-year resistance level of 22.9 cents. But I held, only to see the stock come tumbling down. I figured I'd hold as long as it stayed above 18 cents. But it briefly broke below that, and I had to sell....had to take my loss quickly like a good trader. But it sucked to see it bounce back into the mid 18's!!!!!! I basically had about an $80 profit turn into an $80 loss. $80 isn't much for my account...I prefer playing stocks with more profit potential....but I had to play the breakout on this one....chart pattern looked too good.



LESSON LEARNED: Always exit a stock when it's near resistance to lock in your profit.





Next came SDTH.

















SDTH had been a Superman pick that I had missed the previous day. It was a low-floater (not a lot of shares available for trading), so it had the capability of moving quickly (low supply, high demand can make the price skyrocket). It was nearing $10, so I figured if it broke that it was a buy. I got in at 200 shares at $10.1555, but it failed to stay above $10. I jumped out at $9.9205 for a $57 loss after commissions.

SDTH was a mistake to get into. First, there was no news to sustain the breakout. I probably didn't have a lot of potential for profit on it anyway. Also, some of Superman's picks tend not to carry through to the next day. Bad, bad trade!!!!!

Then there was LMRA.




LMRA was a late market "pre-hit", meaning that there was a sudden surge in price and trading volume right before the market opened. Some of these prehits can run big during the day, particularly when combined with news. Well, LMRA had some news of merger talks. LMRA opened at 91 cents. But, I hesitated to jump in since $1.00 can be a natural resistance point. I figured I'd jump in if it broke $1.00. Finally, it did, and I jumped in for 2000 shares at $1.02. Around $1.10 was the next resistance point. Within 30 minutes, the price climbed quickly to over $1.10. I kept holding....now $1.14, but suddenly see it go red for a bit so I decided to jump out. Sold at $1.11 for a $160 profit after commissions. But after I sold, I saw the price go all the way to $1.19!!!!!!! AAARRRGGGH! It really sucks when you end up leaving money on the table. Too bad I didn't get in at the open below $1. Neverthless, a pretty good trade for me that more than wiped out my two bad trades, putting me about $25 up on the day (when I should've been up more). Also, LMRA closed at $1.05 so I was smart to take the profit and not wait too long.

I was done trading for the morning, and it was time to go to work. However, the last hour of trading, which is also my lunch hour (12 - 1 PM PST), is also a good time for trades. My old friend, WWEI, was back, sitting just above the breakout point. I figured it was time to give it another shot. Got filled at 5000 shares at 18.8 cents. The price quickly jumped to 0.192 going into the close, and it was looking good....but then somebody sold some right before the close....closing price was 18.6 cents. Still, only down $5 on my position, and it's still above the breakout point. Also, the company had a conference call at 1 PM PST, and it looks like the news was good, which means it should run higher tomorrow.

My final buy today was PDO, a low float oil stock.

I bought it in the last 15 minutes of trading. It had broken $35, and being a low floater, that means this baby can run (and it has a history of running big). Let's hope it does another MXC and goes over $50 (althought that's unlikely).

I tried to get PDO in the low $36's. First was going to go 50 shares but thought I'd do 75. But then 75 exceeded my buying power, so I changed to 60. By the time I did that, the price was in the mid 36's. I got my fill, 60 shares at $36.49. The stock surged to $37.99 and closed there. Right now, as I write this, it's at $37.90 after hours. I'm looking for this to gap up in the morning, hopefully cross $40 where I'll sell...but that's going to depend on how oil is doing tomorrow morning.

So that I have more capital, I decided to sell $2400 worth of my WWNPX mutual fund and put in $2000 more into my trading account. That will help me get better absolute gains, and I'm doing a better job trading than my mutual fund was doing anyway (it was down 4%).

STATS FOR FAR:

Account on June 10th: $2823.46
Account yesterday: $3182.88
Account today: $3268.66

Up $86 from yesterday (although I should've been up almost $200 more if I hadn't made those bad trades), a 2.7% return for the day and a 15.8% return since June 10th. In fact, since June 10th, I've only had 3 red days on my account, where it finished lower than the previous day.

My % return since June 10th: 15.8%
S&P 500 % return since June 10th: -3%


POSITIONS TRADED FOR A GAIN:

LMRA ($160.10)


POSITIONS TRADED FOR A LOSS:

SDTH ($-57) (a bad trade!!!!!!!)
WWEI ($-81.90) (a bad exit!!!!!!)


POSITIONS BEING HELD OVERNIGHT:

WWEI
PDO

Welcome to the Gutter

Always one to be looking for a way to make extra cash, I decided to jump into the risky realm of day trading and swing trading.

My past experiences in the stock market haven't been pretty. I lost a ton of money on Fidelity Select Electronics (FSELX) during the NASDAQ crash in 2000. Lesson learned...don't invest in a mutual fund that's all tied to one sector.

I jumped back into the stock market earlier this year, buying and holding stocks, thinking I could do a good job of picking stocks. Wrong. For example, I bought some Wamu thinking that I had picked the bottom....wrong (never, EVER try to pick bottoms on stocks!!!!!!). Lost more money, and it didn't help that I was being charged $19.95 per trade with Fidelity. Large commissions will kill you if you have a small account.

Always seeking to get better, I joined Covestor. Covestor tracks your trades and performance, which is available to all other members. You can check who's doing the best and see what trades they are making. I noticed this one guy, Timothy Sykes, who was making huge returns and was outperforming a lot of the people on Covestor. But I noticed one thing that was weird....he didn't have any holdings! WTF is going on?

I then found out that the guy trades penny stocks. Penny stocks are the gutter of the stock market. While some of them are real companies, many are failing companies, and some aren't even real companies at all (pump n dumps, anyone?). These are the smallcaps and microcraps, err, I mean microcaps in the market.

Anyway, I found out that Tim trades these stocks. He doesn't invest in them. You don't invest in microcraps, since most of them will fail as companies. But, since they are so volatile (i.e., they can have big price movements in very short periods of time), you can make good money trading them....if you know what to look for. Also, you have to get in and out of these stocks quickly...which is why Tim didn't haved any holdings....he stays liquid most of the time.

So I decided to jump into trading the penny stocks. I started with a small account, around $4200. From April to the beginning of June, I struggled. I made TONS of mistakes, and my account had dwindled to $2800 by early June. I had some winning trades, but WAY more losers. Trading is NOT easy.

However, those mistakes were good learning experiences (nothing like the pain of losing money to get you good at something), and I formed a set of trading rules to abide by so I wouldn't make those mistakes again.

Those rules are now paying off. Since June 10th, I'm up 13% to over $3100, and I'm dramatically outperforming the S&P 500 (down 3.3%) in those 10 days. My average winning trade is almost 10% per position, and my average loser is only about 4% per position (and I'm looking to improve on those stats).

That's the nice thing about penny stocks....they aren't tied to the market and you can do well regardless of how the market is doing.

The guys that have helped me the most on this are Tim Sykes (up 50% in 6 months, totally outperforming the S&P) and a trader named Mike (100% returns per month!!!! He's up 350% so far!!!!).

The other thing that helped me was switching from Fidelity to ThinkorSwim, which is much more trader friendly. Commissions now are only $5 - $10 per trade.

I'll keep you guys posted on my trades and my progress in this new blog series.

Welcome to the gutter.