Weekly Trading Lessons and Observations

by Ryan Mallory

Last couple of weeks - I've been some-what break-even on my trading. Not the best of performance, however, like last week there is a number of lessons and observations to take from this week in trading. My trades for the most part were good trades with good entries, only one of them, Apple (AAPL) on July 22, that I probably shouldn't have gotten into at all. DIA from the day before was another one, that had questionable timing - had my timing been better, I would have made a phenomenal return.

So here are my observations and lessons learned on the week and a few that I have adopted from the week prior...

• When a stock trades range-bound after entering a trade, don't stay in it until the end of the day waiting to capitalize on the an end-of-day breakout. I risk being hit by the end-of-day reversals that typically happen within the last hour. Instead I need to do a better job of trying to get out at break-even or at the high-end of range when the opportunity presents itself, instead of holding out for a mythical breakout, that is unlikely to occur.
• On Wednesday and Thursday, I was not as diligent as I should have been with managing the stop-loss, instead, I tried to give the stock as much room as possible instead of booking gains where I could. As a result I allowed for my profits to turn into losses.
• Let the trade come to me, rather than me to the trade. Sometimes, its easy to rationalize a trade or force a trade; this all goes back to where timing is everything. This week, was much better than last at doing that.
• General Observation: Looks like the 'buy-the-dip and hold for the rally to break even or better,' isn't playing out as well as it had earlier in the month. Nonetheless, that will still be my approach going into next week, as it still remains the best trading strategy at this point. The market can easily jump back into bull-mode next week, despite the past week of minor selling that took place. Taking the short side of the trade, still remains to be a pretty risky trade, and the odds are stacked against me on being profitable to the short side at this point.

So there you have it, some observations and lessons learned this past week, that I need to do a better job of, and hopefully you can benefit from. Enjoy the weekend, and get set for another full week of trading come Monday!

I'll have the stock screens and market barometer updated by the end of the weekend, likely sometime Sunday night.