Trading recap 12/2/16

Unfortunately I have back a decent chunk of Thursday but it wasn't due to any one particular trade. It was just everything I tried didn't work. There were some trades that I had no problem with trying (I lost the least one this), there were ones that were ok but now I know not to do after a few times of trying, and there were ones that I shouldn't have tried or at least been more cautious on. But I learned some things that I'll go over down below.

FIVE: I had this on watch due to the gap up and the fact that all earnings and guidance were pretty much exactly in-line with estimates and with the recent trend of stocks gapping up on earnings but not reporting stellar guidance and then fading, this was top watch for me. Had it gone to the top of the premkt highs I would have shorted it but it just kind of blipped up a bit then started coming off. I saw that 44.10 was an important premkt support area and if it failed I had a feeling this would just start to come off right at the open so I wanted to be in for a breakdown as I didn't think there would be any pops similar to BLUE. I got in as it was cracking and it did crack a bit. But then that got bought up again and when it got back above $44 I covered for flat. This was stupid as my risk should have been on vwap/$44/10-20 over/under as I was confident in it and had it popped it should have been another opportunity to add possibly. Anyway, I got out and then got right back in at the same price because I saw the mistake I had made. Now this time was different. I let it got for a while but there was a really stubborn absorbing bid at 43.45. I was confident in the setup and so I didn't cover at least some here but it did give me some pause. After it kept absorbing and went back up I put in a stop above $44 as this made me less confident in the setup and I wanted to play it safe. If it was going to fade it shouldn't have any huge buyers like that. So I got stopped for tiny, tiny losses overall so far. I decided to not bother with it unless that bid dropped and then I would short under it. It came back to it eventually and I put my stop under it but for some reason I got filled even though it never dropped - it didn't even fake stop and start again so that was weird. I was debating just taking it off for scratch but I decided to give it a little room but when it started ticking up I just got out and left it alone the rest of the day. So overall I was confident in the setup but it just didn't work for whatever reason due to some people buying it for some reason. My first entry was good and I wanted to be patient with it. I shouldn't have gotten out and instead added on the vwap retest. I think what I can do in future scenarios is to just cover at least some of it in cases like this and then add back if it breaks it. So that is a lesson going forward. I keep going back to one trade on OPTT that was a while ago where the bid was absorbing but I guess I was just stubborn and it worked out and it went lower. The difference there was that OPTT is a complete POS and everything that day was fading with all the sympathies. So just because it worked there doesn't mean it will work again.

SBUX: I thought the reaction to the news was way, way overblown and was looking to buy at good spots for a ride back to where it was the day before the news hit. I figured funds who were in this would use this as an opportunity to buy more and so that would help drive the price up. What ended up happening was similar to JACK where it made its huge move in the first 2minutes due to someone buying it all at the open or something and then the rest of the day did nothing (JACK made new highs later but that was due to a CC during the day). So I tried to do the same thing as I did on JACK which was buy at vwap and support. I gave it some room and then that didn't work. Then I tried again later in the day when it started perking but that was just a trap and I had a feeling it would be. I should have waited until the .25s-.30s held again because that was the inflection point. That would have never really gotten me in the trade again. I think I gave the second shot way too much room because it was either going to work or it wasn't at that point and as I mentioned before, buying breakouts during lull isn't a good idea most of the time. Better to have bought dips after the inflection point held. One other thing is that I put a stop buy for a breakout above the resistance in the morning but that never went. Again, similar to JACK, it made its move and that was it. So the lesson here is when a stock just makes a big move like that right at the open, don't buy dips or anything. Probably just forget it. You can try buying it when it is really off the highs (it looks exactly like JACK did minus the ramp later on).

SWHC: This was potentially a stupid trade. Sure it could have worked but it was a low probability trade when taking everything together and I think I got in because I was emboldened from BLUE the day before and how well shorting breakdowns worked. But everything I know about shorting breakdowns and the dangers that are present shouldn't be negated by one circumstance. Their earnings/guidance was mixed so there wasn't really a big catalyst to already propel it lower. I just had it on watch to potentially play it either way. When I saw a nice bear flag I figured I would try and short it for a move down to the recent low at around $21.04. But before I put on the trade, I said to myself: the ssr is on so this may not be a good trade. I should wait for a pop or something. So when it broke down I got in but kind of chased and missed a better entry so that was bad. I should have just avoided the trade but thought it would work of course. The other times shorting breakdowns worked was with big momentum or at least the SSR wasn't on. So while it can work with the SSR, you definitely have to be more cautious of it just in case. The fakeouts can happen on any stock, not just with SSR, but it's a greater possibility on it occurring with the SSR. I gave it 20 cents or so and then figured it was a fake out so I got out. I actually thought about going long on the dip and retest back to .50 but decided not to really trade anymore. It ended up going higher a bit but then faking out there and coming back under vwap. It then formed a longer pattern of just lower highs and consolidation until it broke lower and eventually went to my original target area. I thought about reshorting it as it looked weak again but decided against it but it would have worked. When a stock has a longer period of a pattern setting up, it has a better chance of working and almost always works. Lesson: Each trade is its own so don't assign what happened in prior trades to the current one at hand. Be more careful when shorting breakdowns with SSR being on.

LLY: After the news came out I saw the $68 offer absorb a huge amount of shares so I shorted in front of it with the hope it could go back to vwap. I figured this news if there was a seller present was just an opportunity for people to exit after the prior gap down. I gave it to it making new highs. It ended up working for a bit but then it kept getting bought up in the .60s area but I figured I would just let it work out and worst case stop out for a small loss. It ended up coming back and breaking that $68 and stopping me out. So again, everything is a probability and what may happen one time may not happen again. Maybe I could have taken profits in that area and then reassess if it broke lower. When I am down big I tend to want to make it all back with one trade. But I just have to take it trade by trade and not think about the PnL like that. I continue to go back and forth between saying I should take profits vs. I should let things works. Its really a constant battle. And honestly it all comes down to probabilities and what you think will help you in the long run and make you more profitable. I believe if I am ever uncertain I should at that point take some off.

P: I saw an absorbing bid after the second news so I bought in front of it thinking it could go. It popped a little but didn't make new highs so I got out for a small profit after moving my stop up.

EDU: Completely missed the big move in either direction. I didn't really know what to make of it so I just stayed away. The only trade on it was the short was it was consolidating and starting to head lower. Those I have seen work. It wasn't on my radar at that time I believe though or if it was I wasn't paying much attention. There were some other opportunities looking back at it during the move but it's ok. I ended up shorting on an absorbing offer after the big move in both directions was done. I got out for flat before it broke out because it was setting up like LLY was with it continuing to test and get through that seller.

Other stocks:

GIII: I didn't trade this but this had horrible earnings and even worse guidance and yet it ripped at the open. Just a note that to not be stubborn when the market doesn't agree with you.

ULTA: I completely missed this because I was with FIVE but teh fade was unreal. I was actually unsure whether to go long or short but I saw the breakdown opportunity a few times that would have worked really well. With ULTA and GIII, it goes to show things can go further than you think.

Things to work on/remember:
1. On stocks you are confident in and are still within risk parameters, especially on the breakdown trades when they go back to a real level, you can add there instead of covering if it comes back.
2. If uncertain about something like there is a refreshing bid or an offer in your way, possibly size down and you can always get back in.
3. When a stock makes its big move at the open, just forget about it for the rest of the day unless it retraces a significant portion of the move back to where it started at the open.
4. Each trade is its own so don't assign what happened in prior trades to the current one at hand.
5.  Be more careful when shorting breakdowns with SSR being on - unless it has momentum like EDU.
6. When I am down big I tend to want to make it all back with one trade. But I just have to take it trade by trade and not think about the PnL like that.
7. Sometimes the mkt doesn't agree with you on certain things that you think are obvious.
8. PNL DOESN'T MATTER. PROCESS AND PROBABILITIES OVER EVERYTHING ELSE. DO NOT JUDGE YOURSELF BY PNL. THINK ABOUT WHAT YOU SAW, WHAT YOU DID, HOW YOU CAN IMPROVE BASED ON THE OPPORTUNITY OUT THERE.
9. "The ones who are progressing talk about their playbook trades and how well they are exploiting their opportunity set.  They are getting better and better at running their plays and, every so often, they develop new plays as they see new patterns and fresh opportunity.  The ones who aren't progressing talk about their feelings, how they missed the last move, whether the market will go up or down, etc." 
10. The most successful traders can talk in detail about the patterns that they perceive in markets and how they have traded those patterns. .. The least successful traders talk about catching moves in markets and are not focused on particular patterns or setups.  They let market movement define opportunity, rather than allow their definition of opportunity guide their involvement in the market.

Some other things:
1. Look for over/under key levels from premkt to determine long/short.
2. Look for what is happening after 10-1030 and if certain levels are holding over/under in afternoon.
3. Look for 2nd day plays with consolidations from day before to go off of.