Make More Money Waiting

Making money with the stock market in the long term is a buy and hold strategy utilizing stocks with great dividends like Verizon. When you day trade, you must wait for the right buy signals. If you are not disciplined, you will be buying early and late and selling early and late. When you see certain patterns, you have the tendency to buy expecting that pattern based on the day of the week or just plain wishful expectations.

Not waiting does not only shorten your earning potential, it can cost you for your day profit and create a loss you can't dig yourself out of for the day. Let's break down expectations and timing utilizing JP Morgan activity for the day.

Initial Move for the day

The first movement of the day may not be more than a reaction in the opposite direction from the prior day's movement. If this is the case, the theme is likely to continue from the prior day. Alphabet (GOOGL) was a perfect example of this today.

On the other hand, some stocks like JP Morgan go up and come down in the same day which ultimately create net gains for the day. Today looked similar to yesterday for JP Morgan as it moved sharply up from market open. When that happens, you wait for the pull back to  a near open price to buy calls for the upside. On my chart drawing, I mark it with a yellow "A."

Now you are going to let this run until you get 2 consecutive red candles which designate resistance when looking at your daily chart with 5 minute intervals. This is not the time to sell as it must retest the top. When it does, it typically goes slightly higher. You can sell at this mark or place your trade when it retest that mark again. You will know it is a retest when it reaches the same spot, but the stochastic lines have peaked at a lower mark. The second way is based on peaking in the price chart with space between the top of the Bollinger Band (B).

Secondary Movement of the Day

When you have noticed the top has formed. You locate the first out of the money put option and buy at or near the lowest price of the day. Once you are in on the opposite direction, you must be patient and withstand upward movement as long as it doesn't move dramatically above the pre-established ceiling for the day.

Now to determine the exit of this 2nd position of the day, you should look at where the area was that you bought the call option on the first movement of the day. It is almost safe to aim for the point to take your profit and get out. There are many days the reversal is stronger than the upward movement. It is nice expecting it, but if you enter and exit at the right locations, you make profit and are not holding like I did today just to break even.

Further Notes

The strategy works with many stocks, but not every stock has 2 sharp movements in the same day. You can say that most stocks move in one direction and give part back towards the end of the day, but then there will be that one day that it doesn't give back towards the end of the day and you were expecting it. The key is do your research, know your favorite stock tendencies, get in and out to take your profit daily.

Why I Broke Even and Didn't Profit Today

I bought my 8 initials calls at the right moment today. I freaked out with the 2nd large red candle instead of waiting for the retest as I have seen almost every day. Although the stock was higher than where I bought the calls, because the calls were out of the money, I ended up selling at a break even minus commission. I would have been up over $120 if I were patient and sold at the 2 peak.

On the secondary movement, I bought my puts before waiting for the top to form. I have made this mistake before, so you would think I would have learned, but this is why I am writing this blog. No matter if anyone else reads it, I expect it to create a more powerful memory to act appropriately in order to profit off small movements rather than break even or lose money.

So I bought these 108 strike puts in a market order at .48. If I had waited, I could have placed my order to buy them at .36 and would have bought a third more contracts. I did buy more at a lower amount, .44 which is still not .36. I did not panic although I did have 15 contracts with an average cost of .48 that were worth .36. My account was negative $200 at the worst part.

As I mentioned, I did not panic and knew the downward movement was due with all of the red candle following the peak of the day of 109.30. It moved in my direction, but unfortunately the highest these puts were worth today was .54. I did not sell there because I thought it might fall move sharply towards the end of the day. I was greedy and disappointed based on not buying at the right time. If I had bought at .36, I could have sold at .50 with a different of .14 times 20 contracts for a profit of 280 minus commission. Instead I sold at close for .48 to end the day break even minus $20 in commission.

Day Trading with Options Fresh Start Rule

Part of day trading with options is closing out your position by the end of the day. Each day goes by, the options are worth less if the price of the stock opens tomorrow where it closes today. The only time the option is worth more is when it move substantially at open the next day. Most of the time, even if it opens in your direction, you can buy those options for the same price you sold them the prior day. Therefore the odds say, you are more likely to lose money holding options over night. Like anything, holding options over night could work one time, but more times than not it will not work in your favor.

Tomorrow is a new day and as long as you did not buy options based on hope instead of indicators, you can make tomorrow twice as good as today.

Schwab Needs So Much Improvement

After leaving the investment company that I was with for over 12 years and my father passing away, I decided I was going to actively managed my families funds. I have experienced some good and some bad as I started with Charles Schwab. Initially I was very impressed with the tools available through their website and trading tools with their computer software, StreetSmart Edge, and mobile application along with investing with artificial intelligent portfolios in ETF's with no fees. Unfortunately I have found the real truth elsewhere.

I have shared my experience trading with a friend. I recommended he use ETrade due to their tools and didn't recommend opening an account with Schwab. I decided to stay with Schwab so I can manage my mother's account and participate in lower transaction cost. Unfortunately Schwab has me very frustrated because their mobile application is horrible and does not provide the ability to use trailing stops. Only the full blown StreetSmart Edge, which is only available on a Windows 10 PC or a Mac, is capable of doing complete entry and exit strategies on the one platform.

I do have a Windows 10 computer that is awesome, but would like to be able to be free and not attached to it at all times during the day trading. I use my Samsung phone and tablet for doing work
and would prefer to use it for trading also. The mobile application is extremely slow and I have found using the mobile website to be better for some things. Charts are not practical on a mobile device through Schwab. I have had a tendency of using Yahoo Finance (not instant updates) or ETrade to view charts with indicators through the day when I am mobile.

When I am mobile, I have found that I can access my computer at home via a remote desktop application and use the StreetSmart Edge software on my home computer through my mobile device. This is not fun as my connection with the internet is strong for the most part, but may lose connection with my computer at  home or experience a lag that causes me to miss clicking on the correct button at the correct time. The mobile device only views a portion of the home computer's screen which makes it difficult to click when you are actually moving the screen and vise versa.

So the next step was to find a Windows based tablet or laptop that I could use for trading and everything else. Costco has a current sale on a Surface Pro 6 bundle with type cover and stylus bundle, so I took advantage of it. The Surface starts up very quickly and works great. When I logged into StreetSmart Edge, I loaded my saved layout after connecting to my TV as an extended wireless monitor. It was fast, but blown up!

I have 4 different company charts on the 2nd screen, but I could only see 2 and a half of the charts. On the main screen, the chart I have to the right was hidden under the account details and watch list. After further investigating, the TV was set to 150% and the main screen of my tablet at 200%. So I changed both to 100% and the display on the TV looked perfect, but the tablet screen print was so small I could not make much out. This was not working out too well.

In another attempt to try to make it work is using the browser version of StreetSmart Edge. I already knew that the it would not work in Chrome as I tried it on a Chromebook in the past. I also tried it on Firefox. It said that it works in Internet Explorer, so I figured it would work in Microsoft Edge. WRONG!!! This is really bad since Microsoft is trying to get rid of Internet Explorer for good.

On top of that, Schwab's StreetSmart Edge software is buggy. The later in the day, it slows down. I have called their technical support, got someone in trading who had to transfer me to someone in technical support, and then they want you to install a browser add on so they can look into your computer. They have backed up my StreetSmart Edge layout, wiped StreetSmart Edge clean and restored my layouts. This typically works better for about a day. After that it is slow again.

I have tried to find different ways to salvage my relationship with Schwab, but ultimately it feels like they don't want to be in a relationship with me as their tools have not improved and actually worsened. I have tried to make an egg into an orange and it has not worked. I feel insane doing the same thing everyday expecting a different result.

I don't know why it has taken me so long to finally come to the determination about wanting to leave
Schwab. I know that ETrade and TD Ameritrade have the tools available on all platforms that are available on StreetSmart Edge with very little to no lag time. I have an old ETrade account and opened a paper trading account on TD Ameritrade. I will contact Schwab first to find out what they are going to do to improve on the situation. I will then contact TD Ameritrade to see if I can negotiate lower sales commissions.