Monday, June 25, 2007

Gambling for Lunch Money

I didn't have the stamina to lose the rent money, so I went for lunch money instead. I was long 1000 AAPL @ 123.05 and got out at 123.22 for a 3 minute trade that I cleared almost $150 ($148.21). The total profit was $170, but especially on tiny trades, the house's cut seems steep. I don't care, it'll pay for lunch. All week.

about 5 minutes later it was down below $122.25...risky.

But of course, I got back in anyway, for a couple of more 1000 share lots...with buys at 121.97 (sold at 122.07) and 121.57 (sold at 121.68). I can stomach a little risk. I netted $324.64 0n a gross of $380. And the whole thing was still less than 15 minutes. But I could've easily have been down. It's not for those with weak stomachs. On the plus side, I can now justify at least one expensive lunch at Cafe de la Presse. If I stop...right now.

Update 6:00 PM PDT: Apple closed at $122.34, which you can see is $.71 lower than my initial trade. I did get back in the market and made just over another $100. But I should note, what I was doing today definitely was gambling, not investing and I don't know that I'd even call it "trading" other than that's what they call it. There were a couple of reasons why it was gambling, but the main one was on the trades listed here I was going long in a falling market. I wasn't so silly to think that I could "call the low". But I was silly enough to think given the volatility that I could go long and still make some pennies. It was controlled gambling on a bad spread. I was willing to risk losing $300 to make $150.

You can even make money doing that, I did today, but it's not the way to go...unless you felt like gambling for a little, which I did. The problem is AAPL went all the way down to $121.06 at one point. If I had decided to short there or even at say $121.75 and then held to the close, it would have cost me.

What I was doing wasn't totally unsafe, because I more or less had both time & money stops in. For what I was doing, I didn't want to be in any of the trades for more than 5 or 10 minutes. While not totally unsafe, it was totally stupid.

But sometimes I like being totally stupid, and at times like that I focus on lunch money, not rent money.

The problem with timing is that while overall the trend is your friend, in short little bursts that is not always the case. Today AAPL opened around $124 shot up to just over $125 and then the trend line was down all the way to $121.06 before going back to $122.34. For everyone of my trades I would have been prudent to have gone with a the trendline.

You can lose money that way too, but the odds are much more in your favor.

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