 from  yesterday's  close.  My stop  loss  on AMBI  was never activated.
Open positions: 600 Shares of AMBITotal  profit  for  3/21/00:  $389.64
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49
CHAPTER 
(
The  Running  of the  Bulls
DAY  FOUR
Thursday,  March 23,  2000
Following a frustrating day in the market, and an even more frustrating dayat the golf course yesterday,  I was looking forward to  the market open today.I really liked the strong showing the Nasdaq had yesterday.  My strategy fortoday is to manage my open position in AMD I effectively.  I also wrotesome intraday support and resistance levels for the stocks in my Constantwatch list,  I am looking to enter long positions in some of these stocksshould they show continued strength.  Sipping my cup of coffee, I was mak-ing  my way upstairs  to  my trading  desk  preparing  myself for today's  battle.
AMBI  had a  nice  run  from  the open  and  it  hit 6  3/4.  HRZG was  the  Ax.  Isold 300 AMBI  at 6  1/2  when the  stock pulled back  from  6  3/4.  I  was goingto  give  the  other  300  shares  some  wiggle  room.  However, HRZG would  notlet AMBI go  up  higher.  I decided to sell  the remaining 300 shares at 6  1/2.
Although  this  trade  does  not  look  like a  major home  run  when  you  look  atthe dollars and  cents,  it  was  actually a  very profitable  trade  on a percentagebasis.  The  reason  J  only  allocated  about  $3,400  to  this  trade  was  becauseAM13I  is a  low price stock.  I  feel  that there  is an  added risk  to  trading  lowprice  stocks,  so  I  chose  to  be  very defensive  in  this  trade,  I  was  very  happywith  the  rewards;  however,  the  stock  could  have just  as  easily  gone  down  inprice  one  point  or  more  from  where  I  entered  it,  and  caused  me  a  big  loss.Keep  that  in  mind!
The  market  is  very strong  today.  In  fact,  the Nasdaq-100  Index  is  makingnew all  time  highs.  I  was  looking to buy the tracking stock  for the Nasdaq-100  Index  (QQQ).  The  Nasdaq-100  Trust  Series  1  is  a  pooled  investmentdesigned  to  closely  track  the  price  and  yield  performance  of the  Nasdaq-100Index.  It  allows you  to  buy the entire  index  (actually pooled  investment  inthe stocks  which make  the  index)  in  one  single security.  The  way  it  is  calcu-lated,  more  or  less,  every 40  points  on  the  index  are  about  one  point  on  thetracking  stock.  QQQ  is  traded  on  the  American  Slock  Exchange.
QQQ  broke out to an  intraday high  (all  time  high),  and  I bought 200  sharesat  116  1/4.  I  placed  a stop  loss  at  1143/8.  Since we just  broke out  to  an  alltime  high,  my  price  target  was  at  122.  I  was  looking  for  about  5%  return  onthe  index.
Since  the  index  of the  biggest  100  non-financial  stocks  on  the  Nasdaq  was  atan  all  time  high,  I  was  monitoring  the  big  blue  chip  companies  which  makethe  index.  These  blue  chip  companies  are  on  my  Constant  watch  list  on  adaily  basis.
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QCOM  was  moving up  with  the  market  on  higher  than  average  volume.  Ithought  the  stock  could  possibly  go  to  148  which  is  the  next resistance  leveland possibly  160 if it broke out, as seen in the chart above.
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The  stock  was  consolidating  after  the  big  run  it  had  earlier  in  the  day.  I  feltthat a powerful breakout might take place, and I entered a buy order for 100shares on  ISLD ECN at  143  13/16.  I got a partial fill of 50 shares, and myorder was cancelled  for the reason  it would  lock or cross a market.  I  wanted100 shares, so I  entered another order for 50 shares and got a fill at  144  1/16.I  placed  a stop  loss at  142  1/2.  My price  target was  148 -160.
INTC  was  lagging  the  index  most of the  day;  however,  as  soon  as  the  indexbroke out,  INTC started to move as well.  It  broke out over resistance at  141and went vertical.  I tried to buy the breakout, but I couldn't get a  fill.  Istarted chasing it, and  I  finally  got a  fill.  I bought 200 shares  at  142  1/8.  Thestock broke out to an  intraday high and went up  to  142  15/16.  It then pulledback  to  141  1/2.  The next rally attempt was  very weak,  and  the stock peakedat  142  7/16.  It then  traded  down  to  141  3/4  where  it  found  support (shownby horizontal  line on chart).  The next rally attempt took out the top at142  7/16, and  the stock traded as high  as  142  9/16.  INTC was starting an up-trend.  I moved my stop  loss up  to  141  5/8  from  141  3/8.  I  felt that if INTCwere to drop below the  141  3/4  level,  it would be reversing its trend.  INTCstarted selling off and  it took the  141  3/4  support  level  out.  My stop  loss  wastriggered,  and  I  sold  200 shares  at  141  1/2.
QCOM  tried  to  breakout again  as  volume came  in just before 2:00  EST.However, SBSHwas  axing  the  stock  and  the  stock  lost  momentum  andstarted falling down.  It hit  142  1/2 and triggered my stop loss.  I sold  100shares at  142  1/16.
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CSCO  broke out lo a  52-week  high as  well.  I  had  learned my lesson  and  de-cided to wait for a pullback this lime.
SUNW was close to breaking out to an all time high as well.  I had preparednotes  to  keep  a  close  eye on  it  today when  I  studied  the  stocks  on  my Con-stant watch list last night.  I  was  looking  for a potential  swing trade.
CSCO ran  from a breakout at  75  at  11:30  to  78  7/8.  It then  pulled back to76  1/8  and  started  moving  back up.  I entered  an  order to  buy 200  shares  at76  7/16,  and  I  got a  fill  of only  10 shares!  This was very frustrating.  I  en-tered  another order to  buy  190 shares and  I got  a  fill  of only 80  shares  at76  5/8.  I couldn't  believe  it.  I entered another order to buy  110 shares, andthis  time,  I  was able  to  complete my position.  I got  110 shares at 76  3/4.  Iplaced a stop loss at 75 7/8,.  My price target was 80.
SUNW took  out  the  high of the  day and was  now  flirting with  100.  I  bought200 shares at 99 7/8.
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I  found  LOOK on  my Pullback Swing Trade  Scan.  The stock peaked  at  72on 3/8/00.  Then, it had traded down to 37  1/4 three clays ago and was bounc-ing back up.  It was trading near the high of the day (44) when I first saw it.
The stock traded up to 46  1/2.  Then it quickly pulled back and 1 got scaredand sold  200 shares at 45.
The stock stabilized and started trading up again.  I bought-200 shares againat 45  1/4.  I  added another  100 shares at 45  1/2 and  100 shares at 45  7/8.
Around 2:18 PM, LOOK broke out of the consolidation pattern it was in,with increasing volume.  I bought 200 shares at 44 7/8.  I placed a stop lossat 43  7/8, and my price  target was 48  1/4, which was the support level  thatwas penetrated successfully four days ago.
ORCL broke out to an all time high.  Again, remembering my lesson aboutjumping in too soon, I waited for a pullback.
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ORCL did pull  back, and I bought 300 shares at 87.146.  If there was moretime in the day, I would have placed a stop loss below support, illustrated byhe horizontal line on the chart; however, there was only one minute left tohe closing bell.  I was buying ORCL for a swing trade.
MSFT closed very strong and I bought  100 shares at  112  1/16  for an over-night hold.  I felt that the slock would attempt to make it to  115 tomorrow.
The  trading day was over.  I had six open positions, and I  felt somewhat overextended, but the stocks 1 was in were trading higher in after-hours trading.  Iwas  assessing  my overnight  risk and  decided to  sell  CSCO.  The  stock  closedat 77  13/16, and there was a bid on Island at 78  1/4.  I  took another look atthe CSCO daily chart,  and I decided  to sell  it.
MSFT looked really strong.  I was watching it most of the day.  I was goingbuy it for an overnight hold if the stock closed strong.
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As you  can  see  in  the chart above,  CSCO  ran up  from  62  3/16  to 79  in  thelast five days.  This  is not a normal price appreciation  for a stock like CSCO,so I  felt the risk/reward in holding the stock overnight was not worth it.
I sold 200 shares at 78  1/4.
Source
Investment
Constant  List
15,336.87
Proceeds
15,650
MBT
20.54
P&L
292.59
Return
1.91%
Once  the final bell  rang and  the final sell  ticket was stamped,  the bulls  werecelebrating again.  The Nasdaq closed up 75 points from yesterday's close,  ffelt  that  I  traded  well,  and  I  felt  comfortable  holding  five positions  overnight.
Open  positions:  200 QQQ,  300  ORCL, 200 SUNW,  400 LOOK,  100 MSFT.Total profit for 3/23/00: $454.46
Day  Four  Lessons
Wait for a Breakout to pullback before buying.
You can trade an index tracking stock such as QQQ.
Never be afraid  to  buy back a stock which you  havesold  earlier at a  lower price.
Do not chase stocks!
Oakland Here I Come
DAY FIVE
Friday, March  24,  2000
I slept real well last night even though I was holding five open positions.When I did my research last night, I was trying to determine how greedy Iwas going to be today.  In my notes,  I wrote down strategies for both a gap-up open and a gap-down open on any of my positions.  If my positions are toenjoy the same momentum today that they did yesterday, I will simply placetrailing stops.  I did not study any new setups for potential entry this morn-ing, because my basket was full.  Instead, I evaluated each stock I owned inorder to make things easy at the open.  It is very challenging to manage fivepositions simultaneously, so I must follow the guidelines I have outlined inmy plans for today.
I woke up extra early this morning, and I was pumped up for today's action.The Nasdaq looked strong early in the morning, as most of the stocks I heldovernight were trading higher pre-market.  MSFT was trading at  114  1/2.  Iplaced a stop loss order on MSFT at  111  15/16.
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MSFT opened for trading at  112  1/2, after it traded as high as  115 pre-market, and then tanked from there.  My stop loss was triggered and I sold100shares at  111  15/16.
Source 
Investment 
Proceeds 
Constant List 
11,206.25 
11,187.50 
MBT 
10.38 
P&L 
-29.13 
Return
-0.26%
Source 
Investment 
Proceeds 
MBT 
P&L 
Return
Pullback 
Scan 
18,187.50 
18,825 
27.14 
610.36 
3.36%
ORCL went up  from  87  3/8  to  89  5/8.  It was  in all  time high  territory.  I wastrailing  a  stop  on  200 shares,  and  as  ORCL  hit  89  1/2,1 placed  my stop  at88  15/16.  The  stock  turned  around  and  traded  lower  than  89.  My  stop  wastriggered,  and  I  sold  200  shares  at  88  15/16.
LOOK gapped  up  to  47  1/8.  I  placed  a slop  loss  for 200 shares at 46  7/8  andI  also placed a sell  l i m it  order  for 200 shares  at 48  1/4,  which  was  my  pricetarget,  as seen  in  the  chart above.
ORCL hit 88  1/2 and started  to make another attempt to go higher.  It tradedas  high as  89  11/16  before turning back  down.  SBSH was  the Ax.  He wasselling it all  the way to  the top, and he down-ticked his offering price on  theway down.  I  decided  to  sell.  I  sold  my remaining  100  shares at  89  3/8.
Source 
Investment 
Proceeds 
Constant  List 
26,147 
26,725 
MBT 
20.65 
P&L 
Return
557.35 
2.13%
The stock ran up and hit 48  1/8.  It was trading there  for about 3  minutes.  Ithought that my sell order at 48  1/4 was going to get executed for sure, but itdidn't.  The slock was being axed  by an  anonymous party using  Instinct.The size on INCA  (Instinct) kept refreshing.  I cancelled my sell  l i m it orderat 48  1/4,  and  I  sold  200  shares  at 47  1/4.  At  9:53,  the stock broke  downthrough  47,  and  my stop  loss  triggered.  I  sold  the remaining 200 shares at46  7/8.
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Repfintert with permisilnn ofTownnerwl Annlylic*. Ltd. Courtesy ofMB Trading
SUNW ran  from 99 to  103 5/8 where it lopped.  It came down a l i t t le andthen rose to attempt a breakout above that price level, but failed to do so.  Itlooked  like a double (op had  formed, so  I sold  100 shares at  102 7/8.  SUNWtraded down  to  102  1/8 and bounced back up  to  102 3/4.  I placed a stop  lossfor the remaining  100 shares at  102.  The reason I placed it at that mild sup-port level vvas that if SUNW was to break down, it would suggest a trend re-versal confirmed by lower highs and lower lows.  The stock penetratedthrough  102  1/8 and my stop was triggered.  I sold  100 shares at  102.
Source
Investment
Proceeds
Conslnnl  List
19,975
20,487.50
MBT
15.69
P&L
496.81
Return
2.49%
SUNW sold off and went as  low as 99 as seen  in  the chart below.
QQQ  topped at  120  1/2 and started trending down at a slow, sadistic pace.  Iplaced a stop loss at  118  15/16. The stock went lower than  119 and triggeredmy stop  loss.  1  sold 200  shares at  118  15/16.
Source
Investment
Proceeds
Market Play
23,250
23,787.50
MBT
10.80
P&L
526.70
Return
2.26%
The  Market  sold  off hard  as  seen  in  the QQQ  chart below.
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Day Eight Lessons
Hold only as many positions as you can manageeffectiveIy
Manage multiple positions with trailing stops.
Do not look to enter new positions when your basket is
Sell  when things don't look right;
Friday is a payday, don't you forget that!
The final bell  rang, and the bulls managed a small  victory.  The Nasdaqclosed  up  22  points  from  yesterday's  close.  However,  the  Nasdaq  seemed  tohave  topped out as  it closed  115  points off the day's high and 23  points  be-low the open.  It  had  a  reversal day,  which  was  a sign  of weakness.  I didn'tlike this weakness, so J did not enter any new long positions.
Open positions: NoneTotal  profit  for 3/24/00:  $2,162.09
The first week of the challenge  was  over.  It was  a  great week in  which  I  wasable to capitalize on many of the opportunities presented to me.  I started theweek sitting tight on the sidelines without executing one trade for the entireday.  I t h i nk this was the key point for the success I have had this week.  Mytotal  profits  for week one  were $5,476.19.  I  faxed  MB Trading a request fora chuck in the amount of $5,000.00.  After all,  Friday is payday!
Southwest Securities 1101 Elm SI. Sukc 3SIX) Dallii. TX 75270
SIPC 
'"'  209490
DATF,
AMOUNT
Pay To
TONY OZLACUNA HILLS, CA 92654
The  reason  I  like  to  order  checks  rather  than  electronic  transfers  of any  kindis because  I get to sec something that represents a reward for my hard work.It also makes my "better h a l f" very happy when she opens the mail.  I havealso found it to be very encouraging on those days when I am struggling.Let's say I had a very bad day, and  I lost a few thousand in the market.When  I check my mail  that evening, I find a check for a few thousand that Iordered  last week.  This puts a smile on  my face and helps me get ready forthe next trading day.
A Her I ordered  my paycheck from  MB Trading,  I made my way to JohnWayne Airport to catch a plane.  I was going to attend the Online TradingExpo, which was taking place in Oakland this weekend.
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Learning from Beginner Traders
DAY  SIX
Monday, March 27, 2000
I returned from Oakland late on Sunday night, and I was very tired; however,1 wanted to write a summary of the most valuable things I have learned at theconference.  On Friday night, I attended the reception party given by the hostof the event.  I sat at a table with six other individuals, who were discussingtrading methodologies.  I soon found myself participating in a round tableconversation,  or should  I  say debate.  The beauty of the debate was that therewere green traders at the table, professional traders, and trader wannabes.
One of the traders was telling us how he has been writing naked put options,successfully.  This  got my attention very quickly.  Anytime  I hear this  strat-egy, I quiver.  1 remember stories of those who lost all they had, and thensome, using this technique.  When someone writes (sells) a naked put option,he commits  to buy the  stock at a certain price,  over a certain period  of time,from the person who buys this option.  He receives a premium payment up-front for entering this contract.  Let's try to simplify it.
XYZ is trading at $150.  Using the above strategy,  1 can give someone theoption to sell me  1000 shares of XYZ anytime over the next two months at150.  For this right,  the purchaser of this contract will  pay me $6.00 today.This will be my profit (maximum reward).  This strategy is very bullish andextremely risky.  My trading philosophy is to  always manage risk properly.The first thing 1 take into consideration is what happens if things go wrong.The following table will  illustrate the risk and reward  for this trade.
How much  money will  I  make or lose if XYZ  traded at the  following pricestwo months  from now.
50
70
90
-95K
-75K
-55K
no-35K
130
-15K
150
+6K
170
+6K
190
+6K
210
+6K
230
+6K
250
+6K
As you can see, my reward is limited to $6,000.  My risk is not limited, and Ican  lose a  lot of money  if something went wrong.  This  is not what I  look forin a trade.  I'd like to capture a great reward when I am right, and I'd like to
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lose the minimal amount when I am wrong.  There isn't one right way totrade, and I don't discourage anyone  from trading the way they like to; how-ever, what made this debate so unique was the fact that I felt the trader whowas using this strategy did not really understand the risk he was taking.  AndI wasn't alone on this one.
The argument about selling naked options started a discussion about riskmanagement, which  I  Felt was very valuable, especially,  because we werediscussing risks  that are sometime out of our control.  How can  we be pre-pared  for power outages, network downtime, slow Internet connection, etc.,were the questions we were trying to answer.  These arc the behind-the-scenes risks of doing business on the net that everyone should be aware of.You could write more than a handful of books on the various subjects thatwere discussed at the conference.
Now, that I was home, much of the information I gathered in Oakland startedto sink in.  I  was very concerned  with  much of what I saw at the show.There were  many traders who were going to  take on  Wall  Street with  inferiortools,  l i t t le knowledge, and a lot of money to lose, and no one was going tostop them from doing so.  I don't know  if it is a special  quality or simple hu-man nature, but these soon-to-be traders believe they know better than every-one else, and  they arc going to prove to  the world they have what it takes tobreak the code to the Wall Street vault.
The reason I am bringing this up is because, what 1 am presenting in thisbook in an casy-lo-undersland  way, is much more complex in real  life, espe-cially, if you have not experienced any of the pain that slock trading via theInternet inflicts.  I don't want to deceive you and make you believe that it iseasy.  It is not.  It is, however, doable!  That is what I hope to be able toshow in this book.  I need to be able to trade as well  as  I did last week overthe next three weeks  in order to do so.
Beep!  Beep!  Beep!  My alarm clock goes off.  It  is 4:45  AM and time  to getup.  I was so tired that I couldn't open my eyes.  I hit the snooze button, try-ing to steal  another six minutes of sleep.  Beep!  Beep!  Beep!  I hit the snoozebutton again.  Another six minutes go by, and the alarm clock goes off again.It was one of those mornings where I had a million-milc-an-hour argumentin my head, where I would list all the pros and cons to determine if I shouldget  out of bed  or sleep  in.  This,  of course,  happens  almost every morningthat I am not holding positions overnight.  When I don't hold any positionsovernight, turning on the TV in the bedroom will be the first step in gettingup.  1 turn the TV on, and I jump back into bed.  I raise the pillows somewhatand put on  my glasses.  My eyes are still  shut.  The alarm clock is still  in
snooze mode in  case  I  fall  into deep sleep again.  I  hold  the alarm clock  inthe palm of my hand with  rny thumb on  the snooze button.  It takes  me  afraction  of a second to press  the button  should  the  alarm  go  off again.  Everyonce  in  a while, I will open one eye and take a quick peek at Mark  Haincs,Joe  Kernen,  David  Fabcr,  and  the  ticker that runs  at  the  bottom  of the  screenon CNBC.  This  process repeats  itself for the next 20-30 minutes until  I  fi-nally get out of bed;  however, there are days, like today, in which I will stayin  my cozy  warm  bed  for  a  longer (much  longer)  period  of time.  The conswin the argument today, and I am sleeping in.  1 turned the alarm off.
It was  8:30  AM  PST,  when  I  finally  woke  up.  The  market had  been  open  fortwo hours already, and  I didn't care.  I made my way to the bathroom andtook an extra long shower.  What a luxury.  Another hour went by, and 1 fi-nally made it upstairs to my trading desk.  I  started Real Tick III and myscanning program.  I was catching up  to what I  have missed over the  lastthree hours.  I  was very relaxed, and I was waiting  for a good setup to showup  on  my  scan.
WAVX was  the  sniper's  first target of the  day.  It showed up  on my PowerScan.  The  stock had a nice run  from  12  in February,  and  it topped at  50  3/4on 3/1/00.  It then  traded  down to  39, where  it bounced.  It made  another runat the high and topped at  50, testing the top again on  3/7/00.  Once  it failed tcmake  a  new  high,  the  stock  sold  off and  went  down  to  30  on  3/16/00,  whereit  found  support.  The  stock traded back up  to  38  3/16  on  3/18/00.  The  fol-lowing day,  it traded back down  to 30, which was  the price level  that held  orthe  16th.  The  stock held  that price  level  again  and  traded back up.  The  twotops  at  50  suggested  a  double  top  pattern,  which  was  confirmed.  The  two
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bottoms  set  at 30 were  a  positive sign  of good support.  The  resistance  levelis at 38  1/4.  If  the stock is able to trade higher than that level,  it should test40,  where resistance should be stronger.  If the stock can penetrate that  level,then it should try and test the highs at 50.
WAVX went as  high  as 42  then sold off quickly.  I sold  200  shares at41  3/16.  The stock  found good support at the 41  level,  consolidated  andstarted  to  move back up.  I  tried  to  buy 200  shares  again,  but  only got  100shares  filled at 41  7/8.
Source
Investment
Proceeds
Power  Scan
8,025
8,237.50
MBT
10.28
P&L
202.22
Return
2.52%
WAVX traded over the 40 level as it broke out from an ascending triangle.It traded as high as 40 5/8 and pulled back on relatively low volume.  Ibought  200  shares  at 40  1/8.  I placed  a stop  loss  at 39  5/8.  My price  targetwas 42  -45.
WAVX broke out over 42.  1  tried to add to my position, but the stock was