very strong, and  I  couldn't get a  fill.  The stock hit 44  3/16 and was  havingproblems there.  It kept banging its head against 44 for the next  11  minutes,so  I decided to sell.  I sold  100 shares at 43  15/16, and  I entered a buy orderfor 200 shares  at 42  3/16, where  it would sit on  the ISLD  ECN,  waiting  for apullback to occur down to the point of the original breakout.
Source
Investment
Proceeds
Power  Scan
4,187.5
4393.75
M1J1
10.15
P&L
196.10
Return
4.68%
74
75
My  love  affair with  WAVX was  not over.  The  stock  wouldn't trade  backdown to 42  3/16, and was actually very strong.  I entered a stop buy order for200 shares at 45  1/4.
WAVX broke out over 45  1/4,  and  my stop  buy was  activated.  The volumeincreased drastically, and  I  was having problems getting a  fill.  The stockwas  flying!  I wanted to get into the stock badly enough that I decided tocancel  my buy stop order.  Then,  I  sent out a  SelcctNet  Preference order,  out-of-market.  I  sent out  three orders  in  rapid  succession  for 200  shares  each  at46  13/16.  I  got  200  shares  at 46  13/16  from  one  Market  Maker,  another 200shares  at  46  13/16  from  a  second  Market  Maker,  and  yet  another  200  sharesfrom  ISLD  at 46.86.  Now  I had  600  shares.  About  30  seconds  went by,  andthe stock was  trading at 48.  It  was  a wild  ride,  and  in the midst of all  thefrenzy, 1 didn't realize that my stop-buy order, which 1 tried to cancel, wasstill open.  Before I could sneeze,  I got a confirmation that my order for 200shares  was  filled  at 46  5/8.  This  is  not  very common,  but  in  fast  movingmarkets,  it's  very possible  to  get delayed confirmations.  Since my stop  buyorder was  on  ARCA,  cancellations can  take a  while,  because  ARCA  breaksdown  the order and  preferences  Market Makers,  who  hang  on  to  the  order  for30  seconds  and  sometimes  longer.  Since  I  only wanted  600  shares,  and  thestock  was  at 48,  as  soon  as  I  realized  I  had  more  shares  than  I  wanted,  I  en-tered  a  sell  order for 300  shares.  I  got  a  fill  at 47  3/4.
Source
Investment
Proceeds
Power Scan
14,006.25
14,325
MBT
10.30
P&L
308.45
Return
2.20%
XLNX  showed  up on  my 52-Week  High  Scan.  II had  been  moving  up nicelyover (lie last eight clays.  I was looking to capitalize on continued strength inthe stock.
I  bought  100 shares of XLNX at 87  1/4.  The stock went as  high  as  87  11/16.BEST was the Ax, and he was not  letting  it go any higher.  I sold  100 sharesat 87  7/16.  The stock went down  to  86  7/16 and  traded  backup.  I  bought100 shares at 87  1/16 and  decided to hold it overnight.
Source
Investment
52-week High
8,225
Proceeds
8,243.75
MBT
10.30
P&L8.45
Return
0.1%
76
77
The market closed, and WAVX was moving higher in after-hours trading  Idecided to sell another  100 shares to manage risk more effectively  I ex-pected WAVX  to  take  the 50 3/4  top out tomorrow,  based on  the strong momentum it had today.  However, I wanted to lock in more profits, so I sold100 shares at 49 11/16.
Source
Investment
Proceeds
Power Scan
4,681.25
4,968.75
MBT
10.75
P&L
276,75
Return
5.91%
The market was mixed today, but the bears were showing more teeth.  TheNasdaq  lost four points since Friday's close.  I wasn't so crazy about themarket overall,  but  1 did  like  the two stocks  I was  in.
Open positions:  100 XLNX, 400 WAVX.Total  profit  for 3/27/2000:  $991.97
Day Six Lessons
Learn all the behind-the-scenes risks.
Interaction  with  other traders can be very beneficial.
Selling naked options is very risky.
There is nothing wrong with sleeping in if you have noopen  positions.
CHAPTER
to
When the Guru Speaks, We Should All Listen
DAY SEVEN
Tuesday,  March  28,  2000
I had no problem getting out of bed this morning.  In fact, I was looking for-ward to the opening of the stock market.  I turned off my alarm as soon as itwent off, and jumped  into the shower.  I took a quick shower this morning asI was anxious to get to my trading desk, and watch the pre-market action onmy overnight positions, WAVX and XLNX.  I  turned on  the computer andsaw that trades on WAVX were taking place north of 50.  It is going to be agreat day, I thought to myself.  1 then turned on the TV and noticed that thefutures were trading down sharply.  This was a warning sign.  The reasonthey were  trading down  was  because  Abbey Joseph  Cohen  from GoldmanSachs recommended that investors reduce their asset allocation to stocksfrom 70% down to 65%.  The Guru who has  been famously bullish on themarket is recommending a reduction of exposure to  stocks. .This was not agood sign  at all.
WAVX started to trade  down,  and I  sold 400  shares  pre-market at 49  1/8.My reasoning was that the market will be weak at the open, because thosewho cannot sell pre-market will have their market sell order go live at theopening bell.  This will create selling pressure, which will also trigger manystop  loss orders.  I call it the domino effect.  I was not going to take  that risk.I had profit in the trade, and I took it.
As you can see on the chart on  the next page, when  WAVX finally openedfor trading,  the first trade took place at 48  1/8.  The stock then tanked reallyhard, and it went all  the way down to 42  in seven minutes.  It would havebeen  impossible to get out at a decent price had  I waited  for the open.  Myanalysis was right on the money.  It was nothing more than common sense.
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Although it sounds like common sense to me today, I didn't understand thisconcept in  the past.  The reason was that I  was often in love with a stock orwith the setup I was trading.  I just "knew" the stock was going to make abig move, and that I was going to make a killing on it.  I would be countingthe money and spending it before the market would even open.  This was mysubjective point of view, where the obvious is disregarded.  However, after Ipaid my tuition, I learned a few valuable lessons, and one of them was to al-ways analyze my positions and the market in an objective way.  I would letthe market guide me regarding what it wants to do, rather than me trying todictate  to  the  market  what  to  do.
Source
I n v e s t m e nt
Proceeds
Power Scan
18,738
19,650
MUT
31.54
P&L
880.46
Return
4.70%
I was so preoccupied with managing the risk on my 400 share position ofWAVX  that I was not paying too much attention to XLNX. As soon as  itopened, however,  I entered a sell  order, and was able to get out of my  100shares  at  86  3/4.
Source
Investment
Proceeds
52- Week  High
8,706.25
8675
MBT
10.29
P&L
-41.54
Return
-0.48%
I was watching my Constant watch list and noticed that QCOM had a strongshowing  this  morning.  I  bought  100  shares  at  152  15/16.  The stock went  ashigh as  153  7/8 and pulled back.  My price target was  160;  however, themarket was weak,  so  as  QCOM  traded down,  I sold  it at  152  11/16.
80
81
Source 
Investment 
Proceeds 
Constant List 
15,293.75 
15,268.75 
MBT 
10.51 
P&L 
-35.51 
Return
-0.23%
times during the day at intraday support  levels;  however,  I was never suc-cessful  in getting a  fill.  JNPR was closing the day on a strong note, and  Ibought  100  shares  at  307  23/32.  The  stock closed  at  307.
JNPR now trading higher after-hours.  Trades were going by at 312.  I en-tered a sell  order at  314  15/16 on  the  Island  ECN  and went to the dentist.My logic was  that  if I was going to be able to sell  the stock almost eightpoints higher than its closing price, it wasn't worth taking the overnight risk.I can always buy it back the next morning if I still like it.  While I was get-ting my teeth cleaned, someone bought my  100 shares, so  I sold  100 sharesat 314  15/16.
Source
Investment
Proceeds
Power Scan
30,771.88
31,493.75
MBT
11.05
P&L
710.82
Return
2.31%
The bears won  the battle today.  The Nasdaq  lost  124  points  from yester-day's close.  I had a great day,  because  I got out of my WA-VX pre-market.  Ifelt that my MRVC open position was very risky; however, I felt that mysmall relative position should not get me into a deep hole.  But you neverknow what can  happen  the  next morning  ...
Open positions:  150 MRVCTotal  profit  for  3/28/00:  $1,514.23
Day Seven Lessons
Learn how to manage risk pre-mnrkct and after-hours.
Let the market tell you what it wants to do.
Be  objective  when  you  manage  your  positions.
can  be time consuming, and  very dangerous.  Also, I can only enter a stoploss order in round lots on ARCA.  I  sold 50 Shares  at  113  15/16.  The  stocktraded as high as  115  3/4.  I placed my stop loss  at  113  1/2.  The  stock  tradeddown through  113  1/2, and my  stop  was  triggered.  I  wasn´t  able  to  get  out  of7/16.100 
shares 
until 
price 
112 
fell 
the 
to 
Yikes!  How classic is this?  I buy the  high of a breakout and  the stock tanks.My price  target for INTC was  140, and  my stop  loss was placed  nt  136  1/2.The stock traded down  to  136  1/2,  and my stop  loss was triggered.  I sold100  shares  at  136.
INTC pulled back  from  its 52-wcck high and found support around  135.  Itthen traded higher, and was just about to breakout to a new intraday high.
While  I  was  in  INTC,  ORCL was  breaking out of an  ascending  triangle.  Thepattern earlier looked like a double bottom around 84  3/4, and a trend  rever-sal with a possible test of 86, and  maybe even a breakout passing 86  1/8  toan intraday high.  I bought ORCL at 85  1/2, placing a stop loss at 85  1/8.
The stock did break out successfully, so I bought  100 shares at  137 9/16.
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"Tony!  It is  a  great day.  Put everything  behind  you.  Go  up  there  and  takemoney out of the market!"  I  have  found  this  method  to  be  very powerful.  Ithas worked  really well  for me on  days when  I  held  large positions overnightand  something  went  wrong  the  next  morning.
I  went back upstairs  and went into shock,  seeing  what the  Nasdaq  was doing.It was  down  almost  200  points  from  the  morning  highs.
I  needed  a  low  risk  trade  to  get  back  on  track,  so  I  was  looking  for  a  possibletrade  at  support  levels.  SLTNW  was  trading  at  support  levels  around  96  1/2,which  was  the  top  of the  early  morning  trading  range  on  3/23/00.
It  looks  like it  is going  to be a  very long clay.  ORCL pulled back and mystop  loss  triggered.  I  sold  100  shares  at  85.
It wasn't  like I  was  loosing a  lot of money,  but it certainly felt that way.  Iwas  making all  these breakout plays, and I was getting slapped.  I was  veryupset, and the market was starting to look very ugly, so  I took a little break.
1 wanted a breath of fresh air, so I went out on the balcony.  We live on topof the mountain overlooking the saddleback valley.  Things are so peacefulwhen  you  are up  high  enough.  I can sec all  the cars on  the main streets, yet Ican't really hear them.  Once in a while, I will hear the kids playing at theschool down the mountain.  On a clear winter day,  I  can see snow on  top ofthe San Bernardino mountains, which arc more than sixty miles away, andon the 4th of July,  I can sec fireworks go off in as many as  11  differentplaces.  I  have spent  many crucial  moments  in  my trading career right hereon  this balcony.
When I  feel  like I am struggling, yet, I  feel there is a good opportunity tomake money in  the  market,  I  take a break.  I  go downstairs  to our balconyand  try to  regroup.  While  standing on  my balcony,  I  close  my eyes  and  lis-ten  to  the  sounds  coming  across  from  various places.  Sometimes  I  hear thekids  playing,  sometimes  I hear a big truck, sometime the wind  blowingthrough  the pine trees, and sometimes,  I hear the  birds singing.  I try to relax.I  lake a big deep breath, and I blow the air out slowly.  I  then tell  myself,
88
89
SUNW  bottomed at 96 3/8 and started  trading  higher.  I  bought  100 shares at96  15/16, and  100 shares at 96.93.  I placed a stop  loss at 96  1/4, which wasjust below today's  low.  My price  target was 98  3/4 - 99  1/2.
The Nasdaq  was  trying  to  bounce and move over 4700, at which  point  I  waslooking at ORCL.
SUNW soon traded as  high  as 98.  I raised my stop  loss to 97  1/4.  The stockturned  back down and  my stop  was triggered.  I sold 200 shares at 97  1/4.
ORCL seemed  to  have  found support at 82  3/4.  It was  in the process  of con-firming a double bottom pattern.  I bought 200 shares at 83  21/32.  I placed astop  loss at 82  11/16,  which was just below the double bottom  lows.  Myprice  target was  85  1/2.
90
91
After a feeble attempt at a rally, the Nasdaq turned down again and was onthe way to test the previous lows at 4660.
The Nasdaq made a slightly lower low at  12:50, and started moving back up.I was  looking at MRVC  for a possible bounce play.
I  was nervous  about the weakness in the Nasdaq, so I sold 200 shares ofORCL  at  84.
MRVC  was  trading  around  the  lows  made  back on  3/21/00.  It  looked  like  ithad  good  support  at  100  or so.
92
93
The stock had traded as low as  101, and after bouncing to around  102, wastrading in a tight range for 15 minutes or so.  The volume started to rise andthe stock moved up a bit, so  I bought  100 shares at  103.  My price target was106-108.  I placed a stop  loss at  101  7/8.  The stock traded up  to  105,  butjust couldn't make it any higher.  It looked weak, so I sold  100 shares at104  3/8.
the bottom at  10:00).  I placed  a stop  loss at  183, just below today's  low.
YHOO hit resistance at  188 3/4 and turned back down.  I sold  100 shares at187.67.  I was looking to buy YHOO again if it pulled back.  YHOO pulledback to  185  1/2,  and I bought  100 shares again at  185  1/2.
While I was  in the YHOO trade, I bought  100 SUNW at 97  1/2 and sold  it at993/16*.
Although I had five winners in a row following my balcony-break, I wasn'tmaking much money, and I still felt there was a struggle going on.  I wantedto give my YHOO trade a chance.  I saw that it was getting weak, and I wasin  the money, but I didn't move my stop  loss  up.
YHOO held the 184 level and was trading in a tight trading range.  I bought100 shares  at  185  1/2.  My price  target was  194-191  (the  top at  10:30 and
*In  the  flurry of all  the  activity,  the  charts  for  this  trade  did  not  get  captured,  sorry.
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95
YHOO  broke  down  hard  and  broke  the  low  of the  day.  My  stop  loss  trig-gered,  and  I  sold  100  YHOO  at  182  1/16.
Day 
Eight 
Lessons
When  and  if you  are  struggling,  learn  to  take  a  breakregroupand 
The  market  is  always  right.  The  prints  don´t  lie,  sotape!with don't 
argue 
the 
This  last  trade  was  a devastating  blow  to  my confidence.  In  the first ninedays  of the  challenge,  my  biggest  loss  was  $202.  I just  lost  $354  on  YHOOto  close  the day,  but what was demoralizing about it was that the total profit Imade  on  the previous  five  trades,  which  were  all  winners,  was  $593.  I justgave  back  more  than  half of it  on  my  last  trade.  The  break  I  took  to  regroupearlier helped me turn the day around.  Now, I  have  to take another breakand  regroup again.  Although  my exit wasn't all  that  bad  considering YHOOdropped  another 8 points  over the  next  15  minutes  from  where  I got out,  Ifelt  I  should  have seen  it coming  and  bailed  out of the  Irade earlier, some-where around  185  1/2.  My critical blunder was  to argue with  the tape.  Andwhen you do  that, you  lose!  The market is always right.
When  the  final  bell finally rang,  the  bears  were  in  total  command.  TheNasdaq  was  down  a  whopping  189  points  from  yesterday's  close.  If youhaven't guessed  it  by  now,  there  were  no  high  probability setups  for a  longposition.  I went to bed  flat.
Open  positions:  NoneTotal  profit  for  3/29/00:  $319.27
96
97
Awakening  of the  Bears
DAY NINE
Thursday,  March  30,  2000
Following the  189-point decline the Nasdaq had yesterday, the  futures wereindicating a very weak opening for the market.  I wanted to take the day off,but  I  was  thinking  that  I  might  find  some  bargains  if I  traded  today.  At theopening bell, the Nasdaq gapped down  109 points and opened at 4540,which  was  right  at  the  50-day  moving  average.  It  was  down  10.6%  from  theintraday high it set on Day Five of this challenge.  The Nasdaq is officially incorrection territory, the fourth time this year.
Bargain hunters were all over the place and the Nasdaq shot up more than140 points  in the  first 35  minutes of trading on big volume.  I tried to buySUNW,  ORCL,  and CSCO, but they were  flying,  and  I missed  all  entries.  Idecided not to chase any of the stocks.  I was going to wait for a pullback.
What took place next was very painful to watch.  I saw a small fortune thatcould  have  been  made,  had  I  gotten  those  fills  earlier,  grow  bigger  and  largerwith every tick.  I knew that the top was near, and I took my sniper position,waiting for the pullback.  I had not yet gotten over my frustration, so I wasn't
99
as focused as 1 should have been.  In hindsight, it would have been a perfecttime to go out to my balcony and regroup.  But, how could I?  I was a raven-ous animal smelling blood.  I couldn't afford to miss my meal.  I already didthat once today.
SUNW bounced at 95  numerous times.  The support level was holding; how-ever, with the Nasdaq breaking down, I was afraid SUNW was going to tankhard and that my stop at 94  15/16 could possibly not get executed until drop-ping to 94.  I decided not to ignore the tape, and I sold 200 shares at 95  1/16.
I got the pullback 1 was looking for, and I bought  100 shares of SUNW at96  11/16 and another  100 shares when it dropped lower to 96.  I placed astop loss at 94  15/16, which was below the 95 support level for the stock.My price target was the high of the day, 99  1/2.
Oh, oh.  The Nasdaq took out the low of the day, which indicated a reversalpattern.  The street was once again flooded with sellers.
The Nasdaq kept declining and  it found some support at 4500, where itformed a double bottom pattern.  At about  1:15, it started to trade back upand was  again  at 4550.
100
101
CSCO  followed Ihe same  pattern  and  it bounced at 73.  I bought 300 CSCOat  73  1/4.  My price target was  75.  I placed a stop  loss at 72  15/16, whichwas just below the 73 support.
Whew!  SUNW went as low as 93 after I sold it at 95  1/16.  I was followingit closely  for a possible reentry.  The stock started trading higher and Ibought 200 shares at 94  1/2.  I now had three open positions.  1 felt good be-ing in my positions as they were all  showing me some profit.  My P&L  wasover $800.  I decided to  let my positions wiggle.  I  had Jesse  Livermorewords  in  my  head,  "Men  who  can  both  be  right  and sit  tight  are  uncommon."I  felt that the market was oversold, and that I  might have just bought the bot-tom.  I was willing to bet my profits on that.
QQQ  also  had a double bottom pattern at  107.  I  entered a market order tobuy 300 shares, and  I got taken advantage of by the Specialist.  I bought 300shares  at  107  7/8.  If you  have  never  traded  QQQ  before,  you  probably  don'tknow how the Specialist w i ll open the spread on the stock.  And, it is almostimpossible to try and split the spread, so a market order is almost the onlyway to get  in.  It is  very common  to sec  the  spread  at a point or more on  theASE specialist quote.  I placed a stop  loss  at  116  7/8, which was  below the107 support level.  My price target was 111.
CSCO  broke down  and  triggered  my stop  loss.  I  sold  300  shares  at  72.94.
102
103
QQQ broke down as well, and I got taken advantage of again by the special-ist on  the execution of my stop  loss.  I sold 300 QQQ at  106 33/64.
The Nasdaq took out the low of the day, and  I  sold my positions for a totalloss of $708.  I was thinking about Livcrmore's  famous words again, "Menwho can  both  be  right and sit tight are  uncommon."  I  was  sitting  tight,  but Iwasn't right.  I was WRONG!  I  let an open profit of $812 turn into $708loss.  I  went from having a profitable day to  having a losing day.  I wasn'tvery happy about that.  I lost on each of the four trades I made today, so Ineeded a good trade to make a little bit of money to build my confidenceback  up.
As  the market disintegrated,  my stop loss on SUNW was triggered as well.  Isold  200  shares  at 93  5/8.
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105
YHOO had an interesting setup where the stock was trading around  165,which was  the support  level  on 3/20/00.
YHOO bounced at  165  and  looked strong.  I bought  100 shares at  167 3/32.1 thought the stock could go to  169  1/2.  I was trading strictly off the Level IIactivity, and  I was ready to sell at the first sign of weakness.
My love affair with SUNW was not over.  After penetrating through supportat 93.  The stock traded as low as 92  5/8.  It then snapped back up and tookout the 93 level.  Little did I know it would be a perfect fake-out, merelythere to mock me.  I bought 200 SUNW at 93  1/16.  The stock lost steam andwent below 92  5/8.  It triggered  my stop  loss,  and I sold 200 SUNW at92  3/8.
YHOO went up as high as  168  1/2, but was getting weak, so I sold  100shares at  168 3/16.  This was no home run, but it made me feel good.  It wasthe first trade of the day in which I actually cashed in profits.
106
107
SUNW traded all  the way down  to 90.  I really wanted to buy it there, but Iwas having a bad day and was getting gun-shy.
I watched SUNW go up 2  1/2 points from the low.  It was running.  The mo-mentum players were jumping on board, and the shorts were gettingsqueezed.  I liked what I saw, and I wanted to finish the day on a positivenolc, so I threw my hat in the ring and bought 200 shares at 92 59/64.  Myplan was to sell the stock near the close.  SUNW hit 94 with only eight min-utes left in the trading day.  The bears were growling and the stock could notgo any higher.  I sold  100 shares at 93 3/4.  Another two minutes went bywithout any price progress, so I sold the remaining 100 shares at 93  11/16.
Ding! Ding! The final bell rang as the bears were now completely awake.  Itwas another brutal day for the bulls as the Nasdaq dropped J86 points fromyesterday's close.  It has