 learned  a great lesson this weekend watching the evident painon my brother's face.  What was amazing though, he didn't complain aboutit even once.  On the  contrary,  I  saw pride  in  his  eyes.  He  is proud  of his  ac-complishments, and above all, he is doing something he truly loves and en-
joys.
Although my motivation  is not as pure as my brother's, since there is a lot ofmoney on the line in my profession, I still  felt that I had something in com-mon with him.  We both love,  and are proud of, what we do.  I  truly lovetrading stocks, and I consider myself very fortunate to be able to do it full-time.  If you ever wanted to take on this profession,  I  think it is very impor-tant that you understand that the most important aspect of trading stocks  for aliving  is  having  fun with  it.  Do  you  look  forward to  the  open of the marketeveryday?  Does  the  market  still  interest you?  You  must  have  a passion  forthe  market and truly enjoy what you  are  doing.  It is  no  secret that most peo-ple can only  excel  at  something  they truly enjoy doing.
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I  did  an  extensive  research  this  weekend,  and I  came  to the conclusion  thatthe market might be weak  over the next  few  days.  The reason  I  came  to  thisconclusion  was  simply  because  tiie  Nasdaq  has  bounced  800  points  from  thelow  it set on Tuesday to  the closing  number on Friday.  This was quite a run,and  it may be time  for a  rest.
90  - 92.  ALTR traded up  to  89  1/2,  which was  the previous support level  at12:45  PM.  This  support  level  was  penetrated and  now  was  acting  as  resis-tance.  Once  I  saw  ALTR could  not  break  through  the  resistance  level,  I  sold200 shares at 89  1/16.
The  Nasdaq  gapped  up  and  sold  off sharply.  The  classic  morning  bounce,which took  place at 9:50,  was weak.  The  index  then  flat-lined and  traded ina tight channel  for two hours.  At  12:45,  it started to sell  off sharply.  Itfound some support around 4270  and started  bouncing  back up  around  1:45.
At  the same  time  I  was  in  ALTR,  I  also  bought 200  KLAC  at 90  1/4.  Myprice target was 94.  I  placed a stop  loss  at 89  11/16,  which was below  to-day's low.
As  the  index  bounced,  I  bought  200  shares  of ALTR  at  87  7/8.  I  placed  mystop  loss  at  87  1/8,  which  was  below  today's  low.  My price  target  was
KLAC  had  a very quick bounce.  It went as  high  as  92  1/2,  which was  the
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price level of the morning lows.  It pulled back a little, then tried to make itto that price level again at 2:18, but failed to do so.  It turned back down, soI sold 200 shares at 91  1/8.
flae  it set from  12:45 -1:10 prior to breaking down.  I was hoping to get alittle bit more  out of each one  of these positions  than the  very next resistancelevel  so I did not have sell orders ready at those levels.  I wanted to giveeach'one of my trades a chance,  therefore, I didn't capture the maximumhindsight profits.  Once 1 saw AAPL was struggling, I sold 200 shares at
128.
While I was in both ALTR and KLAC, I also bought 200 shares of AAPL at127  1/16.  My price target was  130-131.  I placed a stop loss at 125  15/16,just below today's low.
If you watched any of these three examples carefully, support and resistancewere classic.  AAPL topped at  128 7/8, which was the bottom of the bear
While  I was  in KLAC, ALTR and AAPL, I also bought 200  shares of INTCat  135  1/8, also playing a bounce off the bottom.  My price target was136  1/2, and I had a stop loss placed at  134 3/4, which was just below to-day's low.  I had been managing four open positions at the same time.  INTCran up to  136  1/2.  I did have a sell order for 200 shares at that price, but, Ididn't get picked up.  The stock then reversed and traded lower.  I cancelledmy limit order to sell for  136  1/2 and sold 200 shares at  135  15/16.
I closed all four positions, and I made a total profit of $715.00.  It was nohome run, but it felt good to  start the final week of the challenge with fourwinners.  As the challenge was entering its last week, I was feeling more andmore relaxed.  I would be lying to  you if I said there was no  added pressureto perform well during these four weeks; however, I felt that I was just doingmy usual thing - trying to take money out of the market.
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When I was planning for this last week of trading, one of my goals was totrade smarter than I did in the previous three weeks.  When I log into mytrading software every morning, I have to enter my password.  I feel that Ishould tell you what my password is (which means I will have to change itonce this book is published).  My password is "Trade Smart."  This has beena good reminder every morning before I execute my first trade that my firstgoal in trading is to trade smart.
From the time in which I closed my positions to the closing bell, the marketwent straight down and closed al the low of the day.  The Nasdaq was dpwn287  points  from  the open  and  closed  clown  258  points  from  Friday's  close.The bears were once more in the driving seat.  For obvious reasons, I did notcarry any long positions overnight.  I managed to have a positive day in a bigdown market and  that was a great  feeling.  1  felt that I traded smart today.
Do You Believe in Free Money?
This is going to make a very interesting lesson; however, I must disclose thatI might never again be able to do what I am about to tell you right now, any-time in the future, nor that I was able to do it in the past.
The following is a chart of KLAC.  It was the second stock I traded today,and it is a stock I watch on a daily basis.  It is on my Constant watch list.  Ibought KLAC earlier today at 90  1/4, and I sold it at 91  1/8 around 2:20.  Asyou can see the stock sold off hard and closed the day at 83  13/16.
After the bell,  I was entering my executed  trades  into my journal.  I waswatching the after-hours action on  the  four stocks I traded earlier.  KLACLevel  II  montage  looked  like  this:
The  spread  opens  up after-hours, because the market is not very liquid.  Thebest  bid  for  KLAC  as shown on the Level II montage is at 81  for 100 shareson the REDI  ECN.  The second best bid is for 200 shares on ISLD ECN at80, and for 300 shares on INCA ECN. The best offer is 84 7/8 for 100
shares  on  ISLD ECN. The second best offer is at 85.  There are 600 sharesoffered at that Price on REDI ECN, and 700 shares offered at that price on
INCA  ECN.
Something very interesting happened next.  There was someone who reallywanted to buy KLAC, and there was someone who really wanted to sellKLAC. They both entered orders almost simultaneously.  This is what theLevel II montage looked like.
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I couldn't believe my eyes.  Before you could say "click,"  I already clicked
on  the offer  and bought 300 shares at 81  1/8 on ISLD.  I  immediatelyclicked on  the bid and sold 300 shares at 84 using ARCA.
After the last order was executed,  the Level II  montage  looked  like this:
The Level  II  montage  looked  like  this  for another fraction of a second or so:
I did  it again,  buy 300 at 81  1/8 on ISLD, sell 300 at 84 on ARCA.
After these orders were executed, the Level II montage looked like this:
The  100  shares circled on  the Bid on ISLD were the  left over of my  last or-der to buy 300 shares on ISLD.  I cancelled  the order for the remainingshares.
That was  a lot of fun wasn't it?  I  realize  that many of you are confused  anddon't understand exactly what took place.  To simplify things, think of it astwo different exchanges.  I bought KLAC  from one exchange,  and I  sold iton another exchange for a higher price, because the buyers  there were will-ing  to pay more.  You  may also  be confused by  the  fact  that  I.entered  my sellorders  on  ARCA  when  the best bid  at 84  was  on  INCA.  The  reason  I didthat is simply because ARCA has a direct link to INCA, so it was a quickerway for me to enter the  order before someone else would have  seen what Isaw  and would have nabbed the shares before I got to them.  It would havetaken  a while for me  to check the  SelectNet Preference box etc.  If you no-tice,  my orders  were entered  in  multiple of 300  shares.  The  reason  is  mat mydefault was set that way.  I was not going to try and change the number ofshares in my default, that would have taken a few precious seconds andwould have possibly taken the opportunity away.  I had to be fast.
I agree this is not exactly free money, but it wasn't my birthday, so  it felt likeit was.  I now felt that this is going to be a great week.  I have a feeling Iwould be talking about this last trade for a long time.  It would be very chal-lenging to try and explain it to my wife tonight.
Three time is a charm.  Buy 300 at 81  1/8,1 only got 200 shares  filled  because  that was  all  that was  left on ISLD.  Sell 200 shares  at  84 on ARCA
Open  positions:  NoneTotal  profit  for  4/10/00:  $2,970.76
Nasdaq Looking for Support
DAY SEVENTEEN
Tuesday,  April  11,2000
The sell  off yesterday indicated  that caution must be  taken  today.  TheNasdaq  closed  at the  low  of the  day,  which  indicated  that  there  was  an  80%chance of making a  lower low today.  Anytime an  index closes at the bottom10% of its  day's  trading  range,  there  is  an  80%  chance  of making  a  lowerlow  the  following day.  If an  index  closes  at the  top  10%  of its day's  tradingrange, there  is an  80% chance  it will  make  a  higher high the  following day.The  higher high or the  lower low can take  place  anytime during  the  day,  sothese stats do not necessarily imply that the  index will actually gap open  tothat  higher  high  or  a  lower  low.
The  futures  were  down  sharply this  morning  and  tech  stocks  were  tradinglower in  pre-market trading.  When  the  opening  bell  rang,  the Nasdaqopened down 94 points.  I was  in my sniper position watching my Constantlist of stocks  for  a buy-the-dip  opportunity.
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Following  its 94 point gap down,  the Nasdaq sold off another 85  pointswithin  the  first  15  minutes,  and  was  down  179  points  from  yesterday's  close.The  Index  found  support  at 4015,  and  turned  back up.  4100 was  about
where it opened, and served as resistance around  10:00.  The index  turnedback down, again,  to the 4020  level.  We were now in a defined channel be-tween 4015 which is the support level and 4100 which is the resistance level.
AAPL was trading around  120.  It just broke under its 50-day moving aver-age,  and  I  felt  that the  120  level should be good support for the stock.  If thatlevel is to hold, I felt that AAPL should go back to the 132 level, which wasthe top area during the previous four days and in the beginning of March.
AAPL hits the first level of resistance at  121  1/8 at  11:57 and turns backdown slightly.  I am giving it a little bit of wiggle room at this point.  Thestock makes another attempt to take out the resistance level at  12:06 but isonly able to trade  1/16 of a point higher than the high at  11:57.  This was asign of weakness, so  I  sold 200  shares at  120 9/16.
The Nasdaq  held the 4020  level  and started to move back up.  AAPL seemedto have found a bottom as well.  Note how the volume was drying up from11:15-  11:35.  The volume increased and AAPL penetrated through  119.  Ibought 200 shares at  119  1/16.  My price target was  122 -  130.  I placed astop loss at  118  1/8, which was below today's low.
INTC  had  a strong  showing.  Once  the Nasdaq bounced,  INTC outperformedit and broke out to a new intraday high at  11:55.  I was waiting for INTC topull back.  I had a buy limit order in at  130  13/16, which was  1/8 of a pointhigher than the morning top  (9:30).  INTC pulled back and I got a  fill.  Ibought 200  shares  at  130  13/16.  I placed a stop loss  at  129  15/16.
INTC bounced at (he support level of 130 3/4.  It was gaining momentum,and it penetrated through  132.  The action on the Level II screen suggestedthat INTC had lost momentum.  I moved my trailing stop up to 131  15/16.INTC went under  132, and I sold 200 shares at 131  15/16.
KLAC bounced at support, but it hit resistance at 88 7/8 around  1:30.  Fif-teen minutes later, the stock traded through 88 7/8, but could not go through89.  MSCO was axing the stock at 89.  He was the only one at the inside of-fer.  Note the volume spike when KLAC was trying to take out the resis-tance.  Once I saw that MSCO was not likely to leave his inside offer posi-tion, the stock started to tick down, and I sold 300 shares at 88 5/8.
I have just completed my third trade of the day, and I was up almost$800.00.  It was a great feeling.  My confidence  level was very high as Ihave completed ten trades this week without a loser.  I wanted to enjoy themoment, so I went down to my balcony for some fresh air.  Prior to me leav-ing the trading desk, the market started to sell off.
As I was watching the kids playing in the school yard down the mountain, Iwas recapping everything that has been taking place during this challenge.  Iwas trying to analyze my performance so far and compare it to my expecta-tion levels prior to entering this challenge.  Although the dollars and cents domake all the difference in the world, the two most important things I wantedto accomplish were not to break any rules, and to trade smart.  I really be-lieved the rest would take care of itself.
At the end of every trading day,  I  asked  myself if I  had broken any of therules and if I was trading smart.  And, with three and a half days left in thechallenge, I was asking myself whether the rest actually did take care of it-self.  I then remembered that it is not over until the fat lady sings, and I had
KLAC pulled back from the day high of 90, and was trying to bounce at thesupport level created by the tops it had between  11:00 -  11:45.  I bought 300shares at 87 5/8.  I placed a stop loss at 85  15/16, which was just below thehigh the stock made at  10:06.  My price target was 92  1/2, which was resis-tance when I traded it the previous day.
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better walk upstairs and see if I can find high probability setups.  I felt reallygood as I was making my way to my trading desk.
While I was downstairs for the last 10 minutes, the Nasdaq pulled back fromits  high.  It was  hitting intraday support levels, which I felt should  hold.
The Nasdaq broke down through the support level.
I still had KLAC on my primary order entry Level II screen, and as theNasdaq was hitting the support level at 4138, KLAC was trying to bounce at87 or so.  I bought 200 shares of KLAC at 87  1/16.  Note that KLAC wasalso trading in a channel between 87 to 89.  If KLAC bounces with theNasdaq, I can expect it to go to 89 again.  My conditional stop loss wasplaced at Nasdaq 4132.
As the index took out the 4132  level, my stop loss was activated.  I sold 200shares  at  86 25/32.
My perfect week was now over.  I have taken my first loss of the week.  But Idid not feel bad about it at all, because I executed according to the rules andguidelines of my trading plan.  The trade answered the criteria prior to enter-ing it, so it wasn't a loss caused by breaking the rules.
The Nasdaq found support at the morning highs - 4100.  I bought 200 sharesoMNTC at  132  1/4 when 1 saw that the 4100 level was holding.  INTC wentas high as  133, then started to pull back.  I sold 200 shares at  132 9/16.  Un-fortunately, we only captured the Nasdaq chart at the time.  However, it wasthe Nasdaq chart that prompted both the entry and exit of this trade as shownabove.
INTC traded back down to support.  I bought 200 shares at  130 5/8.  I placeda stop loss at  129  1/2.  My price target was  133  -  134.
The trading Gods were not answering my prayers this time.  INTC bid hits129  1/2, and I was stopped out of my position.  There was so much size at129  1/2, that it was painful to see my stop loss order go live and sell me outof the trade.  In fact, all the ECNs were lined up to buy INTC at  129  1/2, andI  got a price  improvement of 1/32  on  my order.  I sold 200  INTC  at129  17/32, only to watch it begin racing back up  to  133  1/2  over the next 25minutes.  My stop loss got me out at the absolute low!  Can you feel mypain?
Do you remember my second trade of the day,  in which I bought INTC at130  13/16, which was just above support?  I  will be trying to make the exacttrade again.  Note the  130  1/2 morning high is the support level I was play-ing  off earlier. 
K
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The bears are still in the driver's seat as the Nasdaq lost  132 points from yes-terday's close.  In this down market, I felt that I was trading very well, yet Iwasn't making oodles of money.  I think I was still riding high from Mon-day's after-hours trading.  In any case, I did have five winners and two loserstoday.  The last trade I made was a close call as the stock bottomed exactlywhere my stop loss was placed.  However, I managed risk according to myplan, so I couldn't be upset about it even though INTC hit my initial pricetarget.  It is very painful when it happens, but tomorrow is a new day.
Open positions: 200 INTCTotal profit for 4/11/00: $577.00
I really  liked  the  fact  that  the  Nasdaq  held  the 4015  - 4020  level.  I  felt  that itmight  have  found  support,  and  I was  willing  to  put my money where mymouth was.  I was going to cany a long position overnight.  My stop loss onthe position will be if the Nasdaq breaks below 4000.
I chose to  buy INTC, because it showed strength all day.  In case you didn'tfeel  my pain when I sold INTC at  129  1/2 at 3:25, please look at the abovechart and see for yourself how every uptick was pulling another hair out ofmy balding head.
I bought 200 INTC at  131  13/64 and took it to bed.  I felt really good aboutNasdaq's ability to hold 4000.  I am going to make a killing on this trade to-morrow, which will more than make up for the last loss I took on it.
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Sweet Dream or a Nightmare
DAY EIGHTEEN
Wednesday, April  12, 2000
There  were times  in my career when  I slept in and woke up ten  minutesbefore or even after the opening bell.  It is not a major problem if I am notholding a position overnight, but if I am, I am in big trouble.  I will findmyself running upstairs to my office, start my trading program, and react tothe first tick I see.  I will lose all the strategy I originally had for the trade forthe simple reason  that I was not AWAKE yet.  These scenarios, althoughrare, are comparable to trading stocks in your sleep, and more often than not,it is a nightmare.  To avoid this common mistake, give yourself enough timein the morning, so you are alert when the market opens.
I had a very interesting dream last night in which I was  trading very actively.I was buying and selling stocks at lightning speed and my P&L was showinggreat profits.  At some point, I noticed that XYZ stock, whichT have soldearlier in the day,  was  up 60 points  from the price I thought I sold it at;  how-ever, instead of actually selling the stock, I bought more, and I was nowholding 2000  shares.  My open P&L was  reading +$120,000.
As soon as 1 realized that I still owned the stock, I was trying to sell it.  Butthe stock was falling down fast now, and I couldn't get out.  It was down 80points since I  tried to sell it, and I am now down $40,000 on my position.The stock now turns around and races up.  I am trying frantically to cancelmy order.  I can't get it to cancel!  The stock is up  100 points, it is  flying.  Ifinally got a confirmation that my order was cancelled.  The stock is up  150points,  but I  don't see  it  in my position window.  I  look at the confirmationscreen,  and it says that I sold it for $150,000 loss.  How can this  be?  Thereis something wrong.  I saw a confirmation that my order was cancelled, whatis going on?  Can someone help me?!  Please help me!  I can't afford to losethis much.
Suddenly, I wake up.  I am very nervous.  It was just a dream, "Relax," I  tellmyself.  I take a deep breath. But something looked very odd.  The sun wasup and it was very bright.  I turned my head around and glanced at the alarmclock.  "Oh my God!" I  screamed.  It is 6:48  AM.  I slept in.  The market is
open, and I  held INTC overnight!!!  I jumped out of bed as if I was bitten bya rattle snake.  I raced up  the stairs on  my way to  my trading desk.  "Howcould 1 have done this?" I was thinking to myself.  How am I going to ex-plain to everyone that I slept in?  I broke the rules.  The challenge is over.All the hard work is flushed down the toilet.  It took me about three and ahalf hours to start my trading software, at least it seemed that long.  INTCwas down to  129.  I didn't even try to analyze what was going on.  I enteredan order to sell 200 shares at  the market on ARCA.
losses back  All  I wanted was to wipe out the loss I  suffered on  INTC.  Iwanted to break even,  so I could  forgive myself for making a human errorand sleeping in this morning.  Obviously, I was very frustrated with myself,and I knew I just need one chance to turn the day around.  "C'mon, give mea good  setup,"  I  yelled  at  my computer.
I sold 200 shares at  128.34, and at first, I didn't know if I was awake or if Iwas sleeping, but I knew one thing for sure.  It was a nightmare.
I was certainly wide awake now!  All 1  had to do was look at my P&L for theday then glance at the INTC chart and see that I would have been in-the-green on this trade had I not slept in.  Staring at this harsh reality was likesplashing ice-cold-water in my face.
I decided to quit for the day.  I was not in the right mental state of mind tocontinue trading, so I went back downstairs and spent some time with mytwo-year-old son before he had  to  go  to school.  About 45  minutes went by,and my wife took my son and left the house.
I went back upstairs and sat at my computer.  The Nasdaq was down 200points  from  yesterday's  close.  It penetrated through  support at 4000  and wastrading at 3855.  I felt that I should have an opportunity to make some of my
The above chart shows the activity on the Nasdaq from the open to the pointwhen I went back upstairs.  It is amazing how humans'  defense mechanismworks when they screw-up.  And that was exactly what I did, and I was try-ing to make all the excuses, but deep inside I knew that I was at fault.
Taking the Blame
If you have been  in  the business long enough and have talked  to day traders,you  must have heard horror stories  of big  losses  a  day trader suffered be-cause something that was outside  of his control took place.  I couldn't tellyou how many times I  have heard these type of stories told by numerous daytraders  over  the  years.  At one  of the  Day  traders  of Orange  County  meet-ings,  a day trader was telling one of these stories.  He told us that he took ashort position  in EGRP, and the next day the stock went to the moon.  Hewanted  to  cover his  position,  but  his  browser-based  brokerage  firm  wasdown all day,  and he could not get them on the phone;  consequently, he  losthis entire account.  I felt really bad for this day trader who caught a reallybad break and lost all his money.  However,  a  fellow trader who stood nextto  me,  said,  "I don't feel  sorry for you,  it  is all your fault!"  At  first,  I wassurprised to hear what this  guy said  as  it wasn't very compassionate at  all,but then he said, "Tony, I am fed up with these idiots who come here and tellus how they lost all their money and it wasn't their fault."  I was listening
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really carefully as this guy turned to the day trader who told us the story andsaid, "You want to know why it was your fault?  Well, first, you put twicethe equity you had in your account into ONE stock - that is very stupid.Next, you chose to trade with a browser based broker, obviously you did notdo enough research to see what happens if your broker goes down.  Finally,judging from your personality, you wouldn't have taken the loss and cutyour position, because you were already down so much money in the posi-tion.  You had no plan that you were trading with, i.e. no price target or stoploss.  Frankly, I think you were in denial the entire time and as a result, blewout your account."
The day trader who just got the "speech" from the guy who stood next to me,cursed at him and walked away.  Then, this guy looked me in the eye andsaid, "1 betcha I nailed it right on the head."  I didn't say a word, but I knewthat  he  did  nail  it  right  on  the  head.
The moral of this story is very simple, you can't afford to make the mistakeof going into denial and blaming your losses on something that was "out ofyour control."  A professional day trader takes the blame for all conse-quences of his trading.  By taking the blame, a day trader can recognize hismistakes and  learn  from them.  If he doesn't take the blame and confess tobeing wrong, there is no way that he can learn the lesson.
In  my case,  the something that was  "out of my control" was my alarm clock,which was not setup properly to go off at 4:45 AM.  I later learned that myson played with the buttons and things were changed.