February 27th, I changed my mind...chart

Well I changed my mind about posting the chart for yesterday's rule breaking day.

As much as I did lose money I had fun making the trades. If I am to take this seriously I have to stop having quite so much fun until a later time when I ride some profits and use smaller positions to test other strategies...rule breaking is necessary but I should not be doing that right now.

So, here is the chart for yesterday with the trades that would have occurred Had I been diligent and followed my rules. I went back tot he trading platform and used the same charts that I use during the day and just made mechanical buy/sell decisions based strictly upon rules and the indicators that I use.

There were couple of trades that I may have let run longer as they passed the first targets so I will use those shorter runs for my calculations and add my normal fudge factors, I used middle entries if I thought that might have gotten in soon in the minute, I used worst case if the spread was not huge and I applied a 30% deduction to lower the net return number.

Stats:

18 trades
$393 net profits after fudges.

Some of the newish rules I used included paying attention to the sma squeezes as the price approached a pivot point and the sma was near and acting as a boundary...I noted these with the purple dashed lines. I would not place a long trade if the price was bounded closely above the PP BUT would use the conjunction of the sma and PP as a launching for a short trade. The 1030h trades did not pan out so well using this but I only had a small loser. The 1445h was a perfect such setup and worked well. That was one that I did take for real, although I got in a little later.

Otherwise the 50 cent entry, momentum entries, some of these I did take for some decent profits but I was just not patient or paying as close attention as I should be. Like any other plan I pretty much need to take every setup during a continuous timeframe or I risk choosing the sucker trades buy chance.

I may only trade Tuesday Wednesday and Thursday next week due to schedule constraints, and perhaps to let me be more focused while trading.

Jeff.

February 27th, breaking all the rules

I am not going to post my chart for today as I broke almost every rule that I have and I am paying the price...so I am just going to go over my "what not to do's" for this morning.

I started out the day by making a bit of a guiding plan for my trading of the Global Gold Index funds.

"Price opens high - watch for PP200 bounce on the initial reaction"

This price refers to the index price, which opened up about $8 right off the bat. I figured it might have opened a few dollars higher, but the actual numbers don't really matter.

Price jumped a bit off the start, hit and passed the R2 point. I jumped in short before the line was hit...almost a full dollar out...my rule is wait for the 50 cent range first. Had I waited, the price gapped up $1 or so...then I jumped in long farther than the 50 cent range on the other side. Seeing as I already broke this rule twice and was stung each time...why not do it again? So I jumped in short after the price was lower than 50 cents below the R2 again. Even though this was the right side to be on for the next move, I got in late enough that the small rally spooked me out for a small loss...an earlier entry according to plan would have let me ride the small rally out with more confidence.

These first three trades were not wrong...well, the second one was wrong but one wrong in three would not be bad if I had timed these entries according to my rules.

Had I waited to get short until the 50 cent range was breached I would not even taken the first trade as R2 was crossed, then tested. At this point my long entry could be taken with some confidence except it goes against my morning jotting, but it was technically OK. I would have exited for a very small loss as the price bounced back to R1. As the price crossed R1 on the way down I should have entered short. This was the move that I was looking to have happen in the first place, the bounce off of the R1 as the price closes the over night gap.

The gap was fully closed before noon. I managed to squeeze in a few decent small target trades but continued to break my rules all morning long.

I overtraded, I did not observe patience when I missed a particular indication, I played against a 50sma R1 squeeze, I entered trades too late into the momentum move, I held losers too long, I let winners pullback on me into a loss....I traded on Friday.

Based on the previous days this week I was doing OK, holding my own and learning more of the ins and outs of trading these ETFs against the index.

I am going to try using stops next week to minimize the loser trades...I figure that once a trade has broken into the profit zone I will place a stop order for 3 or 4 cents over my entry price. This will force me to at least get out at a net breakeven point. It is easy to modify the stop order on the fly in order to ratchet the stop up or even just to cancel it in order to place a market order to exit the trade.

I know that VTSOs are not immediately available with Questrade but I don't think I would use them if they were available.

So, items on next week's trading agenda:
- adhere to the 50 cent zone
- practise using the stop orders again
- observe more patience
- let the price run without me if I miss time an entry
- watch the moving average squeeze and don't play short counter trend targets
- stop trading sooner, 18 trades today is too many

Jeff.

February 26th update

I did some trading again today. I am starting to see more of what is going on in the interplay between the ETFs, the index and the stock that I use as reference. I had ten trades today and only two lost money, 6 cents and 5 cents per share. I missed out on the initial moves as I was a little gunshy after yesterdays platform fiasco...even though it went in my favour I did not expect any long initial moves today. The first rally was too early for my comfort level regardless. The pullback, although expected, came quick and I got fooled into thinking that the price was starting a new short term uptrend...so I decided to ride it out. The price never made it to the 1/2 S1 line until later so my setup did not materialize perfectly. I am starting to recognize the interaction between the price, my notations and the 50sma now, it is a stronger factor than I gave it credit for as I could have used it for my HGD trade rather than waiting for the pivot point comfirmation.

Here is the chart for the day.
Green boxes are HGU trades, red are HGD trades, blue arrows are my loser spots, very small and short so hardly worth trying to box them. The red arrows are later potential HGD trades and the green are HGU.

Once again this is only the chart for the Global Gold Index. As I am trading the Horizons Beta Pro Global Gold ETFs this is all I need to see the trades for the day.

There really was not a whole lot of large moves to catch and I was working for every penny in the morning as I played either side of S1. I could have rode the 200sma cross as I was already in ahead but chickened out on the smallish pullback. I did jump back in once the move was confirmed though, shame to have to pay two commissions for that move. The trades were sound and filled well but the overall moves were small enough that the real profits barely covered my commissions. I still came out ahead but not by much. I would have finished better had I planned on trading the day as the last setups were pretty solid. I also would have been farther ahead if I was trading a few more shares per trade...100 shares per trade more and I would have added $51 to my meager net profits and still been charged the minimum commission rate of $4.95.

The joy of Questrade's small commissions, even once I get larger than 500 shares the rate is 1 cent per share up to a maximum of $9.95. The ECN fees start to add up then as they are charged on top of the commissions. 37 cents per lot and usually, but not always, both ways at the buy and the sell.

Jeff.

Drawdowns and loss recovery

I was doing some checking into leveraged ETF performance as compared to index that it tracks to find that they are not good candidates for long term holding, they are really a swing, trend or day trading vehicle. I won't get into that here now though. It reminded me of a part of my plan that almost goes without saying, but I have never written it down anywhere.

Draw downs, whether overall losses or just profit losses do not change the target goals. Currently I still use the 1% per trading day on average as a target goal. I have not really been doing much trading lately to be able to see even that goal as I have been playing and testing for quite some time.

I read many comments and articles that talk about grudge trading or revenge trading or trading to get back lost profits or lost capital. The trouble is that a 10% loss on a $5000 account leaves $4500 left to work with. In order to get back to $5000 I would have to see a 11.1% gain. The larger the loss the greater the necessary gain to return to breakeven therefore the more work involved in trading it back.

The point is that no matter how much my portfolio is reduced, I still aim for the 1% daily average performance as it fits my timeline for my financial goals. Trading targets are just targets. Raising the target to try to cover a loss is asking for trouble as whatever created the loss in the first lace is liable to be leveraged into a greater loss again.

With a small portfolio trading one stock or ETF at a time with maximum position sizing based on the account balance, the trade size is automatically reduced after a major drawdown. This reduces the chance of trying to trade it back.

I have reset my balance a few times and just worked with what is left as the capital. My first 1% was based on a $5000 balance so a $50 day is the average target. When I started with $4000 it is then a $40 target. In March, depending on whether I get more trading in this week or not I will start with a $4200 balance. I would reset the starting balance at the beginning of each month regardless of my actual profit or loss. This is a bit of a head game as I definitely do not want to be trying for larger targets just because I had a poor run of trading.

I wonder when a profit becomes capital anyway? Personally I consider it just the balance and the capital is only ever the starting cash that is put into the account in the first place to get things going. Having said that at the begining of each month I could consider that the captial base for the month as I am always in cash at the end of the day.

I will be tracking the return on the initial cash infused into this plan at some point but it is not a target based tracking, only performance.

For example, today was a $121.36 day on one trade. That is 3% based on my $4000 at month's start.

Jeff.

Questrade and the lack of VTSO

This is an update to the VTSO situation as I realized what was going on this week, mid April.

I found out that the TSX does not support Stop Loss orders other than stop limit orders. Stop loss become market orders upon being triggered. A VTSO is basically a moving stop loss order and therefore I believe that the VTSO and stop loss order are unavailable to all TSX and TSX Venture trades. This has nothing to do with Questrade as this will be the same for all brokers unless they institute some method of providing a stop loss through their own systems.

My fix is to trade the NYSE and AMEX using similar issues. I tested the stop loss and VTSO and they are still available over there. So any that really want to use these features will have to go outside of Canadian markets to do so.

Due to my difficulties with my platform and connection this morning I had opportunity to ask about the VTSO or Virtual Trailing Stop Order.

I won't get into the technicals as far as how these work, that is in my index if you need to check it out.

Questrade has not allowed VTSOs for about three weeks now due to some difficulties with executions and the trading platform. I did not ask about a re-instatement timeline but I will do some followup on this as I am curious.

I used to use VTSOs for exits while I was playing with a medium term strategy a while back and they did not do me any favours, nothing against the executions, they worked fine. It was just the fact that a trailing margin is tough to pick for a low volatility stock let alone for what we are experiencing now. Even manual chart stops, my favorite, would be getting nailed left right and center so I have not used any stops in some time.

In daytrading stops are not as necessary but are still prudent. Today was a case in point. Had I placed stop order I would have been protected had the trade go against me and it would at least serve as a safety or stop loss protection. As it turns out I could not have placed the stop anyway...although the market order did get executed so perhaps a stop might have gone through had I tried.

For the record, i was going to place a 15 cent trailing stop on my HGU position today had I been able to.

I am going to guess that Questrade needs to ramp up their platform and throughput to accommodate the higher volume of traders that they are no doubt seeing of late.

On a sidenote:

They are having a chart tracking issue which is to be resolved by Friday, perhaps the VTSO might be rectified as well. Apparently they were not aware of the chart issue until I pointed it out yesterday. I might suppose that it only appears to affect certain index data and I may be one of the few who might be using the platform in this manner as I use the index to base my trading on primarily.

Should anyone have the case when opening a chart after the market is open it does not display any past intraday history. As long as the chart remains open it tracks fine, just don't close the chart or the platform while trading...it screws up the moving averages.

Jeff.

February 25, connection issues

Today was a very interesting day. I made one trade, explanation to follow, represented by the huge green square. The trade entry did not follow my rules very closely as the index was well above the 1/2 S1 line (dashed green) but it was sitting nicely above the 30 and 50 sma, yesterday was a huge massive drop so a rebound was inevitable. So I placed a market order for HGU to take advantage of the leveraged jump to come...this was expected to be a long riding trade for me...little did I really know.

I managed a real 5.4% profit on the one trade, and I called it a day at that...for reasons not of my making. The rest of the morning trades were plotted as HGD positions taken with red arrows and HGU positions with green arrows. These additional trades would have been nice and clean and by the book. The circle is the 50sma squeeze. That is a forced braekout setup and could be entered where I placed the arrow for a small target to the 1/2R1 hoping for the breakout to the upside...which did materialize and produced a corresponding 30 cent move in HGU.

So, the back story.

I let the high volume noise settle off the start, watched as the index pulled back a bit but I did not anticipate that it would pull back to my S1 line, there was far too much interest in getting long on today's most probable action by all traders. So I played the hesitation just below the 200sma...this line is mostly a headgame with traders, but it works to play it against the timid. Today was to be a balls to the wall aggressive day for me...to be continued...

I place a market order...it did not execute so I tried cancelling it after watching it languish in my order box for about thirty seconds.

I placed it again, same deal, and one last time. I really figure that the first order got executed but there was a glitch in the platform connection as I had some trouble thereafter.

Long and short of it is that I could not get access to any trading online, I still had my separate live feed so I was able to see the jump right after my entry. I watched while the price did exactly what I expected it to do...not that I could have done anything if it went against me. Basically I decided to get out after the first test of the 1/2 R1, my second target of the morning but had to wait to get through to a trader desk (that cost me 0.5% profit...but no big deal)...I tried the tech support route first but my account was de-linked so even once I got in I could not sell it anyway. They could not guarantee when it might get relinked...might have been in the afternoon.

Oh well. If I had to be stuck in a trade this is the type of day I would pick, strong move right after entry and an eye to holding the position longer than normal. I did consider leaving it ride but I did not want to take a chance on not getting it sold for a decent profit...I chose not to be greedy. I did ask about placing a VTSO but could not...which is a whole other story.

Jeff.

A little commentary as the markets tank

Yesterday was an interesting day for me in trading as I enjoyed getting to spend most of the day trading even if it was not profitable.

Today would have been a better day to have been trading. I heard how the Asian markets were dropping on the radio. I am not one to trade on news but that was news that is very sweeping as it went on about the lack of enthusiasm of investors in the bailout packages...no surprise there. This was just a setup for the drop anyway.

While I am unable to trade this morning I do look at my charts every once in a while and I see that my Global Gold index is down to the last support line that I plotted for today...I still plot even if I am not trading. That makes a $22 drop which is very large for 1.5 hours of trading. So anything further is off my charts.

I did quickly check to see potential profits based on using my trading rules the same as yesterday. I would have captured 3.1% profit in the drop in 2 trades and perhaps made one trade that would have broke even or lost 0.1%. So 3% leveraged through the ETFs would be a 6% profit less 1% for commissions...this is my quick way of determining captured moves and it is really rough. There was one early one that I might have tried for, it was one of the first large moves but I won't count it.

5% of $8 (the ETF starting price) is $0.40 per share at 400 shares traded is $160 net.


Yah, it would have been a good morning to be in.

Jeff.

Cross checking the trading

I have been running some manual backtesting of the last 30 days or so of trading Global Gold using Horizons Betapro Global Gold bear and bull leveraged ETFs to give me more confidence in my trading plan. Although I know that it can work I felt I needed a little nudge to get me more motivated to get trading for real. It certainly helped. I'll post more about that once it is completed.

Today's performance was not so hot though as I think I over traded a bit and made a couple of calls for entry and early exits that cost me some profits as I was down about $70, (about 1/2 of my trading costs.)

This tells me that my trade setups and calls were mostly on the mark, the execution was a little lacking. I did get in at good and predictable prices so at least that was going for me.

Doing the back test for today had me making 12 trades, surprisingly the same number that I actually traded. Three were washes as the price did not move as anticipated shortly after the entry. I just applied rules not trying to make judgements based on anything else.

Total profits after commissions assuming some slippage was $176. Compared to my backtesting days even this was not a great day, that makes me feel a bit better, but not too much.

Applying my 30% fudge factor puts me at about $122 and if I took off my top two trades I would have seen $92.

Considering that today was my first real full run of this version of the plan for the entire day I don't think I did too badly. If I produced a gross loss (net loss greater than my trading costs) then I would be disappointed.

As it is, I still think there is a little tweaking to be had but the plan is sound.

Jeff.

February 23, the real deal.

Today I managed to be at home all day with nothing to do except make soup for my sick kids, nothing serious but they stayed at home. So I took advantage of the time to see if the problem with me trading was me or the environment.

Turns out it is mainly the environment as I placed 12 round trip trades and had fun doing it. No qualms about getting into trades. So the whole basis for my not getting trades in is still the interruptions of the regular day.

Here is the chart for The Global Gold index and my notations for my trades.
Green boxes are the time and price changes that I was long in HGU (Bull follows the index)
Red boxes are the time and price changes that I was long in HGD (Bear inverse of the index)
Red arrows are my losers, they are pretty tight so no separate boxes
Horizontal lines are the various pivot points, blue primary and green support.

I followed my rules, for the most part, and entered as the price passed and/or tested the appropriate points.

The first trade I jumped out of too soon, I just didn't feel like starting the day with a loss, so I had a breakeven...in hindsight that was a mistake. Even the second trade I bailed on early. Trade three I got out at the appropriate time but the price did not pullback close enough for me to consider another trade. I am using 50 cents or closer on the Global Gold as a margin for entry. Number 4 passed the 1/2 S1 point cleanly so I jumped in to catch that small gain. I was aiming for a move past the 200sma and hopefully a larger move than I got, but I exited at the peak.

The next two trades were washes as the price was squeezed between the rising 50sma and the dropping 200 sma with the 1/2 S1 bisecting the move...the breakout would be a toss up so I tried applying my entry rules firmly here using the 1/2 S1 as the trigger then using the 200 as a trigger prematurely. I will be watching the price relative to the 50 closer now as I see that it has some affect as resistance and support when conjoined with the other points.

The trade just before noon was a classic 200sma entry. I bailed a little prematurely on this one as well but the activity softened too much for me to feel real comfortable staying in. The next entry was banking on a drop in price and there was a brief rally that went high enough to shake me out only to get back in for the same trade, even though for a slightly better price I should have had more confidence in this one as at this point in the day gold was brushing the $1000 mark and I do not believe it is ready to jump past that point just yet. The 1300h and 1400h trades were more typical of what I might expect normally as I used the primary pivot point and the 200sma to play the price drop with HGD. I anticipated most everything to be downhill from here but did not have as much trust in my call as I should have.

The last two trades just whipsawed me out as I played the 1/2 S1 line crossing for momentum. The wost thing was that the last trade was right, I just didn't hold it long enough to see the drop. There were no more trade setups beyond that, other than the last drop off which was a nice technical setup but I decided to stick to my plan.

Overall I am down by some of my commissions as I choked on all of the larger upward moves.

Lessons learned.

1) have a bit more faith in the trade plan, it does work.

2) pay closer attention to the squeezes, 200/50 sma with support and resistances

3) the fast moves past the lines can be captured, as I did, without relying on the pullback or rally to test the support or resistance. In all of my back testing I would not count a fast single bar move past a line without a test. I will still not count them for back testing to fudge against me.

Jeff.

February 20th...Gold tests $1000

I neglected to save yesterday's chart for the Global Gold index.

The price opened low, headed up and crossed the 200sma far earlier than I expected. This led me to wonder what was up as the price jiggled along this line for a while. I did place a trade expecting a move up but once I saw it not materialize I jumped out just moments before the price plummeted $4 in a few minutes. Had I not been long I would have gone short as soon as the price crossed and tested the 200. Sometimes it is hard to be nimble enough to reverse a trade as quick as these materialize. In hindsight I should have bailed earlier as I did hold the trade too long...although I also should have noted a resistance level in AEM that matched up with the peak in GD after my trade...I could have had a small profit and been ready for the reversal.

The rest of the day was a wash as I decided to play with my Forex trial account for a bit instead of trading.

Today, I checked the price of gold before the market open and saw that it looked like it was heading for 4 digit territory. I really did not think it would even touch the $1000 threshold today let alone cross it for a little while. That fact does not change the action expected for today's price in the Global Gold index. A drop off the start to bump the 200 then a return to the day open...the rest was unknown.

So there were 14 trades, marked by the red arrows, that I could have taken, not all great trades but no real losers in the mix. The first circled one was the one that I considered even though it was outside of my boundary, I figured it should be a good high entry as the price dropped off. I won't bother with any of the excuses for why I did not place any of these trades as I saw them set up. While the excuses are all good, they are still excuses. This is something I anticipate correcting for next week.

Trades 2 through 8 are textbook pivot point entries, although #6 was not technically a retest it might have been expected and traded. 5, 7, 8 and 9 are strong PP200 as they meet both trade criteria, testing a pivot point, the primary no less, and the 200 sma at the same time. The last one before 1130h was the kicker and in order to be sure to be in that large move all of the other trades would have to have been made as this move was not guaranteed, it could have happened in either direction at any one of those times earlier...odds favoured a move up though.

The last two were again PP200 trades... the last move on my chart is most of what was left as the price is now hovering around $339. That second last trade was not so great and the less probably one, but I never know for sure...all I could hope is that I realized it was not and got out soon enough to reverse the trade. It looked like a clean retest two minutes after the drop so I would be free an clear for it.

For my own personal gratification of knowing what I might have been able to pull off here I roughly figured the entry and exit trades.

Rise in Global Gold = buying HGU (Bull fund), drop in Global Gold = buying HGD (Bear Fund)

10 trades, I dropped two redundant ones...would have just still been in the previous one and two of the ones off the start that I would not have taken...these just cut the profit by a little bit anyway.

All up was $533 net tax free. So I apply my 30% fudge against me to bring it to $373.

Dropping my two top trades and applying my 30% fudge I still see $159. Still well above my daily goal right now.

All in all I am more than satisfied with the prospect of trading this particular plan and looking forward to the profits to come.

For anyone following along I expect to not be blogging this weekend at all. Other stuff on the go.

Jeff.

Trade Trend Tracking

Last night I came up with an idea about my real trading to date. It has not really been profitable. Although profits would be really nice that has not been my primary objective as of yet. I decided that there must be some correlation between the type of intra day action that occurs on real trading days and my performance on those days.

I keep running profitable fake trading days, although I have had some days even then that have been barely break even. The better performance is really attributable to the fact that I am more willing to "take a trade" virtually than for real. Obviously a factor. The other factor is that I often have a good fake day, figure that my plan is working (and it is) then I jump in for real the next day only to see mediocre results or a small loss. This is not a problem of the plan but a problem of general implementation.

My idea was to do a rough log of the type of day activity and relate that to my real trading performance. The result was interesting.

Rough was the key here. A spreadsheet with a marks to indicate range, 200sma crossover, trend, whether the day was an up or down day, up and down, down and up or just flat. Then I marked if my trading was up or down. No numbers, no formulae, no fancy stuff...a bunch of Xs and a few /, \, ^, v, and some ~s to indicate the various states of activity. I was going for a quick visual impression here so simpler was better.

Mostly what I thought I would see, I saw. But something else jumped out at me as well. My down days were tied to tighter range of price intraday, that was the expected. The unexpected was that my better days were never on trending days. They were on days that the market dropped and returned or just dropped overall, but not on the larger ranging days.

So, my bias toward the short is definitely a factor. Most of my trading is in the morning so the days when the price drops then rebounds, I would be there only for the drop. The days that are down over all likely started the day with a drop too.

It was not just that my better days were this way, but the reverse is true also. My down days were always on up trending days or days when the price moved up in the beginning and down in the afternoon so I would miss the drop.

This tells me a lot about my weakness in trading, besides just not pulling the trigger when I know I ought to. My overall long game needs some serious attention. I think that, ultimately, I am trading with an overall pessimistic outlook and that is affecting my ability to make the trades that I know will produce profits...I need to give myself a new head game.

I let today start without really thinking about any trades off the start, it was going to open down and I expect the price to close the gap or return to some fraction of yesterday's close...at least to where ever the price and 200 may cross and perhaps once it does there will be another jump later in trading...a chance to get my long game hat one.

Jeff.

Overview

I liked today as an overall example of my PP200 plan almost to a "T".

I put a standard zigzag overlay on the chart and it was bounded by a pivot point or the 200 sma to mark entries, other than that little peak at about 1400h.

That little bounce back to test the 200sma once it crossed was classic, the return to the primary pivot point for another test and entry and the exit up around 1/2 R1 right near the end of the day. The zigzag does nothing except point out the pattern after the fact.


I won't bother calculating out the rest of the potential in this day but I will point out to myself that these trades were amongst the easiest to see, and the easiest to trade. I seem to like playing the tighter range bound trades for real and fight for every penny, go figure. I expect that if I had to rely on this trading as an income I would not be so lax in getting trades on the table.

I may do some trading this week yet but I think that my schedule will be a bit free next week to be able to really try this out.

Jeff.

February 18th the balance of the trader's lament

Other than this morning's shenanigans I have no real excuse for not making the trades that I will be outlining here. I called each one of them cold but failed to press the order button. I believe that I am suffering from a form of trading fear, which is odd as I have typically not had any trouble making trades...even in cases where I KNOW that I will expect a loss if not just a very high probability of one. I have blown through $100s of dollars in a day to test theories, order execution, my willingness to take a loss so I know that I can take a loss.

So I must suffer from a fear of PROFITS!

Go figure. I wonder if they have a phobia name for that kind of fear.

So, the morning chart, I will skip the HGU and HGD charts as they track well and make no real difference in the interpretation...other than the drop in price is a gain in price on the HGD, being the bear fund.
First blue circle: teh morning's shenanigans, I dropped a box here to represent an HGD trade that I would have entered but I will leave it off of any calculations. The next circle was my "not quite PP entry". Given the pattern here I was thinking about buying HGD at the peak to catch the drop that I figured was coming...that one was just a thought though as it didn't really follow my PP200 plan.

After the price fails to remain below the S1 line, I watched as it climbed back up, then tested the S1 at about 1020h...order was set, finger on the button...AEM was at a support point as well so it was a good confirmation...I just didn't order. My "non order" is the first green rectangle representing my entry at the bottom and my exit at the top. The second rectangle was exactly the same story...everything was a go including the good ol' finger on the trigger...

The 200sma as resistance (green sma line) was a perfect setup, as perfect and predictable as they come. AEM was also hitting it's respective 200sma, both HGU and HGD were doing the same...although they are usually close to in line with the index.... then the small bounce off the dashed S1+1/2. Even since there are two more medium sized trades that setup but I have just closed down my trading platform for the day.

The "trades":

Buy $14.50 Sell $14.90 Gain 40 cents ps Return 2.7%
Buy $14.93 Sell $15.17 Gain 24 cents ps Return 21.6%
Buy $7.56 Sell $7.70 Gain 14 cents ps Return 1.8%
Buy $14.96 Sell $15.00 Gain 4 cents ps Return 0.2%

$144 net gain overall or 3.6% overall return on $4000 portfolio.

Had I taken the first two trades, even given the odd moves, another 42 cents per share...or another $144 net was on the table. I might have stopped trading after those two alone, or at least after the listed trades.

Now I just have to work on my order entry, perhaps glue a 1/4 inch extension on my order button finger so when I hover and think "order" I will hit the button by mistake.

Jeff.

February 18th, the opening head game

Well,

The opening was very interesting. The index is doing what I suggested it would but I got shaken out before getting into any trades. I intended to get in on the initial roller coaster ride but didn't expect two things:

1) it happened very fast off the start
2) HGU and HGD BOTH went down at the same time

In theory the two funds are the inverse of each other proportionally based on percentage changes, with some margin allowed for trading spreads. So, if HGU goes down then it stands to reason that HGD should go up.

BUT THAT DID NOT HAPPEN! In the first two minutes Global Gold (GD) dropped about $1, HGU dropped close to 10 cents (which is about right) and HGD also dropped about 5 cents...HUH? It should have gone up by about that amount.

I seriously considered a quick momentum reversal play in minute two as I figured that there must have been a glitch in HGD and it will quickly head back up...but that is a very early entry and prone to problems with a market order....with a regular stock that is. ETFs seem to work differently when it comes to higher volume activity. My hesitation was my downfall on this move.

So everything settled out in minute three and was back on track...except that I was not on board. Minute three moved too far too fast for me to feel comfortable getting in but I should have gone with my estimation of the movement that I made yesterday and just bit the bullet and ordered.

Alas, HGD has moved 40 cents from open and 50 cents from where I would have tried to get in had I not hesitated.

So now I just wait for things to settle out and see where the rest of the day leads me.

Jeff.

ECN fees

I have always wondered how the ECN (Electronic Communication Network) fees have been assigned as sometimes I see them and sometimes I don't. They are pretty regular when they do appear $0.0037 per share or 37 cents per lot.

I was reviewing my trades of late and realized that anytime I placed a limit order and was filled there was no fee but yet when I place a market order the fee appears. Even though this fee is not a lot it must be calculated into the cost of trading. I am currently playing with 500 share trades so the commission goes to an even $5 ($4.95 is the minimum with Questrade based on 1 cent per share with a $9.95 maximum) and the ECN for a market order is now $1.85 each way. That makes a total cost of a round trip market order trade $13.70. Still not too much of a concern as commissions where over $20 one way...and still are at many brokers.

Looking a bit deeper into the why I find that an ECN charges a fee for trades that remove liquidity from the market. Basically a market order gets executed as fast as possible at whatever price is next in line, sometimes that price is farther away than anticipated, but that is another story. This does not add to the quotes as an order to be filled at a certain price, which means that I am not adding to the liquidity, I am not placing an order to help fill the basket of orders to choose from.

My next test will be to see if I place a limit order far enough into the quotes that it will just get filled as fast as the inside prices are well under what I am willing to pay...this type of order should get executed as fast as a market order...so I expect to still see a fee, but perhaps not. This still meets my needs of not having to dink around with limit orders and missing the trade rather than having to chase the price.

Jeff.

February 17th...the fake returns for a day...

Today, the day after the North American holiday, President's Day, and Family Day up here would not have been agood day for me to typically be in the market, so I hung back.

The Global Gold index (GD) started high as the price of gold jumped yesterday...and it only stands to reason that gold related stocks, and therefore indices, would rise accordingly. As it was GD started near the top of my pivot points, which puts me out of my "zone". So I decided to do some technical fake trading to see what I could stirup, and to keep me on my toes.

I'll post the GD chart here with a different annotation than normal. The red boxes are the HGD trades start and stop times and prices and the green are for HGU. The circles are my break even or losers, and they will bee noted as well.

Given the start of the day I figured that it was going to be a flatish morning with a decent gap fade in the afternoon as soon as the 200sma caught up again. I didn't get the gap fade but did see a return to below the opening price, so a little fade. Perhaps the rest will happen tomorrow. I would just buy a full load of HGD at the top but I don't trust picking a top outside of the pivot point ranges. I ended up having a go at a couple of points and alternated buying HGU and HGD figuring that I might get lucky and catch a top...no such luck. The nice double hump could have given me a technical entry between 1250h and 1315h but I was not watching at that time...I probably would not have taken it anyway as my morning trading did not produce any great numbers to use as a buffer.

Once the price crossed the 200sma (green line) I jumped in (yah, I should have jumped in for real here as this is a close to a sure thing as I can think of in trading) right where the price popped back up for a quick test. The only reason I would let this trade go so long is that I am gaining confidence in my afternoon calls and the HGD profit went negative on me. I thought about it at the solid red R3, and again at R2+1/2 but bailed before that line was crossed. I got back in as the line was recrossed for a last trade to top things off for the day.

A note about technical trading...even though pivot points are such they are not determined on the fly so I consider them a bit different. The red and blue lines are the 30sma and 50 sma respectively. Often they indicate a trending period and they did just that in textbook style today. Right up to 1230h the price stayed mostly above the 30sma which stayed above the 50sma. in the afternoon the reverse occurred for some nice downtrending action.

Here are the trades, all the HGD trades are in the $7 range and the HGU are in the $15 range.

1023h Buy $7.43 Sell $7.48 Gain 5 cents ps Return 0.7%
1028h Buy $7.43 Sell $7.43 Gain 0 cents ps Return 0%
1055h Buy $7.30 Sell $7.34 Gain 4 cents ps Return 0.5%
1124h Buy $7.31 Sell $7.29 Gain -2 cents ps Return -0.3%
1127h Buy $15.73 Sell $15.83 Gain 10 cents ps Return 0.6%
1138h Buy $7.24 Sell $7.27 Gain 3 cents ps Return 0.4%
1156h Buy $7.19 Sell $7.22 Gain 3 cents ps Return 0.4%
1202h Buy $15.86 Sell $15.98 Gain 12 cents ps Return 0.8%
1334h Buy $7.24 Sell $7.42 Gain 18 cents ps Return 2.4%
1501h Buy $7.42 Sell $7.50 Gain 8 cents ps Return 1%

For any prices under $7.30 I bought 500 shares, higher than that would be 400 shares then HGU in the $15 range is at 200 shares...just due to the limitation of capital in the account.

The final tally was $116 net, 2.9% return based on a $4000 capital base...commissions in the morning killed me due to the small moves but I decided that I need to be in more trades in order to be there when the price does move more substantially. At noon I was only ahead $10 net. At least it would be tax free.

So tomorrow I am looking forward to a better day trading as I hopefully can just do some real trades. I do expect a possible drop in prices over the course of the day and even a jump after the 200sma crossing, a bit of a reverse of today. We'll see though...the proof will be in the pudding.

Jeff.

February 13th ooops!

I just realized that I did not enter anything about my trading for Friday. I obviously threw out my old rule about not trading Fridays seeing as I was willing to trade on a Friday the 13th. I may not be superstitious but I'll bet others were.

I only ended up placing two trades and I was not really focused on trading, what else is new, eh?

So I had a slight loss day as I was not able to trade the first two really nice moves, I washed my two ideas and took the rest of the day to work on other regular work stuff to not have to do it on the long weekend.

I am in the middle of changing the way that I trade the ETFs. I think that I will make that a separate post though as it is it's own idea. Suffice it to say that I reworked Friday's possible trades to produce a return of 7.8% on the entire portfolio...after using marginal entries and exits to allow for bid/ask spreads and using only 70% of the calculated profits as well as adding a few breakevens to let the commissions draw me down a bit more.

Jeff.

Third Party Pivot Point Plan

Well, if nothing else this is a nice little bit of alliteration.

I was wasting some time checking out a few trading videos last night, there area couple that are decent but they are all on US exchanges so the trade ideas don't cross over well, although I expect that sometimes they are pertinent. This led me to thinking about information and trade plans or ideas.

I read a few blogs about trading. They talk about technical setups, psychological aspects, scans, backtesting, market analysis, fundamental analysis....basically there are so many aspects to trading that there should be something for everyone.


Therein lies the trouble. Too many aspects. Considering that the stat I read the most is that between 90% and 97% of traders are not successful, I expect that the same percentage could be applied to the information that is available online. This tells me that I must keep my bullshit filter on high gain...which I have always known. Perhaps that is not really correct to assume. Perhaps it is that up to 97% of the information available is of no use to an individual for the purpose of their trading. Information overload.

Of all the ideas that I have read I have gleaned a few choice ones that work for me. Most I have figured out by some method of trial and error but they have also been confirmed by others that have used the same or similar methods. There is not much that is really new in trading so it is very hard to be original...but that is not really the goal I am after anyway.

Specialization.

I figure that by concentrating on that, perhaps, 3% of all the available information I will find that niche that lets me work a couple ideas to give me an edge in the environment that is very familiar to me. I already figure that I have found it...it did take about a year afterall to figure them out and to put them together in a form that seems to be a very strong plan.

This brings me back to the videos.

The two that I ran across also happen to use pivot points. One had covered it so long ago that I cannot find the clip but I drop in to see what he is up to occasionally (US markets again) and the other stopped short before giving any decent details about the actual trades based on the points, which makes the video next to useless except for those who already know pivot points. In that case it only served as a confirmation that someone else applies them in the same or similar manner as I do. In both cases the individuals do make trades based on their point systems.

So I saw a bit of confirmation that these points work. I happen to use them for daytrading, they are using them for longer term trades.

All in all this was just a ramble to clear my mind about a few things that were floating about this morning. Now I need to get back to setting my pivot points for tomorrow's trading and do some chart work for my medium term trading blog...I have some new ideas for those trades now...but they are probably not original.

Jeff.

Horizons BetaPro Exchange Traded Funds

More on the ETFs, specifically the Horizons offerings.

Here is a link to their website for any who want to do more reading:

Horizons BetaPro ETFs

Something that I did not mention in my last post was how these folks are doing what they are doing. Unlike a typical fund, like a mutual fund, they are not buying a bunch of stocks in the index to emulate the index, nor are they buying any of the underlying commodities. They deal in futures contracts instead...due to a few reasons that they mention in their FAQ.

Here is a complete list of their products:

Horizons BetaPro ETF Summary

I just did a quick check on a leverage comparison for HGU and Global Gold. (GG)

Since Oct 25th (I just picked a nice long gain as an example) to Feb 11th

GG gained $187.55 or 123%
HGU gained $11.18 or 286%

There is mention of rebalancing and daily valuation of the fund, so I suppose this seeming disparity comes from the effect of some level of compounding at work, and it was mentioned on the HBP site but I discounted it as marketing hyperbole...perhaps not.

This does make a good case for beating the market performance. Seeing as 123% is still a good return for a 3 month investment, 246% would be spectacular and an extra 40% definitely adds a bit of gravy. I expect something similar following the HGD bear fund in a down turn...

Jul 15th to October 26th, another arbitrary period the GG dropped over three months.

GG lost $224.14 or 81.3%
HGD gained $68.45 or 187%

Well, considering that gold was dropping, overall, this is a great way to turn the loss on it's head.

Interesting is that the additional gain over the straight 2x leverage is 15% greater than the leveraged percentage return.

None of this makes much difference in my daytrading scenario but certainly makes a great case for using ETFs in my future longer term investments.

From the listing of ETFs that Horizons has you can do the exact same thing with financials, oil, energy, bonds and other popular indexs. I was playing with HGD as a bear strategy against the true stock TLM (Talisman Energy) and earlier I was playing with HGD again AEM (Agnico Mines). I now firmly believe that I have found an alternative to stocks completely.

The funny thing is that six months ago I would have scoffed at the idea of trading ETFs.

Jeff.

Exchange Traded Funds

I decided that I should probably know more about the Exchange traded Funds (ETFs) as they seem to be what I have gravitated towards for my intraday trading.

I have noticed some interesting correlations and some anomalies between the Horizons Beta Pro Global Gold bull and Bear funds and the actual Global Gold index itself which lead me to do some reading to see if I could explain some of what I was seeing. I am not certain why but I was treating the bull and bear ETFs (HGU and HGD respectively) as if they were separate stocks and using the S&P TSX Global Gold index for reference. This has not been working for me as well as I anticipated.

So, the short story is that the two funds that I am playing with are inverse funds and leveraged by 2 times.

Horizons BetaPro Global Gold Bull Plus Exchange Traded Fund, HGU on the TSX.

The fund is directly tied to the performance of the S&P TSX Global Gold Index and leveraged 2 times. I thought that a leverage like this was a direct calculation of 1 penny equals 2 pennies so I had some trouble imagining the valuation of the fund compared to the stock and envisioning the movement it just looked wrong, so now I will clarify this.

If the Global Gold rises by 1 % then the ETF rises by 2%. So each $100 invested will return $2 at the end of the day. If it drops by 1% the the fund drops by 2% and you lose $2.

Unlike a stock using margin as leverage this does not put you in the situation of having a margin call and potentially losing more than you put in as you can only lose a percentage of what you invest, similar to a stock bought with cash.

The next day you start out with $102 and it rises 1% again, the ETF rises 2% and you gain $2.04. Effectively compounding daily. The reverse scenario has you losing $1.96. Again this is not unlike a regular stock as a daily percentage change is still based on the day's opening price.

Horizons BetaPro Global Gold Bear Plus Exchange Traded Fund, HGD on the TSX.

Same as above in the reverse direction.

The interesting part about using these funds to trade, as I am, is that I should be able to track only the Global Gold index and make trades between the two funds, HGU and HGD, while only following the index and ignoring the funds themselves. I have been doing this part way as I have followed HGU mainly and traded HGD just by that chart and it seems to get me where I want when I want...even though the trade may not go in my favour the entry and exits are clean. Lately I have noticed the strength of the index at the various pivot points being more relevant than the pivot points in the ETFs. In order of relevance it turns out the the index is first, HGU is second and HGD is third.

Where this leads me is to using the one main chart and just "pretending" that a long position in Global Gold is a bull ETF buy and a short position in Global Gold is a bear ETF buy. The best part about this, down the road, is that I can hold open positions in both the bull and bear funds at the same time. In theory I could open a position in each of the funds with an equal dollar value and hold them all day long and sell at the end of the day and only be down by the commission...an almost 100% hedge.

This also leads me to adopt a strategy that is used in options trading and I thought about applying to ETFs a few months back but had some conceptual troubles with the possible trading plan. More on that another time...the short story is that it includes placing opposing limit orders and catching only the breaking ETF. It needs some work though.

Today being Friday I try to normally not trade, but I tried a couple of trades anyway, no luck, so I decided that I would wait this out and work on some historical charting to check my "One Chart" method. I see now that the price has really just wallowed about with no big moves except out of the gate.

Jeff.

The Questrade Free Transfer Promo.

I put up the new banner for the free transfer promotion but thought I might mention a few things about this.

First, I would not promote something that I either didn't use or didn't think was worthwhile.

Second, while the transfer is free (up to $150...so unless your existing broker gouges you on the way out it is probably free) it does require a $25,000 transfer to qualify.

Third, $50 in free trades is a nice little touch to get started.

I plan on transferring my RRSP account to take advantage of this myself. I had actually planned to do that a year ago and procrastinated. Now that the account is deflated the $150 is hardly a consideration but still is nice to get something for free. I did liquidate about half of the account at it's then peak at least.

If anything I posted here made you think about opening or transferring an account with Questrade I wouldn't mind getting some credit for your decision, just start the process through one of the ads above.

Thanks,

Jeff.

February 12th. Nothing spectacular.

Today was a mostly uneventful day. I marked the two nice entry points for the morning with blue circles. I choked on getting in as I saw them setup, thought "I should really be making these trades" and didn't. Yesterday's early losses had me second guessing my gut. The pivot points were nice and wide due to yesterday's action so when the price dropped to within 3 cents of the primary pivot point, (barely off the bottom of the chart) it should have been my first trade of the day. Then it rallied touched the 1/2R1 mark (dashed red line) it was a key exit and a potential entry into HGD for the slide...if I was quick enough. Considering that the first would have been near a 50 cent clean gain I might have called it a day after one trade...nahhh!

I did get in at the day's high (first green arrow) by buying HGD for the reverse move (Bear ETF) but chickened out (first red) as HGU rallied slightly so I only captured half of the already small move. Later I saw the setup for a possible 200sma resistance and got in just right (second green) and got out at the then bottom (second red).

I missed the middle peak trade just due to trying to wait for a sign that it was actaully going to head back down. It crossed the 1/2R1 too cleanly on the upside for me to enter comfortably either way.

Both were slight winning trades but very small...the whole point though is that I called the two tougher trades, got the direction correct, got in and got out clean enough, although not as potentially profitable as the early stuff.

BTW, the $15.05 peak was yesterday's high that was tested five times and that I missed, I was going to be damned if I didn't take that trade again.

The rest of the day was not work trading as everything was very small...HGD faired no better as the largest move in the afternoon was about 10 cents and it was not clean, lots of chop. For some strange reason I seem to be drawn to trading the choppy stuff, which is why I decided to can the fake trades. I can fake a good moving day so I need to actively trade those days and often they are not known to be good moving days until they are moving...I need to be in trading mode right from the start as often as I can.

Oh, I should mention, that steep rally at about 1015h did not follow any of my current rules for entering a trade...I could have jumped in once it crossed the 200sma on the way up but it was moving too fast to do so. That was when I decided it was going to peak and I would play the downside. I miss my short selling but I have got this figured out now.

Jeff.

February 11th, the followup

This is the balance of yesterday's chart. I was waiting for the 200sma break, and it happened.

I saw the multiple tests of the $15.05 price and pretty much knew what was going to happen, just the exact timing and the extent were question marks. I powered up and checked in just before the last two tests, saw the setup taking shape and left the computer for eight minutes. i didn't enter at the last peak as I figured that there would be one more test to catch before the break...eight minutes later the price had already crossed the 200 on the way down.

HGU chart. The blue circle was my expected move.

So I missed it. I thought that there might be a continuation but did not feel too comfortable taking the trade based on that so I left it alone for the rest of the day.

Checking the HGD, where the long trade would be to catch the drop, the entry would be about $7.71, first target $7.85, second about $8.00. I expect that an exit at $7.95 would have been the most likely but based on the HGU move taking it to $8.05 is not much of a stretch.

So 24 cents per share at 400 shares. At least I know that I was on the right track even if I missed the entry target.

Jeff.

February 11th...the crunch

This morning is turning out to be a great learning experience for me...which means that I lost money so far...it's about 1030h as I type this and I am just going to sit out the rest of the major move in gold.

The first thing that I learned is to not be so bullheaded.

I saw the opening price above the R1 pivot point, this is more likely to indicate an up morning if not a full day of uptrending. The first target should be the R2 and if that is breached then R3. One of these trades, if gotten in early enough, can be followed up all the way with out worrying about exiting on a bit of weakness as the profit is pretty solid, just exit once a pp has been breached on the downside.

The green arrows were my two trades entered as long positions in HGD for the expected pullback in HGU. The Red arrows are the trades that should have happened, the first was soon enough that I was not sure I wanted to try to get in and the 200sma (circled green line) would have been the target. The next two, I was already in HGD and did not get out prior to the very beginning of the move up. The third and last I was just to fearful that the price was peaking and I was getting in where the price was going to head down...two losses tends to make me a bit gunshy. I won't bother figuring out how much I missed out on, it does not matter. What matters is that I learned a bit more than I knew when I started this morning...pay attention to the first price when it gaps over or under certain ranges, get out quicker if it looks like the move is not going to materialize in my favour.

So, why did I try to enter a bear trade under R1?
I don't know.
Why did I let it run when I knew it was more likely to reverse and continue to head up?
I don't know.
Why did I try the exact same move at the R2 and let it run past my "know I'm wrong" point?
I don't know.

Actually I do know. I like to play the downside of a price move so I have a little bias switch in my head that I have a hard time flipping to play the long game. So I saw what could have been perfect setups for the bear play if the price was going to be somewhat range bound or downtrending.

I also hesitate to buy in a momentum move once it has already started. I like to see a pullback to a resistance point to get in. Sadly this keeps me out of a lot of fast moving and big trades. In both of the above mentioned trades had I just sold my HGD position at that point where my gut said "wrong move, get out" I would have been in a better position to have bought HGU to capture the huge rally just before the momentum took over.

So, the hindsight view tells me what I should have done, and that I should have seen it and, if not getting long on HGU at least not getting caught playing HGD.

The price is beyond any of my pivot points right now so my best bet is to wait until lunchtime and check in again. At that point the 200sma will be "caught up" and may indicate what the afternoon may bring. The price may have rounded over as well and perhaps there will be some downside plays to be had.

Jeff.

February 10th, the death of the fake trade

OK, I've had enough of fake trading.

This morning I jotted down a fake trade early on for about an 11 cent gain...then decided I'd had enough of that game and just traded the rest of the calls. Now the morning was pretty flat so I was fighting for the trades but patient enough to wait them out. I was anticipating a nice drop in price over the course of the day and the setups were mostly to the downside. The rallies did not line up with any clean entries so I left them alone and only traded HGD, the bear fund.

I may have mentioned already that I like short sells and they were my favourite trades for a number of reasons...mainly the reasons why nobody seems to like them. They are fast and need a little attention to stay on top of to get nice exits at the bottom of the move. I found that trading HGD (Bear fund) based solely upon the movement of the HGU (Bull fund) was as close as I can get to actually short selling HGU. So other than watching HGD quotes to be sure there is enough volume to get a clean 400 share fill I really don't pay it much attention at all.

I did manage to wait for the 200sma crossover and get in one trade, even if it was not a very big move my concern is more being sure that my calls are correct and I don't suffer anything other than some small losses along the way. I was not able to stay and trade the rest of the afternoon, sadly, as I see now that most of the move I was waiting for happened well after that crossover. I managed to check in a few times up until 1400h and the price was forming that classic saucer shape that just begs for a short sell off of the lip at the end when the price crosses under the 30 sma (red on the chart).

Oh, with the new blog format I am able to post the full sized charts and they come out clearer...click on the image for the blowup and the prices and notes are legible.

The green circle is the area where I placed my fake trade, too congested to try to note with any clarity so I skipped it. Red is the saucer drop off and blue are the afternoon trades that were available and followed my entry criteria...the first two green arrows would have been orders placed in HGD and the last would have been long in HGU for the bounce...I was there for that one but was unable to place the trade...so I guess I just missed it.


This is HGD with the trades reasonably accurately mapped out. There is not much difference between these trades and fake trades under similar circumstances. With the use of market orders instead of limit orders I am seeing about 2 to 4 cents per trade less...but I am making every single trade that I decide I want whereas with limit orders I was only making about a third of them.

1013h Buy $8.76 Sell $8.90 Gain 14 cents ps Return 1.6%
1231h Buy $8.77 Sell $8.80 Gain 3 cents ps Return 0.3%
1309h Buy $8.78 Sell $8.81 Gain 3 cents ps Return 0.3%

$ 0.20 gain per share or 2.2% overall return on trades

I choked on the third trade as I actually bailed too soon. It was a "keys locked in car" moment. You know the one...you lock the car and just as the door clicks closed you realize where the keys are. I would rather have an early exit rather than some other boffo order mistake... I only missed out on a little over 10 cents more anyway, even that would have made my day though.

I obviously would have liked to have made even one of the afternoon trades. The other downside is that I only traded 300 shares for the first trade as I realized I forgot to bump my orders up to 400. The extra 100 shares on the second two at least pulled me up to breakeven as they are pretty small trades, at least no losses in there.

It felt good to be active at least...I would have even celebrated a loss today for the sake of being in the trades.

Jeff.

Alternate to day trading blog

I started a blog for the purpose of tracking a small project I have in mind for medium term trading. Earlier in last year I started such a plan, Counter Trend Positioning, in this blog and it has morphed into what you read now. I do plan on doing some longer term trading and I figured this is a method to get my bearings again.

Essentially what that plan had was a smidge of technical indicators, some trend plotting and some rather aggressive position trading with both long and short positions being used. This time I am going to apply the pivot points in a purely hypothetical setting...no real trades...but still making "real time" decisions for entry and exit orders. Ultimately this is aimed at making these trades in future once I have a capital base to work with.

It is not so much as Counter Trend as using pivots to enter on the extreme peaks and valleys and at key support and resistance levels much in the same manner as my daytrading plan is now...on a longer term time line.

If any are interested here is the link to my Medium Term Trading Blog

Jeff.

February 9th

Alas...I could not give trading my full attention today again. Once I miss the first few trades I have stopped trying to catch the secondary trades as they are not as lucrative and not as predictable...having said that I still would have made out OK this morning with the later trades


HGU chart.




0933h Buy $13.09 Sell $13.50 Gain 41 cents ps Return 3.1%
1030h Buy $13.12 Sell $13.14 Gain 2 cents ps Return 0.1%
1035h Buy $13.13 Sell $13.23 Gain 10 cents ps Return 0.8%
1117h Buy $13.12 Sell $13.27 Gain 15 cents ps Return 1.1%

$ 0.68 gain per share or 5.1% overall return on trades

All of these trades are strictly by the book, my book anyway, except number three as that was just an attempt to get back in for the anticipated move...I jumped out too soon on trade 2 and realized it soon enough to get back in at an OK point. The problem with doing this is that commission tend to eat up any profits...in these cases I saw $24 gross...$4 after commissions, hardly worth the effort.

This is why I have decided to stick mainly to the pivot point entry setups, less "hopeful" trading and more "numbers" trading.

HGD for the downside trades

0946h Buy $8.93 Sell $9.10 Gain 17 cents ps Return 1.9%
1101h Buy $9.01 Sell $9.14 Gain 13 cents ps Return 1.4%
1131h Buy $9.05 Sell $9.10 Gain 5 cents ps Return 0.5%

$ 0.35 gain per share or 3.8% overall return on trades

These trades don't appear to be "by the book" as I use HGU for trigger signals. So where I might sell a short in a regular margin account I would, instead, just place a long order in HGD as long as the price of HGD has not already headed up. It usually lags by a bit so the timing is pretty decent.

The last trade was a momentum...or better yet, a weakness following a momentum move in HGU...or gold if you want to take it back to the source. HGU jumped quickly and there was no way the price had enough support to continue so the quick downside produced a 5 cent move in HGD...with 400 shares I would take this trade as it is a very high probability small target as long as there was enough depth in the inside quotes...which there was here.

That trade was not according to my rules. I have to have some fun sometimes.

So, all in all the morning would have produced an overall net profit of $206. Although there were no real losing trades I did have two of the seven barely more than break even once commissions would be figured in.

This should have been a 5% return on portfolio day for me.

Jeff.

TFSA and taxation

I finally got around to finishing my investigating the possible taxation of a TFSA. There are no grey areas in this registered account setup...yet.

An excerpt from the applicable page on the CRA website,

"All amounts in the account are not taxable, except in the following cases:
....
If property that is considered to be a prohibited investment or a non-qualified investment is acquired, or if property held in the account becomes such,..."

That severely abridged but the other cases have to do with death, excess contributions, non-residents, closing the TFSA...I have no concerns about these. Here is the link for the complete page so you can read it yourself, Taxation of a TFSA


To expand on "prohibited investments" and "non-qualified investments" for a moment.


Prohibited investments include non-arms length stuff and loans to yourself.


Non-qualified investments include property that is not a qualified investment for the trust...if your broker let's you buy it, it is qualified as they are administering the trust part.


Investment vehicles that are allowed in a TFSA are the same as allowed in an RRSP, here is the link to the CRA page referring to this, Types of Investments Allowed.


From the self directed RRSP page this little blurb is useful to know, "You do not need to report any transactions for items held in your RRSP.". This basically allows any kind of transactions as long as the transaction is based on a qualified investment, the bold was my emphasis. Timeframe is not a factor. Questrade is very clear that they do not enforce any American rules about pattern daytrading, a month, a week, a day or a minute are the same to them. I might suspect that other brokers may enforce these, high minimum balances, even push settle dates for buying power and in their TFSAs those same rules would apply.

Another page from the CRA site, an Income Tax Interpretation Bulletin that has some pertinent information and clarifies a number of issues.

More reading can be found in the actual Income Tax Act itself, this from the Department of Justice site.

I mentioned timeframe. Nowhere is a timeframe mentioned as a restriction in any registered plans, or even any kind of factor. In a regular non-registered account, timeframe is a factor in determining if a gain is of a capital nature or not as transactions involving "identical properties" from the Captial Gains 2008 Guide. See Page 35 under "Superficial Loss".

What this all boils down to is that if timeframe is not a factor and a stock traded is a qualified property under the plan then there shall be no tax implications on any gains, whether capital, interest, dividend or otherwise in nature.

Happy TFSA trading for any that are doing or planning to do so.

I suppose I should put this bit in...I am not a tax specialist nor do I have any qualifications to advise any one their particular tax situation. Please consult your own knowledgeable source before making any decisions that may affect your tax profile. If nothing else this entry can at least point you in the direction of doing your own research. Everyone should know what they are dealing with without having to rely solely on anyone else's opinion or interpretation.

Jeff.

Trading the plan

I have come to understand what my next hurdle is with respect to trading...trading the plan consistantly.

My fake trading came to be once I understood how the trades were executed. I could perform the same trading without using real money and produce a result that would be very close to the actual trade had I actually pushed the buy or sell button at the time. I know that I have been doing a lot more faking in the last few months than I did when I started...in fact I did no fake trading when I started. Everything was based strictly on backtesting, formulating a plan of action to guide my trading, then jumping in with both feet. I learned a lot from this method. Ironically I did not lose a lot though. I've been told by many that I should have lost it all already based on how much trading that I did.

Now comes the final crunch. In order to capture the same sort of results that I was able to create while fake trading I need to do one thing different than what I am doing right now when it comes to my real trading.

Trade the plan, consistantly.

I need to take every ideal setup that appears.

The consistant returns will materialize once I start trading, for real, consistantly.

Today I had two losing fake trades of six but did not make any real trades. I used to have a rule about not trading on Fridays, that is a poor rule but I still followd it today. In those six trades I cleared $150 net, tax free...had I been pushing the order button instead of writing down the next to inside bids/asks.

Jeff.

Feb 5th, recap...the missing link...

Well,

I was correct in my assessment, just a little off in my timing. HGU did take a turn for a gap closure, came within pennies I believe but not by noon as I surmised. Most of the drop happened between 1200h and 1300h. I actually timed it so that I left for lunch and expected to be enjoying a snack while in front of my computer at home when the price finally did meet the 200sma and cross for the expected drop. As usual I was tied up so I did not get to see it except in retrospect. Shame too.

Here is the chart for HGU:

And here is the chart for HGD that I would have been trading on in order to profit from the drop in HGU:
The trade setups are pretty obvious. At about 1225h the price of both HGU and HGD hit and do a little jig at the 200sma...HGU led by a little bit, that is the edge as HGU trades with a higher volume so it sees the action first, not by much but just enough. That is a strategy that can be used to gain an edge on any stock...find a larger very similar stock to use as an indicator. Even better, use a smaller Canadian stock that has a NYSE counterpart that trades higher volume...AEM is a primary example of this.

Anyway, HGU leads by a hair but the trade is rally just to get in once the price crosses the 200sma, HGD did this then pulled back just a bit for a nice $9.15 entry...depending on the volume some of the osition might have been opened in $9.16 as well...close enough for an anticipated move of this magnitude.

I cannot say for sure where I might have gotten out but consider that I was targeting the closing of the gap, HGU that is $12.75. I really don't care what the price of HGD is as it just moves the opposite direction, this makes the trade easier to execute.

So, worst case:

Buy $9.16 Sell $9.32 Gain 16 cents ps Return 1.7% (HGU hits and stalls at R1 for a moment)
Buy $9.32 Sell $9.42 Gain 10 cents ps Return 1.1% (HGU has more room to go, re-enter)

$0.26 gain per share or 2.8% overall return on trades, Keep in mind these are now in the 400 share position size range so that is a $104 for the pair of trades.

What I do to make it cleaner is to watch HGU for the actual entry and also for the exit. The quotes on HGD tell most of the story as well but as I have always played the short sell I find it easier to see the price dropping on HGU to judge the timing.

Back to HGU for just a moment, if I were trading for the day there are four more long trades using strictly the pivot points for entry and exit points, even getting two of them would be another 14 or 15 cents per trade at 200 shares for another $30 or so.

Not a stellar day. The actual trades that I did broke even (well +$5) so I can count 2 losers and one winner in the mix already.

Jeff.