March, mid month review

This week's trading has me thinking over my trading strategy, kind of a mid month review...or even a post trading review for the last couple of months.

All in all I am down right now. That does not concern me in the least though. I am still testing the trading waters and getting more and more familiar with the market activity. I think that most people might be more concerned in my particular situation than I as there would be an expectation of having made money by this time. My only real concern is that I cannot add any more cash to my TFSA account due to the $5K annual contribution room so that will eventually restrict my trading power should I not turn profits...eventually.

I am waiting for my RRSP to be established in my trading account and I can do the exact same trading in that account so I am not terribly concerned about being restricted over the longer term.

What is a little disconcerting to me is the spiral of the ETF pricing right now. As the bear and bull funds' (Horizons BetaPro Global Gold, HGU and HGD) prices cross the crossover continue to get lower. The last time that I noted the crossing price was somewhere around $12.50. Last week it was about $10.20. Each successive crossing will continue to get lower as the nature of a leveraged ETF drives the valuation down.

This leads me to wonder what will happen to the ETFs as the price gets lower and lower, consolidation, re-valuation, closing of the funds, perhaps they will become a penny stock equivalent.

Recently I have noted the cost of ECN fees as I pay 37 cents per lot when I use a market order, generally. As the price gets lower my position sizing gets larger and my ECN fees climb. Right now with commissions and ECN fee for a round trip trade I am paying about $12. Still a good rate though so perhaps I should not be too concerned.

All this has me looking at stocks again. There are advantages to day trading stocks over ETFs as well. The volume and quotes of the stock mean more than those of an ETF as the ETF follows the valuation of the index it is tracking. The price stands on it's own as it is not dependant upon an index even though an index came be a nice correlating indicator. The disadvantage is that I cannot short inside my accounts of choice.

So, this is not so much a review as a bit of a rambling. Later today I will be going over all of my charts and trades to come up with a better more concrete set of guidelines for trade entries. I will still continue trading the ETFs at least until the end of March but I hope to have a more flexible entry and exit strategy. I am fixed in one mindset for a day and that usually is based on the previous day or two and whatever method I am considering at the open. That has been most of my downfall I believe. This past week was the week for playing with stops so I was looking for larger moves. Some of my entries were decently profitable had I been just exiting based on weaknesses, enough that I would at least have been up overall.

Jeff