April 23rd, SPY, SDS and the easy trade setups

I made some trades today, the following chart has them shown as numbered arrows. Red indicates a short position (long in SDS) and green a long position in SPY. I was trying to work with the market strength and weaknesses in conjunction with a few support and resistance levels. I didn't really do all that well though. Had I followed my rules I may have come out ahead a bit.

SPY for today:


OK, so I plotted the ideal trades today that I could have made by ignoring all the chatter that I have started paying attention to. Blue circles indicate the entry zones and the blue arrows the best path of the moving stops (not VTSOs). I chose the 50 SMA but could have used the 30 sma with similar results.

It is worth noting that the one trade that I did make according to my old rules I was stopped out early due to having a too tight stop which I blame watching too much data on... that and I was looking for a profit so I got trapped into the "small profit is better than none" mentality. Not a good place when a larger move is expected and possible. I would have obviously faired better using a break even stop then following the 50 up, as noted in hindsight.

SDS for today, same annotations:

The major rules used for these trades center around using the 50sma for entry given a cross over to the upside followed by a test of the line, this is the entry point. Initially a tight stop below the line is best so getting a good low price close tot he line is crucial. There are two ways to do this, wait and hit buy for a market order to ensure a position is entered or place a limit order just above the line in hopes of getting the test close enough. I decided to only use trades above the 50 and 200 moving averages for now. This favours trading with the short term trend and can lead to catching the longer term trend moves in a swing trade style.

Market order entry can be prone to placing the order too late and trying to catch a possible runaway price then having it return to the 50 sma and be too far out of the money and ending up closing the position. That or letting it run farther into debt to where the stop should be in the first place...only to have it keep going and losing more than initially anticipated.

Limits are important to keep the maximum loss allowance manageable. No limit order hit, no trade made.

Using those ideal trades, allowing a 30% hedge, commissions, 100 share trades and a losing trade or two still leaves $100 or so on the table... USD so about $120 CDN.

Back to what I know while gauging the new information against my trade rules to see how pertinent it may be in helping make my trade no trade decisions. I will only use the extra stuff as confirmation now instead of trying to trade off of it for now.

Jeff.