While I had two losing trades last month they were only losing trades because I closed them early.
I made a call earlier that the S&P500 would re-test 1150 this month which would have meant holding my February expiring trades would have been a good plan. I ended up closing them when the loss was near it's peak... due to the nature of spread trades and the late term volatility spike associated with near strike market levels I got spooked.
So, same thing is happening with my call spreads this month, even though calls are the most risk averse trades on the books they are mounting substantial paper loses.
Should I be concerned?
Probably.
My lowest calls are at the 1160 level and 1150 should produce enough resistance to carry these trades through to next Friday... but it doesn;t have to. The key is that as long as the market closes Friday (including afterhours trading) anywhere at or under 1160 all my spreads will be fine and I will see 100% of the target profits.
Seeing as there is a 20 point spread in the spreads and each point is worth $250 I will see a loss of $250 per point that the market closes above 1160 in one trade and per point that it closes over 1165 in two other trades.
I liked setting my own spreads in Questrade better as I could pick my own levels cleaner... having said that my levels were closer and therefore more risky. So perhaps I just need to back off on my aggressive stance on these trades at least until the market picks up some volatility to increase the spreads for better risk ratios.
I don;t have access to decent futures options quotes... yet... so I cannot judge whether I could produce better spreads or not. I think that I might be able to so I will setup a trial account with a US futures broker sometime to try out their platform and spin the numbers in my spread calculator. See if the same rules can be applied to futures contracts as I applied to regular options spreads.
Always something to keep my mind occupied.
I scanned through the charts that we have been trading in the trading room and I am picking up on some of the trade setups that are suggested. The key is to be able to recognize the setups pre-market and have the right stocks in front at the time. I think I could still do that on my own with a handful of stocks, maybe fifty, sprinkle in a couple of ETFs and trade with the general trend as it sets up in the market.
I could tie this into the bullish percent index charting by having a group of stocks in each represented index and trade among the index stocks while that particular index is doing well relative to the other indices.
Then there is the pivot point relevance, volume confirmations and order flow to know when to buy, where to stop and where to target.
Definitely a theory to pursue... sometime.
Jeff.
Questrade, My direct access discount broker.
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Hi,
ReplyDeleteI have been scanning some of your posts. Scanning because I have a hard time sitting and reading every word as I am ADHD. Anyway I am a trader also, I do not day trade per say, I would call it short term trading, I rarely keep anything very long, just long enough to make some good money.
The reason I comment Is I do not see a pattern to your trading. Do you just pick stocks that are cheap and hope they wil go up? I am sure you don't but you knowwhat I mean, I don't see a method.
I primarily trade biotech, espescialy small pharma. The reason being is that I am a biologist with a degree in physiology. I buy what I know and understand.
I was just wondering how you pick stocks.
I actually have several blogs on blogger.
silvermakesmehappy.blogspot.com
chukkam.blogspot.com and
cornerofshortandlong.blogspot.com
check em out,maybe we can share links.
If you haven't been following along then missing the patterns would be understandable. I have been trying to find my niche in trading so I have been all over the map. I have never picked a stock just because it was cheap (well, maybe once or twice), I would be better to take my chances at a casino. Everything has been based on technical setups and chart patterns, some better than others. I have aimed at stocks under certain prices but the technicals must have been in place first.
ReplyDeleteCheck stock picking theory I my index, that gives one of the first picking strategies that I used. it involved a bit of visual chart scanning. I would still use the exact same idea but I might focus on slightly different patterns now and perhap use options to include some higher priced stocks.
For daytrading and short term trading daily average ranges (ATR) are important to create the possibility of a move quickly and with large enough range to produce a faster profit. Then I would use the various timframe pivot points.
Currently I am playtesting some advisory services to see how they fair...I cannot recall how many I have tried, 10 or more, and most failed miserably, especially agianst their claims. I have been very selective in those trials to be sure of a guarantee to not cost me a lot to test them.
Right now I am making out very well with a daytrading room, a short term stock advisory, a momentum option service and the index futures broker...although that last I would be as good doing it all on my own, but they do make it so easy.
Jeff.