I've still been trading but almost none of it has to do with the CTP plan as I set out. I do believe that it is a workable plan on its' own, I just cannot help but tinker and tweak. Usually I end up with something very different than what I started out with. I tried out some different order types, looked at options trading, tinkered a bit with more daytrading and I am currently working on an Exchange Traded Fund (ETF) hedge plan to reduce the exposure to risk by playing a Bear fund aginast a Bull fund in the case of a reversal. I managed to get invited to a 1/2 day workshop which was really a marketing seminar for a trading course but they did drop some interesting tidbits and demonstrated their trading plan in short term day trades with live market and money. I had also joined a website as a 45 day trial member and went through all of their video material on stock and options trading.
Basically I am still learning.
I have found that there really isn't much else out there that is not already available for free if you know where to look.
The kicker is that you can do all the reading you want, know all there is to know about trading, not that I do yet, and still not be a successful trader. You have to trade to become successful...practise just like anything else.
Even so every piece of information I find all leads back to a few basic principles, most of which I found myself and have already posted here.
1) trading must be without emotion
2) loss management is more important than profit, trade to not lose and you will win
3) stick to the plan
I might add a new one that I sometimes have trouble with:
- when the circumstance changes and the trade is not doing what you expect...get out.
I have had many trades that gave me the opportunity to take a small loss, break even or even come out slightly ahead as I realized that the trade is not doing what I thought it should but I chose to adhere to my stop setting. What I failed to realize, in some cases, was that my stop setting was placed according to my Maximim Loss Allowance (MLA) and not necessarily where it should have been. What I mean is a stop should be selected after analyzing the movement THEN the purchase price set and if the Profit/Risk is acceptable make the trade. The stop should have some reason for being where it is other than I think I can afford a certain loss figure.
Back to the ETF for a moment. I opened a trial account with my broker using a more advanced trading platform...handy stuff but if you can trade you can trade with almost anything so I am just playing. It allows $100K play money credit, long positions but not shorts. So I picked 10 ETFs on the TSE, 5 Bear funds and 5 corresponding Bull funds. Basically the bull fund follows the index it is referring to, for example the HXU follows the TSX/S&P 60 and the HXD follows the same index inversely. There is a ratio to figure for this but I won't get into that now.
The theory is that buying an relatively equal number of shares based on price movement in each of the bear and bull funds of the same index will counter each other and you will always break even. I bought $38,000 in the 10 funds on Wednesday. Today I am down $159 ...three things affect that number though.
1) the aftermarket bid/ask quotes throw it off a bit
2) the ratios I came up with were rough, that could throw it off a bit
3) The relationship between bull and bear may not be constant
Still, the variance over 2200 shares is only 0.4%...close enough to prove the point that the funds can be played against each other. I'l leave that simer for the next week and see how far off it is and do a comparison fund by fund.
I'll post the strategy once I get it fleashed out and simplified. I may not use it but it looks like an interesting theory.
JD.
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