I stayed at home for the morning so I figured I might get some one on one time with the computer and the markets, not quite but close. I made some trades, wrote down some trade ideas that I did not trade... usually due to timing or some other factor... and reflected on where I am heading with my trading next.
I have been slowly adding to the various pieces of information that I try to assimilate in order to judge a trade worthy of entering. I started out trying to fundamentally analyse a company for long term purchases. I decided that was as much a crap shoot as anything else so I dropped it in favour of technical analysis.
I tried to find the right combination of indicators and trendlines for medium term trading that I could mechanically trade with. Finding the right combination is likely as hard as learning the data moves behind it, so I did that next. I now find more information is available and I am adding that to my knowledge base.
I have gotten over the nerves of placing trades, grown accustomed to taking losses and have stopped berating myself for placing a poor trade.
Over the past year and change I have made many hundreds of trades and I am quite familiar and comfortable with different orders, although I still need to work on getting my stops at the right price, far enough away for price movement due to volatility but close enough to keep my losses low.
Enough reflection. I have tracked enough winning trades to know a good setup when I see one... I now need to recognize the daily trend earlier to judge the direction that the great setup is likely to take.
BTW, I considered taking the hedged entry for uncertain moves and felt that the loss (two trade commissions, loss allowance on one trade and the possibility of getting whipsawed out of both trades) was too great a risk for a single trade. Besides I tried that and it is just more complicated than getting to know the next most likely move and reversing the position if needed.
Rather than natter on about any trading today I am just going to make a few quick notes on some chart shots. The SPY chart: (I'd use the SPX but I cannot seem to get the pre and post market data for the index)
Nice start to the day with that smooth move off the start. Zooming in to that first trade setup on the SPY chart:
Now here is the same time on the SSO chart, note the slight difference of position of the price with respect to the 200SMA... just enough to sway my idea of the trade entry direction, pretty major tidbit. Between this descrepancy and the spiking of SPY more often I decided to go with SSO for trading as of today. It's a leveraged ETF so it does give me more position sizing flexibility as well.
Checking the TICK for the same period yields inconclusive information as it is pretty middle of the road so far. Tick does take a jump right at the end of the pullback but lags price by a bit, as any indicator usually does.
Now the Advance Decline chart is a little more promising. The value cleanly tests -1500 and, even though remains under the averages it looks to be saucering nicely near the end of the same time period.
I have a table of eight of the major index ETFs and I recall they were all looking reasonably positive (no major red off the start anyway).
Of course none of this is conclusive to give a trade signal and I am sure that there were a few other factors that I could have looked at to determine that this was a very high probability trade to the upside. There were four other similar setups later in the day but none with as large or as sure a move. As fate would have it those were some of the ones that I played with...win some lose some. I need to recognize quicker when a price is just going to wallow and get out with a small profit rather than holding it back into a loss.
Oh, here is the SDS chart for the same trade, this shows the testing on the downside of this ETF, seeing as it is a short fund this just validates the SSO long trade that much more:
Longish post and I didn't even get into the other trades.
Jeff.
No comments:
Post a Comment