Penny Stock Trading

I've done an awful lot of trading over the years and never managed to place any penny stock trades. There seems to be some stigma surrounding these just because they are cheap. For that reason I followed right along with the crowd when it came to avoiding them. Grant it many pennies can be questionable but that is part of the game, rooting around the few that should be left alone. Even regular stock trades can be trades to avoid for the unwary.


I'll write more about Penny Stocks another time as I have some interesting ideas for some trading strategies that target these minuscule wonders. Time for some testing.

Meanwhile.....

I ran across this newsletter the other day while looking up some other information (unrelated) and thought that it looked interesting enough to share.

The site puts up a video and lots of information so I won't get into details here other than to say it looks like this fellow has an angle on penny stocks from a trading standpoint, and also from a non-trading standpoint so there is something for everyone who is interested in making money.

Check it out and feel free to let me know what you think.

Like most sites of this nature there is a 60 day  money back guarantee... I've tried enough of these in the past and ended up getting money back on some with absolutely no hassles every time. So if this is not necessarily your thing, the risk is practically zero. Sometimes you just have to try them to know.

Here's the link again.

Jeff.

Strangling 96 out of 100 and Online Spreadsheet Woes.

I usually use online spreadsheets to run my data when I am working on a new strategy and trying to see the future possibilities based on past performance. This time I have had to use a PC based system as there is just too much processing involved. The online services just cannot handle it. As a result I don't have my spreadsheets with me today, so my numbers are going to be rough generalizations. I also have some more adjusting that I need to do to my entry and exit criteria to get the accuracy that I would like.

Actually, on the entry and exit. This particular strategy does not conform to the typical style of back testing that you might see when trying to buy or sell a stock based on indicators. In those cases the indicators need to be overlaid and entry exit prices determined by using some complicated formula and a charting service that has some level of backtesting capabilities. While there area  number they are not cheap and the results are not always exactly what would have actually been traded... for a number of reasons.

Due to that my backtesting has typically been done by hand so that I would see what had gone on and applied my rules accordingly, I got to see exactly where the plan worked and didn't rather than just getting a number at the end of the test. This was necessarily very time consuming and, if a plan did not pan out, it was often frustrating.

This is different. I am not concerned with entry and exit points. I am not overly concerned with the price movements that the underlying security exhibits. I really don't care if it goes up or down or nowhere after a trade entry, only if it goes past my set move allowance from trade initiation to completion. The test is a win or loss determination for each trade based on the particular opening price and the particular price at option expiry (could be Friday's opening or closing depending upon the style of option traded). Each week there are one or two trades made, the allowance is applied for the time period and the result is spit out and tabulated as a total number over whatever time period I am testing for.

Also, unlike many backtesting plans my window tested can go back as far as I have data available. I can easily get free data for about 18 years, run that through my spreadsheet and produce a win rate in moments... just not online. If I want to apply a normal loss allowance I can do that, or I can use the actual closing value of the stock at the expiry of the trade to determine what the un-stopped loss could have been, sort of a worst case let it all ride scenario. I expect to do both methods to see what would have happened.

At this point I am seeing a greater than 96% win rate over all traded timeframes (1, 2 and 3 days). Well above my estimated 80% requirement. This is without any adjustments, just applying an allowable move percentage and making a sweeping assumption that I would have to use that allowance each and every time. In more volatile markets I could use a much wider allowance so the percentage I started with is really a minimum. I would rather not try to guess where the allowance could have been greater so I will just consider this as a worst case scenario. I have always liked to skew the results against me in order to keep the expectations more realistic.

Given such a high win rate and using a loss allowance of 4 times my option value (I may change that for a number of reasons but it is a good place to start) and applying this over the past since 1993 produces some very large numbers. I tend to think that the numbers are large enough that they can be discounted as, more or less, unworkable in a single security option. I expect that, at some point splitting the account into multiple security options would be necessary to not be trading all of the available open interest... that and switching to or adding the larger and more expensive index futures. This would also serve to mitigate any potential single loss. Of course there is always the removing of cash from the plan to use for personal uses along the way. I am not letting these numbers get me too excited as this is a longer term income strategy and I have yet to see what premiums can be sold in various option chains after applying reasonable move allowances to their respective historical data. I also have not accounted for income taxes in any of my math yet.

Even though past results do not guarantee future results I can at least be certain that if a stock or index fund exhibited 96 winning trades for each 100 trades and held this average for 18 years using a single move allowance value I can be pretty sure that some similar result may be reasonably expected to continue, particularly if I can apply varying move allowances to suit the volatility of the market in real time.

Jeff.

Strangling, forecasting the required win rate

Before I get to the backtesting results I figured I should check what might be needed for a win rate in order to produce a profitable plan. If I assume that I use a stock/ETF option produces at least a 10 cent credit each week I was going to setup a spreadsheet to forecast this over a period of time, a few years anyway, but decided that if I applied a very basic ratio of loss allowance against the expectation of profits it is very simple to calculate.

I figured if a 10 cent credit trade provides a $100 profit (10 contracts per side of the strangle, ignoring commissions at this point as they are only worth about 2 cents of the trade and I figure that 10 should be a low enough expectation to accommodate that).

Given the nature of a strangle, limited gain for larger possible loss, I used 4:1 loss over gain on a per trade basis. The 10 cent trade could loose 40 cents (which is actually a 50 cent move but the 10 cent credit gets applied against the loss) or a losing trade would be $400 for a winning expectation of $100.

Given this simple math I would need to see 4 trades to cover the one loss which is actually an 80% win rate just to break even. That's tough in the world of trading in the normal sense of buying and selling based on charts, fundamentals or news.

Keeping this in mind I will run the numbers for trading based on SPY (any index ETF would suffice to see the trend over time). After applying the range of 4% from open to close of the trading period I decided that I should also allow this range to be variable to see how much of a difference it might make on the win rate.

I also noted that I had been using the numbers based on Friday's closing price. there are only a small handful of options that expire in the evening of Friday, most expire based on the opening price on Friday morning. this is calculated based on the first moments of the market so I also need to adjust my spreadsheet test to accommodate this as well. Doing so makes the results more accurate as Friday can move quite a bit from open to close.

Win rates over time coming up.

Jeff.

Strangling the weekly options, back testing

I downloaded the historical data for SPY from about 1993 to date and ran three checks.

The first compared the opening price on Thursdays to the closing price on Fridays to represent the percentage move over those two days. The second compared the opening on Wednesday and the Third the opening on Tuesday, again to the close on Friday.

These tests would show the number of times that the price of SPY, in my first test, moved 4% over one of these periods. Now this does not reflect the trades being set at strikes that are greater than 4% away nor does it factor times that I might only make one side of a trade to reduce risk during particularly edgy times. I am assuming that I am trying to set this as a, more or less, automatic style of trading where I can place the trades according to strict rules. I would count all the trades, winners and losers, and use the lowest target trade entry price. For a full strangle my lowest acceptable credit would be 10 cents. That may change as I track the current weekly trade possibilities, but it is a good conservative number for now.

These tests would also count a cumulative profit and increase the trade size as the capital base grew. I know that weekly options were not available in 1993, not actually until fairly recently, so the exercise is for interest sake mainly. At least the testing covers the tech bubble and the latest bear market and the infamous flash crash.

More on the results tomorrow.

Jeff.

Strangling Risk Management

First note, weekly options expire every Friday which means they are very short term as the trade is closed as of Friday's closing price. If the price falls short of the call strike and doesn't drop as low as the put strike then I keep all the premium. If I sell options on Wednesday or Thursday I limit my exposure to one or two days, no positions held for a possible weekend move. With the short time to expiry there is not much premium left for time decay so the options are fairly cheap, probably less than 15 cents normally... depending on risk tolerance and volatility at the time.

All that the price needs to do is not go into the money in either direction so I need to set my risk levels wide enough to miss most of the large moves and close enough to still have some premium left to sell. For SPY I tried 4% first. Based on this, as long as the price does not move up or down 4% from the time of the trade then the trade is a winner.

On a stock with a price of $100, just to make the math simple, I would sell the $104 calls and the $96 puts. Calls are usually less risky than puts as a price is more liable to drop faster and farther than to rise far and fast so I wouldn't mind holding the strike a bit closer whereas a put I would sooner leave a little more room. So if the same stock was priced at $100.50 I would still sell the $104 call but if the price was $90.50 I would move the put down to $95 to have AT LEAST a 4% allowance.

4% is just a guideline though. As the market becomes more volatile premiums rise and I could just as easily go to 5, 6, or 7% as long as I meet my target weekly option price. I haven't set targets yet as I need to watch the options for a while to see which ones will be the best for premium vs risk.

Watching the stock for price moves into the money is one way to keep track of the trade. Another is to just set a stop loss. I am not as keen on stop losses on options as option prices can vary widely even though the option is still OTM. Perhaps a 4 or 5 times loss allowance would do it. For example, a 10 cent option sold would have to go to 50 cents to stop out. I am not as comfortable with this as it could lead to some whipsaws so I would prefer, when I can, to monitor the price activity when the option prices get that far out.

Actually, another method of loss mitigation could be to sell the next higher (for calls) or lower (for puts) strikes seeing as the prices are higher. Closing the first trade may not be required but can be part of the plan. While this might not eliminate a loss, selling another 10 cent option farther out can at least cut it by 20 or 25%. Adding  the other side of the trade to make a new strangle using the new stock price and adjusted strikes could effectively cut the loss by as much as 50%. Obviously I have not worked this particular trade management out completely as there is only a day or two in the original trade anyway. The worst case would be that one week's loss needs to be recouped over the next three or four weeks. How often can a stock make statistically unlikely moves from week to week? Given the correct analysis and application of the risk management strategy I expect losses to be few and far between even if they are larger relative to the individual gains.

Jeff.

Breaking down the naked option income strategy

Well, historical option pricing is a pain to acquire for regular options let alone weekly, so I will just do some tracking this week figuring that the current activity is more or less average.

I ran up a spreadsheet to compare trade sizing vs option pricing to get an idea of how much capital I would need to maximize my returns based on the commission rates that I currently have. The thing about this strategy is that the premium collected from selling an option that is far enough OTM to be relatively safe is relatively small. Selling 5 and 10 cent options means selling enough contracts to make it worth while. For example a 10 cent option selling 10 contracts returns a net profit of $83.05.

An easy method to increase the revenue without increasing the risk is to turn the trade into a strangle. If both sides (the higher strike call option and the lower strike put option, a naked strangle) are taken simultaneously the commissions are less than doubled (with Questrade anyway) whereas the potential profit can be as much as doubled.

Selling calls at $140 strike and puts at $130 strike for a stock priced at $135 might create a 15 cent credit or more (5 cents on the call and 10 cents of the put, but these prices depend on a lot of factors). This particular  single contract trade would require a cash balance of $985 to cover the margin requirements, although a single contract is not really worth the effort due to the small credit acquired. Take it up to 10 contracts per side and the margin requirement is $9,850. Profit on this trade would be $123.05 or, based on cash allocated, 1.25% return.

The down side of this is that, in the rare case that a trade goes against me the loss far outweighs the profits. This only means that the trading record has to have a very high win/loss ratio... back to the spreadsheet to create some historical tracking.

Jeff.

Return to the basics in option trading

I almost called it "Return to Fundamentals" but I am not a fundamental trader, never have been and I don't see that changing. Oh, this involves naked options, not really basic but the strategy is easy and should prove consistently profitable and, overall, relatively low risk.

I still like my latest trading plan but I don't like the need to hold a bunch of stocks in the wings waiting for trade setups. I look at tweaking the system every once in a while in order to generate more trades but I realize that more trades does not equate to more profit, often it is quite the contrary.

So, I return to an option trading strategy that I started a while back and add a few incidental facts that I did not have available at the time. If any were following along then and are still here it was my iron condor option trade strategy. While it happened to produce 100% profitable trades while I worked it, I shut it down as the SPY ETF options were getting rather cheap. This only served to drive the risk up while trying to optimize the profitability as I have to take options that were further away from expiry and closer to the strike prices. Besides, I had another grand trading scheme in mind at the time.

The little fact that I did not have at the time was that weekly expiry options were becoming available for various index ETFs. I had determined that I would need to start trading futures in order to see enough premium in option selling to justify running iron condors but I had tried that using a service already, and it did not pan out very well. Losses were more frequent and larger than I would have figured, but that is sometimes what happens when you work with a service and have less control over the trades directly.

Now, rather than selling options then having to buy the corresponding protective options to look after loss control I can directly sell options and set stop orders to exit for protection.

This allows two things to happen. One, cost savings for the trade overall, no buying and Two, I can take cheaper options which means closer to expiry (days) and/or farther out of the money.

This is where the weekly options come into play. Each week I can place a trade that is one, two or maybe three days away from expiry and select options that are far enough out of the money that the chances of them closing in the money are very very slim, I'll work that one out next post. These options are using the European method where they cannot be assigned prior to expiry so there is zero change of getting stuck with stock pre-maturely and they are traded right through to Friday evening which means I don't have to just sit and wait to see what happens on Friday as the prices could go anywhere. I had that happen where a loss turned into a larger loss over the Thursday night. Not fun.

I know this is an all over the place post but I wanted to get some information down and out of my head so I could focus on the particulars that I need to work out before this actually can be deem ed a workable trading plan. 15 years of backtesting for starters... even though the weeklies have not been around for more than a few years this lets me track the underlying price activity in order to see historically significant moves which provides me some idea of the possible risk involved.

Jeff.

CMC results to date

The posted CMC trades, just one of the stocks that I am tracking and trading, has produced a decent return on investment since September.

Five trades posted, 4 winners and 1 loser.

Using the typical "$1,000 invested could have been..." method of reference seems a little unrealistic as the price varies and percentages can be deceptive if spun the right way. Assume that a trade size of 100 shares (the typical lot size) the first trade (a short at $14.50) would have tied up $1450... so I will use that as the starting capital. All trades thereafter remain 100 shares and, but as it turns out, $50 would have had to have been added to keep this size as the price does rise into the last trade.

Total profit was $400 for a 27.6% return based on the first trade of $1450 (26.7% if you count in the extra $50 added at the end)

Not bad.

Doing the compounding thing based on the share prices for each trade turns this out to $406. Interesting as I thought that it might have been a bit higher. The loss early on and the larger share price at the end reduced the effectiveness of the compounding.... but an extra $6 is still $6.

I'll post my total record next time around. I have the data but just have not run it through the ringer yet, some I traded and some I did not so it's a little all over the place right now.

Jeff.

CMC and not so live trade blogging

I've been somewhat tied up in other projects (personal and work related and I have not taken the time to keep my blog updated. Some of the trades that I have been tracking I have not actually managed to get into, and some I have. I can only do so many things. So, I am updating my favourite stock following today.

My CMC trade posted active on November 23rd, 2010 didn't get entered. The way the price hovered around $15 then broke up just did not instil much confidence in a followup drop in price, basically the setup looked far more bullish than bearish. As a result I just decided to let it settle into the next groove. In the interest of not looking like I am fitting the trades to the hindsight circumstances I will keep it in the mix as if it were made anyway.

Book one loss of $1.50

As such the setup came for a long trade, a little more aggressive based on older support / resistance rather than new trend establishment, enter long at $15.50 following the mid-December high of $17.46. February 17th saw the $18.00 break which made the setup a little less aggressive but still active.

Mid-March saw the price spending most of it's time in the $15's so there was lots of time to get a decent price for this trade. Target exit at $17.00 met on March 29th.

Book one profit of $1.50

Of course a short is in order next, target entry was for $17.50 to allow a little space to wind up and make this a lower risk setup. Trade filled on April 1st and closed on April 18th at the target of $16.00.

Book another profit of $1.50.

All in all not a bad producer.

Jeff.

Broker hiccup? (NOT!)

I tried to close my IAU position this morning but I keep getting a "More shares requested than in current position" message. I even tried reducing the order, setting a stop order, limit order.... no avail.

As much as this is frustrating I am not terribly concerned about it... yet. Gold jumped a bit between my attempt and now, almost $8, and the fund jumped from $13.71 to 13.79.... about 8 cents. Yes, there is a reasonably close correlation in short term moves on this one.

I would like to set a stop and just trail it manually, I'll have to wait for the broker to get back to me... or I can call the order desk if I feel a strong desire to have this dealt with quicker.

UPDATE:
I called the trade desk and had it pointed out to me that I had an outstanding stop order in place and therefore could not add another order on the same shares (DUHHH!). I have been trading with and without stops for a while no so I just forgot that I had one in place. Once I had placed a couple of failed attempts and had them rejected then looked at the order status I failed to notice the original order nested in the bottom. Classic newbie mistake.

Anyhow, the price climbed back up near it's high for the week at $13.85, I closed it out at $13.77 so I don't need to sit on it for the weekend. With the Middle East shenanigans it may very well gap one way or the other by Monday and I would rather not deal with that... so an overall 3.11% gain on a short term gold rally trade.

I look at the entry and exit based on the gold futures contracts and drool... a little. $6,000 in profits. Now I am not trading those so the point in moot but what is interesting is that there was a bit of a disconnect between the percentage increase between the ETF and the futures. Prior to this week they were tracking with the ETF a little ahead but this week the ETF has been a full 1% lagging. A shame as I was likely to be closing the trade this week it would have been nice to have been able to post an extra point on the return.

Jeff.

Resisting the urge...

I keep having to pull myself back from overtrading. I have considered selling and buying this gold trade a few times and I may have come out ahead based on my timing BUT I am resisting and sticking to the plan.

Today I moved the stops up on my first trade and entered a second position, double basically, and set the same stop. This has me at breakeven for trade one and 33 cents down on trade two.

Today's entry was close to not getting filled due to the shallow pullback off the start, but I stuck to my entry price. Had I started earlier I would have got my price pre-market, just busy with other stuff.

I am starting to go over my previous trades, as I mentioned I was going to. It looks a little monotonous as I will have to print out and manually annotate my charts as there are no studies that cover what I am looking for. Most indicators are available (Aroon, On Balance Volume, moving averages and perhaps I'll use the Bollinger bands) but cross referencing time scale charts with non-time scale charts... either nobody does it or they have and not found it useful.

Actually, over the years I have found that all of the non-useful stuff is readily available and all the really good stuff is near to impossible to get without having to pay a fair price to get, so I am now wondering if what I am doing is just one of those things that may happen to work very well. If nothing else I can prove or disprove that theory this weekend. The trouble with any study is trying not to let the known future affect the trade ideas that are to be based on the past data.

Jeff.

Gold continued....

It's nice to be in a trade that is actually doing something.

EOD today has my gold trade up 1.82% as gold sits in the mid 1370's. Target is somewhere over 1400.

I have closed all of my other trades as of yesterday. While my win rate is just under 50% (too many shorts as the shorts did me in with this grinding rally overall) I have more data to play with while I wait for the setups to setup and trigger. I decided to apply an On Balance Volume (OBV) indicator to my trades to see how it reacts to the various price moves. I haven't been using volume as a factor in my trade decisions lately and I think that it may have been a factor that could have made me take, or close trades at a different point.

Sometimes simplifying things too much can be just that... simplified too much.

Jeff.

Gold ETF and equivalency tracking.

One of the factors that affects how appropriate an ETF is to replace an underlying index is how well it tracks relative to the underlying index moves. Right now I am in a gold trade that I am using IAU as a proxy for gold futures contracts.

I have both the futures and the ETF prices tracking from my entry point as if I had bought both. So far my real position in IAU is beating the futures by a slim margin.

For example, last night's close for gold was 1362.7 and IAU was at $13.32. Now futures trade after hours so there is no continuous price changes to compare so EOD is as of 1600h yesterday. The increase from the position opening is 0.87% for gold (11.7 points) and 0.98% for IAU (13 cents per share).

While this is worth noting the real difference is mostly negligible as futures contracts can vary based on factors other than just the traded price for gold. If the contracts are skewed high due to demand or expectations then later on the futures increase in value may be less than the corresponding ETF as this initial disparity shrinks.

Basically, if the tracking is this close I consider it acceptable to base the gold trades off of the futures contracts for triggers at entry and exit. The only exception might be that virtually closing the futures trade due to proximity to the expiration date may not apply to the ETF trade. It depends on the trend.

Jeff.

Gold proxy

I was away from my computer for the entire trading day and of course gold did the move that was to have been the setup to get into the trade. As a result I took the trade smaller than planned a little past the entry.

I used IAU as a proxy for gold futures or CFDs. It is cheap, under $15, so I can buy enough to let me feel comfortable with the smaller break-even move.

I did have trouble figuring out the correlation to the pricec of gold and decide to let the relative price action dictate the final entry. I may take an additional position tomorrow if there is a small pullback.

Off to bed for now, it's been a long day.

Jeff

ERTS Addendum

I look at the closing numbers today and see that ERTS closed almost $1 higher than my exit, $18.12.

It looks like a breakout move that some may try to get in on to ride a momentum gain.

Volume was a huge 38million shares.

It may hold, this is one reason why I tossed around the idea of staging in and out of trades, to let something like this run. I did decide against it for now in favour of the surer bet of getting out at target profits though. Too much gaming involved for me right now as I am still keeping a lower trading profile.

It's time I go over my charts again and see what is in position to get back into.

Jeff.

DRAT! Electronic Arts (ERTS) jumped today.

That isn't the problem... actually there is no real problem here.

I had a position in ERTS, long, and I have gotten rather lax in checking the pre-market activity on my longer term holdings. I set a target exit and just let it ride.

Upon checking into my portfolio (I keep a tracking portfolio on a free charting site for quick reference as I don't need to log in to look at it) I noted that ERTS had a 15% jump.

DRAT!

I had a much lower target set and, had I been checking the pre-market, I most likely would have either raised my target or cancelled my order and set a VTSO after the open. I did get 15 cents over my target in both entries at least ($1.67 and $1.15)

Based on my entries I saw 5.8% and 8.5% returns... but I have held these since October last year. Compared to my 10 day, 2.5% trade in gold last week that's poor. But, a planned gain is a planned gain.

I am still waiting a setup to go long on a gold trade using IAU as a low priced proxy for gold. It doesn't track as well as I would like but overall I am expecting the trade to span at least a week, so a little off should be no big deal. This is actually a breakout move to the upside and I am using a stop limit entry to buy. Due to the tracking error I need to monitor the entry and probably manually enter it. Although if the price of gold gets close enough to the target entry I can estimate the correlated IAU price pretty close and enter an order at that point.

The variance is just not working out to be able to set this one on autopilot.

Jeff.

FX equivalent trades

Today was to have been an FX trade for the Australian to US dollar (AUDUSD pair). Seeing as I do not have a forex account I looked for an alternative in the ETF world. FAX is an Australian dollar trust which closely follows the AUD so I figured it would be my best bet.

Seeing as there were no short funds (reverse correlation) I would have to short the ETF in order to take advantage of the expected pullback. The stop was about $1 higher than entry and the target was over $3.50 lower, a nice risk/return ratio... except for one hitch.

The order was rejected at the broker.

I did wonder as volume was not huge on this fund whether I would be able to short it in the first place, I guess not. As a result I am sitting on the side lines out of the trade. Too bad I did all the math to get into it.

I fully expected to not be able to take part in all trades through this newsletter service, so this is the first. I will be able to take the long side at least as there will be no trouble buying this fund at such time as appropriate for a long position.

Oh well. I am curious to see if this trade works out anyway.

Jeff.

Gold... short for the pull back.

I am not a gold bug by any stretch of the imagination. I know I used to do some day trading off of the gold indices some time back, and had fun with that, but I would take the long and short with equal ease.

Today I closed a gold short that I entered and managed by using a newsletter service that I started earlier in the month.

This is not a typical hyped newsletter or trading service. It's inexpensive, informative, membership is small and is based on personal trades made by the newsletter author. The only reason I am doing this is I have followed this fellow for some time now and have seen his ideas play out well. Also I was on his mailing list when it came time for him to actually monetize his ideas. Based on his fee and number of readers he is not doing this for the money.

That is the good side, the not so good side is that he bases his trades on futures contracts, CFDs (Contracts For Difference... which I have to research more to really understand), FX and commodities. These are all less familiar to me than typical stocks and options.... but that is half the fun.

The last trade was a short gold play to take advantage of the counter trend move as gold pulls back (my style of trade in the first place). He based the trade on CFDs that are worth $10 for every $1 (research needed here). Not only do I not have access to these I doubt that my broker has them anyway and there are restrictions that do not allow US citizens to even trade these... not that I am American but it just makes them likely harder to get into.

In order to be able to trade in my current arena I need to convert everything over to ETFs... which was easy enough as I just plotted the Gold March contract prices (highs and lows over 6 months) compared to the corresponding ETF highs and lows (DGZ for short and IAU for long), calculated the current price correlation and the current ratios, plugged in the target entry, exit and stops and VOILA! ETF conversion.

My entry was bang on and my exit was 5 cents lower than the exit target... but that is due to me not being able to trade ETFs afterhours as futures and CFDs are, so I took a 5 cent loss of potential to ensure a pre-market exit. It turns out I could have nailed the target, but that is the nature of trading.

DGZ entry at $15.73 jan 18th (short Gold ETF)
DGZ exit at $16.30 jan 28th (today)
3.6% gain in 10 days. a 100 share trade pays for the annual membership to the newsletter. Nice start.

I played it small in order to be able to not be concerned about how much I had in the trade and to ensure that I could take part in other trades that may come up. We had a S&P500 trade that I lost a few pennies on but it was opened and closed as a daytrade and I had to wait until the next day to close mine out... obviously a hinderence being restricted to typical stock trading hours.

Jeff.

Lethargic Trading Strategy

... at least that is what it feels like.

I closed two trades this month one winner and one loser.

I started looking at gold ETFs to see if I want to dabble in those, perhaps look again at some others. Gold should be set for a pullback, in fact it already started without me so I will likely wait this move out.

That was exciting.

Jeff.