What a Week!

Well, this past week was a roller coaster. I started with a zero day on Monday, just opening trades, continued with a good Tuesday, a down Wednesday... then Thursday hit.

Daytrading turned over $800 net, which was nice but the real kicker was all the momentum options trades that I closed as the market did it's thing. I closed about 20 positions at various points over the afternoon and saw well over $7,000 net profits. Based on the capital in play that is about a 70% ROI.

This month, one week in at least, I have set every trade at 3 contracts so, other than attempting to cherry pick trades, I have fully optimized my trading plan as I should have been doing all along. Plugging in 4 contracts shows about an increase of 50% in profits. That makes the move to 4 the largest gain in potential as I am getting past the effect of commissions. I posted a chart already indicating the increase, by percentage, for each single contract increase in overall trade size.

I could go right to 4 now but I would like to have one more week at three as I cannot run 10 trades at 4 yet... although one day will change that if is a profitable day.

On another note, Questrade has dropped the $5 daily fee for trading in US securities in a TFSA and RRSP account. That will bump my bottom line by $100 a month. That alone is a 1.5% per month increase in profits based on my original starting capital in the TFSA. Not a lot compared to the overall but every little bit does help.

Daytrading and the original targets

Well, I get to revisit the original targets that I set out a while back for average daily profits for my old daytrading plan. Currently I am 8 trading days in but I have only opened and closed trades on 6 of those days. Once I close the trades that were opened on the other two days I will adjust my averages and stats accordingly. Over the course of time I expect that I will have most trading days active... or I will just count all days whether traded or not for the purpose of forecasting.

I am at 6.87% total return on my original capital. I transferred $10,000 over for this venture and this week is the first that I have really used this amount to it's maximum as I am currently holding $10,646 in trades open... seeing as they are all still open I guess I cannot call these typical daytrades... perhaps just really short term trades.

Anyway, Seeing as I am just finished the ramping up process as I have just managed to allocate full capital and I am already hitting the 6+% mark I feel reasonably confident that I can easily nail 1% per trading day in the coming months.

Targets for the margin account are $250 average daily profits as this will accommodate taxation to provide a particular after tax profit of about $150. At 1% this is attainable in 6 months as I will see $25,000 in capital at that point. Seeing as the target of the room is $500 days with $25,000 starter cash I would be quite happy with my 1/2 sized target.

Most of the profitable trades have been options trades and a margin account does not extend margin to options trades...so whether these are in the margin or TFSA make no difference. This allows me to transfer cash to the TFSA and trade tax free over there...my original plan... which only needs to see a $150 day average for the same target income. That is month three at 1% per day or the same six month window if the return is only 0.8% per day... on average.

This only counts my daytrading account. I have my swing and momentum options account as well as my index futures options accounts that I will tally in the final total later. For the purposes of "income" the daytrading is the primary as it is going to be most active followed by the momentum options then the swing trading. I am likely to leave the futures alone to grow on their own and consider it a retirement account for now.

The coming weeks will tell if my targets are attainable or not.

Jeff.

Streamlining the daytrading

Today was a good day, profit wise and because the trading room managed to start and finish two trades and stay within the 1.5 hour target time. Yesterday's trades that were left open are still open though so this allows some more profit room in case those two happen to need to be closed for any losses...we'll see. I am looking forward to the days when we can run 5 trades and have most come out ahead like those today.

Updating my numbers:

Daily average net profit: $172.73
Trade average net profit: $39.86
Trades total: 13
Account gain: $518.20
Account gain is a tough one as I have segregated the account in my mind as to what is being used for day trading vs other trading...so I'll just use the hard numbers instead of a percentage return. It's somewhere over 3% this week as a whole though.

I am playing with two performance tracking formulae that give me an idea of overall record and a ratio for future trade expectation. Once I get a handle on exactly what the numbers mean I will elaborate further. The short story is that they should indicate to me general trade expectations to help determine whether I should be upsizing or down sizing my positions based on historical profit statistics.

I did some number crunching on my Optioneer trades last night but have yet to add some of the "detached" spreads I placed to recoup some of the losses on two trades. Everything is positive but I may be changing the trade entry criteria in order to better diversify the trades as a whole and to reduce the overall risk with wider iron condor call/put levels.

The overall impression I am left with is that some of my expectations, while realistic under most market circumstances, may have been a bit too aggressive. My overall trading goal is going to govern how aggressive I may need to be in any single strategy that I am working. Seeing as I am working three actively now it looks like I can afford to loosen the reigns a bit on the Optioneer trades. My initial plan was to get to my primary cash flow goal number one with Optioneer alone. Seeing as I may be able to reach that goal faster through day trading while still running Optioneer and the medium term swing trades... well... let's just say that I am quite happy playing things a little looser.

All in all I am feeling pretty good with my progress even though I have not followed my initial idea...that of doing this all on my own. I have learned that "wholly self directed" may not be the most efficient path towards my ultimate goals.

Having said that, deciding what "help" to hire along the way can be more of a mine field than the stock market itself. I have tried a great number of services to whittle down to the ones that work and that takes resources in both time and money that I had not initially anticipated.

I did not envision doing a report of services available so I have not gone there. Some did not work due to the fact that the underlying plans are just not valid, others didn't fit my style or account type, some needed more money to enact. So rather than service bashing I will, eventually, talk about the ones that did work out. Most have limited subscriber list size so getting in, if not on the ground floor, is a game of attrition so the topic may be moot anyway.

The day trading room is one such service. 200 subscribers only and there is a waiting list. Today indicated why it needs to be restricted as we played out an option trade. We could see how even just one member rocking the boat can affect the entire trade outcome easily for the group.

It's certainly getting there though. Today was a $330 USD day net all commissions and I was using about 1/2 sized trades.

Jeff.

Closed some overnighters

Closed some laggard overnight trades today and opened two more.

This day trading at the open is turning into short term momentum trading. Quite a few trades are doing nothing off the start and taking a day to resolve...or two...and then not really doing much. Sadly I didn't start keeping stats on these specifically but I think that I would be better off closing them at the end of the day rather than holding them over...but I am not the one that came up with the trade idea in the first place so I do not have all the criteria and factors to make that decision easily. For now I will ride along and see how it works out.

Today I have 11 trades closed this week and two open overnight.

Average per trade is down to $17.09 but my daily average is up to $94.00.

I half expect that will drop if all I did tomorrow was to close the two open trades as they look as if they are set for a loss... but that could be completely wrong based on the setup they are in as well as I could easily have 5 more trades tomorrow that make nice gains.

I know very well that there is a good possibility of making really good profits doing the early trading but the good profits will be from the trades that take off right off the bell and those have been few so far. Last week had a couple of those but there were many more that were missed due to the coddling that was going on with the non-traders in the group. That does not seem to be an issue this week so either a few dropped, were dropped or did some homework over the weekend.

I pulled a boffo by leaving a stop on an overnight stock and it got stopped out mid day. All I had to do was buy it back later in the day when the price was lower anyway...even at that it did not make any great profits for me, so in hindsight I might as well have left it alone.

Considering that I am trading a little less than half size positions right now I consider I am doing well enough. After this week, if I see a solid profit number I may ramp them up 25% to 50% larger and end up with 100% sizing by the following week.

I still think that the group has some growing pains to go through as I could easily handle more concurrent trades given my sizing but we are topping out at five. I would love to see up to ten.

Jeff.

Housekeeping, Questrader Elite, One Down

There is not too much to report on the trading front today, just some housekeeping mainly.

I cancelled one swing style trading service as the track record was next to abysmal. Considering the marketing said that I should be making nice profits in the first 30 days....not only was I seeing losses I was also seeing a 1 in 7 win rate. At that the winner was just a small profit as well. Full money refund.

I did go back and check the historical track record. 57% winners. Not a spectacular record at all. Now had I made every single trade over the period I would have made out OK. Say $1000 trades every single time would have me in the $20,000 profit mark after well over 200 trades. History didn't seem to want to repeat itself or I would have held the service through.

One of my trial criteria is typically to test and use the "free trial" or guarantee period to pay for the service. If it can do that then I will carry it forward for a while and see how it works. To date I have not ever had one single service do that.

The second service is doing much better. 1 winner, 7 in the money trades and one loser. Not bad

Then there is the daytrading.

Work in progress this one. My trading volume is up just over 60 trades this month so I elected to upgrade to Questrader Elite again. This gives me more active charts, multiple order boxes and a dome order view which, I haven't tried before, allows me to place orders by clicking on the quote. I also recall something about being able to place limit target orders and stop orders simultaneously...but I might be wrong on that one.

As far as the service is concerned, I like the live atmosphere of a trading room. The trades are somewhere under the 50% winners right now....but I have pretty much chosen to discount last week as a writeoff due to the issues surrounding people not being able to follow instructions and the gearing up of a new service.

I should have waited until this week to start. If I add up the total subscriber base and multiply the annual revenue from this alone it certainly behooves the host/moderator/supplier to produce some results. The attrition rate if he does not will be terrible.

I have some faith in this though. Others are using other services from the same fellow and they are quite happy with the results. So I am only one week into a four week trial anyway. Like I said though, I may start over with this one.

Jeff.

Day Trading Three

No, I am not going to give blow by blow every day.

Today was notable as it started out more than a little odd. I set up at home to listen in and do some trading. I setup my laptop for the audio and plugged speakers into my PC USB for power. I was setting up my trading platform (nice to get Questrade's Questrader Pro back on line now...so much easier to see everything at once and execute trades with one click on the security and one click on the buy/sell button...but I digress) and jotting down some of the setups to watch when I decided to turn on my overhead lights.

ZAP!

The lights came on and the computer went off. Smell of burnt electronics wafting from the back of my PC.

Turns out that I fried at least the power supply, the USB port, the speakers and the earphone plug on the laptop all in one go. I cannot see how it was the lights that did it but there is something funky going on.

Now I was up and running in less than 30 minutes in my office on different equipment when I should have taken the hint...don't trade today, I was not meant to trade today...or at least not meant to make any money.

Two trades, one long play that netted a whole 10 cent gain and a large for me put option play that lost 23 cents.

Now, seeing as the trading room provider has some sort of obligation to perform with timely advice on trade executions and seeing as this is live I expect that the next few days will be better. One poor day in the first three is not a braking situation at all.

So, time to check out the physical damage to the two computers and go over the wiring to see what, if anything there, might have caused this.

Jeff.

Day Trading Two

I traded again today until 1030h. Covering the trades is of little consequence as any one trade is just that. Four completely different stocks (one option and one missed entry) resulted in an up day... which is good as yesterday ended down by less than the commission costs.

$145 between the two days with very small position sizing. My option trade was the big winner today as it was inside month and just ITM. $4.90 to $6.00 on two contracts is a $220 trade.

My overall win rate is 2 of 5, not stellar but the trades average out to $29 per trade net losses and commissions. The idea is to keep the losses tight and let the winners run.

Return on investment is hard to gauge as I never had my whole capital at work. Having said that I am using my margin account which allows my 3:1 margin. I have about $5,000 in there that is not already in medium term trades so I will count this as my base for now. That leaves me with a 2.91% return for two days.

Yesterday was supposed to be a trial day for the trading room as this is a brand new service setup so we were not supposed to make any money... so if I do not count yesterday I am actually at 3.25%.

There are about 200 people in the "trading room" at once, all paid subscribers as I mentioned. The executions are fast. The room administrator...I don't know what he is called, is running the show by bringing up stocks and pointing out the entry levels and possible targets. I can follow along and see what is going on on my charts easy enough but we are paying him to come up with profitable ideas.

Originally this was not my idea of trading as I wanted a self directed account where I am the producer of the ideas and executioner of the trades... and the beneficiary of the profits. I am learning more of what to watch for in the first hour of trading. I did not fair very well in my initial foray into early hour trading before and now I see some of my pitfalls quite clearly.

So, for the time being I will follow along and produce some gains and grow my margin account. I figure that I can treat this as a training course rather than a cash cow so once I get enough experience under my belt I will be looking to do this on my own. It does give me a crutch that I could use if my own ideas end up not panning out.

Jeff.

Daytrading, another self test

Quite a while back I had an idea to trade in the first hour of the market in order to make a few good intraday swing style trades at the time that the trading is the most volatile. I found that it was tough due to poor information flow or just plain wrong judgement calls. I made some nice trades and some poor trades.

I have learned a lot doing this testing of my ideas, and some ideas of others as well. The thing that I find about all the old ideas that I have tried is that they always reside in the back of my mind as I think about future ideas or trades. Something will come up to remind me of something I tried before and may offer a new slant or a twist that may make it work better.

This is just another example, the early day trade. I plan to start with some pre-market setups this time...get positioned before the big volume start in some cases.

Today I jumped back in and joined a chat room style setup (paid subscription). It took only a few minutes to setup my charts in my old platform, nice to get back into something that has some faster execution and tracking tools. I am set up now for pre-market trading as well as after market...not that I plan on being there after market. It was also nice to hear some banter about the market and the securities being looked at.

RIMM and GOLD were on the plate and I ended up with a break even morning with only two trades. I looked at the options a bit and would have been better off trading those even with the higher commissions. That may become my focus in future.

I bailed on my trades before the big run up in GOLD and before the return to break even in RIMM. The GOLD potential had I played my stop just 5 cents lower (even a penny would have done it as I got nailed at $72.00) was a full $2 gain for my entry by noon.

The setup was to get in near the daily pivot point at $71.27, I waffled and got in at $71.40. I was following along with the room but my normal play would have been to follow the price with 1/2 PP moves...I split the pivot point and resistance 1, 2 etc in 1/2 size increments and move the stop as each higher (or lower for shorts) 1/2 point gets hit.

So, in at $71.40 or less (ideally). Initial stop at $70.80 (1/2 S1).

Trailing stops at $71.26, $72.07, $72.88, $73.33 and $73.76, all the 1/2 points of S1 through R2.

Price moves from PP to 1/2 R1 ($72.07) and I placed my stop at $72.00 I should know better then using even numbers as I should have used $71.95. I was stopped out and left the trade at that. Since, the price hovered there and moved past $72.88 without pause and cleared $73 to hover at the current $73.40 range. Consolidation and prime exit point here.

Definitely worth noting is that the monthly 1/2 R1 line is $73.41 which was the upper range of the day thus far.

RIMM was to have been the exact same play, the price did not approach the PP until about 1020h so I got in far too early. When it did approach it nailed the $70.45 and promptly headed back up returning to near the opening price. The best trade plan would have been to short this off the start for the move tot he PP (almost a full dollar) then reverse the trade at the pp for the return (75 to 90 cents depending upon the exit).

As long as I have charts with the pivots and support and resistance lines this is not a difficult method to trade. Right now I am using esignal delayed so my live charting is through my trading platform...there are very few usable tools there for charting... so I may upgrade my esignal package to realtime again soon. Once I establish a credible profitable trading strategy and pay for the service that is.

No charts today.

Jeff.

The day in TICK

Here is the trading day today, as mentioned, all fake traded, most live.

The first chart is the TICK chart that I use for trade entry. This is a larger window of the next chart as this shows a little more detail. The first two arrows are the first two trades of the morning, both in SDS to play the SPX short side.

Green lines represent the trade duration and stop times.
Moving averages are 15, 30, 45, 60 SMA.
Dotted black lines are 390 period moving averages of the high and low of the TICK extremes.

It is worth noting that the first trade could have happened in the minute prior to the arrow or in the following 2 or three minutes and the trade would still have been a decent trade...even a little later than that would have worked out, seeing as the second trade was 9 minutes later and only necessary due to a possible tight stop. In reality I am not certain that I would have kept the stop so wide though... I expect, being so early in the trading day that I would have been up another ten cents on the stop which would still have gotten me out in the same minute.

Here is the day in TICK, up to the second last trade:

This is SSO and the trades made using the TICK entry.

Following is the SDS chart for the trades as well.

It is worth noting that I tried a chart entry early in the day and compared it to a TICK triggered entry. I entered SDS for a 15 cent loss and two minutes later, waiting for the TICK to set up, I entered SSO for a 30 cent gain. I have more faith in the TICK method for these ranging sort of days. We'll see how this whole idea works out in the wash.

I notice only now the pattern of the trade entries. Seeing as the range was set in just over the first hour the day can hardly be called a trending day but the pattern of generally higher lows after 1100h are similar to an uptrend. All of the entries in SSO (long SPX) are at the bottoms during the uptrend pattern. All of the trades in SDS (Short SPX) are somewhat later than the bottom during that same period. This leads me to check out the TICK chart closer for clues as to why...I suspect that an established uptrend has the MAs in synch whereas the counter trend takes longer for the MAs to indicate an entry against the grain...similar to a standard price chart.

Total gain for the thirteen trades was $1.78 per share of SDS and $0.64 per share of SSO.

Assume 100 share trades and deducting commissions that rings in at $112...USD so add about 20% for my currency...but that is all moot as I did not actually trade these trades with my currency.

The point is that, using the TICK entry setup I did not have a losing trade but every single trade at least broke even even after commissions. Checking over my stats from my short trial period leaves me with a 21:4 win/loss ratio. My worst day was 5 out of 9 trades loosing and still showing a net profit for the day.

Time to start the real trials to see if I can get anywhere close to those kind of win/loss numbers.

Jeff.

February 23, the real deal.

Today I managed to be at home all day with nothing to do except make soup for my sick kids, nothing serious but they stayed at home. So I took advantage of the time to see if the problem with me trading was me or the environment.

Turns out it is mainly the environment as I placed 12 round trip trades and had fun doing it. No qualms about getting into trades. So the whole basis for my not getting trades in is still the interruptions of the regular day.

Here is the chart for The Global Gold index and my notations for my trades.
Green boxes are the time and price changes that I was long in HGU (Bull follows the index)
Red boxes are the time and price changes that I was long in HGD (Bear inverse of the index)
Red arrows are my losers, they are pretty tight so no separate boxes
Horizontal lines are the various pivot points, blue primary and green support.

I followed my rules, for the most part, and entered as the price passed and/or tested the appropriate points.

The first trade I jumped out of too soon, I just didn't feel like starting the day with a loss, so I had a breakeven...in hindsight that was a mistake. Even the second trade I bailed on early. Trade three I got out at the appropriate time but the price did not pullback close enough for me to consider another trade. I am using 50 cents or closer on the Global Gold as a margin for entry. Number 4 passed the 1/2 S1 point cleanly so I jumped in to catch that small gain. I was aiming for a move past the 200sma and hopefully a larger move than I got, but I exited at the peak.

The next two trades were washes as the price was squeezed between the rising 50sma and the dropping 200 sma with the 1/2 S1 bisecting the move...the breakout would be a toss up so I tried applying my entry rules firmly here using the 1/2 S1 as the trigger then using the 200 as a trigger prematurely. I will be watching the price relative to the 50 closer now as I see that it has some affect as resistance and support when conjoined with the other points.

The trade just before noon was a classic 200sma entry. I bailed a little prematurely on this one as well but the activity softened too much for me to feel real comfortable staying in. The next entry was banking on a drop in price and there was a brief rally that went high enough to shake me out only to get back in for the same trade, even though for a slightly better price I should have had more confidence in this one as at this point in the day gold was brushing the $1000 mark and I do not believe it is ready to jump past that point just yet. The 1300h and 1400h trades were more typical of what I might expect normally as I used the primary pivot point and the 200sma to play the price drop with HGD. I anticipated most everything to be downhill from here but did not have as much trust in my call as I should have.

The last two trades just whipsawed me out as I played the 1/2 S1 line crossing for momentum. The wost thing was that the last trade was right, I just didn't hold it long enough to see the drop. There were no more trade setups beyond that, other than the last drop off which was a nice technical setup but I decided to stick to my plan.

Overall I am down by some of my commissions as I choked on all of the larger upward moves.

Lessons learned.

1) have a bit more faith in the trade plan, it does work.

2) pay closer attention to the squeezes, 200/50 sma with support and resistances

3) the fast moves past the lines can be captured, as I did, without relying on the pullback or rally to test the support or resistance. In all of my back testing I would not count a fast single bar move past a line without a test. I will still not count them for back testing to fudge against me.

Jeff.

February 9th

Alas...I could not give trading my full attention today again. Once I miss the first few trades I have stopped trying to catch the secondary trades as they are not as lucrative and not as predictable...having said that I still would have made out OK this morning with the later trades


HGU chart.




0933h Buy $13.09 Sell $13.50 Gain 41 cents ps Return 3.1%
1030h Buy $13.12 Sell $13.14 Gain 2 cents ps Return 0.1%
1035h Buy $13.13 Sell $13.23 Gain 10 cents ps Return 0.8%
1117h Buy $13.12 Sell $13.27 Gain 15 cents ps Return 1.1%

$ 0.68 gain per share or 5.1% overall return on trades

All of these trades are strictly by the book, my book anyway, except number three as that was just an attempt to get back in for the anticipated move...I jumped out too soon on trade 2 and realized it soon enough to get back in at an OK point. The problem with doing this is that commission tend to eat up any profits...in these cases I saw $24 gross...$4 after commissions, hardly worth the effort.

This is why I have decided to stick mainly to the pivot point entry setups, less "hopeful" trading and more "numbers" trading.

HGD for the downside trades

0946h Buy $8.93 Sell $9.10 Gain 17 cents ps Return 1.9%
1101h Buy $9.01 Sell $9.14 Gain 13 cents ps Return 1.4%
1131h Buy $9.05 Sell $9.10 Gain 5 cents ps Return 0.5%

$ 0.35 gain per share or 3.8% overall return on trades

These trades don't appear to be "by the book" as I use HGU for trigger signals. So where I might sell a short in a regular margin account I would, instead, just place a long order in HGD as long as the price of HGD has not already headed up. It usually lags by a bit so the timing is pretty decent.

The last trade was a momentum...or better yet, a weakness following a momentum move in HGU...or gold if you want to take it back to the source. HGU jumped quickly and there was no way the price had enough support to continue so the quick downside produced a 5 cent move in HGD...with 400 shares I would take this trade as it is a very high probability small target as long as there was enough depth in the inside quotes...which there was here.

That trade was not according to my rules. I have to have some fun sometimes.

So, all in all the morning would have produced an overall net profit of $206. Although there were no real losing trades I did have two of the seven barely more than break even once commissions would be figured in.

This should have been a 5% return on portfolio day for me.

Jeff.

Feb 5th, recap...the missing link...

Well,

I was correct in my assessment, just a little off in my timing. HGU did take a turn for a gap closure, came within pennies I believe but not by noon as I surmised. Most of the drop happened between 1200h and 1300h. I actually timed it so that I left for lunch and expected to be enjoying a snack while in front of my computer at home when the price finally did meet the 200sma and cross for the expected drop. As usual I was tied up so I did not get to see it except in retrospect. Shame too.

Here is the chart for HGU:

And here is the chart for HGD that I would have been trading on in order to profit from the drop in HGU:
The trade setups are pretty obvious. At about 1225h the price of both HGU and HGD hit and do a little jig at the 200sma...HGU led by a little bit, that is the edge as HGU trades with a higher volume so it sees the action first, not by much but just enough. That is a strategy that can be used to gain an edge on any stock...find a larger very similar stock to use as an indicator. Even better, use a smaller Canadian stock that has a NYSE counterpart that trades higher volume...AEM is a primary example of this.

Anyway, HGU leads by a hair but the trade is rally just to get in once the price crosses the 200sma, HGD did this then pulled back just a bit for a nice $9.15 entry...depending on the volume some of the osition might have been opened in $9.16 as well...close enough for an anticipated move of this magnitude.

I cannot say for sure where I might have gotten out but consider that I was targeting the closing of the gap, HGU that is $12.75. I really don't care what the price of HGD is as it just moves the opposite direction, this makes the trade easier to execute.

So, worst case:

Buy $9.16 Sell $9.32 Gain 16 cents ps Return 1.7% (HGU hits and stalls at R1 for a moment)
Buy $9.32 Sell $9.42 Gain 10 cents ps Return 1.1% (HGU has more room to go, re-enter)

$0.26 gain per share or 2.8% overall return on trades, Keep in mind these are now in the 400 share position size range so that is a $104 for the pair of trades.

What I do to make it cleaner is to watch HGU for the actual entry and also for the exit. The quotes on HGD tell most of the story as well but as I have always played the short sell I find it easier to see the price dropping on HGU to judge the timing.

Back to HGU for just a moment, if I were trading for the day there are four more long trades using strictly the pivot points for entry and exit points, even getting two of them would be another 14 or 15 cents per trade at 200 shares for another $30 or so.

Not a stellar day. The actual trades that I did broke even (well +$5) so I can count 2 losers and one winner in the mix already.

Jeff.

February 5th, mid-morning update

Today is a crappy day for trading the gold ETFs, they are terribly range bound after opening very strong based on the pre-market surge this morning in the price of gold.

I made three trades and am still up $5 but that is a pretty poor showing but not too bad considering the churning going on. I decided to let it wallow and work this kink out.

I had figured that the opening gap would be closed buy noon so I played HGD bear for the downslide that never really materialized, I was still ahead though. So I switched to HGU to try for what looked like a possible break up after 1000h, against my decided bias for the day, and didn't fair well as there was no solid move. Too much horizontal with lowish volume while in a trade makes me edgy as the longer it plays that way the less likely it becomes that the move will materialize in my favour. I usually try to exit these while in a profit position but will dump within a few cents of my mental stop, usually based on a technical trigger for me.

Yesterday was a day to play with the bear fund and today was a day to play with the bear and bull combined. I am still getting "into" playing the bear against the bull rather than short selling so, even though I faked a lot of trades, it takes a little more on the ball to play these back and forth. The market orders are making this a lot easier to manage.

Now that HGD is well below $10 that puts it into the 400 share position size range for me. I have been using 300 shares and find that the fills are broken but within a penny. They do not trade inside orders of high enough volume to secure a clean full fill in one shot...I am curious how 400 share orders are going to work out for me. Nice to get larger positions under my belt with smaller prices and smaller moves now, this is part of my plan to grow with the account.

Jeff.

January 27th

Bummer day today, just didn't make the trades but the day was a small target day all around. I tracked a few trades but didn't pull the trigger on any of them, didn'y feel like getting most of my profits eaten up by commissions for little return.

Having said that my few trades didn't do too bad. Every time I go through this process this month I have decided to not make the trade but jot down the planned entry and exits as if I were in.




0932h Buy $11.96 Sell $12.00 Gain 4 cents ps Return 0.3%
0935h Buy $11.93 Sell $12.04 Gain 11 cents ps Return 0.9%
1008h Buy $11.76 Sell $11.95 Gain 19 cents ps Return 1.6%
1111h Buy $11.95 Sell $11.99 Gain 4 cents ps Return 0.3%

$0.38 gain per share or 3.1% overall return on trades

Pretty small stuff but still all winning trades...and still $74 after commissions...1.85% return on the portfolio which is still over my 1% daily target

The last trade, although small, was a nice technical setup as I managed to write down the two possibilities:

"setup at 1/2S1 but the 200 4 cents higher - resistance - wait for

1) drop to S1 for entry

2) cross 200sma for entry"

It crossed the 200, I got in, watched for the waver and got out. A good trade in that it did what I expected off the bat, just did not follow through for a larger gain. The whole point here is that the exit is as important as the entry and both were executed according to plan. I could have held it through the pullback to $11.95 and subsequent rally but I MAY have gained another penny or two...and if I had held for the first pullback my mind is set on holding through so I would have ended up losing as the price plummeted to below my entry.

These days are only good for smaller targets so take the smaller profits when they arise and this will keep the losers at bay.

Ther is a cliche in trading that states, "cut the losers short and let the winners run". That is all fine and dandy but a cliche does not a plan make. Small churning markets are no place to try to let a trade run when there is profit on the table, too risky.

Jeff.

January 26th, looking back a day.

Talisman Energy chart.


PP200 firm rule following today.

I checked the pre-market and figured that a run for R1 was in order, it made it sooner than I anticipated as the price opened above 1/2R1, hit R1 and hovered for 15 minutes then climbed again. I got taken by surprise as there was no pullback to test R1 so I did not get my entry. I think the long waver just under R1 might indicate that my PPs are a little high today. That and the quotes looked too heavy in the asks to comfortably enter a long position hoping for a quick R1 break. So the price made it to 1/2R2.

There were some small target possibilities over lunch as the 200 rose and crossed the price. At shortly after noon it looked like the 200 was setting up as nice support with 1/2R2 as the target. As it fails on the fourth test it becomes resistance. This is were I would just tkae a break as the targets between the 200 and the two closest pivot points are just too small.

I did make a trade at 1253h off of R1 as I figured that was as high as the 200 was likely to get, so I tested my entry plan.
R1=$12.11
Limit order filled at $12.12 (target is to be within 2 cents of the PP price)
Price reached $12.21 and I closed at $12.20
8 cents per share. Certainly nothing to write home about but still a $24 trade with 300 shares.

I almost made a second similar trade at 1257h but with the dropping 30 and 50 sma lines together I figured my target was no longer the 200sma. That and with the price under the tendancy might be towards a continuation of the down trend so I would be trading against the trend big time.

Speaking of trends and moving averages. It could be argued that there were a total of three trades this day.
Long form 0930h to 1130h
Short from 1130h to 1430h
Long from 1430 to 1530h.
For a rough total of about 90 cents per share

At 1330h there is a really nice example of why I like short selling so much. R1 gets broken on the way down, hesitates just enough for an entry and topples 25 cents in about 15 minutes. For curiosity sake that is about $5 per minute at my 300 shares.

This is the point where I should be entering HED long as capped energy peaked twice very near it's 1/2R2...Trying to follow PP200 I was watching for HED to hit 1/2S2. The relationship between it's pivot points and price are probably not as firm as it realy follows the index rather than it's own trading, so they are guidelines only. I know this but am hesitant to trade it until I get a firm foothold with TLM and the long only trades.

Horizons Betapro chart

I have been concentrating on a single stock trade for some time now and I have a hard time tracking two, especially one that inversely correlates. This may take some getting used to.

Jeff.

Backtesting

I was a fan of backtesting when I started looking at trading as it gave me some cool numbers to indicate what I "could" have profited had I followed a particular strategy. I learned a few things about the fallacy of backtesting in the process, namely that it is historical and can be misleading.

The key is that the testing proves that a strategy has potential and needs to be followed up with live testing.

I did a bit of historical testing of what I am calling PP200, just 8 trading days worth.

I used the PP, R and S lines primarily, the 200sma for some reference and the 1/2 lines occasionally. I placed the orders on the first pullback to test the respective lines and exited on a re-crossing, weakening of the price, next line hit or, if the move had a large momentum then when the price move weakened after the next target was crossed. Orders were only placed if the pullback came to within 2 cents of the target line to give me a mechanical entry criteria. Price used was the target plus 2 cents for the entry and minus 2 cents on the exit. Trading was stopped every day at 1300h. Commissions are accounted for in the net profits.


There were very few losing trades, which surprised me as I expected a fair number, perhaps as high as 40%. I only saw 6%, so I will assume that is higher in real life. There were fifty trades altogether.

TLM, long only trades

Average daily return (based on the full $4K portfolio) was 1.45%
Total for the period was 11.6%

HED, long only trades

Average daily return (based on the full $4K portfolio) was 2.68%
Total for the period was 21.45%

$1322 total combined net return or 33%.

My normal fudge is to drop the net return by another 30%, so that makes $925.40 or 23.1%

Interestingly the HED trades only number 16 but almost doubled the returns from 34 trades of TLM. I think this may be due to the fact that HED follows the capped energy index and smooths out the variances and hiccups along the way whereas TLM is a straight up stock. I believe that this will require some testing under fire as this mitigation may prove useful for smoother trading results.

Either way that is a decent return for two weeks trading. One of these days I will get around to applying this strategy to prove the results.

I keep in mind that all of the live testing that I have done in the past was with real money and I had no qualms about losing a bit here and there in the interest of learning the ropes. This month I have been very hesitant to pull the trigger even though I know my strategy. It would appear that "getting serious" has some psychological implications that I did not anticipate.

Jeff.

January 16th, Friday

Normally I stay away from trading on Fridays, along with a few other holiday related days, so I only watched some key times to see what was happening. I would like to take a look at three of my charts anyway to check out the PP200 possibilities that occurred.

Talisman Energy first.

The premarket action looked like a similar setup as yesterday, likely headed down after a gap up. With this kind of gap I would expect a gap fade strategy to work well...if I could short. The first trade would not be a sure thing as it is only on the halfway point between PP and R1. Two and three are specifically using 200sma and end up being very small as the 1/2R1 acts as resistance. Fourth is right off the PP but again a small trade. All told there might have been 45 cents altogether here, 300 share trades assuming commissions and no other losses would yield $105...making every trade and exiting well.

Suncor

The first possible trades were only playing with the 1/2R1 so they were not solid PP200 trade setups...but could have been traded given the rest of the indicators being in good shape...but they weren't as I checked a few times. After 1130h was the key time here as the price came down to meet the 200sma and it acted as support. The following four trades were solid and could have garnered $1.15 per share...200 shares less commissions for $190. The fifth trade would have been the kicker for a good 70 cent run.

I really need to get comfortable with this ETF as I am only playing long, as I have mentioned many times. The chart after the fact looks really spotty as the price appears to jump around. This is the uncertainty factor on these. The quotes show another story though as they smoothly slide from price to price and I think I could nail some of them in between the gaps. It looked like three decent trades but this is even farther out specualation than I have been doing on other charts.

Jeff.

January 13th, final tweaking

Still no account setup yet so another day of fake trading. Yesterday was a learning experience due to the short range, today was one just due to the mediocre range. Market is still under 9000 so still uncertain. It needs to either head down or up before there will be much large volatility again...but that is fine, perhaps I will start trading cash when the market picks up it's heels and I can start on a good day.

No matter.

TLM chart for the morning. I added dashed lines to represent the mid range of the pivot points, specifically the ones that are off the chart so this gives and idea of where they will be AND provide another possible zone of resistance and support. I have known that these can be as relevent as the PPs themselves sometimes, in their own way, I just didn't plot them or really use them.

I did a bit of swing style trading as the price moved up, I could have just held the first trade but I wanted to see some profits after yesterday's poor performance. The bluse circles are trades that I considered but waffled on so missed the entries...I refuse to chase a price as it is quite likely to retest the entry price level before moved the way I anticiapte it...that just puts me behind more should I be wrong. This has proven to be a very useful strategy by keeping me out of some losing trades altogether and letting me exit gracefully and without fear.

Buy $12.00 Sell $12.18 Gain 18 cents ps Return 1.5%
Buy $12.12 Sell $12.25 Gain 13 cents ps Return 1.1%
Buy $12.27 Sell $12.27 Gain 0 cents ps Return 0%
Buy $12.16 Sell $12.23 Gain 7 cents ps Return 0.3%

$0.38 gain per share or 2.9% overall return on trades

HED privided one decent trade. I kept plugging away at TLM until the SPTEN looked like it was going to give out for a bit...chart at the bottom.

I entered earlier...or later than I ought to have. I would not have go in on the early trade as I was just exiting TLM so waiting for the better setup would have been more prudent. I think I should have exited this trade at S2 in order to have folowed some of my plan. I held through and let it ride up to S1 though and madea decent gain.

Buy $17.25 Sell $17.65 Gain 40 cents ps Return 2.3%

$0.40 gain per share or 2.3% overall return on trade

The following SPTEN chart shows the ideal timing for HED in blue and the actual timing in red circles. This shows the inverse correlation between the S1 and S3 on HED with the PP and R1 on SPTEN. Had I had the dashed halfway point between PP and R1 it would have been clean support and would have corresponded with S2 from the HED chart. I marked the relationship between SPTEN PP and HED S1 as the prices crossed them at about 0945. This led to the assumption of other correlations and makes it easier to follow the concurrent charts.

Total tally was $144 net for a portfolio return of 3.6%.

January 8th

Some post market strategy checking.

I plotted four trades in the morning based solely on the PP200 plan. The first trade was pretty early and almost more an impulse trade than a PP200. Without seeing the premarket quotes and watching them at the open it is hard to know for sure that this was a good trade entry but a price dive to very close to the S1 and a quick return like this would be well indicated, getting in in a timely manner would be the only real issue. The 200 was broken above the S1 so I might have figured up, I am not spending too much time on this now though so I will just follow the pivot points and price action. There was another good entry just after 1030h but in the spirit of the plan I only added teh trade after waiting for the 1100h bouncing on the previous close.

Buy $12.32 Sell $12.69 Gain 37 cents ps Return 3%
Buy $12.56 Sell $12.70 Gain 16 cents ps Return 1.3%
Buy $12.70 Sell $12.76 Gain 06 cents ps Return 0.5%
Buy $12.71 Sell $12.91 Gain 20 cents ps Return 1.6%

$0.79 gain per share or 6.4% overall return on trades.

The first trade value would be bang on $5000 for 400 shares so I might have used this as incentive to make that first trade, risking an earlier trade to take advantage of an additional 100 share position size. This would also allow me to play the rest at 400 shares due to the profit off the first trade.

At 400 shares that would be $264. Should I not make the first trade then the rest would be 300 share trades and the profit would have been 42 cents per share for $126

Both figures are well past my target so I would not begrudge missing the first trade....but let's look at SU and HED anyway, just for kicks.

The first trade is setup and bounces pretty early off of S1. Dark blue is previous close and open acts a strong as a pivot point so I would have considered the first little peak an exit point and would not regret missing the next move up as a result.The second trade is a bit more complicated as it starts to incorporate the 200sma into the mix. Rally off the entry is good, the pullback is more than I might normally let go but the price is over the 200sma and returns to test it momentarily without breaking down...maybe a little risky but a solid probable hold. Given that it played out once the next pullback tests the close price, twice, then heads up over PP. I let it ride enough times and would jump here as my target was met nicely.

An aggresive trade move here could include scaling out, selling half and letting half ride or really aggressive would be to hold as long as the red 30sma line holds. Either would have had me holding past R1 for a full exit with 60 cents ps extra, but I am not greedy even in historical testing.

Buy $26.57 Sell $27.04 Gain 47 cents ps Return 1.8%
Buy $26.77 Sell $27.80 Gain 1.03 cents ps Return 3.8%

$1.50 gain per share or 5.6% overall return on trades.

At 100 shares that would be $150. I could not trade more than 100 shares as even 200 puts the trade size at over $5K. This is why a smaller priced stock can be much better to trade right now. Having said that I do not want to go too far with this just yet as more than 400 or so share trades may execute differently and the losses are also larger by the same scale.

Actually, I changed my mind. The Energy index did not drop enough anywhere to make trying to play HED a good enough idea. There were a couple of potentials in the afternoon but I won't bother with the charts for those. I wouldn't have traded them as I was already in good shape from the morning and I don't trade in the PM yet and there were still some decent long trades on stocks left int he market anyway.

Jeff.

January 7th, "could have's"

I did not trade or even look at the market today but I decided to see what it could have had in store for me. Sticking to my PP200 strategy, which is pretty much just using pivot points for entry determination and the 200sma relativity for bias and sprinkling in a little market timing for the exits, I plotted out the most likely trades of the day.

Both Suncor and Talisman had down days and that is the bias for the day based on the price starting out the way that it did. Watching for the support to appear at the primary pivot point the entry occurs upon the PP test as the price heads back up. Exit is pretty standard as the price gets near the R1 and a classic candle pattern looks like a peak. If this had been in the middle of a range I might let it go. Perhaps a 40 cent trade for 100.

Talisman didn't pass the PP so just entry right off the bounce...either the second or third minute following the test. Exit is a classic volume depletion. About 20 cents.

Both of these trades are against what would be expected for the day but at this point the actual trend is not really established, so I would be trading the opportunities. There appears to be another long trade just after 1030h except that the next pivot point, S1, is much lower so it would not have followed the PP200 strategy. If I chose to stray I might have entered this one on the second dip and may have seen a 30 cent gain...a lot would depend on the setup at the time though. SU had a very similar opportunity but again, without being there ...

Now, the Capped Energy index is basically the exact same pattern and is the "control" for trading these stocks...see the fourth chart for the HED bear ETF.

This is where the money was today. Considering that I expected a down day I would have my eye on this one more so than the others. Considering that I can only trade one stock at a time as I am going "all in" for each trade I do have to make some decisions about where to focus. I am more comfortable with the stocks at the very beginning and they bounced nicely so one of those would have been the primary trade. Then, shortly after 1000h the slump starts so shift to HED in anticipation of the trend setting.

After trading SU or TLM the second trade on this chart is the first real candidate. Second test of the S1, maybe a slow entry. The little hesitation midway to the PP corresponds with the SPTEN index testing it's PP... given the bias I would hold that through as there is not much of a pullback on HED. It then screams up past PP as SPTEN drops like a rock. 85 cent gain.

The wrap up:

This trade takes me to about 1045h so I would stop having met my goal for the day and it being near my time cutoff. If I had to choose between SU with it's larger swings or TLM and it's larger position sizing I think I would tend toward TLM. SU's trade was 40 cents ps at 100 shares for $40 based on $5K capital but TLM allows 300 shares. So a 20 cent ps trade profits $60. It goes back and forth as to which is better on any given day with this ratio so I am probably best to just pick one and go with it. TLM is close to being able to trade 400 shares so It would be my focus soon anyway.

HED also allows 300 shares traded so an 85 cent gain is $255...nice. If I traded the rest of the day and followed PP200 there is another 50 cents overall as the price of HED bounces along the 200sma...kind of the norm for afternoon trading so i eventually want to be able to take advantage of some of these long rides. I just plain do not have the time right now and I don't think I want to play with VTSOs jsut yet.

I don't go on much about losers as I have about 5 losers for the last 30+ trades and they are for pennies a share...so extrapolating that here might reduce the possible overall gain by say $20. Even if it was $100 I would still have met my goal but I would not allow a $100 drawdown ... anymore.

I have to keep in mind that my goal per day is 1% return on portfolio... $50 right now so all these larger numbers are almost pure gravy, like today's $315 or yesterdays live trading at $366. I like to keep myself grounded so I do not get carried away when the money is on the table. I also do not want to slack if I do have such nice days as I do not want to get lazy or over-confident and lose my edge.

I will probably post a wrap up for the last round of trade testing later. It looks better than any of the previous tests even though I was hard on myself.

Jeff.