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.

January 6th trading plan, PP200

Yesterday's plan was to use the new idea of the Pivot Points as entry and exit and the 200sma as a genreal bias indicator...although I could not trade for the whole day it turned out that most of the good moves were in the monring anyway and I was done by 1030h.

So here are the charts for the trades of the day, Suncor with two trades.



Buy $28.60 Sell $29.40 Gain 1 dollar ps Return 3.5%
Buy $29.63 Sell $29.60 Gain (-3) cents ps Return (-0.01)%

$0.97 gain per share or 3.3% overall return on trades

First is a bounce off of the R1 for a early entry. I may have considered selling as the price hovered just below R2 but these were live trades, not historical speculation and I decided to hold it through and was rewarded by another 25 cent move. The second trade was placed as the price bounced off of R2 but was exited at 100oh due to weakness in the overall market as seen by the decline in price on the following Capped Energy index.

This index chart gives me my signals for trade exits and worked well yesterday. I will be following this index even more closely now as the last two trades of the day were on HED, the Energy bear ETF, chart follows:



Buy $14.31 Sell $14.64 Gain 33 cents ps Return 2.3%
Buy $14.65 Sell $14.85 Gain 20 cents ps Return 1.4%

$0.53 gain per share or 3.7% overall return on trades

The strong inverse correlation between the Capped energy and the HED ETF make for a nice combination as the index tends to lead the ETF by enough time to make the trades and enough time to place a good exit. The only factor is that the quotes tend to move ahead of the actual price more so than a regular stock, partly due to the low volume and difference method used for valuation. This one could be a decent vehicle to perform some true scalping...but I don't know how the low volume would affect such a strategy.

The Energy index dropped through R1 nicely, and would have been a great short sell trade on SU if I could short. Instead I look at the HED and see the corresponding gain in price. Using the PP200 plan I would not enter until R1 was broken on the way down which equates to S1 broken on the way up on HED for about about a 20 cent gain (conservative). Enter at 1055h exit at 1110h as the index stalls but the ETF doesn't drop off as quick.

Realistically I would have placed a more aggressive position trade at 1050h and exited at the same point for a gain of 38 cents. Both of these are just "could haves" though so I don;t count them as anything but a bit of chartwork.

Jeff.

Pivot points and the 200sma

When I first started trading I tried to set up semi-mechanical systems with limited success. I liked the idea of having the indicators make the decisions to buy and sell for me, mostly. The trouble was I did not trust it as well as perhaps I should have, I was new. I do not believe that mechanical systems are a great idea but they can work. One of the key factors is that they have to change according to the market, as any plan must.

So this is as close to mechanical as I am likely to get as I notice some correlation between the pivot points and the 200 sma line in my charts that perhaps can help to set the trade bias for the short term and perhaps even be used for some lazy trading.

Actually, this is not so much for lazy trading as it might be to let me track a few stocks at the same time. This comes back to the fact that I cannot use short sells in my trading and I will therefore need to watch more charts in order to be able to keep money active while things are turning down.

Pivot points and the 200sma are not so much points or lines as they are zones of support and resistance. In this sense they are areas to watch for activity that may indicate a good time to enter or exit a stock based on other indicators such as the quotes, volume, time and sales and correlating indices.

Here are two charts for today, the first fo SU and the second for TLM.
Blue is the previous day close
Red are the R1, R2, R3
Green arrows are buy points and red are sell points
Green line is the 200 simple moving average



For SU the primary pivot point is below the chart.

The mechanical idea here is that the pivot points and closing price will act as triggers for opening a trade long. Closing the trade is given more leeway but these points will also play into this as well. I did watch these this morning and know that the trades as indicated were definitely possible and would look just like they do on the charts, nice clean setups. A few of them I tracked but most I did not watch that closely.

Buy $26.60 Sell $27.40 Gain 80 cents ps Return 3%
Buy $27.40 Sell $28.00 Gain 60 cents ps Return 2.2%
Buy $27.75 Sell $28.10 Gain 35 cents ps Return 1.3%
Buy $27.80 Sell $28.10 Gain 30 cents ps Return 1%

$2.05 gain per share or 7.5% overall return on trades

Here is where the 200sma relationship keeps the trades capped. As the price drops below 200 the best next trades would be short, but I cannot trade short sells so this just keeps me out of the action here which is where the ETF comes in, but that is another story.

TLM followed a very similar idea, as it should as it also follows the capped energy index reasonably well, although today was a bit off as I couldn't really rely on the strong sector as an indicator.

Buy $12.90 Sell $13.10 Gain 20 cents ps Return 1.6%
Buy $13.02 Sell $13.22 Gain 22 cents ps Return 1.7%
Buy $13.16 Sell $13.24 Gain 8 cents ps Return 0.6%

50 cents gain per share or 3.8% overall return on trades

Keep in mind that I plan on having a certain dollar amount committed to these trades so SU might be a 100 share position and TLM would be a 300 share position. In those cases the net gains would be $165 and $120 respectively.

It is a shame that short selling will no longer be available to me as there were as many opportunities to short as there were to go long even with the strong rally over the day. I consider the fact that there will be no taxes on any of the profits and that will make up for a large part of this minor restriction.

Jeff.

Exchange Traded Funds (ETF)

Here are four charts that might be examples of what I would be tracking at once.

This first is the Horizons BetsPro S&P/TSX Capped Energy Bear Plus ETF for last Friday afternoon trading. This tracks the TSX capped energy index inversely.

This second chart is the same period for the Bull version of the fund as it tracks the energy index directly. Note that the price is not in the same range.

This is the S&P/ TSX Capped Energy Index itself.


This last chart is Suncor Energy.




The correlation of Suncor and the TSX Energy index is more obvious when looked at in better detail but the pattern is pretty obvious.

The volume of the two ETFs is substantially lower than SU. The volume is not a factor in the ETF's though as they are tracked to the index with some variance due to the bid/ask spread of the ETF. I need to watch these ETFs to see how they behave and it will be different trying to trade a derivative that is not driven by the traders trading it directly.

It is worth noting that ETF's can be traded using all the normal order types available to use with regular stocks, limits, stops, shorts, probably VTSOs and I understand that there are even options on these as well...although I don't anticipate using those.

There are a number available for most of the popular indices, gold, natural gas, oil, financial etc.

Jeff.

Dec 31st and a new toy, TLM

Talisman Energy.

True to form I cannot leave well enough alone. I want options and to see what else works. I have proven my strategy workable for AEM, now SU and I would like to test it on one or two more so I have a total arsenal of four of varying prices to choose from.

I ran a new scan today for stocks between $10 and $30 with a volume over 500K per day. I ended up with about 40 stocks to choose from, cut out all the ishares and ETFs as well as small movers to pare it down to about 5. Then I concentrated on only the ones that had patterns that mimicked AEM, Suncor and the realted indices.

Cameco Corp (CCO) and Talisman Energy (TLM) were the only two that exhibited the qualities that I was looking for. CCO is about $20 and TLM is around $11 so I chose TLM for the ease of trading small if I so decide to really scale it back. Both are energy related, TLM more so...but enough of this boring research, they follow the indices in the intraday and daily scales and that tells me as much as I need to know.

I checked the pre-market posturing for TLM at 5 minutes before the bell and decided that it sould start down and best to concentrate on long positions today...so long as soon as it looks good. Rather than playing the quotes as hard as normal I decided on a technical entry based on the primary pivot point (horizontal blue on the chart) as that looked to be where the price was going to head for very early. I was not disappointed. Long was the play so I ended with two trades, but only because I didn't hold for the whole long move when the price wallowed.

Of course the targets were the 200sma and R1 but I didn't think the 200 would hold. The R1 was at $12.15 so this was the real target for the morning. I set my limit for 400 shares at $11.70. Keeping with the more technical trade I exited on the pullback when it was just above $11.93...volume was very high and the price hovered, usually a good sign to bail if it is on my mind I find.

Trade 2 was a no brainer as the consolidation at about 0950h was getting ready to break. 400 shares at $11.85. I kept in the trade and waited for the 10sma to break or the R1 line to be hit...although the volume dropped off to nothing between 1025h and 1030h...1029h was the best exit. I wasn't paying much attention to the quotes so I was not sure what my exit would have been exactly so I just took the low for the minute I exited at $12.11

These were bigger moves than I was really thinking I was going to get.

Results:

3.74% return on trade

The 400 share trade is part of my plan to have the whole portfolio on each trade, or as close to it as can be managed with even lots...which is why a smaller price stock is actually a better play while the account is small. It lets me play smaller if I need to, scale into and out of questionable trades and take advantage of smaller moves.

So, let's compare this with the possible trades with SU.

This day was not tracking the pivot points as PP is on the chart and R1 and S1 are no where in sight. The same opening was expected though and this is a typical gap fade style of trade. So long off the bottom based on the pre-market quotes. I half expect that I would have missed the first nice trade of the day though so the rest were a fight for pennies and at best 10, 10, 15 and 10 cents per trade. 200 shares is the only reason these were profitable as the commission is $10 per trade (round trip).

Results:

1.2% return on trade...with the fighting for pennies I would have stopped at 4 trades.

Out of curiousity had I managed to get into the first trade where I might have...had there been more technical indicators lining up to make that decision, $23.10 to $23.40, roughly another 30 cents per share. I expect that I still would have stoped at four trades so that is only another 20 cents per trade overall. Still not a bad day and it would have met my goal.

All in all I am looking forward to trying my hand at TLM for about a week as I apply and wait for my tax free trading account to get set up and funded.

Jeff

Consolidation setup today.

Here is another take on the same chart as I posted earlier but looking at the one trade that I missed and let run mostly out before entering.

This is a classic example of a triangle consolidation pattern that is the basis of my old CTP strategy, here is an example of the same strategy in day trading.

In CTP the red arrows would indicate trades entered and exited, basically buy low sell high and short high and cover low. Entering these trades would put me in a position to take advantage of the breakout in either direction.

In today's case the trade would be long only and have been entered at about 1000h as the price hits and bounces off of the S1 green line. Entry around $22.75ish for the prime position, $22.80ish and $22.85ish as secondary entries.

Once the price breaks out the trendline gets established (dashed red) at 1018h and holds as it bounces along at 1025h to R1 when it breaks the line around $23.20. I would choose to exit at R1 though. I could choose to exit half of the position at this point for a guaranteed 45 to 60 cents per share then let the rest ride to $23.35 for 60 to 75 per share on the balance. This takes the chance that the price will drop while I still hold a position.

Profits

Ranging from $80 to $120 depending on entry, exit and scaling strategies.

Yes, this is a hindsight trade but it is only a matter of not having entered this trade at the S1 bounce, just a matter of timing. The consolidation setup would only have been acting as confirmation of my trade, not really part of the entry plan until I have a larger capital to work with. In that case the pattern would indicate adding to the position along the way, scaling into the trade.

I don't normally get into speculating on trades, but, seeing as I am already doing it, let's see what a scaled trade might do here.

Buy at $22.70, 22.80, 22.90 and 23.05, 400 shares average price $22.8625.

Exit half at $23.25 and the balance at $23.35 for a $145 net gain.

Not bad, but I expect I would just buy in all at once at the bottom and scale out instead.

Buy 400 at $22.70.

Sell 100 at $23.10, 23.25, and 200 at $23.35.

Profit of $205 net.

No matter the trade style the fact remains that the trade is a profitable one so there is no sense in trying to speculate on the maximum profitability except for the purpose of getting familiar with differing ideas.

Jeff.

Dec 30th...not trading, just watching

Today I decided not to even track fake trading but to watch the price moves and pay attention to the volume and pivot point importance, we'll see if I can resist.

Chart is at the bottom.

The price opened close enough to yesterday's close for the 200sma to be relevant right away and it did not fail to act as resistance along with the primary pivot point. I decided that this would be a good sorting day to start. The first few minutes resulted in the PP being tested and not broken. I am not positive if I would have entered a short at this point just because it was still early but the volume was low enough that I could have. Just the fact that the volume dropped off as the price climbed higher is a very good indication of a pending reversal.

The first trade tracked

On the bottom, $22.65, the price bounced so cleanly off of the S1 that, had I been in a short trade I would have exited within five cents of the bottom. Either way trade number two was cleanly setup right here as well. I would have considered this a no brainer entry with the 200sma as target one and the PP as target two. Given the way it tested the 200 three times I would have bailed at that point, $22.95ish.

The second trade tracked

$22.95 would have been my limit order entry for this next short trade and I expect I would have missed the initial entry so close after my exit... I would have seen it hit shortly thereafter and rode it down to the S1 area and bailed around $22.70.

The range

This day is trading between the S1 and 200sma so far which only has a little more than 30 cent spread, not a large target so entries and exits must be quick as 30 cents can dry up really quick. Small targets can be fun to trade but are not worth the effort when they start to get too small. This is one reason why trading a smaller stock can be good as the position size can compensate for the small moves and the cost of commissions.

The third trade tracked...eenie meenie minie moe....

My next trade was to be another short starting above the 200sma, $22.95 most likely, but the price did not show the signs of slowing down. Once it broke both the 200 and PP the entry may be for a long at $23.05, at least that would be the plan. It pulled back to just under this and I would have been filled at my price...or lower which is always nice to see.

Note that I am typing this as the maket progresses so it is a live blog in that sense, at this point the quotes are about 3:1 asks in the range which usually indicates a good time to close the trade as there is more selling pressure than buying BUT the price is not wavering much so I would stay in and see where it goes, R1 is near $23.30, the next target. I see the volume slumping as the price stops climbing so I would bail as the bids are at $23.25, my most likley close price.

Profit

Just to work out the profit on this one trade, entry and exit difference is 20 cents X 200 shares is $40 less $10 commission for a net gain of $30. Based on the value of the trade this is a 0.6% gain.

Watching for the next trade to be a short as the price hovers under the R1 except it looks like a good uptrend right now so I would wait for other signs before placing an order or I would check my gains and see if I even wanted to do any more trading.

Estimating the three trades (assume that I missed the first big drop and didn't get in on the large gain at 1000h) I would be seeing 65 cents per share x 200 shares = $130 less $30 commissions for a $100 gain...roughly 2% gain based on trade value.

Profit protection

This is the point where I would exercise a few of my rules. I have made my goal for the day, I should not let greed interfere with my decisions, do not try to place a trade and hope that the price does what I expect...or want it to do. So I resist the urge to apply more trades and just watch what the price actually does for a bit. It turns out to be uptrending after wavering below R1 then finally breaking through. Based on the quotes and the volume it looked like it might drop off but the indices I use looked like it would hold and gain. Not enough correlation to really make a confident trade anyway.

Interestingly it broke at $23.38 and dropped to $23.10. I was right but my timing was off a bit. I may have held it through the 8 cent gain (my short would have been targeted at $23.30 as an entry) and made some profit but I likely would not have. I didn't really watch close enough to see if I would have nailed the top on this one.

Now that the stockcharts have caught up with my trades (or not trades if you will) I have the chart to post. I only labelled the trades I did end up tracking (I cannot help it). So, following is the intraday minute chart for the first part of the day. Pivot points are blue green and red horizontal lines, the 200SMA is green.

This turns out to be a pretty classic trading day. Starting at the PP, dropping tot he S1 as clean as can be then rallying right up to the R1. The rest of the day can wallow around all it wants as this is the activity that I like to capture. I feel that the trading follows these pivot points prior to the lunch hour more closely than afterwards. I will try afternoon trading after getting some serious gains going in the morning first. I expect that PM trades will be slower progressing and VTSO will be more usable as a trading tool as a result.

Jeff.

Dec 29th trading

Today was interesting as everyone is home and doing stuff so I decided that no real trading would occur, too many distractions...that and I am satisfied to continue fake trading to be sure that I am up on the tendancies of Suncor as it is still fairly new to me.

The only pivot point that I placed was at $22.99, blue horizontal line. It worked well as support so far. I am curious to see how the 200sma (green) interacts once it catches up with the price around 1300h. I would love to be able to say it will act as support and there would be a few long trades right afterwards but that is only a best guess and could easily be wrong. The best plan would be to watch the price and volume tendancies and see where the quotes lead the price and decide my trades based strictly on the activity at the time. It would not be good to get stuck in a long bias, this is the trap of emotion trading by trying to be correct rather than just trading the action.

Over all I exceeded my goal by a reasonable margin today. Total net was 1.32%.

I finished trading at just the right time this morning. I was considering doing some more but often the late morning is a bit of a wash, which is was this morning. The afternoon mught be nice and swingy but it is holiday time yet so the price my not be as volatile overall. Not worth the effort of playing having already met my daily goal.

Jeff.

Christmas Eve Day trading.

Today is Christmas Eve day and there was not much going on at work so I thought I might see how the market would fair on this pre-holiday day. I did not know that the market was going to close early, although I should have expected it, closed at 1300h. Not that this affected my trading as I am usually done by 1030h anyway but it can affect the outlook for the day and I would probably choose not to trade on a half day market.

Here is the chart anyway. I took three trades and met my goal with a 1.26% return on the trade value. Considering that the price is dropping this return on trade is lower then my return on portfolio...but that doesn't really make that much difference in the long run.



The pivot points were just on the edge of the chart, $21.45 was S1 (green) and $22.33 was P (light blue) while the highest price off the bell is dashed red.

The price gapped down this morning so this was the reverse of yesterday's gap up. The price closed the gap, but did not hold it. If this were the end of a normal day, and tomorrow was a trading day, I might expect an open very near to the close and a downtrending day. With the holidays here now trading is suspended until Monday so a lot can happen in the news with regards to oil so Monday will only be known when Monday starts.

A quick note about this type of open, or any time that a price shoots quickly in one direction but does not hold it. I have noticed that this high (or low) price spike very often sets an intention or direction. I have often seen that as soon as the price gets back to where it started it slowly inches toward the spike price. I have made quite a few trades in the direction of the spike and used the high price as the possible target. While it is only an impression I feel that it is a surer trade than a gap fade but a lot depends on the setup.

Trade one was pretty good and it met my daily goal right off the start but I figured I should at least try a couple more trades. The second lost a couple of dollars as I misjudged that small blip down and exited just before it hit. I managed to time the third, a short, pretty well and catch the quick pullback. The final trade should have happened at ?? and there were two prime entries marked by the arrows...I think I must have fell asleep to have missed that one or perhaps I was looking at something else. It was actually later than my normal quitting time so I suppose I can be excused.

A note about the rest of the day. Normally when the price hits the 200 it does some decent moving using the 200 sma as resistance or support creating a nice string of reasonably probable trading options. Today, perhaps due to the short day, created a very tough chart to make anything without fighting for pennies, not worth the hassle.

So, all in all this trial is working out very well. I am staying away from edgy stuff, sticking with SU which is turning out to be a pussycat and playing tight as if my money was on the line although I always play it that way.

Jeff.

Picture perfect gap trading

On Friday I decided to start practising with Suncor as my day trading subject.

Today I was thinking about trading it for real but I had a glitch or two with my platform as I was considering entering a trade, lost connection and upon startup the charts would not update. I restarted the platform and the charts were back but the bids were wonky. I have had this happen before and I usually just shut down but I thought it might be a good exercise in trading with a handicap. It means that I have to track the bids closer as they are not up to date were they should be. A real PITA. The charts are correct and SU, being a slower mover may give me time to make decisions... Here is how that went.

This was such a nice example of how to play targets that I had to capture it and post it here.

Green line I placed as yesterday's close $22.30 (from my broker account chart)
Red line was the primary pivot point for the day $23.04
Dark green is the 200SMA
S and L are short and long positions taken

The overnight gap up was interesting in that it spanned the 200SMA line so I would have expected the gap to close and therefore I considered shorting very early. I usually like to wait and see what starts to form first, just to make sure.

My trades are pretty obvious as were the targets. The shorts were closed as the 200SMA was hit, I did not wait for bounces or hoping for it to cross the 200 for a big hit, just taking my targets. Even the third short I closed early. The one long was rather speculative but worked well, I didn't hold for the red line as I just bailed as soon as the price hesitated then went short almost right away.

At the end of the above chart the price started a nice consolidation then promptly offered a very nice 200 sma bounce and cross. Seeing as today is a short day I would have been playing for more shorts. The price did not even hesitate at the green support so I expect that I would have let it go...as I type this the price is still heading down and considering the next support level is $21.11 I would have liked to have been trading yet. This last bit is hindsight but I know my plan and I know I would have been on this ride for at least a few cents had this been my fourth trade...although I have been adding the fifth lately. I see that at $22.oo the price turned a hair more than I like....So out I would have been as there was lots of trading at the $22.00 mark.

Stats for Friday and Monday were 6% net return combined. Today bumped that up to 9.12% net. The last move that I did not actually track would have dropped 55 cents more had I got in at the resistance area...for another 2% for the one trade. I don't like banking on those sized single trades, though they are nice.

So, my target would be nicely beat as I saw 9 days worth of trading in three days.

While I don't expect DTing Suncor to be this easy all the time, it does look promising.

Jeff.

Re-forecasting the plan based on Suncor.

I based my day trading goals and forecasts on a stock under $50. I had picked AEM as it looked like it might stay under this figure until January even though, being a gold mining company, I expected it to appreciate as this market slump progressed...gold being the normal haven when money is floundering. It has gained earlier than I anticipated though...which is fine.

So I switched my sights onto one of my alternate picks, Suncor Energy, SU.TO as they are hovering around $25 now. Today I tried them on for size as a daytrade and found it is a smoother performer than AEM and has a lot of similar qualities. A lot of the smoothness comes from a higher daily trading volume combined with a smaller price.

I re-ran my spreadsheets to accomodate this price and realized something that I had missed the value of a smaller price in the formation of my trading plan.

Three things emerged:

-the compounding effect was accelerated
-more shares are able to be traded sooner
-partial orders can be placed still using even lots

Compounding

My strategy considered that I was going to start trading 100 shares per trade, an even lot, and therefore the price had to be under $50 due to Tax Free Savings Account (TFSA) being treated as a cash account and limited to $5000 deposit in the first year. I picked a stock that was close to $50 as the larger the price often the greater the daily swing between high and low prices.

This leads to the idea of growing the size of trade by even lots which means I could not increase my trade size except in $5000 increments, roughly. I based my forecast on this premise.

Switching to a $25 stock lets me increase my trade size by $2500 increments. My return is based on a percentage of the trade value rather than the portfolio value as I will only ever be gaining returns on the trade no matter the portfolio. This advances my first substantial goal by about a month and a half, that of doubling my money.

More Shares

This is simple, 100 more shares mean the 1 cent gain is a $2 gain and the commssion is still the same. It also means that a loss is magnified equally. I have run figures on larger trade sizes over my trial periods and it served to increase my returns by greater than 2X due to the static commission rate.

Partial orders

Having positions of 200 shares lets me decide to close half of the trade while letting the last half run if I choose...this lets me take advantage of a run in price while cashing out to secure a profit should the price not run or even pullback before I exit the balance of the trade.

The next to final word

SU is a slower moving stock, seemingly, which lends itself well to a more relaxed trading environment. Decisions do not have to be so quick, larger position sizing is easier to manage and quicker to attain through growth. Although these are great advantages not having time to think, due to AEM's volatility, created an instinctive pattern to my trading style and I was able to time exits very well, I just needed to work on my entries as I had time to plan those and they have been my weakness all along, getting in when I know I should be in.

I made a change to my spreadsheet today that I will have to work out so I will post something about it later. It will have some accommodation for fluctuating stock prices and trade sizes tied to the prices and portfolio balance.

Jeff.