January 28th...flat

Today was a small target day, again but worse than yesterday. I decided that my pivot points were so close together that trade targets were so small as to not be real targets, support or resistance at all. So, in keeping with my normal plan I fake traded anyway to see how this might lay out for future reference. I'll post the TLM chart just for curiosity's sake.




The entire range was contained within the $11.97 to $12.29 area, that's a total delta of 32 cents. Not much room here to play with. The price was not supported or resisted by the various pivot points very well today as any move was likely to overshoot them easily. I almost did not even other looking at anything today but figured that faking a trade day in such tight quarteres might be a good thing. I did track a few trades to see where I might have ended up.

1013h Buy $12.12 Sell $12.21 Gain 9 cents ps Return 0.7%
1231h Buy $12.12 Sell $12.27 Gain 15 cents ps Return 1.2%
1113h Buy $12.12 Sell $12.14 Gain 2 cents ps Return 0.2%
1220h Buy $12.12 Sell $12.15 Gain 3 cents ps Return 0.2%
1251h Buy $12.12 Sell $12.15 Gain 3 cents ps Return 0.2%
1321h Buy $12.12 Sell $12.18 Gain 5 cents ps Return 0.4%

$ 0.37 gain per share or 2.9% overall return on trades

That would not be too bad except that there are commissions to take in to account...even Questrade's low commissions turns an $111 day into a $51 day...still that is 1.3% on the initial portfolio, so that would still meet the goal for the day...but it is a lot of work as I would have been better to stop after the first two trades as the rest is pretty much just breaking even. I did not even bother checking into HED today at all.

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.

Speculation about today and PP200

I checked in at the end of the day to see what kind of action the market had and specifically TLM. I quickly plotted the trades that could have been taken based solely on catching the price at or within 2 cents of the pivot point line.

Without getting into each trade the total captured price move over the day would be $1.46 ps(12.2% on the trade)...over 300 shares trade that is a decent $438 (10.9% on the portfolio).

Now, for these I usually apply a fudge factor to account for slippage, early exits and whatnot. IF every trade was made I would use 70%. That's $1.02 ps (8.5%), $306 overall (7.6%).

Here is where the 200 part of the PP comes into play. On all of the trades the 200 sma was as far as the next or last pivot point or half PP line. The one exception is the red circled possible trade as the 200 is right above the nearest 1/2PP line...too close to be considered a target althoughthe first trade might have managed to squeeze 4 or 5 cents profit it is not a good setup for a trade.

This is where I will miss my short sells as there was another $1 movement that I could be short selling based on PP200 as well...perhaps I would only get 70 cents of it but on a down day the returns would be reversed.

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 12th...I knew I could do it.

I am still waiting for my account linking to take place so I decided to do some fake trading. All of the historical days I have been doing of late all look sunshine and rosey, as hindsight studies should. So I thought I would put some of my theories to the next test.

The almost real fake trade.

What I managed to do was to show a miserable loss while faking. This was a very crappy day to be trading though, so I think I will blame that, primarily, and the fact that I did not recognise it until after 5 trades is the secondary issue. At least I was faking.

No need for better resolution on this chart. The price opened well below the S1, headed for S2 and just plain wallowed in misery right up to noon. The entire range from open has been less than 30 cents. I will not go on about these trades as the green S2 was the trigger for entries and the exits were just whenever I was uncomfortable with the lack of movement...which was often.

HED has been 60 cents and has been elusive to catch the right swing as there is mostly flailing.

I faked ten trades and the results are as follows:

TLM, 6 trades, +8 cents per share, 300 shares = $24 less $60 commissions. (-$36)

HED, 4 trades, +14 cents per share, 200 shares = $28 less $40 commissions. (-$12)

Great grand total of (-$48) net.

I was down about $100 net after five trades and almost threw in the towel but decided I should keep going for the sake of experience at this point. So commissions were the difference between an on target day (1.3% overall) and the resulting loss (-1.2% overall).

I figure that fake trading a day like this is a great setup for trading a good trending or larger ranging day as I was able to squeak some winning trades in in such a tight range. Largest winner was 14 ents per share and the largest loser was 10 cents per share.

The market (TSX) opened and has remained under 9000 and I believe this is the issue as traders and investors cannot decide what to do. This may be a the beginning of a new drop in the market as a whole as it is trending down, if you can call this a trend today, but is bumping against the 8825 mark as support. I'm not into market prognostications though.

I guess I am going to call this a consolidation day. I do expect a surge one way or the other starting at mid afternoon though. I am not looking forward to tomorrows tight pivot points as that will make using the PP200 strategy difficult.

No matter, I am done even faking trade for today. I am hoping that tomorrow is a larger range day.

I just noticed that my account is reflecting only the cash amount as buying power. I must lose my margin capability at some point. I transferred all but a few hundred dollars to the TFSA in order to leave this account active and use it to cover the data fees, should there be any, so the fees are not withdrawn from the TFSA.

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.

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.

Pivot Points and their relevance

I stumbled upon pivot points a while ago quite by accident. It was mentioned in an article and the term intrigued me enough to go looking them up. Now I do not trade without them, real or fake trading. I have found that they make very good targets and I suppose it is not so much that they are predictive, as it would appear by the following chart, but more likely a self fulfilling prophetic tool because many traders are using them.

TLM on Friday. The pivot points are represented by the three red lines which are resistance level 1, 2 and 3. The primary pivot point is just below the chart and labelled PP.

Alas, I did no trading on Friday. Busy with holidaying.

I have been plotting these lines on SU, AEM, the gold index and the energy index as well as the TSX or whatever other chart I might be using for trading and reference. TLM seems to follow them even closer than the other stocks, which I found interesting.

The blue circle represents the only questionable period as the price spent a bit of time consolidating before breaking R1. I expect that I might have shorted at about 0945h to try to catch a pullback from R1 to only exit the trade a few minutes later as the price did not successfully break the 10sma. Perhaps the trade would have broke even or a few cents per share profit. Then again I cannot short in the TFTA so this trade is moot.

The price ratcheted upwards towards R1 after testing 10sma a couple of times so this would have made a very nice position entry. This is the kind of setup where scaling out of a trade would come in nicely. R2 would be the target but the price cleanly broke that level and pulled back to test it. Selling half of the position and leaving the rest go would be a good call.

Following just the pivot points and trading long only, there would have been a trade just before noon for about 10 cents per share, one at 1345h for 5 or 6 cents and one last trade shortly after 1400h for about 30 cents per share...but that would involve watching all day.

The whole point is that pivot points are one of the few tools that are not dependant on the price and volume on the day of trading. These lines are calculated easily and are placed at anytime after the previous day's close as they have been determined by the previous day, week and/or month's price movement alone and have been used for quite some time by traders to determine where the trading range may be for a given day. They have proven very useful to me.

I won't get into the formula that I use but it is a standard one that is easily found on a variety of sites online. Setting up a spreadsheet with formulae to calculate these is easy enough as well so you can just enter the open, high, low and close and have the points. The open is not used but I like to reference it. Some trading platforms have these as an automatic tool, which would be really nice but I am not going there any time soon as these are pricey packages that may not even work with my broker feed...so I haven't looked too closely at that yet.

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