After market chatter

Well, yesterdays trading ideas worked out well. As it turned out there was no ranging of the gold market, just a nice downtrending day. I had worked out three exit strategies aimed at maximizing the time spent in HGD should Global Gold happen to remain in a downtrend. I didn't run the fourth.

The last method includes letting the price run while holding back using the 30 50 AND 200 sma for exit prices. The strategy would be to move my stop to net break even early to minimize any losses quickly...I don't mind getting knocked out of a trade at this point even if the move continues, part of my capital preservation plan. Then using the 30 sma as a stop while the price move is steep, switching to the 50 sma on a pullback toward the lines.

Once the price has passed one or more of the target PPs the stop is moved to those prices. I use the pivot points and halfway points between the points to allow for slightly tighter stops. I now use the monthly pivots as I have noticed them being at least as valid as the daily stops. This puts me somewhere between the 50 and 200 sma.

Worth noting that with Esignals all of these points are plotted automatically so I eliminated the need to calculate and manually plot points and lines on charts...I can now just pull up any chart in a moment and it will automatically have all my studies and indicators placed. I'll go through those in another post.

This is a tough strategy to follow for me as I like to have shorter trades and on the days that I decide to try this the price is ranging and I do not stay in for long. Yesterday was a classic downtrending day though and it would have been a very good move as the total index move was from about $330 to about $303...HGD moved about $1. Considering that my normal position size at this point would be 500 shares (I could do more but 500 seems like a nice number and I have not tried more than that recently to see how it might get executed).

I have noticed in the past that the last 30 minutes of the market sometimes reverses for a bit so my exit would either be a tighter stop as the market nears EOD or just selling for the nice profit around 1530h.

I am working on setting these various strategies and rules down in writing in one place for easy reference to remind me of my goals and plans on the fly. I hope this will remove some of my more speculative moves, make my entries and exits more calculated and also allow me to remove the various interruptions as the plan is set...less thinking and therefore less emotional involvement.

Jeff.

Third Party Pivot Point Plan

Well, if nothing else this is a nice little bit of alliteration.

I was wasting some time checking out a few trading videos last night, there area couple that are decent but they are all on US exchanges so the trade ideas don't cross over well, although I expect that sometimes they are pertinent. This led me to thinking about information and trade plans or ideas.

I read a few blogs about trading. They talk about technical setups, psychological aspects, scans, backtesting, market analysis, fundamental analysis....basically there are so many aspects to trading that there should be something for everyone.


Therein lies the trouble. Too many aspects. Considering that the stat I read the most is that between 90% and 97% of traders are not successful, I expect that the same percentage could be applied to the information that is available online. This tells me that I must keep my bullshit filter on high gain...which I have always known. Perhaps that is not really correct to assume. Perhaps it is that up to 97% of the information available is of no use to an individual for the purpose of their trading. Information overload.

Of all the ideas that I have read I have gleaned a few choice ones that work for me. Most I have figured out by some method of trial and error but they have also been confirmed by others that have used the same or similar methods. There is not much that is really new in trading so it is very hard to be original...but that is not really the goal I am after anyway.

Specialization.

I figure that by concentrating on that, perhaps, 3% of all the available information I will find that niche that lets me work a couple ideas to give me an edge in the environment that is very familiar to me. I already figure that I have found it...it did take about a year afterall to figure them out and to put them together in a form that seems to be a very strong plan.

This brings me back to the videos.

The two that I ran across also happen to use pivot points. One had covered it so long ago that I cannot find the clip but I drop in to see what he is up to occasionally (US markets again) and the other stopped short before giving any decent details about the actual trades based on the points, which makes the video next to useless except for those who already know pivot points. In that case it only served as a confirmation that someone else applies them in the same or similar manner as I do. In both cases the individuals do make trades based on their point systems.

So I saw a bit of confirmation that these points work. I happen to use them for daytrading, they are using them for longer term trades.

All in all this was just a ramble to clear my mind about a few things that were floating about this morning. Now I need to get back to setting my pivot points for tomorrow's trading and do some chart work for my medium term trading blog...I have some new ideas for those trades now...but they are probably not original.

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.

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.