Well, another down day. I can blame all sorts of outside factors, mainly interruptions or distractions that resulted in loss of focus, and I would be correct but there is one underlying factor that is the crux of my current loss.
I haven't bothered to run the numbers but it would be in the $60 net range. I have set a $50 loss limit per day, before commissions. Once I hit that I am not to trade any more as I would consider that I have "lost it" for the day...I didn't expect to hit that in two trades and I didn't actually expect those to be my first two trades of the day. I chose to bail early, even though I thought there was a good move left, I just was in the wrong frame of mind...perhaps I should have faked it just for the learning curve.
I started out the day seeing a good gap up from Friday's close. Given the recent activity this would lead me to favour short trades today, so that is what I did. My 20 minute rule had me sit out too much of the first move ($1 of it) to feel comfortable getting in...so I waited until what looked like a good setup to develop for the downside after a brief rally or consolidation at a support/resistance level.
1024h and it looked OK. Price had dipped nicely below the primary PP for the day and I might have expected it to continue to head down. I planned for a tight mental stop as I was not sure that it would head back down convincingly. I held through a small profit to only have it turn up and I got out at a small loss. Depending on how you look at it, in too soon, out too late. Although had I been in sooner I would have captured a bit more of the last drop to the low and might have been more satisfied to close early.
I tried again at 1103h and had the same thing happen, except worse. larger loss even after calling the target, hitting the target and bouncing off the target. I held on too long.
Problems:
The limit order is taking to much thinking and time to execute well.
Me not listening to my intuition. Get in when I think get in. Get out when I think get out.
A little greed making me hold on
A little fear keeping me from getting in earlier
I must admit that had I placed the third trade I would have been on the leading edge of the last large move down for the day. Even if I had waited for full PP break confirmation there was still $1 left in the move.
I checked in before lunch and saw the activity and at least knew enough to not try to trade beyond that point. The trading range for the rest of the day is likely to be within a dollar with lots of small moves, not worth the hassle.
All in all a good learning day even if I close it on a loss.
JD.
Questrade, My direct access discount broker.
Monday, September 8, 2008
Sunday, September 7, 2008
Realization
I started this blog originally to try to not only track what I was doing but also to give some ideas to others who might want to try trading for fun or profit. My first blogged strategy was a reasonably sound one but needs some small tweaking and boundary changes to make it profitable. It also needs more than I have for capital to allow it room to grow which is why I dropped it a while ago in favour of the day trade.
My blog has changed to more of a tracking blog with no real information that is valuable to a new trader other than as a blow by blow of my foray into a what I think a misunderstood trading methodology or style. I will attempt to get into some of the thought processes and technical setups but the daytrade is so subjective in it's execution that it would be very hard to descibe in much of a useful framework. It cannot be duplicated except using live or delayed data feeds.
The one major piece of advice that I can add that is of great usefulness is to start small and work your way up after proving that a particular style works. Almost all of the losing stories I have heard...in fact all of them, have started out too large too soon and that has been their downfall. Whether this be through large positions or large volume of trades it amounts to the same thing, large losses as the learning curve was short circuited.
While I have not seen long term consistant results yet I do not anticipate great losses either. I am trading small enough to manage losses easily.
My blog has changed to more of a tracking blog with no real information that is valuable to a new trader other than as a blow by blow of my foray into a what I think a misunderstood trading methodology or style. I will attempt to get into some of the thought processes and technical setups but the daytrade is so subjective in it's execution that it would be very hard to descibe in much of a useful framework. It cannot be duplicated except using live or delayed data feeds.
The one major piece of advice that I can add that is of great usefulness is to start small and work your way up after proving that a particular style works. Almost all of the losing stories I have heard...in fact all of them, have started out too large too soon and that has been their downfall. Whether this be through large positions or large volume of trades it amounts to the same thing, large losses as the learning curve was short circuited.
While I have not seen long term consistant results yet I do not anticipate great losses either. I am trading small enough to manage losses easily.
Projections... a little more realistic
The following makes the basic premise that I can daytrade as successful as my testing would indicate. There are a lot of mind games involved...more than I anticipated, but that is another topic.
I like to run spreadsheets and forecasts based on minimum expectations so I have some goals in mind that look very good. I was going to try to put some of that here but it gets too messy without just seeing the sheets. Suffice it to say that by this year's end if all goes as expected I will have increased my portfolio by 80% or more after taxes. I plan on using the Tax Free Savings Account as my primary trading account next year so anything over $5K in my account at year end is really just a bonus. I figure that will be my "carrot".
I know I posted a previous "projection" but I consider it flawed and a little outside of my real expectation as it was based on heavy margin use. My goal is to not have to use margin.
Next year is the roll out of the Tax Free Savings Account which can be traded like a regular account, except with no margin use. $5K can be added each year and all earnings are tax free if withdrawn or allowed to accumulate. So I plop $5K in Jan and run my 1% per day based on the value of the trade (so a $5K trade is $50 and a $10K trade is $100 etc.). I increase my trade size by even $5K increments as the account can handle it. I double my money in 26 trading weeks and triple it by week 40, the end of the trading year if I so choose...tax free. By the end of year two I will have increased my portfolio by $1160%, capped my trade size at $35K, be pulling in $1400 per week tax free.
Full margin account as a comparison and using only double margin would see me double my money in 14 trading weeks and 6x by week 40, then cometh the tax man and drop the real return to 443%. By the end of year two I will have increased my after tax portfolio by 1332% capped my trade size at $50K and be pulling in $1300 per week after taxes.
Year three is the interesting year and shows the power of tax free accumulation assuming the same trade cap is applied as the margin account, $50K.
TFSA: 2856% return, $2000 weekly net income,
Margin: 2932% return, $1300 weekly net income
I prefer the higher tax free income as I can skim the excess over the 1% per day and see some play money. With margin and taxes the income gets eaten up and the TFSA pulls ahead in net income after 1.7 years or so...with a $35K trade value. Just plain easier money as my goal is income rather than mass cash accumulation, although it will come along with the income anyway.
For the record I would consider any gains over the 1% goal as "bonus" money and, if I am consistant enough, this could be skimmed for use outside of the trading account.
JD.
I like to run spreadsheets and forecasts based on minimum expectations so I have some goals in mind that look very good. I was going to try to put some of that here but it gets too messy without just seeing the sheets. Suffice it to say that by this year's end if all goes as expected I will have increased my portfolio by 80% or more after taxes. I plan on using the Tax Free Savings Account as my primary trading account next year so anything over $5K in my account at year end is really just a bonus. I figure that will be my "carrot".
I know I posted a previous "projection" but I consider it flawed and a little outside of my real expectation as it was based on heavy margin use. My goal is to not have to use margin.
Next year is the roll out of the Tax Free Savings Account which can be traded like a regular account, except with no margin use. $5K can be added each year and all earnings are tax free if withdrawn or allowed to accumulate. So I plop $5K in Jan and run my 1% per day based on the value of the trade (so a $5K trade is $50 and a $10K trade is $100 etc.). I increase my trade size by even $5K increments as the account can handle it. I double my money in 26 trading weeks and triple it by week 40, the end of the trading year if I so choose...tax free. By the end of year two I will have increased my portfolio by $1160%, capped my trade size at $35K, be pulling in $1400 per week tax free.
Full margin account as a comparison and using only double margin would see me double my money in 14 trading weeks and 6x by week 40, then cometh the tax man and drop the real return to 443%. By the end of year two I will have increased my after tax portfolio by 1332% capped my trade size at $50K and be pulling in $1300 per week after taxes.
Year three is the interesting year and shows the power of tax free accumulation assuming the same trade cap is applied as the margin account, $50K.
TFSA: 2856% return, $2000 weekly net income,
Margin: 2932% return, $1300 weekly net income
I prefer the higher tax free income as I can skim the excess over the 1% per day and see some play money. With margin and taxes the income gets eaten up and the TFSA pulls ahead in net income after 1.7 years or so...with a $35K trade value. Just plain easier money as my goal is income rather than mass cash accumulation, although it will come along with the income anyway.
For the record I would consider any gains over the 1% goal as "bonus" money and, if I am consistant enough, this could be skimmed for use outside of the trading account.
JD.
Friday
Friday was interesting. Over my testing period I logged no losing days and this was my first...but with real money so I lost...$11 over three trades.
Trade one was not bad but I exited too soon for 38 cents. I don't mind exiting early at this point, I am still learning and better to exit positive early than turn it into a loss by holding.
Trade two was just plain wrong and I see now why I placed it and why I should not have placed it. I was losing the focus that I was working so hard on. My mental state was ready to place a trade to just be in. I had missed the key entry point and watched as the price dropped figuring to let it go until the next setup...I actually went short after a large move without real confirmation. Then, once in and seeing it was not a good trade I told myself to go for a breakeven and mentally called the exit but did not place the order and it would have been a very small profit...instead I rode it to a 30 cent loss.
Trade three was a non-loser...if you can count 11 cents a gain. I called it wrong, went long and held past the only peak. Once again I mentally called it as I would have while faking but held to see if I could squeeze more out of it.
So down $11 for the day. I stil met my daily average goal as I only traded three days and hit 3.6% but I would have liked to have cleared my weekly goal. I almost called it a day after trade one and would have. Got to listen to my gut.
Interestingly, had I been trading 200 shares instead of 100 it would have been an up day, if only by $8. Basically I gained but then lost due to the commissions.
Also worth noting, I am planning on trading 200 share lots after next week but had I been trading them all along I would be at 9% return so far. I will give myself one more week before bumping that up though. I need a little more confidence in my method.
The end result of the week has me learning more, which is the whole point right now.
Go with the gut for the exits
Don't try to "squeeze" anything, there is no control, only reaction
Trust the entries
I may start using market orders for the next week. I am finding that the tight limit order is just a little too restrictive as I make the call, place the order then do some juggling to get it filled. The trouble is that once I see a setup I wait for some confirmation and sometimes that includes a price move which puts me chasing the price a bit. I do not like to chase prices, better to have placed a market order if the spread is small.
Hmmm... maybe just limit orders with a wider price margin. A market is prone to getting a poor fill so at least a limit will keep me from getting tagged way out of the inside prices.
JD.
Trade one was not bad but I exited too soon for 38 cents. I don't mind exiting early at this point, I am still learning and better to exit positive early than turn it into a loss by holding.
Trade two was just plain wrong and I see now why I placed it and why I should not have placed it. I was losing the focus that I was working so hard on. My mental state was ready to place a trade to just be in. I had missed the key entry point and watched as the price dropped figuring to let it go until the next setup...I actually went short after a large move without real confirmation. Then, once in and seeing it was not a good trade I told myself to go for a breakeven and mentally called the exit but did not place the order and it would have been a very small profit...instead I rode it to a 30 cent loss.
Trade three was a non-loser...if you can count 11 cents a gain. I called it wrong, went long and held past the only peak. Once again I mentally called it as I would have while faking but held to see if I could squeeze more out of it.
So down $11 for the day. I stil met my daily average goal as I only traded three days and hit 3.6% but I would have liked to have cleared my weekly goal. I almost called it a day after trade one and would have. Got to listen to my gut.
Interestingly, had I been trading 200 shares instead of 100 it would have been an up day, if only by $8. Basically I gained but then lost due to the commissions.
Also worth noting, I am planning on trading 200 share lots after next week but had I been trading them all along I would be at 9% return so far. I will give myself one more week before bumping that up though. I need a little more confidence in my method.
The end result of the week has me learning more, which is the whole point right now.
Go with the gut for the exits
Don't try to "squeeze" anything, there is no control, only reaction
Trust the entries
I may start using market orders for the next week. I am finding that the tight limit order is just a little too restrictive as I make the call, place the order then do some juggling to get it filled. The trouble is that once I see a setup I wait for some confirmation and sometimes that includes a price move which puts me chasing the price a bit. I do not like to chase prices, better to have placed a market order if the spread is small.
Hmmm... maybe just limit orders with a wider price margin. A market is prone to getting a poor fill so at least a limit will keep me from getting tagged way out of the inside prices.
JD.
Thursday trading...and non-trading
I am doing a bit of catching up as I was busy last week...short week and all.
On Thursday I only managed one trade due to work constraints...part of the arrangement I have means that some things take priority.
Having said that I wonder how long I will need to work...seriously. Sure, today's "take" was only $69 but it still surpassed my daily goal as that is a 1.73% gain. I missed out on 4 other trades that would have (yes I say would have) amounted to another $200 plus. I had the trading platform running and jotted down the trade entries and exits, I just knew that I could not make the trades as I might have to leave it or just exit at a not so great moment. Them's are the breaks.
Given the movement that DID occur in all the missed trades I COULD have placed the darned things and let a VTSO take the ride for me. I will have to investigate that option for future. Here are the missed trades using conservative entries and trigger happy exits...just for fun, they might have been more if I had been on the button but i will never know:
10:44h short either in at $55.60 OR $55.00 to $54.20 for minimum $80
10:56h long $54.40 to $55.20 for $80
11:12h short $55.20 to $54.20 for $100
11:59h long $54.52 to $54.80 for $28
Grand total of $240 net
I don't want to start tracking missed opportunities but this one really stood out. I feel that missed opportunities are good for learning by seeing what may have happened and why the trades were not made.
JD.
On Thursday I only managed one trade due to work constraints...part of the arrangement I have means that some things take priority.
Having said that I wonder how long I will need to work...seriously. Sure, today's "take" was only $69 but it still surpassed my daily goal as that is a 1.73% gain. I missed out on 4 other trades that would have (yes I say would have) amounted to another $200 plus. I had the trading platform running and jotted down the trade entries and exits, I just knew that I could not make the trades as I might have to leave it or just exit at a not so great moment. Them's are the breaks.
Given the movement that DID occur in all the missed trades I COULD have placed the darned things and let a VTSO take the ride for me. I will have to investigate that option for future. Here are the missed trades using conservative entries and trigger happy exits...just for fun, they might have been more if I had been on the button but i will never know:
10:44h short either in at $55.60 OR $55.00 to $54.20 for minimum $80
10:56h long $54.40 to $55.20 for $80
11:12h short $55.20 to $54.20 for $100
11:59h long $54.52 to $54.80 for $28
Grand total of $240 net
I don't want to start tracking missed opportunities but this one really stood out. I feel that missed opportunities are good for learning by seeing what may have happened and why the trades were not made.
JD.
Wednesday, September 3, 2008
Daily real update, AEM daytrade
Today I placed my first cash trade since starting my day trading trial with AEM about three weeks ago. In my fake portfolio I got a little over 23% return for the 14 trading days. I consider that a very good return as it is a 1.64% daily return based on $5,000 starting capital. 1% per day is a good return as well and is my initial goal.
Here is most of the chart for today, the part that has the good trading moves anyway.
The lower pivot points were the important ones today. top red line is R1, the light blue is the primary pivot point then green are S1, 2, and 3 in descending order. The price barely broke above the PP, then bounced briefly off the S1, broke cleanly through S2, bounced off of S3 then hovered about the S2. Real nice trading moves and most of them occured before noon. The price did make it back up to S1 for about a minute right near the end of the day before dropping nearer to the S2 at the close.
I placed two shorts near the start, 1006h and 1023h for 22 cents and 44 cents per share gains, small moves but I was anticipating the drop that ended up happening so I was considering those intra-day positioning trades. I actually placed a short right at the 1030h mark where the nice consolidation was coming to an apex and the price just broke out to the downside nicely...perfect entry and would have grabbed the 80 cent drop. What happened was the connection to the ECN dropped at the broker and my short never got through...it was a limit so it would not have gotten executed at all by the time that the connectin was back up. I was really ticked and had to take 10 minutes to cool down in order to not trade under the influence of negative emotions.
The thing that I was most concerned about was, had the order been received and executed and the price jumped up I would not have been able to close the trade so the downside might have been a loss that I had no control over. I would rather a missed trade than a missed exit, at least missing the trade is a break even proposition.
Once the price bounced off of the green S1 support line I lost confidence in the down trend. I never got back in until the very bottom turned on the S3 line so I entered a long for a 51 cent per share gain. The price of gold was coming up by this point so it was a fairly high probability trade supported by the Global index that I use as well.
All in all not a bad day, 2.18% portfolio return even considering the missed opportunities.
Worth noting. Seeing as my portfolio is down to about $4,000 after all of my testing and goofing around I have restarted with $4K as my initial working capital. The $1000 loss is far less than the commissions incurred during the last 7 months, so I can't complain...especially as I blew $300 just trying out market orders to determine how fast they would get executed at the very start of the market. I'll restart the side bar stats soon as well.
Also worth noting, even though fake trading this as if I had money on the line it is always different when the money is actually there. A couple of times a hesitated when I shouldn't have, but there will always be other trades so once I realized my mistkae I did not jump ahead in. Take a breath and check to see that the indicators are all still good THEN make the trade. This difference will pass as I get ore trades under my belt.
Jeff.
Here is most of the chart for today, the part that has the good trading moves anyway.
The lower pivot points were the important ones today. top red line is R1, the light blue is the primary pivot point then green are S1, 2, and 3 in descending order. The price barely broke above the PP, then bounced briefly off the S1, broke cleanly through S2, bounced off of S3 then hovered about the S2. Real nice trading moves and most of them occured before noon. The price did make it back up to S1 for about a minute right near the end of the day before dropping nearer to the S2 at the close.
I placed two shorts near the start, 1006h and 1023h for 22 cents and 44 cents per share gains, small moves but I was anticipating the drop that ended up happening so I was considering those intra-day positioning trades. I actually placed a short right at the 1030h mark where the nice consolidation was coming to an apex and the price just broke out to the downside nicely...perfect entry and would have grabbed the 80 cent drop. What happened was the connection to the ECN dropped at the broker and my short never got through...it was a limit so it would not have gotten executed at all by the time that the connectin was back up. I was really ticked and had to take 10 minutes to cool down in order to not trade under the influence of negative emotions.
The thing that I was most concerned about was, had the order been received and executed and the price jumped up I would not have been able to close the trade so the downside might have been a loss that I had no control over. I would rather a missed trade than a missed exit, at least missing the trade is a break even proposition.
Once the price bounced off of the green S1 support line I lost confidence in the down trend. I never got back in until the very bottom turned on the S3 line so I entered a long for a 51 cent per share gain. The price of gold was coming up by this point so it was a fairly high probability trade supported by the Global index that I use as well.
All in all not a bad day, 2.18% portfolio return even considering the missed opportunities.
Worth noting. Seeing as my portfolio is down to about $4,000 after all of my testing and goofing around I have restarted with $4K as my initial working capital. The $1000 loss is far less than the commissions incurred during the last 7 months, so I can't complain...especially as I blew $300 just trying out market orders to determine how fast they would get executed at the very start of the market. I'll restart the side bar stats soon as well.
Also worth noting, even though fake trading this as if I had money on the line it is always different when the money is actually there. A couple of times a hesitated when I shouldn't have, but there will always be other trades so once I realized my mistkae I did not jump ahead in. Take a breath and check to see that the indicators are all still good THEN make the trade. This difference will pass as I get ore trades under my belt.
Jeff.
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