Today was a great day to play the longer term day trade, in fact I thought it might be best to just place a short at the earliest peak and let it run... but I don't have the patience for that right now. It certainly would have been a good application for some sort of moving stop but probably not a VTSO as that would have gotten hit pretty early in the day.
The setup was classic. I entered my pivot points, 15 minutes, checked the trading price of gold in other markets, 45 seconds and decided that the day was going to be a huge gap up and run or a fade...given the size of the gap and the trading of late I was putting my money on the fade.
This is an example of why I like the day trading arena. Time spent researching...45 seconds... as the pivot point setup is a technical tool. I know of traders who get up early, 4AM, to research the markets, check out scans to determine what stocks they are going to trade, set those stocks up in their platforms, then wait anxiously until the market opens and hope that all that time spent is worth it.
Most, in fact the vast majority of those traders are not trading right now either because the market is not reacting as they think it normally should (whatever normal is) or they have lost a lot of money and cannot stomach it anymore. A percentage I keep stumbling across is 3% of all traders ever make it consistently. With the influx of online traders right now that makes a lot of easy money available for those 3% that know how to pull it out of the market.
I feel that the research adds a bias to the idea where the price is going to go.
Consider that it can only really do one of two things, in the big picture. It can go up, it can go down, it can wallow around and churn while not really going anywhere. So all the research and watching for a slightly better then one in three guess is not my idea of a good time.
If I am wrong off the start, I lose a few bucks then change my plan. I have not invested a lot of time in deciding which way it is going to go so I won't get caught in the trap of wishing and wanting it to go my way, I have no way, I just follow the price action.
For the record, the gap up was a guaranteed move, there was next to a zero percent chance of it not jumping at least $2 off the start given the price of gold, and it went over $3. The aftermath was just a hunch and best guess. I would put a 70% or better chance of an overall fade in the current market for such a jump. Had it gapped down I would have put a similar chance of the gap NOT fading and the price continuing down, under similar market circumstances.
Back to the day.
The gap started a quick momentum move in the direction of the gap which quickly peaked and fell, the first short entry ...which I hesitated on and missed...no big deal (which is one of the other reasons I like day trading, the next setup is only minutes away, not days).
Truth be told I fumbled the first couple of prime entries, the first short, the resulting long for the rally, then the very next short...I need to close my door so nobody can chatter at me while I watch these setups but mainly I need to tailor my limit order entries to not be quite sot tight as I try to squeeze every penny out of the starting price. I refuse to chase the price, I want it to come to me, so I miss a few and usually by pennies.
I ended up 1.07% net gain, still meeting my goal but missed at least that much off the start.
Shorting the top would have me closer to 2% after just riding it until sometime after lunch. The day is not done yet but I doubt that I will trade any more as the action is slow and unpredictable now...although it may still drop to fill the morning gap, just not for sure.
I won't speculate as to how much I really might have made had I hit the trades that I setup initially as I just didn't make them.
Just another fun day in the market.
BTW, I was done by about 1030h. Another reason I don't like the typical DTing "idea". I make my money or take my losses for the day early and get the heck out, I have other stuff to do for the day... although I would love to hit a really nice day for letting trades run and sit it out to make some serious cash...another time though.
Jeff.
Questrade, My direct access discount broker.
Monday, December 8, 2008
Questrade and the TFTA
I have given up differentiating the difference between real trading and fake or paper trading for the rest of this month here. My entries are the same either way and my exits are very close as well. I don't really want to have any tax implications for this year as I apply all my energy towards fine tuning my trading in preparation for the Tax Free Savings Account coming to Questrade next month. They are referring to it as the TFTA (Tax Free Trading Account) as they are offering all the same tools for trading as their regular account...with the exception of margin I expect.
I will be tracking them separately and combined still but I need to get my headspace around the whole trading game, all of the trades not just two subsets.
Here are the links for the general release and a Q&A about the government rules. Questrade is being pretty liberal with it but I am not familiar with any other offerings.
Pamphlet
The original link again
Jeff.
I will be tracking them separately and combined still but I need to get my headspace around the whole trading game, all of the trades not just two subsets.
Here are the links for the general release and a Q&A about the government rules. Questrade is being pretty liberal with it but I am not familiar with any other offerings.
Pamphlet
The original link again
Jeff.
Saturday, December 6, 2008
VTSO or mental stop order
I still have not gotten around to testing the viability of a VTSO in day trading yet. I feel that the volatility would have me out of trades too often but I like the idea of a safety in case I had to walk away from a trade.
I used VTSO's extensively when applying my CTP plan earlier in the year and found that they were too quirky. One steep day (this was medium term trading) and the VTSO is brought up too tight to the price and an exit was inevitable.
Alternately I can set a stop order as a safety, and just modify the order as needed to follow the price. I do this mentally and execute a market order to close the trade so using a stop will do the exact same thing and give me the security of knowing that I have an order in place should I have a glitch in my platform which makes exiting impossible, it has happened on occasion.
Normally I choose a price to exit based on the quotes, not the actual trading price, and often I will exit a trade immediately upon seeing a certain indication of a turn. This would mean having to cancel the order in place and placing a market order to close. I have had cancel requests take a long time, in the scale of DTing 10 seconds can seem like an eternity and can make the difference of giving up as much as 60 cents per share of gains. This means there is a chance that I cannot place a market order right at the moment that I want it... I will have to experiment and see if this is an issue of more concern than the possibility of getting stuck in a trade. Usually I see these points approaching so cancelling the order ahead of time should not be an issue in most cases...modifying the order might be quicker than cancelling it too.
Testing needs to be done.
Jeff
I used VTSO's extensively when applying my CTP plan earlier in the year and found that they were too quirky. One steep day (this was medium term trading) and the VTSO is brought up too tight to the price and an exit was inevitable.
Alternately I can set a stop order as a safety, and just modify the order as needed to follow the price. I do this mentally and execute a market order to close the trade so using a stop will do the exact same thing and give me the security of knowing that I have an order in place should I have a glitch in my platform which makes exiting impossible, it has happened on occasion.
Normally I choose a price to exit based on the quotes, not the actual trading price, and often I will exit a trade immediately upon seeing a certain indication of a turn. This would mean having to cancel the order in place and placing a market order to close. I have had cancel requests take a long time, in the scale of DTing 10 seconds can seem like an eternity and can make the difference of giving up as much as 60 cents per share of gains. This means there is a chance that I cannot place a market order right at the moment that I want it... I will have to experiment and see if this is an issue of more concern than the possibility of getting stuck in a trade. Usually I see these points approaching so cancelling the order ahead of time should not be an issue in most cases...modifying the order might be quicker than cancelling it too.
Testing needs to be done.
Jeff
Week wrap
In the interest of keeping ahead of any work stuff that comes up I had decided to not sequester myself and remain available during themorning trading times. I also do not let trading take priority so I will fake trade if something else is going on at the time rather than being stuck in a trade that I may have to leave.
So, I now realize that will not work. In order to actually realize real gains I will have to shut my door and only trade for the period. I suppose it is no different than taking 5 smoke breaks over the day, except I don't smoke so I don't get that time off.
Anyway, today is a case in point. 3 trades in 30 minutes done by 1000h. I left the fourth and last one go and didn't even fake it even though it slipped for one last dollar as I might not have traded it for real so I didn't count it, too far into a slide for my comfort even with gains to play with. 5.37% net return. I almost made the trades but had people looking for stuff or was on the phone. I am satisfied with the faking in the sense that it re-affirms my actual trade strategies so I am in good standing as far as keeping my edge is concerned.
I did cheat and place one last trade at about 1030h. The only reason that I did was that I had seta limit sell at $34.00 earlier, dropped in to take one last look at the morning activity and saw the setup at the right moment, called the short and let it go for a bit, caught 35 cents of the slide so worth the effort. My daily gain was bumped to 6.27% net.
Combined real and fake trading for the week is 11,42% net even after considering my 4% loss on Monday while getting my feet wet again. I still count that loser day even though I half expected it to be a loss before getting in. Just finding my edge.
Jeff.
So, I now realize that will not work. In order to actually realize real gains I will have to shut my door and only trade for the period. I suppose it is no different than taking 5 smoke breaks over the day, except I don't smoke so I don't get that time off.
Anyway, today is a case in point. 3 trades in 30 minutes done by 1000h. I left the fourth and last one go and didn't even fake it even though it slipped for one last dollar as I might not have traded it for real so I didn't count it, too far into a slide for my comfort even with gains to play with. 5.37% net return. I almost made the trades but had people looking for stuff or was on the phone. I am satisfied with the faking in the sense that it re-affirms my actual trade strategies so I am in good standing as far as keeping my edge is concerned.
I did cheat and place one last trade at about 1030h. The only reason that I did was that I had seta limit sell at $34.00 earlier, dropped in to take one last look at the morning activity and saw the setup at the right moment, called the short and let it go for a bit, caught 35 cents of the slide so worth the effort. My daily gain was bumped to 6.27% net.
Combined real and fake trading for the week is 11,42% net even after considering my 4% loss on Monday while getting my feet wet again. I still count that loser day even though I half expected it to be a loss before getting in. Just finding my edge.
Jeff.
Wednesday, December 3, 2008
The perfect setup
Today I concentrated on the perfect setups.
I like consolidations that are overdue for a move. Triangles, horizontals, descending, ascending ...whatever. I like to set the limit on the far side of the trend so the worst thing that happens, if I am wrong, is slightly less than break even. Even a small move in my favour but one that looks like it might not go anywhere is still good for a gain. This was the premise of my old CTP trading plan earlier in th eyear, except on a daily trading basis rather than a minute basis. Now I need to work on fast charting as I don't have the luxury of playing with the charts overnight. Spot those trends quickly, identify the pattern, plot the trend lines and make the trade. I miss a few because I am a minute or two late and the move has already started without me.
Even so, all that chart reading I did before has paid off well.
I like consolidations that are overdue for a move. Triangles, horizontals, descending, ascending ...whatever. I like to set the limit on the far side of the trend so the worst thing that happens, if I am wrong, is slightly less than break even. Even a small move in my favour but one that looks like it might not go anywhere is still good for a gain. This was the premise of my old CTP trading plan earlier in th eyear, except on a daily trading basis rather than a minute basis. Now I need to work on fast charting as I don't have the luxury of playing with the charts overnight. Spot those trends quickly, identify the pattern, plot the trend lines and make the trade. I miss a few because I am a minute or two late and the move has already started without me.
Even so, all that chart reading I did before has paid off well.
I made four trades today but only one was a real trade. The others I had interruptions distracting me so I would not actually enter the trade...as I mentioned in the past I do not like to be in a trade when there is potentetial to have to leave it.
Of course the two winning fakers were nice smooth sliders and I garnished 80 cents per share on each. One was a break even. The only real trade, I choked on (the mental stop was pennies too tight) and gave up 60 cents of the 90. Still a 0.5% net gain for real.
So a combined 4.80% return. I will be glad when I can dedicate the time in the morning to trade exclusively until about 1100h. There will be no fake trading then and all, or most of the gains will be real.
If anyone is reading these do keep in mind that I am not currently writing in a manner that lends itself to learning anything from these posts. It is as much for me to feel that I am being accountable if only to myself.
Tuesday, December 2, 2008
December trading begins, days one and two.
I got back in yesterday but I seemed to have lost a little of my edge.
I still have Agnico Eagle Mines as my target stock, AEM.TO with trade sizes of 100 shares.
I popped two decent biggish losses in the mix, only biggish (over $20) because I let them go too long, both would have been small profits if I had exited when I said I was going to. The rest were small losses. (-4.74%) for the day, nice. This was more a "jump back in and see what happens day". I didn't anticipate gains.
Today I faired better. One trade, +1.39%. I caught a small 72 cent slider for 52 of the cents. I just watched and called this like I would have in the past... For the record this would have me stop for the day as it is already 0.39% over my daily goal...unless I saw a nice setup taking place...today looks like a wallowing day though. Had I been on the ball yesterday I should have been able to do better as the price slid pretty well. All in the fun though.
This leads to a rule review.
Daily losses should be cut closer AND next day trading must not be performed to try to recoupe a previous loss...it MUST stand alone as a daily goal otherwise emotion gets in the way...I would have placed additional trades this morning and I can almost guarantee that they would have been losers on some level due to the wallowing. This rule needs to be used even for individual trades.
I learned that one on my high volume testing day a while ago...12-16 trades with about a $400 loss for the day, one trade fed the next which fed the next and only a very few were well placed and gained, and even those were just luck.
I updated my spreadsheet today while waiting for the next trade setup, which is not materializing at all, to calculate my returns based on my actual account balance running as I enter the trade data. This gives me a more accurate picture rather than just going from a preset balance all the time. It makes the gains look better but makes the losses look worse...all in all it is real and adds a certain amount of compounding if I always meet my goal based on the current balance... Headgame with the numbers at this point though.
An interesting observation about setting the return percentages off of the running balance. This will serve to move me into higher volume trading gradually and automaticcally. As the balance grows the trading either has to be more profitable per trade (which is not really the goal) or just more trades per day, then on to larger sized trades as time progresses. I consider it a built in training tool, kind of like increasing the weights at the gym. The other factor is that this can serve to attenuate the trading frequency and curb any chance of overtrading...which is what leads to losses often. Headgames, if I follow this to the "T" then my results will determine how my trading practices develop.
I did massage my combined (real and fake) sheet to match as well. I pop the odd faker in the mix as I see a speculative move setup and call it but don't quite have the balls, or un-interrupted time, to actually place the trade...or perhaps I hesitated that moment before the change starts. I changed it to allow fake trades on the same days as real trades. This gives me a real performance, pure fake performance and combined performance numbers. If the fakers outstrip the real then I should pay more attention to my gut calls.
Followup to the trading, about 10:45 the wallowing came to an end and I was not really there to trade the first slide right off of the pivot point for the day... $41.20 was my target entry with the PP of $41.24...not that they always work out that close but it did today, I had that price in my order box often. Generally the price remained bracketed between yesterday's low and today's early morning high. I usually try to pick some points that look like they may be significant from the previous day price, usually the close or high/low prices in addition to the pivot points, just gives me some targets and references. They don't always work out to be resistance or support but can very often prove so.
That's about all for today. Just a little rambling.
Jeff
I still have Agnico Eagle Mines as my target stock, AEM.TO with trade sizes of 100 shares.
I popped two decent biggish losses in the mix, only biggish (over $20) because I let them go too long, both would have been small profits if I had exited when I said I was going to. The rest were small losses. (-4.74%) for the day, nice. This was more a "jump back in and see what happens day". I didn't anticipate gains.
Today I faired better. One trade, +1.39%. I caught a small 72 cent slider for 52 of the cents. I just watched and called this like I would have in the past... For the record this would have me stop for the day as it is already 0.39% over my daily goal...unless I saw a nice setup taking place...today looks like a wallowing day though. Had I been on the ball yesterday I should have been able to do better as the price slid pretty well. All in the fun though.
This leads to a rule review.
Daily losses should be cut closer AND next day trading must not be performed to try to recoupe a previous loss...it MUST stand alone as a daily goal otherwise emotion gets in the way...I would have placed additional trades this morning and I can almost guarantee that they would have been losers on some level due to the wallowing. This rule needs to be used even for individual trades.
I learned that one on my high volume testing day a while ago...12-16 trades with about a $400 loss for the day, one trade fed the next which fed the next and only a very few were well placed and gained, and even those were just luck.
I updated my spreadsheet today while waiting for the next trade setup, which is not materializing at all, to calculate my returns based on my actual account balance running as I enter the trade data. This gives me a more accurate picture rather than just going from a preset balance all the time. It makes the gains look better but makes the losses look worse...all in all it is real and adds a certain amount of compounding if I always meet my goal based on the current balance... Headgame with the numbers at this point though.
An interesting observation about setting the return percentages off of the running balance. This will serve to move me into higher volume trading gradually and automaticcally. As the balance grows the trading either has to be more profitable per trade (which is not really the goal) or just more trades per day, then on to larger sized trades as time progresses. I consider it a built in training tool, kind of like increasing the weights at the gym. The other factor is that this can serve to attenuate the trading frequency and curb any chance of overtrading...which is what leads to losses often. Headgames, if I follow this to the "T" then my results will determine how my trading practices develop.
I did massage my combined (real and fake) sheet to match as well. I pop the odd faker in the mix as I see a speculative move setup and call it but don't quite have the balls, or un-interrupted time, to actually place the trade...or perhaps I hesitated that moment before the change starts. I changed it to allow fake trades on the same days as real trades. This gives me a real performance, pure fake performance and combined performance numbers. If the fakers outstrip the real then I should pay more attention to my gut calls.
Followup to the trading, about 10:45 the wallowing came to an end and I was not really there to trade the first slide right off of the pivot point for the day... $41.20 was my target entry with the PP of $41.24...not that they always work out that close but it did today, I had that price in my order box often. Generally the price remained bracketed between yesterday's low and today's early morning high. I usually try to pick some points that look like they may be significant from the previous day price, usually the close or high/low prices in addition to the pivot points, just gives me some targets and references. They don't always work out to be resistance or support but can very often prove so.
That's about all for today. Just a little rambling.
Jeff
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