June 3rd, levels and whatnot

I see others setting out price levels for the S&P 500 ETF SPY, the futures and other market indicators for public consumption. I have seen them and usually don't use them as they are not mine. Some of the pivots and various levels are from "proprietary" algorithms and methods...whatever works for me is what I go by and I need to know that I do not have to rely on someone else to supply my information...who knows when they may stop putting it out there?
Yesterday I placed important price points in SSO in my journal to see what stuck. I use simple Previous Day high and low, pre and post market ranges and perhaps some important and plainly obvious resistance or support levels from the previous day. Occasionally I will go back and see what might be important from a month or even a year ago but I have not really set those in writing for easy reference so far.

So, for yesterday's "trading" I had PD high of $27.81 and low of $26.80 and the pre and post range was $27.20 to $27.55.

Interestingly my SSO entries were from $27.52 to $27.65 and the exits were all $27.80 or $27.70. So the range that I was able to trade was the pre and post market high to the PD high.

I did not write down SDS levels but the ranging was inversely similar.

Today I only managed to squeeze in two trades. I planned on no SSO trades (long the S&P) as I expected a down day overall and perhaps even a trend.

SDS levels were marked but the only important ones were the premarket range, $53.47 to $54.00. Trading started in this range and passed the $54 early and never looked back...yet. I entered a trade at $54.11 but was stopped out early with very small profit as I was too anxious for a profit and not 100% sure of the coming move.

Second trade was just after 1000h at $54.45, I missed the pullback by keeping my stop at $54.30 then ratcheted it up to $54.67 before getting stopped out...impatience again.

Then lunch hit...or at least the pre-lunch hanging about that often happens which basically keeps me from actually placing trades. I did not get to look at the market again until about 1400h, the trend had trended and looked to be whipped as the days volume was petering off a bit. I did mark the entries at the beginning...the setup was at 1143h and the first of four primary triggers were from 1146h to 1206h. Given that I had already tried two trades in SDS it is more than fair to say that I would have placed more trades along the same plan.

Here is the SDS chart for the morning activity leading into the afternoon:



Assuming an entry on the high side of those red arrows...when I may have over ridden my plan and gone back to the PP200 style entry given the establishing trend and entered even better...there was a decent 60 cent climb using the 50sma (less 5 - 10 cents) as a stop and the R3 as the final resting place.

I am still ahead today regardless, though not a whole lot.

Jeff.

Relative period volume

I revisited the chart that I posted a while ago looking at the relative volume of each 1/2 hour period over the course of the day...including the first 1/2 hour of post market activity. I was trying to come up with a method of being able to compare each period with previous day periods. I did not come up with anything terribly easy so I went back to over simplification.

Here I plotted the 30 minute simple moving average of the close which would basically track the high of each bar directly as if it were a line chart of the high points. Then I offset yesterdays' ahead by 14 periods which overlays yesterdays' onto today...easy comparison this way. I then went to town and created 10 SMAs and offset each by an additional 14 periods...effectively this creates a cascade of SMAs overlaying today's volume representing the last 10 trading days general average.

I considered, and started colour coding the averages so I could tell how far back each one came from...then I decided that it is not necessary. I may grey scale them to fade them into the past so the more current ones are darker and likely more relevant. I do have to remember that the averages are of the close, or high of each bar so the fact that the bars are hanging in the breeze below the lines has no bearing, only the top of the bar is important. I could run averages using H/L/C data and put the lines in the middle of the bars...naw.

It is worth noting that Friday's volume was low over the course of the day, remained low into the close then skyrocketed past all ten days values in the aftermarket. Most regular traders do not trade in the aftermarket so I expect that was the large institutionals and fund managers getting their positions in or out for the month end weekend. Toady's volume was shooting right up the middle of the range.

This is just another piece of information to judge the trading day activity as it has no direct bearing on trades other than to justify a bias. Range trading if volume is lower than average or watch for trend breaks if volume is higher...generally speaking.

Jeff.

June 2nd...non-trading trading

Today I could not actively trade but I was able to follow along to see what would have been nice entries.

There were a total of 9 trades that I may have taken. A few more setup according to the TICK entries but were not good due to the price location, market situation and gut feeling...yes, the gut still plays a part, a smaller part than it used to though.

As I start to type this entry I see a final setup in the last 20 minutes of trading that I would like to trade, but prudence tells me to stay clear. The EOD volume is not as high as normal so I SHOULD be able to get in well and get out safely...but it is the end of the day afterall.

Actually, the day has been low volume overall. seeing as this is a consolidation after yesterday's runup I think that this bodes well for the bears. Personally I don't really care which way it goes as I would just like to be able to profit from the moves, trending or slow range bound are looking like the best for me right now to practise in.

Here is the TICK chart: setups are green arrows and trade triggers are black.

I checked the price entries based on the TICK spikes at the triggers and fudged about 2 cents or so against me and used tight stops due to the nature of the range trading today. The results are as follows:

SDS, 6 trades. 1 loser. $1.19 per share gained overall or 2.25% based on average price.

SSO, 3 trades. 0 losers. $0.42 per share gained overall or 1.56% based on average price.

So, single lots of both gross return of $162

Optimum position sizing of 200 SDS and 400 SSO would yeild $410

Fudging 30% against me puts the single lot return at $113 and optimum at $287.

Oh, commissions would be $90 and all these figures are in US dollars so I see a bit more at this time

I'll feel better when these are actual real trading results.

Jeff.

The average trader fails at trading...better than 80%

I just read an older post from Dr. Brett Steenbarger's blog site concerning the failure rate of average traders.

It boils down to what I have said all along, that a high number of traders fail. I have been using 93% as my benchmark, perhaps that may be a little high. It is nice to see that there is actually a study that did some decent number crunching to confirm this.

So, in Dr. Steenbarger's post he poses the question "So what keeps new traders coming to an arena in which far fewer than 20% of participants are profitable after costs?"

In answer he suggests that "...individual day traders may place too much confidence in their ability to read market patterns out of the gate."

OK. I consider myself confident enough in my ability to learn how to read and understand chart patterns, market forces and a host of other market variables in order to create an edge in my trading to end up producing profits to justify my time spent in this learning process. That is probably the key, spending the time studying. I did start out a little over confident and had a number of wake up trades, both large winners and large losers, to realize that it was not as easy as it looked.

I would suppose that I am a little farther than "out of the gate" now and, seeing that I have been trading for well over a year and have not blown my account up, I suppose I have demonstrated my ability to manage risk where I can be fairly confident in not blowing it up in future. I have have not firmly set myself in profit mode as I recognize that I still need some tweaking in my trade management. Once I can get things down and I see some consistency, which is slowly getting there now, then I will start to ramp things up and review my capitalization levels.

I know that I have gone off half cocked a few times in my blog about being there already, when I sit back and ponder my situation I usually see the light and pull my horns in a bit. Some of my previous plans would have worked out nicely but did not suit my style. They may be tweaked in future once I have a consistent trading base to work from.

Jeff.

June 1st, new month, new outlook

Today was a day of learning.

That noon trade that I was monitoring got ahead of me, I left it ride and when I came back to it the price had climbing and pulled back steep enough that my stop was likely to get hit. I have learned in the past not to adjust a stop if the price is moving fast, especially on high volume, which this was. In modifying the stop the system cancels the first and reorders the second. I have had these rejected as the stop loss cannot be placed higher than the trading price. I have also had them get placed but the delay is large enough that the price just keeps going and I get a poor closing price. So I left it fro a very small profit.

Here is the TICK chart for the day.

I know it is not the clearest in the worked but I decided to not break the day into AM / PM portions for time constraints. It is pretty clear that trades 2 through 6 were at least at the beginning of the TICK trend change. I need to work on my stops and my earlier entries as I get in a little later than I would like but my TICK timing at least doesn't get me nailed to the wall chasing a price and being way out of whack and getting whipsawed. Some of these trades were held for a longer period of time than my normal, which is a good sign all of it's own.

Chart for SDS and the three trades with the green stop lines.

Of these trades, 2 and 4 were not so great, small loss though. 6 was one of the more profitable of the day as I realised that I need to keep my stop tighter so I managed to snag the exit at the first pullback. I would not have tried for more as the 390VWMA was very close (the pinkish heavy line). i considered more momentum reversion style trades but decided I did not have earlier profits to play with.

Chart for SSO with it's three trades and stop lines.

Obviously missing that morning run up was a shame. #1 was a false start as I may have gotten in earlier or later for a better price so I ended up in #3 instead at the same price. Paying closer attention to #3 would have gained me another few cents at the end as I should have been up just below the 50 SMA and even tighter as the price approached the purple monthly R1. Same deal with #5. Leaving the prices alone too long before looking in on them is an issue today. I will be working on an automatic alert to let me know when a price is in jeopardy of turning based on the faster moving averages in the TICK...need some more research for that one. The entry alerts are doing well.

All up I came out with about $13 and change profit.

Oh, new rule for me lately. I am not counting my commissions in my daily tallies as I do not want to get caught up in trying to break even based on them. I would rather work on having good trade ideas, good entries and exits and let the profits build. The commissions will look after themselves. I realise that they are a cost and must be considered so I do track them very closely in my overall P/L plan and data management, just not for trade dissection now.

For the record, commissions and SEC charges were a little over $60...so, yes, I am down approximately $47.

Jeff.

Nice morning

I decided to try to wait out the first 15 minutes of trading starting last week. Today that cost me a nice entry which cascaded to missing a few nice entries and left me scratching at the range area mid to late morning. Lots of learning as this tends to be my weak spot, but I would like a bit more profits to play with for my future learning...I guess I can't have it both ways.

I expect that I was not in the right trading mindset as the morning opened either. I had three people chattering at me right up to 0930h and on and off there after...not conducive to getting in the "zone" for sure.

Watching the open turn relatively strong on higher than average volume had me itching to jump in long, but I held. Trade the plan and all, I used the interruptions as excuses for not being in.

So I think I may have a new guide as it pertains to the open. I see that the TICK indication was strong to go long, there were a number of nice pullbacks in TICK that never reached the lower boundaries. I will note these on another post, I am just venting right now. The one low that did hit my target was a good entry on it's own, a little late but was still a 30+ cent move on SSO.

Lunch approaches and I see the TICK pattern heading down and I am in a long position in SSO hovering over my stop which I will not lower. I am sitting just under the 100VWMA which has typically been a good place to be and I usually miss it and get stopped before I can get under it...we'll see if it works today...this is my second try at a long SSO from the same price.

Ah, it is moving as I type and the TICK trend may be resuming up as well...I'll see where the next low reading appears and judge whether to advance my stop or not.

Jeff.