I have two trades that I still have open one from last week and one from last month.
My other trades ended up in the red overall so I am not overly impressed with the method that I was using...that was the test of the service. Even had I exited the few that did turn green at the peak I suspect that I would have ended negative for the test anyway. That is not anywhere near enough of an edge to sway me into using this particular service. Of course, I shouldn't have been surprised.
So on to the next more serious trade plan with a healthy sprinkling of patience. Now that I am using all of my own picks and entries I don't mind getting into the nitty gritty of what I am really doing...so here it goes...
I went through some back testing of the two trades that I am in right now and found how the particular stocks seem to work with respect to my indicators...more on those another time.
Badger Meter Inc. (BMI)
This stock moves well and has a nice pattern of observing various support and resistance levels far more often than breaking them. Volume levels are clean and well delineated and the price ranges often enough to produce a good number of trading opportunities. It's a keeper in my arsenal of stocks to trade.
There have been 26 trade setups in the last 12 months. 8 did not meet the entry target, 2 were losers (less than $2 ps) and the rest were up $55.50 ps.
I bought it on Friday at $38.50 based on a signal, but not mine. It was a buy under $40 but I had it down as a buy under $38. $38.50 is not too far off and the price entry has some reasonable trend support so I will play it out. The up target is $44.00.
Lincare Holdings (LNCR)
LNCR is the other longer term trade, it is a short placed on June 30th at $23.30. This one is a slow mover and I would not have traded it had I realized that it would tie up capital for so long to make it's moves. I did not do all of the back testing that I would normally plan as I doubt that I will continue tracking it. It does trade decent volume and I wouldn't mind so much holding it as a long position but it is in a serious long term downtrend right now....has been for almost three years and it has only moved $15 overall with a large drop of $12 in 2007 that took 6 months to finish.
Wider stops, more patience...I should check to see if I am going to get hit with a dividend payout soon.
The down target is somewhere just south of $20 and I will cover this trade rather than letting it go much farther.
That's it for active trades and I have nothing else tested yet. This is where the patience comes in. I will not just enter a trade until I have done the one year back test and determined that the stock is a good candidate. I plan on having a number of stocks, perhaps forty, to choose from at any given time. They will all have pre-set entry targets and use rule based following stops.
I estimate that I can choose a stock in a few minutes after doing a scan for my criteria. It should take about an hour to do a back test so I may only end up with a few per week to add to my list.
At some point in the future I will set these up with a semi automatic trigger program but I need to see some returns to justify the necessary time investment involved in writing that kind of software.
Jeff.
Questrade, My direct access discount broker.
Monday, July 13, 2009
Friday, July 10, 2009
Three ring circus
I was running three separate trials to test some theories and a service.
1) a "unique" signal service that provides a stock call for possible trades
2) a parallel self generated scan that produces stock picks in a certain range
3) a plan based on longer weekly period moving averages
I chose to use my account for the signal testing figuring that perhaps a pre-tested system might generate some real profits, which would be cool and be "easy" for some modest gains. My plan was not to stick with this unless it was wildly successful... which I doubted it would be.
Now, I have tried out a few systems in the past when they have had "free trials" and I have always cancelled and either been refunded or just not billed. I must say that they have always been good about the cancellation and have been above board when it comes to processing and responding. It's too bad the performance was not up to the claims.
So far anything that I have tried I have not really written about as they were just for my curiosity and none were anything to write about, nothing has changed. In all cases I wanted to see how they worked and get inside the system, do a bit of comparative backtesting and some real time testing. What I have found is that any system is only another indicator like any other. Some claim to have the "secret" to making money in varying quantities but none are more than that. I really knew this all along as nobody can forecast what a stock is going to do.
Curiosity.
I am down to # 3) a plan based on longer weekly period moving averages. I am adding the Point and Figure charting to this to supply some entry and stop settings and using the averages more as a general guide to help with the trade direction bias.
I am down to a one ring circus now and I already feel the calm as a result.
Jeff.
1) a "unique" signal service that provides a stock call for possible trades
2) a parallel self generated scan that produces stock picks in a certain range
3) a plan based on longer weekly period moving averages
I chose to use my account for the signal testing figuring that perhaps a pre-tested system might generate some real profits, which would be cool and be "easy" for some modest gains. My plan was not to stick with this unless it was wildly successful... which I doubted it would be.
Now, I have tried out a few systems in the past when they have had "free trials" and I have always cancelled and either been refunded or just not billed. I must say that they have always been good about the cancellation and have been above board when it comes to processing and responding. It's too bad the performance was not up to the claims.
So far anything that I have tried I have not really written about as they were just for my curiosity and none were anything to write about, nothing has changed. In all cases I wanted to see how they worked and get inside the system, do a bit of comparative backtesting and some real time testing. What I have found is that any system is only another indicator like any other. Some claim to have the "secret" to making money in varying quantities but none are more than that. I really knew this all along as nobody can forecast what a stock is going to do.
Curiosity.
I am down to # 3) a plan based on longer weekly period moving averages. I am adding the Point and Figure charting to this to supply some entry and stop settings and using the averages more as a general guide to help with the trade direction bias.
I am down to a one ring circus now and I already feel the calm as a result.
Jeff.
Thursday, July 9, 2009
To niche or, not to niche?
My dabbling in longer term trading has changed the way that I view all trading, even the intraday stuff. In the past I knew that trading based on multiple time frame was necessary in the long run and now I have managed to inadvertently get to one of those stages. I was daytrading in the minute time lines then I changed that to 30 minute and daily with the longer term stuff and now I am investigating the weekly, which I played with a little while back with no real conviction.
Today (and a couple of other times) I entered an intraday position based on either news or just what appeared to be the current trend. My previous two trades were small profits as a result of letting the stop sit where it should be to start considering the longer time frames, I just made sure to close out before the end of the day.
Today I placed a long trade in SPY around 0945h and set the stop below the overnight low range which was near the previous day close price. I have watched as the price has ranged between 60 or 70 cents over the morning, leaving a few opportunities to make some small profits on closing the trades at the repeated high of the AM. I decided to leave these in order to just play the longer game. This is as much a mental game as anything else right now as I left the position open for four tests of the low price then moved my stop tight when the price reached the first support/resistance line at about noon.
So, three "daytrades" for three and all profitable, even if marginally.
Perhaps I was just in the wrong frame of mind all this time and I should return tot he day trade?
No, I like the longer term as well as the shorter term trades. I figure that I will be better served by keeping a wide array of experience in the market active. I know many suggest finding a niche and sticking to it but a niche edge in trading can evaporate in a slight change in market dynamics so I would rather have a broader approach that allows me to pick and choose what works and what does not given the ever changing circumstances. The key will be to recognize what is best for any given timeframe and market condition.
The never ending game.
Jeff.
Today (and a couple of other times) I entered an intraday position based on either news or just what appeared to be the current trend. My previous two trades were small profits as a result of letting the stop sit where it should be to start considering the longer time frames, I just made sure to close out before the end of the day.
Today I placed a long trade in SPY around 0945h and set the stop below the overnight low range which was near the previous day close price. I have watched as the price has ranged between 60 or 70 cents over the morning, leaving a few opportunities to make some small profits on closing the trades at the repeated high of the AM. I decided to leave these in order to just play the longer game. This is as much a mental game as anything else right now as I left the position open for four tests of the low price then moved my stop tight when the price reached the first support/resistance line at about noon.
So, three "daytrades" for three and all profitable, even if marginally.
Perhaps I was just in the wrong frame of mind all this time and I should return tot he day trade?
No, I like the longer term as well as the shorter term trades. I figure that I will be better served by keeping a wide array of experience in the market active. I know many suggest finding a niche and sticking to it but a niche edge in trading can evaporate in a slight change in market dynamics so I would rather have a broader approach that allows me to pick and choose what works and what does not given the ever changing circumstances. The key will be to recognize what is best for any given timeframe and market condition.
The never ending game.
Jeff.
Monday, July 6, 2009
All in.
I am now up to five long and two short positions.
My plan has me going "All in" but not by increasing my position sizing just yet. That would place the loss allowances needed to start these trades too high, or I would tie myself down to only a few possible trades due to needing the price to get closer to my stop setting before entering.
Right now all my trades are 50 shares. Maximum loss allowance of $150 ($3 stops) even though most will come in tighter than that. At 50 shares I can get three shorts in my margin account, 6 or 7 long in my RRSP and 2 or 3 in my TFSA. This allows for some diversity as well as bringing my active trade quantity up to give me some data to work with for determining how successful this trading may turn out.
I think I will add some cash to the margin account and put up with the fact that there will be income tax owing as a result. Once I get my TFSA built up then I should be able to avoid having to do that in future. I just like the idea of having 3X margin available in addition to the shorting capabilities.
So, here's to going all in.
Jeff.
My plan has me going "All in" but not by increasing my position sizing just yet. That would place the loss allowances needed to start these trades too high, or I would tie myself down to only a few possible trades due to needing the price to get closer to my stop setting before entering.
Right now all my trades are 50 shares. Maximum loss allowance of $150 ($3 stops) even though most will come in tighter than that. At 50 shares I can get three shorts in my margin account, 6 or 7 long in my RRSP and 2 or 3 in my TFSA. This allows for some diversity as well as bringing my active trade quantity up to give me some data to work with for determining how successful this trading may turn out.
I think I will add some cash to the margin account and put up with the fact that there will be income tax owing as a result. Once I get my TFSA built up then I should be able to avoid having to do that in future. I just like the idea of having 3X margin available in addition to the shorting capabilities.
So, here's to going all in.
Jeff.
Misjudgment and the learning curve.
Trading using the P&F charts in the manner that I am now involves some new ideas for me when it comes to holding positions and setting stops.
With regards to stop setting I need to move the stops according to my rules, generally move them $1 at a time when the price moves past the higher dollar or 50 cents if the price stalls and consolidates to preserve that 50cent per share previous move. Also set the stop to my target price shortly after it is crossed as I do not want to give back my target profit once achieved.
This first change in thinking and stop setting would have had me out of positions for a profit before Friday, not all, but at least two of my longs. Now I am selling them off at a loss instead.
This past employment report being so negative it has affected the general market enough to throw off some of my chart triggers and stops and make me consider tracking both the market and individual sectors on their own charts to co-ordinate long and short position entry depending on the correlation between the stock traded and the sector/market it is in.
More work.
Having said that I am treating this as a buying opportunity as some of my stocks have met their trigger prices due to this news and they may not have otherwise. I have two limit orders in now. None of my short targets are setting up as they have mostly dropped now. I'll likely have to give them a couple of days to return to normal. I'd hate to short a couple of stocks only to have them bounce through my stop.
I would liked to have been tracking P&F charts back when all this started in the initial downturn. I may go back and look at it in that timeframe just out of curiosity sometime.
Jeff.
With regards to stop setting I need to move the stops according to my rules, generally move them $1 at a time when the price moves past the higher dollar or 50 cents if the price stalls and consolidates to preserve that 50cent per share previous move. Also set the stop to my target price shortly after it is crossed as I do not want to give back my target profit once achieved.
This first change in thinking and stop setting would have had me out of positions for a profit before Friday, not all, but at least two of my longs. Now I am selling them off at a loss instead.
This past employment report being so negative it has affected the general market enough to throw off some of my chart triggers and stops and make me consider tracking both the market and individual sectors on their own charts to co-ordinate long and short position entry depending on the correlation between the stock traded and the sector/market it is in.
More work.
Having said that I am treating this as a buying opportunity as some of my stocks have met their trigger prices due to this news and they may not have otherwise. I have two limit orders in now. None of my short targets are setting up as they have mostly dropped now. I'll likely have to give them a couple of days to return to normal. I'd hate to short a couple of stocks only to have them bounce through my stop.
I would liked to have been tracking P&F charts back when all this started in the initial downturn. I may go back and look at it in that timeframe just out of curiosity sometime.
Jeff.
Saturday, July 4, 2009
Medium term trading and daytrading combined now
I decided to keep all my trading to together in journalling and in action as that seems to be the way it is working out now. Thursday I did a little bit of daytrading as the bad news came out for the US employment figures, I rode SDS for a small gain as the market adjusted downward.
Either my concentration on medium term timelines or stop loss setting has sunk in..or what I don't know. I entered the day trade and left a $1 stop in place...HUH? ... that certainly is not my normal stop loss for day trading... perhaps that has been part of my problem all along with stop setting though. I seem to like this longer timeframe for trading.
I will sort of start from scratch over here for my current trading as I just spent a fair amount of time reviewing all my real trades, fake trades and did a little bit of speculative backtesting based on my new plan in order to set some rules down... I'll work them out later.
Jeff.
Either my concentration on medium term timelines or stop loss setting has sunk in..or what I don't know. I entered the day trade and left a $1 stop in place...HUH? ... that certainly is not my normal stop loss for day trading... perhaps that has been part of my problem all along with stop setting though. I seem to like this longer timeframe for trading.
I will sort of start from scratch over here for my current trading as I just spent a fair amount of time reviewing all my real trades, fake trades and did a little bit of speculative backtesting based on my new plan in order to set some rules down... I'll work them out later.
Jeff.
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