Trading started out as a hobby and, even though I am taking past the hobby level, it is still really a hobby. Yes, I spend a few hours each day doing trading related stuff even if not directly trading. Yes, I am making more money than a hobby ought to... perhaps. Yes, I plan to be able to replace two incomes and only have to trade for a living.
I enjoy it and, therefore still consider it a hobby.
Having said that I often get asked "what's new?", or people are talking about their hobbies and that leads me into my hobby. Because I get to talk about gains, as that is what this is all about, people get curious and ask how to do it. Originally I thought that anyone could but I now know better... at least when it comes to day trading. The momentum and stock stiff anyone could do.
Anyway, I have stopped counting how often I've been asked if would trade $10,000 for them. I cite legal, accounting, possibility of loss or any number of valid reasons why I would not trade their money... as much as would secretly love to have a much larger account to trade.
I would be curious to have a nice $200k account base to see what I could do with it.
Jeff.
Questrade, My direct access discount broker.
Saturday, May 8, 2010
What a Week!
Well, this past week was a roller coaster. I started with a zero day on Monday, just opening trades, continued with a good Tuesday, a down Wednesday... then Thursday hit.
Daytrading turned over $800 net, which was nice but the real kicker was all the momentum options trades that I closed as the market did it's thing. I closed about 20 positions at various points over the afternoon and saw well over $7,000 net profits. Based on the capital in play that is about a 70% ROI.
This month, one week in at least, I have set every trade at 3 contracts so, other than attempting to cherry pick trades, I have fully optimized my trading plan as I should have been doing all along. Plugging in 4 contracts shows about an increase of 50% in profits. That makes the move to 4 the largest gain in potential as I am getting past the effect of commissions. I posted a chart already indicating the increase, by percentage, for each single contract increase in overall trade size.
I could go right to 4 now but I would like to have one more week at three as I cannot run 10 trades at 4 yet... although one day will change that if is a profitable day.
On another note, Questrade has dropped the $5 daily fee for trading in US securities in a TFSA and RRSP account. That will bump my bottom line by $100 a month. That alone is a 1.5% per month increase in profits based on my original starting capital in the TFSA. Not a lot compared to the overall but every little bit does help.
Daytrading turned over $800 net, which was nice but the real kicker was all the momentum options trades that I closed as the market did it's thing. I closed about 20 positions at various points over the afternoon and saw well over $7,000 net profits. Based on the capital in play that is about a 70% ROI.
This month, one week in at least, I have set every trade at 3 contracts so, other than attempting to cherry pick trades, I have fully optimized my trading plan as I should have been doing all along. Plugging in 4 contracts shows about an increase of 50% in profits. That makes the move to 4 the largest gain in potential as I am getting past the effect of commissions. I posted a chart already indicating the increase, by percentage, for each single contract increase in overall trade size.
I could go right to 4 now but I would like to have one more week at three as I cannot run 10 trades at 4 yet... although one day will change that if is a profitable day.
On another note, Questrade has dropped the $5 daily fee for trading in US securities in a TFSA and RRSP account. That will bump my bottom line by $100 a month. That alone is a 1.5% per month increase in profits based on my original starting capital in the TFSA. Not a lot compared to the overall but every little bit does help.
Wednesday, May 5, 2010
Taking an erroneous loss.
ARRRGH!
One of the two last oversized positions ended up in a loss today as I closed it. The worst was that upon setting the exit order I used a limit order instead of market. Now this position has been held since mid April and has shown some nasty negative numbers until yesterday's drop in the market. Closing it this morning I should have seen about a 10 cent loss but instead, due to my error, I booked it at 65 cents down. The other was up 10 cents when I closed it.
Normally that would not concern me, and to be honest it really doesn't concern me now anyway, but it was a #390 drop. That still leaves me up for this month and has no bearing on last months numbers anyway as I treat a trade as fully executed on the day it is closed, no matter the open day. That is just plain easier than figuring the commissions out over multiple timeframes...especially if the trade was entered in stages, as this one was.
Due to some newbie shenanigans this morning I booked a scratch trade (commissions lost only) that should have been a decent gainer of at least 30 cents but John was trying to make a point with some new folks about market orders vs limit orders. So when everyone else was out I figured I better get out as well. I know he knew that the stock was going to jump but we will have other trades and I don't want to lament over a scratch.
My margin account is up quite nicely and I was hoping for some profit taking over there to pad my overall numbers...but that is the wrong reason to close a trade. So I am holding. Paper gains were as high as $4,500 this morning, back down to $2,500 and now inching back up to $3,600.
I'll post as I get some more profits locked in...or have to book another loss if needed.
One of the two last oversized positions ended up in a loss today as I closed it. The worst was that upon setting the exit order I used a limit order instead of market. Now this position has been held since mid April and has shown some nasty negative numbers until yesterday's drop in the market. Closing it this morning I should have seen about a 10 cent loss but instead, due to my error, I booked it at 65 cents down. The other was up 10 cents when I closed it.
Normally that would not concern me, and to be honest it really doesn't concern me now anyway, but it was a #390 drop. That still leaves me up for this month and has no bearing on last months numbers anyway as I treat a trade as fully executed on the day it is closed, no matter the open day. That is just plain easier than figuring the commissions out over multiple timeframes...especially if the trade was entered in stages, as this one was.
Due to some newbie shenanigans this morning I booked a scratch trade (commissions lost only) that should have been a decent gainer of at least 30 cents but John was trying to make a point with some new folks about market orders vs limit orders. So when everyone else was out I figured I better get out as well. I know he knew that the stock was going to jump but we will have other trades and I don't want to lament over a scratch.
My margin account is up quite nicely and I was hoping for some profit taking over there to pad my overall numbers...but that is the wrong reason to close a trade. So I am holding. Paper gains were as high as $4,500 this morning, back down to $2,500 and now inching back up to $3,600.
I'll post as I get some more profits locked in...or have to book another loss if needed.
Tuesday, May 4, 2010
Re-considering the TFSA overcontribution again
I decided, seeing as I have a 32% return for April and I aim for higher with the 3 contract plan in May, and with more trading days as well to work with that I will not bother trying the over contribution plan. It doesn't make any sense to raise any taxation red flags for the sake of a few months of optimum trade sizes. I'll get there soon enough.
Jeff.
Jeff.
Monday, May 3, 2010
Average option prices
It only took about five minutes to run all off April's trades to come up with an average option price.
$2.62.
Well, a little higher than my $2.00 guesstimate. Some of the trades were over $6 so I would feel comfortable running a minimum trade size for all trades below, say... $4. There were 14 above $4 out of 108 trades so about 10% may be one contract less.
Even at $2.62 per considering that I want to trade 5 contract minimums I would only have to add about $6,000 to my TFSA to meet my requirement. This puts me about three months ahead of schedule on my cashflow plan as well.
Considering the CRA fees against the added profit potential makes this a no brainer. I figure that I will have to come good for the taxation and penalty next spring... That is almost 12 full months of trading and I fully plan to withdraw the equivalent amount, $6K, to halt the accumulation of penalties quickly. In fact, based on April's trading that could be covered in the first month.
Tomorrow I will call my accountant to see if he has any insights for me though.
Jeff.
$2.62.
Well, a little higher than my $2.00 guesstimate. Some of the trades were over $6 so I would feel comfortable running a minimum trade size for all trades below, say... $4. There were 14 above $4 out of 108 trades so about 10% may be one contract less.
Even at $2.62 per considering that I want to trade 5 contract minimums I would only have to add about $6,000 to my TFSA to meet my requirement. This puts me about three months ahead of schedule on my cashflow plan as well.
Considering the CRA fees against the added profit potential makes this a no brainer. I figure that I will have to come good for the taxation and penalty next spring... That is almost 12 full months of trading and I fully plan to withdraw the equivalent amount, $6K, to halt the accumulation of penalties quickly. In fact, based on April's trading that could be covered in the first month.
Tomorrow I will call my accountant to see if he has any insights for me though.
Jeff.
Month End Stats and TFSA overcontribution.
I started my TFSA trading full tilt in April, early April anyway. Although there were a few days that were in the margin account in the first part of April I am only going to count the day trading in the TFSA, all of the momentum options trading and all of the medium term stock trading for statistical purposes. The reason being that my end goal is cash flow based on those three setups so I consider anything else prior to that, win or lose, testing and fine tuning...although I am still doing some of that yet.
Stats for those three plans are:
TFSA Daytrading:
Daily Average: $119.30
Total net profit: $2142.44
Momentum options trading:
Daily Average: $34.00
Total net Profit: $1156.15
Stock trading:
Daily Average: $9.72
Total net Profit: $563.77
The grand totals are:
Daily Average: $163.03
Total net Profit: $3174.39
I figure that if I can post those numbers based on my meager startup and yet to be fine tuned trading I will look forward to some nice profits going forward.
I still track my "potential" profits had I made every single daytrade in the TFSA using 1-10 contract sizing. At my current decided size of 3 contracts I would have seen $3114, about $1K more had I just same sized everything. At the current expected maximum size of 10 contracts I would have seen $14,399.
I haven't worked out my average option price recently to see roughly how much I would have to have for each contract size increment. Having enough to cover an average size may have me running out of cash on very busy days though. Biggest day yet was 10 trades, largest trades are in the $3 range... so that would take $9,000 is all trades were so large for 3 contracts... I figure that $2 is about the normal average though... $6,000 for 10 trades at 3 contracts.
I have some more cash to transfer to my trading and I am considering transferring it to the TFSA and absorbing the 1% monthly hit and taking the chance of getting taxed on profits based on the over contribution in order to get my sizing up to the more profitable level of 5 contract trades. In April that would have produced $6,338 and the fees would have been about $1150 or so producing a net of $5,188. That is better than the $2,147 I did squeak out.
I emailed Questrade and they advised me of what I already know and said to check with the CRA regarding what the final charge would be. All I wanted to know is whether Questrade would block the transfer... they apparently won't.
I'll see what happens.
Jeff.
Stats for those three plans are:
TFSA Daytrading:
Daily Average: $119.30
Total net profit: $2142.44
Momentum options trading:
Daily Average: $34.00
Total net Profit: $1156.15
Stock trading:
Daily Average: $9.72
Total net Profit: $563.77
The grand totals are:
Daily Average: $163.03
Total net Profit: $3174.39
I figure that if I can post those numbers based on my meager startup and yet to be fine tuned trading I will look forward to some nice profits going forward.
I still track my "potential" profits had I made every single daytrade in the TFSA using 1-10 contract sizing. At my current decided size of 3 contracts I would have seen $3114, about $1K more had I just same sized everything. At the current expected maximum size of 10 contracts I would have seen $14,399.
I haven't worked out my average option price recently to see roughly how much I would have to have for each contract size increment. Having enough to cover an average size may have me running out of cash on very busy days though. Biggest day yet was 10 trades, largest trades are in the $3 range... so that would take $9,000 is all trades were so large for 3 contracts... I figure that $2 is about the normal average though... $6,000 for 10 trades at 3 contracts.
I have some more cash to transfer to my trading and I am considering transferring it to the TFSA and absorbing the 1% monthly hit and taking the chance of getting taxed on profits based on the over contribution in order to get my sizing up to the more profitable level of 5 contract trades. In April that would have produced $6,338 and the fees would have been about $1150 or so producing a net of $5,188. That is better than the $2,147 I did squeak out.
I emailed Questrade and they advised me of what I already know and said to check with the CRA regarding what the final charge would be. All I wanted to know is whether Questrade would block the transfer... they apparently won't.
I'll see what happens.
Jeff.
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