Gold vs Oil, a question of volatility.

Volatility is a day trader's best friend.

Which is why I was trading and playing with Energy stocks a little while ago but they flattened out so I switched to gold ETFs...as much for variety and a little more intraday volatility as anything else. The energy stocks were Talisman, Suncor and HED (Horizons betapro bear energy fund).

I found that HED was traded really thinly and did not look like a good ETF to use as a daytrading bear player, so I don't think I ever actually placed a trade there. I should really try it sometime just to know though.

Now I am playing with HGU, HGD, the bull and bear versions of the Horizons Betapro gold funds, and they seem to work out well enough...although they have also flattened out and now are trading with far less than a level of volatility than I like.

BUT....

Trading a plan must consist of making a plan and sticking to it, as long as the plan is not flawed beyond hope in the first place. My issue has always been that I set up a strategy, I play it for a bit to work out some of the bugs. Perhaps I breakeven or even lose a bit in the process of testing it out, either is my expectation to a certain extent.

In the playing and testing I find the plan very workable only to find that something changed along the way. It may be my expectations (timeframe, profit targets, price move desired...etc) or some facet of the stock itself in the way that it reacts or leads the market, index or other related stocks. Once I hit this point I usually shift to another strategy, change the stocks that I am working with or something to force some sort of change in the results.

THEREFORE....

I know that my plan is very functional and the strategy is based on good testing and real enough numbers that I am comfortable sticking with it. So in this vein I am not going to switch back to energy at this point. Even though I have worked it enough I could do so with 20 minutes of preperation...I did it when I switched back to gold even though I changed to ETFs rather than stocks....I will stick to the plan. Unlike trying to hold a stock through a drop in price as a buy and holder might do I will hold the stock (ETFs) in my trading plan through a lull in volatility.

The part of the plan that allows this holding pattern is my timeframe and return goals. I have mentioned it many times in the past but I will refresh it hear...this gives me some confirmation too.

Timeframe: 40 weeks of trading 4 days a week. 160 trading days of about 260 market days
Goal: 1% return per day on average

Given my timeframe I have missed something like 21 trading days this year...I have over 70 spares left to use up. My goal is way off so far as I have not turned a profit yet, overall.

So, that is about all of a pep talk I am going to give myself today. I shut down my trading platform to look at later...maybe after 1300h once the 200 sma has caught up to give the prices something else to supply supoort or resistance. I am expecting a drop in price in gold and therefore the HGU ETF. I had actually considered just buying HGD at one of the earlier lows (peaks in gold and HGU) and holding it for the day but I have a hard time with trades longer than a few minutes now...I could have just used a wide margin VTSO I suppose and I should consider this in future again...as a backup for a longer term trade.

Jeff.

February 5th, mid-morning update

Today is a crappy day for trading the gold ETFs, they are terribly range bound after opening very strong based on the pre-market surge this morning in the price of gold.

I made three trades and am still up $5 but that is a pretty poor showing but not too bad considering the churning going on. I decided to let it wallow and work this kink out.

I had figured that the opening gap would be closed buy noon so I played HGD bear for the downslide that never really materialized, I was still ahead though. So I switched to HGU to try for what looked like a possible break up after 1000h, against my decided bias for the day, and didn't fair well as there was no solid move. Too much horizontal with lowish volume while in a trade makes me edgy as the longer it plays that way the less likely it becomes that the move will materialize in my favour. I usually try to exit these while in a profit position but will dump within a few cents of my mental stop, usually based on a technical trigger for me.

Yesterday was a day to play with the bear fund and today was a day to play with the bear and bull combined. I am still getting "into" playing the bear against the bull rather than short selling so, even though I faked a lot of trades, it takes a little more on the ball to play these back and forth. The market orders are making this a lot easier to manage.

Now that HGD is well below $10 that puts it into the 400 share position size range for me. I have been using 300 shares and find that the fills are broken but within a penny. They do not trade inside orders of high enough volume to secure a clean full fill in one shot...I am curious how 400 share orders are going to work out for me. Nice to get larger positions under my belt with smaller prices and smaller moves now, this is part of my plan to grow with the account.

Jeff.

February 4th. very short day.

I have no shortage of excuses why I couldn't do much trading today, meetings, generator issues, phone calls...you name it.

Even so I did manage to squeeze in a couple of trades to see how the HGD ETF works with market orders for entry, pretty much exactly as I figured. This will make life a lot easier and get me into more of the trades that I see setting up as a market order is a guaranteed order fill and with these volumes and small spreads they are fairly predictable.

I marked three trades here but I oly managed the first two. Sadly I bailed on the first one as I got in a little too early in the pattern, got jittery and sold...which is not a bad thing as it could have kept going down. The next trade entry was actually in a lower position by a few cents and I managed to recoup some of the loss, I was out by commissions today which is OK for a pair of testing trades, I have done far worse while testing.

The third trade I marked, it was one of those ones that I saw after it started to move, the generator issue kept me away form actually placing the order but it was a good 15 cent move. Small but with this current wallowing I cannot expect much more than that.

HGU followed the pattern that I figured for the day...or at least the one that I anticipated once it got moving. Once the price crosses the 200 sma (green) it usually stays there for a while and I can use pivot points farther away as targets or launch pads. There were a number of decent trades setup here, the one off the start I didn't get into as it setup after some hovering off the start, I expected a quicker momentum move off the bell to establish a low range price around $12.40 for the day but it never happened, so I missed the entry, thought about taking it but decided to wait it out. Even the late afternoon trading was rather choppy and would not have had me staying in for very long on any trades.

This is one of those better luck tomorrow days. The PPs are getting pretty tight right now, there should be a decent move in one direction or the other soon, perhaps tomorrow, and I hope to be in a position to be able to trade it.

Jeff.

February 3rd. Market orders return.

Well, I've had enough of trying to nail entries with limit orders.

All the benefits of using a limit order are also detriments. While I do like getting the price that I want, I also would rather be in a trade when I decide I want in.

Today was a prime example of why limit orders are killing me. I won't note the trades on the chart as it is not terribly clear but here is the intraday for HGU:

So, $12.50 limit order ($12.48 PP) at shortly after 1000h...filled then the price dropped to $12.28...I got out around $12.38, it was moving. That was the only order that filled.

I placed another minutes later to catch the bounce off of the 200sma (green) but missed it by a penny or two. 20 cent trade missed.

1035h...$12.50 again, missed, 1058...$12.50...missed. 15 cents and 15 cents again missed.

I made out well enough when I was placing market orders to get in before so I will go back to that method again.

48 cents per share had I been using market orders, and perhaps some trades on HGD too...perhaps not. At 300 shares that is a $144 gain or $104 net profit.

I decided to concentrate on HGU only and leave HGD alone for a bit...although I did place one order over there too, same result.

The end result is a loss for the day, not really much but had I gotten in on every other order...or even one or two I would have broke even or ahead at least a bit. The one trade was filled only due to the price dropping through my order. This ETF is traded enough that the spread is only usually 1 or 2 cents so using a limit is really not a great advantage.

Trying the limit orders has given me a lesson in patience though, letting the price go if the order is not filled has it's own lesson built in. It helped to train my emotions to watch a price climb...and occasionally drop, without worrying that I missed the trade as there is always another being setup later.

I know I am a month in and really nothing to show for it but I did only plan on 40 weeks. So I still have 48 weeks to go...8 week buffer should be loads I expect.

Jeff.

Forex, Questrade and huge margin

Over the weekend I opened a trial forex account with Questrade.

I must admit that I was surprised to get a call today from a representative offering his services should I have any questions. My "tele-marketer" radar blinked on for just a moment but was quickly dispelled once I realized who was calling.

One thing that he was sure to point out was the huge margin allowances, up to 200 times...not 200% but 20,000%. This is needed as lots are in the 100,000 not the 100 I am used to with stocks.

So today I logged in to do some playing. Not quite as intuitive as I thought it might be but I think that may just be the strangeness of the currency trading environment. The charts can be easily set up to emulate my stock charts, moving averages, colours...not much else is really needed. I have not checked my account in the last hour but I watched as the profit/loss jumped up to $500 then back to the red in a minute or two. Very fast due to the leverage involved.

The Java based platform works well. There is a PC version that can be downloaded but it will be easier for me to stick with the online version due to my moving from computer to computer.

An interesting twist is the 24 hour trading environment. 1700h Sunday until 1700h Friday. I thought this would make a nice seamless charting experience but it is strange to not have a beginning for each new day...then again, sitting down for an hour in the evening is possible, if not necessarily prudent. I am sure this could be addicting.

I will investigate this further but I am not sure that it is for me at this point, I need to play with it some more. Unlike stocks I would not suggest anyone try this on for size with your own real cash off the start as it could be lost very quickly. Carefully traded, with tight loss allowances, I am sure that it can be lucrative and could be a small portion of a trading portfolio.

Like anything else, due diligence is in order big time here. Getting to know a bit about currencies and choosing currency pairs that you can trade regularly will be important.

All in all it looks like a hoot and I am looking forward to at least some further playing, if not some active forex trading.

Jeff.

February 2nd, HGU and HGD

Today was pretty much like any other day, lots of potential and not any real trading due to circumstances that I have let control me...a whole other story.

Actually, perhaps not. Some have said that in order to be successful in trading you have to treat it as a business and take it seriously. I have not done that yet and perhaps that is my whole problem. I let interruptions get in th eroad of perfectly good trades and today was no exception. I did call and track them but that is easy enough to do now in my head as the pivot points are so predictable now and work as very good targets for both entry and exits.

HGU and the early long plays.

The short story:

0931h Buy $12.20 sell $12.40 Gain 20 cents ps Return 1.6%
(this may not have played out well due to the early entry, so I skip it in the final results)

0934h Buy $12.40 Sell $12.70 Gain 30 cents ps Return 2.4%
0956h Buy $12.80 Sell $13.00 Gain 20 cents ps Return 1.6%

$ 0.50 gain per share or 4.0% overall return on trades

Due to the late morning downtrend HGD would have made some decent trades as well.

I noted the "technical squeeze" circled in red as it was happening. The Friday closing intersecting with all of the moving averages and squeezing the price between them and the 1/2 pivot point just below. On HGU the blue arrow would have been a short sell for me, no question, as that is superb resistance...playing HGD would have been the alternate here, as noted below, the same technical situation was happening in reverse. The blue arrows below are loosely where trades would have been entered. I noted them below for curiosity:

1102h Buy $9.47 Sell $9.63 Gain 16 cents ps Return 1.7%
1150h Buy $9.54 Sell $9.70 Gain 16 cents ps Return 1.7%
1258h Buy $9.80 Sell $10.00 Gain 20 cents ps Return 2.0%

$ 0.52 gain per share or 5.4% overall return on trades

So, The long story is still my hesitation to get serious with this and turn it into a profitable venture. I really have no excuses so this week will be my week to work on the implimentation of some firm plan to get active in the trading. Perhaps not focusing on the open is in my best interest and just aim to start a little later to follow a trend more than trying to nail the faster initial moves that are prone to having interrupted.

Well, either way I am having fun, if I wasn't what would be the point?

Jeff.