February 27th, I changed my mind...chart

Well I changed my mind about posting the chart for yesterday's rule breaking day.

As much as I did lose money I had fun making the trades. If I am to take this seriously I have to stop having quite so much fun until a later time when I ride some profits and use smaller positions to test other strategies...rule breaking is necessary but I should not be doing that right now.

So, here is the chart for yesterday with the trades that would have occurred Had I been diligent and followed my rules. I went back tot he trading platform and used the same charts that I use during the day and just made mechanical buy/sell decisions based strictly upon rules and the indicators that I use.

There were couple of trades that I may have let run longer as they passed the first targets so I will use those shorter runs for my calculations and add my normal fudge factors, I used middle entries if I thought that might have gotten in soon in the minute, I used worst case if the spread was not huge and I applied a 30% deduction to lower the net return number.

Stats:

18 trades
$393 net profits after fudges.

Some of the newish rules I used included paying attention to the sma squeezes as the price approached a pivot point and the sma was near and acting as a boundary...I noted these with the purple dashed lines. I would not place a long trade if the price was bounded closely above the PP BUT would use the conjunction of the sma and PP as a launching for a short trade. The 1030h trades did not pan out so well using this but I only had a small loser. The 1445h was a perfect such setup and worked well. That was one that I did take for real, although I got in a little later.

Otherwise the 50 cent entry, momentum entries, some of these I did take for some decent profits but I was just not patient or paying as close attention as I should be. Like any other plan I pretty much need to take every setup during a continuous timeframe or I risk choosing the sucker trades buy chance.

I may only trade Tuesday Wednesday and Thursday next week due to schedule constraints, and perhaps to let me be more focused while trading.

Jeff.

February 27th, breaking all the rules

I am not going to post my chart for today as I broke almost every rule that I have and I am paying the price...so I am just going to go over my "what not to do's" for this morning.

I started out the day by making a bit of a guiding plan for my trading of the Global Gold Index funds.

"Price opens high - watch for PP200 bounce on the initial reaction"

This price refers to the index price, which opened up about $8 right off the bat. I figured it might have opened a few dollars higher, but the actual numbers don't really matter.

Price jumped a bit off the start, hit and passed the R2 point. I jumped in short before the line was hit...almost a full dollar out...my rule is wait for the 50 cent range first. Had I waited, the price gapped up $1 or so...then I jumped in long farther than the 50 cent range on the other side. Seeing as I already broke this rule twice and was stung each time...why not do it again? So I jumped in short after the price was lower than 50 cents below the R2 again. Even though this was the right side to be on for the next move, I got in late enough that the small rally spooked me out for a small loss...an earlier entry according to plan would have let me ride the small rally out with more confidence.

These first three trades were not wrong...well, the second one was wrong but one wrong in three would not be bad if I had timed these entries according to my rules.

Had I waited to get short until the 50 cent range was breached I would not even taken the first trade as R2 was crossed, then tested. At this point my long entry could be taken with some confidence except it goes against my morning jotting, but it was technically OK. I would have exited for a very small loss as the price bounced back to R1. As the price crossed R1 on the way down I should have entered short. This was the move that I was looking to have happen in the first place, the bounce off of the R1 as the price closes the over night gap.

The gap was fully closed before noon. I managed to squeeze in a few decent small target trades but continued to break my rules all morning long.

I overtraded, I did not observe patience when I missed a particular indication, I played against a 50sma R1 squeeze, I entered trades too late into the momentum move, I held losers too long, I let winners pullback on me into a loss....I traded on Friday.

Based on the previous days this week I was doing OK, holding my own and learning more of the ins and outs of trading these ETFs against the index.

I am going to try using stops next week to minimize the loser trades...I figure that once a trade has broken into the profit zone I will place a stop order for 3 or 4 cents over my entry price. This will force me to at least get out at a net breakeven point. It is easy to modify the stop order on the fly in order to ratchet the stop up or even just to cancel it in order to place a market order to exit the trade.

I know that VTSOs are not immediately available with Questrade but I don't think I would use them if they were available.

So, items on next week's trading agenda:
- adhere to the 50 cent zone
- practise using the stop orders again
- observe more patience
- let the price run without me if I miss time an entry
- watch the moving average squeeze and don't play short counter trend targets
- stop trading sooner, 18 trades today is too many

Jeff.

February 26th update

I did some trading again today. I am starting to see more of what is going on in the interplay between the ETFs, the index and the stock that I use as reference. I had ten trades today and only two lost money, 6 cents and 5 cents per share. I missed out on the initial moves as I was a little gunshy after yesterdays platform fiasco...even though it went in my favour I did not expect any long initial moves today. The first rally was too early for my comfort level regardless. The pullback, although expected, came quick and I got fooled into thinking that the price was starting a new short term uptrend...so I decided to ride it out. The price never made it to the 1/2 S1 line until later so my setup did not materialize perfectly. I am starting to recognize the interaction between the price, my notations and the 50sma now, it is a stronger factor than I gave it credit for as I could have used it for my HGD trade rather than waiting for the pivot point comfirmation.

Here is the chart for the day.
Green boxes are HGU trades, red are HGD trades, blue arrows are my loser spots, very small and short so hardly worth trying to box them. The red arrows are later potential HGD trades and the green are HGU.

Once again this is only the chart for the Global Gold Index. As I am trading the Horizons Beta Pro Global Gold ETFs this is all I need to see the trades for the day.

There really was not a whole lot of large moves to catch and I was working for every penny in the morning as I played either side of S1. I could have rode the 200sma cross as I was already in ahead but chickened out on the smallish pullback. I did jump back in once the move was confirmed though, shame to have to pay two commissions for that move. The trades were sound and filled well but the overall moves were small enough that the real profits barely covered my commissions. I still came out ahead but not by much. I would have finished better had I planned on trading the day as the last setups were pretty solid. I also would have been farther ahead if I was trading a few more shares per trade...100 shares per trade more and I would have added $51 to my meager net profits and still been charged the minimum commission rate of $4.95.

The joy of Questrade's small commissions, even once I get larger than 500 shares the rate is 1 cent per share up to a maximum of $9.95. The ECN fees start to add up then as they are charged on top of the commissions. 37 cents per lot and usually, but not always, both ways at the buy and the sell.

Jeff.

Drawdowns and loss recovery

I was doing some checking into leveraged ETF performance as compared to index that it tracks to find that they are not good candidates for long term holding, they are really a swing, trend or day trading vehicle. I won't get into that here now though. It reminded me of a part of my plan that almost goes without saying, but I have never written it down anywhere.

Draw downs, whether overall losses or just profit losses do not change the target goals. Currently I still use the 1% per trading day on average as a target goal. I have not really been doing much trading lately to be able to see even that goal as I have been playing and testing for quite some time.

I read many comments and articles that talk about grudge trading or revenge trading or trading to get back lost profits or lost capital. The trouble is that a 10% loss on a $5000 account leaves $4500 left to work with. In order to get back to $5000 I would have to see a 11.1% gain. The larger the loss the greater the necessary gain to return to breakeven therefore the more work involved in trading it back.

The point is that no matter how much my portfolio is reduced, I still aim for the 1% daily average performance as it fits my timeline for my financial goals. Trading targets are just targets. Raising the target to try to cover a loss is asking for trouble as whatever created the loss in the first lace is liable to be leveraged into a greater loss again.

With a small portfolio trading one stock or ETF at a time with maximum position sizing based on the account balance, the trade size is automatically reduced after a major drawdown. This reduces the chance of trying to trade it back.

I have reset my balance a few times and just worked with what is left as the capital. My first 1% was based on a $5000 balance so a $50 day is the average target. When I started with $4000 it is then a $40 target. In March, depending on whether I get more trading in this week or not I will start with a $4200 balance. I would reset the starting balance at the beginning of each month regardless of my actual profit or loss. This is a bit of a head game as I definitely do not want to be trying for larger targets just because I had a poor run of trading.

I wonder when a profit becomes capital anyway? Personally I consider it just the balance and the capital is only ever the starting cash that is put into the account in the first place to get things going. Having said that at the begining of each month I could consider that the captial base for the month as I am always in cash at the end of the day.

I will be tracking the return on the initial cash infused into this plan at some point but it is not a target based tracking, only performance.

For example, today was a $121.36 day on one trade. That is 3% based on my $4000 at month's start.

Jeff.

Questrade and the lack of VTSO

This is an update to the VTSO situation as I realized what was going on this week, mid April.

I found out that the TSX does not support Stop Loss orders other than stop limit orders. Stop loss become market orders upon being triggered. A VTSO is basically a moving stop loss order and therefore I believe that the VTSO and stop loss order are unavailable to all TSX and TSX Venture trades. This has nothing to do with Questrade as this will be the same for all brokers unless they institute some method of providing a stop loss through their own systems.

My fix is to trade the NYSE and AMEX using similar issues. I tested the stop loss and VTSO and they are still available over there. So any that really want to use these features will have to go outside of Canadian markets to do so.

Due to my difficulties with my platform and connection this morning I had opportunity to ask about the VTSO or Virtual Trailing Stop Order.

I won't get into the technicals as far as how these work, that is in my index if you need to check it out.

Questrade has not allowed VTSOs for about three weeks now due to some difficulties with executions and the trading platform. I did not ask about a re-instatement timeline but I will do some followup on this as I am curious.

I used to use VTSOs for exits while I was playing with a medium term strategy a while back and they did not do me any favours, nothing against the executions, they worked fine. It was just the fact that a trailing margin is tough to pick for a low volatility stock let alone for what we are experiencing now. Even manual chart stops, my favorite, would be getting nailed left right and center so I have not used any stops in some time.

In daytrading stops are not as necessary but are still prudent. Today was a case in point. Had I placed stop order I would have been protected had the trade go against me and it would at least serve as a safety or stop loss protection. As it turns out I could not have placed the stop anyway...although the market order did get executed so perhaps a stop might have gone through had I tried.

For the record, i was going to place a 15 cent trailing stop on my HGU position today had I been able to.

I am going to guess that Questrade needs to ramp up their platform and throughput to accommodate the higher volume of traders that they are no doubt seeing of late.

On a sidenote:

They are having a chart tracking issue which is to be resolved by Friday, perhaps the VTSO might be rectified as well. Apparently they were not aware of the chart issue until I pointed it out yesterday. I might suppose that it only appears to affect certain index data and I may be one of the few who might be using the platform in this manner as I use the index to base my trading on primarily.

Should anyone have the case when opening a chart after the market is open it does not display any past intraday history. As long as the chart remains open it tracks fine, just don't close the chart or the platform while trading...it screws up the moving averages.

Jeff.

February 25, connection issues

Today was a very interesting day. I made one trade, explanation to follow, represented by the huge green square. The trade entry did not follow my rules very closely as the index was well above the 1/2 S1 line (dashed green) but it was sitting nicely above the 30 and 50 sma, yesterday was a huge massive drop so a rebound was inevitable. So I placed a market order for HGU to take advantage of the leveraged jump to come...this was expected to be a long riding trade for me...little did I really know.

I managed a real 5.4% profit on the one trade, and I called it a day at that...for reasons not of my making. The rest of the morning trades were plotted as HGD positions taken with red arrows and HGU positions with green arrows. These additional trades would have been nice and clean and by the book. The circle is the 50sma squeeze. That is a forced braekout setup and could be entered where I placed the arrow for a small target to the 1/2R1 hoping for the breakout to the upside...which did materialize and produced a corresponding 30 cent move in HGU.

So, the back story.

I let the high volume noise settle off the start, watched as the index pulled back a bit but I did not anticipate that it would pull back to my S1 line, there was far too much interest in getting long on today's most probable action by all traders. So I played the hesitation just below the 200sma...this line is mostly a headgame with traders, but it works to play it against the timid. Today was to be a balls to the wall aggressive day for me...to be continued...

I place a market order...it did not execute so I tried cancelling it after watching it languish in my order box for about thirty seconds.

I placed it again, same deal, and one last time. I really figure that the first order got executed but there was a glitch in the platform connection as I had some trouble thereafter.

Long and short of it is that I could not get access to any trading online, I still had my separate live feed so I was able to see the jump right after my entry. I watched while the price did exactly what I expected it to do...not that I could have done anything if it went against me. Basically I decided to get out after the first test of the 1/2 R1, my second target of the morning but had to wait to get through to a trader desk (that cost me 0.5% profit...but no big deal)...I tried the tech support route first but my account was de-linked so even once I got in I could not sell it anyway. They could not guarantee when it might get relinked...might have been in the afternoon.

Oh well. If I had to be stuck in a trade this is the type of day I would pick, strong move right after entry and an eye to holding the position longer than normal. I did consider leaving it ride but I did not want to take a chance on not getting it sold for a decent profit...I chose not to be greedy. I did ask about placing a VTSO but could not...which is a whole other story.

Jeff.