No trades today.
For some reason, I kept thinking the market was so overbought that it couldn't go higher and so was looking for some stock shorting opportunities. Couldn't really find anything convincing enough to trade. As it turned out, it was an all-day trend up day, so no doubt I missed some good longs. Probably got too much biased to 'thinking short' and didn't just do what the market wanted me to do...i.e. go long.
As we are coming to end of the year, a few comments on where I am with my trading.
1. Stocks: Having dropped them for a while, I am coming back to them I think. I will be trading mostly 5min charts. As I am a believer in going with direction of main market, I will also be looking at maybe trading the DIA as a proxy for the main DOW Jones Index.
2. Futures: Still dabbling and backtesting etc to try to get some sort of consistent method together. The ES is very tough to trade IMO as it seems to be suited more to counter-trend trading. So I may look at the YM and NQ as other possibles. Overall Futures is still work in progress.
3. Financial: I made a very decent return on my money in first couple of years of day-trading. But 2010 has been a lot tougher. As a consequence, I have taken money out of my brokerage accounts to pay off some mortgage, loans etc and to put some away in longer term savings for added protection, future family education etc. So I am in effect 'starting again' in terms of trading capital.
In fact, I may as well lay it on the line. I have $32k in my IB account (for trading stocks and futures) and have $6k in my Tradestation Account (for futures). Generally for each IB trade I will be risking $150 (0.5% of IB capital). For tradestation futures I will be risking $100 (2 points) which is 1.6% of trading capital. Needless to say my trading of futures at Tradestation will be less frequent.
The above are generalisations though, so for example I might risk less if I'm not confident about a setup.
I will post all my trades with sizes took and P/L etc, as there seems to be little point in hiding it.
I know that the 'experts' would say that the above trading capital is too little...but it is in effect what I started out with when I first went live. I'm not as confident now, so I am risking less on each trade.
In terms of losing money, if my trading goes to the dogs, then I can lose around $6k on my IB account before I hit the $25k mark then the pattern daytrader rule will stop my trading. I can lose $1000 on my TS account to get to their minimum size. So in these circumstances I will need to re-finance if I want to continue trading.
Of course a consequence of my lower capital and risk is that I am nowhere going to be making the kind of daily returns I did before. But if I can average around 15R a month which is approx $2000, then that will suit me fine. I know that 15R sounds 'easy', but that is deceptive. If things go well then I could consider upping my position size and maybe risking 1% per trade. We'll see how it goes and hope you will join me in the journey.
If things don't go well, then I will cut back on trading but still continue working in background on different strategies, setups etc.
4. The Blog: As mentioned above I will be posting daily my charts and P/L statements etc. But in addition over the rest of this year I am looking to revamp/update the blog a bit. E.g. The bulk of my 15min setups I don't really use anymore. So it just needs updating etc with my current way of trading. I'll place the 'older' posts in some sort of archive folder. In addition I maybe will change the design a bit...colour, font, background.
So any suggestions on blog design...I will be happy to consider them. Or of course I could leave it as is. Look forward to any comments on my ramblings above.
7 comments:
Thanks for the organized update of your trading. Seems HFT is the current thing... GS made an announcement concerning higher prices in commodities, upgraded financials and they all ramped up esp energy at the open: rig,apa,anr,btu,clfbhp,rio,fcx,tck types. ANF had a decent pull back. Bot/sol 70janCalls RIG +20% since Monday. Looks like a $70 breakout. Watching. Bot/sol GS 165jan and watching
Hi,
I read your blog everyday (if there is a post), I have it in my feed. Your blog proved an inspiration to me as to how with consistently exploiting a strategy, you could make serious money and it does not have to be really difficult.
Its good to see you back to stocks as I have found that futures and forex are very hard for me to trade.
It did surprise me to see your basic setup (the 15m pullback) performing so badly for you in recent times, just as I had such great success with them. In fact, the last few days have been fabulous. I just scan for strong stocks in a freestockcharts.com scan, but always look for very strong stocks,breaking out the 1st, or 2nd day out of a daily consolidation. I then zoom in on the 15m or 30 chart for Narrow Range Bars. Sometimes if it is the first day of the breakout and it closes strong on high volume, I hold half overnight to sell (preferably) on the third day. Often the second day does not do much, but the day after that really makes up for it.
Well anyway, thought I'd share some of my thinking as your sharing so freely has helped me so much in getting more consistent.
I like your openness. I look forward to following your trading, keep it up and good trading!
bl: yes HFT is the current thing. The ES seems to be particuarly suited to it..lots of churning going on.
Trevor.
Thanks for your post and useful info. Good to hear from you.
It's not that the 15min setups don't work, it's just trying to find a consistent method to get them and trade them. Like for example your way of looking for stock breaking out of daily consolidation seems to be going well. It is something I have looked at briefly...but hope to get back to it at some point.
I haven't looked at 15min charts for couple of months at least, so I may indeed have missed some decent trades.
The crux of it is as follows IMO.
We can all look at the end of the day and see stocks which have setup (15min, 5 min whatever) perfectly to whatever pattern setup a person trades.
This does demonstrate that setups are working. But you have to have a 'system' in place which will allow you to be watching that stock at that point in the day in order to take that trade. If you have too many stocks to watch, you may miss the chance, if you have too little then the one which did run you might not even have been watching.
It's a never-ending learning process this trading lark...lol
You are exactly right, about having a system or method in place. That is why I focus on the best daily charts. The clearly uptrending stocks, consolidation on the daily and in the top gainers. Preferably on the first, or second day. Gaps on the third day for example usually go nowhere during the day, or break down...
Well anyway, just my observations.
Awesome post! I appreciate your willingness to share details of your trading methods and account sizes. It is extremely helpful for traders out there when so much information is either bogus or held too close to the vest. I know when I started trading I learned more from blogs like yours than from all the books I read about trading.
I would encourage you to continue to at least paper trade your e-mini account. I loved trading stocks using methods similar to yours and ugly's (uglychart.com). Although I find futures to be much more difficult and stressful, I think they provide much more opportunity with a similar account size.
They are also much more reliable for getting filled and for getting in and out of a trade--especially on the short side of things.
The thing I've found with trading the whole market instead of individual stocks, is that it is less about "setups" and more about "concepts". Using if/then statements like "if price moves up to here then sellers will bail out of their positions and create a impulse of buyers as stops are hit" has helped me tremendously after suffering many losses trying to force my systems to work.
With that being said, I would also encourage you to trade what you're comfortable with and with methods that you enjoy. You make killer "R" values with your methods.
Thanks again for sharing with everyone!
Hello Scott.
Yes indeed..I will still be trading and/or investigating futures. In fact I had a pre-market trade on the ES today.
Agree with what you say about getting filled and volume etc on Futures compared to stocks.
Thanks for posting.
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