Thursday, November 21, 2013

FOMC minutes day

Am one day late on this post. But anyway, yesterday was the day FOMC minutes was scheduled to be released at 11 am PST. The day started off bearish, so I was short. Price then jumped back up and stopped me out, and I reversed into a long position. Bonds then shot up about 12 ticks in my direction before reversing and stopping me out! Oops. Frustrated, I get short again and then BOOM. A continued trend down day, all day until the close. Solid day in the end.

I'll let the chart speak for itself.



Whipsaws happen, and are frustrating, but when a good strong trend emerges, it pays for all the whipsaws and more. Wisdom on trends paying for all whipsaws and more, in a song by Ed Seykota, the trading great!




Sunday, November 17, 2013

My biggest losers - a lookback (part 1)

Few people do this but I think this is important, I'm going to write a post about all the huge screw up trades I've made over the last 3 years since I've started trading US equity and futures markets.

1. First big loss was NFLX. I bought NFLX around 88 and sold at 67, for about a 23% loss. Notice NFLX was in a massive downtrend, and I was bargain hunting here. Also notice how once I exited NFLX, it closed above the 21EMA soon and rallied to above $100.


2. Next 2 trades were the start of the most painful phase of my trading "career". TZA and TVIX. I bought 200 TZA at 28 or so, then bought another 200 to average down my cost to about 26.5. I also bought 130 shares of TVIX at 32. This was around Christmas in 2011.

January 2012 was a really strong bullish month for SPX, so I averaged into TZA and bought another 300 shares, my average price was about $24.5. I also bought another 85 TVIX at 17(wow!) and my average price on it was $26.

February 2012, market continued to go up, I continued to average into TZA and TVIX, while religiously reading zerohedge daily and talking crap about the state of the economy and where price "should really be" based on fundamentals. I had accumulated another 70 shares of TZA and another 50 TVIX, so I had about 770 shares of TZA and 265 shares of TVIX. Average price on TZA was a bit lower and TVIX was about a dollar lower as well.

March 2012 and April 2012, I do nothing. I hold onto TVIX and TZA and watch their value drop everyday, helplessly. It was horrible. TVIX continued to drop. Kind of late to figure out what contango and its relation to VIX is! At the end of April, TVIX is trading at $6 or so. I'm down almost $20 per share of TVIX.

May 2012, markets start selling off a little. This is the time to exit! My positions start to improve, so I sold all my 770 shares of TZA at $20.8, so about a $2300 loss on it. I also sold all 265 shares of TVIX at $8.6 for a loss of about $4500. So I had lost about 7000 dollars on these 2 trades, and I was relieved to have sold them. Holding onto these losers was misery.

3. By this time, I had found a new way to lose money. Options!! Buying calls and puts? Nice, so all I need to do is guess up or down, put down less than a $1000 or so per trade, and if I am right, I could double my money or more! Traded SPY, MT, AAPL, WAG, NFLX, GRPN and LNKD. Biggest loser here was the LNKD puts, I bought like 4 contracts to begin with, and kept averaging down again until I had about 20 contracts, and lost almost the entire value on these puts. Another 3000 dollars or so down the drain. I also bought many SPY puts and lost money on it. Probably another few thousand dollars in losses.

4. As I was experimenting with options, I discovered Twitter and all these amazing traders making all these winning trades using futures. So I figured thats what I should do. So I opened a futures account, made a few decent trades. I also heard this phrase "if you cant make money trading, then trade corn". So I decided to trade corn. The reason people say that about corn is because it trends. The genius that I am however, decided to short corn right before the start of one of the biggest bullish trends the year. Same story, shorted 1 contract, added another contract higher. Averaged into it again with a third contract. Fourth contract and a margin call got me out of the trade. Loss of about 20 points per contract, about a 8000-1000 dollar loss. Ouch.



There have been others, but I think I'll go over them in another post some other time. One good thing is, after these trades, I started keeping meticulous trading logs. So although I made mistakes, I logged them and studied them.

Notice the theme through out -

1. I bought things that were dropping. I shorted things that were going up.
2. I did not know when I would be wrong on a trade.
3. I averaged into losers.

Isn't that amazing? The cardinal sins of trading, laid out here for everyone to see.


Weekly update - November 10 to 15


Another losing week! But we cant control the markets, we can only control our decisions regarding trades. In that sense, I've never felt more in control of my trading. For a long time, I would enter without knowing where I would be wrong on the trade, I'd exit due to fear of losing profits, not take a loss with hope of getting back to break-even. No such feelings or emotions anymore. When its time to enter the trade, I enter, when its time to exit, I get out. Plain and simple. No emotions, just execution. Although it sucks when there's a losing streak. Last 3 weeks have been such losing ones. However, I've done everything I can. The lines below come to mind. 

God, grant me the serenity to accept the things I cannot change,
The courage to change the things I can,
And wisdom to know the difference.


This week's trade stats - 5 losers, average loser of -8.5 ticks. 4 winners, average winner of 3 ticks! Cant win with winners being so small. Also had some execution errors on my part. Horrible week over all. One other thing to note is, historically, my system performs the worst in November. Interesting. 

Monday, November 11, 2013

Make believe top caller games


From a top Eliott wave expert. May very well play out this way, but best follow price.

Nov '82 breakout above 1973 all time high, bull market top Nov '83, duration to top 12 months.
Aug '89 breakout above 1987 all time high, bull market top July '90, duration 11 months. 
Jan '99 breakout above 1998 all time high, bull market top Jan '00, duration 12 months. 
Oct '06 breakout above 2000 all time high, bull market top Oc 't07, duration 12 months.
Mar '13 breakout above 2007 all time high, bull market top ???, duration ???.  

Thursday, November 7, 2013

One of those days!

Homer in this video reflects my thoughts during today's trading day



Ha ha! Here's today's chart. Was a rough day, I made 3 trades for -11, -18 and +2 ticks as results.



One interesting thing I noticed is, on a day like today when nothing's going right and you're just tired and want the day to end, one's more likely to make poor trading decisions. Need to make a mental note of that and avoid this. 

Wednesday, November 6, 2013

Time waste - weed out the noise

Starting today, I'm tuning out most of twitter, Facebook, etc except for sometime in the morning and sometime in the night. No using of twitter between 6 am to 6 pm.

I created a separate list on twitter called "intraday" so that I can monitor for economic data releases, news, etc. Check out my list - has 5 people.

No Facebook, quite worthless anyway.

I read almost no blogs except for reading debrink.blogspot.com every morning.

Two other blogs which I read time to time are - www.etfroundup.com/ and tradingsuccess.com/blog/.

Thats it. I plan to spend more time learn tradestation programming, working on my job and the rest of the time unplugged from technology. 

Friday, November 1, 2013

October - its a wrap!

So October ended tamely yesterday with a monster loser day! Got whipsawed all day, then caught a nice down move which then ended up reversing all losses, triggering a long and then continuing to sell off. 4 trades, 1 break-even trade and 3 losers. Ouch :-)
But then, who cares about what happened during the 4 trades when I have the next 1000 trades as my view?

Week ended nicely however, with the first day of November having started off with a bang. Very nice move today in bonds, and will be closing near the low of the day.

For this week

Number of trades: 11
Winners: 3
Losers: 7
Average win: 12.6
Average Loser:  -7.5
Average risk per trade: -10

So average risk was trade was a little higher than before, average loser about the same, only problem was there were more losers than winners! About a net loss of 14 ticks for the week, no complaints after 2 monster winning weeks. Whipsaws happen.

Todays trade - short from 5 am to close.



Until next week! Peace