I am up to five active trades today. Four long and one short. I should have closed one out at the $2 mark, but it is still in play so I will hold it and perhaps consider doubling the position if the chart looks right...it is only 25 shares now so taking it to 50 is not a big stretch.
P&F charts have a default setting of a 3 point reversal before a new column is started, $1 per point for stocks between $20 and $100. My target is $3 initially then running a tight stop beyond that point with an eye to exiting before a weekend to avoid a gap against me on the following Monday. X'x and O'x each represent $1 in movement which makes stop setting easier than penny raises. This is certainly an interesting plan and different than anything else I have played while being similar to my CTP method.
I still have more room so I will see what opens up tomorrow and perhaps enter another short and two more longs...if they materialize.
I have about 40 stocks setup on my watchlist right now. The ratio of long to sort setups is about 3:1, which is interesting. I expect that this ratio will change as the market shifts between up and down trending in general. I could run a back test scan to see if that holds for the recent downturns...but I want to play in the future, not the past.
Tomorrow is a holiday (Canada Day) and the US markets are open so I will check in a few times over the day, which is the advantage of longer term trading. Make the order, set the stops and walk away until the next day.
Jeff.
Tuesday, June 30, 2009
Very small position issue
I pulled back to trading 25 share positions for testing and have found that it creates an interesting problem...I am willing to just hold it almost no matter what so profit and loss have no real meaning.
Normally I get a little antsy when a profit builds up and I sell too soon or I the reverse I jump out just before the low turns. This is not so much a dollar gain/loss issue...or so I thought.
In my current small sizing I have seen my positions hit $2 per share and was willing to hold it open and perhaps just move my stop up...after all, $2 is really only $50 gain less my $10 commission...$40. Had I been holding 100 shares I would have sold at the $2 mark to lock in gains of $200 rather than let it hold, or even sell half.
It almost seems as though a 25 share position is just too small. I know it takes 40 cents to break even due to commissions so I have no choice but ride the price action out longer, that was sort of the plan. My next step was to bump up to 50 shares as this still allows me to hold a few trades simultaneously, part of my diversity planning.
It turns out that my two current trades are creeping back down and I seem to be quite willing to let them go for a while yet to see what happens.
More trading to take place today.
Jeff.
Normally I get a little antsy when a profit builds up and I sell too soon or I the reverse I jump out just before the low turns. This is not so much a dollar gain/loss issue...or so I thought.
In my current small sizing I have seen my positions hit $2 per share and was willing to hold it open and perhaps just move my stop up...after all, $2 is really only $50 gain less my $10 commission...$40. Had I been holding 100 shares I would have sold at the $2 mark to lock in gains of $200 rather than let it hold, or even sell half.
It almost seems as though a 25 share position is just too small. I know it takes 40 cents to break even due to commissions so I have no choice but ride the price action out longer, that was sort of the plan. My next step was to bump up to 50 shares as this still allows me to hold a few trades simultaneously, part of my diversity planning.
It turns out that my two current trades are creeping back down and I seem to be quite willing to let them go for a while yet to see what happens.
More trading to take place today.
Jeff.
Monday, June 29, 2009
Mixing it up with P&F
The last week has been an interesting week for a number of reasons, but I will focus on one today.
Lately I have been looking at volume by price as well as extending my timelines into weekly charts for some trending analysis. I have always stood by the idea that price tells the whole story and trading can be performed without regard to the fundamentals of the underlying company...I still do so that has not changed.
I have resisted using Point and Figure (P&F) charts for some time. Someone suggested that I look at them but I couldn't drag my eyes back to such a primitive looking chart after playing with the nice graphic presentation of the candle charts with all the great tools and overlays. I didn't get them at first glance so I discounted their usefulness.
I finally broke down and looked closely at the P&F charts. Although I may regret not doing this earlier I don't think that I would have appreciated what the charts were about before.
The key is that P&F charting is only price dependant not time dependant. I choose to add the volume levels in as I think that they add to the information available.
Here is a chart that I picked from a scan that I ran for possible trade setups. I scanned for stocks that had a new box that day, which indicates that the price has gone past the established range.
NIKE:
The current price is in red to the right. The trendlines are placed automatically, the volume below represents the volume for the particular row of Xs or Os while the volume on the side represents volume at those particular price levels. These can give more credence to a support or resistance level as large volume at a higher level could indicate that sellers are agressively selling at that level ...there is some interpretation involved here.
Lately I have been looking at volume by price as well as extending my timelines into weekly charts for some trending analysis. I have always stood by the idea that price tells the whole story and trading can be performed without regard to the fundamentals of the underlying company...I still do so that has not changed.
I have resisted using Point and Figure (P&F) charts for some time. Someone suggested that I look at them but I couldn't drag my eyes back to such a primitive looking chart after playing with the nice graphic presentation of the candle charts with all the great tools and overlays. I didn't get them at first glance so I discounted their usefulness.
I finally broke down and looked closely at the P&F charts. Although I may regret not doing this earlier I don't think that I would have appreciated what the charts were about before.
The key is that P&F charting is only price dependant not time dependant. I choose to add the volume levels in as I think that they add to the information available.
Here is a chart that I picked from a scan that I ran for possible trade setups. I scanned for stocks that had a new box that day, which indicates that the price has gone past the established range.
NIKE:
The current price is in red to the right. The trendlines are placed automatically, the volume below represents the volume for the particular row of Xs or Os while the volume on the side represents volume at those particular price levels. These can give more credence to a support or resistance level as large volume at a higher level could indicate that sellers are agressively selling at that level ...there is some interpretation involved here.To trade based on this chart the entry price would be in the low $49 range, stop at $47 perhaps.
Here is the candle chart for the same time period:
The previous low in May was $48.76 so if that price was to act as support then the $49.00 would be a good entry price with a tight stop. The key would be to keep the stop tight as anything below that May low would likely be followed by even lower prices.
I'll clarify a plan for entry and stop settings in another post.
Jeff.
Tuesday, June 23, 2009
Getting ahead of myself
I should know better than to start from scratch with any trading plan. I have some proven medium term stuff that has served well enough for a launching pad that I really don't need to start all over again...but that is just what I did. That and I was playing with two plans (three if you count the daytrading) at the same time.
Sometimes I am my own worst enemy.
Then, in my exuberance, I entered some trades to do some testing in one plan. Exuberance or impatience... almost the same thing here.
The "plan" was a pre-packaged indicator "service" that I thought I would give a whirl. I had looked at it in the past and discounted the triggers as too scattered to be profitable in the long run. While I was sort of right, I see that I would have to select a fixed number of stocks to trade and use the indicator on those stocks for long AND short trades. I cannot short in my registered accounts so I can only play one side of the market and there are a lot, an awful lot, of whipsaws in the system. I am sure that it could work but the platform they use is slow and is not very flexible. No custom chart notations at all so I would end up having another package to do anything other than what the service provides.
That one boiled down to an attempt to provide "no-brainer" trade entries for a swing trade system. I can manage any number of ways to enter swing trades using standard charting, I just have not gotten back into it yet as I am having too much fun in day trading.
I won't go into any details about plan 2 and what I was trying as I think it has some serious merit but just needs a lot of work. Suffice it to say that one plan is along the lines of longer time frame sector rotation using ETFs and their relative mid term performance. I need to work on timing... and some serious number crunching. I know the theory is sound and this is a method that used to be used with certain types of managed funds in the past with good success.
Jeff.
Sometimes I am my own worst enemy.
Then, in my exuberance, I entered some trades to do some testing in one plan. Exuberance or impatience... almost the same thing here.
The "plan" was a pre-packaged indicator "service" that I thought I would give a whirl. I had looked at it in the past and discounted the triggers as too scattered to be profitable in the long run. While I was sort of right, I see that I would have to select a fixed number of stocks to trade and use the indicator on those stocks for long AND short trades. I cannot short in my registered accounts so I can only play one side of the market and there are a lot, an awful lot, of whipsaws in the system. I am sure that it could work but the platform they use is slow and is not very flexible. No custom chart notations at all so I would end up having another package to do anything other than what the service provides.
That one boiled down to an attempt to provide "no-brainer" trade entries for a swing trade system. I can manage any number of ways to enter swing trades using standard charting, I just have not gotten back into it yet as I am having too much fun in day trading.
I won't go into any details about plan 2 and what I was trying as I think it has some serious merit but just needs a lot of work. Suffice it to say that one plan is along the lines of longer time frame sector rotation using ETFs and their relative mid term performance. I need to work on timing... and some serious number crunching. I know the theory is sound and this is a method that used to be used with certain types of managed funds in the past with good success.
Jeff.
Thursday, June 18, 2009
Back into the swing of swing trading?
Most of this post is from my day trading blog entry of today.
I am trying something a bit different, actually it is a medium term trade idea. I have accumulated a list of stocks that are reasonably big players that I see other traders trading intraday or these are used to gauge market sentiment. Either way they are fairly common and reasonably fluid issues.
I plan on putting all of these stocks (McDonalds, Morgan Stanley, General Electric, Dupont, Johnson and Johnson, 3M, etc.) on a page in my Esignal software. I am working on a script to monitor these for certain significant milestones and trends in order to do some swing trading and sector rotational style trading, perhaps a bit of hedging as well, perhaps capture some dividends while at it.
It would be fairly easy to even scroll through these one by one to watch for certain patterns and price positioning on a daily chart basis. I have been only trading full lots due to a restriction in Questrade that would not allow me to place a part lot stop loss. I figured that, seeing as the stop loss was a market restriction altogether, I should try a partial lot stop loss in the NYSE...surprise surprise! I am able to stop loss partials, so it had nothing to do with Questrade at all.
Now I will be trading in my TFSA using part lots of various companies with appropriate stops in place for each. I may even let them trickle into my other accounts if I can keep enough capital free for daytrading...although even there I could use smaller position sizing as the main restriction I have been considering was having to use lots of 100 shares which can, in slumps or testing periods, draw my account down. Live and learn.
Today I bought McDonalds (MCD) due to the significant 200DMA test. It was not ideal but I wanted to place with an order setup and test the stop loss order entry. I placed a limit order lower than my eventual entry which I should have just left in play. Due to impatience I replaced it with a market order, only to see the price drop 20 cents shortly afterward. Unlike day trading a drop of 20 cents in a medium term trade means next to nothing as my stop loss is a full $1 away. I sort of wanted to be in the trade today even though I likely could have gotten a better price tomorrow.
I think that I will apply trend in process trading, like swing trading, and skip the counter trend stuff altogether. At the very least I will choose position sizing to suit the risk of the trade, at least for my loss allowance.
Entry points will likely be determined by entering the trade at the previous day close price or better. This saves trying to decide when to trade during the day, set a limit order at the open for this point unless it is plainly obvious off the start that I may get a better price. These are not to be time intensive trading decisions during the day. Shorting will not be involved at this point either.
Basically, a work in progress.
Jeff.
I am trying something a bit different, actually it is a medium term trade idea. I have accumulated a list of stocks that are reasonably big players that I see other traders trading intraday or these are used to gauge market sentiment. Either way they are fairly common and reasonably fluid issues.
I plan on putting all of these stocks (McDonalds, Morgan Stanley, General Electric, Dupont, Johnson and Johnson, 3M, etc.) on a page in my Esignal software. I am working on a script to monitor these for certain significant milestones and trends in order to do some swing trading and sector rotational style trading, perhaps a bit of hedging as well, perhaps capture some dividends while at it.
It would be fairly easy to even scroll through these one by one to watch for certain patterns and price positioning on a daily chart basis. I have been only trading full lots due to a restriction in Questrade that would not allow me to place a part lot stop loss. I figured that, seeing as the stop loss was a market restriction altogether, I should try a partial lot stop loss in the NYSE...surprise surprise! I am able to stop loss partials, so it had nothing to do with Questrade at all.
Now I will be trading in my TFSA using part lots of various companies with appropriate stops in place for each. I may even let them trickle into my other accounts if I can keep enough capital free for daytrading...although even there I could use smaller position sizing as the main restriction I have been considering was having to use lots of 100 shares which can, in slumps or testing periods, draw my account down. Live and learn.
Today I bought McDonalds (MCD) due to the significant 200DMA test. It was not ideal but I wanted to place with an order setup and test the stop loss order entry. I placed a limit order lower than my eventual entry which I should have just left in play. Due to impatience I replaced it with a market order, only to see the price drop 20 cents shortly afterward. Unlike day trading a drop of 20 cents in a medium term trade means next to nothing as my stop loss is a full $1 away. I sort of wanted to be in the trade today even though I likely could have gotten a better price tomorrow.
I think that I will apply trend in process trading, like swing trading, and skip the counter trend stuff altogether. At the very least I will choose position sizing to suit the risk of the trade, at least for my loss allowance.
Entry points will likely be determined by entering the trade at the previous day close price or better. This saves trying to decide when to trade during the day, set a limit order at the open for this point unless it is plainly obvious off the start that I may get a better price. These are not to be time intensive trading decisions during the day. Shorting will not be involved at this point either.
Basically, a work in progress.
Jeff.
Monday, June 1, 2009
Quick update on my S&P500 short position
Given today's activity I would have to say that I would have been in the high volume of short coverings...or bear fund dumpers. I am not sure where my stop would have really been but I expect that, after the first 30 minutes of trading, I would have closed all SDS, SH or short positions in SPY or SSO for a loss.
I have been following another trader's short position and noted that he often closes the position based on the type of day we might have only to re-enter at a better price near the end of the day. This is almost day trading but it falls under intraday management of a longer term trade. some interesting ideas.
I'll check later this week to see if this is setting up for a good long position in a SPX related ETF.
Jeff.
I have been following another trader's short position and noted that he often closes the position based on the type of day we might have only to re-enter at a better price near the end of the day. This is almost day trading but it falls under intraday management of a longer term trade. some interesting ideas.
I'll check later this week to see if this is setting up for a good long position in a SPX related ETF.
Jeff.
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