Month: January 2013

  • Trading Update: 1/21 – 1/25

    Last week I was lulled into thinking that sledding was going to be fairly easy relatively speaking compared to last year when I was still early in honing my trading skills. Then I got a bit over confident and broke one of my prime rules in waiting for the market to tell me what the trend is through reactions at support/resistance trend lines and jumped in feeling pretty sure of what the market would do.

    Turns out that was a big “Nope!” as the market proceeded to ignore my plans an move to its own beat which was not on my expectations list. This is a common trap for all traders – jumping in ahead of an anticipated market move, only to have the market do the opposite.

    Two areas that can be trap prone are at near term market tops or bottoms. Market Makers know traders are trying to step in early so there will be numerous false signals to lure in folks, only to have them stopped out of positions. However during this time, the cycling/chop can be extreme- which means serious profit potential for those able to sync up with all the zig-zags.

    It took me most of the week to figure out the flow of market gyrations since there were no large scale moves- just lots of chop with a slow and steady grind higher. By the time I figured it out and recalibrated my analysis, there wasn’t much to do except watch and see if the market will confirm my assessment.

    Had one closing trade this week for a loss as the market moved higher than I had planned. The sad part is the overall trade was profitable at one point after being in the red, but I didn’t close thinking the top was in- my mistake which cost me.

    The good news is this was an excellent week to get in the weeds of sharpening my scalping trading skills which should prove to be a great asset in getting future market profits.  Lots of chop and false moves for analysis. It was also a good lesson in being patient- easily one of the most important aspects in raising the odds for a profitable trade or investment.

    The market showed clear signs of topping action so a pullback appears to be imminent. Based on what I’ve seen, I wouldn’t be surprised if next week started with a gap down.

    In other news, there were big market moves with earnings reports coming out. Google, Netflix, and Amazon soared to new heights while Apple’s stock value dived even though they beat estimates. This is why I always stress never to fall in love with a stock. There are people who bought Apple at $700 thinking it was a short time away from $1000, only to see it drop over 35% since those highs. It’s almost where it was a year ago before the parabolic rise- so those who didn’t take profits during the past year have given back almost all the gains.

    And you have people still trying to preach the virtues of “buy and hold”. whatevah

     

     

     

     

  • Trading Update: 1/14 -/1/18

    While working on my new intra-day trading strategies at the start of the week, I fell victim to a couple of “fat finger” trades, where I entered the trade order wrong and the automated secondary trade did something unexpected, as in cost me money. whatevah Damage was minimal, but it negated the results of a good trade. I was clearly a bit rusty in the shorter term fine tuned trades arena.

    After I improved with my trade order entries, things moved along much more smoothly as I started getting better at timing the short term fluctuations. The results were good with respectable returns…MUCH better than last weeks big score of $1.32, haha!

    As I anticipated, the con of shorter term trading is I wasn’t “loaded up” for the breakout on Thursday. I caught a piece of it, but I didn’t have a big position to sell near the top like I would if I were just swing trading. However , the “pro” is the shorter trading profits pretty much made up for the bigger gains if I just held onto the positions.

    I’ll have to work on balancing the intra-day trading with also keeping and open swing position to get the best of both worlds.

     

     

  • Anyone Participate in No Pants Subway Day?

    Last Sunday people from around the world participated in “No Pants Day” which originated in NYC several years ago.

     

     

     

     

     

     

     Here’s the global news perspective of the event:

     

     

    It’s like they took a page from a common bad dream and turned it into an annual event. laughing

    I assume it must be a full day event since I can’t imagine anyone showing up to work without pants.

     

    So, did anyone “forget” to wear their pants this past Sunday?

     

     

     

  • Protect Yourself from Flu and Passing Germs

    With the flu this year striking early, hard, and reaching epidemic strength, it’s important to be aware of how germs can spread far and wide through coughing.

     

     

     

     The proper way to cough and contain germs ala funny video instruction

     

     

     

  • Trading Update: 1/7 – 1/11

    Started trading this week for the new year- hoping to move onward and upward from last year.

    Market movement was pretty slow this week – taking a break from the last couple of weeks of hyper Fiscal Cliff Washington drama that sent the market gyrating up and down.

    One of my goals this year is to be patient and wait for high probability trades, so that was my focus most of the week as I practiced restraint and just watched/analyzed market movement.

    The market had a lot of choppiness this week with an occasional mini surge to run through stop loss orders. That made it better for shorter term trading rather than swing trading. By focusing on the movement this week though, I realize that there’s a good amount of profit potential if one can successfully navigate the choppy nature of the market.

    Unfortunately I still need some more practice in this area of short term trading, as I thought I saw some trading opportunities, but still wound up jumping the gun at times.

    I did manage some good trades as well – but they basically paid for the mistakes.

     

    The net result of trades set a new record:

     

    This ranks as my lowest positive weekly return. Whoop whoop! laughing

     

    Well, at least it kicks off the year to a positive start! cool

     

     

  • Trading Update: 2012 End of Year Summary, Stats, Thoughts

    Yearly Return Summary for Main Market Indices:

    Dow Jones: +7.26%

    S&P 500:    +13.41%

    Nasdaq:      +15.91%

     

    It was a strong year for the Bulls. Anyone who invested in an index fund would have gotten similar returns. This means that these are the bars to beat if one is actively trading an account, since investing in an index fund requires minimal effort while trading takes much more time and energy.

    These are also the numbers to compare against mutual fund or brokerage returns of investments by fund managers if you have one. After all, they are charging management fees to beat market returns.

    Also, take note of how the market ended so well despite all the negative news that the market dealt with this year – sluggish economy, anemic jobs creation, and never ending infighting in Congress between Republicans and Democrats over US debt and entitlements. This is why using news as a true gauge for market bullishness or bearishness can be dangerous.

     

    My first post of 2012 had the following about my trading goals:

     

    2012 should be where it all comes together – the intersection of knowledge and opportunity coupled with proper risk management which should make for an amazing year, end times or not. =)

     

    So let’s see how things turned out…

     

     

    As you can see, the results were indeed amazing. Total performance return for the year is 342.17%. It’s hard to fully believe the level of success reached. 2011 saw me transition from feeling like I was learning “how to trade” to actually being a trader. I felt I finally had the necessary understanding and edge needed and 2012 was the test of that.

    Analyzing the chart further reveals some good info:

    The rate of climb increases over time, which indicates my trading skills were improving during the year. At the same time, volatility was also increasing as I was working on improving my methods, meaning that my risk management needs some work. The two come together in November where I had both my worst daily decline and my best daily gain of the year.

    The daily chart of the year reveals the big battles waged during each month, but the monthly chart smooths it all out:

     

     

     

    Looking at this chart, it appears everything was smooth sailing the entire year.

     

    Quarterly Results:

    Q1 2012 30.88%
    Q2 2012 49.30%
    Q3 2012 87.03%
    Q4 2012 20.99%

    Average  47.05%

    The relatively low returns of the 4th quarter were largely due to me starting to get ahead of myself with trying to hit home runs instead of focusing on the base hits and doubles. The market then proceeded to show me that I still need to show it the proper respect and that I’m not as “invincible” as I thought I was.

     

     Note: Trainman = Market laughing

     

     

    Time Performance

     

    Performance is mostly low key during the 1st 3 months but starts picking up with increasing intensity after that. The first half of the year I was in a long term swing stock position and also trading futures and options. The second half of the year saw less stock activity and more option and futures trading, which increased trading volatility.

    While the negative high volatility fell between -10% and -15% , the positive high volatility was within the +15% and +25% range – which shows my gains were stronger than my losses. What makes trading difficult are the feelings that are generated within you when you are at market extremes which can interfere with your rational decision making.

    Also notice there is typically a dive down prior to the greater move up. This is showing the problem I had with getting into a position too soon and having it move against me before the move I anticipated starts to happen, which I often wrote about during the year. Getting into positions too soon added risk and reduced returns.

     

    Distribution of Returns

     

     

    Reflecting on the results, it was an awesome year. While I know I left quite a bit of profit on the table, I’m also aware that I managed to dodge some serious bullets, so it balances out.

    The results show that I’ve arrived as a trader and the objective of being able to trade for a living is moving from dream to reality. These are exciting times – finally reaching this elusive milestone.

    It also shows that an individual not connected with a Wall Street or prop trading firm can successfully trade the markets from home in the age of super technology like high frequency trading computers dominating the landscape. It may take an extraordinary amount of time and effort in developing a working understanding of the market to create a repeatable profitable edge, but the fact is it can be done.

    What next? for 2013, my continued goals are pretty clear- reduce risk while maintaining/improving on performance. Focusing on being more patient before initiating positions will go a long way towards helping in that area. My time should also start to free up as less research and analysis is needed on my developed methods. So I can be more social and less hermit. cool

     

  • Trading Update: 4th Quarter Performance

    The quarter ended well, but it had the most volatility of the year.

     

     

    Looking at that November plunge still looks as disturbing now as it did when I posted the monthly performance stats. I hope I’ve learned enough to avoid repeating a descent of that magnitude.

    On the other hand, as bad as the drop was, the rise back up to profitable levels matches it in power – even more so since it requires more effort to make up for losses since you are starting with less capital. Looking at it that way, from the October peaks, the drop was over 50%, while the performance to return to that level and higher was over 100%.

     

    4th Quarter Performance Vs Indices

     

     

  • Trading Update: December Performance

    Trading for this month was cut short thanks to all the “Fiscal-Cliff” drama that was making the markets pretty skittish. Still in all, it was a good month.

     

    I had no desire to get caught on the wrong side of some big market move inspired by some surprise Washington budget negotiation news. When the market gets very news sensitive like this “Fiscal Cliff- will we go over or not?” event, the market moves more into pure casino mode where it’s either going to zoom up or down based on that specific event.

    At that point, it’s basically a big gamble to take a position on either side until the decision is made.

    Some folks like taking on that risk because the rewards can be great – the market jumped a significant amount once it looked like a deal would be made in time. Those who were long made a very nice profit fast while those on the wrong side had heavy losses.

    I try to avoid being in the market when analysis is dominated by a singular news event. I’m a trader, not a gambler. cool

     

    December Performance Vs Indices

     

     

     

  • Lucky 2013

    It’s hard to believe 2012 has come and gone. In some ways I think back and what I was doing in January seems like only yesterday.

    It’s true that the busier one gets, the faster time feels like it’s moving. It’s amazing and scary how quickly time passes!

    One time when I was on a deep sea fishing trip, we were assigned numbered bags to store any fish we caught. My number was assigned and it turned out to be 13. Rather than get let negative superstitious connotations get to me, I called it “Lucky 13″ instead and didn’t worry about it.

    Turns out I caught the most fish for the day, despite being my first time deep sea fishing…..much to the trip organizers and fishing veterans chagrin. laughing The experienced folks weren’t getting any action on their lines while I kept getting bites and reeling them in. That was a fun day. =)

    I’m still waiting for my brokerage to tally out the last market day of the year so I can do my trading summaries for the month, quarter and year- that will be fun!

     

    Happy New Year to all!