Month: March 2013

  • Trading Update: 032513 – 032913 plus Month/Quarter Performance

    My whole shebang weekly/monthly quarterly update….

    As the week went, so went the month. As the month went , so went the quarter. One word to describe all three- meh.

    This week my mind was sent on a direction trade that never hit its target point although I felt near certain it would. Instead, it would move towards it, then move away as the market slowly edged against my position. The end result was my target was never hit and I gave my profits back to the market..again.whatevah  It’s a good summary for the month’s performance.

     

    March Performance

    Definitely a retrograde performance month for me. Apparently I entered the “Bizarro Universe” where you start out with high gains and then seek to give it all back….doh!wtf

    Was this a result of my new methods of hedging? Nope, it’s due to me NOT hedging when I should have. This is basically a pure directional trade that I’m “patiently” waiting to hit the intended target price range. This also highlights a critical fact that I need to remember:

    My directional methods typically accurately determines the markets destination, but not the path it takes to get there.

    What that means is if I make plans for the market to make a bee line to my target price level, there’s a good chance the market will have other ideas and tell me to think again. You’ve seen this in my past performance charts on several occasions (ie “roller coaster” charts).

    Hedging is supposed to solve this issue by taking advantage of the path taken while I wait for the target to get hit……that’s IF I use it, but I wind up standing in my own way.

    This is what happens: I get to a hedging point but I feel so certain that it’s going straight to my target that I don’t initiate the hedge, thinking I’ll be reducing my profits needlessly. Then when the market proves my feelings wrong, I miss out on the hedge move. This happened so many time these last two weeks, it’s a bit embarrassing.  If I had properly hedged, this month’s performance  would have easily been 15% – 20% if not higher.

    Another key mistake is I should never let a 25% gain turn into a nominal return – at a certain point you have to lock in gains to prevent the reversal I experienced. At a minimum, I should have retained at least 10% for the month.

    One thing I didn’t take into account (again) is that the market was nearing all time highs- and when that happens signals that typically pan out don’t work, even my home brew ones. Certain forces were intent on getting to an all time high so any market weakness was quickly countered with more buying. Indicators that typically moved in the opposite direction of the market were overpowered by the market’s singular intent to break records, and lo and behold, we hit all times highs in the S&P 500 this week. Still, it wouldn’t have mattered had I been taking the appropriate hedges.

     

    March Performance vs Indices

    This lackluster month also seals my fate for the the quarter as well.

     

    1st Quarter Performance

     

    1st Quarter vs Indices

     

    Clearly this isn’t performance to be proud of. bummed A big bunch of meh. whatevah

    That said, despite the bad quarter, surprisingly, I feel pretty upbeat going forward. That’s because I know exactly what caused my problems this month and I have solid solutions for them. In addition, I gained some new insights that will significantly improve my precision in entries/exits.

    Here’s one big solution that I’ll share: I’ve reached the stage where I can make my trades semi automated by putting in my calculated entries and exit targets in advance. Yet, silly me was intent on hedging via trading live. Since I know now I can’t be trusted to follow through on hedging live, I’ll just put in my hedge price entry/exit levels in advance as well. I don’t know why I didn’t think about doing this earlier. This leaves me to focus more on the accuracy of my analysis rather than keeping an eye on trades throughout the day or night, which also solves the problem of having to stay up for late night monitoring as well. Life just got simpler. cool

    Lots of lessons learned this month and quarter- now to see if I can put them to proper use going forward.

     

     

  • Mood Transforming/Reprogramming Music

    I know a few people who have mentioned they are experiencing some difficult times so that is the inspiration of this post.

    I don’t share much of my personal life on this blog but suffice to say, I’m no exception from having to deal with issues that generate negative emotions. Some of these issues have greater significance and as a result can be harder to resolve or get past.

    I only bring it up now because last night while on the net I rediscovered a song I heard a few years back while I was driving, and haven’t heard it since then.

    As I was listening to it, the song had an unintended and amazing effect on me. It was as if it was awakening or reminding me of what my normal state of feeling was without any negative feelings getting in the way. It wasn’t like I forgot the negative issues, but they lost the priority they once had and were down shifted in significance.

    This made me realize how we all go though life and whether we realize it or not, we are changed on an ongoing basis by the experiences we encounter- sometime the changes are subtle, but are there nonetheless. In time and over the years in adapting to dealing with all the negativity the world can dish out, we also change and likely become darker versions of our former selves.

    The change can be so slow that’s it’s imperceptible that it’s happening until something breaks through the armor plating/insulation that reminds us of what we were like and how we felt before getting bogged down by life’s issues/concerns.  When that happens it puts everything back in perspective and resets the internal stress clock.

    I don’t remember any song ever having this kind of immediate and lasting effect on me before so I wanted to share it in hope that it may benefit others as well.

     

     

     

    Extended Non video version:

     

     

     

     

     I don’t know if this song just affected my with my specific wiring or if there’s a more mass effect. If not, then may you find your awakening song soon! heart

     

     Happy Friday!

     

  • Something to Feel Good About – Great Rescue

     Man rescues baby girl who stopped breathing at Australian grocery store.

     

     

     

     

     

  • The Magic Key to Successful Trading

    I’ve read numerous books on trading from the beginners series to those intermediate and higher on improving one’s trading skills.

    Some focus on mastering certain techniques, others on risk management or some other “improvement based” factors to move to higher levels.

     

    I’m here to say there is one critical thing that every would be trader needs in order to move forward.

     

    Just send me $99.95 and I’ll tell you what it is.

     

    Kidding. laughing

     

    The truth is the following – it may sound stupidly simple, but it’s guaranteed to be overlooked by 99% of traders including myself when I was on the beginners curve.

    The key is before one can improve their trading skills, they FIRST have to be a satisfactory trader, and what I mean by “satisfactory” is being able to consistently make a profit over time trading regularly.

    Taken at first glance, what I said sounds very tautological- some will think improving trading is the same thing as learning to be a satisfactory trader. It isn’t. These are two distinct animals with two different goals/mindsets.

    Improving trading generally means a whole host of things – making more and more money, being able to trade for a living, becoming wealthy, living a life only dreamed about, and so on. This compares to being a satisfactory trader, with the ONLY goal of being able to generate consistent profits over time.

    What does it mean to generate consistent profits? Over many trades, one can satisfy the following:

    1) Net positive days.

    2) Net positive weeks.

    3) Net positive months.

     

    Having a net loss day is normal, but positive days should be the norm versus the exception. Same thing goes with weeks and especially months. If one has an abundance of negative days/weeks, and winds up with a positive month, that looks like more of a lucky “big” trade saving the day instead of consistent good trading. Relying on good luck is fine for Vegas trips, not so much if the goal is to be consistent or stable.

    What I’m saying is the first thing a trader must do is develop a technique/method that allows them to generate consistent profit before thinking/planning anything else.

    How much profit? Doesn’t matter, as long as it’s consistent. It can be just a few dollars a week. The key is being able to repeat that again and again over time and numerous trades.

    Once you’ve mastered generating a profit consistently, then one can move on to working on the host of improvements like building wealth, trading for a living, etc,…

    Knowing this can save one a ton of “tuition” in mastering the learning curve since it sets the focus on just staying positive versus getting “rich”. Everyone wants wealth to come ASAP which is why the key basic element is overlooked. Trying to be a satisfactory trader AND generate wealth just makes the learning curve many times more difficult – that I know from experience!

    When I think back to the difficulties I had and boatloads of money lost when I was still learning how to trade to how fast I can now understand and pick up new things when “improving” on my core skills, the better path to success becomes obvious.

     

     

  • Trading Update: 3/18 – 3/22

    A very tumultuous week packed with strong moves both up and down, but interestingly the week ended almost exactly where it ended the prior week (for ES). Despite the sum total “non action” of the week, each day had a strong move which provided good trading opportunities.

    As for my trading week – two words – mixed bag- I had my share of high and low points.

     

    Sunday: As I suspected, the attempt to levy a fee on Cyprus insured “guaranteed” deposit holders spooked the market and futures went lower. The was of course, great for me since I had a nice size short position that I had rolled over from the prior week. It feels good to have a position established at the starting point of a move since that means there’s the good chance of getting big returns. The market basically moved in just one direction, down all through Sunday and into the night. My intraday account had a nice big fat surplus of profit. With my planned targets, I though I might even have a shot at a record breaking five figure day. I didn’t want to miss getting the max gains if my targets were exceeded, so I decided to stay up all night monitoring the action.

    Monday: Early Monday morning I was expecting one more leg down move to reach my target area, but prices starting drifting higher instead. I didn’t think anything of it as I felt certain my targets would be hit. But slowly but surely, prices continued drifting higher. There was a time when prices were zig zagging back and forth and I thought, ah, this is where it drops back down and continues. Instead, prices decided to surge upward as if it consumed an energy drink. I looked on incredulously and the market ramped higher and my mighty profits kept shrinking. The day ended down, but well off the overnight lows, and I had to live with the fact that 2/3 of my profits went bye bye. whatevah The remaining profit was still decent, but compared to what it was at the market lows, felt empty. It’s like being on a game show where you have $500K in potential prizes, but you goof and wind up with a $70K prize. You don’t think about the $70K gained as much as you do the $430K lost.

    Analysis: Losing potential profit has to be taken in stride when you’re looking for a bigger profit target. If I cashed out whenever the market made me feel any doubt, I’d never the big win days. This is why most traders lose over time – they cash out too soon for fear of losing their profits but when in a bad trade, they stay in until the loss is bad enough to force them out. What they are doing is minimizing their gains and maximizing their losses, and results in traders losing weeks worth of gains with just one bad trade.

    Looking at my chart analysis, I was chagrined to figure out that I made an error and the market did indeed move to my target area – I just had the target level wrong, doh! After that realization, then I truly felt bad since it was a definite screw up on my part. To get handed such a nice gift and let it slip away feels “almost” as bad as losing money outright instead of just profit.

    So I reanalyzed my price charts to make sure everything looked good and prepared for Tuesday. I didn’t get much sleep as I compared price movement to my new analysis to make sure everything synched up. It was then in my sleep deprived state that I started getting additional insights in predicting price movement in the short term, which was great.

     

    Tuesday: The market is moving as expected, and I expect some energy up from the counter trend before the market heads lower. I decide to “rest” my eyes for a while, and that is exactly the time the market chooses to do what I “thought” it would do the prior day and move straight down like a meteor towards my target. And because life is like that, this time I didn’t have my preset auto trade targets set. So when I woke up I went back to see my target area was hit and now the market was on its way back up again. whatevah Give me a double shot of doh! bummed  No one to blame but myself which adds to my frustration. Actually I blame the market too since it seems personally out to thwart my plans.

    The interesting thing was the target hit was just the 1st one, and it should have gone lower to hit additional targets, but it didn’t and bounced instead.

    I’m left wondering why it didn’t break lower, looked over my analysis , and don’t see any errors this time, so I’m thinking my target is right, but the path taken there won’t be direct due to all the market gyrations.

    Wednesday: Market heads all the way up and reclaims all area lost the prior day, except this time I’m expecting it to do that via my analysis.

    Thursday: Market is very choppy and does numerous zig zags, but ultimately heads lower, which is what I also expected. I still have my main position that is rising and falling profits like the tides. I’m also making some actual profits on my hedges throughout the week.

    Friday: Today I expect the market to finally drop lower to my secondary target, but it again decides to slowly ramp up and make up the losses from the prior day. I’m still confident in my analysis that the market should be heading lower, but again, it’s taking it’s sweet time to get there.

     

    I did make some modest gains this week with my hedge trades, but they could have been much greater. Still figuring out the best way to apply them. My main trades are still on hold as the market plays out going into next week.

    Cyprus is still in negotiations on a bailout deal since they rejected the 1st one requiring those deposit fees. The two market dangers here are the following:

    1) Reinstating charges on insured deposits that could trigger a bank run across Europe. It sets the precedent that banks are not safe – even with so called “insured” deposits.

    2) No bailout for Cyprus, their banks fail and they are forced out of the Euro. The first country being allowed to fail would trigger bond prices surge and make it more difficult for the banks of other troubled countries to borrow funds. It sets the precedent that not all countries will be bailed out which raises the risks for all other problem child countries.

    Both scenarios are bearish in the short term.

     

     

  • Way Cool Harlem Shake Version

    As it was meant to be…..

     

     

     

     

  • Big News With Cyprus Banking Bailout that May Trigger Global Impact

    As usual, this isn’t making headline news today in most areas, so you’ve likely missed this potential bombshell.

    Apparently, the island of Cyprus needs to be bailed out financially as one of the many countries faring badly in the wake of the financial meltdown/recession that’s affecting so many countries. The fact they need help isn’t surprising news.

    The EU has agreed to pump money into the Cyprus banks to help stabilize them – standard policy and again, nothing too surprising here.

    However, the terms being applied this time marks a critical first, and a very dark one in my opinion.

    Under the terms of the bail out, ALL bank depositors will be charged a levy based on their bank balance:

    9.9% on balances over $100K euros

     

    6.7% on balances under that amount.

     

    The bombshell to this is that amounts under $100K euros were supposed to be government insured. It’s the equivalent to FDIC insurance for the US banks.

    In other words, bank amounts that were insured as being “safe” to keep in the bank backed by the security of the Cyprus government is going to turn out to be one big fat lie. Cyprus has already acted in curtailing depositors fighting this by stopping all electronic transfers, and the policy will be put into effect on Monday, which is a bank holiday over there so no one will be able to access their accounts before the policy goes into effect and the money is extracted.

    So, rather than just make the banks, ultra wealthy or corporations pay the price for the policies they backed that were largely responsible for their economic downturn, they are seeking to transfer the pain to even to lowliest depositor who had nothing to do with the financial crisis except being a victim to it. It also punishes folks of low income who are responsible enough to have an account with savings rather than be spendthrift.

    Alright, so why is this BIG news? It’s huge because it undermines the integrity and confidence consumers have in banks. How can people trust their money in banks when so-called “government insurance” is nothing more than empty words that fail to deliver? This is liable to trigger bank runs all across Europe as people rush to take out their money before a similar fate happens to them. This will only make the other banks weaker and trigger more bank failures and a greater need for bailouts.

    This new policy is backed by the EU, so the folks in change don’t seem to care about the banks  or government honoring their obligations to their citizens. Of course I have no doubt that the uber wealthy got wind of this in advance and off shored their accounts leaving the less informed and less fortunate to carry the burden.

    Will the Cyprus citizens accept this or will there be riots?

     

    That also begs the question, could that type of policy eventually happen here?

     

    Info: Link1

    Info: Link2

     

    They may not be announcing this news with big fanfare in the US this weekend, but it’s sure to make big headlines worldwide next week. This can’t be good news for economic stability going forward if people start losing faith in their banks. It moves the situation further from recession and closer to Depression.

     

     

  • Trading Update: 3/11 – 3/15

    I caught myself still not adhering to my hedges that I should take which left me once again fighting the trend. I’m clearly making it harder than it should be at times. But at least it’s a problem I’m actively working to bring a solution to.

    This was the week the March contract stops trading so I had to rollover my positions to the June contracts. I did it all at once, but I see I could have timed it better for better rollover rates.

    Of course I “learn” all these things in hindsight, but at least it helps me in not repeating the same mistakes.

    Have to focus more on making my hedge trades being  independent from my directional trades so I don’t miss/ignore the obvious cues.

     

     

  • Trading Update: 3/4 – 3/8

    Had a great week for the most part. The gains this week made up for the losses from the prior two. Big gains using directional methods, medium gains via hedging. Missed adding to my profits later in the week due to old habits dying hard. I’ve been finding it hard to engage in hedge trading at times due to my “directional” sense resisting the hedge move as being the “wrong”. Of course the hedge move turns out to be “right” and I missed that additional profit. whatevah At least it serves as a reminder to not override my hedge trades. My solution was to make hard rules that I have to follow regarding hedging until it comes more naturally.

    I still kind of kick myself for not engaging in hedge/delta style trading earlier, but I would not have been able to do it well unless I first picked up my current set of skills, so it follows my evolution and growth in trading.

     

     

  • Filibuster Against Drones Being Allowed to Kill Americans on US Soil

    On Wednesday Rand Paul staged a filibuster against CIA appointment nominee John Brennan in opposition to his involvement in the US drone warfare program and the fact that neither the President or Attorney General will guarantee that an American citizen could not be killed on US soil via a drone without a trial or due process.

    Issues like this reveal the true nature of our government. Here we see bipartisan acceptance of the drone policy with no active reservations against Americans being potential targets of such airborne strikes by executive directive. Only 6 Republicans and 1 Democrat supported this filibuster, meaning the vast majority apparently have no problem with current drone policies.

    It’s both humorous and sad that the average citizen will get up in arms over the 2nd amendment, abortion, gay marriage, etc, but are pretty much oblivious to what’s going with American civil liberties being under attack. It makes little sense for anyone to go rabid over the threat of their guns being taken away while basically ignoring the fact that a single executive order can erase them from the Earth no matter how many weapons they’ve stockpiled.

    Because the “spinmeisters” of the left and right are pretty much silent on this, it’s easy for them to push this past public perception people. It’s a shame that if folks don’t hear it from “Rush”, talk radio, or the opinions people on Fox, MSNBC, etc, it goes ignored with folks not doing anything to enlighten themselves on the more important and concerning things going on beyond the time wasting “R vs D” fighting.

     

     

    For reading: Link

     

    The response to Rand Paul?  Other Democrats and Republicans as well as MSM like the Wall Street Journal, were not amused