I'm taking up the April Journal Challenge. My primary aim is to figure out a sustainable format and pace at which I can put my daily recaps into writing. I'm already keeping a journal and a research log, but I'm not entirely happy with their layout.
I will keep the format for the time being fairly open. I'll use the journal as a research log and as a trade log.
Currently I trade the markets with two strategies. The first is a portfolio of fully automated algorithmic strategies that trade index CFDs 24/5. The second strategy is my rule based options trading strategy.
The portfolio of algorithms consists of 5 different algorithms that trade the SPX500 CFD. All of the algorithms run in MetaTrader and don't need any supervision, except for the occasional restart of the machine that they run on. Windows updates can be annoying.
All of the algorithmic strategies use different signals:
Strategy 1: ATR
Strategy 2: Momentum
Strategy 3: RSI and candle pattern
Strategy 4: Bollinger Bands and Moving Averages
Strategy 5: MACD and Standard Deviation
I am entirely biased at how I look at the stock market. I think that the long term direction of the market is up and to the right. For that reason, all of these algorithms trade long only.
I am also biased in that I don't believe there is an edge to be had by figuring out any special pattern in the market, a magic combination of indicators, or signal in the noise. Markets will be markets, they go up, down and sideways in the short term. I can't control their direction, and indicators won't tell me anything about the future.
However, because my bias tells me that the stock market will rise over the long term I can use indicators to find favourable trade entry zones. Once I have entered the market, I derive my edge and my profit from risk management.
All my algorithms have the same exit rules. I have time based exits, I have volatility based exits, stop losses and take profits. Used with the right amount of leverage, these tools will give me a win rate high enough to grow my equity, for now.
The second strategy I use is an options trading strategy.
I am a seller of options. I sell mostly undefined risk positions like puts and strangles. I try to stick to highly liquid ETFs and stocks that I sell options on. All options that I sell are close to 45 days to expiration (DTE), and can range between 5 and 30 delta. I don't go closer to the strike than 30 delta. All my options selling is geared towards farming theta. Theta is the time decay of an option's value. However, I do also sell options through company earnings to make use of IV crush / vega decay following earnings announcements.
That is it for now. I will post the first update tonight after the market closes.