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Using Options for Swing Trading


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Using Options for Swing Trading

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  #181 (permalink)
Market Wizard
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Didn't trade for the rest of the day and ended up close to profitable with my existing positions thanks primarily to GRPN.

I'm kicking myself a little because I know that when the SPY is up 1.4%, those are the days where I could theoretically be swinging for the fences, but all's well that ends well I suppose. I don't anticipate another gangbusters day like today will regroup and scan charts later today for potential plays tomorrow.

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  #182 (permalink)
Market Wizard
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Key price area for the SPY. The markets not only touched the control price for the current channel but also broke through the value area high of the larger trend.




I wouldn't be surprised to see it quickly retrace and give back today's gains. I think that sentiment might be in the back of a few traders' minds as the VIX crept higher by 1% today in spite of ATHs.

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  #183 (permalink)
Market Wizard
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Markets did what I expected today. I was not able to take advantage of the trade because almost all of the great bearish charts on my radar are, for some unGodly reason rallying ATM. There are a lot of energy related trades on my radar but the top short trades I am stalking at the moment are:
  • T
  • KMI
  • DAL

If I get involved in any of these, I plan on holding for as long as feasible instead of my normal 2-10 day trades.

Edit: I have had puts on OXY for a few days. Currently it is going sideways/higher though.

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  #184 (permalink)
Market Wizard
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Depending on how the markets play out, I think that swing trading may not been feasible short term if there is volatility/unsurety about direction. I might start day trading a bit (reducing my size since I'm new to it) or exploring other instruments. For the time being, I'm watching the SPY for a potential overnight fade.

I think there is a possibility that selling might pick up going into the close and we will be flush against the value area low. If that happens, I think that there might be some short term exhaustion which may result in a quick pop higher (which will likely be faded eventually). I have been playing the upside for the last few months but I am still overall bearish based on the government's inability to get Covid under control and the lack of a V-shaped recovery.





Strategizing for an EOD purchase @ the close. We shall see what happens.

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  #185 (permalink)
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^ Scratch that. Didn't see the setup I wanted/didn't see it in time.

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  #186 (permalink)
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I've missed a few opportunities today and had some minor losses (my stops are razor tight right now). I was working on fading SPY's rally as well as TSLA's but I was a tad early on both. They both would've been 3R trades but ya live and ya learn.

For what it's worth, OXY is down ~9% on the day. For some reason though, my profits are not where I'd expect them to be. Price has decreased for a cumulative 3R but my option price has increased by approximately 2.6R. Not sure if it is due to a bad fill? Volatility has increased and my option has a delta of 0.75. I'm gonna have to dust of my copy of Options As A Strategic Investment to brush up on my knowledge.

Speaking of brushing up on my knowledge, after some extensive reading, over the last week I opened an Interactive Brokers account and I also applied for Forex in my ThinkOrSwim account. Some of the Currency charts look ripe for swing trading and so I'm keen to get involved, especially since swing trading opportunities are (temporarily) sparse in the stock market. I think that we are either in the beginning stages of a larger decline or the markets need to digest the current sell-off before retesting highs. Either way, I am not seeing a lot of swing trade opportunities to the long side, but also technically the short side is not looking too great since I am expecting a 1-2% pop in the SPY any day now and a lot of stock is oversold.

After opening an account with Interactive Brokers, I realized that their minimum lot size is 25,000 units which is doable, but doesn't let me manage risk as much as I'd like. ThinkOrSwim allows for multiples of 10,000 so I will likely just trade with ThinkOrSwim & round up/down my lots accordingly. I'm more familiar with their platform anyways.

With my (unfunded) Interactive Brokers account, I might dabble in Futures Trading down the road but I don't want to stretch myself thin right now. When I cross that bridge, I will start with micros and (hopefully) work my way up to the minis. Taxation is a large reason to trade futures but I'm grasping for straws outside of that. SPY is one of the most liquid instruments known to man and SPY has a tighter spread & AFAIK allows for more granular risk. For my purposes, options contracts give me plenty of leverage and cost about the same now that trade commissions are no longer a thing.

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  #187 (permalink)
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There's nothing like waking up with a loss lol.

Completed my first Fx trades last night (long EURUSD & long AUDUSD) and both were losses. The markets ended up going in the direction I wanted once the US markets got active but c'est la vie.

I'm trading w/ reduced size (just under 1/2 normal R) so it doesn't hit as hard when i'm stopped out. but the inability to make discretionary decisions makes it feel inefficient. I think I might reduce my risk further and trade 0.33R per trade w/ Forex until I get more comfortable with it. I like the trendiness of the markets, but I don't like that the (current?) correlation. I wanted to jump into currencies to avoid everything loosely tracking the SPY, but a lot of the major pairs are more correlated than I expected. Here are the correlation stats for the SPY, QQQ & IWM over the last 24 hours:



It appears that this correlation breaks down as you increase the timeframe fwiw. Here are the #s over the last month:



Perhaps because the sell off of US stocks is going on, other markets are more in tune with our economy? Hopefully things will become less correlated as a clear trend higher/lower/sideways sets in.

I will probably start a separate journal for my Fx trades so that I can keep things consistent in here fwiw.

Stocks
Markets are up ~1% today like I hoped. What I didn't plan for is my bias once the 1% pop happens lol. A part of me wants to fade rallies on weak stock at value area highs, while another part of me wants to try out some new longs at value area lows. I am leaning towards loading up on my shorts more but the charts will tell me what to do.

I'm stalking the SPY right now and looking to potentially fade the move higher, especially if it gets momentum going early in the day & hits the value area high (aka the top of the channel):


Yesterday, I was watching a trading day recap video on YouTube and they touched on the /CL chart being in no man's land. That explains why OXY was hit so hard yesterday. Realizing that Oil prices are dropping again makes me even more bearish/confident on my position in OXY (I also have VLO in my IRA). I am looking to hang onto OXY until it breaches $10. As for VLO, I'm aiming for $44.50. I might take partial profits in both once these price areas are hit, but I am working on keeping runners in the game more so I don't want to sell my entire position.

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  #188 (permalink)
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I have been intent on playing the market to the downside to the point that a couple potential bounces on my radar went higher without me (IBB, DKNG).

SPY does not want to re-enter its channel which is a neutral-to-bullish sign imo. I have been waiting patiently with some puts but no dice. I am going to watch more closely around $341 for potential price rejection:




Fx
EURUSD is back on my radar also. There is a confluence point on the chart where the top of the secondary bearish channel meets the bottom of the primary bullish channel. My bet is that odds are the primary trend will resume but I would prefer that the test was coming on a retracement instead of a push higher since I think that is even higher probability.


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  #189 (permalink)
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Pulled the trigger. I'd been waiting forever lol.



If it slightly retraces, I'm probably jumping out of the position FYI

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  #190 (permalink)
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Exited my position. Buyers came and scooped the retracement lows and so I tightened my stop and exited on a short term trendline break:




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