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FM's Trade Log

  #161 (permalink)
 
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 FlyingMonkey 
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Thursday 27 Apr 2017
====================

On Tuesday, while I was on the road, I closed out the second half of my DUST position (Short Gold Miners 3x) for a tidy gain. Left a bit on the table--I was looking primarily at the price of gold to judge the exit, but the miners over-reacted considerably. It's likely that will be the last swing trade closed for April, giving me a bit less than 2% gain for my first month. Not bad, and I'd take that compounded on a consistent basis if I can get it.




I'm looking very closely at flipping long here on gold-related stocks. I'm also looking at a long in bonds. Oil is probably getting close to a near-term bottom around this 46 - 48 area. ES looks like a near-term double-top but I'm not particularly interested in top-fishing the s&p More on all of that later.




Not much time to trade this morning, still recovering from my travels. Overnight CL blew out the lows from the past few days in the 48.80 - 49 region, and appears to have just completed a first retracement retest. 15 minutes until the open, I'll just have to see how it reacts and if we get a something at those levels for a short (VWAP is hanging around there also), or near the 48.50 lows for a long. Or if we just look really weak, any spot for a good short.




A big chunk of the volume traded since the lows broke has been in this .65 - .75 range. Will keep a close eye on which side of this zone the open takes us.




We spiked in and out of that zone and I took the short. I'm running the risk here of letting a nice 10+ tick winner turn into a scratch. I decided to try going for a longer target today . . . just seemed like the odds of getting a break of .50 were good enough from my entry that it was worth a shot. Pulled my target down a bit lower than what's in this pic, looking for .35. We'll see. At this point it's all up to the equities open coming right up.




Scratch. Solid entry, but moved my stop to Break-even. Not my day I guess. The way I've been trading recently for smaller 8 - 12 tick wins, I would have had a good winner here, but something about that .50 level just looked too tasty not to try for the break.

We got there eventually. Definitely some food for thought on this trade. When to hold em and when to cash out is one of the biggest challenges in intraday trading and trading in general.


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  #162 (permalink)
 
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"Worry is often a symptom of imperfect information." - Charlie Jane Anders, All the Birds in the Sky.

Now that I'm swing trading ETFs, I worry about gaps. Yes, I'm going to get stung by gaps here and there, maybe even severely on rare occasion. But I can't let an irrational fear of gaps prevent me from sizing correctly for the vast majority of positions.

I mentioned earlier I was thinking about taking a long in the miners. I changed my mind.



This is a chart of the GDX miners ETF, with the /GC continuous contract overlayed in purple, It tracks pretty well, but recently the miners are severely lagging and don't show any signs of being in an uptrend. Gold still looks OK and could be poised for a bounce, but this relationship is suspicious and may resolve very poorly for gold if the miners are leading. And I don't have a way of getting long gold directly within my risk profile anyways. The leveraged ETFS tracking the commodity are both way too thin.

In /ZN the longer term charts are telling the best story I think. Here's the weekly.



Now, part of me doesn't even think I should look at weekly charts if I'm trying to swing trade in the 2-to-10-day time frame. I can't help it though. In this case, the weekly gives a context that really makes you second guess the daily chart's action. Yes, price has been going up over the last two months with a nice double bottom from december to march. But! Price just seriously rejected new highs at long term resistance. It's trying for a second attempt... Here's the daily



If it can get over 126 and hold it, then a pop could follow. But this could very easily be a near-term top for another leg down. I honestly think that's the most likely scenario and if anything I'd be looking for a short somewhere up over 126.

With FOMC rate decision next week, I'm going to sit this one out and just watch and learn.

And since I'm not trying to top fish the indexes, that just leaves good old CL.




I'll be keeping a close eye on CL. It's clear there's a very legitimate opportunity for a long here... Almost too clear. I want to see how the lower time frames behave and maybe get in if it looks ready to launch and I'm able to pounce before it rockets away. After getting smushed on the last down move I'm very aware of the shitstorm that would ensue if this thing decides to dip to 47 and below.

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Sunday 30 Apr 2017
==================

"If you ain't aim too high, then you aim too low." - J. Cole

April was a positive month trading real money. Intraday trading of CL netted a small gain. And my first month swing-trading ETFs netted a respectable gain. I'll focus on assessing the CL month here, since I will be applying some changes to hopefully improve in the coming month. I'm still feeling out the swing-trading process and hopefully May will hold more of the same profits but with more graceful losses.

I combed through each of the CL trades and was surprised to find that my entries were about 85% really good. However my skittish trade management (poor exits and re-entries) killed the results.

I applied a slew of basic "hands-off" trade management styles to those same entries and every single one of them came up with better results. Here's a couple that were roughly in the middle of the pack.



Here you can see every trade taken with cumulative profit in TICKS in YELLOW. Note, I'm not taking anything out for commision here so after 30 trades you can figure most of the actual gains are gone.

In the blue we have hypothetical results with a static 15-tick target and 15-tick stop. Walk away.

In the red we have a 15-tick target and 15-tick TRAILING stop.

Both yielded less trades because it would not be possible to jump in / out as much.

Am I curve fitting here? Yeah, undoubtedly a little bit. But the data is still pretty firm and there were other approaches that did way better even than these. What does it mean? I think it means that I'm trying to manage my trades like I pick perfect 0-MAE entries all the time. And I don't. But I do pick pretty friggin good entries, which I'm ruining. If I can trust my market read and give these trades some room to work, I can get significantly better returns AND not have to stress about over-managing the trade.

Only one way to find out. Let's see what May brings.

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Tuesday 02 May 2017
===================

"Everybody knows that the dice are loaded,
Everybody rolls with their fingers crossed" - Leonard Cohen

Yesterday was slow so I used the time to tweak my workspace. No trades. Let's see how today goes.

The action so far is comfortably inside yesterday's range. And this week's action so far has stayed comfortably within last week's range. The market continues to build up its consolidation in the 48 - 50 area, seemingly firming up this mid-48 price.

The channel du jour is an upward channel since yesterday's low. Important level at play right now is 48.75. 48.60 below, and 49.10 above. It's 15 minutes to the open. Going to wait and will be leaning carefully long if the channel bottom looks like it is holding. However I don't think this is going to last long - the selling in the last couple hours was pretty strong. A short off VWAP, playing for another leg down would be worth taking.




On the open, Price shattered that channel lower boundary, made a new low, and then spiked back up into resistance. I took an entry. Not the perfect price, but a good enough price. There is no way, absolutely no way I would have held onto this winner the way I was managing my trades in April. So far, so good. +15.




Kids are waking up and I'm off to breakfast and work.

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  #165 (permalink)
 
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Wednesday 03 May 2017
=====================

Wasn't able to trade in the early morning as I was up late last night due to other obligations. Seemed like a reasonable morning to skip with several major reports on the way.I have some time mid-day inbetween things and thought I'd update the swing setup list. I'm just minutes away from the fed announcement and may be interested in placing some entry orders after the release.

ZN. I could be tempted into a long in the green circle area. If it tries to spike over 126 and can't do it, I could envision a short in the red area.




GC

Reasonable case for a long at these levels.




CL

It is possible that we just made a multi-week low at 47.30, but this chart still looks dangerous.




Because in CL the break between contracts is very extreme on a percentage basis, I do think it's useful to look at the unadjusted series as well. Here's the weekly, unadjusted for rollover. A very different chart, and making the case for a long in what appears to be a pullback within an uptrend.




And here's the monthly, just for giggles. I know I mentioned I wouldn't have any "macro" reasoning going into my approach, but it just jumps out at me here. I've boxed the months from February to June over the past 9 years. Only 3 of 9 years closed down over this time period. Out of 45 monthly candles, 29 of 45 were up. (65%). This year, we've had an up candle for Feb, and March and April were down. Is it time for some more up candles?




ES and YM are in the middle of deciding whether to pop or drop. To me it's a coin toss or worse. NQ won't even do us the courtesy of a friendly pullback. Not touching any of those for now. They are befuddling. The words STFU and buy come to mind.

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Friday 05 May 2017
==================




Yesterday I slept through the open and that made me very upset with myself. I knew going into today that I had to be cautious of my temperment, because I may go into the market with an agenda to make up for a week where I only managed to get to the screen for one solid day. Even with that in my head, my will broke down after the first two trades and I entered the dreaded "trading too loose" mode. I over traded and did not take the best entries, and reacted negatively after missing the best opportunity of the day just after the equities open.





The kids and wife are up and smiling. Dance party commencing in my office. Life could be worse. Clean out the mental baggage and back at it next week. I think I needed a little knock off the horse today to remind me what I need to work on. Trading without clarity is a disaster, eventually. -32 today. -17 for the week.

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Sunday 07 May 2017
==================

Lessons in Value, and the Magic of the Offer
--------------------------------------------



Last night my wife made a delicious chicken dumpling soup. There were 3 big dumplings in each bowl. 3 for her and 3 for me.

At that point, those dumpings had no market value. There was no market for dumplings. But my wife and I did have our own perceived value for the dumplings in our bowls.

I was not very hungry because I'd had a big lunch. My wife was quite hungry. Let's say my perceived value of the dumplings was 5 hunger-satisfaction units each. And my wife's was 10 hunger-satisfaction units each.

My wife finished all 3 of her dumplings before I had even touched one of mine. I was focusing on the broth. She left the table to tend to one of the children, leaving her broth behind for later consumption.

At that point, I realized a new perceived value for the dumplings. I could give a dumpling to my wife. In doing so I would probably earn the very valuable currency of "brownie points". This is a very valuable currency that only wives can grant their husbands. Most wives do not realize it exists, because it is a psychological manifestation internal to husbands. Husbands believe that in exchange for good behavior they receive brownie points that can be exchanged for occasional afternoons on the couch drinking beer and watching sports. Whether or not this is true is a subject of much debate. It's probably best not to mention it.

I believed that offering one dumpling would be worth about 15 brownie points. Additional dumplings thereafter would not be as significant, perhaps 5 for the second and 0 for the third. But that first one would be a winner for sure.

So I offered to my wife one of my dumplings. Her eyes sparkled in anticipation. Her autonomic nervous system triggered a salivation response as she started to imaging the satiating effect of that dumpling entering her digestive tract. You see, before that moment, that dumpling had no perceived value to her. She was basically satisfied, and had no awareness of any opportunity for further dumplings. But now I had, by simply uttering "would you like one of my dumplings?", created a marketplace for dumplings. And she was ready to buy at market.

So now that I've established a market, I can exchange my dumpling. Because of the emotion involved on the bid side, this dumpling has actually increased in hunger-satisfaction-units, standing at around 20 for one dumpling on this market. But then, I made a mistake. I lost track of what I was doing. I zoned out and I accidentally ate all of my dumplings without thinking. With each dumpling that went, until the last one, I still had an opportunity to get that 15 brownie points in exchange for one much in demand dumpling. And something else happened as I swallowed the last bite. Somehow, quite intangibly, when I ate that last dumpling I ended up with less than what I had started with. I ended up with negative brownie points. Because once I had offered the dumpling, an additional negative brownie point value had been assigned to the act of not giving my wife the dumpling. I had promised one unit of liquidity, and then eaten it. The toll needed to be paid.

This is the magic of the offer. The offer created a marketplace. The marketplace created an opportunity where none had existed. The opportunity bestowed exchange value. The fluctuating exchange value allowed the possibility that I could finish the exchange negative from where I had started.

Eventually, my wife forgave me for my carelessness.

Many market participants believe that the market has offered them something. An opportunity. Those market participants have, perhaps, allowed themselves to be participants in an imaginary market with emotional consequences. The real market is structured and is zero sum. This other imaginary market is one that lets you trade emotional capital and finish with much less than the money lost in the real market. Perhaps it would be wise not to listen to the chart whispering to you of the opportunity for riches, and all that goes with it. This is the market of emotions. The real market has simply offered you an opportunity to buy or sell X at price Y. It promises you nothing beyond that. Don't listen to the whispering of the charts. That whisper is actually coming from inside you, and it will force you to pay the toll some day.

================================

I won't shamelessly self-promote daily, but I come from Los Angeles and they teach you how to do this very young here, so once a week seems appropriate. If you like what you read here occasionally, take a second to drop a "thanks" over in the journal contest here (no pressure either way):

Thank you for reading,
FM

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FlyingMonkey View Post
Sunday 07 May 2017


I won't shamelessly self-promote daily, but I come from Los Angeles and they teach you how to do this very young here, so once a week seems appropriate. If you like what you read here occasionally, take a second to drop a "thanks" over in the journal contest here (no pressure either way):

Thank you for reading,
FM


Perhaps you can insert this into your signature like I have done!

Thus the shame is automatically watered down, and on a similar vein to trading - not caring about the outcome is a key ingredient to successful trading! However I admit that once you have gone almost insane fighting for and yourself to win at the markets the forums become an abode - when the friends have stopped returning calls, and the trading business really has nothing to do with money - it becomes an irony when one realizes how SIMPLE life's goals really are.

I will be off into the Himalayas tomorrow for a week ( https://www.travelblog.org/Asia/India/Uttarakhand/Rishikesh/blog-379302.html / The Journey Into Life Coaching: India Through My Eyes - 2nd stop Aurovalley Ashram) - meditation, yoga and seeking balance.

Peace to all!


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iqgod View Post
I will be off into the Himalayas tomorrow for a week
Peace to all!

Very nice, enjoy. I have a lot of friends in north India. A vacation in Manali sounds pretty good right now.


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Monday 08 May 2017
==================

A new week. The snap back ralley hit some sellers at 47 overnight. 46 is holding for now.




I've put up a couple hypothetical downward trajectories in case sellers are able to take it below 46 with 45.50 being the most significant level immediately below. Otherwise the trajectory resumes upward with a test of VWAP at 46.40, Y_H at 46.69, and then on to 47. We currently sit right in the middle of last week's range and in the bottom third of Friday's range. Market probably needs to digest this 45 - 47 range this week.



And here's how it panned out.



I'm OK with that. I came out and traded my plan mostly, and even though the chips didn't all fall my way the market rewarded me by mostly not kicking me in the nuts. +15 -5 -5 = +5.

Currently I'm highly aware of the following issues that I need to work out.

1. Missing opportunities because to try to get the best price I'm waiting for a "shakeout" that doesn't come. I want to buy when longs are weak, getting pressed out of their positions because they can't take the heat. I want to sell when shorts are weak, covering because price is vaulting them into the pain zone. This doesn't always happen so clearly, and I occasionally miss opportunities like the one boxed out at 4:45am on the above chart. Something to keep an eye on.

2. I don't like using an arbitrary target of 15 ticks, and have started to move it around a bit, based on the particular trade structure. I need to look at the stop the same way, but I don't really want to go much lower than 15, although occasionally I may bail early if the trade appears invalidated (today it was a good move — will keep an eye on that). Don't want to be the weak hand. Have to give it room.

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