December 12, 2011

First week back ...

The immediate MF Global impact is winding down. Got my custom trading platform working with a new broker the week prior, and finally got my '60%' with that broker. I'm restarting at 'half' strength wrt number of contracts traded, with a program for working back to my plan, say by the end of January at the latest.

Looking back I see I made 12 trades which is probably fewer than I should have. I played very cautiously, more to avoid losing and just get back into the swing of things. I feel like I really underperformed. Looking back versus the 'optimal' trade execution, i.e. once a trade is entered, what is the optimal way to finish it, I see I under performed by about 50%. My analogy is a hitter in baseball coming back to spring training trying to get their swing back. But then I look back at my goals in March, and I see I am actually on track in the sense that I made a 2%+ return on my diminished margin. It's actually pretty exciting how much my own expectations have changed the last few months. If I was at full strength, like I fully intend, that would have been 4% of the diminished margin, or 2% of the new 'virtual margin' I will be working off of going forward. Which is to say, I will not be keeping myself so over margined with cash at the broker in the future.

The most disappointing thing last week was the 'perfect' closing trade on the eighth. I was on the phone and entered the trade in simulator mode without realizing it. That would have been good for another 4%. Just have to get back into the groove.

 November 10, 2011

Trading resumes ...

Finally got my account reopened. I can't believe it took this long. My IB switched to one of the clearing firms involved in the first wave MF Global transfers. The clearing firm got swamped and it took them almost a week to get my new account application processed. Than there was a paperwork problem that needed straightening out (my IB had very old records that needed updating.) Anyways, I'm back online, but no trades yet.

I think I missed some big easy trades. Now you have to deal with the big gap up following the big gap down. Coupled with the underlying good economic numbers and bad eurozone, very tough to trade until the market makes a statement, possibly not until the close.

I feel a need to be a bit cautious in any case as I don't want to get over anxious to finally start trading again. Plus my account is not at the level I would like it to be pending the return of my MF Global funds.

 March 9, 2011

Swing trader throws a punch. Key levels 1327,1313.5 ▲

After yesterdays post, I received an email "Swing Trading Report". Always glad to see someone showing the strength of their convictions. But really, short 1312.75 with a stop loss at 1336.75. I guess he thought the closing high (1313.72) from Monday would hold. He may be right, but do you really want to wait 23 extra points to find out? I've looked at more intermediate strategies, and they do require those big ranges. So you certainly can't leverage up the index futures the way you can with day trading. Maybe you should try options instead.

The 'risk of ruin' or at least not being able to follow through can be excessive with just 2 or 3 losing whips of 20+ pts. Say this trade has a 50% chance of success. That means with every initial trade, you have a 1 in 32 chance of getting 5 losing trades in a row. If you are a successful trader, in your trading lifetime that will happen. If you are just starting out, that will probably happen tomorrow. So what kind of margin do you need to risk 100+ points? Now this blog got off to a bad start with 5 quick losing trades. But simple money management kept the losses in check. One good trade can wipe those out.

Eventually this triangle will break out. Apparently not yesterday. I thought the close had a good chance to crack Mondays high of 1327.25, but alas, this market continues to hold its powder dry.