Monday, February 9, 2015
Case study: sideways trading
I think we are experiencing the classic sideways pattern...and wall street is probably loving it...looks too simple so I think they're going to change it up soon.
Tuesday, February 3, 2015
Oil my gosh!
Well...oil is certainly rocketing from its lows. Nowadays: where oil goes, the market follows. Or to put in more accurately, the conditions which are causing oil to rally also tend to support stock prices.
We could resume the upward trend again. The Greeks are negotiating. That's a good thing.
We could resume the upward trend again. The Greeks are negotiating. That's a good thing.
Saturday, January 24, 2015
Greek Sunday
The markets have been wild ever since they caught the Greek woes.
I have not participated in paper trade due to focusing my energy on college and housing. My excuse is the market has no clear direction right now. However, this is the perfect time to do non-directional paper trades...weekly iron condors. So I have been missing out big time.
If the left party is defeated I'm sure we will rocket a bit. If they win a big majority...the woes are hardly over. Then uh-oh...they might leave the Euro zone!! That will be the fear.
European stimulus was the catalyst for the latest rally...or at least what sustained it.
I have not participated in paper trade due to focusing my energy on college and housing. My excuse is the market has no clear direction right now. However, this is the perfect time to do non-directional paper trades...weekly iron condors. So I have been missing out big time.
If the left party is defeated I'm sure we will rocket a bit. If they win a big majority...the woes are hardly over. Then uh-oh...they might leave the Euro zone!! That will be the fear.
European stimulus was the catalyst for the latest rally...or at least what sustained it.
Wednesday, January 14, 2015
Danger, Danger!
We may have a trend line break today due to disappointing US data based on the numbers showing on the futures. This will probably result in a new downtrend. Graph of SPY shown!
DANGER!!
DANGER!!
Tuesday, January 13, 2015
Operation Oblivion
obliv·i·on
noun \ə-ˈbli-vē-ən, ō-, ä-\ : the state of something that is not remembered, used, or thought about any more: the state of being unconscious or unaware : the state of not knowing what is going on around you
The latest attempt to develop a (nearly) bullet-proof options trading methodology...
It's hard to be right when the market can only go one way and must do so in a certain time frame...I will be doing forward testing on this strategy and trying to optimize it. This strategy is an index strategy in that it requires a lot of movement away from the position to be profitable. Limit orders will be used to reclaim the position once it becomes profitable so that waiting till expiration is not needed and thus even if the index was to be where this position was upon expiration it may not be affected. Eligible indexes include:
-SPX
-NDX
-VIX
And other European, Cash-settled indexes with a lot of movement. Market makers really gouge you on indexes...this is a problem. But cash-settlement makes it so these strategies cannot be destroyed by early exercise. I may have to brave the regular markets though, depending. The idea is to take a slice of the market's trading range and make it so that if, on expiration, the market is within this range the trade is a losing one. However, if it is anywhere outside the range the trade is a winner. However, since the market will move before the position expires, it can be recalled before it reaches its max value, thus making it more likely that the position will be a winning one. Time periods and recall values are to be tested.
The strategies to be used are a short butterfly and a reverse iron butterly. These strategies typically have a loss region of 12 or so pts on SPX and a win anywhere outside of that. The max loss is approximately equal to the max gain oftentimes.
HOWEVER, I could NOT get a trade that registers a profit on my profit/loss calculator. I must be doing something wrong today. I will try again. Because there's a buyer for the seller of an iron condor and a seller for the buyer of a long butterfly there HAS to be a way to implement this strategy. Maybe the volatility is too high, making this trade too expensive. Or maybe I'm just really doing it wrong.
UPDATE: I was able to get a doable trade on AAPL, but even with a wide spread (20 pts) the profit was much higher for the buyer of the butterfly spread. Now is obviously the time to SELL options, not buy them. So this trade would be good for times of low volatility, apparently. And apple isn't going to lose much more money I think so...Iron condor on AAPL would be even safer and probably highly profitable...crazy. Just because selling options is better than buying right now.
This market IS designed so you lose money if you're the herd. Wow. If one were to sell at the peak of the volatility my goodness! This is why buying puts on VIX just doesn't work well. Its time to sell when VIX spikes, and buy calls when VIX is low, even though the VIX going up is not the most likely outcome...going down is historically what it does. Very interesting. However, this system CAN be made to work if we play it right. Hmm. Might just be the perfect thing to sell an iron butterfly now and then even if it goes underwater the options will decrease in value as VIX decreases and once can correct the trade before expiration. Interesting, interesting, interesting.
Friday, January 9, 2015
Operation Paper Profit
So here are the rules for my paper trading:
1) Money is no object. The account will be boosted to 1,000,000 and replenished whenever it needs more.
2) Experimentation is good. For every trade I make I will do it several ways. I will also have actively managed trades and passive trades. For the passive trades I will put it on to the best of my ability and let it expire. For the active trades I will do what I think is best.
3) I will keep a spreadsheet record of each significant trade (one that I think will be right) I make and all its permutations. I hate doing this. It is time-consuming, but with $1,000,000 and random trades there is no way to use my account balance to gauge where I stand.
4) I will size my trades for what I would do in real life
5) I will have fun.
Core Tenants (active management):
-If you have a significant profit, take it.
-Limit losses
More to come.
1) Money is no object. The account will be boosted to 1,000,000 and replenished whenever it needs more.
2) Experimentation is good. For every trade I make I will do it several ways. I will also have actively managed trades and passive trades. For the passive trades I will put it on to the best of my ability and let it expire. For the active trades I will do what I think is best.
3) I will keep a spreadsheet record of each significant trade (one that I think will be right) I make and all its permutations. I hate doing this. It is time-consuming, but with $1,000,000 and random trades there is no way to use my account balance to gauge where I stand.
4) I will size my trades for what I would do in real life
5) I will have fun.
Core Tenants (active management):
-If you have a significant profit, take it.
-Limit losses
More to come.
No More Real Trading until I turn significant and consistant paper profits.
Things went very badly for me today. I sold my spread at 2044, what was mostly likely the bottom of the day for a $550 loss overall. That's plus the $250 I lost getting out of my shorts to make this play.
Amateur hour is well named, but I could not take the risk of market going lower.
That's it. I've lost $2,400 total since I started "investing" (gambling) in the stock market. And I could lose $300 more depending on what I do with the gold miner plays because that and some GM stock are the only things I have left. Things are looking good for GM. But I still think, esp if global turmoil rises, that these miners might move up. But I'll deal with that later.
This last trade was sort of a desperate bid to make up $1700 and put my account back in good standing, but I was pretty confident it would work. I had the opportunity over the course of the trade to put my account in a $1000 loss state and in hindsight obviously should have done it, Or at least taken my loss when things turned out not to be that great.
I'm going to sleep haven't been getting enough of it recently.
You know, most of my problem is my risk management strategy...I don't take profits quickly enough and I don't cut losses quickly enough. I need to learn how to use automated methods such as stop losses more effectively. There's the persistent worry that I will leave money on the table with such a method. I'll have to experiment in the paper account.
Amateur hour is well named, but I could not take the risk of market going lower.
That's it. I've lost $2,400 total since I started "investing" (gambling) in the stock market. And I could lose $300 more depending on what I do with the gold miner plays because that and some GM stock are the only things I have left. Things are looking good for GM. But I still think, esp if global turmoil rises, that these miners might move up. But I'll deal with that later.
This last trade was sort of a desperate bid to make up $1700 and put my account back in good standing, but I was pretty confident it would work. I had the opportunity over the course of the trade to put my account in a $1000 loss state and in hindsight obviously should have done it, Or at least taken my loss when things turned out not to be that great.
I'm going to sleep haven't been getting enough of it recently.
You know, most of my problem is my risk management strategy...I don't take profits quickly enough and I don't cut losses quickly enough. I need to learn how to use automated methods such as stop losses more effectively. There's the persistent worry that I will leave money on the table with such a method. I'll have to experiment in the paper account.
No big rally today
I am not placing any trades. I already have enough risk and the market is not conductive to it. US employment data beat expectations on the whole but global data was gloomy to mixed. So...things aren't as rosy as maybe some people were expecting.
Lets hope we make 2070 for my sake ;-). I would make maximum profit then.
Edit: it seems that many market participants were disappointed, and that the steam has been taken out as SPX dropped to 2057 after making 2064.
Certainly, no major rally today.
Lets hope we make 2070 for my sake ;-). I would make maximum profit then.
Edit: it seems that many market participants were disappointed, and that the steam has been taken out as SPX dropped to 2057 after making 2064.
Certainly, no major rally today.
Thursday, January 8, 2015
Plan for 1-8-15
Essentially, we could rally quite a bit tomorrow if US employment data and Chinese economic data, primarily, are good. The price of oil will reflect the economic data, and US stock futures will tell us where things stand right before the market open. If they are up a lot we are going to rally hard.The E-mini S&P was around 2055 on the 7th at its peak. So if we're up significantly from that number tomorrow morning we know rally is in the air.
If rally, then we immediately on market open buy $1000 or so more of SPX calls expiring on Friday. We wait intraday for what looks like a likely peak (during morning unless we are really rallying) and then we sell SPX calls right at or above this peak. Or slightly below as the situation is. This hedges our bets because the market most likely won't close at the peak of the day...maybe takes away a little upside potential but more likely increases profits by decreasing the amount of capital committed to the trade, therefore also decreasing risk. I like that setup.
If there is rally then we're done here. Our previous trade will likely expire as a winner. The only thing we need to watch for is 10:30 (or 7:30 my time) Lacker will speak at the FED. So watch rxn. If things start going south intraday, just take the profits (hopefully) and run.
If there is not a strong rally we may buy some calls and do this thing but with $500 or so instead of $1000.
If a rally is doubtful we will NOT buy calls. And we may try to get out of our previous trade.
If market really tanks we will immediately sell the call spread while buying puts. And then we will trade just like we would the rally scenario but with puts. And if this goes south intraday we will immediately buy it back.
I am very much hoping that we have a continued rally or trade flat because my real money trading future depends on not achieving a large loss, and on the contrary achieving profit. Otherwise I must content myself with fake money until I have proven that I can trade effectively. And the rally scenario would be the easiest trading. It is also the most likely in my opinion.
If rally, then we immediately on market open buy $1000 or so more of SPX calls expiring on Friday. We wait intraday for what looks like a likely peak (during morning unless we are really rallying) and then we sell SPX calls right at or above this peak. Or slightly below as the situation is. This hedges our bets because the market most likely won't close at the peak of the day...maybe takes away a little upside potential but more likely increases profits by decreasing the amount of capital committed to the trade, therefore also decreasing risk. I like that setup.
If there is rally then we're done here. Our previous trade will likely expire as a winner. The only thing we need to watch for is 10:30 (or 7:30 my time) Lacker will speak at the FED. So watch rxn. If things start going south intraday, just take the profits (hopefully) and run.
If there is not a strong rally we may buy some calls and do this thing but with $500 or so instead of $1000.
If a rally is doubtful we will NOT buy calls. And we may try to get out of our previous trade.
If market really tanks we will immediately sell the call spread while buying puts. And then we will trade just like we would the rally scenario but with puts. And if this goes south intraday we will immediately buy it back.
I am very much hoping that we have a continued rally or trade flat because my real money trading future depends on not achieving a large loss, and on the contrary achieving profit. Otherwise I must content myself with fake money until I have proven that I can trade effectively. And the rally scenario would be the easiest trading. It is also the most likely in my opinion.
What a day :). Here are some commentaries I sent out to friends. One at end, the other intra.
Intra, after a sizable decline in oil prices caused SPX to go back below critical 2060 support:
THIS MARKET IS SO TIED TO OIL ITS
SCARY.
If you look at the charts you'll see that there's a region around this area where 2 closes and 1 open centered on, on the (recent) way down. You will also notice important support at 2055 approximately, where the Cyber Monday fiasco bounced, and where several recent notable bounces occurred. And again, ~2060 is the region that gave stiff resistance during the downturn shortly after in early December.
We're not out of the woods, but this took the better part of the morning to do. And it seems to be holding although it is being assaulted.
We've already moved alot today so a big jump above this may not be in the cards. But if this holds for the rest of the day we have good upside prospects for a few days more.
If you look at the charts you'll see that there's a region around this area where 2 closes and 1 open centered on, on the (recent) way down. You will also notice important support at 2055 approximately, where the Cyber Monday fiasco bounced, and where several recent notable bounces occurred. And again, ~2060 is the region that gave stiff resistance during the downturn shortly after in early December.
We're not out of the woods, but this took the better part of the morning to do. And it seems to be holding although it is being assaulted.
We've already moved alot today so a big jump above this may not be in the cards. But if this holds for the rest of the day we have good upside prospects for a few days more.
Buying into the close...at long last!
Ladies and Gentlemen, we have a
contested close, but buying into the close. From my experience
this is a very important indicator of a healthy uptrend, and one
that will likely continue for some time. If we had excessive
selling at the very end of the day today I would be very, very
worried. After all we are on shaky footing with market-moving data
coming out tomorrow morning. My expectation is that as long as the
data is OK...no big negative surprises...we will continue to move
higher. If the data is very good...oh...we will rocket. If it is
bad I see up moving back down around 2050. If it is very bad,
well, we are in for wave 2 but that is unlikely. Just a guess.
Pure speculation. But I'm going on record so I can look back and
see how things went.
Things are looking good. Skew is FLAT. Fear and greeeeed is just starting to tick up. Vix is falling. Oil is kindof rising but stable (so far). And SPX had a lot of volume at the close. This is the best part. We could be going on for awhile.
So I stuck to the plan....kindof. New insights on long call spreads vs. short pull spreads
The market rose to 2050 right off the bat, so I decided to buy another spread, this time 2055-2070.
To my surprise it looked like the order didn't take. I was relieved...yeah, that was a spur-of-the moment decision, the kind that get me into trouble...but then I examines my positions. I did a double and triple take. Those 2055 calls I had sold...I got $160 for them? REALLY??? I thought it was closer to $500.
And I did a triple take. A quadruple take...and I realized...my new order essentially bought back those calls...ok. That's not the best situation perhaps. Certainly NOT what I had planned.
Oh well. We are rallying strongly. Hope we aren't derailed and that we reach 2070 by the close of tomorrow.
ABOUT THE MINERS:
The last bit of my plan was to ditch the miners if they were falling. But they appear to be trying to break through again. And its so early that I'm gonna let them run and see what happens. The miners are doing a wedge. They are either going to break up or down at some point. This is what I get for not waiting for a conclusive breakthrough to place my trade. I have to admit, the volume does not look encouraging. Looks like people are SELLING up at the resistance instead of BUYING. Meaning that we won't break through. I don't know if I should hold or sell. Sell would be safest. I should probably take the path of safety even though I'll book a $100 loss on this trade. But....no want to take loss...
Conclusion:
My original trade cost 1100 for a potential of $2000 max value so $900 profit. That was acceptable. Ratio of max profit to risk: .81 Break even on expiration: 2046
With the second trade the overall cost is including commissions was $1,605. Max profit = 3500-1605 = 1895. Ratio of max profit to risk: 1.181. And I took on significantly more risk. 2070 is a long stretch from 2055. Break even on expiration: 2051
The second trade was supposed to be:
Cost -510, Max profit: 1000. Nearly 2 to 1 ratio.
I used too much money. I am not happy with that. Too much firepower. I only have $2600 cash right now. Committed over the top. I should have just entered the trade with a wider spread at the start. But then I didn't know we were going to rally so strongly, either. And Ideally I would have entered Yesterday but wasn't sure of what was going to happen. If I had entered yesterday the cost would have been about half for the original trade.
It's 11:00 on the markets, and they are at 2055 so we have 15 more pts to go before we have 2070. And 2 days to do it. We are in a strong rally (after an impulsive and furious decline) but I'm sure it could get de-railed with some catastrophic event, like worse-than-expected US payroll data. I will monitor the market throughout the day and will cash in my spread if we don't keep moving up but hit a wall around 2055, because that is significant resistance. If we go much above that I'll be relieved. Because then that will become significant support.
But I AM SCARED STIFF!!! I think that Greek crisis is looming so who knows what could happen. But then there's always uncertainty in the market. And we have had an intense sell off over some speculation about an event half a month away.
I'm listening blindly to the market this time but I'm still scared. Don't know how I acquired the courage to enter the trade in the first place.
Ok. I lied. Now its 11:05 and we nearly hit 2060. 10 pts from my target. We are moving up at a phenomenal rate. We could hit 2070 today...and with that strong of a rally, it will be very hard to derail. I suppose I shouldn't get my hopes too far up.
8:12...I just realized the critical-ness of the situation. We must break 2060 decisively...if we do, OMG. We are in. This is the last major resistance before 2075. We'll be in that range, a day early. I'll be holding my breath. I get the 2075 from looking at the 10 day chart. Which, for the record, is below the 5 day.
Update. We are starting to form a head and shoulders pattern after a double top. Oh, no. NOOOOOOO. Well, the "head" is trading in a tight range so...
If we complete the pattern I will be very worried. We are most likely bouncing off our new support at 2055 (more accurately 2057) and then going to try again though. Forgot that support was there. The trend is hitherto very strong. 30 pts in 3 hours. 10pts an hour. We can't continue at that rate, but will we all of a sudden reverse direction? seems unlikely. 11:30 market time. 8:30 my time.
Oh NO! I just realized I also did another blunder: I should have waited to sell the call until the market was higher. Just bought the beginning call and then wait before selling the other one. This would have opened up my window and allowed me to not blunder $200 away with getting in and out of calls and it would have given me my target at a higher price, lowering the cost of the trade. While maybe not worth "legging in" during a slow moving market, with something like this its absolutely the best strategy.
Wow. I have a few lessons to take from this trading session. Overall I made significant blunders, again. I suppose I should just be happy that I haven't lost money this time yet, and that I've actually come close to reversing $1000 of losses. With $400 more from careful options strategizing, however, I'd be really happy. Till next time. In a rapidly moving market I'll buy the call, then wait until the market loses momentum for the time being to sell the put. And then, I'll have a lower break even and more profit...and the risk of a reversal with an extreme rally is slim.
And I've been trying to find a reason why buying a call spread could be advantageous as opposed to selling a put spread to get the same action. Well, aside from doing the buying up front, you can easily leg in relative safety. With the put spread one might not have enough margin and man you want your protection. Cool. +1 for the buying.
To my surprise it looked like the order didn't take. I was relieved...yeah, that was a spur-of-the moment decision, the kind that get me into trouble...but then I examines my positions. I did a double and triple take. Those 2055 calls I had sold...I got $160 for them? REALLY??? I thought it was closer to $500.
And I did a triple take. A quadruple take...and I realized...my new order essentially bought back those calls...ok. That's not the best situation perhaps. Certainly NOT what I had planned.
Oh well. We are rallying strongly. Hope we aren't derailed and that we reach 2070 by the close of tomorrow.
ABOUT THE MINERS:
The last bit of my plan was to ditch the miners if they were falling. But they appear to be trying to break through again. And its so early that I'm gonna let them run and see what happens. The miners are doing a wedge. They are either going to break up or down at some point. This is what I get for not waiting for a conclusive breakthrough to place my trade. I have to admit, the volume does not look encouraging. Looks like people are SELLING up at the resistance instead of BUYING. Meaning that we won't break through. I don't know if I should hold or sell. Sell would be safest. I should probably take the path of safety even though I'll book a $100 loss on this trade. But....no want to take loss...
Conclusion:
My original trade cost 1100 for a potential of $2000 max value so $900 profit. That was acceptable. Ratio of max profit to risk: .81 Break even on expiration: 2046
With the second trade the overall cost is including commissions was $1,605. Max profit = 3500-1605 = 1895. Ratio of max profit to risk: 1.181. And I took on significantly more risk. 2070 is a long stretch from 2055. Break even on expiration: 2051
The second trade was supposed to be:
Cost -510, Max profit: 1000. Nearly 2 to 1 ratio.
I used too much money. I am not happy with that. Too much firepower. I only have $2600 cash right now. Committed over the top. I should have just entered the trade with a wider spread at the start. But then I didn't know we were going to rally so strongly, either. And Ideally I would have entered Yesterday but wasn't sure of what was going to happen. If I had entered yesterday the cost would have been about half for the original trade.
It's 11:00 on the markets, and they are at 2055 so we have 15 more pts to go before we have 2070. And 2 days to do it. We are in a strong rally (after an impulsive and furious decline) but I'm sure it could get de-railed with some catastrophic event, like worse-than-expected US payroll data. I will monitor the market throughout the day and will cash in my spread if we don't keep moving up but hit a wall around 2055, because that is significant resistance. If we go much above that I'll be relieved. Because then that will become significant support.
But I AM SCARED STIFF!!! I think that Greek crisis is looming so who knows what could happen. But then there's always uncertainty in the market. And we have had an intense sell off over some speculation about an event half a month away.
I'm listening blindly to the market this time but I'm still scared. Don't know how I acquired the courage to enter the trade in the first place.
Ok. I lied. Now its 11:05 and we nearly hit 2060. 10 pts from my target. We are moving up at a phenomenal rate. We could hit 2070 today...and with that strong of a rally, it will be very hard to derail. I suppose I shouldn't get my hopes too far up.
8:12...I just realized the critical-ness of the situation. We must break 2060 decisively...if we do, OMG. We are in. This is the last major resistance before 2075. We'll be in that range, a day early. I'll be holding my breath. I get the 2075 from looking at the 10 day chart. Which, for the record, is below the 5 day.
Update. We are starting to form a head and shoulders pattern after a double top. Oh, no. NOOOOOOO. Well, the "head" is trading in a tight range so...
If we complete the pattern I will be very worried. We are most likely bouncing off our new support at 2055 (more accurately 2057) and then going to try again though. Forgot that support was there. The trend is hitherto very strong. 30 pts in 3 hours. 10pts an hour. We can't continue at that rate, but will we all of a sudden reverse direction? seems unlikely. 11:30 market time. 8:30 my time.
Oh NO! I just realized I also did another blunder: I should have waited to sell the call until the market was higher. Just bought the beginning call and then wait before selling the other one. This would have opened up my window and allowed me to not blunder $200 away with getting in and out of calls and it would have given me my target at a higher price, lowering the cost of the trade. While maybe not worth "legging in" during a slow moving market, with something like this its absolutely the best strategy.
Wow. I have a few lessons to take from this trading session. Overall I made significant blunders, again. I suppose I should just be happy that I haven't lost money this time yet, and that I've actually come close to reversing $1000 of losses. With $400 more from careful options strategizing, however, I'd be really happy. Till next time. In a rapidly moving market I'll buy the call, then wait until the market loses momentum for the time being to sell the put. And then, I'll have a lower break even and more profit...and the risk of a reversal with an extreme rally is slim.
And I've been trying to find a reason why buying a call spread could be advantageous as opposed to selling a put spread to get the same action. Well, aside from doing the buying up front, you can easily leg in relative safety. With the put spread one might not have enough margin and man you want your protection. Cool. +1 for the buying.
Wednesday, January 7, 2015
Plan for tomorrow.
If futures are strongly up:
Set a market order to get out of SPY puts on open? Hmm. I'm probably going to lose most of their value if I do that. Not sure what's the best time to sell puts Probably NOT open, but if market moves up...so I need to sell on open.
Then
Buy a $SPX bull call spread expiring on the 9th, Friday: 2035-2055, immediately. And let it run and expire unless market turns. Don't look back. Let it do its thing. Spend up to $1,500
It will be hard to do this immediately on open. With SPX one has to use limit orders to ensure that a fair price is obtained.
Finally, watch GDX. If it is tanking, sell those calls ASAP.
And then, wait until Monday to trade again....if things go as expected I will be putting on an iron condor. If I lose this trade then, well, no iron condor. I'll have to wait until a good setup because I will have lost too much money. And then I will have to move over to the virtual trading account and pretty much only trade there for the time being because I will have lost ~$3,500 total if everything fails. And that's all I care to lose. "It's been a pleasure, Mr. Market. I'll be back after I practice awhile."
Obviously if the futures are not strongly up and there is no steam...plan scrapped. Maybe get out of shorts...but maybe not. That would be ominous. Stay in shorts. No rally = bear country.
Set a market order to get out of SPY puts on open? Hmm. I'm probably going to lose most of their value if I do that. Not sure what's the best time to sell puts Probably NOT open, but if market moves up...so I need to sell on open.
Then
Buy a $SPX bull call spread expiring on the 9th, Friday: 2035-2055, immediately. And let it run and expire unless market turns. Don't look back. Let it do its thing. Spend up to $1,500
It will be hard to do this immediately on open. With SPX one has to use limit orders to ensure that a fair price is obtained.
Finally, watch GDX. If it is tanking, sell those calls ASAP.
And then, wait until Monday to trade again....if things go as expected I will be putting on an iron condor. If I lose this trade then, well, no iron condor. I'll have to wait until a good setup because I will have lost too much money. And then I will have to move over to the virtual trading account and pretty much only trade there for the time being because I will have lost ~$3,500 total if everything fails. And that's all I care to lose. "It's been a pleasure, Mr. Market. I'll be back after I practice awhile."
Obviously if the futures are not strongly up and there is no steam...plan scrapped. Maybe get out of shorts...but maybe not. That would be ominous. Stay in shorts. No rally = bear country.
I really DID take the bait! GO LONG
It doesn't feel right to me. It doesn't feel right. May be a trap.
But...we can't trade on feelings. And the decline felt a bit out of
place anyway so...And if we do rally you can probably keep the miner
trade in the back of your mind for now...It failed to break through
again today and if global fears are easing it won't. BUT it might be
good to enter at a bottom if you think we are going to have a rough year, cuz those guys are pretty beat up.
IF the futures tomorrow morning right before the open show a big positive increase...guys...we are going to rally. Its over. I suspected it today. Getting better at this. I see the $SKEW index is a good indicator of tops. Says nothing about bottoms. It doesn't quite make sense since Europe fears are still there, so we might not be rallying for long. The $VIX is a good indicator of bottoms...it starts declining when the bottom is in. Here are the charts for 1-7-15. If the futures are up...GET OUT OF ANY SHORTS and GO LONG ASAP.
IF the futures tomorrow morning right before the open show a big positive increase...guys...we are going to rally. Its over. I suspected it today. Getting better at this. I see the $SKEW index is a good indicator of tops. Says nothing about bottoms. It doesn't quite make sense since Europe fears are still there, so we might not be rallying for long. The $VIX is a good indicator of bottoms...it starts declining when the bottom is in. Here are the charts for 1-7-15. If the futures are up...GET OUT OF ANY SHORTS and GO LONG ASAP.
$Tick Vs. $SPX
Fear and Greed Index
Tuesday, January 6, 2015
Took the bait, Shorting.
JANUARY 5th, 2015 (not posted until the 6th)
Today I bought 2 Jan 15 SPY 202 puts because we've been going down, down, down. Options are weird. I bought at 2024 approx and at close of 2021 I'd lost $50? Must have been decrease in the VIX.
Well, I'm in this one until the market decides its time to turn around.
Once again though I was sleeping while the market was moving. Shame, shame. I am changing this I am. Must be up to check on what market does when it opens.
January 6th, 2015
EDIT: so far the trade (which should have been put on long ago) has gone in my favor. That means nothing of course...what matters is what it is when I exit it. And I could royally screw that up.
NEED TO FINISH CURRENT US MARKET ANALYSIS (and I'm not going to get to that tonight it seems)
I also placed a $450 GDX Calls trade...and I bought at a peak which was inspiration for a song I started writing today.
There was HUGE selling at end of day on this one. Is that smart money shorting? After all, the ETF is at resistance. So if it goes back down that will be a huge win for this short. If this does not break out I am out with my loss. And in with my shorts with that guy.
In the trade now. No looking back. May want to improve screening next time as this was sort of a spur-of-the-moment thing....kindof like an impulse buy. But then what isn't with me. I badly need more discipline. Working on that Sir!
Looking further out to 6 months the picture is promising, however.
Even further out you start to appreciate just how low price went. If this ever was at a bottom...
The new woes might be just the catalyst these miners need to knock one out of the park. We will see.
I just sent out an email to some friends. Here's the text. No need to re-write:
Hello Everybody. I read an article about a certain gold miner on the market analysis tab of the Investing.com app...This one right here: http://www.investing.com/analysis/this-gold-miner-is-breaking-out-impressively-237452
First of all, I am NO gold bug. In fact, I've been bearish on gold since it started declining from its peak. I was extremely bullish at $700 an ounce. However, gold has not really responded to the market turmoil yet. This is partially due to the fact that the USD is on a tear I think. Gold is still ~1200 an ounce, right in the middle of the range it has been trading in. Holders of other currencies are likely seeing gold appreciate. However, the fact that gold hasn't started to rally in USD at least shows that, if things really start getting bad, gold has significant upside potential to me. And its still early. However, gold bulls have been burned pretty badly so it might take a few serious events to get gold to budge...like Greece leaving the Eurozone. More global slowdown.
Will this happen? I don't think gold is going to be bumping up against $2000 an ounce any time soon. However, as the article pointed out gold gold miners are beginning to rally.
As it turns out I couldn't find this article when I went to go long so I looked at a gold miner's ETF, GDX. Now there are 2x and 3X etfs to choose from but the bid/ask spreads on the Direxon 3X ETF (NUGT) options are incredible. Like $1 difference on $2 options. No thanks. But if you want to just buy an ETF as insurance against mild catastrophe (look at what gold and its miners did in 2008...no protection against severe market crashes it seems) the 3x etf might be perfect.
The good part is: GDX was/is at its lowest levels--ever. Take a look.
And the 6 month chart shows that potential breakout on the short-term scale
And of course nothing would be complete without my blunder on the daily chart. Wow. I should have been more insistent on analyzing this earlier in the day. Would have already made a bunch of money if I had. Beware all that volume on end of day. No clue what's up with that.
Anyway, just wanted to bring what looks (from the surface) like a sweet setup to your attention. Worth a gamble in my opinion. Let me know if ya'll have any info that I/we should be aware of. And don't trade purely based on what I said in this email. I am still a noob. Short term sell target would be ~$26 at the next resistance. But things are so depressed that this could move much farther than that over a few years based on the chart.
I'm out of time.
Today I bought 2 Jan 15 SPY 202 puts because we've been going down, down, down. Options are weird. I bought at 2024 approx and at close of 2021 I'd lost $50? Must have been decrease in the VIX.
Well, I'm in this one until the market decides its time to turn around.
Once again though I was sleeping while the market was moving. Shame, shame. I am changing this I am. Must be up to check on what market does when it opens.
January 6th, 2015
EDIT: so far the trade (which should have been put on long ago) has gone in my favor. That means nothing of course...what matters is what it is when I exit it. And I could royally screw that up.
NEED TO FINISH CURRENT US MARKET ANALYSIS (and I'm not going to get to that tonight it seems)
I also placed a $450 GDX Calls trade...and I bought at a peak which was inspiration for a song I started writing today.
There was HUGE selling at end of day on this one. Is that smart money shorting? After all, the ETF is at resistance. So if it goes back down that will be a huge win for this short. If this does not break out I am out with my loss. And in with my shorts with that guy.
In the trade now. No looking back. May want to improve screening next time as this was sort of a spur-of-the-moment thing....kindof like an impulse buy. But then what isn't with me. I badly need more discipline. Working on that Sir!
I just sent out an email to some friends. Here's the text. No need to re-write:
Hello Everybody. I read an article about a certain gold miner on the market analysis tab of the Investing.com app...This one right here: http://www.investing.com/analysis/this-gold-miner-is-breaking-out-impressively-237452
First of all, I am NO gold bug. In fact, I've been bearish on gold since it started declining from its peak. I was extremely bullish at $700 an ounce. However, gold has not really responded to the market turmoil yet. This is partially due to the fact that the USD is on a tear I think. Gold is still ~1200 an ounce, right in the middle of the range it has been trading in. Holders of other currencies are likely seeing gold appreciate. However, the fact that gold hasn't started to rally in USD at least shows that, if things really start getting bad, gold has significant upside potential to me. And its still early. However, gold bulls have been burned pretty badly so it might take a few serious events to get gold to budge...like Greece leaving the Eurozone. More global slowdown.
Will this happen? I don't think gold is going to be bumping up against $2000 an ounce any time soon. However, as the article pointed out gold gold miners are beginning to rally.
As it turns out I couldn't find this article when I went to go long so I looked at a gold miner's ETF, GDX. Now there are 2x and 3X etfs to choose from but the bid/ask spreads on the Direxon 3X ETF (NUGT) options are incredible. Like $1 difference on $2 options. No thanks. But if you want to just buy an ETF as insurance against mild catastrophe (look at what gold and its miners did in 2008...no protection against severe market crashes it seems) the 3x etf might be perfect.
The good part is: GDX was/is at its lowest levels--ever. Take a look.
And the 6 month chart shows that potential breakout on the short-term scale
And of course nothing would be complete without my blunder on the daily chart. Wow. I should have been more insistent on analyzing this earlier in the day. Would have already made a bunch of money if I had. Beware all that volume on end of day. No clue what's up with that.
Anyway, just wanted to bring what looks (from the surface) like a sweet setup to your attention. Worth a gamble in my opinion. Let me know if ya'll have any info that I/we should be aware of. And don't trade purely based on what I said in this email. I am still a noob. Short term sell target would be ~$26 at the next resistance. But things are so depressed that this could move much farther than that over a few years based on the chart.
I'm out of time.
Friday, January 2, 2015
Intraday Idiot
I buy 5 options on a head fake. Then I sell at a low. And buy again as it rises, and sell even lower. Racked up $100 in new losses for the new year to stand at -$1130 all time. What an idiot.
I have absolutely no clue what I'm doing.
So I make a second trade with puts...this time although I miss the ball I made $10. Don't think I'm going to be doing any more of this today, though. So I'm $1120 in the hole. Great.
I think part of my problem was I was looking at the 1 day minute chart...much better to look at the 2 day to put things in perspective.
Wow. Like OMG. I get in again. I suffer through lots of emotional pain, see my puts double at one time...hold one, then looks like the down trend broken and get in calls. And then it goes down, but market consolidating. Now I lost another $2 overall.Take it to -$92 for the day! WOWOWOWOW. If I had held on to the puts or sold when I had made bank I would have been in great shape. I guess strong downtrends don't evaporate right away. That trade was WINNING big!
And I miss lots of $ in profit throughout the day and wind up with a $100 loss. GREAT. I am so bummed. Like SERIOUSLY disappointed.
Now its rising like I thought...9:06 AM
Obviously in a range....so...I will sell my first real iron butterfly spread...finally got it sold at 2055 on spx with 15 pt wings. Only doing this because options expire today so time decay will be intense especially since it's nearly 1:00 at the markets. Max loss: 3000-1340= 1660. Max gain: $1340.
Yeah, finally brought out the big guns. Hopefully they're not shot out of my hands.
I have to go to a luncheon today. I do want to buy this spread back by 3:20 market time at the latest. My quandary now is if I'm driving to the luncheon I can't do anything if the market really moves. As long as I can attend to the market I will not realize my max loss. I can buy back the side that's in trouble, and when the trend looks like its changing sell that side again. Or just let the market go while the other side expires. I hope we don't get to that point. So far, so good. The market is trading in a tight range. I should probably place those paper trades I had planned to place before I became so distracted.
At least I'm erasing the day's loss right now. I certainly don't want to lose more so I'm afraid I'll bequick on the trigger. And I know I won't make the max gain.
I just can't stop watching. Market is trading on the lower end of the range. Lower end is the one in most danger, too. Still have support before positions would close at a loss, but this is getting close.
Mother came in the room and distracted me for 20 minutes...this contributed to what happened next.
Now the market broke through and I fumbled with the trade...tried to buy back my put spread before the market broke through because the direction was obvious but selected the wrong options because they were not ordered as I expected on my screen.
Oh great. Then I placed an order to buy back the spread and set the price too high. Now I paid as much as I can make from the entire trade to buy back that spread. And I still have a $3000 risk on the other side.
This did NOT work. Bad trade. I was about to cancel that order.
And the market moved back up to where I could have bought that spread back at a profit.
And all this right before my birthday on Saturday.
Seriously, as one friend told me, "Do more fucking paper trades." I will NEVER learn like this. Its just my paper account is delayed by 20 minutes and trading there just isn't very good.
It seems like my trouble mostly is I let my emotions get the best of me and therefore trade too much.
I got out. Now I'm 1,500 in the hole. I moved $2000 out of my trading account. So funded with $7000, current valuve 5,500
I have absolutely no clue what I'm doing.
So I make a second trade with puts...this time although I miss the ball I made $10. Don't think I'm going to be doing any more of this today, though. So I'm $1120 in the hole. Great.
I think part of my problem was I was looking at the 1 day minute chart...much better to look at the 2 day to put things in perspective.
Wow. Like OMG. I get in again. I suffer through lots of emotional pain, see my puts double at one time...hold one, then looks like the down trend broken and get in calls. And then it goes down, but market consolidating. Now I lost another $2 overall.Take it to -$92 for the day! WOWOWOWOW. If I had held on to the puts or sold when I had made bank I would have been in great shape. I guess strong downtrends don't evaporate right away. That trade was WINNING big!
And I miss lots of $ in profit throughout the day and wind up with a $100 loss. GREAT. I am so bummed. Like SERIOUSLY disappointed.
Now its rising like I thought...9:06 AM
Obviously in a range....so...I will sell my first real iron butterfly spread...finally got it sold at 2055 on spx with 15 pt wings. Only doing this because options expire today so time decay will be intense especially since it's nearly 1:00 at the markets. Max loss: 3000-1340= 1660. Max gain: $1340.
Yeah, finally brought out the big guns. Hopefully they're not shot out of my hands.
I have to go to a luncheon today. I do want to buy this spread back by 3:20 market time at the latest. My quandary now is if I'm driving to the luncheon I can't do anything if the market really moves. As long as I can attend to the market I will not realize my max loss. I can buy back the side that's in trouble, and when the trend looks like its changing sell that side again. Or just let the market go while the other side expires. I hope we don't get to that point. So far, so good. The market is trading in a tight range. I should probably place those paper trades I had planned to place before I became so distracted.
At least I'm erasing the day's loss right now. I certainly don't want to lose more so I'm afraid I'll bequick on the trigger. And I know I won't make the max gain.
I just can't stop watching. Market is trading on the lower end of the range. Lower end is the one in most danger, too. Still have support before positions would close at a loss, but this is getting close.
Mother came in the room and distracted me for 20 minutes...this contributed to what happened next.
Now the market broke through and I fumbled with the trade...tried to buy back my put spread before the market broke through because the direction was obvious but selected the wrong options because they were not ordered as I expected on my screen.
Oh great. Then I placed an order to buy back the spread and set the price too high. Now I paid as much as I can make from the entire trade to buy back that spread. And I still have a $3000 risk on the other side.
This did NOT work. Bad trade. I was about to cancel that order.
And the market moved back up to where I could have bought that spread back at a profit.
And all this right before my birthday on Saturday.
Seriously, as one friend told me, "Do more fucking paper trades." I will NEVER learn like this. Its just my paper account is delayed by 20 minutes and trading there just isn't very good.
It seems like my trouble mostly is I let my emotions get the best of me and therefore trade too much.
I got out. Now I'm 1,500 in the hole. I moved $2000 out of my trading account. So funded with $7000, current valuve 5,500
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