Spreadbetting Journal Ė Trend Strategy

This is a discussion on Spreadbetting Journal Ė Trend Strategy within the Trading Journals forums, part of the Reception category; Iíve been thinking a fair bit about protecting my account and the benefits vs drawbacks of hedging. But I think ...

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Old Oct 28, 2010, 12:59pm   #8
 
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Hedging strategy

isatrader started this thread Iíve been thinking a fair bit about protecting my account and the benefits vs drawbacks of hedging. But I think I have come up with a reasonable solution which wonít cost me too much to implement.

My plan is to keep a long term position in the VIX and possibly increase my position when the markets has had a big rally for a few months or so and volatility has fallen to previous resistance points. To do it I will need to auto-rollover my current position each month, which I believe costs half the spread (Spread is 10). So £5 a month cost at £10 per point. Which means a cost of £60 a year in costs. It can also fall in value and the previous long term low is around $10 on the $VIX. So I got in around $19, so thatís another £90 it could fall. So my total risk of holding it for a year would be £150.

Iím not allowing myself to continue trading in a month if I lose more than 6% of my account Ė which is currently £241. So in theory if the market crashes and Iím stopped out of all my open trades, then the rise in the VIX will recoup most or more than the loses. Iím basing this on that I got in at around the $19 price and previous corrections have taken the VIX above $45, which would mean a £260 profit. So that would cover my losses.

What Iím not sure of is whether I should include the VIX position in monthly risk calculation as at £150 total risk it would take up 3.7% of my monthly risk allowance leaving me only 2.3% to play with or whether it should be separate as it is a hedge. I think maybe I will include part of it to start with and bring down my monthly risk limit on other positions to 4% max risk a month and see how it goes,
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Old Oct 28, 2010, 7:47pm   #9
 
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S&P 500 Long Entry Scale in

isatrader started this thread Iíve opened another very small position on the S&P 500 Dec 10 Spread which brings my position risk up to 0.7%.

Entry Price: 1178.4
Qty: 0.5
Spread: 0.6pts

Stop: 1147
Limit: 1220

Account Risk: 0.39%
Potential Account Profit: 0.52%
Risk Ratio: 1.32

The risk ratio is very small at the moment, but Iím using a safezone stoploss so I will be moving that up at the close today, which will start to bring the risk ratio up. The buy signal is still on, as shown in the attached chart and I think it has a bit room to run yet. Iíve set my limit order near the previous high, but I might switch to a chandelier stoploss to track the move if it gains some momentum over the coming days.
Attached Thumbnails
sp500_entry_28-10-10.png   sp500_signal_28-10-10.png  
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Old Oct 29, 2010, 12:42am   #10
 
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GBP/USD Signal On

isatrader started this thread Looks like Iíve got a possible entry on GBP/USD. The buy signal was triggered at todayís close. So now I need to confirm itís a valid signal and then watch for the pullback to value in the coming days for decent entry point. I think thereís a good chance Iíll get one as there should be some resistance around the 1.60 level again.

The 11 Day EMA is currently at 1.5808, so that is my initial entry target with the chandelier stop currently at 1.5724 Ė so an 84 point margin of entry.

I will watch closely on the 4 hour chart and the 5 min chart to see if it finds a base and turns up. As if it breaches 1.5724 the signal will be invalidated. If however, it does base in my buy zone then I will go long.

Patience is needed for this I think to see if it has potential to be good entry point.
Attached Thumbnails
gbpusd_signal_28-10-10.png  
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Old Oct 29, 2010, 11:22am   #11
 
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GBP/USD Entry zone

isatrader started this thread Based on the overnight price movement of GBP/USD, the 11 Day EMA has moved to 1.5826 and the Chandelier exit to 1.5738, so that is now my value zone where I will look for an entry if the price action looks promising after the GDP data this afternoon.
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Old Oct 29, 2010, 1:57pm   #12
 
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GBP/USD Entry zone

isatrader started this thread Doesnít look like Iím going to get an entry point today. As the US GDP data was good and Pound is rallying now. It got close though, was only 37pts from my value zone earlier, but I will get another chance to get in next week I think.
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Old Oct 29, 2010, 8:29pm   #13
 
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Re: S&P 500 Long Entry Scale in

isatrader started this thread
Quote:
Originally Posted by isatrader View Post
Iíve opened another very small position on the S&P 500 Dec 10 Spread which brings my position risk up to 0.7%.

Entry Price: 1178.4
Qty: 0.5
Spread: 0.6pts

Stop: 1147
Limit: 1220

Account Risk: 0.39%
Potential Account Profit: 0.52%
Risk Ratio: 1.32

The risk ratio is very small at the moment, but Iím using a safezone stoploss so I will be moving that up at the close today, which will start to bring the risk ratio up. The buy signal is still on, as shown in the attached chart and I think it has a bit room to run yet. Iíve set my limit order near the previous high, but I might switch to a chandelier stoploss to track the move if it gains some momentum over the coming days.
I decided to close the scale in position I placed in the S&P 500 yesterday as the market looks like it could be stalling today. So I closed for a very small profit with the aim of getting back in early next week at better value.

I have also tightened up my stop loss on my previous S&P 500 position so that it will close at breakeven if the market sells off. So risk is now zero on this trade.

Closing trade
Entry Price: 1178.4
Exit Price: 1181.30
Qty: 0.5 per point
Points: 2.9
P/L: £1.45

It looks like Iím going to finish about 1% up for the week. But I will post my trading spreadsheet over the weekend and review the open trades for next week, what I need to watch out for and my plan for getting into GBP/USD on a pullback to value.
Attached Thumbnails
sp500_exit_29-10-10.png  
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Old Oct 30, 2010, 5:38pm   #14
 
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Trading Review Ė October

isatrader started this thread Attached is a screen shot of my trading spreadsheet, which I use to list my trades, calculate risk and potential profits. I also like to grade my trades based on how much of the daily Keltner Channel I manage to capture. I use the following grades:

A+ 40% and above
A 30-40%
B 20-30%
C 10-20%
C- 0-10%
D Below 0%
E Below -10%
F Below -20%
G Below -30%

It turned out to be a good week for my new account. All trades are currently in profit, giving me a 1.02% gain for the account. Iíve tightened up my stop losses on Randgold Resources and moved the S&P 500 stop to breakeven. So my risk is now back down to 0.39%.

I intend to re-balance my risk at month end each month. So I have calculated the new account size and adjusted the maximum sizes Iím allowed to trade in November.

November Account Start: £4065.49
Maximum Account Risk (6%): £243.93
Maximum Single Trade Risk (2%): £81.31

Iíll be watching the market closely this week as is going to be a very important week with the mid-term elections Tuesday, FED announcement Wednesday and Nonfarm Payrolls Friday. Think there could be a good chance that traders sell the news, so hence the tightening of my stoplosses. But it could go either way so will be watching with interest for any trading opportunities.
Attached Thumbnails
trades_spreadsheet_29-10-10.png  
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