sjalmond's Blog

[sjalmond]

End of week #1

I sat and stared at the screen after writing the above title. Is this really week #1? I suppose so: I've been dabbling (badly) for two years, and paper-trading (well) for six months, but this is the end of the first complete week of my Trades Diary. Time for a little reflection...

Okay, right. This time last week, I was short two SB on the FTSE 100 Rolling Daily @ 4978.5, giving me a 9p (paper) paper loss. The FTSE 100 had just failed to renew its rocket-like climb after profit-taking in the 4965-5005 region, and was to spend the rest of the week Not Going Up.

Monday was a Bank Holiday. I was a Viking at Whitby Abbey.

Tuesday saw the price fall to 4960 - the resistance - and one of my shorts closed to secure 25p profit, leaving me with one short at 4972 and a paper paper profit of 2p. I learnt one thing from this day: I could (conceivably) make money by trading the intra-day moves, at least in a sideways-market. Assuming, of course, the market kept going sideways.

Wednesday saw the price rise to 5014, i.e. 9p above the resistance. I hadn't expected that. The volume was high, so I didn't expect it to last, so I didn't cover my short, but that spurt up cost me 20p. The price was at support, so I expected it to rise 50p today then fall 50p tomorrow. For some reason, probably because I was still carrying a short at 4972, I didn't position to go long during this probably-up day - instead I positioned to go short the day after. The price races up to almost-resistance, I short, it keeps going, crosses resistance, and my stop covers the short for a 20p loss. Darnit. If I'd placed the same trade, but the sensible way round, I would have made 20p instead. *shrug*

Thursday was a test of a old theory of mine: if the price goes nowhere between 10:30ish to 13:30ish, and it breaks out, it'll go off like a rocket. Nice theory, but not proved correct today! Note to self: I'm trading with 15-min delayed charts. I don't do intra-day. I'm trading a SB platform. I can't set limits close enough to scalp! [Just thought: Order-SL doesn't work. What about Order-Order? One-cancels-other pairs? Interesting...] In short, Thursday didn't do anything other than prove that Wednesday's break out wasn't, and it did on low volume: no one wants to sell above the (ex?)resistance level. Despite yesterday's scare - I'm still bearish.

Friday showed I was right to stay short, or to trade the range, or something. The market fell 30p on low volume - no one wants to buy, and we're now inside the trading range again, though there's still another 35p to go to the (ex?)support line.

Summary
--------------
Last week:
Open -9p x1

This week:
Closed 25p x1
Close -20p x1 (trade wrong way round)
Close -32p x1 (trade on wrong time scale)
Open -4p x1

My weekly target is 30p. If it wasn't for those two (stupid?) mistakes, I'd be bang-on. As it is, I'm going to have to try harder next week... to think before I act. Wish me luck.

 

[sjalmond]

Is this the wrong end of the stick?

I've read dbPhoenix's PDFs on Buying & Selling Pressure and it's rung bells with me. I've been giving it a lot of thought, and a bit of reading-around, and I've got a few things I'd like to put on paper. Here's as good a place as any ;-)

All feedback appreciated.

1. The direction of the day's move shows which pressure (buying or selling) is greater.

2. The day's volume shows how many people wanted to buy or sell in the day's price range.

3. If the move's up, but the volume is low, it shows a lack of sellers. Similar with moves down & a lack of buyers.

4. Many trades are intra-day. That gives a certain amount of volume on even the quietest days.

5. Many trades are inter-day. If there aren't any sellers at a high price, the price rises and these traders start to sell. This increases selling pressure and the price falls. Same for buyers at low price.

6. Similar to 5, but relating to stops. Falling markets trigger bulls' stops. When these stops run out, so do the sells that were helping provide the selling pressure. Similar for rising markets, bears, and buying pressure.


I think I've missed something, but I don't know what. I'll look at this sometime and see what else I come up with. None of the above tells me what to do on Monday, so there's clearly some more work to do here!

 

[sjalmond]

Week 2

Position at end of Wk 1
==================
Total Value: -£31
Open: -£4 x1
Closed: -£27 (all, 3)
---
Closed: -£27 (W1, 3)
* 1x +£25 x1
* 1x -£20 x1 (positioned against weekly trend)
* 1x -£32 x1 (traded intra-day)

Position at end of Wk 2
==================
Total Value: +£1 (+£28 change. +£0.50/wk ave.)
Open: +£37 x1
Closed: -£36 (all, 7)
---
Closed: -£9 (Wk 2, 4)
* -£47 x1 (didn't move stop after trend changed)
* -£9 x1 (traded intra-day)
* -£3 x1 (bought low, sold 15p higher, but FIFO gave me -3. Ho hum.)
* +£50 x1

Notes
=====
So, £28 better off than last week. Can't complain, especially as my stated goal is £30/week. My closed trades for the week total less than £0, so I'm still Actually Losing, no matter what it says on paper. My risk is currently £4, so I could open more positions at the current price, and make more money in this up-trend, but my trading rules won't let me. *Phew* - a rule I'm sticking to!

Two FTSE-constituents published good results this week, and that must have helped. I wait to see by how much.

The -£36-worth of closed trades works out like this:
- Trading with system: +£72
- Trading outside system: -£108

Pretty convincing, huh? Plan the trade, trade the plan.
Some of the 108-quid loss was due to circumstances the plan didn't cover - but it should have done. I failed to plan (sufficiently), so that money goes on my Stupid Losses score.
More galling is the £9 loss for intra-day trading -- it comes on top of a £32 loss last week for the same reason. Maybe I've learned my lesson this time... but I doubt it.


Looking Forward
=============
I'm reading Jones' Money Management (Trading Game?) and I recognise several of the bad ideas in the book from my own Trading Plan. The Plan will have to be revised over the next week or so -- and it's not finished, so that's still to do, and as a matter of some urgency. My self-imposed paper-trading period comes to an end at the end of June and I must have my Plan & System done, proved, and working before I put my Real Money where my Paper Money has led.
I'm so close to being a successful trader... yet so far. Oh well.

Speak to you again, dear diary, next weekend.


Steve

I've heard mature, serious people say, "I'm not scared of ghosts, I'm scared of urban gangs and terrorism and pollution!" - and I always think, "Sure, you say that now, in daylight, with lots of other people around"
-- Tim Powers, author

 

[sjalmond]

Cash = June!?

Forgot to say: I had a bit of a relvealation this week. Capital Spread's chart for the FTSE 100 Rolling Daily is actually the chart of the June Future. It's not a problem - I already knew one was derived from the other, and I now know that the Cash is exactly 6p less than the June, so it's an easy conversion to make.

This explains why trades crossing the channel, as drawn on the chart, hit some but not all of the stops on the Cash (6p different). I've not re-figured my trades to see how that affects my profit-and-loss account, and don't intend to.

 

[sjalmond]

Week 3

Position at end of Wk 2
==================
Total Value: +£1 (+£0.50/wk ave.)
Open: +£37 x1
Closed: -£36 (all, 7)


Position at end of Wk 3
==================
Total Value: +£109 (+£108 change. +£36/wk ave.)
Open: +£0 x0
Closed: +£109 (all, 9)
---
Closed: +£145 (Wk 3, 2)
* +£29 x1
* +£12 x4
* +£56 x4 (1)
* +£25 x4 (1)
* +£23 x4 (1)


Notes
=====
1) Friday was a very bullish move. I checked CS mid-afternoon and took profits on the remainder of the position that generated that +£48 - a good thing too, as the move retraced 40% during the afternoon. The locked-in position was worth £126 more than it would have been at the close.


Any way you slice it, this has been a good week. I'm a little bemused by that huge move on Friday. I made a lot of money, but it feels atypical and that worries me. Small and often was the aim, and if I'm drifting away from that, I'm drifting away from my system. I closed half of the profit for +£48, which is certainly small, so I don't feel bad. Maybe I should -- comments please! Much of this move was due to the new position-sizing rule of my new money-management system. More details some other time...

The FTSE 100's still trending up, and still pushing the top of the channel. I'm told this means it's likely to break down (c.f. double tops), but this feels more more like straining-at-the-leash than last-gaps. I expect further rises. Of course, if I'd thought that earlier, and held my first long position, I'd now be sitting on a large, large profit -- £4,800 or there abouts. Food for thought. Maybe I need to develop a bigger tolerance to small drawdowns on open positions. Again, comments please!


Steve

----
Nothing hath an uglier look to us than reason when it is not on our side
-- George Saville

 

[sjalmond]

Money Management

Jones' book (below) advocates Fixed Ratio money management. That makes sense to me, so that's what I'm going to do.

I have to put values to several terms. Message (or comment!) if you'd like to know what some of these terms mean.

Largest Drawdown = historical largest distance between equity high to the lowest equity low following it but before the next equity high
:= (ass.) Largest Drawdown To Date / weeks traded to date * 52
= £111 / 3 * 52
= £1924

Delta
= f( Largest Drawdown, risk aversion )
:= half of Largest Drawdown
= £962

Initial Capital = f( Margin Required, Largest Drawdown, risk aversion, margin required to trade more contracts)
:= £30 + £1964, rounded up to a nice number
= £2000

Lot size = f( broker's restrictions)
:= 1

Initial lots = f( personal choice)
:= 1

Decreasing
1) Decrease lots twice as fast as increase
2) Ignore the first two decreases

Re-increasing
1) Continue increasing as before
2) Counting equity increases from where the next decrease would have happened

So, I start with 1 lot at £2,000, gain a second at £2962, and a third at £4886. My real cash account will start with c.£3000, so I'll be starting with 2 lots, so I'll trade 2 lots in my demo account. Obviously, my estimated Largest Drawdown, & delta, are heavily dependant on how many weeks I've been trading so I expect my number of lots to change week-by-week, which will make my equity & risk bounce about a bit, but hopefully they'll settle down somewhat at some point.

Right: that's my rules down in writing. Now, to stick to them!


PS
==
Week three's mega profits were due in part to my trading four lots. Cursed lot numbers are bouncing around already!


Steve Almond

----
Before a man speaks, it is always safe to assume that he is a fool. After he speaks, it is seldom necessary to assume it
-- Oscar Wilde

 

[sjalmond]

Week 4 (20/6/5-26/7/5)

Position at end of Wk 3
==================
Total Value: +£109 (+£36/wk ave.)
Open: +£0 x0
Closed: +£109 (all, 9)
Largest Drawdown: £111
Delta: £962
Lots traded: 2


Position at end of Wk 4
==================
Total Value: +£99 (-£10 change. +£25/wk ave.)
Open: +£0 x0
Closed: +£99 (all, 11)
Largest Drawdown: £111
Delta: £721
Lots traded: 3
---
Closed: -£10 (Wk 4, 2)
* +£14 x1
* -£24 x2


Notes
=====
My positions this week have been mainly trend-following -- CS's FTSE 100 Cash has been riding a rising Support line for the past four weeks. I had been trading the range between S&R but the Resistance line was penetrated several times during those weeks (with no breakout) and the width of that range has fallen to be of an order with intra-day noise. Frustrating.

My last week's Journal entry includes a comment about riding the trend for longer. I still think this is a good idea, but didn't work today. The Cash opened 30+ points lower, then traded down. Still, that's what trailing stops are for, and I only lost £48 on three bets. Part of me wonders if I should have reversed at my stops for a back-up break-out strategy (and +£150?) but most of me is glad to be in cash again. Monday will tell if that's a spike and prices will close the gap (wider stops better), or if that's the start of a fast run down (reversal better). I don't want to be out of the market during The Big Move (who does!?), but I really, really don't want to be in the market but pointing the wrong way when it happens (Sod's Law). Time will tell.


Enjoy the weekend,

Steve

 

[sjalmond]

Money Management #2: Lots

I've been posting my results for the last four weeks in this journal. It's helped me keep an eye on the big picture and to remember my losses as well as my wins. I'm going to keep it up, but with one small change.

My position-sizing rules allow my £60 risk per lot (typically £3/p with stops 20p below entry). I'm currently trading three lots and that (supposedly) means that my profits (now) are (more than) three times greater than when I first started - I'm effectively weighting my average performance. I don't want to do that, as it encourages me to increase lots faster, which will increase my risk - and probably faster than my skills increase. Result? Disaster. Solution? Publish all results as for one lot.

I'll display my results as 'change x lots', e.g. '+£100 x3'. This has the side-effect of apparently linearising my increases in lots: if my delta's £1000 and I'm starting at £1000, then I'll trade 1 lot from £1k, 2 lots from £2k, etc. *if the results are quoted per lot*. Fair enough? I'll go back and change my previous entries before I post the results of Week 5... which was a stonker

Steve

 

[sjalmond]

Money Management #3: Effects of MM #2

I've now been through and changed the results quoted to be per one lot. It's made me look a lot poorer!

So far so good. Week 3 had one small win and one larger loss. Making them both per one lot made it one small win and one medium loss - giving a small net loss. Much more consistent-looking. I suppose I can kind of evaluate this money management system just by looking at my account balance (with money management) and comparing it to this journal, which is all per one lot, i.e. never increasing numbers of lots. Maybe I'll do that next week.

 

[sjalmond]

Week 5 (27/6/5 - 03/7/5)

Position at end of Wk 4
==================
Total Value: +£99 (+£25/wk ave.)
Open: +£0 x0
Closed: +£99 (all, 11)
Largest Drawdown: £111
Delta: £721
Lots traded: 3

Position at end of Wk 5
==================
Total Value: +£207 (+£108 change. +£41/wk ave.)
Open: +£0 x0
Closed: +£207 (all, 15)
Largest Drawdown: £111
Delta: £577
Lots traded: 3
---
Closed: +£108 (Wk 5, 4)
* +£63 x3
* +£128 x3
* -£23 x3
* -£60 x3


Notes
=====
I was disappointed by my performance at the end of last week and the beginning of this. If I'd followed my own rules and positioned to catch the downward move, I'd had made 47p between my stops in two days and a night - £141 x3 before costs.

I made up for it somewhat by catching much of the rise this week.

I made £68 x3 with a stop just under the previous high, i.e. approx 50% retracement. Good move, I think.

Wednesday saw further rises, as did Thursday. I'd predicted that the weekend's sudden drop was temporary - oil crossed $60 and that's a psychological barrier, not a financial one - but I hadn't predicted that CS would shift their FTSE 100 Rolling Daily quote 6p on June 30th.

Six pence!? I hear you cry? Yep. The chart they provide is actually the next quarter's future, i.e. September. Up to 2300, 29/06/05, Cash was exactly 15p below; by 2045, 30/06/05, it was exactly 9p below. That 6p lunge tripped my stops for a £23 x3 loss - fortunately, after I'd taken half my position as profits further up the range.

The amusing thing is that I'd taken profits by a sell order at the appropriate price - usually I amend my buy orders to include a limit. This meant that I had several part positions open with different stop losses. I spotted this at lunchtime and, like a good boy, standardised them all at the higher level... Guess what? If I hadn't, that £23 x3 loss would have been more like a £10 x3 loss and the other -£13 x3 would be a (huge!) profit today. That is, if it hadn't also been for today's gap open.

The final trade, -£60 x3, was a short triggered after today's gap down opening and rocket up. Part of me is narked I didn't catch that huge move today - currently worth £126 x3. Most of me doesn't mind. It's been a good week and I don't expect to catch them all. My entries and exits on trends, especially the newly-establish, need work, or maybe I just need to be more willing to watch from the sidelines.

Little and often, that's the key...


Steve

 

[sjalmond]

Money Management #4: Drawdowns

The Largest Drawdown I quote is from my equity curve, i.e. actually (paper) pounds and not 'per lot'. Week 5's three lots gave me some large losses amongst the huge gains, and that's increased my delta to £1290, giving me 2 lots; it would have been £590-ish if I'd been measuring drawdown 'per lot', for 4-5 lots. Big difference! I hope I'm doing the right thing... Comments please!

Steve

 

[sjalmond]

Money Management #5: Largest Drawdown

We spent Saturday in Cambridge and the 2+ hours' drive either way left plenty of quiet time for thinking about my Largest Drawdown. It left plenty of time for thinking about other things too: I'm not as boring as that sounds!

I measure my system's Largest Drawdown so I can calculate my system's Delta so I know how many shares to trade. Delta tells me how often to increase my lot size - so should be calculated per lot. Makes sense? [If it doesn't, contact me or read more T2W!]. I'll revise my post for Week 5 when I come back from dinner...


Steve

 

[sjalmond]

Week 6

Position at end of Wk 5
==================
Total Value: +£207 (+£108 change. +£41/wk ave.)
Open: +£0 x0
Closed: +£207 (all, 15)
Largest Drawdown: £111
Delta: £577
Lots traded: 3

Position at end of Wk 6
==================
Total Value: +£484 (+£277 change. +£81/wk ave.)
Open: +£68 x3
Closed: +£416 (all, 21)
Largest Drawdown: £111
Delta: £481
Lots traded: 4
---
Closed: +£209 (Wk 6, 6)
* +£17 x3
* -£5 x3
* -£9 x3
* +£155 x3
* +£27 x3
* +£24 x3


Notes
=====
Another good week, financially speaking. Not much more to say, really - I had a plan, I followed it, and I profited. Thus ends the lesson.

Those small losses (and the big win) on this week's results were the result of the stock market panic following Thursday's explosions in London. I'm not glad it happened, obviously, and I've got a funny feeling regarding profiting from it, but it did wonders for my account balance. I'm seizing on the facts that a) I had a plan and stuck to it, I didn't cause the panic and b) a similar thing happened a few weeks ago when oil crossed $60/barrel. Panics seem to happen every so often; I have to live with that. Emotion-free trading has to include guilt-free trading.

My average (paper-)pounds/week/lot is £81, and I'm now trading 4 lots. This means my paper account is now taking home more per week than I am. In theory, I can now retire from my day job, age 25. Sobering, huh?


Steve

 

[sjalmond]

System Evaluation #1: Win/Loss/Expected

All trades logged
-----------------------
Weeks: 6
Trades: 24 (closed)

Wins: 14 (58%)
£/Win/lot: £46
£/Loss/lot: £23
Expected: +£17 /closed lot


Some trades
------------------
[Ignoring trades in Wk1 & Wk2 logged as not following the system]
Weeks: 6
Trades: 20 (closed)

Wins: 14 (70%)
£/Win/lot: £46
£/Loss/lot: £21
Expected: +£26 /closed lot

 

[sjalmond]

Week 7

Position at end of Wk 6
==================
Total Value: +£484 (+£81/wk ave.)
Open: +£68 x3
Closed: +£416 (all, 21)
Largest Drawdown: £111
Delta: £481
Lots traded: 4

Position at end of Wk 7
==================
Total Value: +£449 (-£35 change. +£64/wk ave.)
Open: +£12 x4
Closed: +£437 (all, 26)
Largest Drawdown: £111
Delta: £412
Lots traded: 4
---
Closed: +£21 (Wk 7, 5)
* +£60 x3
* -£60 x4
* +£28 x4
* -£28 x4
* +£21 x4


Notes
=====
I take trades on a hybrid trend-follower/-breaker strategy. I really don't like confused markets!

Tuesday's market closed a 3-lot trade from last week for 3x£60 profit, then spiked outside the channel to trigger a 4-lot trade which crashed back against the stop for a 4x£60 loss. On a per-trade basis, I broke even, but on a (paper) cash basis, I lost £60. That hurts, but only a little. Emotion-free, right?

Thursday's market product a 'shooting star' candle (inverted hammer at a price-peak) triggering a 4-lot long, the 50% limit-profit, and the stop loss. Busy, busy, but profit-neutral. Still, that's what the 50% limit's supposed to protect against, so I can't complain. Dratted ambiguous signals...

Friday may -- may -- be the long-awaited sign that the mid-term bull run's over. I took a position based on the (revised) old rising channel and not only did the price fall below and trigger my short, it fell further and triggered my limit-profit limit near a previous low. There's an arguement that Tuesday, Wednesday, and Friday show a new horizontal channel - and that's what I've based Monday's new market orders on - but I think it's unlikely. A 40-pence channel with a 40-pence typical day's range? Unlikely. I'd want to see a 60+-pence channel, or <30p ranges, before I trusted it enough to risk range-bound trading. I continue to wonder which way the market's going this week.


Steve

 

[sjalmond]

Real Money

I've started (sort of) trading my real-money account, based on the same signals I've been logging and trading in my paper account. The stats above are for my paper account and I'll keep that up a while longer. I plan to have the new account fully funded and up to speed by the end of the month, and that's when I'll start quoting stats from that instead. The real price isn't the same as the demo price, that's for sure. So far, they're parallel, but I don't know how long that'll last. Time will tell.


Steve

 

[sjalmond]

Week 8 - Not a good one

Position at end of Wk 7
==================
Total Value: +£449 (+£64/wk ave.)
Open: +£12 x4
Closed: +£437 (all, 26)
Largest Drawdown: £111
Delta: £412
Lots traded: 4

Position at end of Wk 8
==================
Total Value: +£366 (-£83 change. +£46/wk ave.)
Open: +£0
Closed: +£366 (all, 29)
Largest Drawdown: £111
Delta: £361
Lots traded: 5
---
Closed: -£72 (Wk 8, 3)
* -£20 x4
* +£8 x4
* -£60 x4

Notes
=====
It's strange that such a bad week - just look at the closed profit(!) for the week - would reduce the delta so much, and increase my number of lots traded so much. *Sigh* The joy of averages. My current drawdown is £110 so another loss will change those figures, and for the worst.

This week's market had a different feel to the previous 7 - wide daily trading ranges but trading horizontally. I've found myself playing a touch more aggressively than usual and, as usual, it's cost me. The system relies on trending markets (in my timescale - see next post?) and this back-and-forth surging gets me in and stops me out, often in the same day. I need wider stops, or more patience. A break in the trend is good news for traders as it stores energy for the next move. 'Wider stops' means I've got more money at risk should the market break the wrong way, so 'more patience' it is then. That translates as orders placed further outside the prevailing trendlines and trendlines drawn further from the action. The downside is that I should have less to write about next week. Sorry!

System #2, which steals pennies off the opening gap and/or surges, has had a good week. There's a potential means of diversification there, but I don't have enough data to back-test the system yet. Patience, gentle reader, patience - unless anyone reading has got this kind of data lying around? PM me...

I've had some thoughts about how I pick my trades, and pick my trends, and that'll also affect how I implement my system this coming week. I'll try and put something down in writing today or tomorrow but make no promises: this is Get In weekend at the theatre and my time's precious indeed!

Good, thoughtful trading,

Steve the Stage Manager

 

[sjalmond]

Week 9 - Going Nowhere

Position at end of Wk 8
==================
Total Value: +£366 (+£46/wk ave.)
Open: +£0
Closed: +£366 (all, 29)
Largest Drawdown: £111
- Delta: £361
- Lots traded: 5

Position at end of Wk 9
==================
Total Value: +£378 (+£12 change. +£47/wk ave.)
Open: +£12 x4
Closed: +£366 (all, 29)
Largest Drawdown: £111
- Delta: £321
- Lots traded: 5
---
Closed: +£0 (Wk 9, 0)


Notes
=====
The market went nowhere, so did my account. That's a victory of sorts, especially given my history of finding more aggressive, more risky trades when the safe-and-easy trades dry up. I've got an open position based on clear trendlines drawn on the weekly chart and there's now a trendline coming out of the mists on the daily chart too. It's frighteningly close to resistance at 5300, and rather steep at +15.7p/day, so it's a risky play and I've set my orders accordingly. Time will tell.

I'm trading five lots on each of the weekly and daily markets, and I have some pennies riding on a place-EOD, trade-intra-day system called Pudjim. If this forming daily-chart trendline is a sign of an end to the current going-nowhere market, and some of my orders are triggered, the next day or two will be very, very interesting... which will be a pleasant change. Not that exciting is a good thing to a patient trader, but this week has been *dull*. Yes, a change would be pleasant.

Yours patiently,

Steve

 

[sjalmond]

Diversification

I had this great idea about diversification. I decided I should diversify into three different things on each variable I could identify, so three ways of trading, three SB firms, three set-ups, three different markets, three different time frames... or 3^5 or 243 different sets of trades. I trade fairly mechanically and I trade EOD but still! When I had this great idea, I was typically working an hour a day for one set of trades.

The great idea stunk...and sank.

I've not abandoned diversification entirely - I've never liked having all my eggs in any one basket. My Simulation and Real accounts trade ranges and breakouts of the FTSE (of daily and monthly trendlines) and of the Brent Crude Future. It takes me about an hour and a half to analyse the markets' movements versus the trendlines and to place all the orders. I'm a little concerned that a spike in the FTSE will threaten both my 'daily' and my 'monthly' systems - exposing me to twice the risk - and that there's a high correlation between some FTSE companies and Brent Crude - e.g. BP, Shell. I'm considering other commodities and FX but, basically, I'm under-capitalised. I'm trading 3 lots on my cash account (curse you, asymetric leverage!) and that gives me £180 risk. 180 ticks isn't much on the Brent or Cable, and trading something with much smaller volatility doesn't appeal. Trading's a business and I'll make the necessary decisions for business, not for pleasure, but that doesn't stop me procrastinating! If you've got any suggestions of markets I should look at, let me know. Otherwise wait (but don't hold your breath) for next week's gripping installment...


Steve

 

[sjalmond]

Week 10 - still going nowhere

Position at end of Wk 9
==================
Total Value: +£378 (+£47/wk ave.)
Open: +£12 x4
Closed: +£366 (all, 29)
Largest Drawdown: £111
- Delta: £321
- Lots traded: 5

Position at end of Wk 10
==================
Total Value: +£309 (-£69 change. +£31/wk ave.)
Open: -£15 x4
Closed: +£324 (all, 31)
Largest Drawdown: £139
- Delta: £361
- Lots traded: 5
---
Closed: -£42 (Wk 10, 2)
- +£18 x4
- -£60 x5

Notes
=====
The FTSE rose on Tuesday and triggered some very aggressive (25 bets!) Longs just above the 'daily' channel and closing my existing position for +18 ticks/lot. The day's close re-drew the channel, moving my stop-loss to a level that just plain didn't feel right. I couldn't afford to move my Stop to just below the more likely line of Support, so I moved the Stop to the furthest distance from the price that I could still afford. Result? Stopped out for the full -£60/lot on the day's low. Today? Those 25 bets would be worth +£450. The moral?

- Capitalise
- Watch the risk, not the reward
- Want out? Get out
- Live to fight another day

Capital Spread's market was closed, so I couldn't exit immediately. The closest they'd have let me set my stops was 2 ticks - which would have limited that loss to £50 instead of the £300 I lost through being greedy. Greedy? Yes: my wider stops kept me in the market in case it went up. I should have got out when I thought it would go down. Yes the market went up over the rest of the week, but Wednesday's low would have had me with an open position worth -£500, which I should not afford and my system does not allow.

Diversification
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As I've said elsewhere, I've diversified into trading trendlines drawn on a weekly chart of the FTSE and into trading Brent Crude futures. That complicates my book-keeping enormously and my spreadsheets can't cope! I'll write some new ones someday soon but, until I do, this Journal will only chronical the success or otherwise of my 'daily' FTSE system with the occassional aside.

'Til next time,

Steve