Joe's Journal

[Joe T]

Update here:

http://digitaldiatribes.wordpress.com/2 ... 010-close/

Summary
As of 3/31/2010 the close price of gold was $1,112.85. As of 04/16/2010 the close price of gold was $1,136.25 (+2.1%)
As of 3/31/2010 my account equity was $3,404.44. As of 04/16/2010 my account equity was $3,665.08 (+7.7%)

As of 10/31/2009, when I started this, gold price was $1,045.45, so that has increased in value by 8.69%
As of 10/31/2009, my account equity was $2,360.46, so that has increased by 55.27%.



As mentioned previously, I took a quick short as gold started to get near all-time highs. Thsi is the only area I will consider shorts, and only on tiny lot sizes, and fairly close take-profit levels. My strategy is about going long yet.

USDJPY settled trades are holdovers from a previous strategy. Once disposed, I won't be trading in that pair. There is one old USDJPY remaining. I also have some old gold SELL orders well out of profit from a previous strategy. I'll play those by ear. At the moment, I just kind of use them as a hedge, but at some point I'll kill those.

No particular strategy changes, so I'm afraid this journal is more results-oriented. But if anyone has questions on my approach, or want to know more about why I'm trading this way, I'd be happy to provide my thoughts.

[Joe T]

Here is my full update and the transactions for the Gold Trading strategy I've been engaged in:

http://digitaldiatribes.wordpress.com/2 ... 010-close/


Summary:
As of 4/16/2010 the close price of gold was $1,136.25. As of 04/30/2010 the close price of gold was $1,178.25(+3.70%)
As of 4/16/2010 my account equity was $3,665.08. As of 04/30/2010 my account equity was $3,890.42 (+6.15%)

As of 10/31/2009, when I started this, gold price was $1,045.45, so that has increased in value by 12.70%
As of 10/31/2009, my account equity was $2,360.46, so that has increased by 64.82%.


Other notes: Strategy generally remains the same, except I am adding a consideration for when price gets close to all-time highs as it currently is. At approximately 95% of the all-time high price, I start shorting, planned in $10 increments (for now - may change that up a bit to percentage based). So, I started by placing shorts at $1160 through $1230, starting my take-profit at $1157.50 on the $1160, and increasing profit targets by 75% of my increase in the pending sell order. Then, if an order executes and I take profit, I'll reset the order with a $1.00 higher pending sell limit, and increase the take-profit accordingly. I want to keep pushing that limit higher because this is all about simply taking advantage of high prices that will eventually tend to see a correction, and not a bearish statement at all. It's a play on likely volatility, while still maintaining teh underlying bullish strategy. I just don't want to buy at all time highs, so I will wait for dips before entering back in. Basically, in a nutshell, I play long at a price level of 95% of the all-time high and below, and I play short at price levels above 95% of the (previous) all-time high.

I take this approach because gold is an actual commodity. If I were to use this strategy against currencies, I'd be incorporating a dual buy/sell strategy. The nice thing about going only in one direction, or mostly in one direction, is that you can foresee a day where you don't have outstanding negative positions. With a dual strategy, you always will have those outstanding negative positions. But at the same time, you'll be profiting from moves in both directions. But you really need to develop a spreadsheet an map the effects of your buying/selling plan against where you might be at different price points, because if you don't you could be left out to dry with a strong move in the wrong direction.

[Joe T]

Crazy day in the markets today. Forex was no difference.

My strategy is holding up well. I'll post an update mid-month that is more official, but I wanted to share some things that I've done to shore up my risk position, and take advantage of the markets a bit.

First, I am not deviating from my long-term bullish outlook on gold. But I consider trying to profit from long orders near the all-time high to be risky. If and when that high gets pierced, we'll see how far it goes, and then I'll reset my retrace points when I'll start entering again. Until then, my first buy-in point is at $1170, and I'll buy in at $10 increments below. Take profit starts at $1172.50, and drops by $7.50 for each $10 buy-in point. Lot sizes start at 0.01 and increase at certain levels depending on where I am at in my risk position. Still not trading with a stop loss, which sounds scary, but my lots are so small that it does not concern me. I have been able to ride out major retraces without a concern of seeing my account wiped out. Today was a good example of that, which I'll get to shortly.

I've tweaked the strategy a bit so as to not hold long positions on the first five $10 thresholds below the all-time high. So, the high was $1226, which means I don't go long at 1220, 1210, 1200, 1190, or 1180. I start buying at 1170. Thsi will move up if we reach new highs. However, this is a new tweak, and I currently have positions open at 1210 and 1220, which I will just wait out until the day comes where they can be closed at profit. I closed 1180, 1190, and 1200 over the last couple days and did not enter limit orders to enter back in at those points. This provides more cushion on a fall, as well, since I don't have those 5 positions. My current zero balance threshold is at $955, and I will move that target down $5/month by taking profits and adjusting planned lot sizes accordingly.

That is the long-term strategy, and it's all that is necessary.

However, I can't resist trying to profit on some shorts. This is much more short-term thinking, and I am not necessarily recommending it. But I have made some profits by doing this over the last few days and plan on continuing to do so. Here's the strategy: when I am within 5% of the all-time high, set sell limits at $10 increments. So, I went short at $1160, then $1170, and have limit orders all the way to $1220. I won't go short above that level, because a new high gets pierced at $1226 and at that point I just want to wait it out and see where price comes in. But the otehr thing I do is that once I execute a short and it hits my take-profit, I enter a new limit order $1 higher than the previous level, with a $0.25 higher profit. For example, SELL $1160, TP = $1157.50. It hits. Now SELL LIMIT $1161, TP = $1158.25. Why? Because I am bullish long-term and I don't want to get caught too low on a short. So, I keep pushing it up.

I am now short gold at a few different levels with varying TP levels from $1164 to $1210. Only long on those previous orders. I'm still carrying some old shorts that are probably a lost cause for a while, and still haven't quite decided what to do with them.

Now, the other thing: I was carrying one contract on USDJPY from a previous strategy, and it was teasing me at a near breakeven area where I was just going to close it out and be done with it, when suddenly the thing went from 95 to 88 in about an hour's time. It was crazy. a 700 pip fall could be a killer, but for me with the low lot size and no stop loss it was no huge deal. In fact, I just reacted to what I saw as complete irrational market behavior by buying again at about 88.5. I sold that position tonight at 91.79. My other initial position is still riding, and I'm considering closing it because it's now up to 92.30. I can consider the two contracts net of each other to realize an overall profit and be done with USDJPY. But there's just something in me that hates to close any contract at a loss, so I may just see what tomorrow brings.

Make no mistake. Things are going well, but I fully realize that a major, major correction in gold will really decrease my equity. On the other hand, if that happens, I'll be holding a tone of positions to profit from a rebound. You can't profit unless you hold positions. So, I'm prepared for some interesting times in the future.

[Joe T]

Here's my complete and detailed update:

http://digitaldiatribes.wordpress.com/2 ... 010-close/


Summary:
As of 4/30/2010 the close price of gold was $1,178.25. As of 05/14/2010 the close price of gold was $1,229.80 (+4.38%)
As of 4/30/2010 my account equity was $3,890.42. As of 05/14/2010 my account equity was $3,733.86 (-4.02%)

As of 10/31/2009, when I started this, gold price was $1,045.45, so that has increased in value by 17.63%
As of 10/31/2009, my account equity was $2,360.46, so that has increased by 58.18%.

I explain exactly why a bullish strategy on gold has seen an equity loss during a run-up in price. Basically, bullish or not, I short near the all-time highs. So, this unrealized loss will turn into gains if and when there is a retrace in price. This is a short-term play. On the pure bullish side, I would have no positions, and wait for price to pull back below $1190.

Other notes (all explained in the link, but bullet-pointed here):
*Not doing $10 increments any longer. Now determining my gap by 1% of previous entry price
*Now trading between 0.01 and 0.02 lots with each trade
*target safe position on equity is down to $955
*Made on play on USDJPY completely apart from the strategy - just a no-brainer entry in my opinion during that 700 pip drop. Made 350 pips on that trade.


All actual trades are shown in the link. Here are my current next targets:

Buys (all xauusd):
0.01 lots @ $1,188.05, t/p @ $1,191.05
0.02 lots @ $1,176.17, t/p @ $1,182.14
0.02 lots @ $$1,164.41, t/p @ $1,173.32
0.02 lots @ $1,152.77, t/p @ $1,164.59
0.02 lots @ $1,141.24, t/p @ $1,155.94

Sells (all xauusd):
0.01 lots @ $1,247.36, t/p @ $1,229.28
0.01 lots @ $1,259.83, t/p @ $1,238.64

[Joe T]

I am respectfully submitting a complete document outlining my trading system. It is 16 pages long. I wanted full documentation covering all aspects of it. I welcome any feedback on how to improve the document, or any questions pertaining to it.

[Joe T]

In the document attached to the previous post, I explain how to create a spreadsheet that is imperative for risk management in the system. However, it will be easier to follow along with an already created spreadsheet, so here is the one I have put together. If you have any questions, let me know.

[Joe T]

My complete and detailed update can be found here:
http://digitaldiatribes.wordpress.com/2 ... t-5312010/

Summary:
As of 5/14/2010 the close price of gold was $1,229.80. As of 05/31/2010 the close price of gold was $1,216.00 (-1.12%)
As of 5/14/2010 my account equity was $3,733.86. As of 05/31/2010 my account equity was $4,116.78 (+10.26%)

As of 10/31/2009, when I started this, gold price was $1,045.45, so that has increased in value by 16.31%
As of 10/31/2009, my account equity was $2,360.46, so that has increased by 74.41%.

Bullish or not, I short near the all-time highs. So, this gain is due to price retracements off the high, and is a short-term play. On the pure bullish side, I would have no positions, and wait for price to pull back to $1188.05 before entering any BUY orders.

Other notes (all explained in the link, but bullet-pointed here):
*See the previous posts for my complete trading strategy document, and spreadsheet
*Now trading between 0.01 and 0.02 lots with each trade
*target safe position on equity is down to $955, targeting $950 by June month end. Also targeting high safe-zone levels.
*Made some plays on USDJPY completely apart from the strategy - just taking advantage of some buys near all-time lows.


All actual trades are shown in the link. Here are my current next targets:

Buys (all xauusd):
0.02 lots @ $1,188.05, t/p @ $1,191.05
0.02 lots @ $1,176.17, t/p @ $1,182.14
0.02 lots @ $$1,164.41, t/p @ $1,173.32
0.02 lots @ $1,152.77, t/p @ $1,164.59
0.02 lots @ $1,141.24, t/p @ $1,155.94

Sells (all xauusd):
0.01 lots @ $1,236.79, t/p @ $1,221.63
0.01 lots @ $1,249.28, t/p @ $1,231.00
0.01 lots @ $1,261.90, t/p @ $1,240.47

[Joe T]

Now that I've posted my strategy and worksheet, I should probably post rationale for times where I make a judgment call to take profit. I had a short position at 1224.42 that had stayed in that general area for a bit. At one point it dropped to about 1213, just outside of the designated take-profit range. I wasn't monitoring at the time. Price reversed and went back to the execution price and had wavered around there for a couple days. There was another drop to around $1214 this morning, and when it looked like price was reversing again I decided to protect profits, so I manually closed the position at 1216.61. I immediately entered a limit order to sell at 1224.42.

It may or may not be the right move... price could dive to my take-profit later today. That's fine. I banked profits and don't fret about the decision, even if I could have made more. Don't look back after you do this. Just set your orders and wait for the next opportunity. After all, I have some lower sell orders, so it's not as if I'll be upset that price is dropping.

[Joe T]

Gold hit a new high this morning, and then retreated down below the previous high. A little work kicks in for us at this point. I canceled all pending buy and sell orders and resubmitted at the new levels defined by the new high.

As described in my document, we wait to work through the active sell orders. I took profit on the retreat down to below 1235 from my executed order at the previous high, so I resubmitted a sell order at 1250.95 (the current high). However, my outstanding orders are 1236.79, 1224.42, 1212.18, 1200.05, 1188.05, 1165.00, and then my old clunkers. If and when price retraces to take profit from these orders, I'll resubmit at the new levels (1238.44, 1226.06, 1213.80, 1201.66, 1189.64 - no sell orders below that level). Buy orders have been completely refreshed at new levels.

One thing to note for your money management is that when the new high was achieved, it changes the entry price on your buys to higher levels, which means you need to redetermine appropriate planning for lot sizes down to your target level. Since my plan is to get to $950 by month end, I just decided to get it over with and target that right now, so my current schedule of entries starts at 1189.64 with 0.01 lots. All the rest of the entry levels are at 0.02 lots except for 1054.48, which is at 0.01.

Schedule of sell orders is still 0.01 lot sizes at each step, and this takes me to a maximum allowable price ppoint of $1471.45

[Joe T]

Update as of 6/15 here: http://digitaldiatribes.wordpress.com/2 ... t-6152010/

Not a whole lot to say. It was a fairly uneventful couple weeks. The account was down 1.82%, but this followed more than a 10% surge in the previous couple weeks. Price has not been making huge moves, and I patiently await a retrace while taking a few small short orders.

Summary:
As of 5/31/2010 the close price of gold was $1,216.00. As of 06/15/2010 the close price of gold was $1,234.45 (+1.52%)
As of 5/31/2010 my account equity was $4,116.78. As of 06/15/2010 my account equity was $4,041.73 (-1.82%)

As of 10/31/2009, when I started this, gold price was $1,045.45, so that has increased in value by 18.08%
As of 10/31/2009, my account equity was $2,360.46, so that has increased by 71.23%.



All actual trades are shown in the link. Mainly being patient at the moment.


I see there have been a number of downloads of my document. I hope you have found it worthwhile. I'd be happy to respond to any questions, or get feedback on your thoughts. If anyone else decides to give this a go, let me know how it goes.