Joe's Journal

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Re: Joe's Journal

Postby Joe T » Tue Mar 15, 2011 11:08 am

Cpntinuing a recap of the last few months. Sorry for my absence.

Journal Note on 12/1/2010:
Kind of changed this system up, by making my entry points more time-dependent than price-dependent. Also, just going long after taking a bath on shorts, but stepping up the size just a bit after taking a closer look at back-testing and risk tolerance.

Current standing:

+34.84% since 11/1/2009

Had I simply stuck with my original buy-only strategy and not played the shorts, I'd be up well over 100%. It is what it is. I made the call at some point to liquidate those positions at a loss because I realized I have much higher risk tolerance for losing positions on long positions than short ones. I believe that I will ultimately see gains on long positions whereas I wasn't nearly as confident that the same is true on shorts. Should have probably realized that earlier, but I was sticking to my thoughts that I'd see a large retrace down. As the world continues to implode, I'm less comfortable that the old rules apply. Which probably means they do and someone else will make money shorting this market, but I am just not comfortable with the assumption at this point.

So, anyway, here's the parts of the roller-coaster ride of the trading:

11/1/2009 - 7/31/2010: +89.71%
8/1/2010 - 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 - 11/30/2010: +8.27%


What I'm doing now is, rather than buy in at a particular drop in price, I have a few rules in place where I only check in at one or two particular times each day and compare that to the price a day earlier. If price has dropped by a certain percentage I buy. If not, I don't. Then I just wait until the next check-in time. Once I buy, I wait 24 hours and if it's up a certain percentage I close. If not, I hold. I do have a target price where I will sell on a rapid spike upward, but that's the one exception to the rule.

It basically accomplishes most of what I tried to accomplish before, except it reduces the need to monitor things even more. My total positions are reduced, so to compensate I adjusted my position size up a bit so it puts me at the same general risk level as before.

The ups and downs are part of trading, and you deal with it and move on. The goal is to make money in the long-term and not dwell on the losses other than try to learn from them. Many people don't like the risk and the swings that can occur. I probably wouldn't either on funds that I'm counting on for retirement or savings. This is on money I can afford to experiment with.



Response to a question on 12/1 regading commissions:
Results are net of commissions.

I trade on the Forex market (XAUUSD pair) through FXDD. Not all brokers offer gold trading via Forex.

The "commission" is the spread on the trade. Right now, the spread is $0.51 per ounce. The moment I buy in at $1389.01 I could close it at $1388.50, and that's the extent of my transaction costs. The broker pockets the $0.51 on that initial transaction, but there aren't additional costs to close the trade. There are some small rollover/holding charges that come into play if you hold it for a long period of time. That amounts to roughly one penny per ounce per week.

Margin to control one ounce is 2% of price. So I don't need to tie up $1388 to get in, I only need to tie up $27.76. However, you need to make sure you have enough money to absorb drops in price, because it's marked to market every day. 2% is the current standard for most pairs. There are a few currency pairs requiring 5% ["exotic" pairs, such as USDMXN or USDTRY (Turkish Lira)].

One ounce is 0.01 "lots", which is a micro-lot. Not all brokers will allow trading at those levels, they may require at least a mini-lot (0.1 lots, or 10 oz at a time). Seriously, unless you have at least $15,000 to play with you should not be trading mini-lots.

The platform I use to trade with is MetaTrader 4. There are others, but this one works fine for the simple trading I do, so I don't know much about them. I actually like MT4 because you can act as though you are trading into and then out of a particular transaction. In reality, trading rules are such that you have to trade First-in, First-Out. You end up in the same spot if you do it right, but it's much easier to think about trading the way I do it by following each individual transaction as its own buy/close.

There are other ways of trading gold, or to proxy it. Others here have discussed their preferences. I love Forex because it's 24 hours per day 5 days a week, it's instantaneous entry/exit at low transaction cost. Others feel differently. One thing I like about the Forex account is that, if I so choose, I can get into some other currency pairs. At times, I've entered into trades where there has been a huge spike simply based on initial reaction to some news report. I usually stick with gold, but I'll take an occasional shot elsewhere here and there.


Response on 12/1 to questions on counter-party risk, Oanda, and the margin requirement
Yes, you need to make sure you are dealing with a reputable broker. There are some decent forums (Forex Factory and Forex Strategies Revealed are good places to start) where there are a lot of traders who can offer guidance on finding one. FXDD is sizeable and has a good history, but I don't make recommendations to anyone other than do your own research. That said, if I ever reached a point where I had enough money to actually get nervous about things, I'd split it among two or more brokers and just execute the same trades. It would be a little more hassle, but it would spread the risk of the kinds of issues you're talking about.

Oanda is a trading platform, I believe, and not the broker. It's the software you download in order to execute your trades. I've never used it.

As for how much capital you need to hold in order to trade microlots, it depends on your desired strategy. The given strategy I laid out, I'd start with a minimum of $1500, just to be safe for those unusual market conditions where it's dropping and you need to buy in on a number of consecutive days. But you could start with a smaller amount and just decide not to trade nearly as much.

In perspective, do you believe gold will drop $500 in rapid enough fashion where you wouldn't be able to add funds to your account? If the answer is no, then you could start with $500 and just try trading a single microlot. But you are losing flexibility going this small. It also depends on the broker. Some require a minimum starting amount.



Yes, 2% margin is the same as 50:1 leverage.
Last edited by Joe T on Tue Mar 15, 2011 11:16 am, edited 1 time in total.
Joe T
 
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Re: Joe's Journal

Postby Joe T » Tue Mar 15, 2011 11:16 am

Continuing a recap of my journal and trading activity over the last few months:

Outline of the trading algorithm as of 12/2:
As opposed to putting in limitless entry orders and changing the entry points every time a new high is established, and all that stuff, I've decided to use the following as guidelines for my trading. I say "guidelines" because I simply will not always be able to check in exactly 24 hours after my last trade. And in some cases I may just decide that there's enough profit there at the moment to take it, particularly if I know I'll be gone during my normal "check-in" time. But for the most part, I'll try to stick to the rules as much as I can.

Basically, I'm trying to accomplish in a simpler way what I was doing before. Since it's not exactly the same, the results won't be the same, but I'm expecting similar returns. I have adjusted size of my trades to account for an anticipated fewer number of total trades.


On a per micro-lot basis. Actual time of day as initial start time is not all that relevant. It will adjust anyway:

Initial start time: t=0

1) P(1) = price at t=1, which is 24 hours after t=0.
2) If P(1) <= [0.995 x P(0)] then buy. Set an automatic take-profit at a $30 increase in gold price. Go to step 5, ELSE go to step 3.
3) Review the prices in the last 24 hours. If any exceed P(0), note the time of that peak as your new t=0. If that is not the case, then set t=1 as new t=0.
4) Go to step 1.

5) At t=2: If position closed previously due to spike in price (took profit at $30 increase in the last 24 hours) then note the time of the highest price in the last 24 hours, define as t=0, and go to step 1. Else go to step 6.
6) If [P(2) - P(1)] >= $5.00 then close position. Observe time of highest price in last 24 hours and set that time as t=0. Go to step 1, else go to step 7.
7) If P(2) <= [0.995 x P(1)] then buy and set your take-profit level.


At this point, you may open a few transactions on consecutive days due to a dropping market. Positions stay open until the profit from the original purchase price is at least $5 per microlot or until closed automatically at a $30 gain per microlot.



I did this kind of quickly, so hopefully that logic flows. It's actually not complicated at all in my head, but whenever you try to explain it on paper it seems more confusing.


Note: I've since even simplified this further. This algorithm changes the check in time each day depending on where the highs occurred and all that. i just wanted to check in once a day, so my method changed later. I'll address those changes.

Trades that follow this post are using that above method:

12/7
Thought I'd throw in a random journal entry:

Price peaked on my platform at $1430.90 at 7:26 am my time. It has since fallen to $1415.

If price is below the $1424.74 level as of 7:26 am tomorrow, I will buy in at whatever market price is at the time.


12/8
Just bought in at 1388.86, at 7:26 am. Set an auto take-profit at 1418.86. Will check in tomorrow morning at the same time. If price is below 1381.92 I'll buy again, setting a tp = 30 on that trade, and check back in 24 another 24 hours. If price is above 1393.86 I'll close at profit and then set my next evaluation point at 24 hours at the time of the high between now and then. Anywhere in between, I'll let it ride and check back in another 24 hours.


On 12/8, I was asked if I have an unlimited supply of capital to withstand daily declines for months on end. My response:
Well, there is always the risk that there are continued declines with absolutely no profit-taking, in such a way that it hasn't happened before since gold started trading on the open markets.

And no, I don't have an endless supply of capital, so there is the risk that at some point I blow my account and I move on with my life.

Unlike the shorting concept that I abandoned, there actually is a floor on how low price can go, irrespective of associated probabilities of price increases and price decreases. So, theoretically, one doesn't need an unlimited capital supply to do this, but you do need a substantial sum to combat the armageddon scenario.


What I did to try and figure out the nightmare scenario and trade accordingly was to literally go back and look at the price movements of gold on a day-to-day basis, and "paper trade" this method. As price declined, positions were added. Quite often, price would decline for a few days in a row, positions would be added, then price would increase and a couple positions would close, but not all of them. Then maybe price would go back down and positions would again be added. There was only one instance where as many as 15 positions were in place at a given time. Even in this scenario, it wasn't a continued fall. There was someprofit taking, then a reversal back down, some profit taking, then a move back down, and so on. But at the low point, 15 positions were open. This only happened once. It was a rare occurrence to see more than 10 positions open at the same time.

More importantly, every step of the way I tracked account value. After all was said and done, I looked at the absolute largest draw-down during the entire time and looked at the number of open positions that accompanied that. It actually wasn't the scenario of 15, so I increased the worst scenario to match what it would be if the average drawdown per position with 15 matched the average drawdown per position under the worst actual occurrence.

Then, I designed a trading system to withstand 20 positions at the maximum level of drawdown per position, based on the historical worst-case.


What I determined was that for every microlot (1 oz) of position held, you need $1600 for this level of protection. You can increase one of those 20 positions by a sincle microlot for every 4% increase in account value. I looked at likelihoods of where you get the biggest bang for that increase, and add to the plan according to that. My first increase is on the 5th entry position, then 4th, then 3rd, then 6th, and it goes from there. I just printed out a little chart where I need to plan the trades based on account value.

So, at $3,506 all positions would be 2 microlots. At $7,682 all positions would be 3 microlots.

And, also, that 4% increase is conservative. The actual needed was somewhere between 3.5% and 4%, but I rounded up with an idea of capital preservation as account increases.


Quite honestly, I just kind of have a lot of fun with this. I learn a lot about the markets by playing, and I enjoy trying out and planning out new trading strategies. And if I can make some money doing it, all the better.
Joe T
 
Posts: 186
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Re: Joe's Journal

Postby Joe T » Tue Mar 15, 2011 11:23 am

Continuing a recap of the last few months:

12/9:
@ 7:26am, 1381.92 < P < 1393.86.

No action taken, will check in again tomorrow at 7:26.


12/10:
Same deal. Will check Monday morning.


12/13:
Closed this morning at $1396.10. Profit per microlot of $7.24, less 2 cents per microlot carrying costs.

At 9:03 am price went to a 24-hour high of 1399.20. Will continue to monitor. If price does not exceed that level in the next 24 hours and price is below 1392.21 I'll buy back in at that time. If price goes higher, then I'll reset the clock and valid entry level. If that stays the max, but P > 1392.20 tomorrow morning then I'll wait it out another day.


12/14:
Price > 1392.20, so no action taken.

Price peaked since yesterday at $1408.00, at 5:49am. Will check in tomorrow morning (probably not at that time - whenever I wake up).


Responded on 12/14 to a question about whether or not this method is flawed because I'm getting in near the top of the market, but not buying during the actual run up to the top:
I'm not sure I'm following. Quite honestly, the method depends on a somewhat volatile market, and the trending is not particularly relevant as long as that volatility is present.

So, in a case where there is a very consistent trend up, I'll miss that run because I'm not entering the market with new positions. Since I'm taking profits and not holding positions, I'll limit my profits in a huge run up. If there is a very consistent trend down, I'll keep buying in with no profit-taking, and there is the risk that it won't turn around and I drain my account.

I am going long only simply because the trend is up and I see no signs of the trend flattening or reversing. One coould do this with another currency pair in both directions. Or, if willing to risk the capital, you could do it in this market as well. I've decided for now that the downside of that far outweighs the upside. just a judgment call.

But the wins here simply come from volatility. What we're looking for is that, typically, a drop of some percentage is followed by a similar move back up. In cases where there are continual drops for a few days, we don't even have to get back up to previous levels for a while to profit, because taking profit on movements at lower levels will outweigh the equity loss from the drop in price from positions taken at higher levels. Ultimately, if price eventually comes back, we'll profit from those other positions, but immediate profits aren't necessary, or even expected.

So I'm not really worried about missing out on a run up because eventually price will stall, and then I'll start playing again. And yes, that means that you start playing at near the top levels, and you might carry some of those positions for a while.

I'm actually not all that concerned about that, because holding it isn't any different than buying a piece of gold and seeing the price drop and just holding on to it for a while. While I wait for price to rebound, I'll just trade at the lower levels. Obviously, the concern is a very long and protracted bear market. And if that happens, I may consider getting back into offsetting short positions. There's nothing that says you can't change those strategies up if a trend changes.

Quantifying the risk here is pretty tricky. In looking at all the different markets, I actually don't even feel as if there's a lot of risk in what I'm doing. Now, I admit that moving into shorts during an upward trending market was pretty risky, and I paid the price on that. And it certainly is true that current trends could change. But quite honestly, I "feel" more risk in holding equities than I do in trading gold. (though, that probably has to do with the fact that I have a lot more invested in equities. But I have been moving out of those slowly because I just don't feel that good about them).


12/15:
In today at 1393.64.

12/16:
In today at 1376.62.

12/17:
No action taken this morning. Will be checking back at 12:34 am on Monday based on price action in the last 24 hours.
Joe T
 
Posts: 186
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Re: Joe's Journal

Postby Joe T » Tue Mar 15, 2011 11:35 am

Continuing a recap of recent months:

1/4/2011:
OK, haven't checked in for a while due to holidays and work and stuff. On 12/20, liquidated the second position at a price of 1385.58 (less 2 cents per microlot carrying cost). On 12/23 bought at 1375.96. On 12/24, liquidated that position at 1384.66, less one cent per microlot carrying cost. On 12/28, liquidated the position entered on 12/15 at 1404.68, less 12 cents per microlot carrying cost. Entered a position at 1388.66 this morning.

Account status as of 12/31/2010: +39.41% since inception (11/1/2009)
Annualized: +32.93%; Avg Per Month: +2.40%

Return in December 2010: +3.39%

11/1/2009 - 7/31/2010: +89.71%
8/1/2010 - 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 - 12/31/2010: +11.94%


1/5: [/quote]In again this morning @ $1374.79[/quote]

1/15, responded to the sarcastic question, "so how are these long positions working out for you?" No matter how many times I say this is not necessarily a short-term profit strategy, people can't resist pointing out when the positions go south for a bit.
Here's my trading since my last post, since you asked:
Liquidated the position entered on 1/5 @1384.41, less $0.065 per microlot swap fee. Had a brief opportunity to liquidate the 1/4 position at a small profit, but i didn't take it, so still holding that position (down $29/microlot at the moment). Entered long on 1/13 at $1374.77, down $15.12/miscrolot at the moment. Entered long on 1/14 at $1365.27, down $5.62/microlot at the moment.

No concerns about gold getting "killed." I look at it as a buying opportunity, and looking back historically, sometimes you end up holding these positions for a while. I'll check in Monday morning and if price level is below $1358-ish I'll keep buying. Remember that I trade small sizes relative to account balance, so I can absorb quite a downswing. I'm not even remotely into nervous territory. This just looks like some short term action to me.


1/19:
Since last post I have not entered any new positions, but I did liquidate the 1/14 position at 1373.16, for profit per microlot of $7.89. less $0.03 swap fees per microlot.


1/20 response to question "How'd that Brazilian Rate hike treat you?":
Great!

I was able to jump in at $1361.02 and then again at $1347.04. Bargain rates!

(The second entry technically broke a rule because I didn't wait another 24 hours. But price seemed to hit a wall around that level and I wanted to take advantage. In 24 hours, maybe it's a lot lower and I jumped the gun, but it was a judgment call.)
Joe T
 
Posts: 186
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Re: Joe's Journal

Postby Joe T » Tue Mar 15, 2011 11:46 am

Tweaked strategy on 1/21:
Minor tweak to my strategy, just because my schedule was not able to fit the strategy as far as checking in 24 hours after the high, etc.

1) basically, I just check in every morning when I wake up
2) If price is at a profit-taking level, I take profits and leave it at that
3) If price has dropped to at least 0.995 or less of the last buy-in level, I buy again.
4) If price is not at a profit-taking level, but has not dropped to a buy-in level, I place a buy limit order at 99% of the last buy-in level. Just one. If it drops more than that, I'll apply (3) and (4) the next morning.

I didn't make the changes because the other strategy wasn't working, I made the changes because it simplified things. The old way I had to keep track of when to check in, which could be at any time, and my schedule didn't always permit it, which means I wasn't checking in as often as I could, which means missed opportunities for both profit-taking and buy-ins, etc.


Really, what all these strategies boil down to is whether or not this is a relatively volatile investment (it is) that is either in an overall uptrend or at the very least in a horizontal state (it is). All these strategies are just variations of taking advantage of price swings and a generally increasing price. All these same strategies will not be nearly as effective (but can still overall make money) in a slow downtrend. They will lose money in a precipitious and continued downtrend. It's not rocket science, and there is a risk that you are wrong in your estimation on the trend direction.

I've picked my buy-in levels based on backtesting to try and maximize my leverage of the volatility in gold. Shorts were a loser in this market because it defiantly refused to correct, so for right now I'm long only.

Whenever there are a few days or weeks where gold retraces, people seem to think I'm disappointed in that. Obviously if, a year from now, gold is at $1000 after a continued downtrend, my results will suck. But I actually welcome retraces because I consider it a buying opportunity. The most important thing about this is that I literally trade small enough lots that I can enter a lot of positions at different points and price can drop quite a bit before I'll even consider worrying about it. I'm not over-leveraged, which is the issue with most people in these markets, where one huge drop wipes them out. It's also one reason why I limit my trading activity to once per day (except on rare days where a second position may be entered) - to force myself to have a maximum of 5 transactions per week, and usually much less than that on average. overtrading can also kill people. If I lose the whole account, it will be a slow burn. I'm not above holding a position for months if need be. Really, no big deal. Sure, it costs me on the swap, but overall that is not a hige deal.

I really don't feel any differently about trading in this way than I do about investing in mutual fund, stocks, whatever. if you put in $100 today and price drops 15%, you ride it out for the longer term. I do the same thing. Just because it's "trading" doesn't mean I don't hold positions for as long as I need to. So, when Brazil does this or China does that and gold drops $50/oz, then it's not a big deal. Now, if it drops another $50, then another $50, then another $50, at some point it obviously becomes a bigger deal.


Note: The above is pretty close to what i am now doing, but I've actually tweaked it since then in a couple ways. I'll follow up on that later as needed.

1/26:
Well, since my last post, I've just entered some positions as the market went lower, but haven't closed any since that one on 1/19.

So, here's how things currently stand:

One position at 1388.66 (entered 1/4)
One position at 1374.77 (entered 1/13)
One position at 1361.02 (entered 1/20)
One position at 1347.04 (entered 1/20)
One position at 1333.58 (entered 1/24)

Current price is 1334.69

There's some support at 1322. And the two most recent 50% retrace points are around 1250 and 1295. Even if it goes to these levels, I'm fine. At least assuming the market does rebound at some point.


1/27 Comments on the market and update on trading:
I was watching yesterday while gold crept up to the 1345 range and contemplated closing the one position I had at 1333. But, I decided to stick with the plan and wait it out until this morning. Sometimes you win, sometimes you don't. In retrospect, I could have banked over $10 per microlot and bought back in this morning when it was back down around 1333.

In the meantime, not only didn't I bank profits there but now it's continued its fall down to 1310. At this point, I wouldn't be completely surprised to see a full 50% retrace, at least on the latest run-up in price, down to $1296.

People in the trading business are fascinated by fibonacci numbers, and also tend to target points at 38.2% retraces, or 61.8%. The 38.2% retrace occurred at 1328. There was some resistance at 1322. A 61.8% move is at $1264. There isn't really another support/resistance areas until around (arguably) 1240.



The longer move is from $1044.05. 38.2% Fibonacci retrace there is $1283, 50% is $1237, and a 61.8% move is $1192. $1200 shows a bit stronger support/resistance line.


Fitting a trend line on the daily chart on the gold price shows the line at about $1280 right now, maybe a bit more, maybe a bit less depending on your choice of fit.


Personal opinion, trend lines are often fairly strong, and lines up fairly well with a longer-term 38.2% fibonacci. I'd be a little surprised to see price go below $1280. If it does, then $1240 looks like the next logical stopping point.

However, the despite this retrace, I believe the trend is still up, this is a longer-term position, and I am a buyer.

If and when price rebounds, don't be surprised to see a run up to $1530, which is a 38.2% swing past the high of the last move.


All that said, I entered another position at $1320.24, for the record.

All that said, part 2: this is all technical analysis, which I find interesting, and use to help develop some general expectations, but it's really not what I actually base my trades on. I just find it interesting, because there does seem to be something to these numebrs - even if just self-fulfilling. Of course, it doesn't always work out that way.


Received a piece of advice from someone on 1/27: Be wary of going long something for more than a quick flip, when it is trading below the 50DMA. Until Gold proves otherwise (gets over $1350, it should be shorted on rallies.

My response:
Meh. Been there. One cardinal rule I decided to ignore was "don't go against the long-term trend." I've decided not to ignore that anymore. Now, probably prudent to be patient and wait for a retracement if trading with limited capital or higher lot sizes. I just plan on eventually profiting from a continued longer term trend.
Joe T
 
Posts: 186
Joined: Thu Jul 02, 2009 10:26 am

Re: Joe's Journal

Postby Joe T » Tue Mar 15, 2011 11:55 am

Continuing a recap of the last few months:

1/31:
Closed the 1320.24 position this morning @ 1327.17. Profit = $6.93/microlot less swap fees of $0.01 per microlot.

Month closes today. Barring some kind of rally, my account will be down this month due to the drop in gold price, but that's OK. One good rally will more than compensate for that. Will update after close when I have a chance.


Status at 1/31/2010:
Account status as of 1/31/2011: +29.33% since inception (11/1/2009)
Annualized: +24.59%; Avg Per Month: +1.85%

Return in January 2011: -7.23%

11/1/2009 - 7/31/2010: +89.71%
8/1/2010 - 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 - 12/31/2010: +11.94%
1/1/2011 - 1/31/2011: -7.23%

Current positions (all long - results in terms of per microlot (contol of a single ounce)):
1388.655 (down $56.21; swap cost $0.26)
1374.77 (down $42.32; swap cost $0.16)
$1361.02 (down $28.57; swap cost $0.095)
$1347.04 (down $14.59; swap cost $0.095)
$1333.58 (down $1.13; swap cost $0.075)


2/2/2011:
Bought at 1333.58 this morning.

2/4/2011:
Closed this morning on this position at 1348.04, for a profit of 14.96 per microlot less 0.035 per microlot swap fees.


2/7:
Closed [the 1347.04 position] this morning at $1352.53, +$5.49 per microlot, less $0.15 per microlot swap.


2/11:
Closed [the 1361.02 position] today at $1366.29, for a profit of $5.27 per microlot, less $0.205 swap charge per microlot.

At this point, I've now more than recaptured the loss in January, up over 9% this month. This includes the marked-to-market loss on my two open positions, which currently stand:
Long position @ $1388.655 (Currently -$23.055 loss per microlot; -$0.37 swap costs per microlot)
Long position @ $1374.77 (Currently -$18.34 loss per microlot; -$0.27 swap costs per microlot)


2/17:
Closed [the 1374.77 position] out today at $1381.64 for a profit of $6.87 per microlot less $0.325 per microlot swap fees. Only one long position remains open at $1388.655. Nice month so far.


2/21:
Closed [the 1388.655 position] out last night. Normally, I wait to make a call one way or another until the morning, but decided that as long as I was in profit that I'd take it. Sure enough, could have made a few extra bucks this morning had I waited. But that's OK, I locked in on a gain, and am now closed out of all long positions. Will get back in long when price decides to trace back a little bit. Closed at $1394.65, for profit of $5.995 per microlot less swap fees of $0.445 per microlot.


A comment from my nemesis on another board who thinks I'm stupid for doing this, on 2/21: "Over $1400 as we speak. Good day for the longs. Oh, wait, you're out; well, you can always buy back in later."
My response:
Sure, it would be great to see the future and know exactly when to get in and out. That's why, as much as others may see what I'm doing as "market-timing," I don't see it that way. Basically, I have a plan for getting in and a plan for getting out with a general long-term expectation on the direction of price. I fully realize that at times I'll get in only to see price drop further. I also realize that I can quite easily take profits before maximizing return. I do this to lock it in, because price can retrace just as easily as continue upward - and it often does.

So, now I wait. At some point, price will drop and I'll buy in again. It always does. I don't sit here and think "what if" after getting out, I just wait for the next opportunity. Constantly saying "what if" leads to bad decisions, imo.
Joe T
 
Posts: 186
Joined: Thu Jul 02, 2009 10:26 am

Re: Joe's Journal

Postby Joe T » Tue Mar 15, 2011 12:12 pm

Status as of 2/28/2011:

Account status as of 2/28/2011: +45.08% since inception (11/1/2009)
Annualized: +34.78%; Avg Per Month: +2.35%

Return in February 2011: +12.18%

11/1/2009 - 7/31/2010: +89.71%
8/1/2010 - 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 - 12/31/2010: +11.94%
1/1/2011 - 1/31/2011: -7.23%
2/1/2011 - 2/28/2011: +12.18%

Current positions (all long - results in terms of per microlot (contol of a single ounce)):
none


3/10:
Been out while price moved up, waited for a retrace to my liking, and got in today at 1414.60


3/13, my nemesis replied: "So, you sold at $1381.64 and bought back in at $1414.60. Nice work."

My response:
Yes. If only I were clairvoyant, I wouldn't have done that. Why didn't you post the times where I sold, then bought lower, and then sold, and then bought lower? This time it happened that price went a lot higher and then I had to wait for a while for a retrace from a high. That will hppen, and that's the way it is. My trading is systematic. I get it. You think it's dumb. I'm willing to share what I'm doing and share my results. If my results suck, well then my system sucks.


His response: "That's the fallacy. Your system can suck and still appear to produce good results over a short period time and conversely."

My response:
I agree. That's why I'll keep showing results as time goes on.


3/14:
Closed this morning @ 1424.75, for a profit of 10.15/microlot, less $0.02 swap fees per microlot.


Today, Moved back in this morning at 1402.98.


Current strategy is tweaked a bit from the last update - assume there is currently an open position:

1) basically, I just check in every morning when I wake up
2) If price is at a profit-taking level, I take profits and set a buy limit order at the lowest support level since the last transaction, or 1% beneath the highest price since the last transaction, whichever is lowest
3) If price has dropped to at least 99% or less of the last buy-in level, I buy again.
4) If price is not at a profit-taking level, but has not dropped to a buy-in level, I place a buy limit order at 99% of the last buy-in level. Just one. If it drops more than that, I'll apply (3) and (4) the next morning.

If there is no current open position, then:
1) move buy limit order to the next highest recent support level, but not higher than a level of 99% of the highest price since the last transaction. Support levels are in the eye of the beholder. The important thing is to be patient and wait for a retrace. If price continues higher, you can move that buy limit up according to higher support levels, but again not more than 99% of the new high.


That's pretty much it.

Again, it's a guideline. I pretty much stick to the rules, but if I have time I'll check in a couple times a day, and if there are major moves I may take some gut-level action on it, but I generally stick to the rules.
Joe T
 
Posts: 186
Joined: Thu Jul 02, 2009 10:26 am

Re: Joe's Journal

Postby Joe T » Mon Mar 28, 2011 12:29 pm

On 3/18, I closed the 3/15 position at 1416.27, for a profit of 13.29/microlot less swap fees of .045/microlot.


I had no activity until today, when I entered at 1413.16. I have a currently unfilled buy limit order at 1399.55.
Joe T
 
Posts: 186
Joined: Thu Jul 02, 2009 10:26 am

Re: Joe's Journal

Postby Joe T » Wed Mar 30, 2011 8:41 am

Closed this morning at 1428.77 for a profit of 15.61/microlot less 0.02/microlot swap fees.

Have a pending buy limit order at 1410.66. This order is placed at the point of the lowest price since the last entry, and will trail on support once per day up to a maximum price of 99% x highest achieved price since last entry.
Joe T
 
Posts: 186
Joined: Thu Jul 02, 2009 10:26 am

Re: Joe's Journal

Postby Joe T » Mon Apr 04, 2011 11:31 am

Account status as of 3/31/2011: +48.39% since inception (11/1/2009)
Annualized: +34.50%; Avg Per Month: +2.35%

Return in February 2011: +2.28%



11/1/2009 - 7/31/2010: +89.71%
8/1/2010 - 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 - 12/31/2010: +11.94%
1/1/2011 - 1/31/2011: -7.23%
2/1/2011 - 3/31/2011: +14.73%


Current positions (all long - results in terms of per microlot (contol of a single ounce)):

none
Joe T
 
Posts: 186
Joined: Thu Jul 02, 2009 10:26 am

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