CL Redux

[Handle123]

Quote from riskaddict:

The 20 day in deed has been breached but the 50 day held like a champ If the 50 day even means anything to anyone is beyond me but if we get below it with conviction I'll "put Up" If I was planning on this just being a swing trade of a day or two I would have already placed a stop to lock in some profits but since this could be a week long play or longer I will use pivots and S&R's as a clue to buy puts or add to the long. For example on monday if we have momentum up above the daily pivot I'll add long. If there is mo below buy puts and then I can either sell the puts for a profit at support areas but I won't add to the loser until we reach the trend line and then use my 1 or 1.5 sd stop below the trend. So on the outright contracts I mights lose 5k or so but that would be slightly offset but some puts thrown in along the way. 3 dollars down 5 to 10 dollars up means green light R:R.

WOW it seems so much easier when I just look at the chart compared to trying to explain my possibly screwed up logic. But thanks for the question ND anything that makes me think must be good. I'm forcing myself to do this long term trade to see if I can force myself to lever up. And if this trade doesn't work out the 100 day and 200 day aren't that far away anymore so there will be plenty of opportunity for revenge trading :eek:

Have a good weekend everyone

Long term, I got short on Dec 23rd and bought calls to hedge, dumped the calls on Dec 30 as I never keep them long cause of I only keep them as a hedge and possible making losing trade on futures side, profitable on the option side. Got stopped out next day. So got short again on January 3rd and bot more calls as hedge, dumped options again next day as market moved much lower. I don't do breakouts in long term trading, I draw trendlines and sell new contracts highs, buy new contract lows, but only when they reach zones of interests, near extremes in past nine years or with divergence in open interest on monthly charts. Sometimes in certain markets, it might be 4-5 years before I trade a commodity. I seldom add on to existing position. I exit half my position in Crude Oil at $10k, I use extremely large stops, once I get to breakeven stop, I never move till I see divergence's on weekly bar charts. Yes, there have been times I have given up some monster money, but I am not out for the small profits of swing trading, I am trying to stay into a trade for months and a very few times, years. And yes, many rollovers. I didn't make this method for reasons of ego or any other reason most would think, but dawned on me many years ago, Commercials seldom ever go broke. Took me 23 tries to find top in 2008 in crude, but using the options, only 3 overall losing trades and reversed near the lows. It is not a method for the faint at heart, I try not to look at daily swings of open profits, can be staggering in bad ways and good. And my exits are always fifteen minutes on last day of a week on profitable trades or I might reverse into another trade. I found too close of a stop would often get me out of a monster trade, so I stopped moving them. I have been doing this method since 1992 and has worked well for me, but it is so boring......I have been short Eurodollar for almost a year and simple will not go down, but it will.

Gawd, time after the holidays always so numbing.

 

[brownsfan019]

Quote from NoEmotions:
so far I am using Tradestation Matrix for order entry, next week I will try using IB Book trader SIM mode. I think IB SIM only fills if price goes through which is a good test for my patience and more real.

If you are testing out platforms and doms, I put a thread on TL about OEC's sims fill results and it was pretty good imo. I put some orders on in large blocks and it filled my orders in increments (not just touch and fill like some do). Worth a look if you are kicking the tires on platforms. Live accounts get free data which is really nice.

http://www.openecry.com

I've used OEC for quite awhile so feel free to drop me a message if you have a question.

 

[BCE]

Quote from riskaddict:

The 20 day in deed has been breached but the 50 day held like a champ If the 50 day even means anything to anyone is beyond me but if we get below it with conviction I'll "put Up" If I was planning on this just being a swing trade of a day or two I would have already placed a stop to lock in some profits but since this could be a week long play or longer I will use pivots and S&R's as a clue to buy puts or add to the long. For example on monday if we have momentum up above the daily pivot I'll add long. If there is mo below buy puts and then I can either sell the puts for a profit at support areas but I won't add to the loser until we reach the trend line and then use my 1 or 1.5 sd stop below the trend. So on the outright contracts I mights lose 5k or so but that would be slightly offset but some puts thrown in along the way. 3 dollars down 5 to 10 dollars up means green light R:R.

WOW it seems so much easier when I just look at the chart compared to trying to explain my possibly screwed up logic. But thanks for the question ND anything that makes me think must be good. I'm forcing myself to do this long term trade to see if I can force myself to lever up. And if this trade doesn't work out the 100 day and 200 day aren't that far away anymore so there will be plenty of opportunity for revenge trading :eek:

Have a good weekend everyone

Don't know if you all saw this but the George Soros Trading thread I started has this post on Soros trading style http://www.elitetrader.com/vb/showthread.php?s=&postid=3053511#post3053511 and in it says, among other things:
* If you have an investment thesis you like, run it by people who support the other side of the argument. See if you still like the thesis afterward.
* Basically, the way Soros operates is to have a thesis and then he tests it in the market. If the market goes against his position and he feels uneasy (e.g. gets a backache), he cuts his losses.

I really like the idea of us running ideas by one another and then, in a positive way, maybe saying things like, "Are you sure that's the right play?" like ND did here. "What about this and that?" This will get us to reaffirm to ourselves the validity of the trade we're putting on and think it through some more. And also it will provide everyone reading the related posts to see what they think too and analyze the trade and thus learn. And then we'll see how the trade actually goes and learn from that too. This is great. The more we learn the better we'll trade and the more money we'll make and/or preserve. Plus it's fun to interact in a positive way and support each other and back each other up.

I had written out a post with some reservations about your trade too RA and then my battery went dead on my laptop. And also I looked at the charts again and then I had a mixed take. I'll post some thoughts more shortly. I do like the hedging with puts part.

Also since we're all in this together, I was wondering if you might all be able to start a "Let's Help BCE" money raising fund to help cover my extremely rare trading losses.............................

You have a great weekend too RA and all of you.

 

[NoDoji]

Handle, your swing trading is way out this ADD trader's time frame!

At the point I'm ready to give swing trading a try, I'll be looking to play 3- to 5-day swings.

"If you have an investment thesis you like, run it by people who support the other side of the argument. See if you still like the thesis afterward."

I have this little exercise when I turn on my platform in the morning. I look at where price is that very moment on my 5-min, and I state reasons for going short or long, knowing that for every trade that transpires one party believes price is going higher and the other believes price is going lower.

This helps prepare me to trade purely technical, rather than trading off a "gut feel" (I think it's going higher/lower), because it's the supply/demand imbalance that's moving price, not what each trader believes.

"Also since we're all in this together, I was wondering if you might all be able to start a "Let's Help BCE" money raising fund to help cover my extremely rare trading losses............................."

If we're all in this together, how come I only see my money in the account? Where's everyone else's money??

 

[BCE]

Quote from NoDoji:



"Also since we're all in this together, I was wondering if you might all be able to start a "Let's Help BCE" money raising fund to help cover my extremely rare trading losses............................."

If we're all in this together, how come I only see my money in the account? Where's everyone else's money??

You never received our check? Damn! Hmmm. I'll look into this. I guess this may also mean we won't be receiving a consulting fee check either. Is that right?

 

[riskaddict]

Quote from Handle123:

I seldom add on to existing position.

This is something I need to try, I'm assuming you are just using the max contracts you want right off the bat. I find it so hard to add to a winning trade yet so easy to add to a loser. This takes both options off the table and therefore the next necessary decisions become much easier. You mentioned your stops are far away, do you ever scale stops since you're going all in at once or do you look at the options as sort of a synthetic stop along the way and if you are proven wrong by an obvious breakdown on a long term chart then the whole underlying position is closed out? And one more question!! If your are in a contract that is say 3 months out what options are you using? front month or one month out to avoid theta decay? Or do you just use the active month futures and roll it over if the trade hasn't played out? What do you do with all your spare time since you probably only need to check on things twice a day if that? --- sorry that was like 4 questions

 

[Handle123]

Quote from riskaddict:

This is something I need to try, I'm assuming you are just using the max contracts you want right off the bat. I find it so hard to add to a winning trade yet so easy to add to a loser. This takes both options off the table and therefore the next necessary decisions become much easier. You mentioned your stops are far away, do you ever scale stops since you're going all in at once or do you look at the options as sort of a synthetic stop along the way and if you are proven wrong by an obvious breakdown on a long term chart then the whole underlying position is closed out? And one more question!! If your are in a contract that is say 3 months out what options are you using? front month or one month out to avoid theta decay? Or do you just use the active month futures and roll it over if the trade hasn't played out? What do you do with all your spare time since you probably only need to check on things twice a day if that? --- sorry that was like 4 questions

Yes, Max contracts right off the bat. I had tested a number of ways to add to a profitable position, but as I have aged, my tolerance for pain has reduced. If I sell a high, it has three days, normally with exception of Christmas/New Year holidays, to make a required move, otherwise I liquidate the position, I do not want to lose a great deal on the option by price just hanging there. I simple don't want to swing trade, less complications.

No, testing showed me that keeping stops at adjusted breakeven price (entry price minus loss on option), allows me to get a handful of monster profitable trades each year. But usually only one year in three are outstanding years of increased equity and two years of just ok years cause there are times when I lose both on the future and the option when there is no follow through one way or another. Few years ago, only had 12% profitable futures trades and it was still a very good year.

There are only a few markets where I do not trade the front month, as the action in the front is nonexistent like Eurodollar, but I don't do options in shorting financials anyway. It took me seven years to be able to fully stomach massive reduction in open profits, work out the kinks, and ongoing tweaking and recoding. Unless waiting for a complete reversal which doesn't happen too often, all exits are based off weekly charts and fifteen minutes before the close of last trading day of the week. Often in slow years, does not require any monitoring, sort of like fishing.

I have been ill last 2.5 years, so my ability to stay awake has been hampered, have had five surgeries, so ability to day trade 3-4 markets at a time is gone, memory recall lacks. I have had to stop mentoring, just can't concentrate like I use to. BUT, because of these limitations, seven months ago, I was able to build my idea of a "Holy Grail" for ES, by concentrating on more refined money management rules, but inadvertently have turned into a scalper, using no stops and targeting 1-24 tics, but overall, netting like $32 bucks per. Instead of day trading 12 hours a day, lucky to be able to cope to 2-6 hours. And I also day trade crude oil and currencies, but can't take multiple market positions.

Like to thank NoDoji for very welcomed advise on stopping dairy and meats. Have noticed good changes not consuming dairy, can breath now and no in the middle of the night ER visits so far for that. Meats, are so tough to rid, I find myself now parked behind a greasy spoon dive just so I can smell the goodness, LOL. Yep, this is what I do in my spare time.....

 

[Nexen]

Quote from riskaddict:

This is something I need to try, I'm assuming you are just using the max contracts you want right off the bat. I find it so hard to add to a winning trade yet so easy to add to a loser.

I'm in the same boat, find it hard to add to a winning position and it almost comes natural to add to a losing one.

The problem with adding to a loser is that eventhough you are improving your average price and taking advantage of so called opportunity your risk increases dramatically, so from a money management standpoint this should be a huge no no and I seldom do this.

There's also the alternative of starting small and adding to the position on better fills, this raises the problematic of being right on small size and wrong on a full position, which is also, not a very good money management decision in my book.

Now last there's adding to a winning position.

It's pretty much what's recommended by experienced traders, "don't add to losers, add to winners". Paul Tudor Jones, J. Livermore, George Soros, many great traders out there have preached this.

Here's my problem with adding to a winner.

I get into a position, it moves in the correct direction, I add to the position, now it needs to breakout or I'm screwed, any significant pullback and I'm unrealized red due to adding, where I would just be slight green had I not added.

This is very hard to execute and many times it implies small gains or breakeven trades ending red. Of course it also implies that if you catch a furious trend where if you kept adding on pullbacks, by the time you hit your final target you are swimming in profits.

I have no doubt in my mind, it all makes sense from a mathematical standpoint but the execution is so freaking hard, this is why you rarely see people doing it. On the contrary, what you do see, is the vast majority of traders, adding to the loser, which is a very dangerous game because it increases your risk exponentially and surely when dead wrong.

Wish I could read editorials somewhere on how to add to winning positions to improve my trading.

 

[NoDoji]

Quote from Nexen:

Wish I could read editorials somewhere on how to add to winning positions to improve my trading.

That's my top goal this year, adding to winners in a trend. Just as a bank only lends to those who prove they're financially sound, adding to winners uses your existing success to finance future success. If you're in a winning trade, you have unrealized gains to "re-invest" in something you're obviously doing right.

Since a trend is defined by HL/HH's or LH/LL's, you put on the initial position on a pullback that demonstrates support/resistance and renewed buying/selling at the TL or 20-bar EMA, then add to the winner at the breakout level, expecting the breakout to hit a new high or low if the trend is still intact.

 

[NoDoji]

Quote from Nexen:

Here's my problem with adding to a winner.

I get into a position, it moves in the correct direction, I add to the position, now it needs to breakout or I'm screwed, any significant pullback and I'm unrealized red due to adding, where I would just be slight green had I not added.

I'd only be adding in a clearly defined trend, not a narrow stair-stepping channel, or in a range. You want strength or weakness to be exuberant so the breakouts are powerful. To be safe, I'd only add to a winning position at the breakout level (1 tick above/below the previous high/low), not before, to avoid the risk of a failure reducing your existing profits. Sometimes the move is so exuberant, though, that adding just before the breakout makes sense to avoid slippage. You can tell by the price action on a DOM when it's like that.