RM's occasional market calls...

[Stewie]

Glad to see RM exited the trade at a favorable spot.

First rule of trading in my not so humble opinion is risk management above all and I believe or assume RM did this correctly by starting small and stating he would add upon heat accordingly.

Happy New Year to all.

I usually like what you say AD, but it seems to me like you're tripping over your words here. You say risk management is key, and yet you say its ok to add to a losing trade and essentially just wait for it to come back to you. If risk management involves waiting for a trade to come back to you, one that has gone over 100% against you, is this really risk management? Where is the management part, other than wishing and hoping and adding to a losing trade in order to make the average entry price just a little bit better?

I'm not experienced enough to question RM's trades or tactics, but surely what is presented here is not proper risk management, other than perhaps for a trader with unlimited resources who can wait forever and is trading enough volume to actually move the price in his desired direction.

 

[Stewie]

Actually 5k plus is total monthly interests paid to IB, most of those would be margin interests rather than borrow fee.

Ah, yes, makes perfect sense. I've never shorted stocks/ETFs so am not familiar with this at all, but of course it would be the interest and not the fee.

I do hope that you and RM are both right and this is merely a delayed fee issue or something similar. But what you show here is akin to someone saying they drive a sports car and yet having no idea that they have to keep filling it up with gas to make it go.

I think healthy skepticism is what ET needs, and anyone who lashes out at your good questions should really be responding in a better manner if they are in fact being transparent and have nothing to hide.

 

[Daal]

To be honest, 4% is so small for the kinda of time frame RM was gunning for that I don't blame him for ignoring it. I short some stocks with 50-200% borrow costs, these ones I got keep an eye daily for covers and for changes in the rate, otherwise it just wipes out your edge

 

[Rearden Metal]

I've yet to be shown a better market calls thread than this one. If the argument is that I've consistently put up better market calls than anyone else, yet I do have my flaws... then we're all in agreement and can move on from here.

If anyone is certain that I DON'T have 8-figure lifetime trading profits including 6-figures this year, let's bet $10,000 and appoint an escrow/mediator so I can show my hand and get paid.

 

[Stewie]

I've yet to be shown a better market calls thread than this one. If the argument is that I've consistently put up better market calls than anyone else, yet I do have my flaws... then we're all in agreement and can move on from here.

If anyone is certain that I DON'T have 8-figure lifetime trading profits including 6-figures this year, let's bet $10,000 and appoint an escrow/mediator so I can show my hand and get paid.

I have seen many people praise your calls, so that speaks volumes. But can you not address why your costs seem to only be $11 when @luisHK is showing that it should be much higher (if the position was large enough)?

I'm not sure how to calculate interest for shorting, but if I assume 4.6% as luis quotes, and you held your short from Dec 4 to 28, this makes for 24 days, or 0.0657% interest based on per annum of 4.6%. If I assume that $10 was interest (no idea how much of the $11 is a fee or interest), so to make the number better in your case, if $10 was interest paid for 24 days, this would equate to an initial investment of $3309 for this short.

I of course don't know how margin plays into any of this, or if my calculations are based on how it works or not, but considering that you are shorting, and considering that interest has to be paid, and considering that as you state now, you have made over 6 figures this year, the interest paid seems really low and would point to a very small position (nothing wrong with that though). Of course if the fee is more like $6 and interest paid is only $5, then this would have made your position even smaller.

Hope you don't mind me working through this. I just think its an excellent question that could be better addressed with facts from your end rather than being all macho about it.

 

[luisHK]

Yawn...how many times we saw those challenges yet ? how many times they materialised ?

Anyway I hope for you u managed those gains, it seems you've known better days, but for a 100k position on short DGAZ 11bucks is almost what you pay per day in borrow fee only. If you enter bigger positions and are more profitable on futures for instance, good for you.
This is probably one of the best journals on this forum, but the least I can say is this call is not convincing - per se and how you managed it online. I'm not so sure why you jumped on the borrow fee issue which was pretty easy to double check
Still go have a look in the " hard to borrow fee details " of the account statement to see what you have been charged

 

[Autodidact]

I usually like what you say AD, but it seems to me like you're tripping over your words here. You say risk management is key, and yet you say its ok to add to a losing trade and essentially just wait for it to come back to you. If risk management involves waiting for a trade to come back to you, one that has gone over 100% against you, is this really risk management? Where is the management part, other than wishing and hoping and adding to a losing trade in order to make the average entry price just a little bit better?

I'm not experienced enough to question RM's trades or tactics, but surely what is presented here is not proper risk management, other than perhaps for a trader with unlimited resources who can wait forever and is trading enough volume to actually move the price in his desired direction.

That is not what I said, I was simply stating that RM was not ambiguous about how he would begin his trade. In addition it is not a practice in trading I use, when I enter, I expect very little heat, and if I see it, I exit on the spot, either price does what I thought it would do, immediately, or I part with my money, I only add to trades in the money upon new signals.

 

[Stewie]

That is not what I said, I was simply stating that RM was not ambiguous about how he would begin his trade. In addition it is not a practice in trading I use, when I enter, I expect very little heat, and if I see it, I exit on the spot, either price does what I thought it would do, immediately, or I part with my money, I only add to trades in the money upon new signals.

Glad you could clear this up. I re-read what you said, and you say that you believe that RM did this correctly, with the "this" referring to risk management. So for me, it seems like you're saying that RM followed risk management correctly.

But this is of course not your risk management, and so regardless of how I perceived what you said, thank-you again for stating quite clearly what you do.

 

[Autodidact]

Glad you could clear this up. I re-read what you said, and you say that you believe that RM did this correctly, with the "this" referring to risk management. So for me, it seems like you're saying that RM followed risk management correctly.

But this is of course not your risk management, and so regardless of how I perceived what you said, thank-you again for stating quite clearly what you do.

I assume he started small, to allow masssive heat, and adds, then waited for all positions to be in the money to then exit a bad trade. That's what I assume he did, if he did that, he used prudent risk management (but terrible position management), even if it's something I don't condone or do.

PS: The reason for my assumption is because RM has gained my respect with his history of good live calls.

 

[eurusdzn]

I am a fool for not taking, listening to the call and managing it in my own way. Everyone is different. Grizzled veterans, seasoned pros have sat beside this guy and acked how good he is.
There was a moderate cold snap and the thing cratered. Didnt Rogers wait $200 for gold to turn. He is retired long ago.