Trading Operations

Z

ziyan

Good day, fellow traders!

For the next six months, I will utilize this blog as my public trading room and here I will document a small segment of my path to consistency.

I am developing a mechanical trading system using:

- 3 EMA lines mainly on the
- 30-min chart for US equities with a
- 14-day average ATR >= .15, trading
- >=5M average shares over 14 days with
- prices ranging from $15 to $40 per share.

I will trade mostly in 600-share orders and will not be increasing my size as I am not yet experienced and have not developed a model for adding to trades.

Unfortunately, my method becomes less objective from here...

To screen for potential trade candidates, I look to the daily chart and look for areas of major and short-term support and resistance. I will not trade unless I can objectively identify these levels based on the S/R lines I draw. Once these candidates are screened, I wait for them to find objective levels of support and resistance on the 30-min charts. On the 30-min chart, when the fast and middle EMAs (9, 14) touch the slow (17) on good price action, I will most likely cross the spread to enter the trade. **I am conflicted as to whether this is a better entry/exit strategy, or if I should wait for the trades with limit orders.

This brings me to the things I still need to reconcile based on experience:
- stop-loss thresholds: exit @ support/resistance, or a firm % and risk missing the rest of the move?
- entry method: wait on limit or cross the spread?
- exits: math-based stop dollar amount, or wait until EMAs cross?

I guess I really can't account for every situation and some trades simply shouldn't be taken... and these things I will learn on my learning experience.

If anyone has any tips and suggestions, please feel free to drop a line.

I will also be publishing these and starting a thread on tradelogic.blogspot.com .

Thanks all and happy trading!
 
Entered WU yesterday, 4/8/14 at 16.05. Market looked strong today on the close so I left it open today at 16.40.

Made a stupid trade in CHK today, entered at 26.07,
watched it make a high at 26.34
and saw it break 26.20
so I sold it to cut the loss,
only to watch it go back up and close at 26.38

Overall, made $78 on CHK and have an unrealized $210 in WU.

I've attached my trades & blotter for the day.
 
Okay, so I was wrong about the "market looking strong" yesterday. From the 1.5+% drop in the SPX, we see that there is clearly some weakness.
I'm wondering if we will test the support at 1837.50, which was the low of the week, coming off the highs we made last week.
Judging from the fact that we had such a rough down sessions lately and that
1) we've broken the 50-day SMA on the SPX daily chart,
2) daily MACD made a lower high on the last run up and is starting to make a lower low,

Anyway, I'm not sure if any of this holds water in my hypothesis, but my trading thus far has proven mixed. My WU trade from yesterday made a high at 16.66 but could not maintain the highs, so when the market ticked down today, I closed my position at 16.47 in the morning. I believe I had to cross the spread & hit the Bid to get out. I've attached the charts for both WU and CHK today.

Not surprisingly, the CHK non-trade turned out to be a winner, blowing past 26.83, and still stayed strong above 26.40 despite the overall weakness in the market. My main gripe is that in all honesty, I do not believe I would have had the conviction to stay in trade when CHK dipped below 26.00 today. Granted, it vaulted back up to the PCL and continued higher and stayed there.

Here lies my weakness: I don't have a plan that adjusts on the fly. Is this something that the pros have? I get the separation between conviction vs. stubbornness. But then here is flexibility vs weakness. Mathematically, CHK would have stopped me out early in the morning and then I'd have to muster up the courage to re-enter after it breaks the first 30-min bar after finding support at 26.29. Would this have honestly been a reasonable trade based on risk? It looked a bit 2:1 and those don't seem to be great odds. Anyway, I'm sure there are better/easier trades out there.

It's before 4, and my day is over. I'm not going to fight the market and force my trades.

Also, since the second half of March was so rough, I've decided to take a week off until the 21st to get my bearings. I've only made a tad over $300 this week and it's a pretty bad performance. The market doesn't seem to be in great shape anyway so I will sit back, paper trade, and watch before I risk any more capital. If I don't trade tomorrow, I won't post and will be back in a week.

I've attached my charts for the day below.
Thanks so much for reading, everyone!
 
Back to work today, fellow traders!
The line-up for this week includes
CHK
- Looking strong all week on the dailies, looking for a break of the high established back in Nov.
- Daily EMAs look strong
- Was an idiot to sell the retracement 2 weeks ago
FOXA
- Looking for buy signal on dailies
- Range-bound for past month, looking to breach 34 over the next few weeks
- Up-move from Feb into Mar looks steady
- Up & down action from Mar looks to be a wedge down, providing a possible move to the upside
KMI
- Expect range between 33 - 34
- Upward bias, support @ 33
- Not enough reasons for serious directional entry
MDLZ
- Range-bound for past month & half
- Support @ 34; bullish if breaks 35
SCHW
- Potential bull, but ranges have been too large -- wait for clearer signals
- If trade signal given, use tight stops on daily
TSL
VOD
WU
- Have been singled out as having unclear signals or have greater risk than reward
- Will continue to watch for signals but will not initiate trades until adequately clear and obvious signals have been given to indicate favorable trade conditions
X
- Positive confirmation given today for bearish trades on the daily
- Tight stops until price stays below 26

By the way, the comments on the above selections are still only subjective observations I make through interpretations off the daily charts. I am still in the process of finding a mathematical time-and-price-based method to develop criteria for screening trade candidates.

Let's see how these theories pan out tomorrow!
 
Hey everyone!

No trades today again, just regaining my stride and watching.
My short bias is still in place on X. Today's trading range did not breach yesterday's highs and lows. If the market does not turn over in the next 2 days, however, earnings will be upon us and I will not be trading X at all until after the announcement.

It looks to me that CHK might be hitting a top, although it made a fairly strong recovery following this morning's dip (which btw, did not breach yesterday's low). It still has about $0.60 to go before reaching Nov's high, and judging from the last few trading sessions' ranges, I believe that it's fairly possible that CHK will reach those levels, provided that the market holds up... more on that later.

KMI is seeing some resistance near the 34 level. The uptrend still seems to be in place. If it holds above $33 for the week, I think we can reasonably expect it to break $34.

TSL made a big upmove today which may prove to be a reversal to the 16 level if it breaks and stays over 13 and I'll take the signals if the EMAs cross.

SCHW is surely in an uptrend now. My signal from the EMAs is firmly in place, but the $28 mark is closing in and seems to be a firm point of resistance, considering the large downmove from 28 two weeks ago.

MDLZ is still rangebound but my bet is that it'll edge its way upward & break 36.

VOD looks strong since it's gapped up a few times, recovering from the downmove earlier in the month. On the 30-min chart, there's a clear reverse head & shoulders. We should be able to safely trade from that neckline.

Market update:
The SPX looks like it's hitting resistance at the 1884 area. Unfortunately for my short positions though, it looks like we'll be continuing upwards after a brief pause. But if we drop below 1845, it looks like we'll be heading down.

How does all this look for a start? Does anyone think I might be stretching myself out too thin?
 
Hey traders!

I'm very disappointed in myself today. Got caught up in my analysis and forgot to firstly be a good trader.

Trades:
09:50 -- Shorted X at $26.98 and held on for much too long. As you can see, I stupidly did not wait for any signal whatsoever and hastily entered a losing trade. Then foolishly, I held on as it ran over $0.30 against me, all the while convincing myself that it would go back down.
This is not the way I choose to trade and so I will be liquidating my position first thing tomorrow if the futures are pointing up. Naturally, if the futures run lower, I'll hang on unless price trends up again.
The X trade is a very poorly planned and executed trade that I should not have taken. I will move on from here on out.

15:59 -- Long FOXA at $$32.76
Buy signal on daily EMAs. This trade, I bought ahead of the 30-min EMAs, so I will liquidate if price does not break above the 25-SMA within 3 30-min bars or if price dips below $32.65.
Target: $34

Analysis:
SCHW made buy signals both on the daily & 30-min. However, the upside seems limited and volume has been on the decline for the past few trading sessions, despite the rising price.

MDLZ looks strong on the dailies but may be pulling back a bit on the 30-min. I'm willing to be that it will break out of the recent trading range if the general market is up tomorrow.

KMI is responding to the resistance near $34 and has retraced close to yesterday's close. Also, dividends are coming up so I'd avoid it for now.

CHK broke resistance at $29. This was the best trade not taken. Trades like these make me cringe in agony as I look back and saw that my original entry was at $26.07. Shock and disbelief. But we should move on.

TSL -- not sure what to do here. I'd avoid the trade here… it looks as if price may consolidate between yesterday's range between $12 and $13. Optimistically, it'll turn bullish and reverse, but let's wait for price to tell us what happens. I think I've learned over and over again not to anticipate moves and am clearly still struggling with that!

Anyway, it's been a bit of a painful day. Lesson learned: sit on your hands if you have to but don't break your own rules out of impatience. It is stupid and costly. Luck pays a lot less than consistency in this game.

I can't attach my blotter b/c I've exceeded my limit, but I lost $114, and only traded in FOXA and X, which are both still open positions.

See y'all tomorrow and safe trading, everyone!
 
Still have not learned my lesson apparently. I went against my word and allowed X to chew against me for the morning up to the highs, costing me a total of $510 before bailing right near the top. At $27.83. X then proceeded to head back down & closed the day at $27.47. The importance of adhering to planned stops have never been more apparent. Plan the trade, trade the plan.

The buy signal in FOXA finally appeared & I still have an open position in that for an unrealized of $72. It had a lackluster performance all day but came back to close at $32.88. There were many points during the day when I really wanted to get out, but it stayed within the range above yesterday's lows and no signals were generated from the EMA lines. We're going to use that discipline.

CHK would have been a terrific trade if I stayed with it. Damn! :) Still going strong.

SCHW seems to be having some trouble breaking $27.50 but does not want to stay below $27 either. Will wait for a more definite direction.


MDLZ has broken & stayed above the $35 mark so if the market stays up, I'll be looking for an entry.. with caution. The upside looks limited and the last time it touched 36, price went down rather steep.

KMI looks like it will be generating a short signal soon. It is approaching resistance at $34. Looking for a short here.


TSL is showing strength, rebounding off the lows despite weakness in the overall market. If price breaks through the daily SMA, I'd look to go long.

I'm not sure where the market is right now. Today looked like it was taking a breather. But if you check out the S&P index, you'll notice that over the past year, volume has been on a steady decline relative to the massive growth in asset prices we've experienced in the same period.

Again, I haven't attached the blotter b/c I wanted to put up all the charts for my trades & analysis, but from my records:
Total unrealized: $72
Total realized: ($510)
Trades: X -- covered 600 shares @$27.83

Bad day. 0 for discipline. 1 for stupidity.
Let's skew this the right way.
 
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