Ztradez - Trade Journal - 2013

Z

ztradez

Hi all -
My first post on ET. I do maintain an online blog but haven't posted on an online forum. (http://ztradez.blogspot.com)

A brief intro about myself:
My dream like many others here is to become a better trader and to diversify my assets and income such that I am not solely dependent on my day job.

I've been investing for close to 3 years now mainly focused on SPX but have been trading more actively for a year to a year and a half. I've had my share of successes but an equal number of failures.

I hope that by being very transparent on an online journal I can be better at finding my mistakes and correcting them.

My trading style and what this journal will focus on:
I trade almost on a daily or every few days basis. I swing trade, so I am either long or short. My holding duration is a few days to a couple weeks depending on the trend.

My weapons of choice are currently UPRO and SPXU. I may dabble in commodities but my aim is to first master trading SPX via these instruments. There is some decay but again I trade short term so decay is not a concern of mine.

Why I am starting this now:
I guess this ramp from 1560 to 1680 has caught me off guard and I suppose I wish I had captured this much earlier. I've decided I can't let these opportunities go by frequently so I need to change somehow, perhaps structurally.
 
Explanation of trading style and rules I set for myself
1. Do not risk > 1.5% of loss on total capital on any single trade

2. Always set a stop on each trade. The stop is a complete sell of the position not some cut the position by a third type of rule.

3. Do not trade on margin. All my trades are pure cash. I don't need excessive greed.

4. Only make trades approaching into my timing window. Windows are generally cycles of ~30 trading hours with half cycles of ~15 trading hours. Why I pick these? Lot of testing but I am certain this will change again.

5. Only make trades based off the hourly chart

6. Only master SPX before moving on to something else.

7. If trade moves favorably, move stop up to breakeven. Don't turn a winner into a loser (I've realized this is psychologically the worse for me)

8. I use a combination of indicators which includes sets of CCIs (love CCIs), ADX, OBV, and cycles. I am either long or short and sometimes both if I think my current position is going to get stopped out soon and a change in trend is imminent.

9. I swing trade on a 1 day to 1 week holding duration with zero bias to long or short.

10. I don't play options. There is no edge for me in that game.

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IMPORTANT RULES FOR MYSELF

1. "Losers average losers"

2. "Discipline, discipline, discipline"

3. Don't trade off of someone else's recommendation. I learned that I subconsciously will be influenced by what someone else says. Outside of the top top traders, everybody else is just as clueless as you are.

4. Never get married to the trade. Set the stop and leave it as is

5. If I am stopped out completely, wait until the next timing window setup, then swing again. Never swing intra-cycle.

6. If there are three continuous trades stopped out at a loss (1.5 * 3 = 4.5% drawdown), take A ONE WEEK BREAK. SHUT IT DOWN. Doesn't matter if the next trade would have gone in my favor.

7. If more than 3 times in a row, there is something wrong with the system or the market has changed drastically. Review, review and come back after TWO WEEKS.

8. Never trade when you are considerably unhappy

9. Only trade UPRO and SPXU. Nothing else.

10. After account is up +10%, take half out (5%).

11. Never try to hit the home run. Looking for the singles and doubles.

12. Don't trade while on vacation.

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::Starting trading account balance effective 7/13/13 for this journal:: $100,873

Target for EOY:
+20% return by 12/31/2013 so ~$120k.

Open trades as of Friday 7/12/13:
LONG UPRO 1 lot - entry $71.26 @ 3:34pm EST

STOP ORDER: $68.45.
Rationale: overlap below gap support

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1 lot is equal to 33% of my total capital but I risk at most 1.5% on loss, hence although my stop is ~3.9% below 71.26, it would be approximately 1.3% of my total loss.

Going back in the past, my largest drawdown was $17,000 or roughly 33% of my capital in late 2011 and I thought about quitting. I violated many rules (no stop loss and listened to two people I thought were good), and was a complete newbie trader (I probably think I still am but a senior newbie trader.)

I made that loss back in approximately 2 months on some crazy trades, perhaps "luck" in July 2012 into August 2012 after a series of sideways P&L movements when the swings were going my way at every turn but this didn't happen until I researched completely what was going wrong. Unfortunately this broke some rules (swinging for the fences, backed into a corner).

I made a series of successes but gave those back after, again, listening to others who I thought knew more than I did. Hence, I put that rule in my top 3 rules. Never listen to anyone, you are responsible for your own trades. Therefore, I'm not looking to make any trade recommendations on this forum. Just the raw, here is my P&L and how I'm handling myself.

My longest consecutive drawdown streak this year has been 4 consecutive down days but I have modified my trading strategy so I hope to limit that to 2 at most. If it goes to 3 then I have to re-evaluate again.

Again, my goals are small right now:
1. +20% by year end (even then still rather large undertaking)
2. Once that is reached, then 50% by end of next year
3. Be able to cover for living expenses purely off of trading
4. Be able to make the same amount as day job (after taxes)
5. Whether this is even likely, be able to do this without day job (complete dream but probably least likely to bring to fruition, but can I dream?)

Thanks for reading if you got this far.
 
7/15/13: P&L +$418.50 (+0.41% on capital) vs. SPX +0.14%

however this differential is probably due to UPRO catching up to SPX today (it was underperforming on Friday)

I will provide screenshot of weekly performance at the end of the week.

UPRO +1.30% - holding 1 lot. My timing window for possible CIT is 7/17 which coincides with Bernanke speaking.

- Moved stop up to $71.30 from $68.45
 
7/16/13: P&L -$436.57 (-0.43% on capital) vs. SPX -0.37%

Stopped out at UPRO $71.30 (entry $71.26). Miniscule gain.

Market seems oversold on a very short term basis so my thoughts are if market is down into 10am tomorrow, I will attempt another long (1 lot size) and set a stop that does not exceed 1.5% risk on total capital.
 
Had some time to reflect on my journey over the past several years.

2004-2008: rode the bull market and just like many millions of retail, thought the stock market would go up forever. Didn't bother to invest time after work. Real estate was booming, couldn't be better. Performed at par with market, was good to keep putting money into 401k and watch it grow.

2008: too naive and never bothered to check the 401k frequently until October 2008 when it was down over (25%). Definitely hurt and pulled money out of the market.

2009: Market kept going down, felt better that my losses weren't 50%. There were many comparisons to the Great Depression so got scared that it would go down 80%. Layoffs everywhere, really thought 1929 was repeating.

I made a vow that year that I would never let myself be that naive again. I would learn as much as I could about how the markets worked so I could be better prepared in the future.

2009: Market rebounded, missed the entire move 2009. I blame myself for reading zero hedge nearly everyday. (P3 etc etc)

My goal at the time was to be a better investor.

2010: April 2010. Markets were on a roll and I decided well I missed 2009, I ought not to miss 2010. Still read zero hedge but didn't care as much anymore. Flash crash happened and I got burned. More stories about the resumption of the 1929 analogy.

Stopped watching CNBC completely. No longer read zero hedge.

2011: started realizing that I never thought about a well-defined trading or investing plan. I was the "RSI, 50/200 MA" and didn't have an understanding why price would go up or go down.

Changed my goal to be a swing trader, looking to generate supplemental income. Learned a lot by talking to several folks and participating on message boards. Thought swing trading offered the best flexibility for me (not time intensive as day traders and not so hands off as long term traders).

Started investing my time in reading market trading books and some of the pioneers of this industry after work.

Started wanting to build a foundation in technical analysis so commenced with the CMT program.

As I built more knowledge, I realized how much I could have done better. Definitely felt the burn.

2011: thought I had a plan down but was in the "losers average losers" crowd. Got burned in the August 2011 mini-crash. Flipped short, made a nice chunk of change into the October low, got greedy, and then wow, didn't protect those profits at all.

In hindsight, bad time to get greedy in such a volatile period.

2011: started losing some confidence in my ability and kept reading gurus or the top folks on twitter/stocktwits. They seemed so good I followed almost every move until they stopped posting. Coincidentally happened when they were dead wrong and they started posting again when they were right.

Passed Level 1 CMT.

2012: developed version 3 of my trading plan but the biggest problem I had was being leveraged into big wave 3 rallies. My plan at the time had a huge flaw...there were numerous negative divergences so I thought "well it's the time now for the market to correct, it's a good opportunity to short" Then I get stopped out and try again and again.

Plan got better starting in summer 2012. Was nailing the moves and made back all the losses from losses shorting a wave 3 rally and then some. Kept tweaking the plan but my biggest problem was still reading what other people were posting and the more severe problem was COUNTER-TREND trending without confirmation!

Passed Level 2 CMT.

2013: first half of 2013. Dropped reading other's opinions to 3% of my time. It really ought to be 0% but there are a couple's opinions I still value. They keep it simple and have a similar trading style. Kept tweaking but for some reason have been moving sideways this year. Up big then lose it after a series of unfortunate trades then up big again then lose again. Was frustrating.

Passed CMT level 3. Very happy for that achievement. Meant I took myself from 0 knowledge to someone who at least has a foundation.

Which comes to the present. I realized after much research that I kept chasing after the ball rather than waiting for the ball to come to me. I let price movements dictate what I should do rather than waiting for how price reacted at focal points to take action.

I'm constantly learning from my mistakes. I used to be loser avg loser, now I've definitely stopped doing that. I used to chase, now I don't chase. I used to read other's opinions in great detail, now I don't. I've learned to better manage my risk and not think about too much about the what-ifs after a trade.

Getting better at this and really determined to make it work. My primary focus is my job but this is something I want to be able to do in order to diversify my income.

Thanks for reading up to here!
 
7/19/13: P&L -$505.42 (-0.50% on capital) vs. SPX +0.16%

Added 1 lot SPXU so now maintaining 2 lots of SPXU

Stop moved up to 20.59 given larger size to protect downside risk.

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WEEKLY UPDATE:
Opening balance 7/15: $100,873
Ending balance 7/19: $99,941
% Chg = (0.92%)
SPX % Chg = +0.71%

Weeks outperform SPX: 0
Weeks underperform SPX: 1

Win trade: 1
Lose trade: (SPXU open) TBD

RECAP:
Minor gain on long UPRO, but too small to really count as a win. Nevertheless, I am not doing any $P/L filters on the W/L

Current unrealized PL is a loss and if we move up more on Monday it will get stopped out.

First short lot at timing window failed to see gains materialize afterwards.

I short a second lot at the next timing interval if the first lot did not get stopped out but move up the stop to protect downside risk (unless we gap huge on Monday)

Second short lot failed to see gains

There will not be a third short lot. Position either gets stopped out or held into the next timing window from there I either close it out and switch long or hold.

7/22 is a full moon and in the past, probability-wise, odds were stacked against a big up day on full moon so decided I will hold this position over the weekend.

Evaluating how the market has been during these two windows. System thought today was opportune to take a change in trend short bet.

I take a snapshot of the chart when I took the bet for future evaluation.

Have a good one
 
7/22/13: P&L -$592.37 (-0.59% on capital) vs. SPX +0.20%

Stopped out on 2 lots of SPXU.

My stops are generally < 1.5% risk on total capital. A bit disappointing for this go around but necessary to incur losses in any trading system and I will learn from what happened during this period.

Sitting in cash. Looking to be moving balances around so will not be making trades until after 7/31. However I will present my thoughts during the period.
 
7/24/13: no trades until 7/31

Mentally noted to myself that the timing window ending 7/23 was another short opportunity. It would have been short 1 lot.

The previous 2 lots of SPXU were stopped out for a total loss of ~1.5% of total capital.

This entry would have been $20.70 on SPXU with a stop of $19.90.

Currently SPXU closed at $21.03 (+1.59%).

Will evaluate how this short goes.
 
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