Thursday, November 5, 2009

The new Beginning

as I had been talking for a while I have changed back to my old trade system. I have been caught by long term IT trading in February this year and unfortunately have incurred quite severe losses.

There are many ways to come back from such an extended period of draw downs. Looking at xtrends, I am sure you have seen what Sol has accomplished in such a short time frame. Of course he used his own way to get back into the game - by increasing his capital by quite a large amount and averaging down on himself (so to speak). There are other bloggers and traders that have re-evaluated their trade style and made adjustments.

For me its quite simple, I am taking the path of what I consider "detention". What this means is for me is that I will be minimizing my trade capital and go back to a very basic concept. If your system allows you to double 50K, well it will do the same with 500K. There is no rush in the market, the market will be here tomorrow, next year, in 10 years from now and will have opportunities left and right.

To repeat what I had said last week. I am splitting up my accounts as follows:

Futures - Day Trades - $15K
Futures - Swing Trades - $15K
Equities - $15K
Options - $15K
Forex - $5K

Thats for a grand total of $65K, rest of the money gets locked away never to be used. The goal is quite simple for me - there is only one way for me to get out of detention - double the total combined account value. Once that is achieved well I can go nuts again. Until then I will keep my trades small. I will also be keeping a trade log that I will link on the blog as well so you can see monthly performance and positions. Entries and exists will be posted in the comment section and possibly via twitter.

I have to admit, I was hesitant to share this information with all of you, especially the requirement to log every trade. When publicly posting account values and trades one generally attempts to defend their positions and the ego gets in the way of proper objective analysis. So do not expect me to comment on why I take a trade, or why I close out, or not take a trade. Of course I will keep the same format as always posting ideas and views as well as what I am looking for entry wise.

Time wise I am not putting any pressure on myself and my current expectation is that it will take me most of the next 12 months to achieve my goal of 1) doubling the above accounts and 2) prove to myself again that I can actually make money trading.

Trading is a passion of mine, something I really enjoy but this year has taken all of the enjoyment away from it and turned it into something that has caused me emotional unrest during many occasions. The break I have had over the past few weeks has really helped me re-evaluate what I am doing and given me a new outlook yet again. One can say I am refreshed and ready to give it another try. If it does not kill us it only makes us stronger.

EDIT: I added a section on the right hand side for positions that will be tracked on a monthly basis. I will start recording trades starting tomorrow. (Though I would love to put in the winners of this week hah)


  1. I hate to admit I am really tempted to short the close here. This is just a bit too much too fast ...

  2. "Short setups 1061-1062 with stop at 1064.50."

    well thus far it is playing by the rules .. it did not violate the "pain point" quite yet with the high of 1064.00 - however closing right here with important news tomorrow before the open - would not want to be short as this range will likely get taken out before cash hours.

    Do not want to take this risk. Its 50/50 either way for tomorrow. Maybe 51 down - 49 up. lol

  3. This tape is not to my liking.... It seems to be no mans land between 1040 to 1060. It's a big range I know, but thats exactly it. There's been too much whipsawing. Although it keeps pushing up, but the tape seems so weak. I am hesitant to go either way at this point. Even if it keeps pushing up, I see strong resistance from 1070 to 1080.

    As for tomorrow's unemployment... really don't know what to expect in terms of market reaction. I think everyone now expects 10% plus, sooner or later. So even if we see the big 10 tomorrow, will there really be much downside affect?

  4. Yeap you hit the nail on the head "everything is priced in" lol.

    10% is priced in for tomorrow, just like 15% will be priced in 6 months from now with SPX @ 1200 (ok kidding).

    Do you remember the time back in Jan/Feb (I had mentioned this a few times) when we were 800-840 - it was crazy as well.

    Look at us now - just like we were back between 880 and 930 - just back and forth until the clear direction came out.

    Its a really difficult call to make here. Bearish patterns - bullish patterns - we have it all. And if you are opinionated you take the side of your opinion as its a coin flip.

  5. Here is my take. ES 1067-1070 is good resistance. Bad news and market has excuse to go down. You can always catch the train going down from 1062-1060. may ot get exact top but so what. Potential is 1020.

    good news and catch the train above 1076 to 1090, which is a inverse H&S target.

    How does that sound to you as strategy.

    Looking forward to your trade signals and posts. Assume, you will do similar to what sol did.

    will you do it on twitter?

    At the EOD, you can always do the summary like you did before.

    Lat us get our money back and some more.

  6. yeap sam 100% agree. Thats why I did not take any trade. Rather wait out for one with higher probability. Remember I do not position trade anymore. Only care about 12.5-25 SPX points for swing trades and 4-10 pts for day trades. No need to chase anything.

    I am not really sure how I am going to post each trade I enter - was thinking initially as comments for the daily post and via twitter if I have time.

    And I am going to continue posting my reviews and targets before hand. As you saw on Sunday I had posted major swing position targets - we got to one today - but the conditions were not right so had to let this one go. So expect a lot more of that from me in terms of what I am looking for ahead of time for entries.

  7. sorry - what I mean by position trade is longer term positions. I will still take those but much less exposure and probably just via options with different strategies (spreads etc)

  8. just FYI short AUDUSD, GBPJPY - both with tight stops. Entry close to HOD - will update positions in the morning.