The new Beginning

Everyone,

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)

Something weird ....

No idea whats going on there. As mentioned in the comments there are some weird fills going on with SPY - bid/ask spread is perfectly normal but some of those orders coming through ... do not think I have ever seen anything like that. Moved my stops to break even - who knows if someone is going to trip a wire somewhere causing some weird spikes.

Market Weakness

Well what a day yesterday. I had left my computer right around 3:30 or so thinking the FED day was just going to be another non-event with the market closing near the highs. Boy was I wrong.

The weakness in the market is become quite clear here however there are quite a few things that have me concerned. I had mentioned yesterday that it was my assumption that the FED comments would have a larger effect on currency markets and the opposite happened. The dollar remained at similar levels while SPX took a big nose dive. One of my charts I had recently added was an overlay of ES and EURUSD - and both of them diverged yesterday towards the closing hours. This is something I will be monitoring much more closely in the coming days. It is my feel that we may be setting up for something larger in the forex world in relation to the dollar. Many had been talking about call buying on the dollar index yesterday - so someone may know something.

Equities wise - we are struggling to maintain a rally and we still have the same bearish divergences that the market has been unable to balance out. It is becoming more apparent that we will be visiting key support at the 1012 ES (1016 SPX) levels. Until we have made a decision at this range its anyones game. I wanted to remind everyone of the time back in Jan/Feb this year when the market came off the 945 highs and had been fighting with key support at 800. Shorts covered at 800 and re-shorted above 840. Bears are getting more active here but are still very cautious and take profits quickly so a visit to 1012 will cause quite a bit of short covering so do not expect this to be broken on the first try.

Overall - still in no mans land. From Monday the same applies (numbers in ES):

Long between 1011-1013 with a stop at 1009. If that fails long at 1006 with stop at 998.

Short setups 1061-1062 with stop at 1064.50. If that fails short again at 1068 with stop at 1073.

We had taken out 1052 ES yesterday right in the morning hours as we had expected but reversed back below. Currently trading below this resistance level but I feel we may get another test again today.

Take a look at the SPX. We went through the 50dma right off the open but went right back below creating a bearish hammer. Take a look at the last time this had happened back in July. You may remember what I had said on Sunday:

"The largest pull back during our incredible rally was back in june/July for a total of 87 SPX points. Our current pullback comes in at a total of 68 with a low of 1033. You all remember the significance I had mentioned for our 38% retracement level at 1016 SPX - if we do see a sell off towards this level we will be adding a total of 17 points for a grand total of .... wait for it ... wait for it ... yes 85 points pull back - which happens to the same size pull back we have had back in June/July."

Lets see if the market will setup another bear trap here or if we are finally heading lower. Now take a very close look at the 50dma - we are about to turn lower on this average. IF we do visit the 1012 ES which at this point has VERY high probabilities this average will have turned down. This will not be ignored by the large players in the market here and you can expect further selling if we are unable to get back above this average. For the first time since this rally began did this moving average flatten out 100% indicating that the market really is at an important turning point. Bulls need to step in here - or bears will take it away from them.

Is it finally happening? Even if we breach this range - I am a bit more optimistic on the market in general. Yes I strongly believe we will be seeing 880 again in the near future, I think we can all agree on that after such a strong run up. However, I fail to see how we can move into what many are calling the dangerous "primary wave 3" leading us to my old targets of 480. Yes I am saying old targets because I have my doubts. I still believe that we will be seeing this number on SPX but I do not think it will happen quite this fast.

I know I have been slacking off and based on my site traffic I reached the lowest point for this year. Well, expect my participation to change again. Get ready for a new beginning =)

A rare treat

I am gloating quite a bit at my EURUSD trade here. I always try my best to nail entries and exits. Many times (especially when it comes to FOREX) I try one position many times over and over as the leverage is quite high and things move rather quickly. In the past 8 trade days I have tried 6 long attempts with EURUSD, 2 small loosers, 2 small winners, 1 break even and one winner. Now that winner here is probably one of the best trades I have had in a while when trying to capture the absolute maximum of a trade range.

Great entries at the bottom and well the exit speaks for itself. Yes do not get cocky Chris but its nice to have something work for a change. It seems changing over to my old trade system with trying to capture much smaller trade ranges has done quite well for me thus far.

I have a new post ready that I will be posting up tonight with some more info on what I am doing at the moment. Other then that, this one will get printed out and put up on my wall for how to do things correctly. Maybe this is just the confidence booster I needed to get myself back in the game correctly.

In regards to this position, I still feel there is more room to go on EURUSD but as mentioned in the comments - locking in profits feels nice =)

Fed Day

Well lets see whats going to happen today. The market is still right in the middle of 2 important ranges - key support at 1012 ES and key resistance anywhere from 1064 towards 1069-1072.

Based on how the market is setting up I would dare to say we see the upper resistance ranges before seeing the lower range. We also have 1052 on ES to deal with but it is my feel that this will only provide short term intraday resistance.

As I am writing this futures are up around 5 points (I went short at 1048.75 for a scalp in the early morning hours). My EURUSD position is doing quite nicely and depending on feds today we should see quite a strong move in currencies as the FED decisions will have a direct impact on the USD - I feel the impact on USD will be even stronger then the effect on equity markets.

As we are in nowhere land market wise it is difficult to engage into any position unless its a short term trade between 2 levels. I am looking for a GAP close at least in the morning hours (where I will cover my short).