Weekly Update for week 4/50 ended 2/5/2011 Another down week, off 14K (4.6%). Got a drubbing shorting APKT on Wed - lost 18K - as the stock ran from 62.24 at open to close the day at 67.35. I look at the "earnings beat" and the P/E on that stock and keep shaking my head at the reaction from the market. Now shutting down one of my fading/RTM strategies that has been a big bleeder in my account for the last one year: Will program my system to identify and close out such a trade. It is apparent it cannot continue in its current incarnation. Code: Opening Balance: 305,300 Net loss for the week 14,037 ------------------------------------------------ Net Balance: 291,263 Number of Trades 10 Number of Profitable Trades 5 Since Inception of Thread 01/8/2011 - 2/5/2011 Opening Balance: 335,899 Net loss(Less Margin Interest) 44,637 (Down 13%) ------------------------------------------------ Net Balance 291,263 Number of Trades 57 Number of Profitable Trades 30
Sometimes is takes drawdowns like this to realize that a strategy needs to be tweaked. I would either size way down or trade it in sim account to figure out what you have to change. I am speaking from experience. Had to do the same thing with pairs strategy and it is finally working now that I have made the adjustments.
I had an autotraded system on the DAX that was pretty profitable for several years until around October last year, where it hit a brick wall, and continues to be very unprofitable ever since, so I shut it down. I'm not sure why the markets changed but regardless that doesn't matter... no amount of tweaking can fix it, the market behavior that it acted upon is just gone and the system is pretty much dead. I'm just waiting patiently to see if the profitability will return over the next few months or I will have to abandon it completely.
I assume you already tried tweaking the strat. Making a blanket statement that no amount of tweaking can fix a strat is not good adive imo.
Why don't you just take some money like 10 or 20k and buy long term calls or leaps on over sold stocks options like Csco or Ek etc Last time Csco hit 19 it went back to 22 in 3 months .. CSCO Jul 2011 20.000 call is .90 cents At least you can make some money on longer term bets Otherwise do spreads on volatile unpredictable stocks i.e Buy Calls and Puts at the same time .. e.g on APKT you could have bought the Feb 65 call as well as the 62.5 put since you were sure it was going down ... Just my suggestion
BTW I hope you are not using Td Ameritrade Data Feed because you could be off in your timing due to lagging quotes . Google - Td ameritrade lagging quotes
Weekly Update for week 5/50 ended 2/12/2011 Frustrating week, up 5K (1.7%). Saw my good handwork and steady profit for the week almost wiped out by two trades on Friday. Began the week on a good note, fading most of the network stocks that had run too far, making more than 20K as they retraced later in the day. Added more gains the rest of the week until Fri. Added more gains the rest of the week until Fri. Began with Chipotle(CMG). That stock served me a bitter burrito this quarter. Bought 500 shares @ 276 after hours after the earnings report on Thursday. Rushed to get out in pre-market @ 260 after the downgrades and the negative reaction. Revenge took over, and when the market opened, Bought 40 contracts of the FEB 250 puts @ 9.60 avg. Big mistake as the stock took off thereafter, forcing me out @ 2.40, losing 29K. Then came JDSU and another fade accounted for a loss of 11K, after which I became thoroughly disgusted. This creeping rally in the markets is worrisome. It doesn't look like there is any professional manager taking on the short side anymore. Let the market do a +10% one-day move and let's be done with this! Code: Opening Balance: 291,263 Net gain for the week 4,967 ------------------------------------------------ Net Balance: 296,230 Number of Trades 19 Number of Profitable Trades 14 Since Inception of Thread 01/8/2011 - 2/12/2011 Opening Balance: 335,899 Net loss(Less Margin Interest) 39,669 (Down 12%) ------------------------------------------------ Net Balance 296,230 Number of Trades 76 Number of Profitable Trades 44
Neke, have you evaluated the net results of your pre-market/post-market trading? Extended hours trading of stocks is pure gambling, IMHO. You're dealing with emotional reactions of amateurs who believe they can get a leg up on the competition. I personally don't believe there's anything to be gained trading stocks outside RTH unless you're in a position and have bids/offers in place that may well get randomly filled. Here's another thing you should know by now: Options are priced to eat the lunch of traders who play the open of stocks "in play". When I was a newer trader, I escaped bad options trades with a profit by the skin of my teeth when a stock was temporarily in play on an upgrade. I throw in a crazy offer and someone snaps it up i the first 5 minutes and then the thing tanks forever. I still shudder to think of how I traded back then and how lucky I got on a few of those trades. Professional trading is not based on luck; it's based on hard work, acquired skill, and discipline. When the market opens the professionals wait for the emotions to play out and then they step in based on the detailed information they're evaluating. Earnings beat, but guidance sucked; revenues beat, but earnings sucked; earnings sucked but revenues beat; earnings and revs beat but margins may be squeezed, blah blah blah, none of it's important to you, Mr. Day Trader. All that you care about is who's more interested after the opening 5-15 minutes are over, the bulls or the bears. You look at CMG after the first 5 minutes and you see that buyers snapped it up like piranhas @ 243.36. If you don't know what 243.36 means with regard to CMG, then you haven't done your CMG basic homework. The nice thing about price action trading is you don't even have to know what 243.36 means; all you have to know is that buyers really wanted it there and if price breaks the high of that opening 5-min bar, you have an opening range breakout to work with in the direction of the recent trend based on the daily chart and if price breaks the low of that opening 5-min bar, you have a reason to go short. If you don't wait for this emotion to play out, then you are trading as a gambler and an amateur. I can't imagine trading while holding down a full time job, and I give you credit for trying. I assure you that if you traded for a living full-time, your trading world would change very quickly.