April Trading Journals

Discussion in 'Journals' started by Hitman, Mar 29, 2002.

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  1. Is she the market or is she real?

    If she's the market, then we all understand your infatuation with her, as we are all bitten and smitten with her charm (read hairy underarms)...

    If she's real, then, Hello Dear Abby...

    #41     Apr 3, 2002
  2. saico


    Don, unfortunately you dont offer to start with trading at your firm without an initial deposit, like WorldCo is doing.
    #42     Apr 4, 2002

  3. You are correct, but the deposit money is still yours, and allows you to save a considerable amount in commissions every month. Just a different business model. Good Luck!!
    #43     Apr 4, 2002
  4. Hitman


    ***Allows you to save a considerable amount in commissions every month***

    In the beginning, you will be doing 100 shares, the money you save with Bright's commission schedule will not cover the desk fees.

    By the time you do serious volume you will have a commission schedule that is at least as good as Bright's, if not superior.
    #44     Apr 4, 2002
  5. Hitman


    All good things must come to an end as that long winning streak finally ended today. I decided to experiment with pair trading today and I thought it would be nice to do it when I have been red hot.

    17900 shares each way on 11 of 24 shooting, +195 before commissions, -156 after, 1 bullet (which a friend of mine accidentally put up for me when he was on my blotter lol, so in reality I really should have been only down $100).

    I have always had a strong interest in pair trading as I always thought it is the most romantic trading style there is. Afterall every night in my dreams I pray that there will be a day that she and me will be together forever and ever as a pair.

    Last night I looked through many many charts yet still lacked specific entry and exit rules that can put together the puzzle, I went to bed early with a headache yet I had one of the sweetest dreams I have had in a while, in which not only I finally won the princess of my dreams she also taught me pair trading! Unfortunately I paid too much attention to her instead of her lecture and I could not remember all the details about the strategy by the time I woke up.

    Went ahead and experimented with it anyway. I created a secondary layout for my 4 screens, instead of the 9 sectors I now have 9 charts each with two stocks that correlates with each other very well. If I see a divergence then I pull them on a bigger chart that has the spread between the pairs along with a moving average of the spread to make sure that it wasn't just my imagination that there was a temporary imbalance, then I take the position.

    Ended up breaking even on the strategy despite some serious mistakes with AOL/VIA (not a pair anymore as my correlation macro now shows a negative score). Check the rest of my journal for details on this strategy.

    Pre-Market: BMY news, many chemical downgrades.

    9:30: What a god awful open as I got out of my longs at literally the bottom of the futures move AND lost money on the short side. Lost 16 cents on LOW short, lost 2.5 cents on ONE short, shaken out of MER long for 7 cents profit, KRB long for 5 cents profit, TGT long for 5 cents loss, lost 30 cents on AA long at first but bought back as he smacked an offer out with futures ripping straight up and ended up making 7.5 cents. Down $200.

    9:45: Went long on BSC strong daily and XBD was going up but I scrached it. Got small scalps from WDR/LAB. Churned SPF.

    10:21: Went long CAL on XAL move and got just 20 cents, broke out later. Scratched JCI on auto part move. Tried WON on Tony Oz 3 day reversal and got 20 cents.

    11:35: The "bound together forever" strategy. Ouch, there was a large spread between DE/CAT and I went short 300 shares CAT first at 55.45, it started going up and breaking out and I should have covered immediately, instead I put on the DE side of the pair, 400 shares.

    11:39: Eldrige from ET send me a PM before about pair trading and he adds more when the spread moves against him, thinking of his words, I shorted another 100 CAT at 55.70 (adding to a loser position which I never do), and bought 300 more DE as I now have a bullish biase on those stocks. Then shorted another 300 CAT at 55.93, bought 500 more DE at 44.02.

    12:13: I am about to kill Eldridge now CAT is trading at 56.30, and DE is not even moving, I double checked made sure there is no news, and I started to see butter flies like "why the hell are you shorting a strong stock and long a weak one?" Put on the ill fated AOL/VIA pair and lost $200 on AOL, scratched VIA, I gotta make sure the correlation score is at least 85 or better.

    12:40: DE traded 44.25 where I dumped some (I was long 1200 shares), futures came in so did CAT. I pared out on the way down little by little, and that $500 deficit ended up turning into $120 profit, and a $200 profit in DE turned into a $115 deficit, end P&L after commissions, +$5.

    2:52: Saw a big spread on CCU/ETM and shorted CCU, got a quarter from there, went long ETM and got 20 cents. Saw a spread between EOG/BR, shorted BR and lost 13 cents but pulled out 35 cents from EOG.

    3:52: Went long APC but didn't short APA as time ran out, lost 3 cents there. Here is what I am going to do tommorrow:

    1) Avoid putting on both side of the pair if at all possible, try to trade the pairs the same way I trade stock/sector index.

    2) Make directional bets and take quick scalps, don't be afraid to cut losses on single side trades.

    3) Putting on the hedge only when the spread clears favor such a decision (I put on the full DE/CAT pair way too early), slightly cutting down the long side size when the market favors the short side, and vice versa.

    I will probably leave this pair trading thing in scalping mode, sitting through that incredible CAT/DE spread was extremely painful. I definitely need more time to fully define my entry and exit rules, but I think if I can trade pairs profitably I will have a very effective weapon against choppy afternoons.

    One day, when I have open orders to open up the game, sector trading / daily set-ups for bread and butter, pair trading to clean up the choppy dead zone and afternoon's, THAT, will be an incredible offense.

    So despite of the setback today, let's hope I can get a profitable strategy out of this. I was down $105 before I started doing pair trading so I would say it was very little tuition for my first try. (Although at one point I was down $600 something)

    Team Stats:

    9 of 10 active traders
    66700 shares each way 36 of 86 shooting
    +1884 before commissions (7 of 10 positive)
    +290 after commissions (5 of 10 positive)

    Top 3 Symbols: WGO, BMY, CCU
    Bottom 3 Symbols: DCO, APA, LOW
    #45     Apr 4, 2002
  6. Tony01


    LOL !!

    #46     Apr 4, 2002
  7. Are these wet dreams?
    #47     Apr 4, 2002
  8. Treykool


    Saico, Bright Trading is not a true proprietary trading firm. They treat you like a individual retail client. Try Schonfeld, Heartland, Blackwood, Echo, Generic.

    #48     Apr 4, 2002
  9. ... and the winner is?
    #49     Apr 4, 2002
  10. This is just not true...and I should clear it up for the newer readers.

    Most "proprietary firms" ask for some money (including WorldCo, they may let you in with zero, but to get competive rates, they ask for money...).

    Regarding 'desk fees'..
    Let's take Hitman's example (just for clarification. Yesterday your team did approximately 12,000 apiece. If they paid 1 cent more per share then that is $120 per day more (even 50 cents more = $60 per day more), and even with desk fees that is more money. Sure, they'll lower your fees if you stay longer and do more size, but what happens to the extra money paid from the get go?

    Hitman...I am not trying to be argumentative, and it may well be worth it to new traders to pay extra when they begin in lieu of putting up more money...I just want to keep things in perspective.

    (Note: the example of 1.8 cents came from an existing trader in training)

    Our "remote"desk fee is only $200 per month, about 2-4 days of extra commissions.
    #50     Apr 5, 2002
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