Bought 50 VXX @$33.00 at 11:21:32 on ideas market is resuming sell off. Stop is $32.40. Objective is high of day. Sold VXX @ $33.2327@ 13:37:47. Also accidentally shorted SPY for wash. Too busy at work to watch markets.
Sounds like China wants to talk trade. Good money flows in risk based assets overnight. Had the idea that because China, emerging markets, and industrial commodities underperformed due to trade tensions, they may start to outperform as trade tensions ease. I feel the best risk adjusted trade may be based on a relative performance idea. Therefore, I decided to short 7 spy @ $283.41, buy 49 FXI @ $40.97, buy 48 EEM @ $41.84, and buy 145 FCX @ $13.81. The total value of my short position is about $6000 and the total value of my long positions is also $6000, or about $2000 for each long ETF or stock. I'm thinking a range of 2825 to 2840 today in ES in a trading range type of day. May make correlated trades to ES by buying support and selling resistance or fading a sustained early regular session move. Edit: Saw my short spy was not $6000, so sold 14 more at $283.17. All trades from 07:04:24 to 07:05:59, except last SPY order which was 07:55:07. That math brain fart cost me $3.36 plus $1.00 commission, or $4.36 total.
The above spread closed at a loss of $68.00 dollars. SPY outperformed all three other components yesterday and today. There appears to be global growth concerns outside the US. Should the US trading partners go through a recession, the US will be affected by diplomatic repercussions and lower exports. Lower exports will reduce growth, perhaps to the point of recession for the US. Even if China and the US agree to a trade agreement, I wonder if the current risk aversion in emerging markets and industrial commodities indicates that the economic ball was already rolling towards slower growth. There has not been enough time for the tariffs to have a direct economic impact. However, negative sentiment over trade tensions, possible liquidity issues in certain countries outside the US, and the long term overhang of negative demographics in most developed countries appear to be the underlying causes of continued global equity and industrial commodity weak performance. By negative demographics, I'm talking about the aging of a large bulge of babies born post World War II through the early sixties, known as "baby boomers". Spending and productivity tends to decline as people reach retirement age. The combination of lower demand for new housing as well as net asset divestitures as this bulge of population will have a significant impact on the global economy. Net expenditures on housing is important because of the many industries directly and indirectly associated with demand for housing. I am becoming increasingly bearish on global equities markets, including the US. I wonder how many $1000.00 plus phones Apple will be able to sell in a global recession. Will still trade on both sides of the market, but will be open-minded about positional bearish options plays where appropiate conditions present themselves. I will also be very interested in fading price spikes to the upside on short covering.
FXI and Nikkei are one below their lows yesterday, basis US regular session. When of if ES goes below it RTH open, will be looking for bearish trades. Trying buy buy VXX, but having platform connectivity issues. Rebooting. Bought 30 VXX as $30.87. Small than usual size reflects the fact I'm chasing a bit here. Was trying to buy at $30.70 before platform problems. May add at $30.58( the open), with stop For whole position at $30.48. Change in plans, if not stopped out, will add on 5 minute bar break to the upside above the open. Stopped at $30.405. Did not have resting order and price went through my stop price quickly, by the time I put another limit order in, price dropped again. Should have had resting stop order in rather than what I did. At least I did not add on. There appeared to be supply in the bar break area, so I waited instead of adding on at that point. Better still would have been closing my position there. That is another $16.00 or so down the sh**er. My current allowable maximum loss amount per trade is $59.00.
It appears the side to be on is long, but money flows to another risk assets is not impressive to say the least. Nasdaq is weak relative to other major indexes. Will stay on sidelines for now, maybe rest of day. One idea might be to buy ES for a move past the high of the day. Also might look at fading a wide bar 5 minute bar through the high of the day for a quick scalp. ES is now 2840.25. HOD is 2844.25. Perhaps 2845.75 might be a nice area to short ES with a stop at 2847.25 and target back to 2844.25. Actual entry price would be determined by tick action as, or if, ES price penetrates high of day. By tick action, I would look for frenzied tick action followed by a slowing down of activity before entering. Definately a subjective opinion. VXX new low on day. FXI new high on day, US RTH. YM another new HOD. Missed Nikkei futures new high on session a little earlier.
ES new high, but not the tick action I'm looking for in order to become interested in a scalp to the short side. As a side note, freight orders for trucking are ending the week at very strong levels. I have no other ideas for this Friday near lunchtime. Will post screenshots of account metrics and trades this weekend. My account hit a new high value this week. Although overal gains are very small, my stop levels have been extremely tight. Will also update account strategy.
Attached below is account performance information since inception. Trade performance analysis for this period. My TSLA Short scalp trade in the premarket made 6 points. Although only on 6 shares, I’m happy with my ability to adapt my preminary trading plan to take advantage of an unantipiated trading opportunity. I strongly thought about entering a bearish option spread because TSLA’s fundamentals and business model seem unsound. Public rumors of a buyout struck me as a prominent long wanting to reduce their exposure by selling into short covering caused by rumor news. Low energy prices and tariffs increases only add to TSLA’s woes. However, for a mere $60 Billion dollars or so, you could own a money losing company. Sillier things have been done before. Maybe. My return on a slightly out of the money option bear spread would have been 3 to 4 times my risk. I ended not taking this trade because of competing ideas for my attention. Having lots of ideas can be nice, but it can be counter productive and times and can cause loss of opportunities through over analysis. My profitable long VXX day trade was the result of following my daytrade methodology well. I reached my profit target, took profits on half my position, and managed the rest of the position to take advantage of a possible windfall due to market conditions at the time. I exited the balance of my VXX position at better prices than my initial target. My short YM losses were the result of me chasing a little bit and not having enough allowable risk allocation relative to the position size. Ultimately I entered a bear spread in ES puts that resulted in a double. My PAAS position trade was an embarrassment because I entered into a position trade against the underlying trend. Although this trade was initially profitable, the weight of the underying trend on the daily chart started to take hold. I did reduce my position by half late in the trading session I entered into this position. Extreme overnight weakness caused me to reconsider my position and I managed to exit the remaining shares in the premarket at better than expected prices, thus containing my loss. I missed an obvious opportunity to go short because my mindset was slow to fully adjust to the changing market outlook. I also had just gotten up from a short sleep the night before. My relative performance spread idea resulted in a loss. The short SPY component was unnecessary as the China-US plan to meet for trade negotiations was a significant enough development to warrent positive price action on SPY. I exited this spread because of suprising negative performance of the components that stood to benefit the most from a trade agreement. Later in the day, however, these components really came on strong and if I held, I would be showing a nice profit in spite of the short SPY component and looking good for next week. Perhaps in future relative performance ideas like this, I can either do a partial hedged position instead of fully hedged and/or enter into this trade in several transactions instead of all in one single transaction, also known as scaling in for price discovery purposes. My last trade of the week was a Long VXX trade. Although this trade met my most of my underlying daytrading entry criteria, I attempted to chase this trade, had platform issues, and when finally reestablished connectivity, executed a trade at a even more unfavorable than what I would been filled at if my platform did not go down. At least my trade size was smaller than usual as partial compensation for chasing. I was to add on to this position, approaching the standard size, but wisely waited this time as there appeared to be a large order at the ask. If I was in top form, I could have exited the trade at that point and possibly reentered at more favorable prices later on. VXX later decisively broke through my mental stop and was not filled. I entered a limit order .05 lower and was not filled. Finally, after entering a marketable limit order, I got filled 2.5 cents lower yet. All told, I lost and additional 7.5 cents by not having a hard stop in. A little later on Friday, my read on the ES finally turned bullish and thought it was likely to test the high of the day. Instead of taking appropiate action on this idea, I looked for a reason to go short! I was looking for a short scalp on SPY for when or if the ES made new highs on frenzied tick action. At least my subjective “frenzied” tick action criteria was not met, saving me from another losing trade. I need to work on my discipline and my biases. Big time. I believe my trading methodologies are fairly sound and very acurately identify the appropiate side of the market to be on. The practictioner is what’s holding me back! Do I have to promise to publically kiss the photos of politicians I do not favor in order to add additional incentives, beyond making money, before consistently following my goddamn rules and trading plan? Starting next week, I will be incorporating more option trades. I will be looking at calendar spreads, butterfly spreads, long options, and possibly short strangles. @destriero and @ElOchoCinco are geniuses! Options done right can return ridiculous risk to reward ratios or high percentage of profitable trades. Trading skill here is still critical, however. Will go into specific option trade ideas during the next trading session. I will now base my trade times on the US Eastern Time Zone. My allowable single trade stop levels will remain at $59.40 until my account value reaches $34,188. I do have the ability to double my risk allowance on trades I designate as “high confidence”. My maximum allowable daily and weekly loss levels are currently at $178.20 and $534.60, respectively. After reaching $34,188, my allowable risk tolerance doubles.
Good figures, but aren't you going to increase size a bit? It will be nice to see some options forthcoming.
Option trades are coming. Mama wouldn't let me increase size or let me out of the basement until I stop making rookie mistakes and start trading my plan consistently. With solid trading, I can unlock the next risk level in two weeks. If my account value hits $34,188, my risk tolerance doubles to .36% account risk per trade. Option trades and "high confidence" trades allow up to double standard risk. High probability of putting on a somewhat out of the money calendar spread on ES late in the trading session tomorrow if we get a reasonably strong day that looks like it will close well above the open of US RTH. I will probably make a decision on the trade around 1500 ET. Something like long ES Sept 14 2860 calls / short ES Aug 27 2860 Calls. Obviously, all this goes out the window if either one two key parameters mentioned earlier do not happen. I am also very interested in active, high priced tech underlyings for option trades. The Theta decay was sick on TSLA this week. Need to do more studying, but am so busy with work.
I would have thought the Asian and European markets would have been stronger overnight. Is this going to turn into a hope for a China and US trade agreement versus economic growth concerns bull and bear battle? I have rarely seen money flows so polarized from risk, other than US equities, to safe haven assets as indicated on the monthly charts. Emerging equity markets and industrial commodities have a long way to go before recovering this month's losses. Is that chairs sliding on the deck I hear? Meh. The band is still playing! We can't sink just now! There seems to be some interest in alternative monetary assets, as precious metals are seeing buying for the second session in a row. They are still in a bear market, however. May consider taking long signals on silver for short term trades this week. For US equities, will look for flys later in the session that have a somewhat bullish bias. Except for TSLA. As always, will be looking for a daytrade signal on US equities or its derivatives early in the trading session. My goal here is to merely read and react. My preceding thoughts about the economy really have no relevance to this type of trade. My posts of semi-live trades is for personal accountability and educational purposes and It is not intended to be a "live call" service. Even where I designate a trade as a swing trade and expecting it to last several days, it is entirely possible for me to reverse this type of trade on little to no notice. It is not unusual for me to close a trade for non-market related reasons, such as work requirements, as some trades require constant monitoring and resting orders might not be efficient. Therefore, any trades you may make on the basis of this newbie's "calls" are on your own and I take no responsibly for your inevitable losses. This journal is best used for analyzing and critiquing various trading techniques, risk management, and market analysis of a general nature, not specific trades.