Thanks for the info, HB. I've never been good at managing swing trades. My day trading mentality causes me to exit swing positions too quickly. I had a speculative biotech stock gain 150% in less than two months early this year. I trailed the stop below each previous consolidation support level. I was stopped out for a 100% gain, but then it ran another 120% from my exit price. So I bought it again on a steep pullback, but I'm in at a price 30% higher than if I'd simply held the position all along (which was my intention, to hold for the long haul). Then I bought a stock last week in the IRA's with the goal of holding long term. It ended the week up 11% and I'm itching to take profits. I've left so much money on the table closing out position trades way too early. What would you do, move stop to b/e and just sit on the thing until stopped out or not? (It pays a nearly 3% dividend.) I know I'm supposed to manage swing trades just as I manage day trades, using price bars and trend action to guide me, but for some reason I find it so difficult to do. Should I start watching weekly charts instead?
Well, the reason I trade ETFs instead of individual issues is because the volatility in individual issues and "single-company" risk is just so high that my backtesting has found trailing stops to be less effective. It sounds like you played that biotech appropriately -- it just didn't go your way (which sounds funny to say given your 100% gain). However, rather than racing up another 120% it could just as easily have crashed and you would be thinking "i'm a genius!" You said you bought a stock to "hold for the long term" in your IRA...well, i firmly believe you should not buy any individual issue to hold long term, particularly in a retirement account. Either commit to swing-trading, or buy broader ETF funds. You will drive yourself crazy trying to "hold" a bunch of single company stocks for retirement. Who needs the headache? I definitely don't think a weekly chart works for inidividual equities, you could be down 50% by the time you take a look at your chart. Even for ETFs, I've found there is pretty significant risk for single country ETFs (particularly EM and FM countries). I use it mostly with regional ETFs or more stable countries. Personally, i think on a swing trade you should be looking for 12%-20%, and after those levels you should start tightening your stops. I use a mechanical stop because I wanted to take some discretion out of the picture. However, I believe your approach of using support/resistance and other technical levels for stops is probably more effective (if you can stick to it! If you are going to start swing trading equities, i highly recommend using something like Amibroker to backtest exit and stop loss strategies. It really is an eye opener and can give a good sense of what works....particularly the tradeoff between protecting profits (e.g. tight stops) and missing big winners.
Keeping my head above water... Performance for Week 22: Weekly % Return = -0.07% 2011 P/L = +17.85% Current DD = -0.03% MDD = -12.05% My week started off great as I was up nearly 2% by end of day Tuesday. As the S&P500 approached resistance at 1350 I hedged with some SPY puts and a big chunk of TZA. That enabled me to offset a lot of the carnage the next few days. But, Friday saw me open quite a few new positions most of which moved against me. However, in a big down market week like this, i'll take flat in a heartbeat. My system is "mostly long", so normally a week like this will hurt. On a more execution-oriented and psychological note, I am having some trouble "buying strength", and as a result passed on a couple of signals that were big winners (for the week). I need to get a lot more disciplined about making every trade that i get a signal for. At the close Thursday, I got a lot of signals in the softs and opened quite a few new positions. I'm a little worried about the concentration of risk here, but I'm going to go with it and see what happens. Being up almost 20% on the year, I can afford a little bit of concentrated risk. Position Exits generated this week: Exit Short NatGas(fut) Exit MUB New Positions entered this week: Long Swiss Franc (fut) *I still have not entered this and it is running away from me Long Cotton (fut) Long Corn (fut) Long Sugar (fut) *I did not execute this trade and it ran away from me Long Soybeans (fut) Existing Positions remaining open: Long ILF Long FXI Long TLT Long Eurodollars (fut) Short Wheat (fut) Cheers, HB
Thanks for the input, HB. When I say "long term" it usually turns out to be 3-4 months max Most of my IRA swing trades are 3 days to 2 weeks, truly catching a "swing" in price off the daily chart. I do prefer dividend-paying ETFs for true buy and holds in the IRAs. IRR, for example, which I bought during the post flash crash market selloff last year has been rock-steady with a 9%+ dividend.
Ha, you are just like me. I can't hold anything more than a few months, and that feels like an absolute eternity. With that in mind, sounds like you are approaching it correctly with regard to using technical support/conslidation levels as your stops. I use mechanical trailing stops just because I can't monitor the positions consistently enough, so my stops are a little "dumber" but should work if the backtesting is correct.
Worst week since my big drawdown in February... Performance for Week 23: Weekly % Return = -1.74% 2011 P/L = +15.3% Current DD = -1.77% MDD = -12.05% A challenging week for my system generated trades and for my discretionary trading. My biggest equity positions in ILF and FXI got absolutely crushed, generating a lot of my drawdown. My trade in cotton last week closed limit down two days in a row -- my first experience really getting walloped on a futures position. All of those trades are or will be exited this week. The portfolio will be far more in cash as of this week, so either this is the beginning of a serious down move in the market and the system will look "smart", or its not and the system will miss a nice bounce. One redeeming last week was the performance of the futures trading system, which had me in all the ag futures for the big bounce on Friday. Were it not for the performance of that system last week, my losses would have been more significant. However, the most profitable signal, in Sugar, i failed to take. That position alone would have offset all my other losses from last week, so this reinforces my need to take all signals no matter what. Position Exits generated this week: Exit Long Cotton(fut) Exit Long ILF Exit Long FXI New Positions entered this week: Short NKD(nikkei fut) Long Platinum(fut) Existing Positions remaining open: Long TLT Long Corn (fut) Long Soybeans (fut) Long Eurodollars (fut) Short Wheat (fut) Long Swiss Franc (fut) *I still have not entered this and it is running away from me Long Sugar (fut) *I did not execute this trade and it ran away from me Cheers, HB
Sometimes its better to be lucky than good.... Performance for Week 24: Weekly % Return = +1.64% 2011 P/L = +17.7% Current DD = -0.16% MDD = -12.05% Bounced back quickly from a very short-lived and shallow draw-down. While my systems performed pretty decently, this would have still been a losing week if I hadn't traded and done well on a discretionary-basis. I swing traded TNA a couple of times during the week with big gains. Additionally, I went very long crude futures late Friday netting about +1% portfolio profit at the close. That trade alone accounts for a good bit of this weeks gain. A couple of things to note last week: 1) My equity trend trading system worked perfectly and as designed. Closed out all of my remaining trades except TLT, per the signals, on Monday morning coinciding with the market bounce. All finished the week significantly lower, so I actually netted a little profit on this week versus a big loss if i would have just "held". Of course, the real value will be proven if the market moves significantly lower from here. 2) I am poorly executing trades in my daily futures trading system. I am trying to time my entries (or improve upon the signals), and what is basically happening is that the really "good" trades are getting away from me quickly. I am recommiting to executing the signals no questions asked, and with no attempt at improving upon the entry price. I go into next week almost all in cash, with some light positions in TLT, short the Nikkei, and short Wheat. Pretty bearish, but will prove prescient if the market tanks further. Position Exits generated this week: Exit Long Corn(fut) Exit Long Soybeans(fut) Exit Long Platinum(fut) Exit Long Eurodollars(fut) New Positions entered this week: Short NatGas(fut) *i did not take this trade and it ran away from me Existing Positions remaining open: Long TLT Short NKD(nikkei fut) Short Wheat (fut) Long Swiss Franc (fut) *I still have not entered this and it is running away from me Long Sugar (fut) *I did not execute this trade and it ran away from me Cheers, HB
Like the proverbial pig in sh*t..... Performance for Week 25: Weekly % Return = +2.99% 2011 P/L = +22.0% Current DD = -0.00% MDD = -12.05% This market is exactly the type of market where i flourish. It matches up with my tendencies and personality perfectly, primarily in two ways: 1) I am contrarian to the extreme and usually to my detriment. Typical rookie stuff, but in a market with this volatility my habits of taking profits quickly and buying/selling against trend works very well. (since the trends aren't really there or are short lived) 2) I suck at letting winners run when discretionary trading. That works ok in this market. Anyway, i had my best week of the year this week, sending my account to all new highs. I have exceeded my minimum threshold CAGR target for the year already, and now set my sights on my ultimate goal of 30%. I have been taking some risks and overtrading a bit. My alpha is almost all coming from trading crude and silver on a discretionary basis, and i don't believe that is sustainable. Therefore, I will focus on letting my systems do their work for the remainder of the year. If they work as I believe they do, 30%+ should be all but guaranteed. Position Exits generated this week: New Positions entered this week: Long - Enter and Exit Gold(fut) this week, a one-day losing trade Long IWM - This is an open trade/signal that has been open for 6 months. Its very near its stop out point so i thought i would try to enter and hopefully catch the remaining trend if one develops. Existing Positions remaining open: Long TLT Short NKD(nikkei fut) Short Wheat (fut) Long Swiss Franc (fut) *I still have not entered this and it is running away from me Long Sugar (fut) *I did not execute this trade and it ran away from me Short NatGas(fut) *i did not take this trade and it ran away from me Cheers, HB
Thanks! You can see from the three futures trades i didn't take, i should be doing even better. Looks like its the signals that are hardest to take (psychologically) that often do the best. I also got a short signal in crude this week. My risk and loss limit rules forbid me to take it for even a single contract, but it is interesting.