I've been through highs and lows and having been all through that I'm now at a point I want to make my trading more consistent and predictable so I can have the confidence in increasing capital and grow this hopefully into a bigger business. To introduce myself I've been trading futures from 2007 to present and primarily trade equity/forex/metal futures which I think I have an edge in regards to the technical patterns they generate as well as the mid to long-term underlying trends fundamentals point these instruments should eventually have. All of my decisions are discretionary, I am not a buy-and-hold type where I would be aggressively pursuing spots to leverage positions both long and short. There are no automatic entry or exit trades in my strategy. History of my portfolio (USD) 2007Jun: 50K 2007Dec: 10K 2008Jun: 60K 2008Dec: 150K 2009Jun: 180K 2009Dec: 100K 2010Jun: 50K 2010Dec: 80K 2010Jun: 80K 2011Jul: 90K 2011Aug: 120K 2011Sep: 320K 2011Oct: 100K 2011Nov: 130K As you can see the swings have been pretty big, the reason being that I think of this as a leveraged portfolio that i can inject more capital if needed so would not be afraid of being wiped out. (I've been quite arrogant in that since i have not been protecting profits out there and not controlling my losses foolishly) Just to explain the recent swing this year I perform particularly well in bear markets but very bad in bull markets, where I was trading equities on short side, USD on the long side, gold on the long side from Aug to end of Sep and ran it all upto 320K but lost most of it being stubborn and foolishly shorting the equity market consistently from it's run from 1150 to 1280 in Oct. I've been starting to make some back this week. My short term view is that we have 1-2 more days for equities to sell off as well as a strengthening of the USD before we see some stabilization where I hopefully think early 1210s can be seen in S&P futs. I am looking for good points to reinitiate shorts in S&P futs and trying to figure out whether I should sell a break lower or sell rallies. I have 2 mid term views and one is that is after a short sell-off equities will slowly recover for a few months on hope for QE3 and China loosening policy before selling off early next year on the back of European worries as well as US economic weakness which will eventually come to bite back. The other mid term view is that we actually start selling off from here with S&P futs selling off below lows at 1060 and down to 1000 level or under which will be triggered by some kind of event risk, like an unexpected Greece default. So overall my end game is some kind of sell-off of equities which will most likely be accompanied by monetary inflation (precious metals going higher). Last week's trades (position on the back of -3/+3 is max) S&P futs: -2 (entry 1272) => 0 (exit 1243) AUDUSD: -1 (entry 1.0610) (now 1.0490) I would grateful for any thoughtful, interesting comments on how I can improve my trading for all those who have experienced as much or more than I have. I will be posting my thoughts, trades done and weekly results. Thanks for reading this long post
Position update #1 (position on the back of -3/+3 is max) S&P futs: -2 (entry 1231.5) => 0 (exit 1217) AUDUSD: -1 (entry 1.0610) => -0.5 (exit 1.0300) I've reinitiated S&P futs shorts lower than where I initially exited irritating me a little, but my bad entry price turned out ok with the moving averages all tending lower as well as fundamentally bad news (Greece news) also coming out. I've covered all that seeing some basing movement in the S&P futs. I've reduced half of my short AUDUSD position since I made some money on this. I was tempted to reduce all of my short AUDUSD position. Position update #2 (position on the back of -3/+3 is max) S&P futs: 0 => -2 (entry 1217.5) AUDUSD: -0.5 (entry 1.0610) After seeing S&P futs moving back lower from 1225 to 1217 I think we can see another leg lower to sub 1200 levels. I've put a relatively tight stop (1226) onto this one since these 1210-20 levels were my initial target and could well see consolidation and a bounce. Still keeping the rest of my small AUDUSD position since I think there is a chance that it could move lower again and won't cover until seeing a firm signal that the trend has changed which will probably be around 1.04.
Position update (position on the back of -3/+3 is max) S&P futs: -2 (entry 1217.5) => 0 (exit 1224.5) AUDUSD: -0.5 (entry 1.0610) => 0 (exit 1.0345) I've exited all my positions with S&P futs doing much better than expected and with that price action it nullifies any further significant move downwards with also the timeframe that I foresaw for this bear move nearly at the end (I expect US open to be close to the end of this short-term bear move). From here I'm not very eager to aggressively short S&P futs or AUDUSD, only looking to short S&P futs near 1235-40 level for a move back to 1210-20 but that's about it now.
Position update (position on the back of -3/+3 is max) S&P futs: -2 (entry 1232) => 0 (exit 1236.5) A botched up trade, I shorted at a OK time but my stop was just 1 point below the high (1237.5) before falling to 1220 which gets me rattled again. I realize again I have to have really tight stops so I can withhold a thousand cuts or a pretty far away one that can withstand the noise. Was a bit complacent on this trade and will rest before going into new trades. Only opportunity I find today is a buy below 1200 or a sell around 1243.
Position update (position on the back of -3/+3 is max) S&P futs: 0 => +1 (entry 1220.5) I've obviously been lazy not shorting S&P futs at 1240ish (I was looking to short around 1243) and range trade this but think this consolidation move is close to finished which will now push S&P futs higher as moving averages converge. Looking for a stop at 1205, and will add more if S&P futs move higher.
Agree market is turning more bearish.. but why does your plan involve shorting the SP? Have you look at a 50 year chart of it..
Well you have to bullish very long term on the S&Ps especially if you look at it on a 100 year log graph I agree. The problem is it's really about the timing of when you get in, if you get in really near the highs you have to hold onto that for maybe 15-20 years before you see that back. Also I don't have 50 years to wait for my portfolio to return money I would like to have it now. I think that we are in a cyclical bear market one that started from 2000 and will probably go on for 12-15 years. You won't know now when it will be over, but if you focus on the present moment looking at several ingredients you will know when that time comes. After that happens with the markets having been based out they will be ready to rally for another 20 year cycle but before that it will be relatively choppy. My plan in trading is trying to pinpoint fleeting moments where I see opportunities in changes of the short-term bull/bear cycle and trying to find macro events which can effect them. My trading horizon will mostly be 2-3 days in nature or at max a few weeks or so, so my trading does not always coincide with my mid to long-term view. Hope this helps
Position update (position on the back of -3/+3 being max) S&P futs: +1 (entry 1220.5) => 0 (exit 1217) S&P futs: 0 => -2.5 (entry 1216.5) Although I was thinking of keeping my long position till 1205, I decided prematurely to stop out and actually trade short looking at the bad price action. I'm pretty sure that if 1230 is breached a good upside reversal will happen that's where I've put my stop. This is one of those times when I override my original plan discretionary so I want to see how good/bad these decisions turn out.
Position update (position on the back of -3/+3) S&P futs: -2.5 (entry 1216.5) => 0 (exit 1231) Turns out I've made a big blunder. Two takeaways here - I should always have a tight stop rather than a large one especially for my big positions, and I always lose a lot of money when I get mad/irritated/tilted and try to defy the market so I should take a walk when my psychology is like that. You can't make things work... You have to react to the market. Also I shouldn't be listening to other traders. Always listen to your first intuition. Just really disappointed and disgusted at myself. I think s&ps have now entered a up cycle and should look to buy.
Position update (position on the back of -3/+3) S&P futs: +1 (entry 1235) => 0 (exit 1256) After making yesterday's big blunder I've turned long (not long enough) where yesterday's move offsets some of my losses yesterday. I plan to trade to the long side in the meantime where a breach below of 1235 level would get me wary. I had been pretty devastated on yesterday's move and I realize that although I had been ready for such a move in my mind, I truly didn't want it to happen in my heart and fell into desperation especially with my position being very close to max. The logical answer to that solution should have been a quick unwind as soon as I thought the market was going up but just wanted to wait so I could get lucky and get out of the position at a minimum loss. My weakest point comes when I want to make a lot of money getting greedy and risk quite a bit of money on what I "predict" to be a good trade (and not reacting to the market), but even when i rationally realize that my prediction is wrong and the market is signalling another way I fight that feeling and get complacent waiting and waiting for the market to turn. That's when I am the most vulnerable and that's when I lose the most money in the shortest amount of time. I should be very careful of this phase. I should be happily willing to lose 2-3 ticks several times to win a 15-20 tick trade. So in conclusion... when I want to hold trades for a extended period of time with a wide stop, I should only trade 1-1.5 in my position which doesn't get me tilted even if I lose. Whereas if i want to have a bigger conviction like a 2-3 position trade I should have a very tight stop which also doesn't get me tilted if I lose. All notes to self.