In the past couple of years I've banked about $300K doing software consulting work. Upcoming year looks like I may bank $400K. I am almost 30 years old. I enjoy what I do like no other but it is too draining. I'm looking to make trading income a large part of the annual revenue in a year or so. I want more free time to explore this universe of ours but maintain my sexy lifestyle (note: above numbers are net after lifestyle). My trading background is limited to following the stock markets for about 10 years and investing in stock of companies who deal with essentials like food. Day trading is new to me. Well, except I know someone who lost it all day trading. This journal is for myself only. I'm a noobie. If you are reading this for insight, you are a dumbass. However, if you want to read this to find out how badly I can f*ck up, keep reading. I guarantee you will have some laughs coming up. My setup: I am using ChartTrader with Interactive Brokers. I love this thing. It's like playing a video game. I just have one giant chart on my screen with the radio playing in the background. Plan/strategy: I will be trading $25K with a 4x margin (so $100K purchasing power). All profits/losses will be taken by day's end. I could lose it all, including margin, and it wouldn't register a hiccup for me right now. Of course, I will not be that stupid. If I lose my initial capital, that's it for me. Obviously I can't make it. Lesson learned. Buy some index funds and retire. My "plan" is to trade a single index via 1,000 shares of a leveraged index ETF at a time. I'm not sure how smart this plan is these days, given that the ETF I've been looking at has very low volume recently. I may need to find a higher-volume ETF. My "strategy" is to trade intra-day resistance and support. It sounds retarded already. Training: I will be training using IB's paper trading for 1.5* months using the above defined margin account. If I cannot make a reasonable, consistent profit using IB's paper trading after 1.5 months, I will buy some index funds and retire. I will give myself a leading two weeks to learn the ins and outs of trading with ChartTrader. Wish me luck. Subscribe for lulz. Not for insight. * 1.5 months may be 2.5 months. Haven't decided yet.
Dec 17, 2010 (Paper) Morning: Strategy with breakouts on support/resistance worked well. Was up $600 at some point but ended up at $376 because of some fake outs before I decided to take a break and cancel all orders (and then the stock broke below my next resistance, went .50 beyond my original order. oops) The problem is that sometimes resistance/support is broken but it is an anomaly and not really broken. I thought that by putting a large enough distance in my "breakout" orders, I would be able to avoid anomalies but it does not seem to be the case. For example, the stock had a top range breakout of X so I put my stop buy at X+0.1 to "ensure" that it worked. It worked most of the time except when it didn't and made me suffer greatly. I guess this is why people use computers to trade for them as they can use any number of conditions to enter a trade. Good thing I can program, I guess. Still, nearly $400 for an hour's work on a low volume/volatility morning is pretty cool. I've also been using market orders so I can experience some slippage and see how my strategy does. A lot of WTFs.
Testing reply... Doesn't seem to be showing up for some reason! Edit: weird, this reply showed up but my journal for this morning didn't.
think they put limits on your posts right after you register to make sure you are not a spambot. anyway, good luck!!
Dec 17, 2010: Net of sales: $805, Net of commissions: $615 % gain on capital: 2.46% - multiple from index: 6.5x % gain with leverage used (~$70K): 0.88 - multiple from index: 2.3x % index gain: 0.38% I'm not sure whether I should be tracking gain vs my capital or vs trade size. I think it makes sense to track gain vs leverage used. In this case, I would have done about the same as if I had just bought the leveraged ETF. Summary: For some reason my morning journal was nuked. Morning journal summary from memory: * I was up $5-600 at one point, went down to 375 before taking a break * Trading support/resistance is working well for both long and short except when it doesn't ** Unfortunately, lots of fakeouts. Need to find some way to develop an objective measure to trigger a buy. I guess this is why people automate their trading In the afternoon, I caught a couple of good breakouts on some wedges. I think trading a leveraged ETF is a very good idea but I am noticing that the lack of volume makes it hard to fill 1,000 shares even with a paper account. Will need to find another ETF for this index, but I don't think one exists. I missed a couple of huge trades because I was distracted by the little one. That's ok, today I was expecting to be distracted. It will probably not continue. The way I have been trading support/resistance is by using a stop buy and stop sell order on my "breakout" zones. Unfortunately, this means a market order is entered whenever the price hits. What I would like to do is something like: * Draw top of breakout zone * If two trade bars close outside of zone, then enter trade with stop just below corresponding zone I am looking at tradelink, but would need to get a Windows setup going. I use a Mac because I like wearing turtleneck sweaters and saying the word "magical" a lot. Lessons learned today: * If you have a good sized profit, take it * If you have a good entry on a breakout, ride it and adjust stops Till next week...
Wow, $400K after sexy expenses. Stick to software consulting, and if it's too tiring hire some Indians to code for you (quality may not be that great). ps. I'm indian...well Indo-canadian
After some research tonight, I found a very high-volume ETF that handles a similar index. I'm going to switch to this one next week.