Small Change

Discussion in 'Journals' started by vorzo, Jan 19, 2003.

  1. vorzo


    I'm starting this thread to share my trials and tribulations with fellow traders with small accounts that are new to the trade (my account is $2,500), but have a burning desire to make it in this business.
    I also hope to get valuable feedback from the experienced traders on this board.

    I posted here about a year ago under the handle Morpheus - still under Matrix influence - now I find it too pretentious so I've changed it to my Yahoo handle.

    I've opened a cash account with IB 6 months ago. The thing about cash accounts is that your funds settle only after 3 days, so if you want to trade every day you can only use a third of your equity/trade (good thing in terms of capital preservation). And if you want to trade 100 share lots with a $2,500 account, you can only put on 1 trade/day in stocks priced $6-9/sh.
    Another restriction of a cash account (IB doesn't open margin accounts in Canada yet) is that you can't short - a major drawback but as a beginner I'm probably better off not shorting.

    So far I am down about $750 in my account, most of the losses coming from a few bad trades where I didn't take the stops - the old story.
    Now my losses are much smaller, and the gains are starting to offset them. I was even slightly profitable in December.

    My trading system is relatively simple. I trade mornings, as I work during the day - being on the West Coast I can do it before I go to work.
    I trade a basket of heavily traded Nasdaq stocks (avg daily volume > 5 million), $6-9/share.

    Two strategies:
    - gap fading
    - stochastics crossover to the upside

    Two candidates are selected pre-market, and the 1st setup met is taken.
    Entry on the 2nd candle up after a decline or pullback, only with supporting futures (I use the S&P and Naz Eminis).
    Stop loss 2c below closest support, no further than 15c from entry.
    Target usually 2c below major resistance of 50% retracement of gap.
    Trailing stops moved by 1r increments (r=initial risk) as price moves by 1r increments.
    Exit when target is reached or stop triggered.

    I use QCharts for quotes, StockWatchPro for backtesting and Briefing for news. I have a 1.6GHz AMD processor, with 256 RAM and two monitors (17" and 15").

    My short term goal is to reach consistency, and to bring my equity to $10,000 (through savings and hopefully trading profits) then to join EchoTrade as a remote trader.

    I will post my daily trades with a few comments and a screenshot.

    P.S. This thread was inspired by the Tom Waits album with the same name, one of my favorites.
  2. vorzo


    CIEN gapped down with mkt.

    BOT 100 $6.44 (red line on 1min chart) - 2nd candle up with supporting futures.
    Stop at 6.38 (below LOD at 6.40)
    Target 6.54 (below 50% retracement)

    Stopped out as mkt continued to the downside.
    SLD 100 $6.37 (blue line on 1min chart).
    P&L= -$9 (with commissions)

    Mistake: networking was among weakest industries

    The quality of the jpeg is crappy as I compressed it to the upload size of 100k.
    Anyone knows a good jpeg compression program (besides photoshop)?
  3. svsv


    You may try GIMP at

    it supports PNG which has good quality and compression ratio as well.
  4. You should save your image as a .bmp instead of as a .jpg

    The picture quality is so much better.

    After you have saved it as a .bmp can use something like Xnview at to change the image to a .gif without any loss of quality.

    .jpg losses too much image quality for what your trying to use it for.

    I also use QCharts and it does allow you to save your image as a .bmp file

    Also, with can even skip the entire process of converting from .bmp to .gif

    Thus, you can save it as a .gif without the .bmp step

    Good luck and good night.

  5. vorzo


    Thanks Nihaba, xnview rocks! I was able to shrink the gif to 100kb without losing much quality.

    svsv, GIMP seems to be a linux program so I gave up - they have a win version but it requires other programs. Thanks anyway.

    Good trading.
  6. vorzo


    Here it is
  7. Another clever album name (a Canadian band, too)

    Do they really not allow margin for Canadians at IB? Hard to believe. Maybe they require you to have $25,000 minimum for a margin account if you're from Canada.

    Will they allow you to trade Options? Options have a one-day settlement instead of three days. So you have to wait only until the following morning to reuse the cash from sale of your options. Options allow you to get greater leverage for your money too. I'll help you if you have any questions concerning trading options, because there are a few things you do need to understand before you start trading them. But I would recommend options as your best bet trading from your cash account.

    Also, an alternative for you from Echotrade may be You could start there with only $5,000, and you don't need to get licensed either, and may trade remote. Their fees total about $400 per month, and a 15% cut of your profits if you're below $10,000 in your account, but you would be free to daytrade, with no cash-settlement period, and no daytrade restrictions.
  8. vorzo


    Believe it or not, I haven't heard of them.

    I'm was talking to IB about my account, and every rep has a different story. But like you said, you need $25k to day trade. With a $2.5k margin account I would be allowed to do only 3 daytrades/5 business days. So for now I'm better off with the cash account.

    You're right I could trade options from my cash account. I find them a little confusing yet, but I wouldn't mind learning more - appreciate your offer to help. Any books that you suggest?

    I checked out GreenTree and it looks good. Fees are steep but $5,000 equity is close enough.
    One thing I didn't get though - they have remote opportunities for retail and prop, but they don't need the Series 7. Then what's the difference between trading retail and prop?
    Did you trade with them?

    Your handle must come from that Enigma song right?
  9. Moving Pictures was an album by Rush. The cover was clever, it showed paintings being brought into an art museum, with people weeping at the sight of them, and a film crew filming the whole thing.

    If you hold a stock overnight, it is no longer counted as a daytrade. They call this swing trading. Since you're only trading half the day anyhow, forcing yourself to try to make a profit off stocks on the same day seems like it's set to work against you. With a margin account, if you can hold them overnight you're in free. In any case, when you sell them, you immediately get the money in your acount, no waiting. Even if you were intent on always selling the same day you buy, the allowance of three such trades per week would be more convenient than the three-day wait for your cash account funds. The margin account would also allow you to sell short, although I wouldn't recommend short-selling.

    With a prop trading license, you would have lower fees with Green Tree Trading. You're charged $250 a month for access to the extra capital that boosts your account over $25,000 minumum if you're unlicensed. I only know of them from this forum, they do post on here, so you can definitely reach them from here. Once you have $10,000 your payout goes from 85% to 100%, so that may make them competitive with Echo for you also.

    You might want to start learning about options just by reading the explanations that IB gives on its website. Just click Index in Search/Find, then O for Options.

    I think books make things seem more complicated than they need to be. You'll learn options trading easiest just by doing it. IB makes this affordable with $1 flat fee for trading 1 contract. Basically if you have a stock you are interested in trading, and feel confident that it is headed up or down, you would buy the "Call" if you think it's going up, or the "Put" if it's headed lower. Perhaps a good way to get aquainted with options is to take your preferred trading stock, and create an "Options Chain" page on IB workstation for that stock. It's very simple to do this, and lots of information is automatically displayed for you about the prices of many different options all related to that one stock.

    Very important when you are just starting, is buy options where the expiration month is no less than 2 months away. For instance, right now look for April expirations.

    I know that my nickname is enigmatic, but I can't imagine a band calling a song "hii a_ooiioo_a"! That would be really freaky.
  10. dis


    Bottom picking is a losing strategy. Wait for the first higher low, and only then go long.
    #10     Jan 20, 2003