PREP FOR AUG 8 So much happened overnight! A - This is still from yesterday where I was kicking myself for not holding that short down to here, and then going long, given that I was fully expecting this. B - It ended up being quite the nice climb back up to here. C - Overnight, as we come back down to this level, we can see the combo of the previous day low, and that level at 3841 I had outlined from weeks ago provide a bit of congestion. D - Here once again, a level appeared from weeks ago, and we had a bounce. Either this is all just coincidence, or this level was still very important to traders, and more importantly, when I outlined in back then, I clearly knew what I was doing! E - This ends up being our overnight low, complete with a double bottom it seems. F - Going through this level again we see lots congestion. G - Quick rise here, "airspace", so if we come back down, this might be filled in, so a good initial target area, or a place to make an easy 10 points as price drops through again since not many traders were interested in trading here. H - And this looks to be our overnight high. Wow, quite the move, 45 points... and its the overnight session! So now the trouble for me is that other than the overnight high of 71, I have no other levels outlined that we are close to. The previous day high is all the way at 92, and the previous day low at 40, so both are 20 points away from where we are right now. Well... will have to just play it by ear.
Not really, I don't have a registered account with IB. I have only equities in that account but they are long term trades. I get a Tax Slip (T5008) that my Tax program (Turbo tax) automatically calculates as Cap gains. To date CRA hasn't objected.
Interesting about the TFSA. I have it setup with Questtrade, but I better learn to trade first. I always think of how I should have bought TSLA when it was $30 and I knew they would do well, and I always think how I should have bought some NUGT when it was bottoming out $25 not too long ago, but all of these scenarios are pointless. The account will be good for swing trading equities though once I know what I'm doing. In reference to the CRA, I guess when trading stocks I'm not that surprised since lots of Canadians have stocks and collect dividends and such, but do you have any experience with reporting profits from futures if you dabble in that? Also, may I ask if you have other income other than investment? I figure if a person still gets a T4 slip, even if the job is only part time, it shows that he still works, so the investing income is investing. But without a T4 and the only income coming in is from investing, would they not try to say this is your job and hence want you to claim it as income? I guess its worked well for you so that's awesome!
With CRA you can make a one time election to have your trading be Income or Capital gains. Both have their advantages. With income you can write off expenses like a home office, trading computers, and anything that relates to your making a living. Not to mention Traders Expo in Vegas. Technically day trading meets the criteria for income but the T5008 doesnât stipulate the time frame only the amount of profit or loss. I was earning a living when I started trading. Now Iâm collecting the CPP so yes I do have other income but not enough to live off. Most my income is from swing trading and dividends. I only day trade on days Iâm really bored and usually trade a liquid ETF. Most recently itâs been GDXJ. I find swing trading much easier as the decisions are made at a much slower pace. Who are you trading futures with?
Thanks so much for the awesome info! I have an account with IB. I liked the fact they have a Canadian office and hence my account is protected by the... hmmm... is it IRROC or something like that? Anyway, should be insured for 1 million. I think you said you're with IB as well? I hate the charts though, so I'm using Multicharts. Since I'm only trading the NQ, I can use the free version which suits me just fine. The plan after is to fill up the TFSA account with Questtrade and trade this for equities and hopefully make all the income tax free. Its a long way to go, but I see how with trading futures, making $1000 a day is quite realistic with only a few contracts, so once the IB trading account is filled up with enough money to trade as many contracts as I'm comfortable with, I can start sweeping money into other accounts. If you're gonna dream..dream big eh! I do have a job right now and a side business, so if this year I have some profits, it should look more than adequate that this trading account is capital gains and not used for income, and as you say, once the choice is made one way or another, I too have read that the CRA just sticks with this. The hard part is getting the account to be profitable!
I gotta say, today was quite the emotional roller-coaster, but not in a bad way, just that I had to really be tough. Another not so great result though, but my eyes are for sure wide open now. I had the right idea the whole day, but the same problems keep coming up over and over again. Honestly, I never thought in a million years that I would be so unable to adapt. I am literally stuck in a loop that I clearly see, and hopefully one that I am doing something about now going forward. O - So here is the open, but I'm eager to see where it really is once the charts are reloaded. It kind of sucks that I have to worry about the time being off by a whole 30 seconds, but not much I can do about it now. This is partly what worries me about SLA entries. They are based on the bars lining up just right, and contingent on the highs or lows being just a tick higher or lower to initiate a trade. When the time is off by this much, the way these bars are packaged from the ticks can completely change the picture, and I've seen often that SLA trades go from being obvious, to it being obvious that the trade should never be taken once the data is reloaded. So this is why I am getting off track and mixing in so much other stuff with my wild entries. I should also note that just below this open is a cyan line which brings forward a fairly prominent support level from overnight, and just before the open, we see price does bounce off here initially. A - We first try up, but don't go far, so back down we come, through the opening level and the support level. B - I think its fairly safe to enter a short here, and bam, I'm selling a bottom! You can see the exit on the very next minute. So I start my day at -$84. C - Price goes higher ever so slightly again, but we bounce off here again, forming a double top, and back down we come. It does take 5 minutes for price to come back down to my entry level, so that would be a bit to long to keep holding on, but it doesn't stay long at the level of A and C, and so once again, I'm buying and selling at the worst places. D - So I try for another short here, which goes against me right away, but I do get out for a bit of profit. The SL does break, but can be fanned. E - I try for another short here. Look at how much price goes against me! I'm holding on with nerves of steel. This one goes against me almost 5 points, but I'm gonna use the previous swing high as an exit, swing we don't breach. It would be very expensive, but by this point, I can see an obvious downtrend with terribly large retracements, so this is reason enough to hold on. F - The exit in this case is a good one since price didn't go much lower, but it is based on wanting to just take a bit of profit. I fully realize this isn't a winning strategy though, to hold through a major loss but be willing to exit for only a little bit of profit. So I think I'm at about -$40 now. G - So we have broken a few SLs now, and after the last one even formed a higher low, we can draw in a DL. After we clear all the other highs from earlier, I figure its safe to go long. So I try.... And I'm sitting there waiting, wondering why nothing is showing up. Alas, I never did hit confirm. You see, to enter a trade, I slide the STL button to enter a stop limit order and drop it on the ladder at a price point. Then a window pops up telling me what will happen and I have to confirm. I figure this is good, because it gives me a change to double check everything, as sliding a different button sometimes changes the order from a buy to sell and completely reverses how the ladder works, but at the same time, it gives me more excuses often to hesitate and miss the trade. You know all those times price blows past me cause I'm not quick enough? Its because this confirmation takes a couple of extra seconds, and by the time its done, price has gone past me and the order is cancelled by the system. Anyway, so no long here.. shame. I figured we could at least go to the previous highs of A-C and I could then re-evaluate if I wanted to keep holding or get out. H - So as we get close, I take the little line from the double top at A-C earlier and extend it to here. This bar right below H closes midway, so I figure that is close enough and price is coming down now. You can see a trade on the next bar, a short (the red triangle). You can also see a blue triangle a minute later, the exit for a loss. Of course price comes back down again, but I'm already out. So now I'm back down again to about -$90. This exit bar did penetrate the level, but only slightly. I - So I try my short again here. We had a couple of tries at breaking through, which we couldn't with force, and we are now below the low of where I first tried to short. So I short again. Its a little messy here, not sure why, but it goes against me right away... AGAIN! I hold through even a bigger loss, and I'm out BE, hence why the two triangles are at the same level. Its really funny how money changes everything. If I didn't just suffer through a loss, I would think great, price is coming down again, good confirmation for a short. But holding trough the loss, I'm just desperate to get out for BE. Of course price goes even lower, then tries to breakthrough again, and fails again. J - DL breaks, but lets face is, this is all messy. I should only be looking for trades at the extremes. K - We go up again, penetrate the previous resistance level, but don't go far. A good down move starts from here... but its not so obvious in real time. There is a huge down bar, over 6 points, but its all messy, and also that previous resistance level isn't something major like a PDH or PDL, or at least an OH or OL which are much juicier. But you know, shorting after 3 bars tried to go higher but can't, and shorting right at the top is a low cost trade and I could be out for less than 2 points loss if I tried, and look at how much I have to gain. This is what I want to focus on, taking loss cost trades at extremes that either go somewhere right away or they don't. If I have to take a 2 point loss then I know its not working. But the trades I'm taking, 2 point losses don't invalidate the trade, so I'm forced to hold longer and its just too nerve wracking. L - So as we come down, I extend the previous low from F to here via the yellow line. You see me take a short because I saw the penetration, then the swing back up, so I figure I can get in for a better price higher up and monopolize more on the down move. Once again, I have to sit through a 2.5 point loss, and I'm out for a small profit, with price of course going lower nicely right after my exit. Now this could have just as easily been a long really. That bar looks like a REJ bar, so I need to figure out what I will be looking for to think if I should be going long or short. M - So around here, in this box, I am itching for a short. All the way down were places to short, and into view on the chart comes the levels of 41/40 which are quite prominent, so making it down to here since we are close I think is a high probability. The climb back up to M from the earlier lows was quite strong, but I could have shorted and made a few points on the down move to N. N - What I see now, although I didn't in real time, is that we are getting more of an extended base forming. Although this entire down move has RETs that are almost 5 points high, the zig zag pattern down is prominent. By the time we get here, although we bounce off the SL at M, we don't really go lower, and we have 10 minutes of not being able to go lower. That last bar at the end, the huge one, breaks through the previous lower high and this should be a sign. P - Everything I just said in N I just didn't see in real time though. Here is a classic SLA long. I think nothing of it, I'm just waiting for the drop, I'm waiting to get to 40/41. Sadly, this is a 10 point trade in only 5 minutes, but I just didn't see it. In a way, if I'm only going to be trading at the extremes (levels outlined in prep), then its ok to miss an SLA long in the middle of nowhere, even if it does look good now and well above the range at the bottom. Q - So I bring forward the swing high at K and I'm thinking.. what to do here. Waiting for any confirmation of a direction other than on a tick chart makes an entry much further away from the level. It is a risk not knowing if a long or short is appropriate, but if you short 1 point below the level, and exit 1 point above the level, its only 2 points perhaps to find out maybe a short wasn't a good idea. My trades so far include taking 4 point losses, so at least a trade like this at a level that should really do something makes more sense, but of course I am hoping to hammer out something that is more than just a guessing game. Price does turn down, and since I'm only looking to cover my losses for today, I could have done it with just this one short. R - So another chance to short here if I wanted to. But here is the thing. Price didn't exactly drop too far below Q, so maybe each time it comes back up is that much more chance of a breakthrough. Since I have my charts printed out now, I can easily count what is more likely, and especially given multiple attacks of a level. Phew.. I'm tired from typing. This level is turning into a mean with so many trades on either side. Nothing good here. This does mean though that if a trade, long or short is entered at this level, an exit for BE is highly likely. If you short at the bottom, a trip back up to the top of the range is a loss worth too many points, and then seeing price come back down causes too much pain. This is what I've been doing and what I'm trying to avoid. SUMMARY (continued in the next post)
(had to break this up into two posts... jesus.. I typed too much!) SUMMARY So it looks like my day ends at -$79. It really is a shame because I had the right idea, and the first bad trade made me just chase the rest of the day and hope for BE, which isn't a winning strategy, but it is the weekend now so I will work on this plenty for Monday morning. Mind you, shorting wasn't a bad idea, it was just my entry. We never did hit the levels of 40/41 yet, nor did we hit the overnight high at 71 that you can see at the top via the blue line. There are still of course many hours left. This is what is nice about gettingin a trend early. When you are already in the money, you can sit back and wait. But when you get into a move half way, any back and forth action freaks you out and stops you out and then you're just stuck chasing. And lastly, here is what I noticed about the emotions today. The original trade is correct many times, but my entry is based on missing out, and my exit is based on it costing me too much money, after which point the trade starts to work again. So if I generally have the right idea, I just have to find a better place to get in. Since I don't think I can solve this problem of the emotional toll of a loss, I will have to take entries that are less confirmed, but ones that will hopefully provide for a better outcome when they work, and less loss when they don't. I will explain more later. I am also attaching a 15 sec chart of the first 3 trades. You can see how terrible all the entries are, where the first loss happened, but you can also see how the downtrend and hence shorting was the right idea.
No, not yet. I tried to follow the SLA plan as outlined by Db, but there are a few variables the trader has to define. I thought I could just wing it for a while and learn, and its slowly chopping me up. This is at least good because it is teaching me where my problems are, and I fully understand now why I need a firm plan. Its just too hard to make decisions on the fly, and those decisions would be based on which way its likely to go which is, once again, based on having a trading plan that has already looked into this. So I'm going forward with building something around taking around around the extremes, previous day highs and lows, and the overnight levels. This seems to provide lots of opportunity that I can identify on the chart. I just need to define how to get in and out based on what seems to work the best over multiple instances.
My recommendation prefaced by a warning not to take advice from anonymous posters on trading forums is to stop trading immediately. Come up with a written plan then demo trade it for a month to see if it is workable. If you canât make money in a demo account youâll be lost with cash on the line. I look at my plan as operating instructions for my trading account. It should be simple enough that anyone who can read could implement your plan. As simple as it sounds there is a lot of work in developing a plan so count on at least a couple weeks if not more to finalize a workable plan. Then demo trade the plan scoring yourself not on how much money you would have made or lost but on whether or not you followed the plan.