2008 May 23 - Fri

A Half Hearted Day

Last night I got some chart software programming accomplished. I can now see bars, trades and quotes. Over the weekend my task to get some indicators on to them, particularily pivots, Bollinger Bands of two or three different time frames, volume historgrams, and a zig zag indicator. A little further down the road, the zig zag indicator will be used for 'snapping' trend/support/resistance lines in to place to help solidify some chart patterns.

I looked in on COIL again this morning. I got sidetracked watching it and didn't realize the rest of the market had opened. When I did notice what was happening, a lot of things went south. It was all well and good that I didn't do anything. There will always be another trading day, and hopefully for Tuesday I can have my basket trading in place.

That is, I'm hoping to finish off the order entry bit that talks to Interactive Brokers. In doing so, I can then finish the integration my order basket tracking. Each evening, I run three different stock selection filters and come up with a total of about 40 different symbols with associated entry parameters. If all goes well, I can do some semi-automated trading: ie let the computer get my entries in first thing in the morning, then I can monitor the profit curve and start setting stop-loss points to generate automated exits.

2008 May 22 - Thu

Trading Notes: 2008/05/22

I've been trading most days during the month of May. I've been using Interactive Brokers as a broker, and have been using their BookTrader to execute my trades. Regarding things I've learned while using the BookTrader, I'll leave that for another post.

My trading account (real money) is up by 9.4% since April 28, when I first started manual trading, and so far, knock on wood, I've had all positive days, some more positive than others, some a lot more work than others.

I think it is time to keep track of what I do and what I see so I can ensure I don't do the same mistakes more than once.

Limit orders is what I started with. Using a mostly contrarian strategy, I've been able to find some profit areas. I have been caught a couple of times when the market kept going in the wrong direction, and I was getting in deeper and deeper. Those were the rough days where I had to do tricky trading, and through mostly luck, the symbol recovered enough that I could end positive.

With that said, it is now time to figure out the price levels at which to do reversal orders. I'm setting up some charting to help me with that, and hope to have it done for trading next week.

The news over the last 12 hours has been heavy with the news of the large leap in oil (COIL), traded on IPE. I've been watching the 2008/July contract. That I traded with paper trading. The contrarian trading would have worked interestingly enough between 11:30 and 12:30 GMT, where it went from 134.25 down to 133.25. I lost my nerve and closed out half an hour into the decline, right at what turned out to be the bottom. It recovered and then some in the following half hour, to be back around 134.50 for a few minutes. I was thinking afterwards that I could have put Stops at various levels and caught it when it went back up, but thinking it was going to go back up was not really on my mind.

All in all, it was interesting to carry out a risky trade on paper just to see how things would have gone. It is easier to dispasionately analyze the results (monetarily and emotionally) than if that had been real money.

Update 10:05 AST. I saw COIL taking another dip, even lower this time. It went down to 132.50. This one, with real funds, I managed to work 18 trades in and out for a real profit of $643, after commissions, over five minutes.

Regular day trading accounts have a 4:1 margin ratio during the day, and an overnight carry margin of 2:1. On COIL, Interactive Brokers has a different margin structure. When you right click on the symbol and look for symbol details, it shows a multiplier of 1000. Which means each contract is worth 1000 times the BookTrader value. So if the ticker is at $133.23, you'll be buying a $133,230 contract. Margin for this is an initial margin of $9375 and an overnight maintenance margin of $7500. This gives over a 10:1 margin capability. The commission ended up being $2.02 per contract.

While writing this, it took another dip and fast recovery. Traders with deep pockets must be making good money on this.

Update EOD: Well, that was an exciting day. Instead of just closing out at the end of those trades, I stayed in for more, but found I didn't reverse when I should have. I lost what I made and now have to try it again. Smarter this time. Watch for the reverses and run with them instead of against them.

The instances where I've gone against them in the past worked out, they came back. Not this time. They kept on going.

Breakouts are good thing, if you've got them going in the right diretion. I really need to get my charting fixed tonight to show some of the patterns I've seen. The programming is happening tonight. I hope to have it ready for a try in the morning.