May 1 No Trading

Can't trade Tuesday, got other plans. I'm mad that I missed the big move today in ER2 to the downside because I was at work (I had to leave 30min before the breakout). Tommorow's probably gonna be a good day to trade too. I'll be back Wedensday. I need to work on my trade executions some more and review my recordings some more.

April 30 Trade Summary $336

Today was a slow day for the time I traded. Overall I made some pretty good scalps. I missed about 3 trade setups, and exited about 4-7 ticks too soon on my good trades.

P/L= $336 with 9 round turns

I was reviewing some of my charts this weekend, and today I saw a repeated pattern for a short setup based on the slow creeper action on NYSE A/D approaching lunchtime.
I call this setup: NYSE A/D CREEPER SHORT SETUP

World Market Charts

The Charts on this page are courtesy of INVESTMENTTOOLS.com
I would like to thank the owner of this website for providing these charts and allowing for them be shared.

World Market Charts-

US Yeild Spread long term


US Yeild Spread


US Ten Year Note


US Ten Year Note Long term view


German Bund


Euro Dollar


Japanese Yen


Japanese Yen


Australian Dollar Futures


Euro Currency


Swiss Franc


Dax


China's Shanghai Composite


Australia All Ordinaries Index


Brazil Bovespa Index (weekly)


Crude Oil


Gold and Silver index


Recent Put/Call Options Ratio OEX


NYSE weekly new highs


NYSE Weekly New Lows


NYSE Daily New Highs & Lows


SP 500


Corn (spot)


Soybeans


Orange Juice


Coffee


Cocoa

April 28 Weekend Education

This weekend I'm listening to interviews of some professional traders over at Trader Interviews . I liked this interview of Ken Chow; a fellow Russell 2000 futures day trader that doesn't use any fancy indicators. Ken trades 5-10 contracts per position, looking for 1-2 big moves intraday, and he uses 5min candles, volume, and fibs on his charts to map out his trades.

Here's a great interview by Mitch Cariaga, he talks about cutting losers and how you can't really train the techniques of highly successful traders.

This weekend I'm also scouting dividend stocks for a trading strategy I want to test out. Some helpful websites include:
1.MSN Deluxe Screener- (you need to use Internet explorer for the deluxe version with active X controls allowed, the MSN custom screener version sucks compared to the deluxe version)
2. Dividend Detective
3. Smart Dividend
4. Bull Sector Dividend stocks
5. Ex-dividend
6. Investopedia Dividend Facts

April 27 Trade Summary $417

I woke up late, 20min after market open, so I wasn't as prepared as I should have been. If only I had held on to that short position for another 6 min, today could've been a 1k+ day. Still, today was productive for the hour that I traded. Expecting market volatility to tail off now that they got BUSH on CNBC. I didn't have time to record todays trading. Gotta go to work so Quitin early.

P/L= $417

Trade summary-
There was a ton of volume on the bids at 7:35am, as you can tell from that charts, and it was near the lows, so I went short expecting a flush to the down side, but it didn't go within 3 min like I thought. So I ended up covering up the majority of the 5 contracts I held before we got the push through the lows. I ended up buying a little too soon, (should have used a 4 tick stop on that first buy at 832), but remembered that 830 was good support by looking at the volume profile charts which showed support at 830 from a few days ago and also we were getting block trades at this level with less movement to the downside, so I ended up adding to the long position and scaled out on NYSE TICK highs.

MISSTRADE also went short ER2 last night at 839 and made some nice coin today, covering near the lows. I've been checking out his blog through the virtual office, and he's been kicking ass. Also, Evolution Trader; who trades the airlines mostly, has been kicking ass as well lately.(I like his method to trading).

Market observations-
Gold (ZG) and Swiss Franc (6S) have bee pretty volatile lately, as well as crude oil (CL). Bonds (ZN) have been pretty choppy lately.

Weekly Summary:
Confidence was stronger this week, and has been growing each day with my account balance. My goal this month was to gain just as much as I did as last month, and I think I met that goal, which is pretty good considering I had 1 losing day this month where I lost $900. This week's gains were above average, which I contribute to trading with IB Book Trader. My goal was to gain more experience in trade executions this week using IB Book Trader, and it turns out that so far trading with IB Book Trarer has been a wise choice.

Weekly P/L= $2,005

I might not be able to trade next Monday or Tuesday, due to work. So I will probably do my monthly recap this weekend.

April 26 Trade Summary $406

I entered during the choppiest time of the day and still did alright, even though ER2 was acting with a bullish divergence compared to ES. I felt hesitant in taking trade signals early this morning, due to the fact that today I have the day off from work, and I have a tendancy to trade badly on my days off from work (Don't ask me why, it makes no sense to me either. Maybe it's because I feel since I have more time to trade I can take more heat on a trade, and I end up adding to losers. Maybe I get too relaxed from not having the added pressure of knowing that I need to stop trading at a specific time or else I'll be late for work). I came back for a scalp at noon to get an even 4 bills for the day, turns out I should have held that short scalp a little longer.

P/L= $406

Market observations-
1.Block trade signals worked well today given that we had no news.

I'll post more later, gotta go get some food and finish my recording.......

April 25 Trade Summary $239

I traded the first 2 hours, and now I'm done(I'm most productive during this time period and the market is looking a little choppy now).

P/L= $239

Good things today-
1. I'm trading more frequently like yesterday and gaining execution experience.

Bad things today-
1. I'm still making errors when exiting my trades using IB Book Trader.
2. I should have used a buy stop on my first YM short trade of the day, instead of going for a 5pt scalp.
3. I need to work on my entries when adding to a core position.(If your going to add to a long position, don't add by using buy stops placed a few ticks above the current price, instead buy when you feel its right, like right now, while the price is on a down tick)

Market Observations-
I'm going to make a new strategy that has a 80-90% chance of success during bull markets. It's called, "If new lows are being made between 7:15-7:30am with a decline in volume seen in ES,,,,,BUY!!!" Today we got the TIME REVERSAL of 7:15am on the dot on SPY,,,,YAWN... I should have held my long position,,,,,LONGER....
Also something I've noticed in bonds these last few months is ZN getting faded after a spike off of news after 7:30am, which follows in relation to JPY and EURO.

ER2 and IWM charts-


ZN/JPY/EURO-YM/ZG/CL


I'm thinking about imploying a new strategy on the currencies. I want to test on the simulator "how good of an entry" I can get using buy/sell stops on the release of economic numbers. When economic numbers come out that effect the currencies you will often see a spike in the currencies in one direction that lasts a good 20 minutes sometimes, where as ES may pop up then down, and then back up again before deciding a direction, which would end up chopping your position to pieces if you used this strategy on ES. I'm also thinking of doing a pair strategy on the currencies, where you enter a pair of currencies, 1 short and 1 long, with the more volatile of the 2 being the position you have a biased position on. This strategy would hedge your trade, and depending on how good of an exit you can get on your losing half of the pair, may be a strategy that has an edge worth trying. This might work on the bonds too, trading ZN/ZF/ZB. I remember Dr. Steenbarger had a post about a trading coach that did something like this, here is the article- Traderfeed: Dealing With Price Spikes: A Best Practice in Trading If anyone has any experience trading economic numbers on currencies or bonds, please leave a comment on your experiences.

Trader Tax Status

Trying to decide whether you should file for Trader Status or elect MTM accounting?
I've been doing some research and found some good information that may help.

Trader vs. Investor-
The only difference between filing your taxes as a trader when compared to an investor (considering your not a MTM trader) is-
1. You can deduct all your investing expenses on Schedule C, like any other sole proprietor. This is great, because investors have to account for these expenses on Schedule A, where they can write off only the amount that exceeds 2% of their adjusted gross income. Plus Schedule C writeoffs reduce your adjusted gross income, which raises the odds that you can fully deduct all your personal exemptions and take advantage of other tax goodies.

2.You can also deduct your margin account interest on Schedule C and probably take an immediate writeoff of up to $108,000 for 2006 ($112,000 for 2007) for equipment used in your trading activities more than 50% of the time (computer stuff, desk, bookshelves, fax machine, etc.; it's called a Section 179 writeoff). Home-office deduction? Sure, as long as you use the space regularly and exclusively for trading and the deduction doesn't throw you into a net loss position. Finally, you don't have to pay self-employment tax on your net profit, because capital gains are exempted. All in all, a pretty good deal.

3.If you're a trader, you will still report gains and losses on Schedule D, and can still deduct only $3,000 in net capital losses each year. All this makes for a pretty funky-looking tax return. Schedule C will have nothing but expenses and no income, while your trading profits (we hope) will end up on Schedule D. I recommend attaching a statement to your tax return to explain the situation.
(info courtesy smartmoney.com)

April 24 Trade Summary $541

Today was a learning experience in trading with IB Book Trader(2nd day trading with it). Overall I did alright, but I really need to work on my execution skills. As you can see from my trade execution report I put on a lot more trades than I normally do.

P/L= $541

Today I recorded my trading and reviewed the tape right after I got done trading. Let me tell you, I suck. I made at least 3 execution errors, with 2 of those executions errors actually being helpful. The trading errors are due to the fact that I don't have experience trading with IB Book Trader. I'm a little pissed that I didn't hold onto my long position that I accumulated at the lows around the KEY REVERSAL TIME of 7:15-7:30. My audible alerts that I've created using ATT Labs Text to speech software has being very helpful.

I was watching my tape today and I couldn't help but laugh at the number of times I swore at the computer and called the market a number of different names when I had my position move against me. The tape was funny, but also shows that I need to become more disciplined in my stops and I need to work on my execution skills using Book Trader. If anyone wanted to watch the tape I would upload it to Google; however, the file would probably be about 1 gigabyte and take forever to upload for me and download for you. Yesterday's tape would probably be more insightful compared to todays tape. If I were promote an educational website with my videos, my promo would sound like this:

With High Probability Trading you can learn how to become a successful Trader, as high probability Trader guides you through his "actual live recording of trading each day" you will be a MASTER of the MARKETS in NO TIME.
HIGHLIGHTS OF VIDEOS INCLUDE-
1.How swearing at the computer doesn't change the price of the stock you are trading.
2.How adding to your losers while at the same time swearing doesn't help either.
3.How swearing at CNBC's broadcasters doesn't help, because LIZ CLAYMAN and MATT DILLON can't hear you.
4.How telling CRAMER to F#%$ OFF during CNBC's afternoon call doesn't help your trades.
5.How saying F#&$ IT and adding your loser trades sometimes works for a second, only to screw you 6 minutes later.
6.How not following your trading plan makes your account shrink in seconds.
7.How taking the reverse of your trade signals is the wrong trade.
8.How forgetting how many contracts/shares your trading causes a sudden increase in heart rate.
9.How drinking lots of water while in combination of trading increased size results in more frequent trips to the bathroom.
10.How sweating while in combination to swearing at the computer is a sign to add your position, to help decrease your account equity.
11. More to come...Please feel free to add if you have any ideas.

I have alot to say about what I saw today and how I traded, but I don't have time to write about it, because I have to go to work, so I will leave you all with my charts I saved.

Notice the ZN/JPY/EURO relationship, and the relationship between GOLD/CRUDE OIL/YM/SWISS FRANC.



ER2 Block trade Chart



ER2 Indicator Chart

April 23 Trade Summary

I used the NYSE A/D and NYSE TICK to leverage myself into a short setup that was my big winner for the day. My goal is to find one good setup per day where I can use increased size with a profit target of 0.7-1.4 pts when trading ER2.

P/L= $402

This weekend I reviewed some of my recordings and noticed some good things that will help me in my trading. I noticed that I'm missing out on making more money because my trading execution platform was limiting my abilities. I have been trading from the basic IB order entry page, which is a really slow way to make trades if your looking to make your money by scalping. I was watching some of my videos and some of the ninja trader instruction videos and realized that I'm missing a lot of trade signals by not having a trading execution system that is fast enough to take my trades. So, today I started trading from IB's Book Trader, which with a single click, will execute my trade within a second. I missed about 3 scalp trades this morning from being to greedy in waiting for my entry to get hit. I was trying to sell the ask when the price was on the bid, and buy the bid when the price was on the ask. With time I should get better.

SCALPING-
My motivation to start scalping more is from reading an old chat transcript posted over at Linda's Rascke's website. The chat transrcipt was an interview with trading coach Jeff Quinto from Photon Trading. He said that he tells his new traders to make many scalp trades and to look for 3-6 ticks as a profit target and to stratch the majority of trades. Doing this will give the trader more exposure and experience in the markets and should help that trader in their execution skills. This is also something that Dr. Steenbarger; from TraderFeed, talks about in his new book "Enhancing Trader Performance". The chat talked about when you should PRESS trades, by adding to winning core positions, and that he never adds to losers. If he has a loser he cuts it, because something has happened that he didn't expect and he doesn't know why, so he exits the losing trade. I also like how he went over the time frame he holds his trades. He said that he holds winners for an average of 6-7 minutes and 3 minutes for losing trades. This is interesting because my winning trades normally last 3-6minutes, and my losing trades normally last longer than 3min, sometimes 15min from averaging into the loser, so this is something I need to work on. I need to start looking to cut my losers as soon as they are a few ticks against me, or after 3minutes when scalping. To checkout the chat transript checkout Linda Raschke's website.

Here is my new monitor setup showing Book Trader for ER2 and YM along with all my other charts that I use to trade with.





Market Observations-

I missed the big move in ZN, I saw the setup and didn't take it. I was skeptical because there was light volume between 7:30-7:40am, and I was expecting a pullback, but it never happened and the trend continued. O'well, at least I'm getting better at my intraday analysis on ZN. I guess I should have gone long on JPY if I was afraid of the higher risk trading ZN.



Tommorow should be interesting with these key #'s out tommorow:

07:45 ICSC-UBS Store Sales
08:55 Redbook
09:00 Bank of Canada Announcement
10:00 Consumer Confidence
10:00 Existing Home Sales
01:00 5-Year TIPS Auction
01:00 4-Week Bill Auction

The weather out here in Cali is looking beautiful, so I'm going to enjoy it. Have a good day ya'll.

April 20 Trade summary

I was done trading after my first trade, but then came back later and took a look at my account and noticed that I needed another $50 to make $1,000 for the week, so I put on a couple of scalp trades and made the extra amount needed.

P/L= $115

Market observations-
Option expiration was the highlight the first 15min, and then things started to tailoff. ZN and JPY are retracing as expected and the Dow has made new highs. I would not hold any longs over the weekend. I'm expecting next week to be very volatile, with a bearish tone. I'm really anxious to see where the market opens on Monday. I've noticed the Mondays following option expiration tend to be trend days, so be on the lookout.

Trade Summary for the week-
Well, I made up for my big loss I took last Friday and made some extra by going back to trading small size and taking high probability trade setups. Overall, the P/L for the week was average, but the amount of time I was in the market when compared to the P/L, was above average considering I only traded the first 2 hours 4/5 days this week.

Weekly P/L= $1,015

Tuesday of this week I posted charts showing Volume gaps labeled with VPOC (virgin point of control), and these VPOC's were filled as expected yesterday. I wanted to take advantage of the Volume gap seen on IWM (ER2 is the futures contract for IWM), but I wasn't able to because the hedgies gapped it down in the afterhours due to weakness in the asian markets, and I rarely will hold positions overnight so I wasn't in the trade. When the market opened Thursday, the VPOC had been hit and the gap had been filled. Moreover, there was no opportunities for short setups to the downside once the gap had been filled.
Checkout the comparison charts. These charts are a good example of how VPOC's and volume gaps can be used as a setup for short term trades.

IWM April 17:



IWM April 20:



ZN Tuesday April 17:



ZN Thursday April 19: