May 30 Trade Summary $1,517

Unfortunately I had technical problems with IB this morning and missed the first hour of trading, and as a result missed some good trading. IB failed to log me in this morning and wouldn't open the book trader when I finally did get a connection. I finally got connected at 7:30am and scalped the next 2 hours, took a break, and scalped another 20min, and now I'm done for the day.

P/L= $1,517 (61 RT)

Broker Problems-

IB error on log on-


Also, for some reason my total contracts traded on my trade summary log is showing double the amount of contracts I actually traded. It says I did 122 round turns today, when I actually only did 61 RT.

Trading style today-
Today is the first day I implemented a new trading style based on scalping volatility spikes. This new style of trading should have profit targets hit quickly and has a tight stop as default. With this new style of trading I hope to increase my contract size for each trade, become more mechanical in my trading, and eventually be able to move to trading ES to trade larger size.

Market Observations-
NYSE A/D opened at the lowest level I have ever monitored before (I'm sure Feb 27 was a lower value), but the futures couldn't push the NYSE A/D down any further on heavy volume during the morning, and we rallied right back into bull mode and have been trending up all day. ZN got faded today like it usually does at 7:30am, and XLE and Financials look to be the strong sectors today, which are the best sectors IMO for a trending bullish day.

March 23 Trade summary

The only good setup this morning was the reversal on YM/ES after the pop from the news this morning. I missed that move, and then decided to try to get a reversal setup on JPY based on what I was seeing in ZN and the EURO. The trade took forever for just a small scalp and I didn't feel like waiting all day for the trade to work out because today looks like it's going to be a chop fest and I have other stuff to do today.

Overall this week was a little tougher to trade because of the effect the FOMC announcement had on the markets. I did ok for the time I traded and I'm starting to learn a little about bonds and forex to progress my trading.

Yaser Anwar made a recent post on how he trades Futures, Equities, and Forex- I like his style of trading, and I have a similiar approach. I believe that looking at other markets such as the Forex market and the futures for stock indices and bonds will make you see the market as a whole and you will start to see patterns develop on how all these markets interact with one another. For instance the pattern that we have seen for some time now is the inverse relationship between the Yen and the US stock indices, which is due to the affect of the Yen carry trade.
Also, the bond market and the Yen have shown a close correlation between one another as well.

I found a small article that explains the basics of the carry trade:
Yen carry trade - implies borrowing Japanese yen at low interest rates (0.5%) to finance purchases of high-yielding assets. The investor earns the interest rate spread or "carry" as long as interest rates in Japan do not rise (increases borrowing cost) and exchange rates are stable (exchange rate risk if the yen appreciates).

To briefly explain the process, Japanese yen is borrowed at very low interest rates. The yen are sold to buy a stronger currency. The new currency can be used to purchase a high-yielding asset. At the time of unwinding the trade, the asset is sold to obtain the principal and interest in the underlying currency, which in turn is sold to buy yen and repay the yen denominated loan.

Such a trade can be hedged at about a 100bp (1%), so if an investor borrows from Japan (@ 0.5%) and invests in US treasuries at 4.5%, he clearly earns 300bp (3%). The yen carry trade has been like a continuous money generating opportunity for big investors. Trillions of dollars are estimated to be in this trade, which has indeed been profitable for investors.(Yen Carry trade article, courtesy Poonam Bhana)

Feb 28 daily chart

First off let me say that the media is full of BS when it comes to what really happens in the stock market. CNBC is doing it again today (I listen to CNBC in the background). What do I mean? Bob pisani, saying that Bernanke moved the market up this morning. Bernanke didn't move anything, it was weak short covering both in equities and bonds that occured before bernanke even sat down. Now we have Bill Griffeth saying that yesterdays 500+pt drop on the dow was due to a computer glitch. PLEASE get the facts straight! YM had no discrepancies in price. When YM was down 400+ pts, DJI was only down 280pts according to CNBC. What really happened was that retail traders were getting burnt to smetherings from forced margin calls yesterday, which added to the fire, and resulted in the huge drop. I remember watching CNBC's fast money this last weekend were the head retail trader said to sell radioshack before earnings, nice call,,not.(RSH was up 18% after earnings).

I traded on the simulator today because I'm working on my trade execution, although I wish I was trading with my real account, I need the practice. There will always be another day to trade, but right now I need to hone my execution skills. I've had to switch back to trading off of the ER2 chart because my IWM tick chart looks scattered.
Today we had several AMEX tick reversals, first a -100 amex tick reversal and then a 100 and 200 tick reversal all at the key reversal points of the morning. I'm seeing a new trading pattern, which is if we get program trading at 9:45am est, and then we later reverse above/below that level within the next 30min, then look to go with the reversal. I need to get rid of some of my charts on my monitors to speed up the CPU's processing or get a better computer because my computer is not running efficiently enough for the volatility that the markets are showing right now.

Here's the morning chart with my drawn in trendlines and red block trade signals. I've refined my NYSE TICK chart with a new filter for volatility spike reversals using bollinger bands and starc bands overlayed.



I traded my regular size and did good on the simulator today, about 2-3 losing trades that were cut at 0.7pt losses, and some good winners with size. I missed the short covering rally to 798 because I left the room, but I got some good action and I'm pleased with my trades for the day. I need more work on incorporating the TICK volatility signals with block trade signals.

P/L on simulator=$~1300