What a Day!

Posting from my phone. So much red.  Trying to post a chart of ES.  Normally will see a continuation into Monday.  Have to say normally in this market


The Things I’ve Learned From 5 Years of Trading

This post isn’t a one and done. It will start messy, and may finish that way but I will constantly update and try to organize what I write here.

  • Filed under: Advice to Ambitious Beginners
    • Almost all indicators are derivatives of price and volume.  The more time you spend learning how to read some indicator (e.g. RSI, MACD, etc) is time wasted that you could have been learning the subtleties of price and volume.  In the end, price and the bid/ask are all that will matter.
    • Trading is about survival.  Especially in the early months and years.  Count on the money being gone when the trade is over.  Plan on it.  There are so many opportunities that come around over and over.  Risking <1/2% per trade is a good way to start .  Trust me it’s so much better and easier to start small and finish big than the other way around.  You will constantly improve over time.  It is logical to risk the least when you are the least skilled.
    • Find a mentor
    • Be wary of paying for systems or anything. Traders who advertise big winners and almost no losers are part of the “fuel the big easy money” mindset that will turn your pockets inside out. Learning to trade well takes YEARS of practice and experience.
    • If you have a $10,000 or whatever sized account and think you are going to be able to return 300%, 200%, or even 100% every year that would make you one of the best in the world. Aim realistically
    • If you are fading moves or trying to catch them watching how volume is expanding or contracting with price is a very significant part of the puzzle.  Don’t neglect to watch the volume bars.  They are the second most important indicator.  Some might argue the most important.
  • Filed under: Small Time-frames 
    • Day trading is difficult.  Why?  The smaller the time-frame you trade on the less room for error.  Thus swing trading using daily charts you will have a much wider risk range than trading off a 5 minute chart.-This leads into the way price behaves.  If you see the same pattern on a 5 minute chart as on a daily chart and that pattern seems to lead to a bullish move 85% of the time then do you have the same edge on the 5 minute as on the daily? No you do not.
      Think of all the participants, shares, and contracts that have gone off the create the daily pattern vs the number on the 5 minute pattern.  They are similar but there’s simply less of a case being made on the 5 minute pattern.
  • Filed under: Human Behavior

    • Know thyself.
    • I could start writing out a bunch of bullets like “Don’t revenge trade or try to get even”, which is true but this is common sense.  Falling prey to this habit is a matter of personal weakness.  I’ve had to deal with this and there are so very many personal pitfalls in the world of trading that you will be bound to experience many of them. Trading is very personal performance journey where mistakes will be made. Hindsight will make those mistakes obvious and yet you will probably repeat them again. In the end it will be about finding a way to catch yourself from being the weak emotional being your are before mistakes take away capital.
      Easier said than done.
    • Have a plan. You need to have a plan for how you manage your account, how you are going to manage this trade, your day, what your short term goals are, what your long term goals are and so on.  What’s the end game about? What is today about?  Why this trade?  Playing it on the fly or kind of knowing what you are doing and getting away with it will always backfire on you.
  • Filed under: Risk and Reward
    • Manage risk.  Be obsessed with risk.
      Before you take on the trade figure out what you are comfortable losing on the trade.  From there you can calculate the size you want to put on (and should probably divide by two if you are new to trading).
      Seems simple but DO NOT assume the trade is going to work and DO NOT start figuring out how much you can make before realizing what you might lose.For example even now running the passive SPX strategy with covered calls I think to myself how much could I lose if I wake up tomorrow and the SP500 is down 20%
      Seriously I think of that and it comes into play with how I manage my own money.   Is it likely?  No of course not but in managing my own money I want to know every way I am exposed to the market taking it.  Anything can happen to anyone at anytime.
    • The idea of risking 1 to make 2 or 3 is great but it’s not the only way to make money.
      Risk $1 to make $3, you win 40% of the time.  EV is 0.6
      Risk $1 to make $2, you win 50% of the time.  EV is 0.5
      Risk $1 to make $1.5, you win 65% of the time.  EV is 0.625.
      Risk $1 to make $1, you win 80% of the time.  EV is 0.6.
      I’ve found the style that suits me best is to be right more often and accept worse payouts
  • ====================================================
    to be continued…

A Few Individual Looks

TWTR not sure what to make of it but below 60 and consolidating appears bearish to me.  I’m ready to pounce on weakness.

TSLA incredible relentless move today.  I caught about $6 of it with decent size but never expected the rampage we saw.

Implemented 1x passive SP500 position today using covered calls. I was thinking of allowing up to a 5x multiplier but I’ll leave those types of swing for options if the market reaches an very oversold position and I feel it’s worth the risk.

This market certainly proves over and over and over how strong it is.  Swinging BMRN long.



FB has a bullish slant to it at the all time highs. Earnings Wed, 1/29 AMC, Fed day.

2014.01.14[18.57.55]_TC2000 ®

Semi-Passive Returns w/ Low Volatility and Drawdown (SP500)

I’m going to begin implementing and tracking a discretionary but mostly passive investment strategy using covered calls and the SP500.

I will be move between 0,1, 2, 3x size in the SP500 (SPY or mini contract) and use covered calls at all times in equal proportion.

I will use various analyses and experience to increase size during pullbacks in bull markets.  At a time like right now on the first vertical development in the markets since 12-18-2013 I will stay in cash (zero, no covered calls).

Instead of using monthly options I will use weekly options in SPY 1/2% to 3% away from market price depending on volatility and where the market is.  When I decide the market is oversold I will sell option strikes  further out (3%) in order to capture more price movement.

This is not to be a trading strategy but a passive strategy with a decent amount of discretion in order to increase absolute return and in all likelihood reduce worst drawdown.

Chart Comparisons: Last Week vs Now

Revisiting some of the charts I saved from last week and comparing them to now.  Out of these charts I took risk in VCLK and HRB.
Current swing positions: C, HRB, VCLK, IWM (Russell).  Swings closed MDVN

VCLK then and now (long stock)


Current Weekly Chart – attractive

2014.01.12[12.26.36]_VCLK - Charts - 86_____73 Main@thinkorswim [build 1852.9]

CFN (no position)

2014.01.12[13.26.13]_TC2000 ®

HRB (long, covered calls)



MJN (failing)



JNK bonds / similar HYG… drop in rates



BMRN still hasn’t moved out of range, although did drop and fail to move lower Monday


Current IWM chart (long calls)



MDY already new all time highs

2014.01.12[19.49.46]_TC2000 ®

TWTR intraday short

Yeah so I caught a nice short trade in TWTR but really screwed it up leaving ~30-40%.
One of my issues is that I don’t slow down my exit process.  I.e find very small timeframe to get big, I magnify the size and shrink my risk range down for the trade planning on scalling early but fail to to slow down once I am down to a much less risky size and take the whole thing off –  a huge leak in the long run.

I took my last piece off at 62.33 and 62.39, leaving over .50 cents on the table.

I was short stock and long weekly puts, mostly stock.

The setup


Time and Sales -see size at 62.9


The final result.



+0.6% added to equity portfolio with this trade.  Mistakes were made, could have been 1.0%

TWTR – To Soon to Plunge?

Nice movement in TWTR for swing trading, and thinking about the next move — seeing the consolidation take place between 70 and 60.  I have a bias for the upside.  Is the bias sound?  

No not yet.  This thing is a beast and could rip tomorrow to 75 but before I get excited about a full on plunge I’d like to see a more filled out consoldiation.  I know a large block of Feb 75-85 verticals went off today but I’d like to see more evidence before putting any % of money at risk.

Most recent trade in TWTR was a swing long using covered calls from the not so bearish intraday activity in the on 12/30/13.  Posted to TWTR in realtime.