Monthly Archives: January 2011

Week4(a) 24th Jan 11

So I thought I’d look at what the FTSE is doing in light of the book I finished reading (see Book Review thread) and sure enough Tuesday was an up day, Wednesday was a ‘Bearish Engulfing’ candle – good signal of a strong reversal coming and Thursday everything dropped through the floor Friday saw indecision which may hint that prices will bounce off the support at 5900 but it’s of course not confirmed yet…

Certainly wouldn’t put on any long trades next week until there’s a bounce off the trend line, previous support/resistance or you get some sort of reversal candle pattern

If things keep selling off then it’s time to find shorts instead

Yes, I realise I’ve got way too many momentum indicators on my chart but all they’re doing in this case is backing up what the price action says.

You wouldn’t need all of these to come to the same conclusion.

Advertisements

Shorter timeframes?

So what happened by the end of the week? Let’s break it down…

SERCO – Went short and this never got into positive territory, should have closed the trade within the first 3 to4 days of opening it.

Forth Ports – Went really well during the first two days, should have closed it after day 2

Whitbread – Again, very successful initially but went all sorts of wrong until again I failed to pay attention and my stop got taken out. Trade should have been closed early on for profit.

Good points
1. 66% of my entries were actually correct in that they did move in the direction I predicted.
2. A number of errors were observed
3. Must focus more on exit strategy

Not so good points
1. Became emotionally attached to not closing the Whitbread trade for a loss
2. Saw all the trades as a group rather than individual trades
3. Failed to take action and analyse mistakes/price movement at the end of every single day

So basically I need to answer the following question for myself. ‘What is an acceptable target or point at which to close the trade in this market?’ Since volatility is high and there’s a great deal of uncertainty is the best policy to take the money and run? Answers on a postcard please!

Your P&L is not your friend

It’s been an interesting week and perfectly illustrates the following point.

Things began very well as I’d correctly entered long on Forth Ports and Whitbread while also shorting Serco… I was slightly unimpressed with the spread quoted by MF Global, especially on Whitbread but was prepared to let it slide as things initially went my way.

By the end of Tuesday I was in positive territory with 2 of the 3 but here begins my tale of woe 😉

What I now realise was there was a faulty decision making process going on. I was looking at the three trades as a group. In other words I was feeling that they should ALL be in positive territory before closing any of them. I failed to close my positions and subsequently these have all dropped back.

The key message from this is to look at each position individually NOT as a collective. They are not really linked but putting them together mentally means you can’t make objective decisions to close a position or keep it open. Your overall P&L is not your friend!

Free EOD data

I asked IG index whether they had more up to date documents for their Pro-screener, Pro-builder and Pro-backtest apps because the ones on their site are all listed from 2008… and it appears they get all this from another company!

Go to http://www.prorealtime.com/en and get the latest documentation (v3.1) which is more comprehensive and explains a shed load more things you can do!

Also you can sign up for FREE End of Day data from them without any worries. Excellent.

Efficiency and saving time

I guess one of the things I’ve been struggling with, especially as I began looking at placing trades on FTSE 350 stocks is that there are a LOT of stocks and really who has the time to go through them all every day so you don’t miss a potentially lucrative trade?

I believe in the efficient use of systems to optimise what I’m doing.

With eSignal and going through the K2A course you get a version of their screener that’s set up for PowerPlays’ though it seems the only way to really expand this to other criteria would be to pay for a monthly (increased) data rate… Not particularly ideal given where I am at the moment.

Also, eSignal isn’t linked to any of the broker packages I use so I’d have to see a position and then enter it in another package which, unless it’s just end of day creates a time-lag that could lose me some points! What I found today is great! You can program IG Index’s Pro-Screener for FREE!

This means that if you can describe something then you can write it down and if you can write it down it means you can program it to look for 350 stocks for you in seconds! w00t!

Total shocker…

What’s really lacking for me, and has been for ages is some sort of regular schedule… Today being a classic example… Get up, wander about, see what’s happening, think about some trades, fail to place one, see another has a 15 (WTF!) point spread on MF Global off a 440 point stock… then go to work. Watch the FTSE 100 blast up to 6042 without so much as a pause for breath. Come home…

Total daily achievement… Nothing, Nada, SQUAT! Much beating self over the head ensues… No easy to follow daily system!…

On a more productive note should be getting this in the post tomorrow… Will advise… EXCITED!

After this, no more purchasing anything… just trading, promise…

Getting ready… the time issue…

So as previously stated to a few this site goes live on the 4th Jan 2011 and the whole thing will run for 2 years. This may seem like a long time but if you break down the 10,000 hours that Malcolm Gladwell suggests is the time required to reach mastery in a subject then two years may just get me to novice status (2,000) hours.

Having tracked actual time spent on this topic over the last 6 weeks I come up with the figure of 22 hours. Frankly this is awful… Two years equals 731 days so just to make 2,000 hours (novice) that would be 2hrs 45 minutes per day. EVERY DAY. I’ll have to become a total mono-maniac 🙂