svengali's Blog

[svengali]

Week 1

A trading diary is good for the soul, I am told. So here is a diary for my first week of trading. Just for background, I have a SB account, and am trying to trade in the evenings (7:30 to 9pm). And I am plotting charts by hand. In my first week, I have done 5 trades, resulting in a loss of 35 points.

Trade 1 - S&P 500 daily. +1
Traded this mainly to check my password and work out how to drive the software. I was rather pleased to make a point though.

Trade 2 - DJ Daily (15/4/03). -9
Noticed an upwards trend forming at around 7:40pm, waited until it had passed the day's open level to ensure it wouldn't meet resistance there. Entered at 8357@7:45. Trendline broken at 8:02, but I dithered as I was still not in profit. Sold at 8348@8:04.
Not too sure what went wrong here. I spotted the trend, entered when it seemed to be confirmed, but the trend didn't last long enough for me to make enough to cover the spread. I'll put this one down to experience until I understand the chart formations a little more.

Trade 3 - DJ Daily (15/4/03). -12
Noticed what I thought was a downwards trend at 8:08. Decided to go short at 8343@8:12. The trend didn't really exist, and I dithered before bailing out at 8355@8:20.

I regretted entering this one as soon as I had clicked 'Sell'. I had two opportunities to get out at only 5 or 6 points loss, but I held on. This was clearly a bad trade - there was no strong indication to enter the market (but I did anyway), and there were signs that I should leave asap (which I ignored). The only consolation is that I left seconds before a 10 point jump up.

Trade 4 - DJ Daily (15/4/03). 0
Noticed another upwards trend forming and went in at 8371@8:28. Trend held until 8:35. Rather than dithering, I closed immediately for zero points.

Nothing really wrong with this trade, although had I been a little less jumpy, I could have turned a profit on it (max 26 points available). Since I felt that a contributing factor to my previous two losses had been dithering before exit, I think I overcompensated a little.

Trade 5 - DJ Daily (17/4/02). -15
Noticed a gentle down trend at about 7:35-7:40. Waited for it to hit the 8300 level to see if there was still support there. Price moved sharply downwards to 8295, so I shorted at 8294@7:44. Sadly the 8300 level wasn't really penetrated, so after meandering around for a while, I covered at 8309.

The main problem here was that I thought the support level had been penetrated when it clearly hadn't. This was due to a combination of a large spread (7) and confusing sell price and mid price, and also inexperience. Now that I know a little more, I shall be more careful about ensuring a level is actually penetrated - by at least the spread.

After losing 15 points in one trade, I decided not to trade again that night. Instead I continued plotting and identifying possible entries. I was pleased to spot an 8 point gain that I could have had, although over 20 points were available if you knew what you were doing.

 

[Helenqu]

Hi Svengali,

Great to see a new diary You are trading very like I did at first, in fact you could probably just transpose some entires

One thing to watch with SBs is that you really need to look for longer term trades than a few minutes. However good a trader you are you'll find you only break even at best if you try and scalp. SBs aren't for that really. I'm saying this cos it took me 700+ trades and still being at breakeven to find that out

All the very best, Helen

 

[svengali]

Hi Helen,

Thanks for the response. I thought I'd try to swell the ranks of the lonely diarists a bit. Incidentally to all you lurkers - writing about your trades (especially the critical self-analysis bit) is definately worthwhile. Do it here in a diary, and enjoy the feedback.

I understand what you are saying about SBs not being particularly well-suited to short term trading, but I think I'll ignore that for the moment!

My main aim right now is to prove to myself that I can actually make money trading, not necessarily to make large amounts. Short term trading suits my personality reasonably well, since I don't think I would be happy leaving a position open if I wasn't watching the screen.

Whilst I appreciate that the spread is a real problem for short term trades, I have looked at the charts for the time period I am trading and can see that there is money to be had. Not big money, but enough to counteract the spread and keep the pot (and the confidence) gently building.

If I can see that I could have a future in trading, then I'll be prepared to commit the relevant financial resources and choose an appropriate approach. But until then, I am sticking to being a 'mug'.

--Svengali

 

[Trader333]

Hi Svengali,

I think Helen has hit the nail very much in the head here in that, because of the spread using a SB company, you are already down in every trade right from the word go by the 7 or so point spread.

That said trade 4 was by far the best in my view and not because it didnt result in a loss. The reaon is because you exited the trade the moment you realised that the market did not immediately move in the direction you thought it would do. If you apply this rule to every trade then you will make money in the long term. There will be times when you exit a trade and question why you did because if you held on you would have made money but this has to come secondary to immediately getting out of trades that the market does not confirm as being immediately correct.

Cheers


Paul

 

[svengali]

Hi Trader333,

Thanks for the feedback. I was quite pleased with trade 4 myself, as I simply got out without dithering. More trades like that I think. I'll see what happens next week...

--Svengali

 

[Helenqu]

Hi S,

Please don't think I was criticising, I wasn't. Just be aware that if you don't make money it may not be your lack of trading skill, just that what you are trying to achieve is VERY hard

All the best

 

[svengali]

Hi Helen,

I don't think you were criticising at all. I simply think you were pointing out some of the pitfalls of using SB companies. I appreciate that. I am aware that there are many downsides to SBs (mainly the spread, the fact that they use futures, and the old chestnut of bias/no bias). And I understand that these downsides are a particular problem for the timescales that I am considering. Anyone considering SB companies for either short term trading, or as an entry point into trading should become familiar with these things.

However, SB companies do have one redeeming feature (or at least, the one I am with does! Can you guess who it is yet?) - and that is a low initial cost.

If I can prove to myself that I can make money (however little) reasonably consistently, then maybe I'll move up a rung and choose an approach that isn't stacked against me so much. But until then, I prefer to count my loses in pennies rather than £10s.

And as to keeping positions open for longer - frankly that scares me. As someone who was born in Yorkshire, I like to keep my eye on my money!

Thanks again,

--Svengali

 

[svengali]

Week 2

Definately a learning experience this week. On a purely numerical view, I didn't do very well. But looking a little deeper, I learnt quite a lot, and also proved to my satisfaction that there are possibilities that I can exploit.

I'm not going to detail exact trades this week, since I find several of them embarassing...

Tuesday - 2 trades, both dire
I learnt three lessons tonight. The first trade taught me the lesson that the trend is your friend. The second trade taught me the lesson until the bend at the end. Two trades that I shouldn't have entered. However, the biggest lesson I learnt was not to trade whilst feeling tired - my judgement just disappears!

Wednesday - no trades!
Quite pleased with Wednesday - no losses. Spent the entire evening plotting points. By the time I had got enough plotted to start thinking about a trade, there wasn't anything that screamed 'trade me'. On reflection, there were a few places I could have had a few points, but no regrets.

At one point I found a small bull triangle. I predicted the target, and the target was met! However, the size of the target was such that it was touch and go as to whether I would cover the spread. I was pleased with this event for three reasons - firstly I could clearly see the signal whilst it was still developing, secondly I could estimate the target successfully, and thirdly that I didn't take the trade on because I wasn't happy with it. A step forward I think, from simply taking on anything I can see.

Thursday - 4 trades, 1 good
First trade was very pleasing. I spotted a break of a trendline, and took +4 points. Yea! A win! So pleased with this, I went in again and promptly lost somewhat more.

I started concentrating again, and spotted a short opportunity coming up. I took it. The profit peaked at +15. Did I take it? No - my current rule is to take the money when the trendline is broken (or I'm about to go from profit to loss). Trendline is broken at +11. Did I take it? I should have, but for a minor distraction...

Normally my sense of humour is reasonably robust. But for some reason, I didn't find the encouragement from the dining room (shouts of "Buy! Buy! Sell! Sell!") either useful or humourous. Consequently, I got out at a loss (-1). I was fuming! Desperate to vent my anger, I decided to show the market who was boss, and try to claw back some of my money. Naturally, the market showed me who was boss, and took some of its money off me.

Summary
Some of the lessons I learnt this week - they may not be relevant to you:

Do not trade whilst tired
Do not trade whilst angry
Do not trade whilst euphoric
Invest in earplugs

Progress continues...

 

[Helenqu]

Hiya,

I'd face up to embarassment if I were you, I really believe than the more open you are the quicker you learn Actually listing trades and what you did wrong is really helpful and people can often help a lot by saying things like "Yes I was always doing that but I found........"

 

[svengali]

Hi Helen,

Maybe I'll give fuller details for week 3. I've given reasonable descriptions of all my trades this week, just not the actual figures. Then again, my errors this week have been more personal than technical, so the actual numbers aren't so relevant for a public audience.

And anyway, they are really, really embarassing!

--svengali

 

[svengali]

Week 3

Not a bad week this week. Again, I traded on 3 evenings (Tue, Wed & Thu), using the Daily Dow, between around 7:30pm and 9pm. Actually, I didn't trade on Wednesday. Whilst plotting the data, I didn't find anything that took my fancy, so I gave it a miss. I made a total of 4 trades, two winners and two losers. Following Helen's advice, I'll disclose a few more details about the actual trades.

Trade 1: 29/4/03: +12
Shortly after I started plotting points, I saw a long entry. I jumped in and stayed for 12 minutes, and made 12 points. I was pleased with this trade (not least because it was a profit), because I saw an entry and also a target price. I got out as planned around my target (actually 2 points down, but close). Naturally, the market continued after my departure, but I hadn't spotted the signals at that point, which leads me on to...

Trade 2: 29/4/02: -6
With a little more market data under my belt, I felt another long entry was called for. Sadly the price met a resistance level I hadn't plotted. When it became clear that the level was not likely to be broken soon, I left. No real problems with this trade - I found an entry I was happy with, along with a target price. I got out as soon as I realised the trade wasn't going to work. All in all, a good trade. Well, as good as losing trades can be, I suppose.

Trade 3: 29/4/02: -30
8 minutes after I closed trade 2, the resistance level was broken. It had been tested a couple of times, and now breached. Time to go in, I think. It dawdles around, just above the resistance level. Just as I am thinking it is time to leave as there is no action forthcoming, the price drops around 20 points. Huh? A glitch, surely. I get another quote - another 5 points down. Time to get out, I think. Hence the monster loss of -30 (biggest so far).

Although impressed by the speed the market moved against me (never so fast in my favour, of course!), I was more interested in working out why I had been caught unawares. A couple of minutes with a ruler and a sharp pencil showed another trendline I hadn't seen. It had been breached around 90 seconds before the -20 fall. I'm pleased there was a clue - maybe next time, I'll see it and get out (even better, go short).

Trade 4: 1/5/03: +20
Saw a double top (1st peak around 7:10, second around 7:45), and went short when it failed to cross ~8475. Slightly worried when a pullback continued more than I expected, but I realised it was more like a bear flag. Recalculated my target, which was met spot on (I got out only 1 point away). Yes! A further 10 points were available for those with wider pieces of graph paper, but I only found this out after I had taken my money.

Summary

A good week, I think. Net change was -4, but I don't think that shows the entire picture. I learnt a little more about applying TA, and was rewarded with a couple of nice profits. Also I am more confident that I can actually make money from this market, even using an SB company. Overall, a good week, I think. I wonder if I can keep it up next week...