I suck at letting profits run. If left to my own devices, I will cut my own throat with winners every time. I will begin by lightening super early at arbitrary prices, then will continue lightening as it works some more, and then I'm left with a core position which seems so puny, that I decide to just exit because I wont make any money on it even if it works. Of course that last exit is usually too early and although the position was small, staying in would still have made me more money.
The way to fix this mookish tendency that I had come up with is to stick to the script and go for a get out all at a predefined target based on the setup. The problem is, its hard enough to follow when I have a setup, so when I don't have a specific, predefined plan yet still find myself in a position, I quickly resort to the only way I know how to exit, which I have already said sucks a big ball.
So, I have a new plan. If I have a predetermined plan, I will stick to it. If I don't, I won't allow myself to set arbitrary limits to exit. Instead, I will say to myself, how much do I like this trade? If I love it, I wont lighten or exit until I get an extreme tick reading of 1000 plus. If I only like it somewhat I can wait for 800. If I hate it, i will wait for 500. I guess if i am super amped about it I could wait for 1200 or 1300. But I usually hate a play as soon as I'm in it, so at the very least I will attempt to get 500, which are better, wholesale prices for my exits. This only applies to profits. If I am negative in the trade I have to respect my stop and not be tempted to wait for wholesale price at the risk of getting a horrendous move against me first, and hold through it.
I will try to stick to this new plan and reassess later.
-fmlt
Friday, November 13, 2009
Thursday, October 29, 2009
Further Refinements, and thoughts on long PC day
It occurred to me i don't have a contingency planned for when my down day pc play (DDPP) starts to work but then there is a late day reversal. So here it is. Once it starts to work, if it dips back above the MA, my exit is 4.5 points away from the initial touch of the MA, or my original stop loss exit, whichever is closer. That should hopefully be a good one.
Today was a great PC day on the long side. If i had tried to apply the DDPP rules to it, but reversed for an up day, i wouldn't have gotten in at all because there never was a sufficient pullback in the market. It got me thinking that i had seen a lot of up PC days that never had a decent pullback but closed by their highs. That would be a classic trend day. I'm not sure if this is because up days are always like this, or the bull market that we find ourselves in,but that seems to be the case. I'm going to look into it further in order to come up with a good UDPP setup rule list, but in the meantime, i am inclined to think it will have to buy it at a worse relative price, all the while keeping a sufficiently far stop. So it would be riskier, but could still be quite profitable. I will revisit this soon.
Today was a great PC day on the long side. If i had tried to apply the DDPP rules to it, but reversed for an up day, i wouldn't have gotten in at all because there never was a sufficient pullback in the market. It got me thinking that i had seen a lot of up PC days that never had a decent pullback but closed by their highs. That would be a classic trend day. I'm not sure if this is because up days are always like this, or the bull market that we find ourselves in,but that seems to be the case. I'm going to look into it further in order to come up with a good UDPP setup rule list, but in the meantime, i am inclined to think it will have to buy it at a worse relative price, all the while keeping a sufficiently far stop. So it would be riskier, but could still be quite profitable. I will revisit this soon.
Wednesday, October 28, 2009
Down Day PC Play rules adjustment
Well it worked today, and like gang busters. I didn't do much for various reasons. Suffice it to say I suck. Also I did it wrong. But that's neither here nor there.
Here is my adjusted rule list on this play.
Get in 2 Points above where if first crosses above the MA after 1PM. Stop 2.5 points away. Exit if it works - as soon as the market goes 4 points below the MA after 3PM, else, right before MOC's come out.
heres the chart of today (if following the new rules, locked 9.75 of profit and only 2 points of pain at the worst.)
Here is my adjusted rule list on this play.
Get in 2 Points above where if first crosses above the MA after 1PM. Stop 2.5 points away. Exit if it works - as soon as the market goes 4 points below the MA after 3PM, else, right before MOC's come out.
heres the chart of today (if following the new rules, locked 9.75 of profit and only 2 points of pain at the worst.)
Tuesday, October 27, 2009
new bearish pc play to try out
Seems like we just might be rolling over for a little while, daily chart-wise in ES. I've looked back a couple weeks, with the assumption, that if the dynamic of the market has changed recently from bullish to short term bearish, there would be some kind of pattern emerging with the way down days play out.
PC has been working better lately than it had been. I have been really trying to get involved in that again. So I have been looking at these down days for an afternoon PC trade. I have noticed that out of 4 similar down days that i looked at, 3 of them had nice drops close to the close, or after 3 at least. The fourth one did drift up the last hour and a half but didnt rip or anything. So i came up with this trade: If by 1 oclock, we havent had a real bounce on a down morning, wait for the first squeeze to the MA, (if we are above at 1, wait for a cross below for confirmation, then sell the next squeeze to it) then put on a short trade for a couple hours- pc style. Stop-loss has to be fairly far, like 4.5 points. The exit, if it works, is into the first decent size drop after 3. If you don't get one, out before imbalances come out. Out of the 4 samples, i would have made nice bank on 3 of them, and lost about 2 points on one (if didnt take a small profit of 1 or 1.50 on the drop shortly after 3 and instead got out exasperated around moc time). Two of the 3 that worked were today (actually yesterday, its after midnight) and friday, so recent action confirms.
Since this bearish action in the markets has only started recently there were not many examples to look at, meaning that there isn't quite so much confidence to be gained from any patterns found, but PC is something well tested. Also, I have thought that the market tends to do what its been doing recently much more often than would be implied by mere coincidence, and also much more often than it tends to repeat behavior over long periods like months or years. Because of this i think there is a strong chance that in the near future this behavior is likely to repeat, and so i am compelled to try to do this play. I will try it out the next couple times I see it, and hopefully not mess it up too bad. I will reassess then if i need to. Lets say, next setup like this i see, i will do it with 3k shares of spy. That loss if, it goes wrong of 1350 gross doesnt seem too bad... If it really starts working repeatedly and my account balance recovers i can always size it up later.
here's how it would have worked out today
-fmlt
PC has been working better lately than it had been. I have been really trying to get involved in that again. So I have been looking at these down days for an afternoon PC trade. I have noticed that out of 4 similar down days that i looked at, 3 of them had nice drops close to the close, or after 3 at least. The fourth one did drift up the last hour and a half but didnt rip or anything. So i came up with this trade: If by 1 oclock, we havent had a real bounce on a down morning, wait for the first squeeze to the MA, (if we are above at 1, wait for a cross below for confirmation, then sell the next squeeze to it) then put on a short trade for a couple hours- pc style. Stop-loss has to be fairly far, like 4.5 points. The exit, if it works, is into the first decent size drop after 3. If you don't get one, out before imbalances come out. Out of the 4 samples, i would have made nice bank on 3 of them, and lost about 2 points on one (if didnt take a small profit of 1 or 1.50 on the drop shortly after 3 and instead got out exasperated around moc time). Two of the 3 that worked were today (actually yesterday, its after midnight) and friday, so recent action confirms.
Since this bearish action in the markets has only started recently there were not many examples to look at, meaning that there isn't quite so much confidence to be gained from any patterns found, but PC is something well tested. Also, I have thought that the market tends to do what its been doing recently much more often than would be implied by mere coincidence, and also much more often than it tends to repeat behavior over long periods like months or years. Because of this i think there is a strong chance that in the near future this behavior is likely to repeat, and so i am compelled to try to do this play. I will try it out the next couple times I see it, and hopefully not mess it up too bad. I will reassess then if i need to. Lets say, next setup like this i see, i will do it with 3k shares of spy. That loss if, it goes wrong of 1350 gross doesnt seem too bad... If it really starts working repeatedly and my account balance recovers i can always size it up later.
here's how it would have worked out today
-fmlt
Wednesday, October 14, 2009
Learning Day
I didnt get any good quality setups today, so i am not pissed about being flat. On the other hand, PC worked great so I have to formulate a plan of action for that bitch. I am thinking buy either once or twice, a point below the MA and a stop loss 4 or or 5 points away from that, cover at 3:40 or 3:20. Need to work on that this weekend. Also, what to buy? SPY IYR or KBE would be the most likely candidates.
-fmlt
-fmlt
Tuesday, October 13, 2009
Subscribe to:
Comments (Atom)