Thursday, December 29, 2011


The Good news is that the first trade I went live with here with the new tools was closed out with a profit yesterday. I have posted my exact fill prices on the chart, it yielded .91 cents per share or 1.3%. My exit prices were slightly different than the actual MOC price, I made a discretionary call to exit a bit sooner since I was leaving to go play golf and was not going to be in front of the screen for the close. That call wound up getting me a few more cents out of it than it would have brought had I been here. I am glad this trade turned out like it did because this is typical of how these trades seem to be.

What I have tried to dial in here is the following. I am trying to spot very short term trades, that are very extended in price, that are also in zones that my tools tell me the insiders are betting in the opposite direction of the current move. In this case, my indicators were telling me we were very overbought in a spot where the big guys were looking down. The bad news is that I am getting a lot of emails from folks wanting a lot more on this. 

I am going to be a little patient with this. I need to have some trades under my belt with real money, both wins and losses, to reconcile them with how the system says they should work. I have to be sure that this methodology will work consistently with real money, before I go to the next step with it. One other thing to keep in mind here is that when one of these trades signals, there is not a magic price to get in. What you want to do is try and find the strongest momentum on a short term basis that you can find, then go against it. You do this with the idea that we are at a short term turning point, and a reversion should happen very quickly. There is also real danger in this method, there are no stops. Some of the trades will go against me quite a bit before a reversion happens. That reversion may only take me back to a place where the exit is just a smaller loss, and not actually a profit. The next chart is just such an example. I mentioned I put a few of these trades on. All of the closed trades have brought in a profit, but there is one that is still open, that is likely to be a loss.

You can see from the chart, that if the trade were to be exited today which is unlikely the way it looks now, it would be a loss of .09 per share. This trade is a likely example of one that by the time the short term oversold condition gets here, it will be above the entry price which was 61.10. Let's watch this bad one live now together to get a good idea of the downside to this method. I do worry that less experienced traders see good trades in here and get too eager to jump into the game without making sure they have their ducks enough in a row first. Trading is a difficult profession. As you progress you will come across countless seemingly incredible discoveries. Most if not all of them will be proven to be no good in short order. If it were that easy, everyone would be doing it etcc...

This tool I call the Kitchen Sink, is over 10 years in the making, Tennnn Yearrrrs!!!!

I cannot emphasize this enough. I have no idea how many hours I have spent studying, typing code, thinking until my ears hurt, trying to figure out the best way to get around some of the COT data limitations. There have been countless things that seemed very promising, that did not turn out to be any good at all. This one is different. No matter what market I look at, it works. However, how to best trade signals on a short term basis with it is not complete. I know I have a functional method, which is the one I used for the COO and CPT trades, but I think it can be improved. Here is one of the other trades I have done with it that worked out quite well and indicates how good it can be, whereas the COO trade was marginal.

This is an example of one where the method just dead nailed a great short term move. I believe this will happen quite a bit, but I also believe the other two scenarios will as well. One thing to keep in mind, there are countless trade opportunities, the markets will be here tomorrow. Of course I have to qualify this with as long as Douchefett does not get his way, we will be able to trade them. Let's just be sure the approach is the best it can be before hard earned money is put at risk.

In summary, we have 3 trades I have shown, one was a small gain of about 1%, one is a losing trade, and the other is a big win. This if it were to be representative of a large group, would be quite promising. As soon as I am comfortable that this will be the case, I will release more trades. Until that time I am going to cherry pick them. In this case it would have been best had I cherry picked the last trade, but we never know in advance which ones will be best. The very first one I did, was COO so that was why I posted that one. I posted it when I did it.

I always generate a lot of energy, probably mostly negative, when I make bearish Gold comments. I know the world wants this market to be their savior. I missed a recent short here, and you can see alas the new indicator is not perfect after all. It did not signal a sell other than at the very top of the last few months price level.

You can see it gave us the Sell at the top, then a good buy zone after that. It has not gotten into either zone yet, but is close to the buy zone. This is why I mentioned the other day that I was looking more to the long side than the short. We are closing it appears on a weekly basis below the key support levels. This could be a short term bear trap, but overall this is an ominous sign. I did have recent short term sell signals a few days back, but I passed on them due to my seasonal bias which was up. A blunder obviously. It always seems so easy after the fact. The bottom line was it just did not meet my rules the way I like trades to so I missed the trade.

I am not trading much this week, I just have a couple of trades on, I am mostly gearing up for next year. The markets are very quiet intraday right now, so don't push things.

Good Trading and thanks for the interest on the new tools, just be patient.

1 comment:

John M said...

Just wanted to say thanks for taking the time to write a thoughtful answer to the long-winded comment I left the other day. I see your point and can't disagree with a lot of what you said...retiring at 50 with full government benefits isn't going to help any country. That's a good example of the lack of common sense I alluded to. No common sense, no good outcome whatever system you work within.