Wednesday, November 21, 2012


Holiday trading should you do it?

Before I get to that I want to go through a recent trade in the Swing Service that is going to change how we are placing the stops and why it is going to change. This is RB and you can see where we went long and exited. I am going to go through the logic of this trade and why we put the stop where we did and what we are going to have to do going forward.

I mentioned in here recently that I was bullish on the energies and as a result I was looking to get long in one of them. I showed Crude at the time as an example of something I thought was setting up for a rally potentially. Since I judged Crude to be weaker on a comparative basis than RB was I decided to go long in RB instead. You can see where we got filled and things were looking great right from the get go in this trade, WERE! I typically trail stops back a few bars, under pivots, or under/over what I consider to be break out bars. The logic being that price should not come back to these points if the trade is correct. I still believe that is the correct way to place stops. However, there has been a bit of a learning curve in the service regarding stops.

One of the things that is clearly stated in the web site is as follows:

These rates are for individual investors only. The services are solely for your own use. You are legally prohibited under any circumstances, from sharing the signals with anyone else. We have made the fees very reasonable in price, so that they represent very good value. Any business wishing to subscribe, must contact us to discuss a rate. 

The reason we stated this is that we want to limit the number of contracts being traded by our group at the prices we state so we do not create fills just by having large blocks of orders sitting in certain places. We have now seen on 4 different occasions in just a month and a half of this service being offered, very suspicious stop fills. We have seen them in Bonds, Hogs, RB and now the Swiss. In all of these cases the market has run quickly to where our orders were and immediately reversed. In the case of Bonds we were filled on the exact low tick a couple of weeks ago.

I did send out a message after our Hogs trade asking that if someone is violating the agreement to please stop doing so because they were hurting not only themselves but the rest of us. I am making these trades also. Alas, that has not worked. Until I determine who is doing this we are going to have to modify where we are placing the stops to really make the market prove us wrong to get us out of a trade. I hope this does not come across as being a cry baby but in my personal trading I cannot ever recall a time of having 4 trades do this is such close proximity to one another. I suppose there is always the outside chance of a change in the markets but I don't think so. This is just way too much of a coincidence in my judgement.

If you look at the above trade it was close to a break even trade. I personally lost a couple hundred bucks due to the roll of December into January so this is not a huge loss but as I type this the trade is about $2400 above in terms of equity were we still in the trade from we were taken out. If by chance you are a broker trading these or someone who is giving the trades away to someone else please consider what you are doing and whether or not this is worth it. Subscribers to the service have seen as of this morning how we are going to make some changes in how we enter trades with the one we are chasing after today. I am not going to sit by and let this happen any more. Also, you can see in the above chart where we are going to have to keep the stops now. They are going to have to be further back for a while longer than I like to hold them, to try and prevent this stop hunting from happening. I wanted to keep this small so this did not happen and this is also why there is a limit to how many people we are going to take into this program.

I am a bit ticked off now but mostly at myself. I suspected this might happen and I should have been keeping the stops further back knowing the possibility of this existed so this is my fault.

The reason in the above example the stop was moved up to where it was is the bar prior was judged by me to be a breakout bar and we should not have looked back at that point. As I look at that now I think I made a mistake in judgement there. This really was not a huge break out thrust bar and we should have held the stop further back in and still been in. Oh trading....... it can be difficult and frustrating at times. I can tell you knowing others have lost in a trade bothers me a lot more than I loss I personally take and I was in this trade as well. This is why I do the trades in the services. I think if someone offers something like this and they do not do the trades themselves it is not ethical. I got burned too. We also took a loss in the Bond System yesterday so it was not a good day for us overall. Losses do happen though that is one thing I am 100% sure of.


The results above show buying the ES on the open the day before Thanksgiving and exiting the first profitable open. You can see the results for this are terrible only 2 of the last 10 have been winners and there was one disproportionately large win that skewed the total into a net gain. Overall this is not a strategy that has a seasonal bias. That does not mean we can't or won't rally for other reasons. It just means there is not a holiday bias to the long side. The next summary is buying 2 days after the Thanksgiving holiday. I ran buying day 1 through day 5 following the holiday and this was the best of them. I still don't consider this to be a tradeable edge. Net net, there is not a seasonal edge in either direction at Thanksgiving during the last 10 years.

I do expect us to move up over the near term in the stock indexes and we have to keep in mind that date of November 30. That is the Euro mystery chart date established for a significant high to be put in. It does not mean that will be the highest high of the year it just tells us prices should come down starting around that date. I for one am very interested to see if that turning point works because it ties in to other things I am looking at that tell me to short this bounce at some point for a trade to hold for a little bit.

Good trading and sorry for the lousy trades this week. We had the right trades I think but the stops were in the wrong place.


Anonymous said...

That sucks. You are a good trader, not many people are (including BigSwingingD___s). I,too, figured this would happen. Also, would bet there are some "new" trading services that pop-up and "ironically" take similar trades. I used to follow a very good emini trader and saw this happen. Life on the world wide web. I personally haven't taken a trade of yours yet, but have learned a heck of a lot in just a month and half. Thank you and I hope you have a wonderful Thaksgiving with family and friends. November 30th looms! - Chris C.

Jim said...

Those big computer algorithms seem to be able to sniff out where real orders are parked., and know how to go there and come back while still making money.

It almost seems like they are waiting for you to enter your orders so they can get them.

Chris Johnston said...

Yes guys I suspected this would crop up but not so quickly we will get through it we had two good trades here and just got picked off. I think the RB stop was correct and the Swiss was too close.

Happy Thanksgiving

Sebastiaan said...

Hi Chris, maybe I'm mistaken about the volume of the bond market, but I thought that volume there is massive, which means it seems illogical that some brokerage would be able to push price to there, just to trigger maybe 50 or 100 stops?

Chris Johnston said...

In general I agree but what if it were a few thousand stops there? If would watch the spread during the day there are plenty of times where there are 100 or less on either side. If there was an order for 1000 sitting within a tick at that time it could easily happen. If these are being given to a large firm with a lot of clients 1000 lots could be being created with it. I hope not and doubt it on some levels but the facts are beginning to overwhelm the case. To have 4 such occurrences in such a brief time goes beyond what should be normal. I just have to change the stops slightly.