Why trade?

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I have to trade because of the intellectual and emotional challenge and the satisfaction I get from trading well.

I love to trade because I find it interesting, and it challenges me every day to discover who I am and what I can do.

I like to trade because it combines my passions for action, research, intellectual challenge and adaptation.

Trading directly supports my personal and financial goals and rewards me for the time and effort invested compared to other things I can do with my time.

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Live trading workshop and research weekend summary

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we had:

1. options trading and grain trading presentations from career traders in those lines of business which were outstanding.

2. Hunter’s discussions of Value Area based on volume stats and market profile were superb and very helpful during a volatile week

3. numerous analytics of various implementations of some of my systems and the systems of others

4. refinements of blended monthly rebalancing

5, live trading challenges and results

6. tradestation research reports and demos

7. status reports and trading and business plans with deep insights

8/ Wayne Mueller’s work on “when to know if your trading systems id broken” based on Monte carlo and stats  was outstanding and very thought provoking

9. opening range breakouts, use of frog SD etc

10. visual trading from the chart with BB and tick charts

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weekend strategy report for July 16, 200

• Market in Bull Normal;  Market is Oversold on a short term basis
• Equities sold off this week, with volatility increasing slightly
• Blended monthly rebalancing, current holdings:
  • 26 ETF portfolio:  FXF, IYR, IEV
  • 13 ETF portfolio:  IYR, DIA, EFA
  • next re-evaluation  on/about  1 Aug
• ETF2 notes: no change, adjust stops
  • Theoretical exposure is recommended at 50%;
  • model portfolio is at 100%
• You can use this link for adding questions  and/or comments to be addressed in the weekly webinar

http://www.surveymonkey.com/s/WeeklyWebinar

Weekend report review, exec summary for Jul 09, 2011

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• Market in Bull Normal;  Market is Overbought on a short term basis
• Equities maintained the gains this week, with volatility declining slightly inspite of weak employment numbers
• Blended monthly rebalancing, current holdings:
  • 26 ETF portfolio:  FXF, IYR, IEV
  • 13 ETF portfolio:  IYR, DIA, EFA
  • next re-evaluation  on/about  1 Aug
• ETF2 notes: no change, adjust stops
  • Theoretical exposure is recommended at 90%;
  • model portfolio will be at 100%

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Tradestation system bundles ready to go

The TradeStation Bundle2 is just about finished; I was proofing the code and appearance today and in the words of Bill Brower, Tradestation programming wizard: “This is very cool”

The “Alphastat” which uses linear regression lines  and statistics to define trends, can be applied to any number of symbols in order to find those symbols, from a  population with the reatest relative strength vs the market  and the rest of the population, and just as importantly, when it goes out of leadership and runs out of steam. It provides an excellent tool to judge when to harvest profits after a good run in a un a unique way.  There are a batch of other indicators too which support many different styles of trading, related to finding moments of relative advantage, and a “state change” in multiple time frames.

A state change occurs when the underlying conditions of the symbol/market make a nonlinear change or turning point. Being able to get alerts at the crucial times is very handy

the frog style trading is continuing to impress. Our supertrader continued his performance with a 6R trade today with less than optimal entries and exits.  Turning out to be a very robust and popular strategy

Example: MCD (see attached case study) was top 5 Frog candidate today (and also tomorrow), and yielded between 3-5R without any effort at adding positions or finetuning exits

I will be asking our Tradestation programmer to code that as a separate module. his estimate is that a system that performs like this goes typically for 5K in the tradestation world.  more to follow

Reminder:

Tradestation Bundle 1: a set of 6 swing trade mechanical systems, a continuation pattern module (makin it 12 swing systems) and a set of intraday trade management indicators that use rangestat and standard deviation to calibrate profit opportunities

Bundle 2: a set of 6  market and population classification systems that alert you to trends and state changes in all time frames and markets

Bill has seen packages with much less go for 5K each in Tradestation land.  IITM clients and seminar attendees get steep discounts;  contact me for more detailed specs and prices

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Blended monthly rebalancing strategy

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Beginning July 1^st I will be shifting the 331, 631 and 333 strategies to a “Blended Monthly Rebalancing” strategy in this space.

As a result of the hard work and backtesting of many mastermind members I am satisfied that we have found a ruleset that offers improved reward:risk, and risk management.

The 3 systems we have been following here have done their job just fine, but by refining the list of ETFs to choose from,  incorporating a blend of the 3 and 6 month lookback period, and adding a  monthly moving average filter to the system I believe we have a significantly improved strategy.

I am writing up the rule set for distribution this weekend and will distribute it and a spreadsheet for implementing it to Gold and Silver members. I will continue to publish the current list of holdings in this space for the variation of the ruleset I will follow

weekend strategy report, June 04, n2011

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• Market in Bull Normal;  Market is neutral on a short term basis
• Equities remained sideways all week, with volatility increasingly slightly
• Rebalancingproject:
  • Monthly rebalancing : next re-evaluation  on/about  1 June
    • 331 is holding  IYR, EEM, TLT
    • 631 is holding IYR, MDY, IWM
    • Quarterly rebalancing: next re-evaluation on/about 1 July. 333 is holding DIA, MDY, IWM;
• ETF2 notes:   selling IJK, XRT
  • Theoretical exposure is recommended at 0%;
  • model portfolio is at 20% after the sells

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Important insights from one of our workshop participants this week:  a ton of good learning inside these ideas

Our initial stop placement reflects the information available when our trade is initiated. Any price action after the trade provides additional information and can be used to update the stop placement. An example is the use of the MACD histogram to exit before taking a full 1R loss.

If your system is designed to catch singles, don’t wait for the home run before exiting. Take the single and move on (until you can recognize when the market is making it obvious that this time you should hold on for more).

Markets may have unique characteristics that should be taken into account when making framing and trading decisions. DBA, for example, can be framed with tights stops, seems to make orderly moves, and sees more action only after the opening of the grain futures markets.

Framing trades with tights stops right after the open feels like getting caught in a dolphin hunt (the underwater tornado). The lunch and afternoon sessions tend to provide a better environment for identifying trades using the WMB method.

The importance of understanding the type of move you’re trying to capture (F –> C; B –> A), and matching your entries/exits with that type of move.

After learning how to trade large index ETFs (IWM, SPY…), index futures provide a way of using the same skills to produce higher returns. 

Respect the R.

Opportunities are available any time the market is open. 

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defining critical price levels for any trading target

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Price levels you should know for any target in your asset allocation strategy

• Minimum mandatory exposure
• Minimum price level indicating RS momentum advantage
• Limit of Maximum rational outperformance
• Maximum outperformance in the lookback period
• Maximum outperformance since the target began trading
• Your estimate for next new high?

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pre-market call on silver

the overnight session in precious metals was strong, and given the “maxpain” and oversold condition of silver, we ar  prepared for an upward-trending momentum day in silver. An intraday move of 7% in silver is normal these days (between low of the day and high of the day) which translates to a move greater than $2