August 27 Wrap

Got smashed to pieces today.  On days like this it is sometimes worth it to be down 3R just for the education I got from the markets.  Hit a brick wall trying to bounce back from -2R, got range-bound in a bunch of stocks that did nothing for like 2 hours which is wildly frustrating.  Totally shattered so will go over the session tomorrow.  Literally could not have traded worse today if I’d tried!

Saturday update:

So Friday was crazy.  A good lesson in not to even think about trading an hour either side of a Big Ben speech.  Traded pretty badly for most of the session which is disappointing.  Looking back at my trades and some charts, it looks like I was in contrarian mode for the whole afternoon – I seemed to be fighting the relentless market internals which is clearly a bad idea.

I was relatively heavy on the day too, trading 7800 shares over 28 trades with a 64% loss rate.  36% to the upside is sustainable if you’re average W:L ratio is over 2, but mine was 0.90.  I was predominantly short which is why my performance was so weak.  I lost the lions share of my cash during the 11am-2pm window.  I also had some heavy ECN fees after realising my rebate schedule (as displayed by prop) was inversely calculated.  I only managed to get money out of UPS and APA, GS FDX BIDU & AAPL were the losing stocks.  At the time I felt I had a decent handle on the GS and BIDU tapes, but it was the way I traded them that was bad.

Breadth for Friday

Posting the internals separate today because they had some good action.  I seem to have been in micro mode rather than macro on Friday, these internals were non-stop bullish from 10:15.  Even the breadth showed continuation patterns which is rare (generally it just trends), the breadth ratio too was good, kind of mirroring the A/D line.  I do remember this pennant after 2 and seeking long exposure (went long BIDU) – I should have kept adding to the upside from there, instead of cashing early.

Combined A/D

Zoomed in a little to negate the crazy opening, this too showed several continuations to the upside.  Any period of consolidation on this chart was shown by a weak volume sell off across the board.  When this happens you should be adding to longs or disposing of scalp shorts.  I did neither.  13:30-14:30 was a great contraction period.

NYSE TICK embedded

With the exception of the INTC selloff in the morning, the TICK was stuck at positives for the whole session, minus a few bars that only reached -500 at worst.  This TICK is extremely bullish, and meant that any tick below the flatline should have been bought, particularly in times where the A/D line contracts and the breadth remains upwards.  Missed a lot of trading trying to fight the tick which never works.  Check how many tick highs there were today, haven’t seen that (to either side) in quite a while.

WFC breakout

WFC is in my basket, and this presented me with a few trades which I never took advantage of.  I’ve been using GS as a financial barometer, and the relationship between the two started to change this week (relative strength and weakness wise).  This triangle breakout looks pretty promising to the upside for a gap fill.  23.40 and 23.60 should offer a good support range, and I’ll keep this in the basket for next week.

BIDU - multiple entries, traded 3 of them

BIDU was insane for action on Friday.  I started watching this around 11:30 and was looking for a low volume pullback for an entry to the upside.  I was gauging this trade off of these technicals, and the price action from GOOG.  GOOG was setting up a descending volume pullback (protracted bull flag on 5 min) and I traded the 12:30 pullback-bounce.  I did cash out for small gains, and then missed the more implied 123 at 78 (13:00).  I also caught some of the range breakout over 78.75, but traded it badly and scalped out for flat.  I did start accumulating at 78.75 on the retest, nor did I trade the secondary range breakout.  I did catch some of the 123 pullback, but likewise the profits were meagre despite large size.  Ended up net -0.25R in BIDU and am baffled at how that happened with such a basic chart.

GS is for the quick and 1:1 riskers

I love this chart.  Even though GS was a harsh mistress today, I absolutely love this kind of volatility as it reminds me of just how fun (and profitlossable) trading is.  Caught quite a few entries here, but like BIDU, I finished net -1R here despite cranking out some good trades here.  I am again amazed at how few of these trades I caught, given that I was transfixed by this price action for much of the session.  From memory, my range high shorts worked well, but a 123 short (circa 12:40) was a bad loser.  I did reenter as it went lower though.  I did not participate here between 12:30-14:00, where in my opinion, the best trading was.  You are wrong quickly on Goldman before you eventually become right – it is a question of how you mitigate risk in between those two which makes you a good trader.  I was pretty bad today.

IBM simplicity

I had a real habit of being in the wrong stocks at the wrong time on Friday.  This range resistance on IBM was to the cent on the bid/offer, likewise the 123 retest at 11:00.  I knew this was going to breakout, so I planned to buy the breakout (within 5 cents) and the subsequent retest.  By this time though, I was involved deep in BIDU and missed this completely.  With such a volatile day, I wasn’t confident in placing limit orders unless I could give the price action full concentration.  This made me miss some nice R multiples here.  The IBM 5min of today will show this setup a little clearer, I’m using the 1min for the several mini-trades that Big Blue offered.

Learned heaps Yesterday so it’s all good in the hood.  Fridays action did put me down on the month, so the goal for Mon/Tue is to apply what I’ve learned over the past 4 weeks of day trading to see if I can catch a swing to the upside.  I generally trade best when I’m clawing back a drawdown (except from Fridays -2.4R debacle) so let’s see what happens.  I am doing better than I thought I would for my first full month of pro prop trading.

I have also gained a large enough pool of sample data to begin statistical analysis of my intra-day performance, which should make September a more informed month.  Keep an eye out for some intra-day strategy posts, and a weekend update on the overall market.  I’ll try upload more videos next week too.

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