I don't know how many of you have tried using automated trading systems (whether pre-made or self-created), but I know that most everyone has dreamed about having one turn a profit for them. I have spent the past few days getting back into Ninja Trader. It's a simple, free (for non-live uses) automated trading program that allows you to backtest any historic data you may have against your trading system. Of course, configuring your own profitable trading system is the hard part.
Here are some of the technical indicators I am using:
EMA crossovers; 4, 8, 21 period (looking at 5 and 10, as well) RSI: When a crossover occurs, I like this above 50 for long, under 50 for short ADX: This helps limit entries during consolidation, rapid crossovers, etc. Stochastic: under 30 to go long, above 70 to go short.
I've ran this system on the S&P500, the DOW, and NASDAQ100 and the profits outperform the losses by 30% or so.
Anyone have a system of their own they wouldn't mind sharing, or maybe some ideas that work well for them?
The SPY is coming up to resistance on the point and figure. If it can break up two more boxes on heavy volume and maintain price above the current level, then going long may not be such a bad idea. Watch for a fall, though.
Here's a more verbose chart (can charts be verbose?). The SPY is coming up to the 30 day moving average, which has shown resistance before. If it manages to get above and close above on high volume, a long position would be a good. However, look at the falling volume (I know it is a holiday week, and that today was a half day, but that is all the more reason to be skeptical of the upward movement). This increase in price is not being driven by the exchange of many shares. The MACD turned positive, and the 5 day EMA has crossed the 10 day EMA, but I am skeptical that it will be able to hold; something to think about, because these are two signals that I consider when going long. RSI is almost 50. If it goes above 50, I'd forgo shorting, albeit, I am looking to buy some puts depending on Monday's action.
I sold my puts and calls before going to school around 8:00PST this morning. I sold the put first because it looked like XLF was rising, then I waited for a while (making about 10-15dollars) and then sold the call. If I held it until the end of the day I would have made another 40 on top of that, but I did not want to have to worry throughout the day. I lost $6 on the trade, plus commission, but it could have been $10-15 worse if I sold the put and the call at the same time. I really should have looked into the whole Citi thing a little more. That would have given me more confidence to hold the call (I think it will still increase in price, especially with the nice volume it received today).
After I placed the order the strangle was down quite a bit; sometimes the spreads on options can be god awful. At most it was down was 10%, but it slowly gained ground, and is now as shown above. Anyway, I have some errands to do. Take care.
Sometimes I think articles like this one from the WSJ hurt people. Yes, there is some truth to the statement: "The current volatility is less about fundamentals than forced selling." But, I personally believe it to be misleading. The fundamentals are terrible for many companies and for the US (and world, for that matter) economy as a whole. I have posted several things in the last week or two that point to this distressing fact, but the outrageous Debt to GDP ratio stands out most explicitly. When the author says, "Once everyone thinks it can only go down . . . it might go up" I cringe. In middle school, in high school, my teachers implied the stock market went in one, and only one direction over the long term: up. But, if you look around, it feels like we are economically stagnant, living in the 90's and (with a little imagination) the 00's.
PS: My opinion--don't get your information from cable television*. It's bullshit, nonsense, misleading, denial inducing, utter shit. Fuck, Winston had it better in 1984. Stay away from MSNBC with their decaboxs and the talking heads. You will save your sanity, and have time to dedicate to some actual study, not to mention, I have a feeling your account will not suffer nearly as much.
*yeah, I know the above article is from WSJ, and I enjoy the paper; it just reminds me a little of cable television.
I tried to find the scene in My Cousin Vinny where Mona Lisa Vito says, "I bet the Chinese food here is terrible." But all I could find was this annoying page (note: you need sound).
I feel like I should post something more than, "Up 5.3% on the DELL strangle;" but, that's all I have. I might post something else if I get through this book I have to read for class (or if I procrastinate and find myself reading interesting crap on the web). Anyway, check out some of the links to the bottom right. I have been adding to them every time I come across a site that I like. None of them are crap, I guarantee it.
Yeah, the video above borders on terrible. But it was most necessary. (There was another video called Party Like it's 1929, but the guy who made it was just a little too egocentric and nauseating for a link here.)
And here's the Motley Fool's take on the 25 years it took the DJIA to recoup the losses it sustained during the 1929 crash. All I can say is, hope you didn't need that money for anything in the next 5 years; and!, I hope you don't plan to make any interest on it for the next 5 years either.
So much for the whole 8% (or 10%+) return rate that seems to be factored into so many pension/retirement plans. Click here, for instance.
Dell is reporting earnings tomorrow (information brought to you by the lovely people at Option Slam--added to the "Important Technicals" section), and I figured I would give my new option purchasing abilities a try and do my first ever real strangle. I bought 1 DELL Dec 11 call @ 1.10 and 1 DELL Dec 10 put @ .98 for a total strangle price of 2.08 plus the expensive fees.
Note: Puts up 4%, Calls are unchanged.
Update: last update before I go to school. Up $17 on the puts and down $9 on the calls for an overall gain of $8, or +3.85%.
Yes, you read the title of this post correctly. There is an easy, completely legal way to get the Wall Street Journal for free. Although you won't get the journal delivered to you every morning in its paper form, you can read all the online articles for free with these few easy steps:
1) Go to WSJ.com
2) Choose the article you want to read (any article).
3) If it is a subscriber only article, go to the bar right below "To continue reading, subscribe now." Look for the "share" section and go to the icon directly in the middle (at least it is at this time), the icon with a little guy and a shovel. Click it and it will direct you to the website digg.com.
4) A window should open to Digg's site. Click on the link with the title of the article you wanted to read.
5) Wah-Lah! It is as though you are now a subscriber! (i.e. you can read the complete article)
There are some sites out there that discuss the ethics of using this go-around, but I am not going to link any of them. The few that I have read are poorly written and have directions on how to perform the above that will definitely confuse you (much too convoluted and overly technical; stick to the easy five steps above). Furthermore, the paper wants people to be able to access their articles from websites such as Digg and Google News. They do this on purpose. There are plenty of other things that a subscriber gets besides the articles anyway. If you want MarketWatch, for instance, you will have to pay. The same goes for making and reading comments.
"Ross said that we as a nation are to blame for GM's problems (I am not making this up) because we do not have a national industrial policy. The US allowed other automotive companies to build plants in states that had lower labor costs, and that is the reason GM is uncompetitive. GM pays an average of $33 an hour, and those selfish other companies pay a mere $19 plus a host of benefits." - John Mauldin (link). Thanks to Cluster Stock for the link. (Image: Graph of GM from 1962, with a peak at $87 in 1999, to the recent price of $3.10 during after hours trading).
I have been reading the Wall Street Journal lately. I find it rather informative compared to the local newspaper's business section (my grandparents get the San Diego Union Tribune and another county paper--thus, I get them as well). Of course, that is to be expected. What is also to be expected is a much more right leaning perspective, albeit the San Diego Union Tribune is one of the only major Republican leaning newspapers in California. But I am amazed at how right leaning some of the articles can be. For instance, this article on how "the treatment of Bush has been a disgrace."
I find it entertaining that the first evidence of disrespect Mr. Shapiro points out is an offense by 12,000 people in San Francisco. That is one of the most liberal, if not the most liberal cities in the entire country. Of course most people who live there are going to dislike a President who not only seems to shrug off their economic difficulties, most likely prolonging them, but who also stands in direct opposition to what many of them believe in (i.e. social self-determinism).
But, furthermore, Mr. Shapiro seems to think that quoting several comments from George W. Bush's speeches gives insight into Bush's true political sentiments. President Bush does not write those speeches himself. Many politicians, especially Presidents, have professional speech writers. I am guessing those Americans who dislike Bush do not do so because of the speeches he gave encouraging prosperity and unity. I think they may dislike the dismantling of the public military in favor of funneling that money into the private sector. I am presuming those Americans dislike the egregious abuse of prisoners in, oftentimes, recalcitrant prisons. They probably do not appreciate Cheney's connections to Haliburton, and his belief in being part of both the executive and legislative branches. There is much more including, but definitely not limited to, his handling of New Orleans during Katrina, his assurances that Iraq had connections to al Queda and WMDs, his blubbering incoherence and disdain for intellectualism, etc, etc, etc.
I do not mean to put down the entire paper. I enjoy it immensely. Actually, there are plenty of opinion pieces in the paper that I agree with almost entirely (such as Just Say No to Detroit). I just do not understand the sometimes extremely right leaning editorials. I am all for the fiscally conservative (something I am guessing most of the readers here would agree was not a strong suit during Bush's presidency), but when it comes to socially destructive ideas (whether on the left or the right), I just cannot bite. I do not see how writing an editorial on how disgraceful the American people have been contributes to the understanding of the current predicament. Perhaps an editorial searching for the reason the American people are upset would have been better.
I posted about the margin call in the comment section of the post below. It was my fault for being too agressive and impatient. It was a painful fall, but I'm getting back up. I'll post more later.
Averaging down is not always a good idea, but I hope it plays out well in this instance. SOL is up in the premarket. My average is down to 5.49. Looks like futures are slightly positive (not sure if that means anything anymore), but there are many other troubles looming in the business world. Intel's reported significant trouble, profits are down across the board, and the auto industry is receiving its last rights before being put on life support. So we will start the day in a precarious position.
My position in SOL is beginning to look bleak. I'm not bailing on the position, and, if I weren't already in at such a low average, I would probably purchase some more (what can I say?). I'm going to restrain my panicking until earnings are released Tuesday morning next week. Stochs are severly oversold, RSI is falling, I don't know exactly what to think.
On the bright side, while logging into my Zecco account to make a few charts, I discovered that my account has been given the option to trade options (pun fully intended). I'm stoked. If I come out of my SOL position with nothing more than a shirt on my back, I'm pawning it to trade some options. Imagine what I could do if I actually make money on the SOL trade.
Doji formation on huge volume? That's a very bullish sign. But, it looks like it may be breaking below the 52 week low... I'm averaged in at 5.66. Let's see how this plays out.
Forex trading is frustrating. I guess I am too impatient; but, I make $3 only to lose $4. And then I get pissed off and overleverage and end up losing even more money! Here's the last setup I'm banking on this evening. It appears to be an inverse head and shoulders (then again, I am seeing this setup everywhere) and it is very bullish. Hopefully my margin will hold out. Otherwise I am going to jump out of a fucking window.
Maybe patterns are, to a large extent, merely figments of our imagination.
(Clip from the 1998 Sundance Film winner, Pi. A well done movie about a mathematician searching for patterns in the stock market. What he ends up finding is God--or something like that, which explains the drill to the head.)
Starting with yesterday, things have been wild. I began trading currency at 2pm PST on Sunday. Within the first hour I was up 40% on my investment (my starting investment was $25, so I gained $10). I got a little too confident and leveraged my position much too high. These people let me trade $400 for each $1 I invest. Amazing. Of course, there is a mechanism in place to prevent a poor sap from losing more money than he or she has in his or her account. I overleveraged and got a margin call which killed all my positions and took my gains and added about $5 in losses. After that, I kept trying too hard to make the money back. At least, I learned a little about margin calls.
In the stock market I sold all my positions in the morning. Got out of the SPY (@ 95) position that I had been holding for several weeks, as well as my SOL (@ 7.86) position (saved myself half of the losses by averaging down on Friday). GS looked like it was going into the shitter early on, so I got out at 77.36 with a small profit. Got out of MSFT (@ 21.76) with a small gain, and FXP (@ 67) with a decent loss, but limited given the small amount I purchased.
As SOL began dropping I started picking up shares in small orders (@ 7.50, 7.30. 7, 6.75, 6.50. 6.30) for an average price of 6.89. I am down 5.54% on that investment, but I hope it pays off during the upcoming week. SOL's earnings will be reported on the 18th. I'm looking to pick up some more at 6 and lower, should it ever get there.
The trades I closed out this morning brought my account up ~6% or so from Friday. I did lose some on those positions I had in SPY and SOL. I desperately wanted to get out from under my position in SPY. With the bad news circling GS and GM, I'd consider shorting SPY, DIA, and/or QQQQ on up days. 90 is the support level that you want to watch on SPY; if that breaks I would be careful to the downside. In any case, I am beginning to side with those who say the S&P has a ways to go before it can be considered cheap [1].
GM. Toyota makes $1.6k per car it sells, while you lose $2.4k. What's going on? I think we're going to have to put you out to pasture...
I setup a micro forex account this weekend at ForexMicroLot.com. They have an account minimum of $25 and crazy leveraging (I'm going to be careful, albeit you can't lose more than you deposit). I figure that in my equity downtime I can work on making some money in the forex market. I have a lot of trouble with the US equity market because of the day trading rules. I like to add small lots to my position and sell when I think is best, even if that is within the same day. Hopefully I can do some more frequent trading in the currency markets. We'll see.
Added some cash to my account a couple days ago and made some purchases/day trades today. Bought EGLE at 9.09 and 8.92 this morning and sold it all at 9.75 later in the day making about 8.3% (looking to buy back in on Monday or Tuesday). I bought some SOL at 7.24 and 7.04 in order to bring my average down (looking to buy some more at 6.63 and 6.33 and lower should it continue sliding). Bought a little bit of MSFT at 21.36 and some GS at 75.99 (looking to sell around 80 or higher, but may cut it short around 77 depending on Monday. If it gaps down I'll buy some more). Also bought some FXP at 81.50 after reading this schmuck's website. Yeah, the Fly has his amazing moments, but sometimes he acts like too much of a jerk off for my taste.
If you are interested in a helpful and insightful technical site, check out The Market Speculator. His posts are cogent, lucid, and definitely not egregious (forgive the subtle reference).
I live in California, and, while others across the country are interested in the ban on gay marriage amendment in California, I have voted on the proposition and have been following it on and off over the last few hours here. I voted against the addition to the CA constitution. I do not feel that allowing two gay men or women to marry infringes on anyone's rights. However, I do think that not allowing gay marriage fosters feelings of invalidation in certain people.
Also, I am probably a little hostile towards a certain portion of Christians, a portion who may find gay marriage extremely aggravating. I love all (to my knowledge) of the Christians who come here and know many extremely pleasant Christians (my grandparents, mother, quite a few acquaintances) and do not intend to direct any anger or hostility towards you.
I am feeling as though this post will lead to the end of the election crap on this site. I have some feelings of good riddance.
Based on the futures, it looks like tomorrow will be a slightly positive day. Though, I would not be surprised if the market exhibited signs of uncertainty. We now have a Democrat as President--and likely what many may consider a sharp turn from the previous administration (personally, I am not sure if we will experience as much "change" as the candidate proposes and the country hopes for). On the other hand, I would not be surprised if the markets already factored into the price a good portion of the election results. I mean, the outcome wasn't a complete mystery.
More, hopefully, tomorrow.
PS: SOL is doing extremeley well (and it should outperform earnings estimates on November 18). If you want some other solar ideas take a look at SolarEarnings.com.
According to Intrade's election tracking page, Obama has a very good chance of obliterating McCain. Also, if you're interested, Forbes has an interesting article on Intrade's prediction markets. It has some info on how much money Intrade has made on the election contracts and what they are trying to do to improve their legal situation.
I like the futures. Things are green, and green is fucking beautiful.
I'm not sure if I will post anything else this evening, but I do want to link Dinosaur Trader. If you visit his site he'll defecate on you. And, you'll enjoy it.
