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PositiveDev's trading journey

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My GS trade got stopped out at slightly better than break even point a couple of days ago, I QQQQ as I have now switched it for a position in SSO (as a result of a recommendation from elsewhere - not a signal from my system).

 

FSLR was sold too early before the huge move up, very frustrating to get a signal, take it and get out before a massive move up.

 

I sold my whole position in TBT today for a great profit.

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My GS trade got stopped out at slightly better than break even point a couple of days ago, I sold QQQQ for a nice profit as I have now switched it for a position in SSO (as a result of a recommendation from elsewhere - not a signal from my system).

 

FSLR was sold too early before the huge move up, very frustrating to get a signal, take it and get out before a massive move up.

 

There was a sell signal on SPY I missed on my indicator early on Wednesday (3.55pm while I was at work), I'm posting it for little reason other than pure self gratification since I can't take advantage of early day trading signals whilst at work. I need my trading platform installed on a computer with my formulas programmed in and that's not possible at my workplace. Irritating. The intra-day signals would make for great futures trading.

 

Screenshot2010-12-16at181127.png

 

I'm still intrigued as to why some excellent signals happen in the early part of the day (on an intraday timeframe)...in fact there was an intraday buy signal (double bottom) early last friday at 4.30pm (the start of the chart - not highlighted), another damn good one.

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Found a sell signal on USO (West Texas Intermediate Crude ETF)

 

Screenshot2010-12-16at203411.png

 

Bought January puts at $36 strike. For me this one is interesting, as you can see the previous signals were good, although 2 didn't work straight away.

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There was a sell signal on SPY I missed on my indicator early on Wednesday (3.55pm while I was at work), I'm posting it for little reason other than pure self gratification since I can't take advantage of early day trading signals whilst at work. I need my trading platform installed on a computer with my formulas programmed in and that's not possible at my workplace. Irritating. The intra-day signals would make for great futures trading.

 

Screenshot2010-12-16at181127.png

 

I'm still intrigued as to why some excellent signals happen in the early part of the day (on an intraday timeframe)...in fact there was an intraday buy signal (double bottom) early last friday at 4.30pm (the start of the chart - not highlighted), another damn good one.

 

I just want to expand on the point I was making here about the intraday signals being very useful for futures trading. Below I have posted a standard chart showing with a red line the equivalent point to above where the sell signal was generated, 3.55pm on Wednesday for E-Mini S&P futures, the sell signal was 1.5 points from the intraday high.

 

Screenshot2010-12-16at214742.png

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I've been looking for an ally to my indicator for some time and think I may have found it. Regards the example above another observation is that prior to the market's sharp move down and to the point where my sell signal (vertical red line) was generated there was a marked divergence between NYSE TICK and the E-Mini S&P futures.

 

Screenshot2010-12-18at095417.png

 

A couple of months ago after I came up with my indicator I had a dream I was talking to George Soros and he told me, "You need to find the second part, look for the other part".

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A couple of months ago after I came up with my indicator I had a dream I was talking to George Soros and he told me, "You need to find the second part, look for the other part".

:) Nice dream. (Or not?)

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Well possibly a very useful dream... I only remember that part of it, then my alarm clock went off. Guidance from above perhaps! I was a bit stunned by it to be honest, I hardly ever remember dreams, when I do they are usually abstract with no obvious meaning.

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Screenshot2010-12-18at095417.png

 

Correction to the above chart, the lower part, the TICK chart, was from a different day to when the signal was generated. Below is the proper chart with TICK data from 15th December, the same day the sell signal was generated.

 

Screenshot2010-12-27at123500.png

 

This shows TICK declining as E-mini S&P futures climbed up to the sell signal point, then the futures declined. Not all of my intraday buy and sell signals work but if using the TICK data I can make it more accurate then I will be able to initiate improved risk/reward intraday trades, when I'm available for them. I'll continue to monitor TICK alongside my indicator for the index futures.

 

 

-------------

 

 

My sell signal on USO has not acted as expected, my double top sell signal was breached during trade on the 23rd (this is where my indicator (in black) rises above the double top formation). I was travelling that day and unable to react however the Crude oil futures are down today so if I get out it will be at a more favourable price.

 

Screenshot2010-12-27at124340.png

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Today I had sell signals on NKE and SLE, and a buy signal for BHI. Yesterday a sell signal was generated on COST.

 

COST

Screenshot2011-01-05at214641.png

 

BHI

Screenshot2011-01-05at214817.png

 

Oil seems to be in a general uptrend so I bought I vertical call spread on BHI. Consumer discretionary (XLY) and consumer staples (XLP) seem to be stalling somewhat here so I've gone for a vertical bear spread on COST. In theory one hedges the other.

 

NKE has been on the turn for a number of days and SLE had a very sharp move up recently so I've left those out.

 

 

Performance comparison between XLE (Energy ETF), XLY and XLP

Screenshot2011-01-05at213337.png

 

 

I also had a sell signal on GDX on 3rd January but......I didn't take it as PMs were seemingly unstoppable.....(that would have been a nice trade)

 

 

GDX sell signal 3rd January

Screenshot2011-01-05at215002.png

 

 

Just for the record another beautiful early intraday signal on SPY (anyone following this knows I can't take them as I'm working). Posted just for the record.

 

 

SPY buy signal 2.40pm today

Screenshot2011-01-05at215337.png

 

 

E-mini S&P intraday chart with buy signal point noted

Screenshot2011-01-05at215446.png

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I've just found a sell signal generated yesterday for GDXJ

Screenshot2011-01-05at233416.png

 

I may yet jump on the GDXJ put train. The normal price charts for GDX and GDXJ have a slight similarity to a chart of LQD I posted a while back following a DBDT sell signal I got on that, and it broke down hard shortly thereafter. Food for thought, although the fundamentals are completely different. GDXJ will get smacked down harder than GDX if it does break.

 

If it does it will catch a lot by surprise (but not all ;) )

 

Well I hopped on board at start of trade yesterday with GDXJ puts so we'll see how this works out.

 

Also bought puts on X (United States Steel) today, the actual signal to short was given during trade yesterday but it isn't on my usual list of stocks that I scan so I didn't spot it until after the close and therefore missed part of the move (-4.94%) today. Quite annoying but historically when X drops, it drops hard so it's possibly worth getting on board, albeit a day late.

 

X sell signal yesterday

Screenshot2011-01-07at231551.png

 

X

Screenshot2011-01-07at232357.png

 

I also had sell signals on the following;

 

RIMM

GS

FDX

JNJ

MET

 

I have many positions open so didn't take any of these.

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I bailed out of the COST trade a few days after entry as that wasn't working out.

 

I don't normally do intraday trades these days but here's one from Thursday 13th, a short on FCX (Freeport McMoran Copper and Gold).

 

Entry via double top on my indicator, the double top sell signal actually occured at 4.45 however I wasn't back home then but I spotted it before 6 and noted the price was right around the same level, it had just consolidated since the signal so I bought puts at 6pm. The price then dived $3 into the close - Now that's what I'm talking about! Great trade exited before the close.

 

I've been searching for other tools to complement my indicator and had looked at TICK data, and although that is useful for trading the S&P 500 and the NASDAQ it's not suited to individual stocks. I'm a big fan of Linear Regression channels as they provide a great context when looking at price. The next chart shows FCX with Linear Regressions channels and the point of entry.

 

Screenshot2011-01-15at221105.png

 

The first vertical red line is where the signal was generated at 4.45, the 2nd is where I entered the trade at 6pm, as you can see the price of FCX (in blue) was at the same level so the opportunity was still live.

 

The point of entry, 6pm Thursday

Screenshot2011-01-15at222634.png

 

This is where it gets really interesting for me. What I did with the Linear Regression channel is add an additional line that is 34% above and 34% below the median line. This is intended to show where price deviates 1 standard deviation from the mean much like on a bell curve, but in profile along the price channel. You can see that these lines have often served as support and resistance throughout the price channel. You can also see at the point where the trade was placed the price was exactly 1 standard deviation lower than it's mean.

 

messagepart.png

 

A typical bell curve, the 1st standard deviation is at 68%, the 2nd standard deviation at 95%. What I'm also now doing is looking at volume, plotted in profile across the price chart (the light blue bars). Read from left to right if the blue bar is longer it means there was higher volume at that particular price level. What I also did was plot lines across the previous days volume profile in order to seek potential support and resistance areas.

 

I split the previous days volume profile in the same way as the Linear Regression channel - to show the extremes but also - and this is key - the 1st standard deviation from the mean. So the lowest blue line is the low for the volume profile for the previous day (12th) and the highest line is the highest volume print for the previous day. The middle blue lines show where volume deviated 1 standard deviation from the mean. I then extended the 1st standard deviation levels from the prior days volume profile onto the day of the trade to show where likely support and resistance levels would lie. The main volume of trade on the 12th (68%) took place between 121.53 and 122.48, the grey box represents that range.

 

 

 

Follow up price action

Screenshot2011-01-15at185438.png

 

This is how the price played out, from the trade entry the price met resistance at that 121.53 level, failed to close above it (by 3 cents!) then there was a dramatic change in trend to the downside. Looking at the price action now we can see that the trade entry point is now shown one standard deviation higher than the mean price so the trade signal point was just before the price trend effectively switched from up to down.

 

I think I may have now found the ally to my indicator I've been searching for.

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I spent too long editing the previous post and can't edit any longer;

 

In the second paragraph in the previous post....

 

I've been searching for other tools to complement my indicator and had looked at TICK data, and although that is useful for trading the S&P 500 and the NASDAQ it's not suited to individual stocks. I'm a big fan of Linear Regression channels as they provide a great context when looking at price. The next chart shows FCX with Linear Regressions channels and the point of entry.

 

It should read, "The second chart". The first chart is the sell signal on my indicator.

 

Apologies for any confusion caused.

 

 

There was also a buy signal on the S&P 500 on Friday at 2.45, however this was too early in the day whilst I was working so I didn't see it until much later (much to my chagrin this has happened a number of times).

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There was also a buy signal on the S&P 500 on Friday at 2.45, however this was too early in the day whilst I was working so I didn't see it until much later (much to my chagrin this has happened a number of times).

 

E-mini S&P 500 (2.45pm is at the end of the chart)

Screenshot2011-01-16at002319.png

 

Here's the same type of analysis that could have been applied to the buy signal on the S&P 500 had I been around to react. Same as before, the previous days volume profile split to show the 68% band representing the price range where most of the trade took place, 1277.5 - 1283.5.

 

The buy signal was at 1279.5, this was a significant level at that time. The red line shows the price level where most of the volume had ocurred on Friday, this is also known as the point of control (POC) in Volume Profile analysis. The price sailed through that having already bounced off the outer Linear Regression channel and through the 1st standard deviation regression line, so the outer Linear Regression line served as support, the 1st standard deviation regression line provided no resistance and the POC didn't provide any resistance but on a pullback provided support along with the 1st standard deviation regression line (see below) - a bullish signal to corroborate my indicator buy signal.

 

The price then continued upwards through potential resistance at 1283.5 (1st standard deviation of prior day's volume profile) and 1285 (previous day's high) closing at 1289.50.

 

Screenshot2011-01-16at003926.png

 

I'm considering taking some time off work to trade this, until I do I'll keep testing the ones I'm missing. On one E-mini contract that would have netted $480 taking into account the spread and commissions. With a stop placed just below the the previous day's volume profile standard deviation line at 1277.5 the risk/reward would have been excellent.

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Unrequited Love

 

Here are some recent signals that were missed or not fully exploited (due to being abroad, being away from home or not having the discipline to stick to a winning position).

 

This is a situation I liken to unrequited love. Here's why...

 

Dollar Tree sell signal

Screenshot2011-01-20at222119.png

 

Dollar Tree

Screenshot2011-01-20at233429.png

 

The purchase of front month options would have resulted in 400%+ profit in two weeks.

 

 

 

GoldCorp

Screenshot2011-01-20at221805.png

 

GoldCorp

Screenshot2011-01-20at225250.png

 

December 6th sell signal was $1 away from the high of the year.

 

 

 

Barrick Gold Corp

Screenshot2011-01-20at221103.png

 

Barrick Gold Corp

Screenshot2011-01-20at225922.png

 

Buy signal on 25th August and sell signals on 29th December and 3rd January.

 

 

 

Chevron Corporation

Screenshot2011-01-20at222329.png

 

Chevron Corporation

Screenshot2011-01-20at234504.png

 

I had a number of signals on 1st December, this was one I didn't trade - the best one as it turns out.

 

 

 

And the real kicker...

 

 

Freeport McMoran Copper and Gold

Screenshot2011-01-15at221105.png

 

Taken on as an intraday trade, made approx 90% when I closed it out and then the price absolutely collapsed a few days later...

 

 

Freeport McMoran Copper and Gold

Screenshot2011-01-21at000227.png

 

Had I held on to this a few days more than I did I would have gained at least 400% inside 4 days...

 

 

Lessons will need to be learned here.

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This week has been a general story of unrequited love (signals that I missed), a great short on IWM (Russell 2000) and several great signals on AMZN.

 

From: http://www.youtube.com/watch?v=3WgDB_TtXyA

 

Ahhh, apologies if the video didn't work, it will now. I'm new to posting on Youtube and set it as private, now set as public so it'll work now.

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BHI buy signal chart

Screenshot2011-01-05at214817.png

 

Oil seems to be in a general uptrend so I bought I vertical call spread on BHI.

 

Sold my call spread on BHI today for a 361% profit, possibly further milage in it but after recent sharp move up I'm happy with that.

 

BHI

Screenshot2011-01-27at223425.png

 

Corresponding buy point noted on chart

 

 

 

Also sold my GDXJ puts today after I got a buy signal on GDX, only about a 25% made on that particular one, mainly a result of acting on the signal late. I had a signal on GDX on 3rd Jan but didn't spot it until a few days after as it wasn't on one of my stock watch lists, it certainly is now, and came a day earlier than the GDXJ signal on 4th Jan.

 

GDX signal chart

Screenshot2011-01-27at194821.png

 

This is my indicator in black with GDX in blue. A level double bottom in my indicator is a buy signal, a level double top is a sell signal. I've marked out previous buy and sell signals. Buy on 28th July 2010, sell on 3rd January 2010, and I have a buy signal today. I didn't play the sell on 3rd January on GDX, I bought puts on GDXJ as a sell signal appeared on GDXJ on 4th January. Bought the puts back today on the basis of today's GDX signal, a nice trade but I didn't originally spot it on 4th Jan as it wasn't on one of my scan lists, it is now, I bought puts on 6th Jan, only part way into the move.

 

Here's a standard GDX chart showing the corresponding signal dates

 

Screenshot2011-01-27at200911.png

 

I'm less certain about this one so I've opted to sell put spreads as a less risky way of playing it. $1300 may prove to be a support level in gold.

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I sold IWM (Russell 2000 ETF) put spreads after yesterday's open, I got a buy signal on the 27th. It's not an outright long since I paired it with another by selling call spreads on Ebay. Ebay is a sell as of the 27th.

 

Well IWM had a 2.44% down day yesterday but then it was covered by the EBay side of the trade. I'm looking for a divergence here so Ebay to fall and IWM to rise. My long delta on IWM is 1/4 of the short delta on EBay so although I would prefer IWM to rise as long as it doesn't collapse compared to Ebay then I'll profit on this one.

 

IWM buy signal chart

Screenshot2011-01-29at144542.png

 

EBAY sell signal chart

Screenshot2011-01-29at144448.png

 

 

 

I've just realised I didn't post my FXI trade, the signal to short was given on 18th Jan, I bought a put spread on 19th Jan

 

FXI sell signal chart

Screenshot2011-01-29at144852.png

 

FXI

Screenshot2011-01-29at145326.png

 

That's working nicely so far

 

Overall I would greatly benefit if we get a sharp sell off coupled with a sharp rise in the dollar.

 

My open option positions at the moment are;

 

CL short

EBAY short

FXE short

FXI short

FXY short

GDX long

IWM long

 

The currency trades are a result of recommendations from elsewhere.

 

 

 

Also I'm not sure I made my previous post clear. I got a buy signal on GDX on 27th January and sold put spreads, I'm looking for GDX to rally from here.

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Over time with my DBDT indicator I've come to realise that there are different types of double top and bottom that can form on my indicator. I've done a complete review of all signals generated for the top 100 in the S&P 100. What I've noticed is where there is a sharp double spike up or down

 

eg Screenshot2011-01-29at182850.png

 

These signals where the double top or bottom spikes against a level are far more accurate than where a double bottom or top is formed in a more rounded fashion

 

eg Screenshot2011-01-29at183132.png

 

I'm starting to understand my indicator better, if there is a sharp double spike up or down like the first example then this indicates an implied area of resistance or support (depending on whether it's a double top or bottom).

 

 

 

 

I put all these spike signals together in a spreadsheet to better examine dates when there are clusters of signals. The full signal charts are available here;

 

http://www.greenenergyinvestors.com/index....showtopic=13711

 

S&P 100 signals from 1st January 2010 until 28th January 2011

 

Screenshot2011-01-29at184013.png

Screenshot2011-01-29at184043.png

Screenshot2011-01-29at184057.png

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S&P 100 signals from 1st January 2010 until 28th January 2011

 

Screenshot2011-01-29at184013.png

Screenshot2011-01-29at184043.png

Screenshot2011-01-29at184057.png

 

 

9th February : 6 buy signals, that was the day after the low in the S&P500 during the first part of the year

 

2nd March : 5 buy signals, these followed an end of February correction in the S&P500

 

22nd March : 5 buy signals, again following a slight correction in the S&P500

 

15th/16th April : 4 sell signals, around a $ away from the top in the broader market that formed a week later

 

1st September : 9 buy signals, this day signalled the end of the correction and the market rallied powerfully for more than two months

 

1st December : 12 buy signals, this day marked the end of the November correction

 

10th January 2011 : 7 buy signals, trend upwards in S&P 500 continued for a week

 

Here are those dates marked on the S&P500

Screenshot2011-01-29at212450.png

 

To me it looks as though if I get 5 signals or more per index then I should be looking to just trade the index instead, clusters of signals seem to be a key indicator for the broader index, and have pinpointed excellent trading opportunities. I remember 11th November as I had 17 sell signals (counting all types, not just the spike type), there's no way I was going to put 17 trades on all at once but now I've seen the more there are the more relevant it appears to market direction and therefore an index ETF or futures can be traded instead.

 

NASDAQ 100 study to follow...

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Hi PB, would your indicators have anything to say about choosing an entry point for buying the TBT ETF, it's basically a leveraged short on US treasuries, has been mentioned by 'The Mad Hedge Fund Trader' a few times.

 

The arguments for why interest rates will have to rise eventually make sense to me but choosing an entry point is the thing I am finding difficult, especially as TBT costs about 1% a month to hold. Any thoughts?

 

 

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Hi PB, would your indicators have anything to say about choosing an entry point for buying the TBT ETF, it's basically a leveraged short on US treasuries, has been mentioned by 'The Mad Hedge Fund Trader' a few times.

 

The arguments for why interest rates will have to rise eventually make sense to me but choosing an entry point is the thing I am finding difficult, especially as TBT costs about 1% a month to hold. Any thoughts?

 

 

Are you aware of TBF (ProShares Short Barclays Capital 20+ Year U.S. Treasury Index Fund), that is the non-leveraged short on 20+ year Treasury bonds and shouldn't suffer so much from carry costs, and so is probably a far better option for a longer term hold.

 

 

List of Bond ETFs here - http://etf.stock-encyclopedia.com/category/bond-etfs.html

 

I had a look at a few bond ETFs.

 

There was a sell signal on TBT a few days ago on 19th January.

 

TBT sell signal chart

Screenshot2011-01-30at234444.png

 

Not much has happened there so far.

 

 

UBT (ProShares Ultra 20+ Year Treasury ETF) is a double leveraged long ETF for 20+ Year Treasurys and there is an interesting double double bottom on that suggesting that long dated Treasury Bonds have found a floor here and this is therefore a buy signal for UBT (UBT is effectively the opposite of TBT). The two buy signals on UBT were on 7th January and two days ago on 28th January.

 

UBT buy signal chart

Screenshot2011-01-30at232955.png

 

It's up to you what you do but if you're going to be buying TBT then I might be on the other side of your trade zoomraker.

 

Bonds eventually will collapse but who knows how long it will take so you might be better off researching TBF.

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Bonds eventually will collapse but who knows how long it will take so you might be better off researching TBF.

 

Nenner and MHFT were talking about a 30 year cycle in the bond market so it could take a while.

 

Cheers PB, will give it six months with a target entry of 34 on TBT, that was the price MHFT suggested. If 34 not hit will try and find another entry point and take a gamble with a tight stop, if I get lucky will ride the trend, else if I get stopped out will switch to TBF for long term.

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there is an interesting double double bottom on that suggesting that long dated Treasury Bonds have found a floor here and this is therefore a buy signal for UBT (UBT is effectively the opposite of TBT). The two buy signals on UBT were on 7th January and two days ago on 28th January.

 

Well it's clear to see that the bond signals have not worked out (at least not so far). I did not trade them, the principal reason behind this is that TLT is factored into the formula that calculates my signal line. It's difficult to explain but I feel intuitively that if TLT is used in the calculation to adjust another underlying to produce my signal line, and the underlying to adjust is TLT or a proxy (UBT as in this case), then it may have some form of adverse impact on the outcome. I'm not a mathematician but to use a variable in part of the calculation to measure a derivative of that variable doesn't sound quite right to me. I had a check of my indicator on TLT and historically it doesn't display the same type of efficiency as it does with other underlyings. Perhaps I'm just thinking about it too much. It's never going to work every time.

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