Just waiting around

Yesterday I bought some ATM calls on the Dax, but half expecting a trap after the fast run up I was not as aggressive as i should have been.

Nevertheless, I held a basically flat p/l for most of the morning, but with very little happening when I got to the hedge of the average trading window (i.e. time based stop) I closed out the position. Surprise, after I came back to the screen 1 hr later, the Dax had gone from 5850 to 5910.

Disappointed and somewhat angry at myself for not holding on for a bit longer, I closed the computer and called it a day.

Today though, more coolly I see that I acted in exactly the right manner:

>> Bought on the signal- no ifs or buts, even though there had been a fast run up in the last week

>> Closed position at the time stop , after market had done nothing to show possible strength

So it didn't pan out, but I did not lose either, and the time stop is there so that I get out of those positions where the market is likely to go the wrong way.

Now we are right in the middle of the range, no signal as yet.

Favourite play would be for a quick rally to take out the highs from yesterday, then stats print giving me the chance to buy a number of OTM puts to keep for a few days. Should see another set up by this afternoon, or tomorrow morning at the latest.

I'm back, and this time...

...I'll post more often, trade (profitably one hopes) and attempt to show that it can be done by an individual working independently.

I'm able to follow markets once again, as my current projects leave me time to get involved in trading .

I have no real strong view at this point in time, apart from being very watchful of stocks since the cross currents out there are pretty strong. Worries about currency crisis (pick your own favourite one), sovereign debt (same as above) and the fast approaching sound of the protectionist train... is THAT the light at the end of the tunnel?

On Fire

The point has been driven home: take all signals, all of the time. Last three were big winners, I'm now short from Dax U9 4895. Will close position at or before close of futures this evening, going into tomorrow flat.

Be consistent

In my last entry I stated that I could not do anything but be longer term short, although I may need to explain that a bit. Given that I use a model type approach to trade, and that a model is after all only a representation of reality (and an imperfect one at the best of times) I am due to follow certain rules.

The most important one, and the one I adhere to ALL THE TIME is to take every signal that the system gives me, irrespective of what my long term view may be. Not doing that would negate the whole point of model trading, because you just do not know when and where your next profit/trend/reversal is going to come from. To inject your feeling/view on the model is madness. After you've tested it, made it as robust as possible, put in place a methodology for monitoring the P/L series (control charts anyone?) then just let it go.

Today's action is an example, I'm short from Dax U9 at 4835, when the model gave me a sell that should last until tomorrow's late morning. When the signal came in the market had just rallied through resistance, and kept going up higher than I was expecting it to. Coupled with other asset markets acting positively for stocks, I was not feeling well disposed towards going short. But, as the signal popped up (as I knew it would) I did what I always do, which is to say I followed the model's output. No ifs, no buts (well, they do exist, but are correlated to volatility spikes, a subject for another time).

How did we go from this to markets up 40%?

And again

What can I say... this is becoming boring, but another very sharp rally on the back of better than expected US unemployment numbers means the Dax has hit again sell levels in the short term .

The problem here is that I can easily see mkts squeezing higher to hurt all the would be (and current) bears, so that the path of maximum pain is followed, and the greatest number of people are hurt before Indices decide to give back some of the gains seen in the last 3 months. But given the path bonds yields are taking (higher) I can't do anything but foresee weakness ahead in stocks.

UNLESS of course for some reason bonds stage a very sharp rally next week (US refunding upon us...) and thus the differential performance between stocks and bonds goes back to a more "normal" average.
I have to stick to the numbers: still short.

Market climate...