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Trading Journal – 28th April 2019

I think taking time out is a really important part of recovering emotionally as a trader and that is definitely something which applies to me at the moment. After being wrong on the US equity markets and general risk off sentiment I needed some time to recover and get back in control of my decision making rather than trying to chase a recovery win. Also doing something outside of trading which has a positive outcome and has a building aspect to it was another good idea, in my particular case it was looking to climb some mountains overseas which will require some planning and also some goal setting as well as an amount of satisfaction from completing the task. All things for me to look forward to. Even did some things on a more basic level like cleaning around the house polishing up the car after I made a stupid mistake and ask for help on how to fix it from my dad. That has added momentum to do positive things again so that’s great.

Currently I’m long the US dollar by being long Euro US dollar put options so if I was picking something which was not aligned to that trade I would want something which is long a commodity / short the US dollar. Looking through the list of possible trades we also need to consider that the long US dollar position is also a risk off trade so I need to look for something which is a risk on or neutral trade. Oil is a bit of a confusing one because the trend is strong and it is in the right direction but a higher oil price is generally negative for growth unless it’s a demand-driven price rise, which in this case I would say it is not. Lean Hogs is probably a perfect example of what I would want to add to my portfolio but that horse has already bolted so to speak.

Sugar is an interesting example because in the bigger picture I have a bullish perspective on the price moving higher, as it fits quite a few of my criteria for my most successful trade:
– coming down from a major high in the last 12-18 months
– after coming down from a 30% or more fall, then the price has stabilized sideways for at least 9 months
– the moving averages have converged from the 15 day all the way up to the 200 day
– the price has attempted to move through the 200 day average at least once and failed.

One thing which is not occurred with this opportunity so far is the price moving back to within 1.5% of the old price extreme. This is the most obvious entry point from a good risk/reward perspective. Based on the May contract I’m not sure that the price will actually get there though so it’s a question of whether I take some risk now and if so it through what product – options or outright? I think the outright is at a good level in the short term but not close to the long term low.

What interesting thing which I have noticed after riding in my trading journal is that I have tried taking a long-term view and then taking long term positions as well as taking a short-term of you and then taking short term positions but accommodation witch support if I took the time to do the complete analysis is that I could use a long-term Outlook to take short-term positions and that might be quite profitable given in the money trades I’ve had previously. Ones that come to mind off the top of my head include the recent move in t bonds, the move in where the value of my options spiked, the move in the Dax, the move in the VIX index, so I suppose aside from that major trade setup what I’m generally good at picking from a profitable perspective is identifying the big picture setup and then trading the shorter term action. The issue has then become that I hold on to the position because I’ve got a long term view but then I get taken out in the chop or the longer term view turns out to be wrong once the short term move has evaporated. So I should really move to a rule where I take profit if my account is up by 30% unless I have a proven big win at trade setup which I’ve already identified as being either the one described above, or the 19% retracement rule.

Trading journal – 15th April

Just got back from 2 weeks holiday in China, some interesting moves over this time.

Major surprises for me were:

  • the equity markets continuing to push on, I really thought they would fail near the 200 DMA.
  • cocoa spiking with a large rally, circa 10% up to 2450.
  • Orange juice CRUSHED all the way down to 106.
  • grains have continued lower
  • oil continued higher.

not so surprising but perhaps reassuring

  • palladium finally having a pull back circa 10%, was into the very high %’s distance away from the 200 DMA so betting on the 10% pull back when the price goes more than 18% from the 200 DMA would have lost money quite a few times.

disappointing

  • coffee continuing lower to 90 after I had put options at 97.50 and 88, but clearly I wanted to have a larger position size than longer time frame. This is another mistake for me to correct because it frequently appears to be an issue for my profitability. It was also an example of the situation I describe below with having not taken partial profit on a short term spike then keeping the remainder to maturity.

Currently long:

  • 100 x 127 call options on April 26 expiry 10 yr note.
  • 103 x various euro put options with strikes between 1.04 and 1.075 which will likely expire worthless and so tonight I will look at a limit order to set for capturing any volatility if there was a spike.

Thoughts

  • While I was away I was thinking I often have options which have a highly profitable spike and then drop off and rarely I have options where the underlying continues and makes the options at the money or in the money. I have previously realised I can solve this opportunity decision by always taking more than 1 position and getting out of half of my position on the first profitable spike and leave the remainder to run and see if it becomes profitable. The modification to this thought I had while I was away, was to weight this by how likely I thought the outcome was or history tells me the outcome is. So if I assigned a 20% probability to the options becoming at the money then I sell 80% of my position on a short term favourable move and the remainder keep to expiry.
  • looking back at my two largest winners, neither of them were related to an underlying macro view. I have had two big winners which were both related to a specific trade set up and that was it.
  • on the other hand all my losers have been related to either holding on to a view or a losing position. So either way a losing position has only lead to me holding a bigger losing position and rarely recovered enough to generate a big profit. The main takeaway was that my short term views might have some pattern recognition value (with an unknown level of accuracy as I have not collated all that data on my trades), my medium term macro views 3m-1y are not reliable enough to make money, my medium term pattern recognition views need half the position size and double the time frame to be profitable.

Trading journal – 14th March 2019

Still in a holding pattern. Juat nothing happening for any of my positions at the moment, waiting for a move either way on equities which seems to be at a juncture. I’m expecting a negative resolution but that could be confirmation bias given I’m very short mostly through put options on equity indexes and long call options on bond futures all in the range of 7 to 80 days.

Disappointed not to cash in more on my short coffee idea but timing didn’t work out. Expiry at the money so I only lost about $200-300 taking into account the premium cost. Short the AUD and EUR via options but they are all basically a risk off strategy which will move in line with equity markets.

Just waiting.

Trading journal – 5th March 2019

Not much to update to my existing views.

ESH19 – stopped out at 2813 last night, felt I was risking too much with my total equity short position so needed to cut this to de-risk.

KCK19 – coffee  bounced back in my favour but still need to decide whether to sell 1 put option given the return is about 3 to 1 at the moment.

GCH19 – still surprised the market is back this far. Just watching for now.

HGH19 – copper fading after failing to penetrate the 200 DMA by more than 6%.

SBK19 – sugar was really negative. I had thought about going long, that is surprising the 200 DMA didn’t hold.

A lot of the grain complex look like they’ve been pushed to the lows and are now bouncing back or might be about to. Going to keep an eye on this with a view to possibly taking a long position.

There was also a big spike in VIX volume. That’s a good sign.

Trading journal – 4th March 2019

DXH19 – previously the price has been bought abut 50 pts below the 100 DMA, so I would probably expect that to hold again.

E6H19 – has this now become a genuine break below 1.14? Looks like it might finally be a good time to sell if it rallies back up towards 1.14.

B6H19 – a bullish break on the no brexit option/a second referendum? interesting to see how far this upside extends.

GCH19 – Gold definitely looking like it is trending higher now, just need to get on board.

SIH19 – Silver has broken through the 200 DMA, the downward slope of the 200 DMA is not a good sign however the fact gold has turned the corner and all the moving averages are now stacked bullishly for gold makes me think this could have a positive outcome.

PLH19 – Price has now turned significantly higher although long term trend is still lower. Significant discount to the other precious metals now.

PAH19 – Just an unstoppable trend at the moment.

HGH19 – less than 6% through the 200 DMA and a good failure. I am not confident the rally will continue but I have to be led by the price direction.

SBH19 – this could be a good buy now as the 200 DMA turns higher after the bullish break. I’m going long via options in the short term, 5 x 0.1325 calls with 16 days to expiry.

CCH19 – cocoa has turned things around and the price is now moving higher, but a big question with the 200 DMA coming down from overhead – will this be a negative outcome. Not looking good.

KCH19 – this might move quickly lower now it has cleared the previous low from mid-December. I am long 52 x 0.875 put options at an average of 0.0005 which expire on the 8th March 2019 and 5 x 0.9750 put options which expire on the same date.

OJH19 – OJ overall not looking good, more likely to continue lower.

CTH19 – looks like consolidation before the downtrend continues at this stage.

LSH19 – fading after the 6% break through the 200 DMA failed.

ZWH19 – false break lower? i went long at 495 with a stop at 487. Glad I had a stop on that as the price was crushed. I also bought some call options with a 500 strike and a March 22 expiry, not looking good for them at the moment.

ZCH19 – no real pattern aside from a broad range trading between 400 and 360. So that would say buy at 360 and sell at 400.

ZSH19 – shaping into a triangle or pennant formation depending on what terminology you want to use, most likely waiting on the outcome of the trade summit.

ZMH19 – still finding support around 305.

ZOH19 – long at the 200 DMA (271) with a stop just below at 267. Again glad I had a stop as this kept on going the wrong way for me, I really thought it would go up.

RSH19 – back at the lows.

CLH19 – not sure here.

NGH19 – too much going on here for me to get involved. Right back near the lows.

LEM19 – cattle getting back on the front foot and going like a train now.

DYH19 – I am short 1 unit from 11,187. still short.

ESH19 – bought more OTM equity puts. I am short from 2785.25 one contract.

NQH19 – bought more OTM equity puts. I am short from 7099.25 one contract.

VIG19 – I am long from 16.45 again.

Action:
– after writing each entry, check whether I need to add an action to my list
– review my daily journal for action items I have missed before sending it.

Trading Journal – 1st March 2019

Not too much has changed for me at the moment, markets seem to be in a holding pattern, I’ve got quite a bit of short interest fading equity markets (NQ, ES, DY) but other highlights for me are:

  1. possibility to go long sugar – missed the bounce off the 200 DMA at 12.60, probably earlier than I was expecting. I will wait for a smoother opportunity.

Trading Journal – 27th February

DXH19 – previously the price has been bought abut 50 pts below the 100 DMA, so I would probably expect that to hold again.

E6H19 – has this now become a genuine break below 1.14? Looks like it might finally be a good time to sell if it rallies back up towards 1.14.

B6H19 – a bullish break on the no brexit option/a second referendum? interesting to see how far this upside extends.

GCH19 – Gold definitely looking like it is trending higher now, just need to get on board.

SIH19 – Silver has broken through the 200 DMA, the downward slope of the 200 DMA is not a good sign however the fact gold has turned the corner and all the moving averages are now stacked bullishly for gold makes me think this could have a positive outcome.

PLH19 – Price has now turned significantly higher although long term trend is still lower. Significant discount to the other precious metals now.

PAH19 – Just an unstoppable trend at the moment.

HGH19 – less than 6% through the 200 DMA and a good failure. I am not confident the rally will continue but I have to be led by the price direction.

SBH19 – this could be a good buy now as the 200 DMA turns higher after the bullish break. I’m going long via options in the short term, 5 x 0.1325 calls with 16 days to expiry.

CCH19 – cocoa has turned things around and the price is now moving higher, but a big question with the 200 DMA coming down from overhead – will this be a negative outcome. Not looking good.

KCH19 – this might move quickly lower now it has cleared the previous low from mid-December. I am long 52 x 0.875 put options at an average of 0.0005 which expire on the 8th March 2019 and 5 x 0.9750 put options which expire on the same date.

OJH19 – OJ overall not looking good, more likely to continue lower.

CTH19 – looks like consolidation before the downtrend continues at this stage.

LSH19 – fading after the 6% break through the 200 DMA failed.

ZWH19 – false break lower? i went long at 495 with a stop at 487. Glad I had a stop on that as the price was crushed. I also bought some call options with a 500 strike and a March 22 expiry, not looking good for them at the moment.

ZCH19 – no real pattern aside from a broad range trading between 400 and 360. So that would say buy at 360 and sell at 400.

ZSH19 – shaping into a triangle or pennant formation depending on what terminology you want to use, most likely waiting on the outcome of the trade summit.

ZMH19 – still finding support around 305.

ZOH19 – long at the 200 DMA (271) with a stop just below at 267. Again glad I had a stop as this kept on going the wrong way for me, I really thought it would go up.

RSH19 – back at the lows.

CLH19 – not sure here.

NGH19 – too much going on here for me to get involved. Right back near the lows.

LEM19 – cattle getting back on the front foot and going like a train now.

DYH19 – I am short 1 unit from 11,187. still short.

ESH19 – bought more OTM equity puts. I am short from 2785.25 one contract.

NQH19 – bought more OTM equity puts. I am short from 7099.25 one contract.

VIG19 – I am long from 16.45 again.

Action:
– after writing each entry, check whether I need to add an action to my list
– review my daily journal for action items I have missed before sending it.