Swing Trades

No swing trades were opened or closed for 6 June 2018, so there was no trade report yesterday. No trades were opened today, but 8 trades were closed: MSFT, CSCO(2), CRM, RIO, TWTR, IPG, and XES. Total return for the 8 positions: +5.16R

This leaves the portfolio reduced to 8 positions, currently showing +5.38R
Short: AA, EWW.


While the market indexes are showing strength, I feel like it is not broad strength. Select companies are doing well, and others seem to simply be hanging on. Either I’m looking at more stocks that are under-performing, or I need to broaden my watch list.

I’m still working on some other extended posts with reflections on my insights and thoughts from this week. Somethings have gone well. Others not so well. The saying goes that if you ask better questions, you get better answers. I also believe if you ask frequent questions, even if it’s the same question, you may get different answers. Reporting my results here forces me to ask the same questions over and over again, and by doing this, I feel like I’m coming up with better answers, or at least a better sense of what I am doing in the market. Most importantly, I’m starting to see some of the ways that my personality and beliefs trigger my behaviors in the market.

There is a confidence that comes from positive trade results, but there is also confidence that comes from doing the same tasks every day. Trading is a complicated system, just like an automobile. I’m looking to get my trading to the point where it works just as reliably to generate income as the car works to get me from place to place. While you can certainly purchase trading systems like you buy a car, the market continues to change, so with a trading system you bought, you will never know when it needs maintenance or is broken beyond repair.

Think of how much knowledge has to go into building a car. Even a gifted auto mechanic is unlikely to know how to actually make the glass for the windshield or the steel for the engine. I will likely never know all the intricacies of how an order I place to buy or sell stock gets from my computer to the exchange for execution, but I need that process to be just as reliable as my car. If it breaks, I either need to know how to fix it, or how to have the problem fixed for me.

Trading requires not just the mastery of an auto mechanic, but also the skills of a professional driver. Great returns demand great skills. While it may not be safe to go slowly on all the roads all the time, it certainly doesn’t require as much driving skill as racing around a test track at 200 mph. I’m looking for market trouncing returns, so I have to keep working on my trading until I am at the same level as the professional race car driver.

Swing Trades

I framed no trades for possible entry today. One position hit it’s stop loss: SLB. With the weakness in the oil sector and other trades reaching their stop losses recently, I tightened up the stops on the remaining stocks in the same sector, and SLB closed today because of that. Total return for the double position: -.86R

There are now 16 open trades showing +8.88R:
Short: AA, EWW, IPG, XES.


The trading signals I have been focused on recently buy pullbacks. When the market moves up strongly, it leaves few candidates for possible trades. While I’m sure there were opportunities in the market these past two days, none caught my eye sufficiently to frame up and trade. Today’s doji in the market (smaller range and close near the open), suggests to me that there are other people generally satisfied with their current portfolio. I could make a case for further strength and for further weakness. Tonight I will prepare a list of targets for trades, but I have no predisposition for which way the market will go tomorrow. I do have time to sit and watch the market, so am preparing to pounce on what decides to move tomorrow.

Swing Trades

While I performed my market scans this weekend, I was very busy and framed no trades for possible execution today. Two trades (XLE and XES) hit their stop losses, and one of those (XES), I had decided would be a stop and reverse. Total return for the four positions: -.72R

There are now 18 open trades showing +6.95R:
Short: AA, EWW, IPG, XES.


Once again, one of the holdings has moved in after-hour trading. INTC did this after announcing earnings on 26 April. Earnings is something we can generally anticipate. Sometimes a stock starts to move before the news becomes public. This is why I generally watch the chart instead of spending my time trying to stay current on all the details about each specific company and its operations. I only make or lose money when the price moves, so the price is the primary piece of information that interests me.

Tonight as I went through the portfolio to update stops, I had moved the stop for TWTR based on the most recent trade price, but when I went to look at the chart, I noticed the official close was below where I just put my stop! A quick search of on-line news sources showed that TWTR is scheduled to join the S&P 500 this Thursday as Monsanto (MON) completes the merger with Bayer AG. I had noticed that TWTR showed strength during recent market weakness, which is one of the reasons that led me to add it to the portfolio. I’ll be very interested to see how it reacts over the next few days as the change in the index is implemented.

I’ll be drafting a few more trading belief posts later this week as I’ve identified a couple of key points that must be mastered to succeed in virtually any endeavor.

Swing Trades

Following my observations yesterday about not framing trades for the short side, I framed 6 trades for possible entry and most of them were for possible short entries. The three that were willed were all shorts: EWW, AA, and IPG. WYNN opened below the stop, so both positions were closed out, netting +.32R total for the two trades.

There are now 21 open trades showing +5.07R:
Short: AA, EWW, IPG.


The month of May provided 54 trades which netted a paltry +.35R. Graphs of the trade results are included below.

The largest win was +2.34R. There were six trades generating losses greater than 1R. Three of those six were just a penny or two away, so can be ascribed to slippage on stop order fills. Two were opening gaps below the stop. Only one of the six can be ascribed to improper stop placement. I had two positions on in one stock and the second fill was higher than the first, but the stop was left at the price based on the first entry.

The month started in a sideways normal condition and moved more bullish, but also became more quiet. Thirty-six of the trades were channel trades. All six of the losses greater than 1R were channel trades. Clearly this is the easiest system for me digest for entry points. Many of the positions moved in my favor after entry, but the back and forth sideways and drop in volatility led me to close out many of these positions as losses, even when they had been winners at different times. Here’s the plot sequence for just the channel trades in May:

The above is based upon date closed. Here’s the same chart based on date opened:

While I was starting to feel like I might have been improving as the month progressed, when you see the graph by open date, that improvement is minimal. It should also be noted that these are all trades closed in May. Some were opened in April and held into May. Any positions opened in May but not yet closed, are not reflected in either of these graphs.

I believe all these trades were placed with the 2ATR initial position sizing stop loss. For my next step, I’d like to analyze the maximum negative excursion for each position in terms of ATR to determine if there is some earlier point when I can cut the losses to either keep them from running to -1R and/or change my position sizing so that with a tighter stop loss, my gains are multiples of my losses.

General conclusion for today: there is always more to consider about the log of trade results, and your viewpoint can influence the conclusions you might be tempted to draw.

Swing Trades

I framed two trades for possible execution today, but neither was filled. One trade hit its stop loss: EWW.

There are now 20 open trades showing +1.47R:
Short: none.


With the recent sell-off in the market, I realized that I am making my life more difficult by not framing and taking any short-side trades at the moment. In April when I change my position sizing plans, I also basically stopped framing shorts. I have no idea what sort of return I may have missed by neglecting the short side, positive or negative. I have been more consistent in taking channel trades, but have not paid as much attention to some of the other screens I do as they require tighter stops. As noted yesterday, tighter stops are one of the fastest ways to boost returns. One of the drawbacks of using tighter stops however, can also be a lower win percentage, i.e. more losing trades. The tricky part is finding the balance between stops that maximize the reward to risk ratio without encountering too many losses that reduce that return back (or below) to what I get with the wide stops.

Trading requires keeping multiple moving parts in highly functional states. When I changed my position sizing, I inadvertently changed what I scanned for in the market. In trying to fix one item, I broke another. Maybe that’s too strong. I disconnected another part of the system without realizing I had unplugged it. Now, I get to plug it back in and see how well I can keep the whole working together again.

Swing Trades

With the Memorial Day holiday and a busy schedule, I have not been consistent at monitoring the market or framing trades. I quickly framed three channel trades as the market was opening last Friday, 25 May 2018. They would have triggered second positions on Tuesday, but I did not frame any trades during the holiday weekend. I was able to frame 9 trades for execution today and received fills on all of them. Three trades were closed on Tuesday as the market opened lower. PFE opened below the stop, so even though it moved up while almost everything else moved down, I was out at the open. HD also hit its stop loss.

Net return on the closed positions: -1.09R

With the 9 positions opened today, there are now 21 open trades showing +3.54R:
Short: none.


From my market screens, I recognized a general oversold condition last evening. While I expected today to be an up day, I also knew that there could be a gap up, so I placed a trade in the futures overnight. There was a gap up, so I closed out the trade without waiting to see what the market actually did today. Given my inconsistency for the past week, I am delighted to have captured what I did. This week is a chance to get back into the routine.

April contained a large drawdown in my return. (There was also a decent recovery.) May has been more stable and generally upward, though I haven’t collected the larger returns from the beginning of the year. I also adjusted my position sizing after the drawdown in April, so in this calmer market, with wider stops, it simply isn’t possible to generate as many R. I need to find out what my maximum negative excursion is on each of these trades to see what insights I can gain on using tighter stops. If I can cut the distance to my stop in half, then for the same dollar price move in the stock, I would collect twice as much return. When I started this year, I know I was using much tighter stops than the 2ATR that I am presently using for almost everything. Using a .25ATR stop in a market with increasing volatility led to some stellar trades that simply will not happen in this quieter, less volatile market.

Part of trading is knowing when to press your advantage and when to hold back or stay out of the market. Last night I recognized one of my edges and pushed the pedal down. I may have let up too soon, but at least this time, I put my foot on the gas. Knowing how tight to place my stops will give me better control of the gas pedal. Large stops for cautious times, and tighter stops when it’s time to put the foot down and go.

Swing Trades

Catching up on my trade reporting, two trades were framed for possible execution on 23 May. Both were filled. Seven trades hit their stop losses and were closed for net -2.58R.

This leaves the swing portfolio with 12 open positions:
Short: none.

Swing Trades

I framed only one trade for possible execution today: adding a second position to PFE. It was filled shortly after the open. I have had several other projects taking the majority of my time the past few days, so I had no other trades to consider. PFE was framed because it is a current holding and looked ripe for a possible second position.

Two trades hit their stop losses today: CAT and SLB. Net return for the two trades: +2.33R.

This leaves the swing portfolio with 17 positions showing +.8R.
Long: AA(2), CBOE, CSCO, DIS, EWI(2), GILD, HD, IR, KR, MSFT, PFE(2), WYNN(2), XME.
Short: none.


I have had no time to day trade this week. I expect to get a few peeks at what is going on during the next two days while the market is open, but will need to rely upon my stops to lock in profits and minimize losses. The market classification system I am currently studying encourages a cautious approach at this time, so I may have missed my opportunity to lock in profits on some of the positions today as they went against me.

Starting first with the trade report for 21 May 2018. I framed no trades for possible entry today, though two positions did hit their stop losses: SKT and STZ.

Both initially moved in my favor, so I moved the stop closer to the entry, but they eventually moved against me, so were closed out today for losses. Total result for the two trades: -.86R

This leaves the swing portfolio with 18 positions showing +4.69R.
Short: none.


Because I hadn’t framed any trades, and I wasn’t sure there would be any that closed, I intended to write today about my belief that it is ok not to trade. I’m not sure it is a solid belief yet, but rather one I am still working on adding to my belief system.

What this means to me:

As an individual investor, I have no mandate to have my money in the market. I can be in cash, bonds, stocks, futures, currencies, any number of investment vehicles completely at my discretion. There is no prospectus indicating I must always be invested, preventing me from going short, or keeping me from using leverage. There are other beliefs or parts of me that are definitely interested in being in the market, and I certainly know that if I am going to generate any returns from trading, I must make trades. Even so, making trades does not mean I need to do so every day. I can wait for the setups and conditions that I believe will give me an edge.

What this belief gets me into:

It can make it easier to ignore market movements and neglect the daily tasks of trading. It allows me to pick trades that fit the edges I have developed. It could permit me to cherry pick from the trades my systems generate. It provides a sense of ease and loosens the grip on a belief that I need to be in the market.

What this belief gets me out of:

It can keep me out of the market. It can keep me from taking what could be some of the best trades available. It reduces my anxiety around trading and needing to generate results now.

Limitations of this belief:

Taken to the extreme, this would keep me from generating my desired results and achieving financial freedom through trading. It can encourage a less rigorous application of trading practices.

Utility of this belief:

This belief gives me more freedom with y pursuit of trading, lowering my stress, and enables me to focus on process rather than dollar results.


There are other parts of me that are still not convinced of the absolute truth of this idea. I will need to do some parts exploration to identify and negotiate the difference of viewpoints between the parts interested in being in the market and the drive to succeed and become a successful trader. More will follow as the negotiations are conducted or other parts step into the foreground.

Swing Trades

Three trades were framed for today, all channel system trades, so they were all filled at market open. Two stocks hit stop losses and were closed, removing three positions. Total return for the three: -.18R.

Current holding 20 open trades showing +2.14R.
Short: SKT.

Day Trades

I missed the market open today, but was able to watch for a few select windows of time. The first trade went all the way to +1R, though I missed capturing that by just a couple of points. The other two times I exited when I needed to walk away from the screen. If the trades had been solidly in the green, I might have been willing to put in a trailing stop. Net results for 4 trades; +1.43R.


Today seemed to be a back and forth sort of day. I feel fortunate to have caught one of the larger swings on my first trade. It was interesting to notice the possibility of closing trades before they developed as I had hoped. Fridays can sometimes lead to big moves, but this was a quiet one. Knowing the markets I perform worst in are the ones headed into sideways quiet, I was happy to be out of the market most of the time. Follow the process and let the results take care of themselves.