12-30-15 – Trading Strategy

12-31-15 – Trading Strategy

What I’m in


12/30/15 – DRN (Real Estate) @ $77.50

What I’m selling


Sell DRN (Real Estate) Limit @ $81.00 (4.52% Profit)
Sell DRN (Real Estate) Stop Limit @ $74.25 (4.19% Loss)

What I’m buying


No new orders for tomorrow. I think closing out 2016 on a win will be good for the mental health. With a short day tomorrow I’ll wait to see if we get a sharp rebound day on the first day of trading in 2016!

Today’s Updates


Market Snapshot 12-30-15

** Markets will close at 2pm EST tomorrow and will be closed all day on Friday **

I think today’s board speaks for itself. Enormous amount of liquidation as people are existing positions. This isn’t surprising considering many returns are flat or negative for the year and the tax write-off of selling before the end of the year could be quite tempting.

Almost EVERY market was at or above their extreme Average Trading Range (ATR) for the day and this occurred across the globe. 2016 may mark the year this 5 year bull market finished. However, the way I trade and detail in my Educational Series it doesn’t matter if the markets are going up or down, just as long as they stay in one direction or the other for a sustained period of time.

SPXL (S&P 500

Trading is full of ups and downs no matter if you are a day trade or a long term investor, but for me, today was up, way up!

DGAZ (Inverse Natural Gas) limit order filled @ $14.95 for a an 18.65% return on a $60k position for $11,900 profit!

Trade setups like this don’t occur often like I’ve been saying for the past couple of weeks, but think if all you did was look for just these setups? You could spend very little time trading and potentially have really good years.

Here is what it looked like:

MondayUGAZ (Natural Gas) broke above the top of the Keltner Band and I took two positions ($20k each) in DGAZ (Inverse Natural Gas)

Tuesday – I was stopped out with the large opening gap in UGAZ (Natural Gas) and then I took on a ($60k) position in DGAZ (Inverse Natural Gas). I did this because this was the second day in a row to break the Keltner top which is very very difficult for a stock to do. This indicates the price went too far, too fast, so I put in a very large position.

I compare this to BlackJack card counting strategies. If you are familiar with how it works, you increase your bet size dramatically when the odds are in your favor. With the ETF crossing up above the Keltner Band for the second day in a row, the odds were heavily in my favor.

UGAZ 12-30-15

With this much equity position, I was watching closely this morning to find the right exit. On a 5 minute chart, I decided to exit once I saw price move down below the 20-bar moving average in purple. Normally this is a 20-day moving average, but because I was on a 5 minute chart, this would be a 20-bar or (20 * 5 minutes) 100 minute moving average.

DGAZ 12-30-15-1

Here is my intraday exit of DGAZ (Inverse Natural Gas) at $14.95

I had a sell order for $16.00, but when I woke up and started watching price fall, I thought it was already a good enough return to exit. Fortunately it was timed well enough. Hard to say what will happen tomorrow, but I don’t like to stay in volatility trades for more than 1-2 days and an 18% return overnight is too hard to give up especially with as much as I put into the position.

DGAZ 12-30-15

What I’m selling


Sell DRN (Real Estate) Limit @ $81.00 (4.52% Profit)
Sell DRN (Real Estate) Stop Limit @ $74.25 (4.19% Loss)

My order for DRN was filled near the end of the day, most likely caught up in the global sell off of people exiting their positions. Nothing has changed the technical significance of this trade. All prices are trending and above their moving averages, we didn’t dip down to the previous resistance level and PPO is positive. I’m keeping a wide stop as I suspect volatility will continue, but so will the trend. I will move my stop up accordingly if I see profitable days.

DRN 12-30-15

What I’m Buying


No new orders for tomorrow. I think closing out 2016 on a win will be good for the mental health. With a short day tomorrow I’ll wait to see if we get a sharp rebound day on the first day of trading in 2016!