Monthly Archives: August 2016

9-1-16 – Trading Strategy

9-1-16 – Trading Strategy

What I’m In



8/1/16 – TMF (20+ Year Treasury Bonds) @ $29.15 ($16,324 Position Size)
8/16/16 – 3 VXX (VIX) Sep 16 $133 CALL @ $5.10 ($1,510 Position Size)
8/22/16 – RUSL (Russia) @ $69.08 ($7,944 Position Size)
8/31/16 – 3 SPY (S&P 500) Sep 9 $221 PUTS @ $3.45 ($1,035 Position Size)
8/31/16 – SHORT UWTI (Crude Oil) @ $21.18 (13,809 Position Size)

What I’m Buying


Buy JDST (Inverse Junior Gold Miners) Limit @ $32.00 ($6,000 Position Size)
Sell JDST (Inverse Junior Gold Miners) Limit @ $40.00 25% or ($1,333 Profit)
Sell JDST (Inverse Junior Gold Miners) Stop Limit @ $23.00 26.56% or ($1,500 Loss)

What I’m Selling


Sell TMF (20+ Year Treasury Bonds) Limit @ $32.00 9.78% or ($1,596 Profit)
Sell TMF (20+ Year Treasury Bonds) Stop Limit @ $27.00 7.38% or ($1,204 Loss)

Sell RUSL (Russia) Limit @ $77.50 13.04% or ($1,099 Profit)
Sell RUSL (Russia) Stop Limit @ $57.00 16.27% or ($1,292 Loss)

Buy to cover UWTI (Crude Oil) Limit @ $17.00 19.74% or ($2,275 Profit)
Buy to cover UWTI (Crude Oil) Stop Limit @ $23.50 10.95% or ($1,512 Loss)

Sell 3 VXX (VIX) Sep 16 $133 CALL @ $7.50 ($710 Profit)

Sell 3 SPY (S&P 500) Sep 9 $221 PUT @ $7.00 ($1,065 Profit)

Today’s Updates


Market Snapshot 8-31-16

Market correlation still remains strong and the downward declines are ruling the week. Gold broke through all the key support levels today and Crude Oil Broke out of it’s triangle consolidation which is why I took a short position in it intraday.

Performance Update


performance 8-31-16

Small decline in the portfolio today, but I added two new positions with the short in UWTI (Crude Oil) and rolling into a SPY (S&P 500) Sep 9 $221 PUT from Sep 2. Managed to get out with a small profit in hopes the SPY downturn and volatility will be picking up this week.

My VXX SEP 16 $33 Call still continues to decline, but there is very little premium left in it, this is going to move in lock step with the rise and fall of volatility.

TMF (20+ Year Treasury Bonds) was relatively flat, while RUSL (Russia) took the brunt of it today as a result of the drop in crude oil.

Shorting UWTI (Crude Oil) should offset any further downward movement in RUSL (Russia).

I highlighted some of the mistakes I need to fix going into next month. Since I have a number of open positions, I won’t be able to close the books on Aug until these active positions are closed out. The markets have the feel of a more bearish downward play and volatility is picking up in non US-markets, so I’m more optimistic about my September performance.

What I’m Buying


Buy JDST (Inverse Junior Gold Miners) Limit @ $32.00 ($6,000 Position Size)
Sell JDST (Inverse Junior Gold Miners) Limit @ $40.00 25% or ($1,333 Profit)
Sell JDST (Inverse Junior Gold Miners) Stop Limit @ $23.00 26.56% or ($1,500 Loss)

Looking at JNUG (Junior Gold Miners) and my recent loss, it’s obvious now we’ve started a new downtrend. Having broken out of the existing uptrend and now blown through all the major moving averages, we’re possibly approaching a short term resistance level of $15.00. It’s possible this could be a pivot reversal, but I’m expecting some action or a pull back to get into JDST (Inverse Junior Gold Miners) as a result.

JNUG 8-31-16

My order for tomorrow in JDST (Inverse Junior Gold Miners). I will only get in if there is a pullback. I’m doing so, since corrective moves against a major trend don’t have a high of a likelyhood of trending as long, so I can’t be exactly sure this is the start of a major downtrend or just an extended correction to the recent uptrend we’ve seen.

JDST 8-31-16

 

What I’m Selling


Sell TMF (20+ Year Treasury Bonds) Limit @ $32.00 9.78% or ($1,596 Profit)
Sell TMF (20+ Year Treasury Bonds) Stop Limit @ $27.00 7.38% or ($1,204 Loss)

TMF is still flat in it’s triangle consolidation. It taunts me daily showing profitable only to close with a slight loss. My patience will hopefully pay off.

TMF 8-31-16

Sell RUSL (Russia) Limit @ $77.50 13.04% or ($1,099 Profit)
Sell RUSL (Russia) Stop Limit @ $57.00 16.27% or ($1,292 Loss)

Russia is not showing any signs of a continued breakout from where I originally got in. If it crosses and closes below the trend line tomorrow then I will sell out early. There won’t be any need to let it go all the way down to $57.00.

RUSL 8-31-16

Buy to cover UWTI (Crude Oil) Limit @ $17.00 19.74% or ($2,275 Profit)
Buy to cover UWTI (Crude Oil) Stop Limit @ $23.50 10.95% or ($1,512 Loss)

I shorted this due to the triangle consolidation breakout, the fact it bounced off the 100-day EMA from the 17th, PPO turned negative, price is now below all the major moving averages and it’s following the direction of the major trend down. Keeping a tight stop on this because a move back into the triangle consolidation would confirm a false breakout or some other unreliable trading pattern.

UWTI 8-31-16

Sell 3 VXX (VIX) Sep 16 $133 CALL @ $7.50 ($710 Profit)

Volatility continues to remain stagnant with a few burst of intraday premium. 15 days left until expiration. I will continue to hold on through next week at least.

VXX 8-31-16


Sell 3 SPY (S&P 500) Sep 9 $221 PUT @ $7.00 ($1,065 Profit)

Rolled into this from the Sep 2 $221 PUTs and now I’ve essentially bought myself another week. Hard to say from the chart if today is the day of the turn down, but we did hit a new intraday low that hasn’t been seen for a while, so the signs of weakness are growing stronger.

SPY 8-31-16

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8-31-16 – Trading Strategy

8-31-16 – Trading Strategy

What I’m In



8/1/16 – TMF (20+ Year Treasury Bonds) @ $29.15 ($16,324 Position Size)
8/16/16 – 3 VXX (VIX) Sep 16 $133 CALL @ $5.10 ($1,510 Position Size)
8/17/16 – 2 SPY (S&P 500) AUG 26 $221 PUTS @ $3.20 ($640 Position Size)
8/22/16 – RUSL (Russia) @ $69.08 ($7,944 Position Size)

What I’m Buying


 

  • No new orders tomorrow, going to wait for the US Jobs number to come out to see if we get a change in trend. Markets are too heavily correlated right now.I am rolling my current SPY (S&P 500) call to next week, so I’ll be selling my current position and buying next week’s call.

What I’m Selling


Sell TMF (20+ Year Treasury Bonds) Limit @ $32.00 9.78% or ($1,596 Profit)
Sell TMF (20+ Year Treasury Bonds) Stop Limit @ $27.00 7.38% or ($1,204 Loss)

Sell RUSL (Russia) Limit @ $77.50 13.04% or ($1,099 Profit)
Sell RUSL (Russia) Stop Limit @ $57.00 16.27% or ($1,292 Loss)

Sell 3 VXX (VIX) Sep 16 $133 CALL @ $7.50 ($710 Profit)

Sell 3 SPY (S&P 500) Sep 2 $221 PUTs @ Market
Buy 3 SPY (S&P 500) Sep 9 $221 PUTs @ Market

Today’s Updates


Market Snapshot 8-30-16

Strong market correlation continues and we almost reversed all of yesterdays gains in equities and took a beating in Gold. Amazingly, volatility in the US market continued to shrink, but I wouldn’t be surprised if we get a small pop when the US jobs numbers come out tomorrow before market open. No new confirmations today as all the bullish moves higher corrected slightly.

Being stopped out of Gold today wasn’t enough to make me bearish, not until that jobs number comes out will I reverse and play something like JDST (Inverse Junior Gold Miners) if we see a strong trend tomorrow after the August jobs number report.

Sold UGLD (Gold) Stop Limit @ $12.90 Stop Limit or 8.12% or ($1,026 Loss)

This was a legitimate loss. I’ve held onto this position for 25 days. I entered on 8/5, looking for a small pullback, but it gaped lower and I was filled at a better price. After that though, gold spent weeks consolidating sideways. Support at $13.00 held yesterday but failed today and took me out. I can’t really say I had any signals during the time of the trade that I would have exited early as there were a number of days the position was profitable, but the chances were pretty much equal on both sides of an upside or downside breakout.

UGLD 8-30-16

Sold JNUG (Junior Gold Miners) Stop Limit @ $18.00 17.05% or ($1,974 Loss)

This was the loss I was afraid of and this was a trade that simply shouldn’t have taken place. To put it into context, this was the second JNUG trade taken on 8/24 the day before the 10:1 split. Noticing historically the massive moves up after a split, I decided to “gamble” and gamble I did. I didn’t have enough historical data nor is there really any major level of experience around splits, to justify this trade.

I got in a day earlier on 8/23 and then it plummeted afterwards. I bought in a second position to lower my cost basis, but that didn’t help things as I ended up losing on this position as well once price broke below the low of the day the split occurred.

I knew I was gambling. I thought it would be a fun one to try, but it didn’t pay off. So now I’ll have to go back to my original game plan. Another major issue that I ignored was the correlation with UGLD (Gold). I tell students over and over in my educational series to never be in two correlated markets at once. So never be in both UGLD (Gold) and JNUG (Junior Gold Miners) at the same time. So the loss in UGLD (Gold) was legit, but the JNUG trade was just plain dumb.

Suffering from a lack of action and boredom made this look like a fun ‘experiment’ that didn’t pay off. I’ll make up the loss, I always do eventually since I have a winning system of trading, but here is a fantastic lesson to take away when you want to try something “unproven” and take a stab at a trade because the market isn’t giving you much to work with.

Next time, enjoy the free time and trade when the market has something better to offer! =)

JNUG 8-30-16

Performance Update


*** Mistake Alert **

It appears in my spreadsheet, that I forgot to put in my final close price for DGAZ (Inverse Natural Gas). I was looking at my performance today and scratching my head why it was so high. I had left the real time stock price in DGAZ for my 8/10 trade, but it closed out for a profit on 8/11. This has been making my losses look much worse than they were.

I had a customer ask me “How do you mentally deal with losses?” I thought I’d take a moment to document how I do that and what keeps me going. In summary, I evaluate my monthly performance and I see if my losses were because of mistakes I could fix or not. I identified enough dollars in mistakes that I could have had a 3rd profitable month in a row.

performance 8-30-16

Nearing the final day of the month, I look over at my trading performance and there are a few standouts that will affect my strategy going into September.

  1. UVXY (VIX) trades should never have been taken. First, the key to all of my trading strategies is to NOT take a “pre-emptive” or “prediction oriented” trade. I don’t ever want to buy something because I think it’s going to reverse higher, but I like to buy when it’s confirmed it’s going higher. Despite the 1st win in UVXY, I simply got lucky that volatility reversed the next day. The second trade put my in my place and told me you can’t predict reversals to the upside and there is no statistical advantage in doing so. ($483 Mistake)
  2. EDC (Emerging Markets) was a trade I highlighted as well being traded improperly. I put in my old $20k position size and a tight stop, instead of a smaller position size and a wider stop. My entry of $63.04 would have been slightly profitable today and my stop would have been around $57.00 with a reduced position size. Reduce positions sizes according to my risk level is what’s helped me recover so much this year so I will continue this next month. ($728 Mistake)
  3. JNUG (Junior Gold Miners) was an experiment that didn’t pay off. Even if it did, I don’t know if it would have confirmed that buying on splits is a solid strategy. ($2,190 Mistake)If I eliminated those 3 mistakes, this would have been a profitable month. So now I know what I won’t be doing and what I will be doing going forward to maintain my consistent profit run.

What I’m Selling


Sell TMF (20+ Year Treasury Bonds) Limit @ $32.00 9.78% or ($1,596 Profit)
Sell TMF (20+ Year Treasury Bonds) Stop Limit @ $27.00 7.38% or ($1,204 Loss)

TMF 8-30-16

Sell RUSL (Russia) Limit @ $77.50 13.04% or ($1,099 Profit)
Sell RUSL (Russia) Stop Limit @ $57.00 16.27% or ($1,292 Loss)

Small price movement down today, no changes in orders for tomorrow.

RUSL 8-30-16

Sell 3 VXX (VIX) Sep 16 $133 CALL @ $7.50 ($710 Profit)

Volatility continues to go no where. Still waiting for some kind of spike.

VXX 8-30-16

Conversely, if you look at XIV (Inverse VIX) it has yet to break it’s $38.00 resistance level as well.

XIV 8-30-16

Sell 3 SPY (S&P 500) Sep 2 $221 PUTs @ Market
Buy 3 SPY (S&P 500) Sep 9 $221 PUTs @ Market

Rolling my existing position to next week. With the US job report coming before market open, the spike in volatility should help me get out with a slight profit. If it’s not a good report, then I’ll bank even more profit, but I’ll pay more for the Sep 9 $221 puts.

SPY 8-30-16

 

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