Friday, January 26, 2007

Overnight Trading Proving its Worth

I'd credit a signficant portion of the rising profits I blogged about in yesterday's post to adoption of the overnight trading tactic. And today proves the point. I closed my short position early yesterday but didn't go long till late in the day when the market had risen considerably. I bought 3 QQQQ call options in my Roth IRA account (300 QQQQ shares equivalent). This morning the market started up and then began to fall. I then bought 500 QQQQ in my Ameritrade account and after that 1 NQ contract (800 QQQQ) @ 1810.75. But the market kept falling all day... late in the day I bought another 2 NQ contracts @ 1791.75. Using the overnight trading approach I should have either dumped my 3 options contracts for about breakeven early in the session today or kept them and suffered a small loss and then gone more significantly long late in the day after prices had fallen. Trying to position myself in line with the model during the session resulted in significant losses - even though the market had already fallen when I started buying. The model is still long, which is why I bought two more contracts late in the day. They are now a little in the money but my earlier buys are underwater. I also should have put in place a hard stop at a 1-1.25% loss in the index for the day.

The overnight trading strategy does seem to work well for part-time traders who can't sit and watch the market all day. At least it works well with my psychological makeup. Today showed what happens when I deviate from it. Living and learning :)

3 comments:

StealthBucks said...

Hi mOOm, When you getting married and moving to the even more bitterly cold Vermont-New Hampshire area.

Also, I'll send you a big hoooowhhaaa when you hit $400K. You are out percentage growing me....

mOOm said...

Hi Stealthbucks:

First step is getting my green card without that I must work for my current employer or find another one who will sponsor an H1-B. We are now in the endgame phase of the wait for the green card but no idea how much longer it will actually take.

Should exceed $200k in taxable accounts for the first time this month if there aren't any disasters in the last few days (more than 1/4 million Oz-bucks). So that is a milestone to celebrate right now :) A net worth of 1/2 million Aussie will also occur probably before the USD 400k.

Madame X said...

Hi-- can't find your email but am responding to the comment you left me, about the economic analysis of a world full of pf blogs-- would you be interested in writing it as a guest post for me? Or if you post it here, let me know so I can link to it, as I'm not always up to date on my blogroll reading! email me at openwallet1@yahoo.com if you want to discuss...