Friday, November 16, 2007

Day Trading Environment

Current market conditions are only suitable for day trading in my opinion. The SPX model has been stopped out (1.25% or greater market move against it intraday) 5 out of the last 7 sessions and only one of the model's trades - short on 12th November was a winner (a 1% gain). The model is back where it was on 29th August - ignoring any slippage, commissions etc that would have been incurred in trading it. The NDX model has been stopped out 4 of the last 5 trades with a winning 2.5% trade on the 12th November (and winning trades on the 7th and 8th November, six and seven days ago). I had another small winning trade this morning and then a losing trade where all I lost was the commission (entered and exited at the same price). Still, so far I only made back 10% of my big loss earlier in the week. It is so much easier to lose money than make it (though at least I am more likely to make money on any given trade - 2/3 of my trades win). The models are still long despite the decline of the last two days. It doesn't look that corrective though - a corrective move here would imply that another rally similar to Tuesday's was coming up.

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