Thursday, March 06, 2008

Trading Update

Each morning I sketch out a game plan for what I think the Australian Share Price Index will do in the first part of the day. I am getting good at getting it right but finding it hard to pull the trigger since my first successful trade. Today for example the model is calling an uptrend and so I don't really want to go short. My game plan was for the market to open up, then sell off (because stochastics were topping out) and then maybe have a renewed rally later in the day. The first two parts happened, but I missed the rally because it's hard to be sure what's happening in the first few minutes and missed the short, because, well, I didn't want to go short. I'm reluctant to long now because the Japanese market seems to be trending down to close its opening gap.... Seems like there is always a reason not to do something.

On a more positive note I added another swing trade in the US - long Interactive Brokers. These trades are very small. Below the level where I could get worried about losing money. I think I have to gradually build up a profitable trading record with small size before going to larger size and maybe more trades down the road.


LiggerPig said...

Hi mOOm,
Great work, I've been looking for a swing trade on US stocks outside of my blog trading which is intrad-day.
Sorry if I've missed the post but do you have targets in mind and timescales for your swing trades?
Also, as an economist and trader I wondered if you have any views on this idea;
I expect to see new highs in the S&P500 this year based on the US Fed's determination to inflate assets regardless of devaluation of savings, etc.
The way I see it, the Fed have their bids in place to support stocks and a steepening yield curve so, despite massive write-downs in the financial sector, $US continues to be under pressure.
Is this view simply too naive? I have doubts since the index p/e ratio would be too high whilst the US is in recession.
Thanks for your time,

mOOm said...

Basically 5,5,3 full stochastics and 5,3 slow stochastics are my main tools for timing trades at all time scales from intraday to much longer term. These trades are using the daily data - I have a model that helps forecast turning points in the stochastics to time the trades. So I don't have price targets or stops set ahead of time. For day trading I do use stops but these swing trades are with very small positions in individual stocks compared to much larger futures or ETF positions in day trades.

On the macro stuff, I don't think the Fed intervenes directly in the stock market, they do pay attention though when things get bad like back around 22 January. I see the market rebounding from a low in the not too distant future. It's possible that the SPX made its low already. The USD is falling due to the Fed cutting interest rates. I'm skeptical it can fall much further against the pound and Euro. But I was skeptical before and it kept on falling :)

LiggerPig said...

Thanx mOOm,
I'll set up charts tonight and have a look at the swing possibility.
I'm with you on the macro stuff :)
The way I see it the Fed manage the yield curve and try to direct liquidity (impossible) to support the markets. Like others, I call it the 'Bernanke Bid'.
Full agreement on the SPX rebound from lows. Could be as early as today or US payrolls data Friday.
I posted my thoughts on my blog. Sounds like you may want to have a buy order to long $US ahead of the data release?
Thanks for your reply,