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2009 and 2010 were  good for most trend followers(bulls) who bought and held tight onto their positions.  2011 was a totally different story.  It was basiclly a big range bound market caused by the problems in Europe. There were many opportunities on both sides.  That is why I like range bound markets better.

How did I do in 2011?  I took a total of 2068 trades and netted $21,316 in a 100k account.  That is around 20%.  As you can see, I fared better in shorts than longs.

Here is what I think I did well

1. A nice equity curve. The draw-downs were very much contained.
2. Traded both sides almost equally.
3.  Risk management was adequate.

Here is what I think need improvement

1. Capital was under utilized. Use a little bit of leverage in 2012?
2.  Exit strategy was shaky when I had a profit.
3.  Emotion control could be better.
4.  More efficient time management.

20k extra cash a year covers a lot of our expenses.  Miranda will go to pre school this year, which will cost us a few hundred dollars a month.  Our monthly health insurance bill will be 50 dollars more.  Health insurance keeps going up every year.  Everything goes up except our incomes….. Talk about inflation!

My short term goal is to reach a stable annual income of 50k/year, which is a livable income in many parts of the US.

I hope you did well in 2011 and have a prosperous 2012.

PS, I will try to blog more in 2012.

Just kidding…  I took 3  trades  in the AM last Friday(6/3/11).  Check them out in the charts below.

One reason I love TradeStation is that it marks all your trades on the screen.   A cyan line means a winner.  A red one means a loser.    So the first one was a loser and the other were winners.  Total profits in the AM were  close to 200 bucks.     I did not trade in the PM since I had to take Miranda to her doctor  for a routine check.   There was a major move in the PM.  Hopefully some of you caught it.

2 long trades

1 short trade

Click the charts to have a better view

It is Miranda,  my one year old daughter.   She actually is holding a long position in RENN @ 12.51.  Well, I asked her if she wanted that stock.  She said “Yesh”.  Well she says “yesh”  to just everything.  She will join forces with her Mom in just about 20 years …:)

A lot of people must have thought I quit trading because there has been a hiatus between now and last time I posted. I do not trade as frequently as I used to.  You know how busy it can be to take care of a new born.

BTW, I think the market  is kind of sputtering .   It might go sideways for a while.   I am not really good at riding trends.   But trading a range is my strength.

“I am a thinker”

It has been a while since I updated my blog and my portfolio last time. Some people asked If I stopped trading. The answer is “No”.  For a housewife like me, I do not see anything else except day trading as a viable livelihood.  If you ask around, most people will perhaps tell you that they hate their day jobs, ,hate their co-workers ,hate their bosses, or the morning rush hour traffic.  I agree with them.

I was semi active in July. As you can see from the performance report generated by TradeStation below, I took a total of 19 trades and lost a bit over 300 dollars, which includes the commissions.  So I did not lose much per say.  A losing month is normal. Therefore, I will not analyze this and that.  Click the image below and a lot of the fields are self explanatory.

I do not post in my portfolio as much as I used to because I found it distracting.  But I will try my best to do it when possible.  However, I do post my sentiment(market directions and watch list)in the forum almost every day.

Alright everyone, good luck and have a better August!

I think a lot of traders are.  Look at the chart below.  If you were long before point C and you are disciplined,  then you would have been stopped out of most of your positions. 70-80% of your portfolio follows the general market.  That is why some people prefer trading E-Mini.

If you were ambitious, you perhaps flipped to the bear side.  It did make sense to short the market at that point since C was a major support.  Nevertheless, the end result is that you are slapped left and right.   Those were textbook set-ups. But they did not work this time.

 
Click on the image to have a better view

That is trading.  You will have to have the stomach for this.  Anyway, the market will probably remain weak for the summer.

Here are a few stocks that have been performing much stronger than the general market.

Click on the image to have a better view

Netflix, Inc. (Public, NASDAQ:NFLX)

I have Netflix’s 2 DVD package.  Service has been great and their competitors are weak. 

Valeant Pharmaceuticals International (Public, NYSE:VRX)
This stock just made an all time high a few days ago.  It seems pretty stable although it is a pharm stock. 

Questcor Pharmaceuticals, Inc (QCOR)
It has just reached an all time high too.  But it seems to be a more speculative pharm stock than VRX.

 
Crocs, Inc. (Public, NASDAQ:CROX)

I believe this stock, just like Drys, has broken many people’s hearts.  But it is crawling out of a multi year bottom.  The recent strength relative to the general market is worth watching.

The general market has been stuck in a range for a while. A short term trend following system will fail miserably in a situation like this.  Oscillators, pivots , support and resistance work better here.

The overall market sentiment is perhaps still slightly bearish mainly due to the problems in Europe. So we can pay attention to how EURO is doing.  EURO has been rebounding from the bottom nicely during the past 3 weeks.  If it continues, it will help the stock market move up too. Or it will at least ease the downward pressure on the stock market.

The stock market is approaching a key support area.  As we can see from the chart below, support A and B were both valid.  If you had gone long on these key points, you would have profited nicely. What about this time?   Would you want to go long from here again?

I took a small long position in EURUSD @ 1.1963 on 6/7/10.  It is only 1 lot (worth 100k), which is considered a small position in Forex.

Now I have over 400+ pips in profits on paper now.  I was aiming for a 500 pip move here.   And the initial stop loss was set @ 1.1877,  which is less then 100 pips.   So the risk reward ratio is very good here.  Now I am trailing it.  So the profits are almost locked since Forex rarely has gap ups/downs.  That is one of the reasons that I only swing trade Forex in a regular account.  

Here is the trade.  

See my post about this trade on StockTwits here.  Look at the time stamp of that post.  It was posted close to real time.

If you do not trade Forex,  a 500 pip move for a 1 lot position is worth about 5k profits in USD.

As I mentioned in my previous post, we would expect to see some range bound moves. It has been the case for the past 2 weeks partially because some bullish news from China provided some balance to the bad ones from the EU. Let’s take a look at the daily chart of the SP 500.

Daily

The SP 500 tested the Feb low twice in the past 2 weeks. The first test on 5/25/10 was effective because of the long leg of the bar.  The second test was not as visible as the first one. One might say that the big green bar on 6/10/2010 was a good indicator.

For day traders and short term swing traders, we might see a better picture by looking at the 60 min chart. As we can see, a range bound market is relatively easy to trade since we could easily go in either direction. In other words, there might be more set-ups than in a trending market, which I personally think is harder to trade. Your mileage might be different though.

60 Minutes

Look at the daily and weekly, we can easily tell that the uptrend has been broken.  The monthly seems OK so far. Will we slide more? Perhaps. Dow might slide to 8500-9000 and SP500 to 1000.  But it is not likely to have a double dip to the March low in 2009 again unless heavy weights like France or Germany start to have issues.

Weekly

Monthly

The market experienced some dramatic plunges last week.  The worst was the Dow’s intra day drop of 1000 points on 5/6/2010.   I did not trade that day.  But my TradeStation was open and I saw it.  Initially, I thought it was a technical error from TradeStation.  I immediately opened Interactive Brokers and Yahoo Finance.  They all showed the same thing.  While I was scratching my head, it pulled right back up in just a few minutes.  

Now we know that it was caused by some glitches in the Exchanges’ electronic networks. On top of that, I believe machine trading contributed to it too.  However, the market still lost 300+ points on Thursday, which has never happened since March 2009. What made it worse is that the market continued to drop on Friday(5/7/2010)

Before the crash, the market was in an extended overbought state.  But Dow standing around 11000 does not necessarily mean it was overbought. Then what made it “overbought”?  I think it was the continuous rally from 6000 in March 2009 to 11000 now.  That rally had very few meaningful corrections.  This is not good for the overall health of the market.  The market needs constant corrections to inch higher in a healthy way.  Let’s use 2 stocks as an example. One stock shoots up like a rocket. One moves forward 3 inches and then backward 1 inch.  Which one do you think has more stamina provided the fundamentals are exactly the same?

The first stock will crash when it runs out of steam simply because there are many profitable people. Because people have massive profits on paper,they will sell it @ any price when they look for an exit, which will cause a big crash.

The second stock is a lot more stable than the first one. It moves a bit and takes a rest(consolidation or a small correction) during which it can shake off those who are not determined to tag along.  This process is very important for a stock to continuously move higher without much resistance from the profitable sellers.

It is the same with the general market.  A lot of funds(big money)have made massive profits on paper during this rally. They were just waiting for some kind of signals to unwind some of their large profitable positions. The euro zone crisis and the oil contamination were just triggers.

Personally, I do not think this is the start of a prolonged bear market like we had in 2008 and 2009.  The overall fundamentals just do not support it.  However, we might face a mid term correction here since this drop is big.  We will perhaps see a few violent fluctuations in the next 1-2 weeks.  If it bounces higher, It is a good opportunity to unwind some of your long positions.  The worst at this stage is being fully loaded with net long positions.  Remember you should always close your weakest positions first. Never average down.

Safe Trading