Posted on July 29th, 2008 by
Mojo
Finally saw the move I was expecting in the financials today. Bank of America, Wells Fargo, and the most of the gang took off today shortly after the open. Once the high of day was taken out I bought to open the Sep 30 calls for a debit of -1.80. As the chart weakened I wrote a covered call selling the Aug 30 calls for a credit of +1.10 (turning this into a calendar). Here’s the chart:
This gives me a total debit of -.70, time decay on my side and a daily profit of +42%!!
Mojo
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Posted on July 28th, 2008 by
Mojo
I’m back from a week in the woods camping with the Boy Scouts in Goshen Virginia. It was a great time and I feel much better. I’m excited about the upcoming few weeks and have a lot planned for InsaneMoney.
I owe you (dear reader) updates on July where I gave back all of my profits from June the last two days of expiration, an analysis and breakdown of our one year anniversary here, our futures experiment, and what we are going to do for the rest of our summer.
Stay tuned. Its going to be busy!
Mojo
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Posted on July 21st, 2008 by
Mojo
Several weeks ago I posted my thoughts on the potential downward movement of the SPX and Dow. Since that time both have moved down with the SPX dropping 200 points and the Dow dropping 2,200 points. You can see the original post here.
Anyway, we have finally cracked the downward sloping overhead resistance and we are set for a bit of upward movement. Take a look at the chart:
It should be interesting to watch!
All the best,
Mojo
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Posted on July 17th, 2008 by
Mojo
I’ll be heading out to the woods for a week with my son and our Boy Scout troop. No phones, no laptops, no markets. I will spend most of today and tomorrow closing down trades so I can enjoy my week.
I should be back on Monday and online on Tuesday. Everyone have a great time and make lots of money!
All the best,
Mojo
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Posted on July 14th, 2008 by
Mojo
OK, I finally hopped out of my long trade on First Solar. I entered with a synthetic long and sold calls against it to capture time decay and reduce my delta risk. I did pretty well in timing my adjustments and was able to lock in $15 of premium per contract. Here’s a graph of my entries and adjustments.
I entered on June 23rd and closed out this afternoon. I generated an actual ROI of +63.2% in three weeks and it was my first profitable long synthetic!
Mojo
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Posted on July 11th, 2008 by
Mojo
OK. Its been a tough week out of the gates. I did well on most days but only ended up positive on one day and lost on three days. Not a good record. This morning I received a notice that my account had been suspended. So, is the experiment over?? Heck no!
What did I learn? A few good lessons. Here they are:
1) On my $2K account (even with a great broker) they will halt your account once it drops below $1,500 (I think). I’m sure this is done to protect me and to protect them. So, although I have $2K that remaining $1,500 is somewhat “held”.
2) One of the reasons I really like this broker (Infinity) is that you can place daily loss limit on an account. The idea being that if you start to tank and get emotional (which I surely do) it will lock you out for the day. I think it defaults to 30% but you can set it to a percentage or dollar amount. I think mine was set to $1,100 (which was too high). On Wednesday or Thursday I hit that level and was shut down for the day. What I didn’t realize is that the daily loss limit isn’t perfect in its timing (its using “last” for values and market orders to get out so there’s some slippage there) and it doesn’t calculate your commissions into that. So my $1,100 loss turned into an $1,800 loss. Not Infinity’s fault, just mine.
3) I use a scaling out method for trading that I learned from the fine folks who wrote “Trade The Markets”. Basically the idea is this…. Get to a free trade as quickly as possible. How? Like this: Let’s say I enter long at 1200.00 with 5 contracts. The E-mini (ES) trades in quarter point moves or ticks with each tick worth 12.50. Once I’m long, I would set an initial stop loss at -6 ticks, set one sell stop to close half the contracts (3 in this case) at +2 ticks and set one sell stop to close half of the remaining contracts (1 in this case) at +4 ticks. If the price moves up +2 ticks, I would close half of the contracts and move my stop loss from -6 ticks to -3 ticks. At this point I have +6 ticks (+2 ticks * 3 contracts) “in the bank”. If the price reversed and hit my new stop loss I would be down -6 ticks (-3 ticks * 2 contracts). This would give me a zero loss trade (minus commissions). Once I get to +2 ticks and sell half I basically can’t lose any money in the trade. If the trade continues in my direction I would pick up +4 ticks on the 4th contract and have a free contract running (and be up +10 ticks all together). Does that make sense?
Well, here was the problem…. I was using 4 contracts. If you do the math you find that 4 contracts won’t give you a free trade after a +2 tick movement.
4) I made a promise to focus on the E-mini S&P (ES). On the day of my big loss I had made a few hundred dollars in the ES and started trading the YM (Dow mini). That’s a poor lack of focus and discipline. Of course I got crushed, went back to the E-mini to make up the difference and just dug a deeper hole. So I will stick to the E-mini and not wander.
5) I pushed too hard on this account trading to reach a $500 a day profit. Doing that on such a small account is tough. I will set a more realistic goal of $150 a day.
What now? Well, a few things… I’m going to send some additional funds in to get my account up to $5K. That will give me some room above my liquidation limit and not upset my broker with constant calls from their risk manager. Its not as much fun to say “$5K to 100K” but I think its the right thing to do. Then I will set a $750 daily loss limit knowing that it could take out $1,000 on some days.
Feel free to post your comments and questions!
Have a great weekend,
Mojo
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Posted on July 10th, 2008 by
Mojo
OK, OK…. Look, I know I’m not the sharpest knife in the drawer and I’m sure you know that as well. So what am I taking about? I’m talking about taking the $2,333 I have left in an account and trade it up to $100K over the next year. How? By day trading futures of course!!! 
Am I that good at trading futures? Honestly, no. But I’m pretty good, I’m learning fast, I have better tools and I have a lot more discipline today than I did six months ago. Will that guarantee success? Absolutely not. Will we have fun? Yep. At worst I will embarrass myself and lose $2K. At best, I will learn lots, make some money and get that much closer to becoming a broadway dancer! 
I will update you along the way. I just have to get my spreadsheet updated.
Mojo
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