Posted on August 1st, 2008 by
Mojo
OK, here’s the update. I sent in some additional funds to get my account up to $5K. The week of expiration I got toasted pretty good with all of the volatility and ended with an account balance of right around $4,000. I went back through each trade and decided to increase my stop, decrease my size (to make room for my stop), and set a daily profit goal of $150.
That’s been working pretty well for this week. I had three winning days, two losing days generating a total gain of +412.00 on $4,000. Not great but I’m happy with it.
I’m going to work on my rules a bit, do a little more backtesting, and see what else I can improve on. 10% a week is good, now I just need consistency.
Have a great weekend!
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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Posted on November 4th, 2007 by
Mojo
OK, call us crazy. We feel like Goldman Sachs (GS) is going to win the battle of the financials. We also feel like we are going to see support at 1500 on the SPX so we’re putting in a bullish diagonal on GS. Going long the Jan 08 190 calls for -46.50 and going short the Nov 07 230 calls for +9.40. That gives us a cost basis of -37.10.
We’re picking the ATM short because we want the most downside protection. Here’s the breakdown:
If we are called out (meaning that GS closes above 230 on expiry) we will receive a +40.00 credit on a debit of -37.10 for a profit of +2.90 over 37.10. This will give us an ROI of 8% in three weeks.
If we are not called out (meaning that GS closes below 230 on expiry) we will keep out credit of +9.40 (for selling the Nov 230 calls) on a debit of -46.50. This will give us an ROI of 20% in three weeks.
We would like to see GS stay below 230, allowing us to collect the entire short credit and then slowly rise. Since we are long the Jan 190 calls we have three good months to trade with.
Mojo
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Posted on October 24th, 2007 by
Mojo
You won’t believe this! We were day trading along, making good money and doing a good job staying focused, but we had mistakenly scheduled an appointment a couple of weeks ago for 10:30.
So, we had to adjust our positions, exit out and go to cash. The market is heating up (or should we say, down) and we want to stay, but have to leave for our appointment. Guess what we come back to?? The PERFECT Futures Day Trade!
Based on our trading rules we would have gotten in around 1502 and out around 1505. That would have been perfect!
Is wasn’t curiosity that killed the cat, it was carelessness.
Mojo
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