Saturday, August 20, 2011

Weekend News

I've updated the Stats section to clean it up a bit and make it more visibly consistent with other material shown on the left side of my page. I've updated all the stats as well, with the exception of the current long position that is open. The successful short signal last week helped ease some of the losses from the prior trade, but only by a handful of percentage points. I am still down over 40% this month which unfortunately negates all the good work I've done leading up to this point. The system is now down over 10% for the year. Personally I am down closer to 15%.

Had I used the stop loss rules now in place, the system would be down about 21% this month and we'd still be well in the black... sitting pretty at +19.05% for the year. Indeed, as much as I despise stop losses, clearly they can be beneficial sometimes.

Two other things I'd like to mention. While the system is down 10% this year, I see little need to panic. That kind of deficit should be fairly easy to overcome given all the recent volatility, as long as we are on the right side of the trade. TNA has moved as much as 20% in 1 day recently. Hopefully we can get back in the black in the next month or two. Lastly, I wanted to inform everyone that I got an unhealthy buy signal on Friday. This is good news for the current long position. On the other hand, if we continue to sink next week, we'll have the stop loss in place down at 1102 to protect our capital and prevent another 40% blowout.


  1. Yes, this is the right response to a surprising loss. It is more important to know what to do when one is wrong than to be right. Actually, it is more probable that volatility will decline over the coming weeks and returns will come more slowly. Still, it is important not to be intimidated by the unexpected and become paralyzed into inaction. As I noted here once before, after 25 years of experience in this business of trading for a living, I am a fan of stop losses. Yes, one can be certain of being whipsawed from time to time but trading costs are small these days and the saving trade off can be worth the trouble. The secret to successful trading is well-known: proper money management and, even if one is right only 50% of the time, keeping losses small.
    Well done J-Trader.

  2. Quick question ,

    I have a similar system based on close,high,low. I get the idea from David vardi and had extensibly tested it. Only issue is defining healthy market.... Can you share some idea... I have use Vix and slope of last 70 days

    Woul like to see u r tricks

  3. The whole issue of stop orders is surpisingly complicated. I'm going to write a post on that in my blog this week I think. Right now, I'm looking for some upside either tomorrow or Tuesday. Watch the VIX for clues.

    I wouldn't be too discouraged over poor performance this month so far. It looks a lot like word of the S&P downgrade got leaked early and the Byg Wygs knocked 'em down ahead of the news. No way TA can predict that.

  4. Well, TNA just hit Friday's close and pushed through it.

    VIX is running high at 42.33

    Where are all the dang buyers??? Small caps are taking a beating. The broader market is hanging, but slowly dropping too.

    Is there any chance of buying later in the day or tomorrow???

  5. TNA appears to have found some important weekly support around these levels. And its daily chart looks to be putting in a double bottom. I have no TNA position but if I did, there's no way I'd be selling it here.