Market Timing for Daily and Intraday Trading Options, Futures and ETF's on SPX, NDX, and DJIA.
Swing trade - 100% cash positions. Short trade closed on today's close.
Investor core - 100% cash positions. Possible trade by Friday's close.
Issues and comments:
1. Fee based structure - Assume this is true. Price of a service is inversely proportional to quantity of units sold in a competitive market. If so, what determines net profit per unit? If you don't know, then you won't understand why a $40 to $60 per month service is a loss leader in ideal circumstances. I will retrun to this later. Think scales of magnitude of unit sold.
2. The time locus of April 11th - it was a high. It was early and very bearish for the nearby trading and for the long term (months and months). It was a major locus point and has my deepest respect. More on this subject later in the month.
3. Mutual funds - you must choose the funds. You must make your own decisions about any vehicle you will invest in or trade.
4. The short publicly available, trade for trade, record of the System - It is your choice to buy products and services that you want or need. Why people buy or don't buy is my field of expertise. You will ignore your needs to buy what you want. If you want to pay $50 for a service that you expect to make you thousands, don't look here. Anyone who pays that for a trading or investing service has either no respect for the information of the service or no self respect. In brutal terms, if you NEED a service, it is because you haven't or can't or won't invest in the years of learning. You want a Rolls Royce and its luxury for the price of a Kia. That trait is common among traders who are undercapitalized and consistently lose more than they profit in their trading. The cure for that problem is usually, learn how to manage money and risk. Learning that and having a genuine trading plan will turn around a bad trader before they lose all their capital.
5. What would a subscriber get for the fee? I have not wanted to think about that. I don't want to go to fee based service. Two reasons - 1. Too much time doing back office, customer service with people who don't know the basics of trading, technical analysis, want a personal relationship with their 'market hero of the week', and so on.
A quick idea of what would be in the service: the real time live trading signals of an index, no money back guarantee, no generalities as read daily in the Journal, only useful opinion that may be wrong or right, completely different than the signals now for TimerTrac (even though I would still input my signals there with a 30 day delay instead of 3), charts of the markets and what to focus on. More actually useful things than you would expect for the fee. You might not be ready for the quantity and quality. Over delivery is a basic tenet of top priced services. Does any experienced trader (15 to 20 years) buy a $50 service? The best investor services range from $500 to $2500 per month. Now look back at #1 and the question, what determines profit per untit. Yes, it's costs, but what costs kill profits the more units that are sold?
Rob, am I rambling? :)
6. Posting trades for people who can't be infront of the computer at 0930 or 1600 EST - It is difficult to trade the Timertrac restrictions. I may know for hours or even days when an intraday turn is coming. Most of the time, it is what I have thought it would be, such as a low or a high turn. When it is not what I thought it would be, it has dramatic implications on whether or not to trade - on what to trade and how many units, for how long, and on and on. Those instances are usually marvelous opportunities to immediately take advantage of the changed environment.
That is why the presession is so important and to a lesser extent, the action overnight and through the European trading of U.S. index futures and stocks.
7. The nature of the signals - signals can come at any time during the 24 hour period. Many times overseas events trigger market ripples here in the U.S. and vice versa. Stop loss orders must be used. Money management cannot be effective without them. Most traders don't use them, even though they say they do. Would you walk a circus high wire without a huge safety net beneath you? No? Then learn to use stops and how and where to place them for your own personal comfort.
Signals given here in these blogs will be Timertrac driven. We will be churning sea foam in the Swing trades. Depending on how the indexes behave through May, the Investor core may not trade much at all.
That's quite enough for this evening. Send any follow on comments through, or any new thoughts.
I will get through each and post by midnight. But first supper. It will be late in the east and I want to explain what and why we did today because three people asked.
Here is what we said that is possibly not clear to some traders:
@1525 - We expect the SPX to sell off into midday tomorrow downward towards our stated target of SPX 1275. The turn from that locus point may be quite strong. Since no significant upward move has occurred today, we will close all Swing positions at the close.
The question is 'why didn't we hold the position into tomorrow?' because we expect the sell off to continue.
1. we had good profits in the NDX and SPX, and very little profit in the Dow. Again, the important restriction we have is that we may only enter or exit the trades at the open or close. We stopped posting our own trades late last year because of that restriction.
2. quite often the selloff is a failure in price, that is, price does not get close to the target.
3. if we held the position "into midday" and the index turned and moved quickly upward, this could have wiped out our profits and left us with a loss at the close. This is a very common mistake by many traders.
4. The Dow was up through most of the day wasn't it.
5. The upward move I expect for tomorrow should try to get back above the broken short term trend line that was broken. This is known as a countertrend movement - even though a legitimate trend has not been established.
6. I expected a stronger and faster move downward when the trend line broke. It did not. Volume patterns and sentiment moved toward bullish buying, a bad sign.
7. If SPX had moved up more during the day, we might have seen the downward move in toward the close. We didn't and in my view, we either see that move up in the morning or after price slides into the afternoon. I did not want to be trapped by either set of conditions.
There are more reasons to discuss but I'm hungry. :)
I will post responses to the comments I have completed by midnight EST. The rest I will finish by the European open.
WBB
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