Meta-Trader - 2012 Wrap-up

Welcome Back, Meta-Traders and Happy New Year!

As of this post, this blog is almost 3 years old so Happy Birthday wishes are in order as well.  As promised, here is my year-end wrap-up for the year 2012.

In some ways, I'll be happy to see this year come to an end since it was somewhat of a disaster for my Automated Forex Trading experiment.  The table below shows the status of each account, opening balance, closing balance, and disposition.

In 2012, every Forex account lost money and overall I lost about -26% for the year or about $5200 on a $20,000 starting balance.  In some ways, it was the mirror image of last year where nearly every Forex account made money and I turned in a +16.94% profit for the year.  For a recap of last year's Automated Forex Results, click here

Even more disturbing is that this year's losses exceed last years gains in quantity and percentage terms.  We had some spectacular gains the prior year and in one case my Atipaq Full Portfolio account was up almost 100%!  But that was just before it went into a draw down spiral which took it down -46% year to date and about -17.8% from the start.  That means my entire 3+ years of Automated Forex Trading has been a money losing enterprise and that doesn't make me very happy considering the amount of time I've spent on it.

Based on all that, I came pretty close to throwing in the towel on my Automated Forex career this year. But in my years of trading, I have had flat to negative years, and I take that all in stride.  So I have decided to give it another year and see how it goes.  Another sweeping negative year might shake me out completely.

As for equities, it was an excellent year where I beat the SP-500 by about 4 basis points in my cash account, and lagged by about  213 basis points in my retirement account.  This may not seem like much of an accomplishment considering the positive year we saw in the SP-500.  But I was never fully invested and typically about 30% in cash.  So I achieved my objective which is to generate positive returns with maximum possible protection of capital.  Based on this year's results, I'm well on my way to financial independence.  Now I just need to get the kids through college without wiping out my wealth!

As for 2013,  I'm going to go forward with these accounts:

• Atinalla No 1
• Atipaq Full Portfolio
• Atinalla No 3
• Sunqu Live
• Paquarin Demo

Let's see if we can get some positive returns from these systems.

That's all for now and Happy New Year!

Meta-Trader - ESM13

Welcome back, Meta-Traders.

My education as a trader took a big step forward this past week now that I am live on the TradeStation platform.  I have some history with the product since its founding back in 1982 when Ralph Cruz created the first ever product where Trading Strategies could be 1) Described in terms understandable by a trader 2) Back tested against historical data and 3) Executed live in the marketplace.  In the early 1990's, I purchased a product called Super Charts from Omega Research which provides the roots of my understanding whether Automated Trading could make money trading stocks.

Fast forward 20 years and the product has evolved way beyond its roots and now it does all of the above except it now includes Forex, Stocks and Futures.  Earlier in its history, you had to pay $99 per month for access to the platform, but due to competitive pressures, you can get it essentially for free - for non-professionals.  Not only that, trading through the platform is dirt cheap -trades that cost $10 at E*Trade, or OptionsXpress cost $1 (that right one dollar!) on TradeStation.

Its easy to be overwhelmed by all of this information and tools. One of the great features of the platform is when you login you can choose real, or simulated trading.  Simulated trading lets you play around with every feature of the platform but with fictional money.  Platform access includes simulated and separate accounts for Stocks, Forex and Futures which need to be segregated since they are regulated by different entities.

One of the first things I did was pull up a 1440 tick chart of the ESM13 which is which is the March 2013 SP500 E-Mini Futures contract.  Like Forex, this contract trades 24x5 as as a result provides a real-time read on the view on US Equities.  Based on that, I watched the futures after the US stock market close at 4PM EST to see a further sell-off into the close at 4:30 PM EST.   Conclusion:  ES is the real-time 24x5 thermometer of future action in US-Stocks.  That is pretty important in itself since sometimes market moving news breaks outside of market hours.  Lesson #1, watch the futures since they always lead the cash market.

Lesson #2 is the Matrix shown in the upper left corner of this blog.  This single view shows an incredible amount of information for a single tradable.  Its part Level 2 display, showing depth of bid and offers and each price level.  Its also part Market Profile showing amount of trades transacted at each price level as signified by the volume bars on the right side.  The oldest volume is show in dark green while the more recent volume is show in lighter green.  There are also indicators for day high and day low including Volume Weighted Average Price for VWAP.

As if all that were not enough, you can click on the price levels on the left to bid for the stock at that price or on the right to sell short.  Once you have a position, you can submit trailing or fixed stop orders and drag them up and down to make instant changes.  After that you have One-Cancels-Other orders to handle Take-Profit and Stop-Loss orders in a single shot.  Beyond that, you have One-Sends-Another orders so that if an order is triggered due to a Buy or Sell stop, you can kick in another set of stop and take-profit orders. There's no shortage of order handling options.

Enough TradeStation for now.

Those of us following the Fiscal Cliff discussions are pretty much disgusted by the lack of action by our lawmakers.  Despite the sell-off in stocks this past week, the market doesn't seem to care and expects it to be worked on in 2013 with minimal damage to the economy. 

As for Forex, its been a rough year and I have closed a number of accounts.  Expect a recap of 2012 results as well as a plan forward for 2013 by the start of the New Year. Come back early next week for that.

Enjoy your weekend and count your many blessings.

Meta-Trader - Hello TradeStation

Welcome Back, Meta-Traders.

I'm off from my regular job and had a great week trading, doing home improvements and joining free webinars showing live trading from some of my favorite personalities in the business.  This past week was far from typical, but it opened me up to the possibility of a much better future life, more to come on that.

The most significant step forward this week was to open an account with TradeStation Securities.  Recall I have been with E*Trade securities for several years and while I love the platform and the technology, the commission are starting to become an issue.  Looking back at my accounts in 2012, I spent a few thousand on commissions, which seems like a lot of money but just under one half of one percent of total assets under management which is not so bad in the world of Asset Management.

Money aside, I have found that commissions themselves prevent me from taking certain trades.  Let's say I want to enter a spread position with a maximum cost of $115 for a maximum profit of $250 or vice versa.  I would not consider that on E*Trade since the cost on each side would be $10 or more and about 20% or more of the profits!  That same $20 trade with TradeStation would cost just 2 dollars!

As for another case in point, check out the above day-trade in AAPL weekly calls.  Gross profit on this trade was 73 cents or $73 on a one-lot.  After commissions from E*Trade, net profits are $53.  With TradeStation, net profits on this trade are $70!  That's a pretty big difference and over time could make the difference between success and failure in active trading.

On a another note, recall that Tradestaion has its roots in Omega Research which was a founder in the world of algorithmic trading.  There was time back in the 1980's when access to this platform cost a few thousand dollars.  More recently, TradeStation made this platform available for $99 per month.  In my case, the platform is now essentially free (since I am a non-professional) and I still get the $1 for 100 shares or per option contract with no monthly fee!   Sure there's probably a downside, but we will figure that part out later.

Merry Christmas to all to all a good night!

Meta-Trader - 12/12/12

Welcome back Meta-Traders.

It was an historic week to be alive, and the highlight of the week was Wednesday 12/12/2012.

First up, at 12:30 EST the US Federal Reserve released the FOMC statement and - for the first time ever -  tied exceptionally low interest rates to a specific unemployment figure - 6.5%.  Since we may not see that unemployment rate in my lifetime, they essentially indicated rates would be low for an indefinite period! They also increased asset purchases to $85 Billion a month in an effort to keep long term rates at the current "exceptionally low" levels.

All this is of course good for Equities and they market had been expecting this so reacted with a morning rally and and afternoon sell-off, and ended the day essentially flat.   Stocks have had a nice run lately getting my account back to the higher end of the recent range.

Later in the day on 12/12/12 was the Concert for Sandy Relief broadcast live from Madison Square Garden in New York City.  This concert included the greatest line up of rock musicians ever on a single stage including Bruce Springsteen, Roger Waters of Pink Floyd, Bon Jovi, The Rolling Stones, The Who, Billy Joel and Paul McCartney.  Any one of these acts could have sold out the Garden, but they all appeared together interspersed with celebrities and comedy from Billy Crystal, Adam Sandler and others.  And it was all broadcast for free on TV and combined with real time commentary with my Facebook friends. And all for a great cause with all proceeds going to the Robin Hood Foundation for Sandy relief.

I have always had an appreciation for the number 12 since it has a lot of unique properties.  12 is a special number and 2012 has been a pretty good year overall, and this was a rare day, never to be repeated in my lifetime.

And on the topic of Once-in-a-Lifetime-events, we congratulate Daniel Fernandez, webmaster of Asirikuy who is getting married this weekend to his sweetheart Paola Torres.  Best of everything Daniel and Paola, and I will leave you with words spoken to me by the Limousine driver on the day I was married just over 20 years ago:

"What's hers is hers, and what's yours is hers".

On a final note, I finished with my real job for the year and ready to reap the fruits of my labors and live off the fat of the land.

Happy Holidays to All!!!

Meta-Trader - Webinar gone wild

Welcome back, Meta-Traders.

This past Friday December 7th, I had a chance to join a Webinar hosted by Infinity Futures which was structured as a live trading challenge.

On one side was Hubert Senters (one of my favorite trading personalities) trading Bond Futures and Gold Futures.  On the other side was Brian Rehler, trading mini S&P Futures and Euro Futures.  Note that it was Non-Farm Payroll Friday, and we had a good number so it was a better than even chance things would be moving.  We also had a Consumer Sentiment number due at at 10AM EST.

To make a long story short, they both lost money!  Hubert lost about $550 getting stopped out of both Bond and Gold trades.  Brian lost less - about $200 on a single E-Mini futures trade.  I think both traders were constrained somewhat by the circumstances (2 instruments only 90 minutes) and pressed to trade something since winning by doing nothing wouldn't be much of a show.

In going through the process, Hubert revealed some of his rules, one being after he loses 3 times in a row on a single instrument in a single day, he stops trading that instrument for the day.  He also indicates he usually stops trading by about 11:30 EST regardless.  This performance was different from one I attended the Friday after Thanksgiving in 2011 which was totally hosted by Hubert, and he did make some money in that challenge.  

Altogether the challenge highlights how hard day trading is, and you have to expect a low winning rate and be completely un-rattled by losing money.   Hubert indicated he makes most of his money on longer-term swing trades, and something to the effect that he makes all of the years money in 3 months and spends of the rest of the year trying not to give it back.   Its similar to what I've found in my own trading where most of the money is made on just a few trades, but you need to stay in the game and pay attention, otherwise you will miss out on those big trades when they happen.

And speaking of my own trading, I took profits in Facebook (FB), and added a new position in Pharmacy chain BioScrip (BIOS).   On the currency side, I gave back all of last weeks profits and went into the negative.   But I didn't lose much money and stuck with my plan which is what counts.  I didn't find market conditions to be suitable for that type of trading.

On the Automated Forex Trading side, Atinalla #1 is on a bit of a winning streak, but the remainder of the accounts went to new lows.  I already liquidated the COATL H1 account, and the Atinalla Custom account will also be back to cash by the end of 2012.  I'll be glad to see 2012 draw to a close on the Automated Forex side and we are looking for some Neural Network based systems to show some performance in 2013.

That's all, enjoy your week.