Active-Trader - Pattern Day Trader

Welcome back, Active Traders.

It was a pretty active week in my TradeStation account and I am now considered a Pattern Day Trader.   The downside of this is that I have to keep $25,000 of equity in my account, which is not so bad.  The upside is that my intra-day margin level is set to 4 to 1 so for a 30K account I can now swing up to about 120K in stock on an intra-day basis.  That's enough to trade 100 shares of just about any stock out there including GOOG where 100 shares would cost about 89K on a strictly cash basis.

All that said, day trading isn't exactly my game, its just one more tool in the toolbox. But when it works, it works great as shown the chart on the left.  I entered REGN at 9:35 AM after the first 5-minute bar at the market price of $256.38 and sold at 9:53 AM at $260.42.   I did the same thing later in the day where I took out just over a point in 6 minutes time between 2:48 and 2:56 PM.

As for what else worked this week, the Iron Condor in SPY covered in last week's post went out worthless which means it went out at max profit.   For this trade, I made $98 on a 2 lot trade for a total risk of $300.  But this trade was not without stress and it went better than half way to max loss in Thursday's nasty sell-off just to come roaring back into profitability on Friday's rally.

As for what did not work, I put on an AAPL 440/435 Put Credit spread when AAPL was trading close to $447.  At the time, this seemed like a low-risk trade.  The trade took in a credit of $50 for a max potential loss of $450.  This is a pretty horrendous risk/reward ratio, but I did it anyway.  Well AAPL took me for a wild ride trading down below $435 at one point and threatening a max loss.  I closed that one out for a loss of $227 on Thursday and that was a low point of the week.

The trade of the week had to be the following.  On Wednesday 6/5, we had an horrendous sell-off and the $TRIN (described in my post here) closed well above 1.5 and just under 2.0.  This was a classic setup for the "Crescendo Trade" from Hubert Senters.  It goes something like this:

If $TRIN closes < 0.5, go out short the general market expecting a sell-off the next day.

If $TRIN closes > 1.5, go out long the market expecting a rally the next day.

So I went out long DIA on Wednesday on both my taxable and 401K accounts in E*Trade.  I took some heat in the trade on Thursday, but stuck with it through the Friday rally and enjoyed the huge rally in DIA on Friday I am still long.  

This simple setup in $TRIN has an excellent history of picking short term top and bottoms in stocks, so pay attention to the closing value of $TRIN going forward.

That's all, enjoy your weekend.