Meta-Trader - Feast for the Bulls

Welcome back, Meta-Traders.

It was a feast for the bulls this week with the market screaming higher, particularly the Dow Jones Industrial Average starting with a gap into all-time high territory on Tuesday morning.   From there it was straight up with almost 3 more consecutive daily closing highs.

The SP-500 closed the week a percentage point or 2 short of new all-time high territory.  At the same time, broader market index ETF's representing the Russell 2000 (IWM) and SP-400 Mid-Cap (VO) closed the week at new all-time highs.   All this bullishness sent my net worth to new all-time highs on several days including Friday's close which is a beautiful thing of course.

One particularly memorable trade was Apple.  Recall in last week's post "Crapple," Apple was in a flush to the downside with further downside targets in the 380 area.  On Tuesday March 5th, I was watching the 5 minute bars just after the open, and saw a large bull elephant bar on the 2nd 5 minute bar of the day which had a bigger range than any 5-minute bar the day before.  I figured at about $422 the stock was good for a run back up to $428.  So I picked up 1 of the weekly $420 calls at 10.60 for about a $1060 trade size.  I quickly put a stop in at 9.60 for a max loss of $100.  The stock pulled back somewhat, but kept me in the trade, and from there Apple took off and reached an intraday high of $435 exceeding my own expectations of how high it could go.  I closed the contract out at $14.50 later that day for about a 30% profit on the contract in about 4 hours time!

I had 2 other trades this week in my Tradestation account, both winners.  But I closed both of them at the market price and thus gave back the spread.  Had a been a little more patient and used limit orders, I could have made closer to $100 each, but ended up making only about $70 each. So I need to improve my game there and use the feature of TradeStation where I put a stop loss and take profit order on each position before entry. Once entered, the trade can play out as planned instead of the "seat of the pants" management style I am using now.
In any case, I'm doing well in my TradeStation account and up about 7.8% for the year.

One strange thing that happened this week was that CNBC took over Nightly Business Report, my favorite daily business news show on Public Broadcasting.  As it turns out, CNBC sacked most of the NBR staff including host Tom Hudson and replaced him with Tyler Matheson.  They did hold onto Suzy Garib and she is now co-host as shown in this the shot with Tyler M.

The strange part is that I used to count on NBR to give me an unbiased, non-commercial news of business news.  Now instead I see the same CNBC personalities on NBR that I see all day long on CNBC which feels wierd.  Nothing against CNBC since I get a lot of great information from them.  Its just that another perspective has been lost as NBR has been consumed into the media giant CNBC which is now owned by cable giant Comcast after having been spun off by General Electric last year.

I am not one to complain, since there is more information available now (more every day) than there ever was before in the history of the world and much of it is accessible for no cost over the Internet.  Free is always transformational and the Internet has made new industries and new economies just as old ones (like newspapers and print media) die on the vine.

That's all for now, enjoy your week and get some rest.

Meta-Trader - Crapple

Welcome back, Meta-Traders.

Its amazing the way things go sometimes in the financial markets.  Since reaching its all-time high of $705.07 back on September 21, 2012, Apple has fallen an incredible 275 points or nearly 40%.  The while line in the chart represents the SP 500 based on an anchor point set back in early 2010.  From there you can see that Apple greatly outperformed the SP-500 and just recently has gone into under performance.

I point this out because my friends over at Simpler Options are heavily short AAPL via long put positions.  They see the next target at $400 and then $380.  And based on Friday's close at just about $430 that represents 30-50 points of potential price action.

At the same time, they are heavily long calls in Google (GOOG) which is just short of new all-time highs.

Its interesting the way stocks trends tend to continue once started.  That's one reason I find trading stocks so much easier than Forex that can't seem to get much of a trend going without a whipsaw-like retracement.

Speaking of trends, I'm still heavily long Catamaran (CTRX).  I also started new positions in this week in Taro Pharamacuticals (TARO).  As mentioned, I also started a new position in Linked-In last week (LNKD) in which I doubled-down on Friday.

As my friends over at Simpler Options say, "the trend is your friend until it ends."

That's all, have a great week.

Meta-Trader - LNKD

Welcome back, Meta-Traders.

Let's face it, a lot of time trading can be dull, boring and frustrating.  Much of the time nothing is happening and as a result no real money can be made.  But every once in a while,  everything comes together and you are in the right place at the right time.  And days like that are what make it all worth it.

Wednesday Morning Feb 27th was one such morning when everything came together.  It was a day when Oliver Velez type day trading worked beautifully, where you buy in the direction of the first 5-minute candle of the day, with a stop loss below the low of that same bar.

This setup worked with many stocks but the one that screamed buy to me was Linked-In (LNKD),  After a brief and recent consolidation between 155 and 163, the stock started to push the upper zone of that range and looked like a screaming buy on the daily chart.

So took a one half-size position at about 9:40 AM and stock just screamed higher.  Now having cleared the $165 area the next logical stopping area is $200.  Its in what John Carter calls "blue sky" territory.  There's no more supply.  Smoke 'em if you Got 'em ..

Meta-Trader - The Instant Millionaire

Welcome back, Meta-Traders.

I had a fine time this past Monday at the Trader's Expo in New York City.  The highlight was when I met my new mentor John Carter after he gave a 15-minute talk on finding Elephant trades.  I introduced myself briefly but after that I quickly retreated to let the other people have their chance.

After that I went back to the Expo floor and visited the TradeStation booth to watch a presentation by Linda Bradford who is a legend in her own right.  After that, I returned back to the same room where JC gave his talk to find him in the hallway outside the room delving into detail with one guy who had hung around along with his support staff which consists of his office assistant, his sister-in-law and (none other than) Carolyn Boroden - The Fibonacci Queen who is a co-host of the Simpler Options chat room.  I hung around in the background for a few minutes until the other guy left and I had my chance - a hallway conversation with John Carter.

We chatted about a number of things including our favorite current elephant trade Catamaran (CTRX).  I mentioned that I admired how smooth he was during his presentations, and it seemed that whatever nasty circumstances were thrown his way, he was able to right himself and move on.  In fact he gave his 15 minute presentation without any notes or slides. He was completely at ease with himself and the material.

After a few more minutes of small talk, he picked up on where I was going which was more the psychological aspects of success.  Here is a guy with a wife, kids, mortgage and all the same financial obligations as myself.  In my case I use those as a reason why I have to play it safe and stick with my corporate job.  Yet JC has all those same obligations - and it doesn't hold him back in the least.

As an example, I mentioned that in one of his video updates, his kids were screaming in the background.  He explained in the video that his wife was sick and he had to bring the kids to the office and (after that brief explanation) said something along the lines of "life's great" and just moved on.  I told him I admired the fact that he seemed to be able to brush off any distractions - including family obligations - and stay on his game no matter what else is going on.

He seemed to get that my limitations were somewhat self-imposed and said things really opened up for him when he read the book "The Instant Millionaire" by Mark Fisher.  I never heard of the book before and haven't read it yet.  But my opinion of Mr Carter went up 50-fold after that conversation.  Here is a guy who is incredibly successful, a dedicated family man and willing to spend a few minutes with me. Thanks JC - you are a true gentleman.

As for trading, it was a quiet week.  My portfolio got up to new all-time highs on early in the week due to some positive action in CTRX including a new all-time closing high on Wednesday.  The market took a nasty turn on Wednesday and Thursday taking back all of February's gains in the Indexes, but recovered somewhat on Friday.

Now I'm off to find my copy of "The Instant Millionaire" - hopefully at the local library.

That's all for now, enjoy your weekend and get some rest.

Meta-Trader - Hunting for Elephants

Welcome back, Meta-Traders.

Last weekend John Carter held a class on how he looks for "Elephant Trades".  These are longer-term plays based on weekly chart action.  He defines elephant trades as trades that can grow your account in a "life changing" way, turning 10K into 100K or 250K into 1 MM or more.

I was too cheap to attend the class, but I am a do-it-yourself kind of guy anyway.  So I went on an elephant hunt of my own using my prior scan New High, Low PE, High Growth as a starting point.  I also used some new criteria that Mr Carter identified in a free Webinar earlier last week in an attempt to sell the elephant hunting class.

So I created a new scan in TC-2000 with criteria as follows:

• New All time high in price
• PE Ratio Less than 20
• 5 Year Earnings Growth Greater than Zero
• Capitalization between 25% and 75% percentile

This last one is key since once a stock reaches a certain high level of capitalization, the growth naturally becomes limited due to the law of large numbers.  Take high flyer Google for example.  It meets most of the above criteria except its market cap is too big.  At that level of Capitalization, stock is just too big to double let alone triple or quadruple.  Think of it like trees in a forest, you want to bet on the smaller, up-and-coming ones, not the mightiest oak in the forest.

So the above list shows a list of winners, many of which you might also find in the Investor Business Daily IBD-100 list.  Two such examples are SCL and JCOM which I have seen there many times.  Okay now you have your list of winners, when do you pull the trigger?

The answer is very simple, you enter when the chart makes a new all-time high as shown using the "Show Me" feature of TradeStation as shown on the right.

Can you lose money buying at all time highs?  Of course you can.  You can use a percentage stop or (very simply) you can put your stop below the low of the entry bar.  If you get stopped out, you can always enter at another new high.

It also helps to understand what the company does and to become familiar with the earnings and the news.  Listening to a web-cast of the earnings call for the company is a great way to get aquainted with the story. 

Then there's the N part of Canslim which stands for New.  There's always a new technology that's up and coming, Its been just about everything at one point in time, railroads, electricy, software, the Internet etc.  At this point in time, its 3D-Printing stocks.  Its good new know the story and follow it as it unfolds.

Okay, that's all I have, my best information available. Now go out there and make some money, its not that hard. 

Enjoy your Saturday.

Meta-Trader - Range Bands - Part 3

Welcome Back, Meta-Traders.

In this post, we delve into strategy trading inside TradeStation. Coming from Meta-Trader, TradeStation was a bit of an adjustment. In MetaTrader, you have a single file that has all the logic, all the buys, sells, etc.  I'm a programmer and that's the way I would think to design it.

In TradeStation, you have "strategies" which get applied alone or in groups. By convention, there are separate files for Long Entry (LE), Long Exit (LX), Short Entry (SE) and Short Exit (SX).

There are also pre-built Strategies to close a position at a certain dollar loss or point loss, or time of day if you want it to day trade only.  While this seems a bit messy, its so much more powerful than trying to get a single program to do all the work.  You can create a whole combination of items and move them up and down in the hierarchy of priority.  This program is such an awesome money-making machine, it reminds me of a print ad I recall seeing for this product in the past "Don't bring a knife to a gunfight."

Anyway, the combination of strategies required to trade the range bands is shown above.  Each Easy Language file is the height of simplicity as follows:

inputs: Length( 14 ), Price( Close );

if ( Close > EaUpperBand( Length ) ) then
Buy ( "EaRangeBandsLE" ) next bar at market ;

Once I figured out how to download the data, and apply the strategies, voila!  Range Bands in TradeStation against EUR/USD! 

Historical data for EUR/USD and GBPUSD only went back to about 2002, which was a bit of a surprise since we have it on the Meta-Trader side. But it was still 10+ years of signals which is enough to get a large number of trades done.

Once the strategy is applied, you can scroll around in the data and see the trading displayed on the chart which is a pretty cool feature.

The strategy performance report is just a mouse-click and a few seconds away and has a very impressive set of statistics on the system's performance including summary,  Trade-by-Trade Analysis, Periodic returns, Performance Graph including equity curves. 

Here are the results of the Range-Bands system on an hourly chart of EUR/USD from 2002 through 2012:

- Meta-Trader MQL system earned $17,000 on a 100K account for a profit factor of 1.01
- TradeStation system earned $41,000 on a 100K account for a profit factor of 1.05
- Meta-Trader took 1620 trades while the TradeStation took almost double at 2820
- Meta-Trader trades were profitable about 37% of the time and on TradeStation 36.8% profitable

A comparison of the periodic returns were more murky where the year-by-year returns in Meta-Trader were much worse than in TradeStation.  The year-by year results don't line up very well except that they agree more years were losers than winners and that 2010 was a huge positive year for Trend Following in EUR/USD.

To summarize, the results between Meta-Trader and TradeStation were more the same than different, though somewhat better for TradeStation.  TradeStation is head-and-shoulders above anything you can do with MT4, it makes me wonder why I spent so much time in the MT4 world.

As for the Range Bands indicator, they aren't a pancea, but they will also keep you on the right side of the move in hourly and above time frames.

I will upload a ZIP file of the EasyLanguage files for the Range Bands indicator and Strategies to my yahoo group at FX-Mon Group.

Meta-Trader - NYC

Welcome back, Meta-Traders.

It was another wild week in the markets, with the S&P 500 closing at new highs for the year, and now just spitting distance from all time highs.  My portfolio hasn't kept up due to a few rocky trades this week.  Here are the highlights and low lights:

- Took 2.5 points out of RIMM (now BBRY) buying at about 14 and selling at 16.5 the next day

- Flipped out of recently added positions in DNKN and FDO at a loss, just to watch them rally back the next day

- Took a hit in Catamaran (CTRX) which sold off hard on Friday, but I'm sticking with it for now.  Earnings due out Feb 18th.

- In my TradeStation account, bought the weekly Facebook 28.8 call at about $80 and got stopped out a short while later for a $10 loss

- Also in my TradeStation account, I bought a weekly option in Google for about $680 and solid it for $926 about 15 minutes later! I was risking $40 on that trade and ended up making $244!  That's a 6 x 1 risk to reward ratio which is pretty darn good.  I'm on a roll in that account and now up nearly 5% for the year.

And speaking of TradeStation, I'm really starting to appreciate this platform more and more.  I spent some time learning how to code and test strategies, but I think I will save that for post #3 on my "Range Bands" series, probably tomorrow.

Also, I continue to learn a lot from John Carter and the position in GOOG was somewhat due to his identifying it in the nightly video.  Some people can't help themself but to make loads of cash, and John Carter is one of those guys.  He has many tricks and techniques he uses to make money.  He also has an increasingly large group of people following him, and he does not always join the SimplerOptions trading room which is a bit of a negative.  But when he does join, some explosive trades can happen.

I'm planning on attending the Traders Expo on Monday February 18th where I will be able to see Mr John Carter in person give at talk on one of favorite option plays.  Let me know if anyone will be in attendance and maybe we could get together for some lunch.

As for Forex, it was a decent week and Sunqu is now leading the pack up 5.56% for the year.

That's enough for now, enjoy your weekend and get some rest.