My Trading Edge

Worst trade of the week: ES

noreply@blogger.com (mytradingedge) — Mon, 04 Jun 2012 01:39:00 +0000

Entered a trade with no confirmation price was going to break a range and form a new leg.
Certainly don't want to be waiting for too much confirmation (and join the latecomers to the trade)... however there needs to be some evidence to support the trade premise. See chart for trade details.

Click on chart to enlarge

Worst trade of the week: SPI

noreply@blogger.com (mytradingedge) — Mon, 28 May 2012 03:23:00 +0000

Allowed the market too move too far against a "paper" profit. The risk to reward ratio had become inverted.
Was initially aware of the entry being late in the sequence, however didn't factor this in when deciding to hold for a possible re-test of the recent low.
The speed of the move was also a give away... capitulation moves often rebound hard and fast.
See last trade on chart below.

Click on chart to enlarge

Desktop audio done right

noreply@blogger.com (mytradingedge) — Mon, 21 May 2012 13:57:00 +0000

Premium Powered Desktop Speakers
Audioengine 2's are the perfect upgrade for a home office or trader's workstation. Fitting neatly below a multi-monitor set-up, their compact size doesn't compromise their ability to reproduce an authentic and spatial sound stage with exceptional depth and imaging.

AudioEngine 2 compact powered speakers - click on image to enlarge

"I have never been more impressed with or more stunned by a component I've reviewed for Stereophile than I was with the Audioengine 2. The level of sound quality produced by this uncolored, detailed, articulate, and dynamic speaker, in all situations, was beyond reproach, and its ratio of value to cost borders on the criminal." Stereophile - A2 Review

Dedicated Sound Card
The ASUS Xonar STX sound card brings greater openness, smoother highs, tighter and more extended bass plus a more engaging mid-range to your audio playback.

"Featuring independent power sources for line and headphone outputs, Burr Brown 1792A DAC, swappable OPAMPS, hyper grounding circuitry, professional audio grade capacitors, and EMI shielding, the Xonar Essence STX is made for only one purpose: to output the cleanest, clearest possible sound that captures the whole sonic spectrum so that you can enjoy your music the way it’s meant to be heard."

Suggested Mods to Improve Performance

Swap the stock buffer stage OPAMP for a Burr Brown OPA2107AP (approx $20)
Upgrade the audio interconnect that runs from the sound card to the speakers to a QED Performance Graphite Audio 2

CPU and Motherboard Choice

noreply@blogger.com (mytradingedge) — Mon, 21 May 2012 06:56:00 +0000

Intel has just released the latest edition of Xeon CPU's based on their "Ivy Bridge" platform.

The short post here discusses the advantage of a Xeon over a regular consumer i7.

Choosing to go for a CPU with "hyper-threading" is explained in the short post here Similarly, if using a dedicated graphics card (for multi monitor use) then savings can be made by purchasing the current Xeon E-1230 V2 over the common retail i7 3770.

Numerous "Ivy Bridge" compatible motherboards from Gigabyte offer support for Xeon CPU's, making for an ideal choice of motherboard manufacturer. In particular the GA-Z77X-UD5H is a high performance board ideally suited to 24/7 operation featuring a massive 12 Phase Power Design. The main advantage to having more phases is that the circuits work less, which (in theory) means a longer life-span for the circuitry and a lower operating temperature. Another advantage is that more phases usually means more stable output voltage, and also the noise level should be lower.

Additional features include:

Support for Ivy Bridge Xeon CPU's
Ultra Durable 4 for malfunction prevention and durability
Intel ethernet controller for greater consistency internet performance compared with lower-cost controllers
PCIe Generation 3 and SATA 6 to take advantage of the fastest data rate transfers available in SSD's and high-bandwidth dedicated graphics cards
three year warranty

Building a Custom Trading PC

noreply@blogger.com (mytradingedge) — Mon, 21 May 2012 06:03:00 +0000

The toughest step to building a PC is deciding what components to use. I maintain an updated recommended list of PC components here so you can assemble a reliable, high performance, cool & quiet computer optimised for Trading. The modular approach provides you with the flexibility to upgrade individual components allowing you to keep pace with changes in technology. (No need to replace the entire computer every two to three years)
The hardware posts explain the reasoning behind the chosen components.

Assembling a PC is quite straight forward. The video guide below is a great start

I have provided some hints and recommendations on how to set up your software here.

Trades: ABC, BHP and CHC

noreply@blogger.com (mytradingedge) — Sun, 06 May 2012 02:39:00 +0000

The trades in ABC and BHP came back to test the zones I entered long off, but as neither zones were really violated, the trades were held, finally reaching their prospective targets. Holding through those tests was based on an awareness of the larger structural plays, and the odds behind them playing out.
The counter trend short in CHC was in hindsight a poor entry relative to the zone on which I based the trade. This can be illustrated by the entry price relative to the short term moving average. At the entry of $2.40, price had already moved back to the mean...and given the trend is still up, the odds were low that price would continue against the trend.

Further details are shown within the charts below

click on images to enlarge

Worst trade of the week: TEL

noreply@blogger.com (mytradingedge) — Wed, 18 Apr 2012 15:16:00 +0000

First chart shows what was a pretty innocuous trade. However the second chart illustrates some truths as to why the trade was a poor.

Click on images to enlarge

AAD...again!

noreply@blogger.com (mytradingedge) — Wed, 18 Apr 2012 15:08:00 +0000

Having closed out AAD (see this post), I completed another trade as noted on the chart below

click on image to enlarge

Trades: QBE, AMC & AAD

noreply@blogger.com (mytradingedge) — Tue, 17 Apr 2012 04:16:00 +0000

See charts for details

click on images to enlarge

Trades: QBE & BHP

noreply@blogger.com (mytradingedge) — Mon, 02 Apr 2012 14:40:00 +0000

Two things I overlooked on the trade in QBE:

Stock was still in an uptrend, so any deep retracement is likely to attract sideline buyers
While still in uptrend, if price hasn't moved higher than the previous range high, the scenario of trapped buyers forced to cover (which in turn drives down prices) is less likely. See chart for further details

The trade in BHP is self explanatory as per chart annotations

click on charts to enlarge

Quick Chart Glance v Considered Observation

noreply@blogger.com (mytradingedge) — Sun, 01 Apr 2012 12:02:00 +0000

It's easy to miss some critical information a chart is telling you if you look over the chart too quickly. See chart below for example.

Click on chart to enlarge

Worst Trade of the week: AMP

noreply@blogger.com (mytradingedge) — Tue, 27 Mar 2012 02:21:00 +0000

Trade logic, chart entries and supporting reasons as to why the trade was poor are all noted in the chart below

click on image to enlarge

Turning a profit into break-even

noreply@blogger.com (mytradingedge) — Sat, 17 Mar 2012 03:28:00 +0000

See chart below for trade management.
Trade moved into profit quickly by 3%. As tempting as it is to take the quick profit, the planned target was significantly higher. An early exit sabotages long term profitability, given I require larger winners to offset losers. I did however exit the trade early due to price not following the scenario (or close variation of) I planned for.

Click on image to enlarge

The trade process: AGK

noreply@blogger.com (mytradingedge) — Wed, 14 Mar 2012 23:58:00 +0000

The first chart below includes an insert of the longer term price action, showing the buying support that has taken place at around the $13.70 mark. The chart also shows the scenario I marked in (with purple arrows) which price needed to mirror to validate taking the trade.

The second and third charts show the intraday management of the trade through to exiting the position.

Worst trade of the week

noreply@blogger.com (mytradingedge) — Thu, 08 Mar 2012 23:58:00 +0000

Worst trade this week is a counter trend trade in Aquila Resources (AQA). In addition to price action behaviours I overlooked, I left a working stop-order in the market. This acted as a "come get me" sign to the HFT traders. My stops were in the market at $4.83 and prices actually moved in AQA as follows: $4.87; $4.86; $4.85; $4.84; $4.72; $4.71; $4.84. The working stop orders should only be left for those times I can't be in front of the screens.
Due to lack of preparation prior to the market opening I only withdrew my target orders overlooking the stop orders and consequently paid the price with large slippage.
First chart below shows price entries and exits, while second chart makes reference to the price behaviours I overlooked.

On a positive, getting stopped out is a small price to pay for a poor trade, given plenty of "good" trades are also stopped out.

Click on images to enlarge

Short term trade in Dulux

noreply@blogger.com (mytradingedge) — Wed, 07 Mar 2012 13:51:00 +0000

First chart below shows longer term view of price action and in particular the reasoning for fading the uptrend.
Second chart shows the entry, trade management and exit.

Click on images to enlarge

Market prep charts - SPI

noreply@blogger.com (mytradingedge) — Sun, 26 Feb 2012 04:07:00 +0000

SPI prep charts Feb 20-24

click on images to enlarge

Latest Trades

noreply@blogger.com (mytradingedge) — Thu, 23 Feb 2012 12:47:00 +0000

Telstra Fade was exited today.
NOTE: I held during the ex-dividend period, so the profit on the trade is the difference between the entry and sell prices, less the dividend. See chart below

click on image to enlarge

Entered another extension fade trade
Closed out for a point after trade rebounded - them-the-breaks!
Details in the charts below

click on images to enlarge

Fading extended uptrend: TLS

noreply@blogger.com (mytradingedge) — Fri, 17 Feb 2012 03:52:00 +0000

Fading trends is best left to extremes of ranges. Screen shot below shows how Telstra couldn't break the highs reached back in January. Price in the short term is extended to the upside (distance away from all 3 MA's) - so almost like an overstretched rubber band, has pulled back.
Entry was at the edge of price movement to skew risk-reward in my favour.
The irony in entering at the edge is you are getting into the position with very little confirmation. However by waiting for further confirmation, you typically take more heat and have to reduce your trade size to manage the risk. You also diminish the reward to risk ratio.

Click on image to enlarge

Update to Short Copper Trade: Exited due to inside level holding as per plan - see chart below

click on image to enlarge

Short Copper via ETF

noreply@blogger.com (mytradingedge) — Sun, 12 Feb 2012 00:39:00 +0000

Copper is in a bear rally phase. Using iPath's Copper ETF (JJC), I initiated short positions between $50.30 and $50.40.
The price action in Copper doesn't give many clues that it will reverse until after the event. This being the case, I entered short once JJC was well extended in the short term, as indicated by the distance price has moved above the twenty day moving average. In addition, the entry is within the rectangular price zone which is significant because:

it's where price formed the last support area within the uptrend prior to the December highs
it's where the lows which held price in it's consolidation phase occurred
it's where a minor structural high occurred which I will use to define the risk on the trade

If price retests and holds the inside support area (circled yellow) then I will exit, otherwise I will look to exit based on price moving somewhat inline with the arrows I've drawn in.

click on image to enlarge

BHP call warrants - exit flexibility

noreply@blogger.com (mytradingedge) — Fri, 03 Feb 2012 22:46:00 +0000

Trading with trend AFTER short term MA's have turned up (see this post), buying momentum dried up before price got anywhere near projected target so trade was exited early.

See chart below for further explanation and entry/exit details

Click on image to enlarge

SPI & HSI trades - improving timing using MA's

noreply@blogger.com (mytradingedge) — Thu, 02 Feb 2012 14:53:00 +0000

Today's entries into the SPI (index) via call warrants highlights my tendency to enter long trades too early. On an intraday time frame this leads to more stop-outs than necessary.
While I enter in the general area of what will become support....entering PRIOR to the shorter term MA's trending up means taking greater heat or unnecessary losses.

I managed to time the entry on the Hang Seng well with the shorter term MA's trending up.

All entries and exits noted on the charts below.

Click on images to enlarge

SPI (ASX 200 Index) Call Warrant trade completed

noreply@blogger.com (mytradingedge) — Sun, 29 Jan 2012 12:12:00 +0000

Closed out the remaining call warrants on Friday when price tested the overnight session highs.... (see 1st chart below).
If you look at the 2nd chart, you can see the supporting price evidence to remain with the call warrants; however due to time decay, it was prudent to exit. The profit margin was minimal despite having held the calls for a major part of the price move from the January lows.

Click on images to enlarge

SPI and ES trades

noreply@blogger.com (mytradingedge) — Wed, 25 Jan 2012 15:40:00 +0000

Finally added some pennies to the kitty in what has otherwise been a week of "Big Mac" profits.

Trades explained in the charts below

Click on images to enlarge

For traders - 4 core or 8 "core" CPU's?

noreply@blogger.com (mytradingedge) — Wed, 25 Jan 2012 14:55:00 +0000

The first screen shot below shows only 4 of the possible 8 CPU threads being utilised while running NinjaTrader, TWS (or your preferred trading platform) and a web browser.

The next screen shot shows most threads at work once additional applications such as screen recording software and image editing software are being used. The image below illustrates how the extra threads "spread the work load" so the CPU can operate well within its capabilities, ensuring performance isn't compromised.

In summary, most applications used for trading only maximise four cores. However, if recording and editing your live screen images or screen recordings, it's beneficial to have a CPU capable of efficiently running "multi-threaded" applications.

See this post for details of the CPU used in the examples above.

More on Hyper-threading