Bought some banksters this morning “on the dip”, only to have prices quickly move against me, making me painfully aware that I had put on the positions without a written out trading plan in place. Instead, I had been shooting from the hip, betting that bank stocks were “over-sold”. Obviously, I had acted stupidly, and now I was probably going to have to suffer some losses. But then the Market Goddess gave me some chances to get out, which I grabbed.
Scratched on Key: in, 11.48; out, 11.61; +1.1%.
Scratched on DPST: in, 7.57; out,7.75; +2.4%.
Grabbed a profit on CUBI: in, 11.00; out, 13.21; +20.1%.
Made a very undeserved killing on WAL: in, 11.23; out, 20.00; +78.1%.
Still holding SCHW, in at 47.37 and ITM.
On the bright side of things, my precious metals positions are (finally) catching a bid. Lesson to myself. “Don’t trade what I haven’t been tracking and whose fundamentals I don’t understand.”
Thanks for sharing. You mentioned you were holding SCHW…I noticed that you had sold out all the others…Is that because you feel this is a solid long term bet, and so willing to hold should the trade turn against you?
Those were my sentiments exactly. Though Schwab is as much an investment bank as it a brokerage firm, I thought it was/is better positioned to ride out the current liquidity troubles than the pure banking firms.
My plan for DPST is to sell at RSI (5 day)>50 …it is 2 now! I may chicken out and sell earlier…maybe EMA10. Very small position since no stop loss…if all lost I still can go to sleep at night…it WILL reach >50 at some point…odds are it will be higher…but will only know in the fullness of time…
Thanks but we’ll see where the trade ends up! Risk now is that I left profits on the table this am. Another way to trade this…Simon would say to wait for an upper price label since there is now one below yesterday’s bar.
Quill can makes price labels --aka, lookback lows and highs-- work for him. But I think trying to use them as trading signals is a fool’s errand.
You’re still long DPST, right? and you missed your chance to get out at today’s open with a fat profit. You might have put on the position on the basis of EOD technicals, but that isn’t that why the trade worked. To have bought DPST “on the dip” was to have bet that the banksters were so over-sold --fundamentally-- that a bounce back --based on fundamentals-- was more likely than not.
I made the same bet myself by buying CUBI, WAL, KEY, etc. But I got out of them when prices moved in my favor. “Yes” --retrospectively-- I left A LOT of money “on the table”. But when I was getting out, it wasn’t easy to know that prices would go higher, and I’m a stong believer in “When in doubt, get out.”
One of the downsides of mechnical trading systems based on End of Day bars is that, sometimes, the intraday moves are truly fabulolous, and they are what one should be trading. But those moves and chances for profit become obscured or lost when daily bars are used. Whether that is especially true of the triple-lveraged ETFs I don’t know. But I do know that yesterday was what traders would call “a fast market” where the “normal” rules didn’t apply.
My guess that SCHW might prove a good bet is being vindicated. Got in Friday at $47.37. It closed today (Weds) at $59.55, for a 3-day gain of 25.7%.
Yeah, for having promptly cashed out of the other banksters I bought the same day, I left a lot of money on the table. But I also left a lot of possible grief there, too, and I also know this melodrama isn’t even in its second act, for the Fed/Treasury cartel having done nothing that will forestall wider, future problems.
Trade is still on until RSI>50…5 day. Tradingview will text me intraday if I am not watching at that moment. Trade may take awhile…I know of someone who buys only on big down days…mainly in etf’s and only sells when overbought…no exception. He will buy as price is falling at different degrees of being oversold.
He kind of reminds me of Quill in that his rules are very simple yet very difficult to reproduce. He regularly posts his trades in real time and has for like 8 years. He buys in traunches at different levels for each security but usually no more than 3 or 5 buys. I don’t follow him much now but looked the other day and he has a purchase for DPST at $17. He already sold one intraday position for 30% but he will not sell the $17 purchase for a loss. I will sell at rsi>50 if it’s a loss. Some of his trades are days and some go on for weeks or rarely for months. He is a very successful trader. I found out that I cannot trade like that with any meaningful money. We will see if he will recover his $17 purchase…
That’s awesome Arindam…I wish I had the nuance…I absolutely don’t have it yet…but hoping that by following you and others that one day I do get there, the sooner the better…
Thanks again for explaining your thought process so clearly.
Thanks for sharing your process…I only know Quill, Arindam and Lake dog who post here…I didn’t see the one you mentioned who discussed their trading process on DPST…Do they post it here on the TMF boards? May be I missed it.
Perhaps I shouldn’t have mentioned him. Where he posts is freely available but kind of hidden due to how the messages are arranged on the site (not his). He is older now and is in failing health but still posts. He has never promoted his ideas…only answered questions. Perhaps I could ask him if he minds if I post a link.
Others who follow him always try to add stop losses or other safety measures. It’s kind of a trading ‘Russian Roulette’ with leveraged etfs mainly. You have to trade with complete discipline…he is a retired research scientist. Surprisingly he never mentions money management witch is vital. I guess my point mentioning him is to describe how different successful trading methodologies can be…
Got it thanks…Yes, I wouldnt do his trades as I am still learning and so more interested in learning the process…it looks like that may not be possible given his situation, which is perfectly understandable. Thanks for sharing that IBHefty.
