So long, farewell, goodbye...

Well, that's it for this blog.  This is the last entry.  When I first started this blog, I did it to "help me to become a better trader".  And, it has.

If you've followed this blog, you will have seen my ups and downs.  You've noticed my trading style has changed and that I've gotten better over the couple of years that this blog was active.

There are MANY ways to trade profitably, and INFINITELY more ways to trade unprofitably.  If you are looking to learn more about trading and becoming a successful trader, then keep looking for information, keep putting in vast amounts of time studying trading.

My advice to you is simple:
1.  Ask GOD to give you the wisdom needed to be a profitable and successful trader.  Remember what the bible says:  you can do ALL things through Christ who strengthens you.  I attribute my success to GOD.  I firmly believe that He showed me the ways to trade - specifically the high/low system.  If you do nothing else to learn how to trade, do this step.

2.  Find a trading style that is a good "fit" for you.  Some people must have very fast paced trading - like day trading, in and out of a trade in sometimes as little as just a few minutes.  Some people are very long time - like finding undervalued stocks and buying them until you retire.  And of course, there's everything in between.  There is NO right or wrong style, it's whatever fits your personality.

3.  Once you find a trading style that is a good fit for you, then BACKTEST, BACKTEST, BACKTEST, BACKTEST....
Backtesting gives you EXPERIENCE, without losing real money.  Backtest until you are consistently profitable.

4.  Once you have backtested, then PAPER TRADE.  There is no time limit on this.  Simply paper trade until you are consistently profitable.

5.  Finally, once you have done all these steps - THEN it's time to get into live trading.

I give you the above advice because I've done SOME of it.  The parts I didn't do - ended up costing me dearly.

If you take time and go through this blog - especially the stuff from the past year, then you will be able to figure out the majority of how I trade.  It doesn't guarantee your success, but it does give you at least a couple of ways that you can trade in order to possibly profit.

Best wishes in all you do - keep praying - keep believing - and eventually you will become the trader you want to be.  Claim it!

New Trade - KR

Philippians 4:13 "I can do all things through Christ who strengthens me."

Time to make some profit.

Here's the 2nd trade I got into today.

Same method as DELL, the hi/lo method.  2 day's close above a significant high and I'm ready to trade.

The target (i.e. next level of resistance above) is 26.84, so just over a dollar or so away.  Not as much way to go as DELL, but since it's still the same method, then I buy 90+ days out.

I bought the October 26 Call for $1.00, and put my stop just below to levels of support below.

Now that I've given some examples of my different methods of trading, I'm not going to go into the particulars too much anymore to shorten the time it takes to blog these trades.  I'll still put them on here, and with some research of this blog, you'll easily be able to understand how I trade.

Let's make some profit now.

New Trade - DELL

Isaiah 54:17 "... no weapon forged against you will prevail..."

The markets are starting to show some strength again after some foolery lately.

Today I got the second consecutive close above a significant high.  The line on the chart shows the high, but that high was longer than 3 months ago, so you can't see it.  Believe me, it's there.

This is the first method of trading that I use, for lack of a better term, I just call it the "hi/lo" system.  The main thing is that this used to be bear territory and now with 2 days of closing in this territory tells me that the bulls are getting strong and should push the bears back to their next "line in the sand" - i.e. the next level of resistance above, which is approx 23.00

In this method, I'm looking for longer dated option, around 90+ days.  So, today I bought a Nov 18 Call for $1.07.  This trade is something that we'll give plenty of room, and time, to move - also plenty of room above to make some great profit.  I have a stop placed just below the 2nd level of support below.

We'll let God take it from here...

IP - target hit, profit taken

Glory to God, another profitable trade!

Here's the chart:

Textbook choppy market trading - and NO SURPRISE news on this one.

After the entry, the stock went down and traded near the last low.  I actually got out of this trade around 1:00 p.m. EST.  I was watching it go down during the day, saw it hit the zone, and by the time I got my computer up and running (yes, I was at work during this time so my laptop wasn't up and running) the stock price had already started trading back up.

The overall markets were down considerably today, but they also started trading higher going into the close.  If I had waiting to exit until my normal 3:45 p.m. EST trading time, then I would have had much less profit. You gotta take profit when your target is hit and if you can monitor the trades sporadically during the day then do it.  PUTTING on trades need to be at the end of the day, but taking them off can be ANYTIME.

I originally bought this option for $1.50 and sold it today for $1.75.  This gave me a $0.25  profit with an ROI% of 16% in 5 calendar days.  Not bad for a choppy mixed up market.  That's the way choppy market trading goes, just looking for quick small profits.  Guerrilla warfare.  I'll take that trade every single day.

Now I'm back to zero trades on.  I'm comfortable with that.  Once I find another edge, I'll take it.  Until then I'm relaxed.

PXP - took stop, loss

Thanks to BHP, I took a loss yesterday.  It really doesn't phase me, it's just a really great learning experience.  The big takeaway is that it's amazing how news can really affect the market.

One simple takeover can move a sector so incredibly much.  But you know what, that's all part of trading.  There's NOTHING you can do about news.  When news hits, then it's either going to POSITIVELY affect your trade, NEGATIVELY affect your trade, or have NO affect on your trade.  It is what it is.

I always keep my portfolio risk exposure relatively low on each trade - EXACTLY for reasons like yesterday.  If I had purchased 10 Option Contracts, then I would have gotten hurt.  But, due to my account size, I keep my buys at 1-2 Option Contracts.  And, I always figure worst case scenario.

I always think of how bad it would "hurt" if I lost the entire option value.  This way, no matter what happens, my portfolio won't get hurt.  This is called "Portfolio Management". I'm not going to go into the depths of it now, but the gist of it is to keep each trade's risk only equal to a very small portion of your entire portfolio.  This way one bad trade won't hurt you.

Let's get onto the PXP chart:

I had a valid entry on Thursday, and on Friday I took my loss.  Momentum changed - obviously, so in order to protect any value left in my option, I got out.

I originally got into the trade for $1.61, and yesterday I sold the trade for $0.82, which gave me a $0.79 loss for an ROI% of NEGATIVE 49%.

No biggie, it's all part of trading.  Do you know what happened immediately after I took my loss?  I looked for my next trade to get into.  The loss doesn't affect me or my trading, I just keep on trading because I know that my trading style has an edge over the market, so the more I trade, the more my edge has a chance to work.  Just like Vegas baby!

Onward...

KAPOW!!!!

Stepped in front of that one!!

Let me get back up and dust myself off after stepping in front of the Energy Sector train.

Apparently BHP still has enough money after paying for it's spill in the Gulf of Mexico because yesterday it decided to buy HK for approx $38 per share.  BHP MUST REALLY HAVE A LOT OF MONEY because HK closed the day before at $23.49.

Check out the chart of HK:

Yes, that dot in the upper right hand corner of the chart represents the price of HK yesterday.  Nice little spike in volume, huh?  A mere 62% increase from the prior day.  For giggles, I looked at how much it would cost to buy one of the Call Options for HK on Thursday, it was approx $1.00 (or $100 really).  You could have sold that same option for approx $14.00 (or $1,400) on Friday.  Now THAT'S an ROI!!!!

Thanks to BHP, the entire energy sector (XLE) was lifted and was the highest closing sector yesterday.  XLE had a 2.69% increase from it's closing price the day before.  Here's it's chart:

The overall markets gained in the .33% to 1.37% range respectively.  Here's their charts:

So, BHP really pulled up the Energy Sector (Oil and Gas even more), when all the other market sectors were really flat.

Why do I care?  Because the trade on put on the very day before was PXP, which is in the Oil & Gas part of the Energy sector.  Onto the next blog entry...

New Trade - IP

Deuteronomy 28:8 "The LORD will send a blessing on your barns and on everything you put your hand to."

In addition to PXP, I also took 1 other trade, IP.  Here's the chart:

This is just another simple trade.  I'm looking for a quick move lower down to the last low (in yellow).  I bought an August 30 Put for $1.50.

Now, let's see what happens.

New Trade - PXP

Psalm 108:13 "With God we will gain victory, and he will trample down our enemies."

I've been waiting for the market to make up it's mind on where it's going to go.  We were on a long bearish pullback, then a sharp bullish move higher, and now I've got a bearish entry.

So, needless to say it's been quite the choppy market and you just have to be patient and wait for your edge.  I've been in cash for about a week now - my last trades were bullish.

Here's a chart of the trade I took today:

You can see my highs and lows marked on the chart.  I had an entry today in PXP and I'm just looking for this to trade down to the last low.

I bought an August 37 Put Option for $1.61.  Looking for this to be a quick profitable trade.

AKS - took early profit

Another winner - Glory to God!

I took some early profit today.  This stock didn't hit my target, but in just 4 days of trading, there was enough movement for me to take profit now and to keep an eye out for a re-entry.  I'll look for a pullback and then if I get the right opportunity, then I'll re-enter and look for the stock to move the rest of the way.

I originally bought this option for $1.13 and sold today for $1.48, for a $0.35 profit and a 30% ROI in 4 trading days.  Nice.

I now am officially 100% cash and NOTHING in the market.  This isn't a position I TRY to get into, it's just that the market has been going up and up without any pullbacks, so I haven't had any opportunities to trade this style.

However, we are getting close to many stocks that are about to have 2 closing days above a recent significant high - when this happens, I'll do some of my hi/lo style trading.

Also, I'm perfectly content just to sit out of the market and just wait for my EDGE.  I'm not going to chase anything and I want GREAT SETUPS - otherwise I'm not playing - and you can't make me!

AEP - finally took profit

Glory to GOD - another winner!

On Friday afternoon, July 1st, I played hookey from trading and all things business.  I thought the day was going to be a pullback, but instead the market just shot higher.  I could have taken profits on that day, because my target was hit.

So, then we come to Tuesday (yesterday) the next trading day and had another higher day.  As Murphy's Law was still in full force, I couldn't trade due to work commitments.

That left today, thank goodness it was still another decent day up.  I took profits today.  SHOULD have taken them on Friday, that was reckless, and although it paid off to my advantage today, in the long run that's a losing way to go.

Let's go to the numbers.  I originally bought this option for $1.15 and sold it today for $1.75, which gave me a $0.60 profit for an ROI% of 52% in 5 trading days.  Nice.

I'm down to just 1 trade right now.  So, I'm looking for new entries.  The market is just kinda taking a rest right now.  Once it starts moving in either direction, then I can take more action than just waiting.

WNR - target hit - profit taken

Glory to GOD - another profit!

This is just a great trade, got in the trade and the next trading day, the target is hit.  Doesn't get much better than that.

I bought the option for $1.92 and sold it today for $2.20 for a profit of $0.28 and an ROI% of 14%.

These ROI% and profit may seem small, but you must understand the numbers.  I trade a small account (for now - yes, it's growing, so someday I won't be able to say this), so I'm only buying 1-2 contracts at a time in order to keep my risk low and manage my portfolio in a safe way.  The last thing I want to do is load up on contracts and risk a large percentage of my account in any one trade - because the market CAN DO ANYTHING AT ANYTIME and I don't want to be "all in" and get clobbered.

These ROI% do apply to any account size, which is why I concentrate on ROI%.  If I had purchased 10 contracts instead of 1, then I would have still made 14% ROI, but my profit would have been $280.

Also, you have to trade based on edges and consistency.  Think of it like baseball, the BEST of the BEST get around 3 hits out of 10 times at bat - those hits include simple base hits - not all home runs.  

OR, you can think of it like a casino.  The casino makes a TON of money off their slot machines.  The slot machines only have roughly 3-7% edge over the player.  So, out of $100 played through the machine by a player, theoretically, the casino would make $3 - $7.  That doesn't sound much, but it works.  If you've ever been to, or seen video/pics, of Las Vegas you will understand that those little percentages/edges work VERY WELL.

DELL - target hit - better late than never

Thank you LORD for another profitable trade!

Here's the chart:

This trade took a looooooooong time to hit the target.  After the entry, there were a couple attempts at going higher and then a pullback and sideways trading until the last few weeks, then finally it got going higher again.

Better late than never, but when a trade takes this long to complete, it does hurt the ROI a bit due to theta.  However, it's a win, here's the numbers:

Sold the long option for $1.38, bought it originally back on May 9th for $1.21, for a profit of $0.17, with an ROI% of 14%.

Again, this isn't a bad trade, it's just a long trade - but that's why when trading this hi/lo system I like around 90 days until option expiration.  If I had bought an earlier option expiration date, I would have had a loss instead of a win.

WNR - back into this one

Deuteronomy 15:6 "For the LORD your God will bless you as he has promised, and you will lend to many nations, but will borrow from none."

Got back into WNR on Friday, here's the chart:

Along with AKS, this one is also based on the hi/low trading style.  A 2 day close above a significant high.  This will be a short move, just up to the next level of resistance and will look to take profit just below that level.

I got in at at noon and look where this trade closed:

It really rallied the rest of the day, going close to the next level.  If I was not playing hookey Friday afternoon, I most likely would have taken profits on this one again.

I bought the Sept 18 Call for $1.92.

HAVE A SAFE AND HAPPY INDEPENDENCE DAY!!!

DID I MENTION - SAFE??

AKS - new trade

Romans 8:28 "And we know that in all things God works for the good of those who love him, who have been called according to his purpose."

Got into AKS around noon on Friday, here's the chart:

This is an entry based on the hi/lo system.  I had a 2 day close above a significant high.  As you can see by the support/resistance lines, this stock's next level of resistance above is approx $17.  So I'll look to take profits just below that resistance.

I bought a September 16 Call for $1.13.

P.S. Don't forget to buy your firewroks

WRONG

I admit it - I was wrong.  

I thought we would see profit taking by the big money Friday afternoon.  This is what happens USUALLY.  However, the market has been anything but "usual" over the past couple of months.

I decided to put on a couple of trades around noon on Friday.  Again, USUALLY, there would have been a pullback - but there wasn't.

Here's a 5 minute chart of SPY for Friday:

As you can see from the chart above, there was a BIG buying jump early in the day, after that the market just kept going up and barely even tapered off at the end.

Let's look at the DOW's (via DIA) chart for Friday:

Again, even the DIA just kept going up - and notice it was on increased volume compared to the prior week!

So, the big money not only did NOT take profits, but they BOUGHT going into this long weekend.  To me, this is extremely bullish.

Looking over the last week, we should have a pullback at some point before continuing even higher.

As I mentioned earlier in this post, I put on 2 new trades around noon (which I will blog next), and then I took the rest of the day off.  However, since I played hookey I missed my exit on AEP.  And could have taken profits on DELL as well.  Oh well, you can't unscramble eggs.  I'll most likely be able to take profit on both of those next week.

HAPPY 4TH OF JULY!!!

I know it's only June 30th, but it's also July 4th eve-eve-eve-eve.

Thank you to all those who have served, or are serving our country - your commitment has given us our freedom.

Now onto the markets.  Today is Thursday, Monday is July 4th (markets are closed).  As explained in the last post - most BIG MONEY will be getting out of their trades tomorrow around noon or earlier.  So, I'm expecting a bit of a pullback tomorrow.

I do think that the markets are turning more bullish and believe that next week after the holiday there will be plenty of buying.

I have taken off my CBS trade and have left 2 trades on for now.  I really need to get into about 2-3 more trades at this point but I'm not going to do it today.  Instead I'll use today as my trigger to take an entry and instead actually buy my options (i.e. take my entries) tomorrow.  This way I may be able to get a better price on my options because the stock prices should be lower tomorrow.

That's my plan and we'll see how it all works out.

CBS - taking profits - for now

Just like H.I. McDonough in Raising Arizona, I'm taking my goods and running.

First, let's look at the chart then I'll explain why.

After a LONG AND DRAWN OUT PULLBACK, almost hitting my stop, CBS finally has come back around.  I sold my option today for a profit of $0.30, which was 13% ROI.

That's nothing to write home about, granted.  But I do think this stock is going to go higher and hit the target of $32.80.  The reason I got out today and took my profit is because tomorrow is Friday, the day before a long holiday weekend.  July 4th is Monday and the markets are closed.

The BIG MONEY gets sketchy over weekends, especially long weekends and they pull their money out of the market.  They do this because having a 3 day weekend gives the universe in general one extra day to lay some mishap on the world and wreck havoc on the markets at the open on Tuesday.  The last thing BIG MONEY wants to happen is to be doing good on Friday only to have something bad happen over the weekend and Tuesday morning we open with a big gap lower in the markets and now BIG MONEY is in a bad spot.  So, they simply get out on Friday - usually around noon or earlier.

When BIG MONEY gets out of the market, then prices will usually go down (i.e. lots of selling pressure because not enough buyers vs. sellers).

So, my plan is simple.  Take my profit now, and look for a re-entry next week sometime and ride this trade up to it's target.

AEP - new trade

Luke 3:5 "Every valley shall be filled in, every mountain and hill made low.  The crooked roads shall become straight, the rough ways smooth."

Here's the chart of AEP:

After about a month pull back, AEP recently made a higher high and a higher low.  Today was my entry.  In addition to a close above the high of the low day, check out these three things:

1.  The 20 and 50 day moving averages are below the opening and closing price of today's movement.  This of these are "pushing" the stock price up.

2.  The stochs were low and the black line just crossed up above the red line.

3.  The MACD lines look like they are starting to flatten out after going down.  Next move should be up for these lines.

4.  The MACD histogram getting more bullish.

In addition to the items above, I also like the look of the overall markets for a bullish trade:

The main thing to consider in these overall markets is the fact that they ALL have made higher highs today.  This is not to say that we're off to the moon now, quite the opposite - we'll probably get a pullback in the markets very soon.  ESPECIALLY since we have a 3 day holiday weekend coming up.  The big boys don't like being in the market over a long weekend, so I'm anticipating a pullback either tomorrow or Friday.

With that said, however, I still want to be in this AEP trade because I've got my edge and I'm taking it.  It could hit tomorrow, or a week from tomorrow after the holiday weekend. We'll see how it plays out.

Let's make some money.

WNR - victory!

WNR hit it's target in 1 day - Glory to God.  Here's the chart:

I bought an August 17 Call yesterday for $1.55 and sold it early this afternoon for $1.90 giving me a profit of $0.35 with an ROI of 22% in less than 1 day's trading.  Sweet.

I usually trade around 3:45pm to 4:00pm EST, but I do keep an eye on the stock prices and when it hit my target I had to get out.  I have the ability to put on an order that will get me out at a certain price, but I like doing it manually instead - this way I'm sure to get the best price and not just ANY price when I exit.

Also, by keeping my eye on the stock prices that I'm currently trading randomly during the day I can capture profit before getting a pullback.  For example, I exited approx an hour ago and already it's starting to pullback.  This is NOT to say that it won't go back up to those prices that it hit earlier, because it PROBABLY will.  But, "A bird in the hand..."

Time to log this trade and look for the next one.

WNR - time to make some profit

Isaiah 45:2 "I will go before you and level the mountains; I will break down gates of bronze and cut through bars of iron."

Time to start earning profit again.  Got into a new trade - WNR.  Here's the chart:

This is one of my new choppy markets type of trade.  Recently this stock went from making lower highs and lower lows to making higher highs and higher lows.  So, today I bought an August 17 Call Option for $1.55.  I'm looking for a quick trade targeting the most recent high.

I'll get out of this trade if the bears show strength against this trade.

Easy enough, God Bless this trade!

MYL - took loss - somebody stop this dizzy market!!!

The market keeps spinning and spinning, taking money out of the hands of traders left and right.  Bullish or bearish, you are most likely going to take some losses in this market.

Until one side or the other finally gets determined and starts moving this market we may need to keep one of these close by:

Anyway, I'm actually quite content right now.  Yes, I've taken losses, but more importantly, I've been blessed with wisdom on how to trade a sideways market, so I'm just sitting back and waiting for the right entry.

Let's look at the chart of MYL:

Okay, here's the question - why did I get out if my stop wasn't hit??  Bueller, Bueller, Bueller...

Reason: LOOK AT THAT TAIL!  Price traded almost up to my stop today.  Now, the bears DID come back in and drive that price back down, but that's scary.  Also check out the stochs just climbing up higher and higher.  And, see that MACD, it's ready to start screaming higher.

Here's another reason - the overall markets today:

If you look closely, you will see that I put a dotted blue line that represents the last high.  Now, once those price goes ABOVE that high, then what do we have???  A higher high.  And a higher high is indicative of a POSSIBLE bullish trend, because we also need a higher low.

The DIA and IWM have already made a higher high.  The SPY also went above the last high by a few pennies today (although it doesn't look like it on the chart above).  So the last one we're waiting on is QQQQ.

This should be a warning shot across the bow of bearish trades.  Be warned it's POSSIBLE that we could be switching into bullish mode.

So, I got out of the trade because of that tail, the indicators and the overall markets.  I sold my long option today for $1.64.  I originally bought it for $1.90.  Therefore, I took a $0.26 loss on it plus commissions.  This put my ROI at NEGATIVE 15%.  Which in all reality compared to the size of the losses I have been taking - is a breath of fresh air.

From here, I'm still in 2 bullish trades:  CBS, which is looking just so-so, and DELL which is starting to move now in our direction.  And once QQQQ's get going DELL will skyrocket.

I'm going to sit tight and keep an eye out for the market to pull back a little bit in order to put in a higher low.  Once I get that higher low, I'll be looking to get back into some bullish trades.  Of course, that's just my guess for TODAY.

SIDEWAYS IS A KILLER - LEARN TO TRADE IT

For an options trader, a sideways trend is a killer.

The reason that it's a killer is that usually by the time you figure out that the trend has transitioned from a bullish or bearish market to a sideways market it's usually too late and you've taken major losses.  (similar to my RES trade).

However, this has made me realize that I really don't have a sideways trading style.  I only had trending systems.  But, thanks to my RES trade, and some other recent losses, I've developed a sideways system.

I'm not going to give the particulars of it right now, but it will deal with CONSTANTLY marking out the highs and lows so I know if the stock and/or market I'm looking at is trending or sideways.  This sounds overly simple, but if you know exactly what is going on in the market when it comes to movement, then you can find your advantage points and trade them accordingly.

This new sideways trading style has been backtested extensively and will provide some nice profits in the future.  It won't be as profitable as the trending style, but at least it will be profitable rather than either not being in the market at all, or worse - losing money.

The important aspects of this sideways system are:
1.  Marking all highs and lows - thereby being completely cognizant of the market movement.
2.  Knowing where the edges are for probability trading.
3.  Knowing where the targets are once in a trade.
4.  Knowing where to take losses.

I understand the above numbered items are vague, but as I get into new sideways trades, I'll expand on them.

MOST LIKELY we're at a point now where we'll start trending (I'm guessing up) - Murphy's Law.  But, in any event the most important thing to know now is:

I CAN NOW TRADE IN MARKETS THAT ARE MOVING UP, DOWN, AND SIDEWAYS!  

Now is the time to start rebuilding the account!

RES - loss, big time

Well, I had a 100% loss in RES.  Two, reasons for this, one valid one stupid.

Look at the chart above.  You can see the entry day in green.  I was looking for a bounce back up to the most recent high (referenced by the horizontal green area).  But, we didn't get that.

Instead the stock went SIDEWAYS.  For a long time.  This really killed my trade.  As you can see, the stock never hit my stop until about 3 days before it's expiration.  I looked to get out of the trade and by then I could have only sold my call option for $0.05 - basically worthless.  Not worth taking action on.  At that point I had a "lottery ticket" and my only hope was for some type of news that would pop this thing way higher - very very long odds, but by this point, I really had no other option.

There's 2 lessons to learn from this:
1.  Stocks don't only go up and down - they also go sideways.  So if you are an options trader like myself the sideways stuff makes the option price go down and just like this example, my option expired worthless.  Nada, zip, nil, zilcho.  Therefore I had a 100% loss (i.e. read "not good").

2.  The 2nd lesson is this.  IF, you still happen to be in a trade and you are 2 weeks away from expiration with no real movement - then GET OUT.  If I would have gotten out 2 weeks prior then I would have exited by selling the option for $0.97.  Now, this STILL would have been a loss, but a much less of a loss (approx $100 less of a loss).

I bought this option for $1.55 and could have sold it for $0.97, thereby my loss would have been $0.58 for an ROI% of NEGATIVE 37% vs. a $1.55 loss with an ROI% of NEGATIVE 100%.

So, you can see that the last 2 weeks really kills the value of your option.  I'll take a 37% loss over a 100% loss any day.

This brings me to another topic, which I'll discuss next.

Working on making these pics clickable

Try clicking on these pics to see them enlarged from last post.  Going to work on that so it'll be easier to see charts, etc.