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PositiveDev's trading journey

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22nd May 2013 NASDAQ 100 futures; (intermediate top)

Inter_zps326aec9f.png

 

3rd May - 12th June 2013 (Intraday volume);

Inter2_zps685c46d7.png

 

10th May 2013 - 8200>7500

13th May 2013 - 7500>18000

14th May 2013 - 18000>55000

15th May 2013 - 55000>65500

17th May 2013 - 65000>65000

20th May 2013 - 65000>67000

21st May 2013 - 67000>75000

22nd May 2013 - 75000>104000 ~ 29

23rd May 2013 - 104000>112000 ~ 8

24th May 2013 - 112000>115500 ~ 3.5

28th May 2013 - 115500>124000 ~8.5

29th May 2013 - 124000>180000 ~ 56

30th May 2013 - 180000>190000 ~10

31st May 2013 - 190000>253000 ~ 63

5th June 2013 - 253000>249000 ~ 4

6th June 2013 - 249000>246000 ~ 3

7th June 2013 - 246000>254000 ~ 8

10th June 2013 - 254000>251000 ~ 3

11th June 2013 - 251000>244000 ~ 7

12th June 2013 - 244000>235000 ~ 9

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2. Trading divergences between currency and equity index markets and divergences between individual equity index markets.

 

There's a situation in the markets that interests me at the moment;

Precise_zps291dc9f9.png

 

I think there is potential here for some form of short term top in equity futures however it's not confirmed yet, for it to be confirmed I am looking for Dow Jones futures to break decisively below it's recent low, the bounce off the trend line that occurred yesterday. At the moment I'm thinking that if I get that trigger of the trendline break then shorting Dow Jones futures and hedging with long Australian dollar futures would be the trade.

 

These opportunities come along quite regularly but since I have no experience with this type of trading I will be trying these equity futures / currency divergence trades on a SIM account to see how I get on first.

 

The $ value of each E-Mini Dow Jones futures contract is $80185 whereas each Australian dollar future is $91570. If such a trade was initiated I could try 7 E-Mini Dow Jones contracts and 6 Australian dollar contracts in order for it to be as dollar neutral as possible although that would still create a position with a slight downside bias.

 

Contract spec;

 

"AUD/USD Futures

Contract Size 100,000 Australian dollars

Contract Month Listings Twenty months in the March quarterly cycle (Mar, Jun, Sep, Dec)

Settlement Procedure Physical Delivery

Daily FX Settlement Procedures (PDF)

Final FX Settlement Procedures (PDF)

Position Accountability 6,000 contracts

Ticker Symbol CME Globex Electronic Markets: 6A

Open Outcry: AD

AON Code: LA

 

View product and vendor codes

Minimum Price Increment $.0001 per Australian dollar increments ($10.00/contract). $.00005 per Australian dollar increments ($5.00/contract) for AUD/USD futures intra-currency spreads executed on the trading floor and electronically, and for AON transactions.

Trading Hours CME Globex (ETH) Sundays: 5:00 p.m. 4:00 p.m. Central Time (CT) next day. Monday Friday: 5:00 p.m. 4:00 p.m. CT the next day, except on Friday - closes at 4:00 p.m. and reopens Sunday at 5:00 p.m. CT.

CME ClearPort Sunday Friday 5:00 p.m. 4:15 p.m. Chicago Time (CT) with a 45minute break each day beginning at 4:15 p.m.

Open Outcry (RTH) 7:20 a.m. 2:00 p.m. Central Time (CT)

Last Trade Date / Time

View calendar 9:16 a.m. Central Time (CT) on the second business day immediately preceding the third Wednesday of the contract month (usually Monday).

Exchange Rule These contracts are listed with, and subject to, the rules and regulations of CME. "

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When the last bear turns bull..............

 

Zerohedge;

 

"Hugh Hendry Capitulates: "Can't Look At Himself In The Mirror" As He Throws In The Towel, Turns Bullish

"I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."

- Hugh Hendry

First David Rosenberg, then Jeremy Grantham, and now Hugh Hendry: one after another the bears are throwing in the towel.

As Investment Week reports, speaking at Harrington Cooper's 2013 conference this morning, Hugh Hendry said "he is no longer fighting the two-way feedback loop which is continuing to boost risk assets." The reflexive feedback loop envisioned by Hendry is the following and centres on the currency war being played out between the US and China, "in which US QE prompts dollar-denominated investment to head to China, and China fights the resulting upwards pressure on its currency by manufacturing an investment boom. Hendry said this creates a "global supply glut", leading to falling US inflation expectations (as this supply far outweights US domestic demand) - which in turn prompts the Federal Reserve to loosen policy once again." Rinse. Repeat."

"The manager acknowledged his changing stance may be viewed by some investors as a 'top of the market' signal, but said he is not concerned by the prospect of a crash.

"I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell'. The S&P 500 is up 30% over the past year: I wish I had thought this last year."

"Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending."

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Crazy isn't it?

 

Not so long ago people on the internet such as Marc Faber, would say, that if you were locked in prison for 10 years, you'd put your money on gold as when you come out you'd know it'll be worth something.

 

Gold has a track record of thousands of years. Monarchs have use it, and I doubt the Queen would own bitcoins and she wouldn't worry about them.

 

How long have bitcoins been around for?!

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1 trade today
RT1_zpsbaf666ac.png

1 win

No trading tomorrow, it's thanksgiving, and unlikely to trade Friday given its likely to be quiet and futures markets close early.

Happy thanksgiving to my American friends!

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Crazy isn't it?

 

Not so long ago people on the internet such as Marc Faber, would say, that if you were locked in prison for 10 years, you'd put your money on gold as when you come out you'd know it'll be worth something.

 

Gold has a track record of thousands of years. Monarchs have use it, and I doubt the Queen would own bitcoins and she wouldn't worry about them.

 

How long have bitcoins been around for?!

One thing is for sure - something with the violent volatility of Bitcoin does not make an effective currency. The creator of Bitcoin appears to have been thoughtful in areas of security (the block chain), inflation (monetary base steadily increases up to fixed limit), flexibility (trades can occur through multiple exchanges and bit coins can be split into tiny fractions) but extreme price volatility doesn't appear to have been considered (at least not as a problem).

 

Why might that be.....?

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The long term picture

 

S&P 500 futures

B8963E61-2DAE-4A6C-A8E1-82EFB1B0D670_zps

 

NASDAQ 100 futures

1AD6721F-81E7-48E3-AFF0-F0A7A4735C7D_zps

 

Dow 30 futures

F3AEC32B-09E3-44AD-B372-468CD1587982_zps

 

Russell 2000 futures

072B4A96-64C8-4E58-A56E-4D28B3837231_zps

Edited by PositiveDeviant

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but extreme price volatility doesn't appear to have been considered (at least not as a problem).

 

Why might that be.....?

 

Anton Kreil (a banker/trader) said at a London Economics lecture (it is on yourtube) that volatility in trading is the key to profits.

 

Perhaps the makers of bitcoin have baked this into the cake.

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http://www.forbes.com/sites/drewhendricks/2013/11/29/8-signs-youre-an-entrepreneur/

 

Forbes;

 

"8 Signs You're An Entrepreneur

Most people don’t grow up wanting to become an Entrepreneur, they grow into it. I’ve found that there are 10 different signs that are very good indicators that you’re an Entrepreneur or an Entrepreneur in training.

Passion

This is by far something that will qualify you as an Entrepreneur. If you don’t have a passion for what you’re doing, you’ll never succeed. There will be days/months/years when you don’t make any money, you have no customer and everything just sucks but your passion will drive you to keep pushing forward. It’s this passion that will help you to become the Entrepreneur that you’re meant to be!

A great example of passion is John Walsh, creator of Americas Most Wanted. He’s been running this show for 23 years. Why does he do it? What many people don’t know about Walsh is his son Adam was abducted in Sears and later murdered. He’s passionate about what he’s doing and keeps going it today because of his passion. His passion led him to a conviction of the murderer 25 years later. It’s passion like this that makes for amazing Entrepreneurs. Would he have pushed so hard to catch criminals had this not happened? We all have reasons for starting a business, find your passion and it’ll push you through the hard times.

Doesn’t Take No For An Answer

An Entrepreneur doesn’t take NO for an answer…ever. They may concede but they will never give up. They will figure out a way to fit a square block into a round hole.

Competitive Nature

Entrepreneurs are extremely competitive. Much like above, they don’t take no for an answer and they are unwilling to lose. It’s not in your nature. You can’t, because if you do… well that’s not even possible. Many companies are formed out of such competitive natures. They feel like they can do a better job.

A good example of this would be Google GOOG -0.2%. There were 100′s of other
Search Engines out there before they started. Larry Page and Sergey Brin believed they could build a better search engine than all the others combined and because of their competitive nature, they would not lose to anyone. Think of how they crafted it, Page Rank. They were ranking pages. They were making pages compete against each other. It’s been a competition ever since.

Enneagram = #1

If you haven’t taken the Enneagram test, you should go take it today. This is a personality test that will tell you what type of a person you are, what career choice would be best for you and what type of a partner you would best fit with. The test, which is a bit intense consists of 100′s of questions. It will tell you what type of a person you are normally, and what type of a person you are under stress.

They have a free version that should take you no longer 5 minutes. It’s well worth your time. Most Entrepreneurs are number 1, The Reformer. They are principles, purposeful, self-controled and perfectionists. Does this sound like you? Take the test and find out.

Self-Starter

When I was starting my Entrepreneurial career I watched as my boss Lane Livingston pull into work at 7am every morning and not leave till 6pm. He would always tell me that he “got the majority of his pressing work done before anyone showed up.” It’s self starters like Lane that motivated me to start work daily at 630am. It’s true, you get the majority of your work done before anyone even shows up. Ever since he taught me this I have started work early.

Self-Starting isn’t just getting up early. It’s working your tail off day and night on things that are important. Entrepreneurs are people who tackle projects as they come up and finish them. They don’t have someone looking over their shoulder. If they don’t get it done, they don’t have a place to live. They put everything on the line.

Think Outside The Box

You’re going to have to think outside the box now days if you want to change the world. Founder of Amazon Jeff Bezos said “Entrepreneurs must be willing to be misunderstood for long periods of time.” I like to call this thinking outside the box. If you just think inside the box, nothing will ever change. You have to be willing to take chances on crazy things.

Einstein was considered crazy for years before he proved the theory of relativity, he later received the Noble Prize for his crazy findings. Bezos left his well paying job at a hedge fund in NYC to start a company out of his garage that would later be called Amazon. He left his job because of a law that passed that said retailers didn’t have to collect taxes in states where they didn’t have a physical presence. Brilliant or stupid, you ask me?

Unpredictable

Most entrepreneurs plans change by the minute. You have to if you’re going to get ahead in this World. You will truly know that you’re an Entrepreneur if your business life is a little unpredictable. ”Entrepreneurs have to pivot consistently” according to Eric Ries of Lean Startup. This is what will dramatically improve the odds for success.

Strong People Skills

To succeed in business you have to be willing to communicate. Communication is one of the keys to success and every Entrepreneur should have this. I will put a caveat on this though. There are many Entrepreneurs that aren’t good at this but team up with someone that is VERY good at this. An example of this would be Mark Zuckerberg. When he started The Facebook he didn’t quite have the skills to make things work. I believe it was more business skills that he needed in the beginning more than money, you can get money anywhere. He needed Edwardo Saverin to be the business end and people end of the company.

If you don’t have people skills you need to find a partner with them. Someone on your core team needs to have strong people skills in order to succeed.

Remember, being an Entrepreneur is neither a part-time or a full-time job. It’s a lifestyle."

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There's a situation in the markets that interests me at the moment;

Precise_zps291dc9f9.png

 

I think there is potential here for some form of short term top in equity futures however it's not confirmed yet, for it to be confirmed I am looking for Dow Jones futures to break decisively below it's recent low, the bounce off the trend line that occurred yesterday. At the moment I'm thinking that if I get that trigger of the trendline break then shorting Dow Jones futures and hedging with long Australian dollar futures would be the trade.

 

These opportunities come along quite regularly but since I have no experience with this type of trading I will be trying these equity futures / currency divergence trades on a SIM account to see how I get on first.

 

 

I got a signal to open up a long/short position pertaining to the above so on Friday I went short Dow futures and long Australian $ futures but only on a SIM account (ie it's not a trade on my live account but a trade on a demo account). I want to explore this type of trading to see how I get on first. I'm attempting to capture an expected convergence between these two instruments.

 

 

The divergence between Dow futures and the currency markets has been visible for a number of days and I used the trendline break of the Dow on Friday as an entry signal for this trade;

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I got a signal to open up a long/short position pertaining to the above so on Friday I went short Dow futures and long Australian $ futures but only on a SIM account (ie it's not a trade on my live account but a trade on a demo account). I want to explore this type of trading to see how I get on first. I'm attempting to capture an expected convergence between these two instruments.

 

 

The divergence between Dow futures and the currency markets has been visible for a number of days and I used the trendline break of the Dow on Friday as an entry signal for this trade;

reconvergence_zps0dbdf68c.png

 

 

This is working very well today with the Dow selling off. The Austalian $ has also rallied. The two appear to be beginning to converge and this trade is very nicely in profit so far.

 

The vertical line on the right is where I went short Dow futures and long Australian $ futures (on Friday at 6pm);

GF_zpsa5135208.png[/url]

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2 trades today

TDA_zps837d2e4a.png

1 win and 1 loss

 

 

A very interesting day today. Very heavy shorting from the retail traders as soon as the opening bell sounded yet the market rallied during this period for the first hour (when I was long). More and more piled in on the short side and the market buckled. I had a further trade later on, a short, however in hindsight that was an error. It wasn't a crystal clear cut decision to enter as the picture seemed slightly fuzzy yet on some measure it was a legitimate short - overall it was borderline. Although at the time it was slightly frustrating, thinking of the bigger picture I've made over 100 trades with this strategy and I've only made two errors out of all of those since I started trading this strategy. Overall my trade selection and execution has been first class. I'm still up today anyway, just not as much due to the error.

 

Trading such as this can only be measured over periods of 3 months and more otherwise there is a real risk of getting the wrong perception of the actual performance. So far it's fair to say it's going well, and it appears consistent. Let's see where we are three months from now.

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