Friday, August 21, 2009

Agent Zero - Zero Opinion and Weekly Recap

This week I have completed Trades 33,34,35,53 to 68.

Going to New Zealand in 2 days thus I've been trying to unwind all my positions to minimise my stress, and I've been pretty much trading around the clock to try to maximise my exits, whilst also maximising my short term (intraday, overnight) trading game.

I started off the week trying to close of my longs, with what I thought was to go a straight short on the ASX200 index, for the 'pullback' that I expected might happen.

Tuesday Morning

US dropped 4% in one night and things were off to a bad start when I decided to short 6 contracts of ASX200 at at market open (to follow a possible US lead) - thinking that because the market only opened 2% down, there might be a chance of a continuing downtrend day. OH HOW WRONG I WAS and the market proceeded to rebound the whole session.
This added to the shorts I already held in WBC (23.92) and ANZ (20.22)

Wednesday Morning
the US rose again slightly and I decided to close all my short in panic mode (whilst still maintaining my bearish stance of the market) as I felt that I may be wrong - I closed the contracts at 4425 and the combined positions put me in the biggest one day whole to date !! The folly of my trade was that - I didn't even figure out my pivot levels (the price had already hit r2 - and given the market had no reason to rise so fast, the best play was fading the strength). Emotion had demoted me to a girlish donk close. As soon as I closed - the market promptly tanked, and had I held this position for 5 days, I would be up close to 600 and drinking champagne, instead of blogging on a friday arvo.
The panic also induced the close of my ANZ and WBC short at 20.44 and 23.84 - another move I would later regret.

Wednesday Afternoon
I went for a midday run, to clear my head and get a better picture on what the heck was going on.
I came back, went through all the global data, and commentaries - and once again changed my mind back to being a bear...AGAIN!
However, it would be just too painful psychologically to short the ASX.
I also felt that the ASX itself was prone to strength from some key earnings reports coming in.
So I decided to bank my bearish opinion on what I called the 'pullback - portfolio'

pullback portfolio
- short oil 1 contract @ 72.60
- short MQG 200 cfds, 100@46.62 and 100@46.9
- short RIO 100 cfds @ 57.6
- short BHP 100 cfds @ 37.35

I was actually quite proud of my theme based portfolio, as it consists of a lot of imagination and expectationscraft.

Fortuitously the market in china decided to hit a home run for my exact theme, by tanking 4% in the last 1 hour of AUSSIE trading pretty much within half an hour of setting up my shorts, and my portfolio proceeded to be up by $400 or so - effectively wiping out most of my losses from my ill timed exit of ASX200 contracts.

However, the US markets - which the futures were indicating a very large drop in the open, decided to throw a corkscrew in my celebrations by coming out with crude inventory levels that were 8 times worse than expected or something - spiking up the price of oil - leading to my 200 profit in oil being reduced to 20 dollars (stopped out).

Thursday Morning
I was prepared to pretty much close out most of my short positions, based on the sudden spike in the oil price and US market, as it obviously meant I was wrong?
MQG gapped in the open and I managed to turn a 200 profit from last afternoon into a 100 dollar loss closing 200 cfds at 47.17 - basically the MQG high for the day.
Within 2 days, I had made the exact same mistake twice - both covering my shorts; at market open, when all the signs indicated that the market would be fading the strengths - my inexperience is really showing up on the bottom line at the moment.
BHP stopped out also at a small loss.
Interestingly though, I still thought resources were going to continue to weaken, thus I still held my RIO short, as it was also below my stop loss.

I was able to keep a clear head, and after I saw the price action for 20 minutes, I realised that MQG wouldn't have enough strength to consolidate higher - I also noticed the ASX was moving lower, faster and I used this as a confirmation to short MQG again, this time for 200 contracts short at 46.998.
This move finally worked out and I exited intra-day at 45.83, not before misclicking twice, and selling 100 more each time I tried to reduce my 200 contracts to 100 - really have sh1t for brains this week.

Thursday Afternoon
My love affair with MQG couldn't end there, and I decided I wanted an overnight position so I sold 100 cfds again for 45.84 and also shorted bhp 200 cfds, 100@36.97 and 100@37.17

Friday Morning
Sp500 up 0.5% and I really thought I would probably do the same stupid thing I had done the last 2 sessions everytime US had spiked up overnight - closing my position into the opening gap high - thus to discipline myself not to make the same mistake for the third time, I decided to sleep-in until midday.

Friday Midday
Ironically the Aussie markets tanked straight from open, something related to telstra - and MQG and BHP had been falling all morning.
I should've closed when I saw these nice falls, but I tried to ride it out like a donkey and put a stop loss - which promptly got taken out but I still profited from the two trades - but nothing worth nothing.

The table above shows all my trades for the week from the short side.
Overall down -$161.24 - but it was curiously a strangely satisfying week and stressful at the same time.

Mental notes
- Opening gaps really are more likely to close; as the books state.
- Closing Positions into opening gaps are an impulsive move that I will need to control.
- Theme based portfolios can remove certain risks that a straight index position will give you, and also more flexibility in the exit of positions at the most optimal prices.
- I need to work on more specific exit points, and riding out price cycles in the short run or putting in better stop loss points.
- Gotta get my dsylexic brain not to click 'sell' when I'm trying to click 'buy' to close a short position.

I now only have one ctp long position - a position that is the only long term hold in my portfolio.