I've been trading most days during the month of May. I've been using Interactive Brokers as a broker, and have been using their BookTrader to execute my trades. Regarding things I've learned while using the BookTrader, I'll leave that for another post.
My trading account (real money) is up by 9.4% since April 28, when I first started manual
trading, and
so far, knock on wood, I've had all positive days, some more positive than others, some a
lot more work than others.
I think it is time to keep track of what I do and what I see so I can ensure I don't do
the same mistakes more than once.
Limit orders is what I started with. Using a mostly contrarian strategy, I've been able
to find some profit areas. I have been caught a couple of times when the market kept going
in the wrong direction, and I was getting in deeper and deeper. Those were the rough days
where I had to do tricky trading, and through mostly luck, the symbol recovered enough that
I could end positive.
With that said, it is now time to figure out the price levels at which to do reversal
orders. I'm setting up some charting to help me with that, and hope to have it done for
trading next week.
The news over the last 12 hours has been heavy with the news of the large leap in oil
(COIL), traded on IPE. I've been watching the 2008/July contract. That I traded with paper
trading. The contrarian trading would have worked interestingly enough between 11:30 and
12:30 GMT, where it went from 134.25 down to 133.25. I lost my
nerve and closed out half an hour into the decline, right at what
turned out to be the bottom. It recovered and then some in the following half hour, to be
back around 134.50 for a few minutes. I was thinking afterwards that I could have put Stops
at various levels and caught it when it went back up, but thinking it was going to go back
up was not really on my mind.
All in all, it was interesting to carry out a risky trade on paper just to see how things
would have gone. It is easier to dispasionately analyze the results (monetarily and
emotionally) than if that had been real money.
Update 10:05 AST. I saw COIL taking another dip, even lower this time. It went down to
132.50. This one, with real funds, I managed to work 18 trades in and out for a real profit
of $643, after commissions, over five minutes.
Regular day trading accounts have a 4:1 margin ratio during the day, and an overnight
carry margin of 2:1. On COIL, Interactive Brokers has a different margin structure.
When you right click on the symbol and look for symbol details, it shows a multiplier of
1000. Which means each contract is worth 1000 times the BookTrader value. So if the ticker
is at $133.23, you'll be buying a $133,230 contract. Margin for this is an initial margin
of $9375 and an overnight maintenance margin of $7500. This gives over a 10:1 margin
capability. The commission ended up being $2.02 per contract.
While writing this, it took another dip and fast recovery. Traders with deep pockets
must be making good money on this.
Update EOD: Well, that was an exciting day. Instead of just closing out at the end of
those trades, I stayed in for more, but found I didn't reverse when I should have. I lost
what I made and now have to try it again. Smarter this time. Watch for the reverses and
run with them instead of against them.
The instances where I've gone against them in the past worked out, they came back. Not
this time. They kept on going.
Breakouts are good thing, if you've got them going in the right diretion. I really need
to get my charting fixed tonight to show some of the patterns I've seen. The programming is
happening tonight. I hope to have it ready for a try in the morning.