I twittered yesterday that there was nothing on my trading radar. I did find something to trade that ended up stopping out with some slippage. It was NGAS and it seemed to run out of, well, gas. It was late in the day for me, so I probably should have passed. There was very little on the screen at all yesterday.

The automated trading has been in a little slump the last couple days as well. It’s given back some of it’s gains from this month.

I’ll be taking today off for some family stuff. Hope everyone has a great one!

Here’s the chart of NGAS:

Charts automatically generated using StockTickr

This is the second in a series of posts about how and why I started down the path of automated trading. Here’s the first post in the series. If you’re interested in automated trading, check out our Automated Trading Robot which is available in beta now. It’s the best and easiest way to start automated trading – absolutely no coding required!

I thought about trying to trade additional manual systems, but I didn’t want the system to take any more of my time during the day.

For a long time when I thought about automation, I was always thinking about it in terms of automating my manual system which would be quite difficult to mechanize COMPLETELY (although not impossible). In fact, I’ve automated about as much of that system as I possibly can (there are a couple more aspects that I’ll be able to automate soon). But the fact remains that my manual system still requires me to manually submit trades.

I’m not sure why it didn’t dawn on me until somewhat recently, but I never considered adding additional strategies that were designed from the beginning to be automated strategies rather than retrofitting a manual strategy.

Around this time I was getting a handle on my manual trading drawdown and could see the light at the end of the tunnel. I knew at this point that I would start working towards at least a couple automated strategies.

There’s nothing like a drawdown to motivate you to improve and that’s exactly what it did. Also, since my manual trading is back on track and as good as its ever been, I’ve found that I need to put forth some effort to stay motivated to come up with automated strategies (since I don’t NEED it now). I also am realizing that this is the perfect time to brainstorm new strategies – when your trading is going well. There’s no pressure and there’s plenty of time to come up with something that works.

A few months ago I made some pretty radical changes to my manual trading. Instead of looking for trades throughout a large part of the trading day, I began concentrating on a much smaller portion of the day.

This worked really well because it is much less work for me during the day. It’s not that there weren’t setups to be found throughout the day, it was just that it was too much work for me to focus on the market for that long to try to find them. The performance metrics in StockTickr made it clear to me that although the trades were profitable, they weren’t profitable enough to justify all the work I was doing to find them.

This is another way that an automated strategy really shines – a computer can watch the market for setups all day long and it doesn’t get tired, hungry, lose concentration, and its eyes never start hurting.

Once the automated trading system finds a trade, it doesn’t make order entry errors, position sizing errors, and it always puts the stop in the right place. In fact, think about all the mistakes that human traders can (and do) make when trading. Almost all of them are eliminated by automation.

An automated trading system can also make several trades a second if it has to – something a human simply isn’t capable of doing manually.

For the next post in the series I’ll point out another huge benefit to automated trading. Hint: It’s got to do with the person sitting in front of your trading screen.

Unlike OONR7, I didn’t have a lot on my watchlist today. My automated trading system pulled in 1R and I’m still slowly increasing size there. I’ve also tested a new automated strategy that I tested the waters with today. I’ll put it to work tomorrow again and see what the fills are like. It has tested really well and unlike some previous automated strategies I’ve traded slippage shouldn’t be too big of a factor with it. Only time will tell, though.

I traded CNTF short today which didn’t do much. Hopefully everyone made a killing out there today.

Today was a tough day – just glance at a chart of the Qs and you’ll see why:

I lost a couple R on my manual trades, but my automated trades made +4R. I’ll be increasing my risk on the automated trades slightly. I’ve also got a couple more strategies that I’m honing and will start putting to the test in the market soon.

Here are the two losing trades from my manual system which I’m sure you’re excited to see.

Charts automatically generated by StockTickr

I’m scheduled to give another presentation at the Los Angeles Traders’ Expo. The expo lasts from June 18 through June 21 and my presentation is on June 20. You might recall I spoke at the New York Traders’ Expo in February.

My talk is going to cover automation for manual traders. It’s going to cover the gamut beginning with integrating simple automation into your manual trading to full-fledged automated trading. Valuable stuff that allows you to make more money with less time.

I like the expos because they’re a great opportunity to talk trading and find out what’s on the trading horizon. It’s also free to attend! Here’s the signup link.

Drop me a line if you plan on attending and we’ll meet up.

I’ve had several folks ask about the automated trading strategy that I’m developing. Here’s a summary of where I am in the development of my automated trading. I won’t give specific details about the actual trading strategy because I think that would be a disservice to anyone reading this. What I will tell you is why I started down the path of automated trading, how I came up with a strategy, the steps I took to get it “tradeable,” and the software I use to do the actual trading.

Why I Started Considering Automated Trading

I’ve been day trading for coming up on two years now. During that time I learned a lot about my psychology, my trading edge, and my risk tolerance. Over time, I refined my strategy and became more and more consistent with my results. I’m still refining my strategy – this market is ever-changing and the strategy needs to evolve over time.

What worked for most months in 2007 stopped working for me in mid-November 2007. It took a couple months of simply breaking even and even a slight losing month to realize how I needed to change. My manual trading is back on track and I feel my trading is stronger as a result of that drawdown.

During that drawdown, I was very motivated to develop more profitable strategies to trade that could smooth out my returns. Hopefully these new strategies could take up the slack on days where I lost money in my manual trading. There’s nothing like a drawdown to bring out the creativity in you!

I also wanted to find something that traded more frequently. You might think that something more frequent than my manual system is just “too many trades,” but anytime you find a strategy with a positive expectancy you should try to trade it as much as possible without hurting the overall results of the system. Also, my manual trading system uses a relatively small amount of buying power in my account, so there’s plenty of room to trade at least a couple more systems.

In the next post I’ll talk about why I started down the path of automated trading and not an additional manual system, which I have considered as well.

For the next interview in the StockTickr Interview Series (RSS feed), I spoke with Timothy Sykes, the somewhat controversial trader who was featured in the hit documentary Wall Street Warriors.

For those of you that know of Tim, you know how shy and reserved he is – it’s hard to draw out his true feelings. (OK, that was sarcasm.) Whatever your opinion of Timothy Sykes – he tells it like he sees it whether that gets him in trouble or not.

Tim is also the author of the bestselling book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund.

Read on for more about how Tim trades, the way he trades the pump and dump schemes in penny stocks, and why he thinks controversy seems to follow him around.

Tim is looking for your questions in the comments of this post – so ask him anything you want.

Note: Are you losing money trading? If so, give StockTickr a try – we guarantee you’ll be able turn your trading around. There’s a 14 day free trial.

Read the rest of this entry »

Some of the most frustrating days aren’t when you lose a big wad of money. It’s usually days when you hesitate and miss good trades or see open profits evaporate and turn into losses. That’s what happened yesterday. In the long run, you have to tolerate those kinds of days to be in position to have very, very good days. That doesn’t make it any more enjoyable when it happens, though.

I ended up down 2.5R or so for the automated trades and down a little over 1R in the manual trades.

Here’s a chart in CSIQ that went from at least +3R to -0.33R. No fun!

Charts automatically generated by StockTickr

The automated trading did the heavy lifting today. One strategy is definitely rising above the others in my shotgun approach. I’m still trading much smaller in my automated trades, but over time I’ll be adding more and more size as I get more comfortable.

I’m still unsure as to whether my auto-trading will surpass my manual trades as far as income goes, but right now I’m quite optimistic on both fronts.

I mentioned last week my automated trading approach – the ol’ throw a bunch of strategies at the wall and see what sticks. So far so good. Yesterday one of my strategies made about 5R, today it lost an R or two.

The manual trades have started off slowly this month but have picked up steam over the past couple days. No time to post charts.

Hope you guys had a great day!

By the way, there is a bunch of new StockTickr stuff coming out soon on many fronts. Exciting stuff! Stay tuned.