My irrational trading journal

[gomer_tree]

Originally Posted by Colymbosathon ecplecticos

That said, if you did believe in secular bull (and bear) markets, wouldn't your method pretty much guarantee that you go all-in at the top (or close to it as the drop starts) and not buy-in during the run up while waiting for the drop?

I'm not sure I'm following. Quite honestly, the method depends on a somewhat volatile market, and the trending is not particularly relevant as long as that volatility is present.

So, in a case where there is a very consistent trend up, I'll miss that run because I'm not entering the market with new positions. Since I'm taking profits and not holding positions, I'll limit my profits in a huge run up. If there is a very consistent trend down, I'll keep buying in with no profit-taking, and there is the risk that it won't turn around and I drain my account.

I am going long only simply because the trend is up and I see no signs of the trend flattening or reversing. One coould do this with another currency pair in both directions. Or, if willing to risk the capital, you could do it in this market as well. I've decided for now that the downside of that far outweighs the upside. just a judgment call.

But the wins here simply come from volatility. What we're looking for is that, typically, a drop of some percentage is followed by a similar move back up. In cases where there are continual drops for a few days, we don't even have to get back up to previous levels for a while to profit, because taking profit on movements at lower levels will outweigh the equity loss from the drop in price from positions taken at higher levels. Ultimately, if price eventually comes back, we'll profit from those other positions, but immediate profits aren't necessary, or even expected.

So I'm not really worried about missing out on a run up because eventually price will stall, and then I'll start playing again. And yes, that means that you start playing at near the top levels, and you might carry some of those positions for a while.

I'm actually not all that concerned about that, because holding it isn't any different than buying a piece of gold and seeing the price drop and just holding on to it for a while. While I wait for price to rebound, I'll just trade at the lower levels. Obviously, the concern is a very long and protracted bear market. And if that happens, I may consider getting back into offsetting short positions. There's nothing that says you can't change those strategies up if a trend changes.

[gomer_tree]

Originally Posted by Colymbosathon ecplecticos

Mind you, I'm not saying that you won't make money doing this on any given day, but long-term your risk-adjusted returns won't be very good.

Quantifying the risk here is pretty tricky. In looking at all the different markets, I actually don't even feel as if there's a lot of risk in what I'm doing. Now, I admit that moving into shorts during an upward trending market was pretty risky, and I paid the price on that. And it certainly is true that current trends could change. But quite honestly, I "feel" more risk in holding equities than I do in trading gold. (though, that probably has to do with the fact that I have a lot more invested in equities. But I have been moving out of those slowly because I just don't feel that good about them).

[gomer_tree]

In today at 1393.64.

[gomer_tree]

In today at 1376.62.

[gomer_tree]

No action taken this morning. Will be checking back at 12:34 am on Monday based on price action in the last 24 hours.

[thing]

Bailed out of my short today, because hey, I was wrong. I'll wait to see when Gomer thinks gold is about to fall before trying that again, because hey, he's not as wrong as I was.

[gomer_tree]

Originally Posted by thing

Bailed out of my short today, because hey, I was wrong. I'll wait to see when Gomer thinks gold is about to fall before trying that again, because hey, he's not as wrong as I was.

Crazy market, isn't it?


I've been on vacation and traveling and stuff. I'll catch up here on what little activity has taken place with my trades and results through Dec '10 sometime this week.

[gomer_tree]

Originally Posted by gomer_tree

In today at 1393.64.

Originally Posted by gomer_tree

In today at 1376.62.

OK, haven't checked in for a while due to holidays and work and stuff.

On 12/20, liquidated the second position at a price of 1385.58 (less 2 cents per microlot carrying cost).

On 12/23 bought at 1375.96

On 12/24, liquidated that position at 1384.66, less one cent per microlot carrying cost.

On 12/28, liquidated the position entered on 12/15 at 1404.68, less 12 cents per microlot carrying cost.


Entered a position at 1388.66 this morning.

[gomer_tree]

Account status as of 12/31/2010: +39.41% since inception (11/1/2009)
Annualized: +32.93%; Avg Per Month: +2.40%

Return in December 2010: +3.39%



11/1/2009 - 7/31/2010: +89.71%
8/1/2010 - 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 - 12/31/2010: +11.94%



Ref# 236046.329072

[gomer_tree]

In again this morning @ $1374.79