Back in trading

I opened an account at RJO. I used to trade through TradeStation, but their clearing firm was RJO anyway. TS offered a platform called TS4.0 for pit trading contracts, which is essentially the same as RJO Vantage with minus a few nice features, so I thought I should go with RJO directly. The commissions are not as cheap as tradestation, but I'm ok with $5 for futures options as I'm not doing lots of trades anyway.

I placed an order for nat gas. It needs to come down a bit more though. I'm also looking at gold / platinum and corn / wheat as well.

It's good to be back.

I wouldn't touch.

Gold, silver, oil etc are dropping. It sure looks like a bargain compared to where it was a few days ago or based on the trends. However, I do not think this is time to get back in. When markets are trending up, the down move should be slow even if by nature it's faster to go down than up.

NG is coming down again, probably due to the inventory report and more, but I'll wait as well.

All 20/20

It's been a long time since my last post due to family issues. I'm even not sure if anyone stills visits here.

I made an important decision in the mean time. I don't think day-trading fits my personality. I think I can make it work eventually, but is it worth it? I spent way too much time. For some people, yes, but not for me. I have a full time job with a family to support. With health-insurance, house payment and too much uncertainty, I don't think I can gamble. If I were a single, I'd do it in a heart beat.

I finally rolled my construction loan for the new house to a permanent loan. I was so attempted to 5-year or 7 year adjustable mortgage because I know I'll probably move, but at the last minute, just in case, I might still stay, so I decided to go with 30 year fixed.

The whole refinance was a joke. Since my property is something you'd see in West coast, certainly not in Midwest, banks considered this as an unusual property. It has lots of green and modern building features and everybody said, 'oh great', but when it comes to property value, 'oh, we just can't find any matching house, so we can't give you value.'

The first appraiser's value was $170K cheaper than the second appraiser. The second appraiser's value is about $75K cheaper than what I spent, which was still fine. But I question about the frist appraiser's work. Sure radiant heated floor on both upper and lower levels, solar panels, insulated concrete forms, R-9 windows with krypton etc are not popular, but I was thinking if no one starts appraising the value of the house correctly about green building, no one would build that way.

Since I put a lot of cash down during construction, I wanted to a cash-out up to 80% of the value, but with so much frustration with banks, I was glad to be able to refinance and get some cash out. Hopefully, a few months later, I'll do a HELOC for more cash after my credit score goes back up. There are still a lot to be done around the house, but man, I'm exhausted, so I'm not going to worry about it for now.

Anyway, by the time the little cash-out arrived to my bank, Nat gas price was around $3.8. I was actually eying on NG for a while. I saw it dipped around $3.75, and it sure seemed like a bargain to me, which was why I was trying so hard to take a good cash out. The risk was greater since my account was not big as before, I didn't have a lot of room to work with. I could start selling $4 puts and maybe $3.5 puts, but not more than that due to the size of account.

This time, instead of using RJO as a broker, I just put everything to ThinkOrSwim. The ACH took 3 days and boy, during that time NG shot up to already 4.25. The April contract's premium was diminishing so fast, so if I wanted, I had to go in for May contract. In 20/20, if my money was clear a day earlier, it would have been an easy $2K trade. But all 20/20, isn't it. I was then looking at May 4.25 put, but I decided to wait. When I don't get in, markets go in my favor, right? As NG went up, the inflated value of puts got deflated, so puts were no longer attractive. Again, it would have been a nice $1K trade. 4.5 puts are too risky, so I moved on.

I then looked at AAPL. I wanted to use ThinkOrSwim (TOS), so that I can trade both futures and stocks. I love Apple products. I keep an eye on how iPhone buyers turn into Mac, iPads etc. I know how hard it was to buy iPad2. Fundamentally a very strong company in my opinion. The last time I traded AAPL, it was around $150. I made good money, but certainly I didn't hold until $350.

Chart was actually pretty good too. It was drifting down towards to earnings and it even dipped below a strong support level. To me, it's not a new leg down. It's more for stop-runs. Everybody knows stops were sitting there below a support. Even I'd try to see if I can run some sell stops because I can always keep selling and dump everything to buy them back.

This was a perfect candidate for earnings options play. Premiums for calls were low because it was heading down for a period of time. In the worst case, if I bought an $1K option, based on AAPL's volatility, my max risk was about $500 whereas my gain was about $1500 per contract. But at the end, I just chickened out because of bad memories on earnings. Again all 20/20.

I have one more. The last week, I started looking at Silver (SI). Not on buying side, but to sell side. I saw SI reached around 50 and it started doing topping patterns I saw before. I had a few options. Buy puts or sell calls. I especially like selling call side because of premium inflation on call side. Out of money calls were going for some crazy amount! SI didn't necessary had to go down, if it just hung around, I would have made good money.

Of course, I didn't want to sell calls naked due to crazy risk in SI. My strategy was to sell 50 calls and buy 51 calls. That way, if SI kept going up, my max loss would have been $1 whereas premium I could have collected was $3500. Its reward:risk was not as good as AAPL, but with options' spread, it's always the case. So I went to TOS, and placed an order. For some reason it kept rejecting my order saying I couldn't sell 50 calls. I do have permissions to sell and I have enough funds for margin. I never traded futures options through TOS, so there must be wrong with settings. However, jinks or not, I just decided not to bother this trade. SI was around 49-50 at that time. Today, sure enough, it's being traded at 39.

This only money I made during the last month was about $1K playing my retirement account. I've been betting on real estate securities. Everybody is so pessimistic about real estate. I'm pessimistic too, but I'll do the opposite. I'm not risking too much anyway.

There goes all my 20/20 stories. I'm not sure what my next plan is, but I'll report back.

A new portfolio

I'm going to start either one or two new portfolio. One will be based on price action and technical analysis and the other one will be fact based. Both of them will have pretty small accounts, say $5K each.

I've been working with my good ole trading friend for a short term trade and it's about time to go live. He has just so much passion on trading and he's a kind of person who never gives up. He can sit in front of computer for hours and hours until he finds something profitable. He is constantly looking for a way to increase his probability.

While I built my house, he kept asking me when I'd be back to trading. He doesn't mind sharing what he's been doing and how he's been making good money consistently. He's always encouraging me saying 'we' can do this. Simply a nice person who can't say no if I ask any.

Even if I still have a lot of things to finish around the house, I did let him know, I'd like to come back on trading. Over the past few days, he shared everything he does and I spent a few nights with him with live charts.

What I'll trade is euro currency (6E). Euros simply move a lot compared to ES. If ES moves 10 points (or 40 ticks), it's probably a good day to trade. For euro, it's not hard to see 100 pips up and down, which is equal to about 400 ticks. This will work pretty well because I can get up early and trade while I have to miss US market hours to trade ES anyway. What I'm looking forward is about 3 small winners: 1 fixed target and 1 runner.

Another method is completely fact-based. I'm a big fan of fact based trading. Options selling was certainly one of fact based trading methods. If I didn't spend too much money on construction, I would have been still selling options just like Nat gas and Lumber. Nat gas would have been a killer altho it's 20/20 now. This method is pretty simple. Looking at different markets, I'm trying to see if a particular day has been positive or negative. For example, everybody knows Dec has been a positive month. There's a backtest data that especially first day of Dec is particularly bullish. Buying ES at close of 11/30 was a setup. The target was 15pts although it moved a lot more. This is usually a full day trade, but it sometimes takes 2-3 days if things are profitable, to let them run a bit more. Trading instrument would be ES, EURUSD, USDJPY and EURJPY. I probably have one position at a time.

As for markets direction, I have no idea what's going to happen. I kind of hope markets would drop so that I can refinance, but what I hope has nothing to do with what's likely happen. As markets have been extended quite a bit, I don't want to buy a lot, but I've found a few stocks I'd like to accumulate over time due to strong fundamentals. Too many people are still worried about a double-dip, which means it's unlikely happen. All the crashes happened when no one (or 99% people didn't expect). Gov will keep pouring money because 1 million dollars in 2030 is nothing compared to one million in 2010.

Another thing is historically real estate has been always the key to wealth. Sure, real estate was killed in the last few years, but I still think many still believe once real estate takes off that will once again become a key to wealth. This will take a while to roll over, but if I slowly get positioned, it'll be paid off handsomely.

I'll not going to post trade-by-trade, but I'd like to update the end of balance each day until either I keep trading or blow up the account. It was nice to trade a big account, but it'll be interesting to make a new small account grow again.

Market

It has been a while since my last post here. I've been just super-busy building a house. It's not done yet and I don't know if this will ever be done. There are so many times when I thought I should have just kept renting.

As the house is getting close to be done, I reactivated my trading account and slowly started getting used markets again. What I found very interesting lately is the relation between bonds and stocks. There's an old market wisdom saying, 'Bonds always know something...'

Stocks are rallying but if you look at Bonds, it's almost at all time high. If everyone's taking risk, Bonds shouldn't be at this level. Sure, Bonds can be wrong, but we've seen so many times markets would rally in a very thin volume or with no apparent reason. It goes up so slowly, but when it starts selling, it drops very very quickly.

Nat gas is at an attractive level regardless of fundamentals. I missed good trading opportunities in grains.

Break

I have been pretty busy at work and, above all, home building. After I got out all of my long term trades, I've been taking a loooooong break from trading. I didn't mean to take this long, but boy, this home building is a very stressful task.

It takes just too much time, money, and effort. Everybody wants more money from me. At least in trading, you don't see opposite parties in front of your face, but these contractors keep coming back with troubles and ideas.

I, however, have been following markets somewhat. GS, APPL, commodities and markets in general. There are ups and downs everyday. When I first started trading, if I missed anything potential, I felt so bad that I wanted to participate in every market move as if I could have precisely caught everything. But then again as soon as I jump into the very news with my live account, markets did exactly the opposite of what I expected and I ended up losing.

This time at least I don't feel much. For example, I'm a big fan of Apple products. I own multiple products from computer to iPhone. I recommend Mac over PC in a heart beat. Was it Warren Buffet who said 'Invest in something you know'? If I have to pick one product that I know very well, that'd be from Apple. Last year, I traded AAPL quite a bit all to the long side. Unfortunately, I had to close that account because my lumber / nat gas positions were in danger. I think at once, AAPL dropped below $100. While my trading gut kept telling me I should buy at that price, I just chickened out. Anyhow, I missed this Apple's giant move yesterday, and I really felt they are doing really great. However I don't feel much about missing anything because there's always another opportunity.

Speaking of trading gut, I think that is a very important factor to become a successful trader. In theory you should trade by rules, but once you're experienced you know when to jump in. I'm still a wanna be trader, but I've seen good traders trade that way and make 10s-100sK quickly. If you played any kind of sports, and you practiced so much, what you need to do is embedded to your body. You don't have to think too much about everything. In trading, of course without money management, gut-trading will be quite costly.

I plan on coming back to trading with my own trading office at a new house. I'll start with a small account and I will record everything here with even videos. I'm hoping this Summer if not Fall.

TradeStation

Ever since I closed all of my long term trades: nat gas and lumber, I haven't done much other than having so many issues with TradeStation Client services regarding withdrawal.

This is just a lot of BS, so if you have other things to do, please do so. This is more of broker experience / review.

As some of you know TS changed their relationship with RJO Brien, a futures clearing form over the new year day weekend, I waited to request a withdrawal hoping everything is settled.

Tuesday:

I requested a check withdrawal on 1/2. The next day I checked my statement showing the requested amount was deducted correctly. So far so good! However, 2 days later, my phone started ringing showing it's from TS. I didn't answer because last time I requested a large amount, TS kept calling me to see if there's anything wrong etc. I didn't want to get bugged, so I ignored the calls.

But next day, my phone rang two more times while I was away. I was curious, so I called back. TS said the check withdrawal can't be completed because of issues with RJO. TS kindly offered a free (otherwise $25) wire transfer. Great! TS even said if I filled out the wire form by 10AM, I'd receive it in the same day. At this point, since it's treated as if it's a new withdrawal, I wanted to withdraw all of account. I made sure the amount I initially requested as well as what's remaining in my account would be wired. I filled out the form and rushed to the fax machine. Everything looked good.

Wednesday:

Now the disaster starts. I checked my TS statement and obviously the money didn't go out that night. So much for rushing. One day? Fine. I'll wait patiently.

Thursday:

Next day, I called TS and why money didn't go out. They said it'll go out that evening. After I got off the phone, I checked my withdrawal status online and found that only the remaining balance was approved. I called TS again. A rep told me don't worry. It's only showing on our front end program. You'll receive all the money. I trusted this, of course.

Friday:

Not to surprise, on Friday, I only received what was left in my account. On top of that, I was charged $25 for the wire fee. Why $25! Where is the money that was initially deducted for the check request? I called TS and I was able to talk to even a person from Cashiering department. She gave me her name and the money from the cancelled check would go out that day.

Close to 4pm, I suddenly realized that if the canceled money was deposited back to my account, all the money would have been sent find. Obviously whoever processed my wiring request, didn't see (or care about) notes on my account. Chances are it'll happen again, so I decided to have them the canceled amount back to my account asap. Instead of this ideal plan, I got a customer rep saying Cashiering depart is closed, so no one can do that right now. I even tried to talk to her supervisor, but she claims that no one's available, but she assured that the canceled money including the wire fee charged would be sent out today.

I hate when that kind of thing happens on Friday afternoon. There's nothing I can do until Monday morning. It's so annoying. Not to my surprise, on Friday night, I checked my statement, I found that the canceled money was credited back to my account. But there's no sign of wire-transfer. No sign of wire-transfer fee credit.

Monday:

I gave TS a call as soon as they opened. Every time I call TS, I had to explain the same thing over and over again. It was not an exception this time. A rep told me since it was requested on Friday, the wire should go out today. I made sure it better include the fee I was charged.

Of course, when I checked my statement, nothing happened. At this point, I have no plan going back to TS in the future at all. In addition, I'll discourage people to use TS as well.

Tuesday:

I called TS. A mono-tone lady answered a call as if this is some typical call. Instead of explaining the whole thing, I asked her to read my account notes since I had all the reps wrote down the conversation I had with them so far. She gave me an incident #, and again she will verify the transfer and call me.

I told her, 'I'm pretty sure the wire didn't go out and will not go out. Besides, I can't take a word from TS any more. I want the wire feel to be credited right now, send me a check for every penny I have with TS via overnight fedex delivery, of which fee is paid by TradeStation. She said first she'll verify the wire status and initiate a fedex delivery. Either way, she said she'd call.

Of course, no one called me other than one guy from TS asking 'why are you closing your account'. I explained what happened, so he was just reading his manual, 'if you come back... blah, blah, blah...' He didn't care about what caused the issue.

I know exactly what's going to happen. the check will not come tomorrow. It may come Thursday at best. Besides, I'm pretty sure it'll not include the wire fee I was charged. Sure the fee is not much, but it's just so annoying and I want it right.

The story doesn't end here. Maybe TS is not the only one fussing about withdrawal. When I wired money last week, I sent it to ThinkOrSwim. I tried their demo and I liked what I saw. But shortly after, I will probably leave only a portion of the money I wired in, so I initiated an ACH transfer on Friday. The requested amount was deducted right away, I mean , in real time. Since I wired, I thought the money was available asap.

Monday I checked my bank account, there's no sign of ACH from TOS. Tuesday, still no sign. Around lunch time, I receive 2 emails saying it can't be done because since the money is wired in, I have to wait for 10 business days. I got pretty upset because if that's the case why TOS even let me initiate the request. Why did they take the money right away and didn't want to find out what's wrong on that day or even Monday? They 'gladly' postponed my ACH request to 1/25, that is 13 days away while they are keeping my money not making it available. Of course, I called back and I want the money credited back to my account asap. Sucks, but I have no choice but waiting. I'm a software engineer, so it's not hard to write a program when someone wired the money and issue a flag in real time if they're trying to withdraw.

As many of you know, brokers enjoy interest earning from clients deposits. This is from one of former TS salesmen I keep in touch with. I believe that's exactly what TS and TOS are doing by not releasing money easily. It may not be so much, but I bet it'll be quite a bit from dime here dime there.