August 28, 2008

Well, today was a good example of trading a number of differnt systems at the same time. Both of my overnight systems were short (yikes, the market went up 200+ points today) but my day trading system went long in the morning.

The net effect was that I had a small loss of $800 due to the price movement overnight against me, and then was "coppered" (boy that is an old term) for the rest of the day. "coppered" means that I was short in some contracts and long in others, so the net effect is that I was perfectly hedged. No runs, no hits, no errors, except for the overnight hit.

Of course at the end of the day, my day trade longs were closed out and consequently I am now short overnight on the S&P 500 going into Friday, August 29.

One thing you should know. I learned how to trade from my father who traded since 1935 so time to time you will hear some of his old wisdom's come out.

Herman #1: (my father's name)
Don't ever short a thin market!!! Today was an example of this. Last week of vacation before the Labor day weekend, so not too much volume. My "quant" put me in a short position. He was right again!!!

Quantitative method

As a "quant" I have developed a number of different approaches to trading. One thing that I have learned is it is better to trade a number of different approaches at the same time. This tends to minimize the overall "draw down" on the account.

I manage this by trading some overnight systems on different time frames and also a day trading system. I tend to trade only the electronic traded vehicles so as not to have a bunch of "specialists" in the way.

I used to trade the Russel 2000 Globex electronic market but since it is moving exchanges, I moved to the E-mini S&P 500 market.

New to blogging

Rather than continue to send my email updates to selected friends and relatives, I have decided to start a blog. Don't really understand this except that it is a place where I can post my mutterings about life, trading, the economy and also place links that I think are interesting. It is set up so anyone can comment.

I intend for this to include my thinking on the economy and its direction, along with what we should do about it as individuals and as a group.

I have no political agenda and will not get into those types of conversations. The political environment is what it is, as traders we just have to deal with it.