Trading Journal Entry For 2-27-2014

It was an interesting day for the markets today, with the major US indices posting some solid gains by the closing bell. It was also a day of indices trading for us, one of our more favored trading strategies, when the right conditions exist. In the end it treated us alright, with some modest gains on the day at least. Better than modest losses right? But we should have done better. We made a risky “Double-Up” play where we probably shouldn’t have. Well, in hindsight we definitely shouldn’t have. Anyway, let’s take a look at a daily S&P500 Index chart, since that’s all we even traded on today.

daily s&p500 index chart for 2-27-2014

As you can see it was a mildly bumpy, but basically steady rise throughout the day for this, and the other major US indices. We did not get to any trading until about two hours before closing, or somewhere around the 2pm mark on the chart above. Just in time to ride through two distinct “waves” that presented themselves to us with almost no analysis work involved. Our first trade of the day was made just as fast as we could log into our Traderush account. We had opened up our TOS charting and the first chart we checked was the S&P. Just in time to see price breaking below a minor trend line (minor but still important on a short-run time scale).

nearing expiry of s&p500 futures trade 2-27-2014

We decided that the picture above was the best of the bunch for this trade because you can see here both what it was that got us into the trade, as well as how the trade ended up developing. We entered this trade just as soon as price dipped below that top trend line, and the decline rapidly accelerated immediately afterwards. A nice outcome indeed. We chose to use the S&P Futures contract in this case because it was offering a 3% higher return than the regular S&P500 index contracts. Every little bit helps.

Summary For S&P500 Futures Trade #1 – High/Low Put Option

Trade Outcome: ITM
Entry Time / Expiry:
 19:11 / 20:00
Investment: $100
Returns Offered: 73%
Entry Rate / Expiry Rate: 1851.875 / 1849.625
Returns Received: $173.00
Profit/Loss: $73.00 Profit

Unfortunately, we followed up this very nice trade with a very nice blunder. When price declines accelerated so quickly, and then even broker through that second, more major yellow trend line you see in the picture below, we took a big risk by entering into a “Double-Up” trade. This feature simply allows you to purchase a new, identical contract to the one you have open with the click of a single button (at the current entry price, of course, not the old one). But as you will see in the next image, it only very briefly dipped below that trendline, and almost just as rapidly regained the channel. And never dropped back below it. We jumped the gun too quickly, in other words. We should have waited for a follow-through bar, or stayed away from the trade entirely.

second s&p500 futures trade for 2-27-2014

Summary For S&P500 Futures #2 – “Double-Up” Put Option

Trade Outcome: OTM
Entry Time / Expiry:
 19:44 / 20:00
Investment: $100
Returns Offered: 73%
Entry Rate / Expiry Rate: 1847.875 / 1849.625
Returns Received: $0.00
Profit/Loss: -$100.00 Loss

With that mistake out-of-the-way, we quickly put it behind us and moved on to the next trade. Nor did we let it shake us off our trading plan using S&P500 futures. You can probably see from the charts below that as soon as we realized our mistake with the premature trendline break, we got right back into the trade, but this time on the other side of things. The call option side. Price really stuck to those trend lines for most of the day, and we had no reason to think that wouldn’t continue for the time being. And indeed it worked out fine. You can see that we were never even in the red at any point of the trade. Though interestingly enough, price did actually exactly touch our entry-level price, twice.

final s&p500 futures trade for 2-27-2014 binary options trading

Summary For S&P500 Futures Trade #3 – High/Low Call Option

Trade Outcome: ITM
Entry Time / Expiry:
 20:05 / 20:30
Investment: $100
Returns Offered: 73%
Entry Rate / Expiry Rate: 1850.375 / 1851.375
Returns Received: $173.00
Profit/Loss: $73.00 Profit

And that of course brings us to the day’s summary for the combined trades. As we mentioned in the opening, it was a mildly profitable day, and it could have been better. That double-up trade was just not well thought out or executed. It was an instinctive play we got into too quickly because we wanted to get in at as high a level as possible. But we recognize it for the mistake it was, and therefore it is one that will not be repeated any time soon. You learn as much or more from your mistakes as you do from your successes.

daily investments history and outcomes for 2-27-2014

Daily Investments History Totals For 2-27-2014

Trades Made: Three (3) Standard High/Low
Trade Outcomes:
Two (2) ITM + One (1) OTM
Total Investments: $300.00
Total Returns Received: $346.00
Total Daily Profit/Loss: +$46.00 Total Daily Profit
Daily ROI: +15.3% Daily ROI

Not a great day from an absolute perspective, but not too bad on a percentage basis, and definitely better than a loss. And after yesterday’s great gains, we can certainly live with a day of lesser gains. Trading tomorrow will be entirely dependent on market conditions. We will not be trading if we do not like conditions throughout the day. But either way we will, of course, be publishing our weekly roundup for this week’s trade summaries and profit/loss totals. So until next time folks, trade smart and be lucky!

Monday, 24th Trades | Tuesday, 25th Trades | Wednesday, 26th Trades

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