Saturday, December 6, 2008

Misadvantures in Dow Jones Futures experiment

Edit: This system has now expired, since it has hit my exit criteria.

OK... this isn't a tip. I wouldn't recommend this trading method to anyone, since it's so stupid.
Nonetheless, I thought it up myself, and I am using it to trade Dow Jones Futures at the moment.

My technique for this month of December (Edit: my exit strategy will be when the dow futures go 1 full trading days without going from green to red.) is:
EDIT: The dow has gone 2 full trading days without going from green to red and red to green, which is my signal that it's time to stop this strategy. The end.

Every night, I look at Dow prior day closing. Then I queue to buy at -75, and I queue to sell at +75.
Then I go to sleep/ go out/ whatever.

When I wake up in the morning, I look at my profits. (hopefully)

Why this weird technique? Well... cause I notice that the dow will go +100 and -100 just about EVERY SINGLE DAY. So... just taking advantage of the pattern.

Edit(5/12/08): Change in technique:
Every night I will look at dow prior day closing, then queue to buy ONE MiniDowFutures CONTRACT at -100, queue to sell at +100. I might do some "flexible" trading too, but this one will be my "fixed" aka "bread and butter" aka "Jason thing"...

Reasoning: I'm not being disciplined in my trading methods. Not sticking to the gameplan, the laid out formula. Got scared cause I opened up positions larger than I was comfortable with. So, time to buckle down. I shall use this to test what happens when I strictly enfore rules upon myself... I shall still do some other trades, but this will be my callsign this month.

In the event that the trade fails, I will "ignore/forget" my original buy/sell price, and will use this system to find my price to close the contract the next day. So if I get stuck with a long position on monday, I will short it on Tuesday at +100 to prior day closing.

How has this been working so far?

Will blog capsule and update this in the form of 3 numbers and 1 statistic: intraday low, previous day closing, intraday high, and whether it worked or failed. Update: Now including results of my mechanical vs flexible trades, for performance comparison.

4/12: 8274, 8591, 8630 failed ---- got lucky since I was awake that night, first day trading dow. I bought at 8510 and chickened out at 8610. Mechanical +$500.
5/12: 8122, 8376, 8660 success ---- unfortunatly, I was awake tonight! Chickened out again. Bought at 8270.... sold at 8390. Mechanical +$600, flexible -$200!
Sigh. Gonna try some formula modification. Have editted my post to reflect this.
8/12 8800, 8753, 9026 MASSIVE failure. Sold at 8753 during pre-market. Got stuck with 1 short position from mechanical. Stuck with 2 short positions from flexible, 8850 and 8970.
8->9/12 Closed 3 short positions during pre-market at 8832. Mechanical $-395. Flexible $+780. My system failed on Black Friday, and today too. Pretty lucky that the cut loss portion of mechanical system saved me, and saved my flexible trades too. From now on Mechanical Trades will be denoted by M, Flexible by F.
9/12 8667, 8934, 8913 Massive failure today too. This signals that my system has reached the end of it's usefulness. At least to me. Am now cutting off all trades on Dow using this system. The final update will be how much damage today did to me. Bought 2 at 8834, 1 at 8805.
10/12: Closed off at 8755. That's the end of that.

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