Out and down again on the dow

September 20, 2006 at 3:14 pm Leave a comment

Again on intrade. Started with 39.80 August 21st

Total of 21 days trading i.e. about 4 weeks (5 trading days per week).

Managed 13 days with no losses, but the days with losses were rather big (-17.70 one day). In the end I lost 3 dollars and then 5 dollars over two days taking me down to 1.30 cents available balance (keep in mind both times that I’ve traded on intrade I’ve squirelled away 10 bucks so I have 19.90 or so frozen untill October).

Days with loses: -13.10, -6.55, -0.15, -7.70, -2.15, -5.70 = -35.35

Days with Gains: 4.05, 0.45, 2.65, 0.40, 0.70, 0.45, 3.30, 1.05, 0.95, 1.15, 1.95, 1.20, 0.55, 0.60, 1.10 = 20.55

This doesn’t factor in fees or the fact that many of the bets I lost were pretty boneheaded (the major loses were on the usual bet at the last moment on the dow type of thing which proved fatal my last time around). Regardless, this time around I knew about the key economic indicitators, was paying attention to economic calendars, and also subscribed to most of the Fed’s various different mailing lists and as evidenced by my meager profits, I was hedging my bets of using spread betting like crazy. In the future I need to stick with my sell point to cut losses, the last two loses of 2.15 and 5.70 were preventable in fact the -5.70 would have been a profit had I taken a 20 cent profit, but instead I stuck with it and the DOW went down and never came back up (which almost seems impossible some days).

Some major things I’ve noticed, the correalations are changing with the dow, when housing starts proved dissaponting, the dow didn’t go down much, but when PPI was shown to have fallen dramatically (something like 2.0% when it comes to oil) the dow contracts went up a lot (which is when I should have sold the 57.0 bet for 60.0) but when the market opened it quickly headed south and stayed there. My major problem in the end was just experimenting. After 5 – 6 days of hedging for small profits, I found that theoretically waiting longer might be a better idea, but I guess in the end taking the short term, but less risky proposition is probably a better idea. I’m now on the virtual stock exchange on marketwatch and slowly moving into real stockmarkets, but at the moment, I still can’t turn a profit even off of prediction markets so it might not be possible for me to daytrader or move into anything else for money in the near future. My basic strategy which is the DOW is fairly voltaile and often sticks in repetitive movements through around 5 – 10 points before an event takes the DOW in a certian direction (Fed Drops rates things go up, NAR releases info stating the housing market is falling, Redbook sucks, CPI is high, etc). Using an economic calendar I could predict when the DOW would make major movements, but this didn’t turn out to be completely accurate, obviously the drop in PPI on Tuesdays took the DOW up, but in the end it went down.

As of late the non-lineaer 30 input average equation (which is further complicated by the fact that some companies have issued more stock and hence the DOW’s movement more than others) has been acting a little tricky. While previously it was more predictable staying in ruts for long peroids of time, since CPI went slowed, the housing market began to fall, consumer confidence fell, investor confidence, slid, and other factors it’s operating like a different beast all together. Which is how it should act. The DOW is an equation and it’s 30 components make it more risky than the NASDAQ QQQ which distributes risk over 100 companies, but also that each variable in the average in turn weighs more or less and is anchored to different industries means it’s less predictable. It’s funny to track the DOW too, becuase the number of stories you read about doubles or triples. Would I have cared about the CES in India showing that Coke and Pepsi have high levels of pesticides in their drinks before? Would I have known of Hewlett-Packard’s fiascos? Intel’s declines? etc.etc. These are all points I made before, but regardless it was fun and in October I will have 20 bucks again to invest. Hopefully by then I’ll have figured out some more ways to work the the shares I’m buying etc. The first time I didn’t feel like I had control over my bets this time I felt like I had a better idea of how to work with the DOW, but merely just didn’t get lucky for a few days and made a few bad moves when I got over confident or tried of making just 20 cents per share. At the very least I am starting to crunch the numbers and get an idea on what I am investing and where it is going instead of just taking a bling stab at things. Probably going to use my last 9 bucks on hedgestreet to work on forex exchanges, now that I have foreign exchange calendars down I might be able to time my bets better and also get out of bad situations sooner. I do wish I had a better method than just spread betting. Anyway, I’m repeating myself.

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Entry filed under: my life through software.

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