# FMG gap trading



## Gringotts Bank (5 December 2011)

In my latest short term experiment, I will long or short FMG at EOD for sale/cover within the next 2 days.

Using black box predictor.  Not every day will trigger a position.

Stops:  1% profit  *OR* 2nd day's open *OR *5% stop loss

Tonight short $4.85


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## skc (5 December 2011)

Gringotts Bank said:


> In my latest short term experiment, I will long or short FMG at EOD for sale/cover within the next 2 days.
> 
> Using *black box predictor.*  Not every day will trigger a position.
> 
> ...




What do you expect to gain from starting this thread, seeing that no one can offer informed comment to your experiment?


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## tech/a (5 December 2011)

Gringotts Bank said:


> In my latest short term experiment, I will long or short FMG at EOD for sale/cover within the next 2 days.
> 
> Using black box predictor.  Not every day will trigger a position.
> 
> ...



. 

GG
What are you doing?

1 % profit.
5% stop loss.
You'll get slippage everywhere.

If your going to trade intraday or very short term trade futs
Or emini's


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## Gringotts Bank (5 December 2011)

As for all my experiments, the idea would be to see if it works, then if it does, sell the signals.  Obviously for anyone to want to buy something like that it would have to be pretty good.  For those who would not even consider buying someone else's signals, watching someone make money quickly (or blow up) is entertaining reading.

I don't expect any slippage tech.  All the stops are set soon after close and require no fiddling intra-day.  For this experiment, FMG will actually work better than futs.... or it should do anyway.


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## Wysiwyg (5 December 2011)

tech/a said:


> If your going to trade intraday or very short term trade futs
> Or emini's



Yes this stock is strongly correlated to index.


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## nomore4s (5 December 2011)

Gringotts Bank said:


> I don't expect any slippage tech.  All the stops are set soon after close and require no fiddling intra-day.  For this experiment, FMG will actually work better than futs.... or it should do anyway.




Unless you are using GSL there is no guarantee you won't have slippage.

To me this is just a move stops to a point where they shouldn't be hit and then hope you can scalp some profits type set up. Bit like TG's trading of the SPI. You better hope you have an extremely high win rate otherwise it is doomed to lose, also unlike futures brokerage could be a killer for this type of trading with a stock.


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## Gringotts Bank (6 December 2011)

Decided 5c profit stop is neater and easier to calculate than the 1% equivalent.  This will change if/when the SP changes.

Cover $4.80  +1%

Strike rate will have to be high, but keep in mind not all profits will be 1%, nor will all losses be 5%.  I'm hoping for larger gaps and smaller 2nd day open losses.


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## skc (6 December 2011)

nomore4s said:


> You better hope you have an extremely high win rate otherwise it is doomed to lose, also unlike futures brokerage could be a killer for this type of trading with a stock.




Say you pay 10bps commission the 1% profit is only really 0.8% net. 

If the average loss is say 3% (plus 0.2% for commission). A winrate of 80% will just get you to breakeven. 90% winrate will get you 0.4% per trade... 100 trades a year nets you 40%.

BTW you are paying $1 commission for every $1 profit you net. I thought my pairs trading was bad (I pay ~25c per $1 profit) but at least I need double the number of transactions per trade.

Your broker will be a happy man/woman.


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## Gringotts Bank (6 December 2011)

Yes it will be interesting to see what the actual figures come out at after a week or two.

This strategy may be much more efficient (in terms of brokerage costs) performed on a weekly basis with wider stops.  In fact I think I'll do that too, and add it in here for fun.

So, from yesterday's open, I would go long FMG for the week.  Just have to work out what sort of stops to use.

Thanks for the comments.


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## Gringotts Bank (6 December 2011)

For *weekly *trade I'll go with:

 15c profit stop OR 1 week (Mon open to Mon open) OR 75c stop loss.

So *weekly position* opened at $4.89 and is still in play.  Allow me this, since it's about break even at the moment.


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## Gringotts Bank (6 December 2011)

Summary:

1 win - 1%

New Daily trade: long at close Tues $4.82
Weekly trade: long from Mon (current) $4.89


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## Gringotts Bank (7 December 2011)

sell daily at open +1.65%

Weekly unchanged from buy price.


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## Gringotts Bank (7 December 2011)

I want to use this thread to also trial a very basic sentiment indicator based upon 2 influential financial websites:  Marketwatch and Finacial Review, and use their home page lead stories to come up with a likely + or - for the same day on our market.
I have a feeling this may be more predictive than the subscription service I'm using.

for eg. Today's MW sentiment I'd guage as *strong but fading*
Today's FR I'd guage as moderately *positive also, lasting into the day.  *

It's a simple matter of looking pre-market, and having a gut reaction to the lead news stories and pictures.  Sentiment *should* drive prices early in the day, say the first hour.  Even if I could judge this correctly 75% of the time, it would be hugely profitable.


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## Gringotts Bank (7 December 2011)

Summary before brokerage performance:

Daily:  +1% +1.65%
Weekly: still in play

New daily trade buy at close of $4.89


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## Gringotts Bank (8 December 2011)

Sentiment:
MW: moderately + 
FR: slightly +


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## Gringotts Bank (9 December 2011)

MW -
FR --

Daily sell at open 4.74,  -3%
Weekly still open


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## Gringotts Bank (9 December 2011)

FWIW, black box predictor has a strongly bullish week ahead next week on the Dow.
Hopefully my weekly entry can come out even or ahead.

Summary: +1% +1.65% -3%,
  weekly currently down but in play.


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## Gringotts Bank (12 December 2011)

Late start.  Makes it hard to keep a decent trading diary.

Change of plan with the weekly trade.  Think I'll hold it until the black box indicator turns down (it's still positive).  Currently at -1.6%.  So instead of weekly, I'll call it a longer time frame trade.  And instead of daily trade I'll call it short time frame, since it's not triggered every day.

Rules change:
long term trades:
buy = close (when black box gives the signal)
sell = +15c or -75c or when indicator turns down.


*Summary:  

short term trades:  
+1% +1.65% -3%,

longer term trades:
open position   -1.6%


*


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