# Day Trading Lynas



## Gringotts Bank (20 November 2011)

Another paper trading journal.  Will try this also for 2 weeks.

Stock is LYC.  Position size per trade will need to be $20-50K.  The minimum amount will still allow 1 tick to be profitable.  The maximum amount shouldn't be too hard to dispose of given the liquidity of LYC intra-day.  

Long and short.  Will try to post real time and volume entries/exits.

Discretionary entry/exit based upon combination of market depth and intra-day chart of XAO (pretty standard DT approach).  XAO chart will have range candlesticks with a bar range of 1.  Aiming to be in and out within an hour (max) each day.


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## DB008 (20 November 2011)

Why not try something with more liquidity? 
Something like BHP/RIO/MQG?


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## tech/a (20 November 2011)

Gringotts Bank said:


> Another paper trading journal.  Will try this also for 2 weeks.
> 
> Stock is LYC.  Position size per trade will need to be $20-50K.  The minimum amount will still allow 1 tick to be profitable.  The maximum amount shouldn't be too hard to dispose of given the liquidity of LYC intra-day.
> 
> ...




GG
It appears your strategy is to buy or sell on market depth and intraday 1 min chart of XAO
Is that it?


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## Gringotts Bank (20 November 2011)

yes, with more emphasis on the depth.

danny I find the depth impossible to read on big blue chips.


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## tech/a (20 November 2011)

Gringotts Bank said:


> yes, with more emphasis on the depth.
> 
> danny I find the depth impossible to read on big blue chips.




Will be interesting
Always found that trending price action is pushed by buying or selling at market.
Placing orders in line have little influence on direction--- well that was my findings 12 or so years ago--- perhaps things have changed.

Look forward to your commentary.


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## Gringotts Bank (21 November 2011)

Interesting day to start.  Lowest volumes in a long time.

B:1.21


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## Gringotts Bank (21 November 2011)

S:1.18


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## nomore4s (21 November 2011)

Gringotts Bank said:


> Another paper trading journal.  Will try this also for 2 weeks.
> 
> Stock is LYC.  Position size per trade will need to be $20-50K.  The minimum amount will still allow 1 tick to be profitable.  The maximum amount shouldn't be too hard to dispose of given the liquidity of LYC intra-day.
> 
> ...




I personally think you've taken a bit of a backwards step here.

You've gone from having a clearly defined strategy which had testing results which showed if you could nail your entries you could make money, to a system which now relies on you nailing both your entries and exits. You couldn't get your entries correct with the other method so I'm not sure what you have changed which will allow you improve your entries now.

IMO you would have been better off sticking with the last strategy but work out a more clearly defined entry criteria incorporating stops.

Day-trading a stock in the manner you have outlined is probably one of the hardest gigs around, you would be better of trading the SPI in the same manner, certainly more profitable with more opportunities and a hell of a lot cheaper brokerage wise.


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## skc (21 November 2011)

nomore4s said:


> You've gone from having a clearly defined strategy which had testing results which showed if you could nail your entries you could make money




Not sure that was a clearly defined strategy to start off with...

To me GB simply calculated that Close - (Low+1.5c) is profitable... It wouldn't take much to that sort of analysis on any number of stocks/instruments.

Not to mention that fact that LYC is the wrong arena to apply his market depth reading skill (if he develops such skill)... the right arena probably changes everyday.


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## Gringotts Bank (21 November 2011)

Thanks for the comments.  I'm taking into consideration what you're saying, both.  

B: 1.165


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## Gringotts Bank (21 November 2011)

S:1.175

Changing Range Bar to equal 8 for XAO intraday.  Will post what it looks like.


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## Gringotts Bank (21 November 2011)

Here I have curve fitted XAO range bars to indicate the turning points, and will use the same tomorrow.

Note the time scale at the bottom (it is not linear), and compare with LYC price at same time.  
ie.  11.16am LYC = 1.205
2.17pm LYC = 1.165
4pm  LYC = 1.17


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## Gringotts Bank (22 November 2011)

Bid: 1.11


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## Gringotts Bank (22 November 2011)

B: 1.12


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## Gringotts Bank (22 November 2011)

S: 1.14

My new XAO chart helped get a me a better entry today.  Only problem with widening the tick range is that the candles re-paint themselves.


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## Gringotts Bank (23 November 2011)

short: 1.13


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## Gringotts Bank (23 November 2011)

cover 1.125


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## Gringotts Bank (23 November 2011)

buy: 1.13

sell: 1.125 whipsaw mcgraw


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## Gringotts Bank (23 November 2011)

Possible long entry on chart now.

Since the tone is generally bearish, I'll skip this and only trade short today.

The whipsaw could easily have been avoided by *trading only in the direction of the day's broader trend*, which was likely to be downwards, even before market opened.  Note to self: decide this before the day begins.


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## Gringotts Bank (24 November 2011)

Broad market sentiment is a strong negative open with a possible bottom in the making?
So I wouldn't rule out going long somewhere later in the day.

Only thing that would make me wary of shorting at open would be a big gap down.


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## Gringotts Bank (24 November 2011)

short 1.055


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## Gringotts Bank (24 November 2011)

If this downwards push falters, the index will cross the zero line and test the waters there.


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## Gringotts Bank (24 November 2011)

cover 1.045

looking for that upside break now.

*Note to self: you're pulling the trigger too soon!*


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## Gringotts Bank (24 November 2011)

Summary (Thurs first week).

Paper loss: -$104

Brokerage is really cutting into this, and there's not a lot of meat on the bone even when I get it right.  The other problem is a slight lag and loss of correlation between XAO and LYC, which means I am watching two markets instead of one, and trying to balance them out.

Morrison securities have $10 commission and $150pcm platform fee for trading SPI which might work out better.  Can anyone recommend them?


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## tech/a (24 November 2011)

Gringotts Bank said:


> cover 1.045
> 
> looking for that upside break now.
> 
> *Note to self: you're pulling the trigger too soon!*




*GG*

With your "Backtesting" observation your working with a FIXED 3 ticks or 1.5c
In live trading your working with a VARIABLE.

That will always be your problem.

Be done with it and go IB
Pain to set up but you can trade anything.
$5 each way


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## Gringotts Bank (24 November 2011)

Yeh I'll def look at IB too tech.

Meanwhile...

B:1.05


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## Gringotts Bank (24 November 2011)

sorry bit late with this post, S:1.065

and I'm back in black - paper profit $500


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## elbee (24 November 2011)

Gringott,

I don't understand your fascination with Lynas.

If you are trading a strategy that involves entering a single stock based on movements in the overall market cash index then you will only be successful if there is some reason for that stock having a high lagging correlation to the index, and for that reason to be ongoing. I see no such reason being the case for Lynas.

I would suggest you try using the futures contact as a leading indicator for a stock that has a high index weighting, eg. using SPI to predict BHP or CBA movements.


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## Gringotts Bank (24 November 2011)

Hi elbee,

LYC does have a very good correlation to the index particularly when short (not nearly so strong when long).  I also find the depth easier to read than the big blue chips.

I would have thought the day session of the SPI would have mirrored XAO in terms of movements.  You're saying it leads the index?


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## elbee (24 November 2011)

Large players with knowledge of impending transactions that will cause a movement in the cash index may take a position in the futures market.


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## Gringotts Bank (24 November 2011)

I see, thanks for that.  Would that be a regular occurrence?


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## Gringotts Bank (25 November 2011)

Probably not wise to jump in too early today.  I guess if the asian markets run up hard it will take us along for the ride, but I think shorts are out today.


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## Gringotts Bank (25 November 2011)

Missed a small opportunity there short at 1.115.  Note to self: charts are proving more reliable than depth.  Similar to yesterday, waiting for a bounce now.  I think if I was trading real money I'd halve my position size today due to lack of liquidity.


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## Gringotts Bank (25 November 2011)

B: 1.11


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## Gringotts Bank (25 November 2011)

s: 1.115


*summary week 1:  paper profit $614*, represents 1.2% return on capital.

I don't think there will be much further action today.  Hoping for 2-4% return next week if I can improve upon the mistakes made this week.


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## Gringotts Bank (28 November 2011)

buy at open.

B: 1.13


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## Gringotts Bank (28 November 2011)

S: 1.14


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## skyQuake (28 November 2011)

LYC's range can vary quite a bit. No point taking a 1c move when theres a big move going on in the SPI re the IMF bailout


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## skc (28 November 2011)

Gringotts Bank said:


> s: 1.115
> 
> 
> *summary week 1:  paper profit $614*, represents 1.2% return on capital.
> ...




Have you included commission here?

Like SkyQ says, watching LYC full time can be like watching paint dry on many days. 

Volatility leads to volatility. If you just do a simple scan of what moved the most yesterday with volume, short list 10 stocks to watch for today and also have in mind the critical levels for those stocks... you'd at least be exposed to much more opportunities... and better opportunities on days when LYC doesn't move.


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## Gringotts Bank (28 November 2011)

I know I exited too early.  There was a 5% move in it.

commissions included, $110 round trip.

I have thought about watching a list of recently volatile stocks but I really need simplicity, because I don't want to trade full time and I don't like flipping around different screens and MD's.  

I'd rather trade an Aus index cfd, but the commissions are just enormous.  I think it was something like $187 for $50000


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## nomore4s (28 November 2011)

Gringotts Bank said:


> S: 1.14






skyQuake said:


> LYC's range can vary quite a bit. No point taking a 1c move when theres a big move going on in the SPI re the IMF bailout




Therein lies the problem day-trading a stock because intra-day moves become reliant on the overall market to an extent but can also be left behind on a good move by the overall market, making it unpredictable and therefore harder to trade. Also very expensive to trade.



Gringotts Bank said:


> I know I exited too early.  There was a 5% move in it.
> 
> commissions included, $110 round trip.
> 
> ...




Don't mess around, open an account with IB or similar and learn to trade the SPI or other index if you want to trade indexes, CFD's for index trading are a waste of time imo, expensive and unreliable to a certain extent.


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## skc (28 November 2011)

Gringotts Bank said:


> I'd rather trade an Aus index cfd, but the commissions are just enormous.  I think it was something like $187 for $50000




That doesn't make sense. 

Someone like IG quotes with 1pt spread so to buy at bid and sell at offer straight away will cost you one point round trip.

Index at 4000 points so $12.5/pt is all you need for a $50k position size... so effective commission ~$12.5.

Unless you are using $50k as 2% margin and have a position size of $2.5m...


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## Gringotts Bank (28 November 2011)

skc said:


> That doesn't make sense.
> 
> Someone like IG quotes with 1pt spread so to buy at bid and sell at offer straight away will cost you one point round trip.
> 
> ...




lol yes I added a few too many contracts!  I was minus 5k in a few seconds.  
How can I get a quick calculation of how many contracts =  a 50k position size, no matter what the index value?

One contract (Aussie 200) just bought at the offer cost me $25, is that right?


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## skc (28 November 2011)

Gringotts Bank said:


> lol yes I added a few too many contracts!  I was minus 5k in a few seconds.
> How can I get a quick calculation of how many contracts =  a 50k position size, no matter what the index value?
> 
> One contract (Aussie 200) just bought at the offer cost me $25, is that right?




I hope that's just demo!

There is no commission in CFD indices. They quote an all-in spread, which is 1pt for IG, and spread is different between different providers. Each provder also has different tick value as the contract size. Standard contract might be $25/tick. But you can find people who do $0.1/tick.

The face value of the contract doesn't actually matter that much, what matters is obviously the tick size. But if you want to trade $50k face value (for whatever reason) you can simply calculate that to be $50k/index value. 

So that's $12.5/tick with the ASX200 at 4000. 12.5 contracts if they are $1/tick. 125 contracts if they are $0.1/tick...

Before you trade for real though I trust you will actually read up on the contract specifications related to CFD indices. They are *not *futures.


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## Gringotts Bank (29 November 2011)

Will try both LYC and Aus200cfd today.

LYC B: 1.20 was the open - edited
Aus200 2 contracts at 4077.9


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## Gringotts Bank (29 November 2011)

S:1.19
S:4070

slow start for our mkts, wait for new entry bar


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## Gringotts Bank (29 November 2011)

B:1.195
B:4075


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## Gringotts Bank (29 November 2011)

sorry I'm doing 10 things at once.  Buggering up this thread.

That's another loss.

S: 1.185


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## tech/a (29 November 2011)

> sorry I'm doing 10 things at once. Buggering up this thread.




*GG*
Full marks for putting the idea out there.
*But*

Its a gut feel theory with many flaws already mentioned by those here.
Even the back testing has inherent flaws.

Seriously you need to look at how you do this.


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