Sunday, September 14, 2014

How I Use Tradervue with BOWS Bootcamp

Last month, I enrolled into the Bulls on Wall Street (BOWS) 60-day Bootcamp training program for daytrading stocks, and it has surprisingly exceeded my expectations.  After years of studying trading and joining various chatrooms, I initially thought, what else could I really learn or gain?  

Before joining, I asked several prior students and they all said the same -- the Bootcamp was well worth the time and cost.  And yes, I was still a bit skeptical, I thought I was different.

I was wrong.  

I've realized that you never stop learning something new, even if you think you already know a lot. A surprise value-add has been the highly focused / low noise content within the private Bootcamp Google+ community from all the current and prior students, where I continue to learn and also try to help pay it forward.

I'll write more about the Bootcamp and why I joined in a future post.  

One interesting and reassuring topic within the Bootcamp has been the use of Tradervue for journaling trades.  I've written much about Tradervue in the past here and it has been great to dust off some of my old Tradervue tags from back when I traded stocks more actively.  

Posted below is a slightly modified crosspost I made to the private BOWS community regarding how I'm using Tradervue now to create and refine my trading plan.

* * * * *

"Better decisions through data" was the motto for a company I used to work for many years ago.  It's something that I still strongly believe.  And analyzing data has been a big part of helping me to make better trading decisions.

In this post, I'll explain the Tradervue analysis of my SIM (simulated) trades to determine whether the setups I outlined in my initial trading goals are still applicable.  

Based on the performance of the setups, I will then create and refine my trading plan.  This is working somewhat "backwards", but given my trading background, this process works for me.

Trading in the Clique Fund (BOWS hedge fund) is my goal, so the trading conditions (trading share size, daily loss limits, etc.) I used are similar to initial conditions when I go live.  

However, I still chose to measure my performance on the R-multiple scale within Tradervue, which is simply a ratio of how much you made/lost compared to what you initially risked. 

a) Risk $10 and make $20, you made +2.0R
b) Risk $10 and lose $5, you made -0.5R

That way, I focus on reward/risk for every trade, NOT absolute $'s.  It's easy to brainwash yourself and become overconfident with big fat $ returns under SIM, only to get smacked hard with reality when you go live.  

It's also harder to "fool yourself" with the R-multiple returns.  For example, you can make up a big losing day with one last huge unrealistic 50,000 share winning trade, whereas the R-multiple returns will still likely show you with a losing day.  

I've fooled myself too many times in the past, so I've learned some lessons.  Use Tradervue or any other journaling tool/spreadsheet to look at the cold hard facts.  

It was a decision filled with pros/cons, but I decided to reuse many of the tags from my prior experiences in stocks.  Therefore, some of the tags you see in this analysis may not be a part of the BOWS vernacular.

Once the tags are entered for each trade, it's very simple to filter the results to only view or report the performance for a specific subset of accounts.

To only show or report on trades that were long bullflags that were in a ascending triangle, I would type in the tag field:

       long AND bullflag AND asctri


*  Results are based on SIM trades (beware of the *fantasy fills*!), gross (no commissions), 25-100 shares per trade (with few rare 200 share trades), $150/gross daily max loss.  My goal is to get used to initial Clique fund conditions.

*  R-multiple return was +59, based on 400 trades from 8/19/2014 to 9/12/2014.  "Probability of random chance" = 4%, so results are statistically valid.

*  If a consistent 1% of portfolio was risked per trade (R=1%), that's an almost 60% return.  And if 2% was risked per trade, it's almost 120% return. But this is NOT a realistic assumption -- it's hard to daytrade with a consistent R value.  Reality for me will likely be more like 0.5%.

*  I overtraded, surprise!  And only trading 100 shares on lower priced stocks, even if in super-juiced-momo-mode, is very challenging to make decent net dollar returns consistently.  Commissions and errors also start to compound dramatically with overtrading.

*  Winning accuracy was about 50%, which is not great given the lower profit factor value.  I was not as selective as I could have been.  In the back of my mind, I was thinking, "I'm collecting data, so I'll just do this to see what happens."  Not a good habit to make.


Under my initial goals, I thought focusing on flags, ORB, and 123 tops/bottoms would generate the best results.  

WRONG!  Well, kinda...  Here are some key findings.

*  The long side performance dominated over the short side.  Perhaps that's just the current condition of the markets, as well as bias of stocks.  Or maybe the chatroom's bias.

*  Therefore, the bull flag and 123bottom setups also significantly outperformed the short side of those respective setups.

*  I always thought the bearish "h setup" was a good setup for me, but based on the past month, that's WRONG.  Although that setup might do better if overall markets go into correction mode.

*  The ORB setups were profitable overall, but didn't generate a decent average R per trade.  In addition, some of those ORB setups should have gotten runners that run the entire day. Likely I'm doing it wrong.

*  The triple tap breakouts as well as the sideways consolidation type flags were surprise solid performers.  However, need bigger sample for the triple tap breakouts.

*  I thought I'd be a pretty good trader of 1min charts by now, but the data clearly says STAY AWAY.  I need to focus primary on the higher timeframes, and rarely use 1min except when absolutely necessary.

*  Revenge and rogue type trades were a small percentage (< 4%) of overall trades.  But still, total R-multiple profits could have been about 20% higher without them, these trades are a huge negative impact!

*  There is an opportunity to do an even deeper dive to optimize what combination of tags do best, as well as time of day type analysis, and more. This will be something to explore in the near future. 

*  I will need to focus on creating tags to help determine how best to optimize exits.  Exits are arguably more difficult than entries.  

*  Additional reports from the upgraded version of Tradervue have been attached.  These are just a very small number of interesting reports that could be used to further refine your trading, I've only scratched the surface.  Most of the reports should be self explanatory, but please feel free to leave questions in the comments.
A trend report of average P&L
Determine optimal stop amount
Trend of average heat taken on trade (MAE)
Evidence of trade mis-management -- letting winners turn to losers
Report based on tags

Now that I have a clearer idea of what works and what doesn't, the findings from above will be used to modify and tighten up my initial trading plan.  

Focus on your strengths is a common mantra. Therefore: 

I will most likely focus my trading plan on the setups with the magenta values under the PF (profit factor) column of the INITIAL PERFORMANCE BREAKDOWN report.  
Why should I use a lot of energy to try and become a profitable 1 minute chart trader when I'm already doing pretty well with other setups?  

Markets ebb and flow -- what works now may not work in the future and vice versa.  So all these setups will continue to be monitored, and as the market changes, adjustments will most likely be made in the future.

Friday, September 5, 2014

Response from Spread The Trend

As was clear in my last post, as well as some of the comments under the Spread The Trend review (originally posted in October 2013), there have been some rough patches recently.  This happens to all traders, funds, investors, etc.  Participate in the markets long enough, and no one is immune to experiencing challenging times at some time or another.

Spread The Trend replied under the comments of the original review.  I thought it would be good to promote it to a blog post, since there are some clarifications, explanations, and admissions that will be of value to some readers.

Here is the comment in its entirety:
We are responding to the comments made by Marco Starr whose name is unfamiliar to us. When a trade is rolled, you close one position and then simultaneously open another position. The losses being referred to are paper losses. A true realized loss is not incurred unless someone chose to simply close all positions and not roll their trades. We are currently down for the year with implied volatility being anemic but our final tally is far from solidified. We have also been trading in and out of several positions to help reduce the cost of our rolls and being as conscientious as possible to our subscribers.  
In regards to “wiping out several years of gains” this seems to be an over reaching statement. You only need to view our track record page to see that we are well ahead of the game if you consider the longer and even medium term. Now had someone only been with our service for less than a year, then yes it is possible that their account could've temporarily dropped below the value they started with.  
All along it was explained to subscribers what our plan of action was and why our decisions combined with market forces lead to these outcomes. In all fairness, perfection in trading is difficult and we stand by our longer-term track record. Of course, we do our best to try and avoid getting into stressful situations altogether. We also believe we could have done a better job as well and have taken “key learning’s” to heart from this experience.
The majority of auto trade subscribers, or over ¾, did fill on the roll in question. As for those folks trading their own accounts the results seemed mixed as some did fill and some did not. It’s most common for everyone to fill or not fill as a whole but on rare occasions sometimes not everyone will get filled all in the same day. This can possibly be due to the timing of the order being sent or how quickly the broker is able to submit the order, or it could even have something to do with the liquidity in the market at the time the order is processed. 
When we see that the mass majority is filling that tells us that our order is priced fairly and correctly. If a broker did not fill, then we ask the question why? There are tools available where one can go back and see the amount of volume traded on these strikes, which shows there were many fills. Could Spread The Trend have sent the order earlier? In hindsight, probably yes. However, the process that has been successful for many years dictated that waiting was appropriate. We desired a different outcome as well and these trades impact our own personal accounts.  
All trades are posted on our website in the Member's section under current open positions with all of the details in their entirety. We do not post the trades to our closed positions page until the entire trade has been closed out and as of Mr. Starr’s posting and this posting; the entire trade has not yet been closed out. 
We offer a one month $1 trial so folks can get comfortable with the strategy and always ask that individuals add capital gradually. One may review both open and closed trades and decide if the newsletter is a good choice for them. Spread The Trend realizes that this period was stressful but we also have many winning weeks, months, and years on record. However, that concept that we were a “deer in headlights”, “virtually sunk”, or “listing” is disingenuous to our long term subscribers who are somewhat disappointed but are still extremely profitable and content with our strategy.

Saturday, August 23, 2014

After 3 years, I'm still here

[NOTE: This was originally written about 3-4 months ago, but not posted until now...I've been admittedly a lazy blogger).  Material changes have taken place since then and noted with red text.]

Yes, I haven't been blogging much, but I'm still here.  

It has been 3 years since I've gotten back into trading from a long time off, and it sure has been an interesting journey.  Late last year, I hit a bump in the road of life where my health condition lead me down a path with potentially very negative implications.  

There were many times when I wondered about my worst case scenario: how my passing away would burden my wife and 2 young children immensely; how devastated my children would be; how I would never be able to see them graduate school, attend their wedding, see their children, and so on.  

Oh those were depressing times.  Although I was still involved with the markets, it obviously didn't mean as much, and my performance reflected it.  During those times, trading became somewhat of a distraction from reality.  In hindsight, I should have shut it down completely.

After many tests, my heath issues luckily turned out to be nothing major, and I have pretty much worked myself back to "normal."  But it sure was a big wake up call and reminder not to take health for granted.

Seize the day.  This moment, right now, you own it.

* * * * *

Back to the world of trading, my goals and plans from last year are still in progress.  And I have continued to approach trading within 3 key areas:

1)  Discretionary trading:  
- Continue to be consistently profitable, but sizing up slowly and organically
- Focusing primarily on weekly options, with some swing trading via stocks 
- Creates a source of ideas for analysis and system development

UPDATE 8/2014: 
- Recently had too much volatility with weekly options, so I'm putting it on hold with a loss after being up as much as a much as couple hundred percent net with a small account.  The losses were all due to commissions, and I was gross profitable overall, but that doesn't count
- Given the high level of difficult trading weekly options, I consider this experience and outcome successful with many lessons learned
- With swing trading, YTD performance has been stuck, with all time equity highs acting as strong resistance
- Moving back to focusing on short term stock trading, which is how I initially started.  Going full circle.  
- This month, I've joined a trading Boot Camp program just to shake things up, and after starting with low expectation, I've been very positively surprised -- the program has greatly exceeded my expectations.  More about this in the future

2)  Autotrade programs: 
- Expanded and diversified this year beyond credit spread options to include futures
- Added to size up capital 
- Overall, has been profitable year to date
- Tracking/analyzing the signals from various systems have created a source of ideas

UPDATE 8/2014: 
- As noted in the comments section of the Spread The Trend post, this service has recently experience significant losses.  Letting the dust settle, and looking to write an update soon
- My options credit spread account is currently down over -40% YTD.  Will monitor over next few months to determine next actions
-  The futures autotrading programs are up about breakeven YTD since starting this year (they were up +35% as recently as last month), although it was up as much as +60% earlier this year (it's very volatile)

3)  System development / quantitative analysis:
- Programmed a few algo type systems, some with surprisingly solid results
- But not quite ready for prime time
- Positive benefit, program backtesting of ideas and concepts useful for discretionary trading
- Great area of focus when I'm in a slump with discretionary trading

UPDATE 8/2014:
- Scaled back significantly recently.  Will need to reevaluate longer term goals
- Here's my mental road block -- after all these years, I've come to believe that solid discretionary trading can provide returns about 4x vs. a solid mechanical system
- But discretionary trading can have significantly more wear and tear on the psychological and emotional capital.  There are definitely tradeoffs

How quickly things can change over a few month period.  But that can be pretty much "business as usual" in the world of trading.

Tuesday, October 22, 2013

Review of

In my prior post about Adventures in Autotrading Services, I discussed my overall experience to date with a handful of autotrading newsletter services.  And in conclusion, mentioned how one program has actually delivered solid results so far.  That service is

SpreadTheTrend is a iron condor/credit spread newsletter services run by Derek that trades the SPX index options.  Derek posts on Twitter under @spreadthetrend, doesn't have a chatroom, and communicates primarily by email, although he does publish a phone number which I've never tried. 

The website is in the process of being revamped, so the information below could become somewhat dated soon.
  • The non-member/public portion of the website has some helpful information including a very helpful FAQ's, how to get getting started, performance page, etc.
  • The members section contains a couple dozen or so tutorials diving into more details regarding trading credit spread options strategies.  There's a lot of useful information in there and it's not overly technical, so it's relatively easy for a beginner with some basic options knowledge to understand.  But since I'm autotrading, I admit I haven't studied these posts as much as I should.  Maybe it's time for me to revisit them.
  • The performance page format has changed starting this year.  However, you can still see the prior years in the older (and less detailed but easier to read) format.  I started with this program in Q1/2013, so I don't have actual performance results prior to that time.  But from what I have heard from others, the posted performance on the website going back a few years matches their actual account performance very closely.
As mentioned earlier, the primary source of communications is via email.  Since I subscribe to his autotrading program for hands free execution of his signals, my interaction with Derek has been very minimal, only via email.  His response time has been timely, usually within several hours or less during the weekday.

For those who manually execute his alerts, there are examples of how his alerts are emailed on his website.  Pretty straightforward.

He also sends out market commentary on a weekly basis, or more frequently as conditions change.  I admit, I was initially ignoring his market commentary emails since I was in autotrader mode and didn't really want to know what's behind his signals -- I just wanted results.

However, I now look forward to reading his market commentary.  His emails are far from dry and technical -- they often have a entertaining and sometimes quirky or snarky tone (I mean this in a positive way), ranging from rants regarding the "cabal" propping the markets, some subscribers getting too nervous about current positions (or complaining about being in cash too long), or whatever is the topic de jour.  But in the end, his commentaries consistently contain very valid insights and perspectives.

He often says he has no idea what the market is going to do, which might lead you to initially wonder whether he's the right guy to lead the ship across the ocean.  But read carefully and you'll see that his commentary is peppered with wise trading wisdom that can only come from years of trading experience.

For whatever reasons, Derek is yet another newsletter service proprietor who doesn't advertise or market himself very much in his communications.  You won't see "BOOM" or "nailed it!" type comments from him.  It's hard to tell from his Twitter posts that he even offers a successful alert service.  Maybe it's because he's content with his subscriber base, or maybe he'd rather grow based on referrals and focus on trading.  I'm finding that a lot of the good services are very low key, and they probably like it that way.

Ultimately, just look at his past performance and results speak for itself.  I often sense an interesting dichotomy between his market commentary vs. his timely trade executions, and believe it comes down to his unique and intuitive feel for the markets, which can change quickly due to market conditions.  His trading seems to be far from mechanical, and that's what I have come to appreciate about his trading style.

Here's a breakdown of my P&L based on the autotrading service:
  • $5,959.45 in profits net of commissions since starting in February 2013
  • About 24% net return year to date since late February, based on a $25k allocation
  • The net return does not factor in subscription and autotrading fees
  • I started with a decent drawdown, at one point unrealized losses were around 15-20%.  So right off the bat, I was able to see how Derek managed difficult conditions, and in hindsight, he handled the situation very well.  Many other similar services panicked and booked big losses.
    P&L curve generated by
  • The report below indicates a 81% winning percentage
  • However, this is based on how I grouped the various legs of the trades together in Tradervue (which were grouped by expiration month)
  • But if you track the trades based on how they rolled (if applicable), the accuracy would be higher
  • The profit factor is a very respectable 2.50
  • And the probability of random chance is < 10%, meaning these results are not likely due to luck
Statistics report generated by
SpreadTheTrend is a keeper, assuming the results remain within acceptable historical ranges, which I believe they most likely will.  Although my primary goal is to diversify with other autotrading programs, I will likely scale up my investment in this program next year.  So if you're looking for a solid program to begin autotrading credit spreads and iron condors, SpreadTheTrend would be a very good program to consider. 

Adventures in Autotrading Services

Currently, I have 3 ongoing trading initiatives:
  1. Discretionary:  Discretionary trading strategies -- primary swing trading stocks and stock options.
  2. Algo systems:  Develop and manage mechanical trading systems
  3. Autotrading:  Research and invest in autotrading newsletter services
One of my goals for this year was to explore "autotrading" services/newsletters.  Since "it" (auto trade, autotrading, automated trading, signal providers, trade copy, etc.) can mean different things to everyone, I'll define it as an alert newsletter service you subscribe to, which then executes their trade recommendations in your brokerage account automatically.

It's an interesting space -- somewhat between alert service and chatrooms on one end, vs. managed futures accounts and perhaps some types of hedge funds on the other end. 

NOTE: One key point -- like most chatrooms, autotrading services are usually not operated by registered investment advisors, so be aware of your risks (very high) and recourse options (very low).

One of the main reasons for investigating autotrading services is to try and diversify my trading "business" and to hopefully recapture more time for my family as well as non-trading goals.  We'll see if that's possible in such an all encompassing field such as trading, but I going to give it my best.

This year, I've participated in a handful of autotrading services in various asset classes, including index options, stock options, stocks, and futures.  This "experiment" was all conducted with actual live accounts, since ultimately, there's only one way to find out how a program performs.

The autotrading world is a much bigger business than I expected, and I've only scratched the surface.  But if you haven't yet explored it, here are a few ways to find out more.

I've found that the services are generally clustered around a particular asset class (such as stocks, options spreads, forex, etc.).  Here are some sources I've found useful for further research:
  • Google search "auto trade stocks" or "auto trade options" or "auto trade credit spread" or "iron condor newsletters" or whatever other keywords you can think of.  There will be tons of sites that come up.
  • - this company acts as the agent or middle man between the alert services/newsletters and your broker -- they take what the newsletter recommends, and executes the trade on your behalf at your broker.  You can see a list of all the newsletters they cover here.  For my autotrading program, I use this intermediary service linked with my brokerage account at Interactive Brokers (IB).
  • - this stock and stock options brokerage also acts as a autotrading agent.  See a list of newsletters and lead traders that you can follow on this webpage.  I have an account with Ditto, and have used the account with both a Ditto autotrade service, as well as a standalone brokerage account.
  • - I'm not a member of this site, but they will take actual results from subscribers of newsletters, aggregate it, and provide that information to their subscribers.  You can see a list of what they track here.
  • - I have not used this site, although I know someone who has subscribed to some services they offer.  They are somewhat similar to, in which they act as the middleman between those who generate trading signals and your broker.  The autotrade section of the website is nicely designed, with the ability to quickly search for various systems and evaluate their performance.
  • - Another site which I have visited, but never utilized.  This site focuses on forex traders, and you can see the leaderboard here.
  • - Last but not least, this is another site focused on forex systems that appears to have recently offered a new autotrade service.  You can also see their most popular systems here.
  • / - Many of the newsletter services you find above can be researched via these review sites.  I've actually contacted some people who posted comments on these sites and have gotten some great feedback.
Like many things, it was a somewhat of a fluke.  I accidentally received information about a iron condor credit spread newsletter late last year, and that made me recall learning about those strategies over a decade ago.

They say something like 90% of options expire worthless, so why not be the one that sells/writes the options and keeps the premium with a 90% win rate?  But here's the catch -- if you write options, the only thing to be worried about is the 10% of the time when the trade goes against you, and your losses are theoretically limitless.

I didn't like the thought of unlimited losses.  But I liked the idea of having a steady "income" via writing options spreads such as iron condors, which at least limits the downside risk.  I wanted to move forward with this trading strategy, but didn't want to deal with having to execute and adjust/roll all those iron condor legs, which seemed like one big complicated hassle.

After deciding to move forward with autotrading, here are the steps I took:
  1. Subscribed to a credit spread/iron condor newsletter service
  2. Opened an account with
  3. Opened a brokerage account with Interactive Brokers 
  4. Requested Global to link the newsletter service and  brokerage
  5. Set the allocation per trade (i.e. % of portfolio or $ amount) for each trade
A big point of consideration are the overall costs.  Depending on your portfolio size, costs can be high as a % of assets and/or profits.  Here's a general ballpark cost structure for stock and options trading.
  • Newsletters range from $30-$150+/month
  • Global-Autotrading charges based on number of newsletters subscribed:
    • 1st newsletter = $70/month
    • 2nd newsletter = $30/month
    • 3+ newsletter = $10/month for each additional
  • Interactive Brokers doesn't charge any fees for autotrading.  But what's interesting is that because all the accounts managed by Global are aggregated under one adviser umbrella, you benefit from reduced commissions as volume tiers are exceeded within the calendar month.
  • Dittotrade doesn't have a monthly fee, but each of their newsletters/alert services have varying monthly fees.  And their commissions are middle/high end of the road, about $6/trade (and additional $.75/contract for options).
  • There are some options brokers which work directly with some credit spread newsletters and either don't charge any autotrade fees (, or minimal $2/trade ( 
    • In those cases, you can avoid the global-autotrading service and monthly charges.  Their commissions can also be as low as $0.75/trade, with no ticket charges.  However, your fills may or may not be as reliable as using the Global-autotrading and IB combo, although it's hearsay and I have no firsthand evidence.
So depending on your portfolio size and/or returns, costs as a % profits can vary widely on a net return basis. For example:
  • Using the higher range ballpark cost figures above on a $5k portfolio, you would need to make a 40+% net profit in a year, just to break even on your autotrading related costs! 
  • Compare that to a $50k account, which would require a 4% net profit annually to break even.  Big difference.
Surprise!  Most autotrade programs I've tried just haven't delivered.  Maybe it was bad luck with the selection process, or maybe that's just the way it is with most autotrading services  Keep in mind my sample size of autotrading services is very small.  But the bottom line is I've lost several thousand $'s on "autotrading research." 

Yes, there has been one autotrading newsletter that ended up meeting/beating expectations, so I am considering scaling up my investment in that program.  I've posted a review of the performance to date on a separate blog post here.  

It has only been less than a year since I began this journey into autotrading services, so I'm still tracking the newsletters I'm subscribed to as well as continually evaluating other potential ones. 

I'm finding that this is not a process that can be accelerated very quickly, except perhaps from others who subscribed to other newsletters and are willing to share their real time results or experiences.

So if you're someone who is interesting in sharing autotrading newsletter results, it would be great hearing from you.  Like any other endeavor, there are some good opportunities out there, but only after working hard (or luck) at uncovering those few autotrading gems.

Moving forward, I will continue to research potential autotrading candidates, invest a small amount in promising candidates as a test, and if results are within an acceptable range, scale up.  Ultimately, I would like to diversify into 3 to 5 autotrading services across various assets classes and trading methodologies.

Stay tuned as this interesting journey continues.