It’s not the first time I’m talking about smart money moves in Betfair graphs. Following smart money in sports trading has proven profitable for me when I traded the football odds of Espanyol to win Getafe 6 months ago. This time though the circumstances are different, as the bets have been placed close to the official start time of the tennis matches, leading me to assume that smart bettors waited for the last moment before making their moves. They certainly didn’t have the time to trade out before the off, nor did the liquidity of the events allow them to close their positions.

Would a gambler place such enormous bets due to his addiction? I partially doubt it, but I can’t ignore the sad stories of the past when gamblers destroyed their lives because of their passion. Yet, risking that amount of money on set betting in tennis games is not something that a gambler is used to, preferring more straightforward bets such as betting on the winner, or even quicker events like first game winner!

As I’m writing this, Pennetta has broken Jankovic’ service and is leading 1-3 in the first set, making her the game’s favorite at 1.54 live odds (starting off 2.25). That 30K bet on 0-2 set in favor of Pennetta is looking good! For the “smart money” it’s just another +EV bet, but for the gambler it’s obviously bragging time!

The 5 Year Greek CDS graph shows a couple of notable important levels, such as 3,000 and 5,000 basis points. Greek CDS exceeded 10,000bps during 2011; a fact that led me to do a little research and actually find out a Tyler Durden’s article describing the meaning of such an event. His conclusion in the short post he published in December 2011 was that spread in CDS terms becomes irrelevant. Anyhow, Greek CDS are now close to 9,000bps after an optimistic 7,000bps drop between December and January. Will they breakout above 12,000 or retreat lower to 5,000bps since the new bailout deal?

In the meantime, the Italian CDS graph shows a recent decline but I consider that a pullback actually. Since CDS broke above the resistance level at 250bps, we are surely talking about an uptrend, although it has lost speed as of lately. Maybe CDS retrace back to 250bps before resuming the uptrend. For the time being we’ll have to wait for reactions after the bailout. For instance, one would expect EUR/USD to retest the resistance level at 1.33 after recent events, but investors don’t seem to trust the short-term uptrend, as the currency pair has dropped from 1.48 to 1.26 in less than a year!

7 stocks I’m long since December have increased my trading capital by 18%! These stocks include the biggest winner, PerkinElmer (PKI), and also Kellogg Company (K) that recently bought Pringles from Procter & Gamble. The total cost of purchasing those stocks 2 months ago was $22K. Nowadays the market value of my stock portfolio exceeds $26K. Stop loss and profit target orders have been set right from the start of trading, so I occasionally just scan the market in case I need to move the stop loss higher, securing profits and minimizing the risk. Of course those are not the only stocks I went long in December – meaning I am not 100% correct! The rest of the stocks hit their stop loss orders during the last weeks closing out my positions, costing me about $1000.

When Kellogg Company announced the acquisition of Pringles, K stock gained 5% in a day. Kellogg also announced a cash dividend with ex-dividend date of 28^th of February and I don’t think I’ll be selling any Kellogg shares until then, so $65 more are coming my way (150 shares and declared dividend cash rate at $0.43).

PerkinElmer Inc stock has been proven my best stock pick gaining almost 40% in the last 2 months! Although I was quite happy by Polycom (PLCM) stock pick’s performance gaining 30% much sooner, the daily stock chart of PKI is the best example of a strong uptrend nearly hitting my profit target. Since the double bottom in December and the breakout that occurred later that month, shares are gaining almost each day! What’s more the open gap’s fill in February’s early days helps in order to move the stop loss up, much closer to the current trading price of the stock. I have submitted my sell order at $28, as major resistance is apparent at that price level since 2007 if traders look at the monthly chart! My initial risk had been $200, but now I’m looking to make $1,000 out of this trade for a 5-1 reward-risk ratio!

Polycom’s stock surged yesterday gaining 13 percent on the market’s close proving my 40-days old PLCM stock pick correct! Back then I had applied basic technical analysis on the monthly chart and decided to risk going long PLCM, setting a stop loss right below the last price level the stock price found support. I had also mentioned that I would trade 70% of the position out at $22 but given the strong opening gap I am willing to see how the stock behaves the following days and possibly find a better exit pattern setup in the daily chart.

It is safe to say that the previous resistance support at $16 has been converted into a support level. The stock bounced off the 50-month moving average with notable precision and will likely head north, closing in to the resistance level at $34. Another positive sign is the increasing volume in the daily chart. Would I buy PLCM shares now if I weren’t long already? I doubt it, as the reward-risk ratio would be through the roof. I would most likely look for a pullback for safer trading.

Yesterday’s upwards price move was due to the provider of telepresence and video services posting better-than-expected quarterly numbers which has also led FBN Securities to lift the PLCM price target to $25.

The spreadsheet I created in Microsoft Excel calculated the stake I had to bet on Hoffenheim, in order not to risk more than €1 should the odds drift higher than 2.08. I set my stop loss at that level, since 2.06 had been the most recent peak in the Betfair graph. Judging from the odds movement, there have been two more breakouts till the odds rested at 1.80; probably to some kind of news I have no idea about or sports experts betting at presumably value odds. Anyhow, that was the best performing trade of the fresh trading system I am experimenting on today.

Here is the performance of the system for the first 13 trades in football events. I am including 5% Betfair base commission in the Profit and Loss figures.

Unfortunately I haven’t been methodic enough to keep records for each month of that period. The best winning month is missing (May 2005) and it seems I only have the betting history of 16 out of 24 months. In the past I requested betting histories of a couple of months I had missed and Betfair’s support were kind enough to send me Excel spreadsheets including all the back and lay bets. Since I began writing this post, I contacted Betfair to request for all the betting history between 2004 and 2007 so that I can publish the results combined and make the best of it. Until they get back to me, let’s take a look at some of my trading results.

I began sports trading full-time in October 2004 using a bankroll of EUR2,000, that turned into EUR 5,000 during that month, which led me to withdraw my initial bankroll and keep EUR3,000 in my Betfair account. The following two months until the year’s end, I increased my bankroll by EUR12,000 following the trading system and improving my trading skills as I gained experience. I usually withdrew funds that exceeded the necessary capital (EUR3,000) that the trading system needed, so in December 2004 the ROI reached 227% trading 561 horse racing markets. You’ll notice that the lay bets are more than back bets, since in order to green up after successfully trading the odds, you need to place an extra lay bet. So, I am assuming I did about 3,150 trades during that specific December – some of those back bets are due to races that cost me money and I had to split the loss on all possible outcomes by placing a back bet. Thus, I was making 0.4% per race (EUR12) or 7.5% per day! I keep reading in stock trading forums that successful day traders make 1% of their leveraged trading capital (you have USD20,000 but your buying power is USD80,000), so compared to that my daily ROI at that time was excellent, although I hadn’t the slightest clue!

The first 5-digit profit came two months later in February 2005 (with just 28 days!). By that time I was using a EUR6,000 capital in order to fulfill my system’s requirements, which has been the biggest amount of money I ever used to trade in Betfair. Although I mostly entered twice before I closed a trading position, I needed the extra money to either trade odds of another horse simultaneously, or pick another entry point before cancelling an unmatched bet. The daily ROI was now 6.1% but having doubled the capital that meant bigger profits! As volume of trades and money increased, so did commission but it didn’t concern me. It was obvious I had found an edge without even suffering from drawdown!

March was another record-high month for the system’s performance but then came April which was the first month I made less money than the previous one, dropping to 4-digit figures. The betting history for that month is the one Betfair sent me and it shows that I did 15,000 back/lay bets! That certainly can’t be accurate, unless the Betfair’s spreadsheet calculates the bets differently. I’ll have to wait and see the new spreadsheets I requested for to make safer conclusions. May 2005 was the best month in my sports trading career, winning EUR500 per day!

The summer of 2005 was not that great in terms of profitability in sports trading. I made less money each month till September came and I was right back on track, although still winning 4-digit figures. The turnover exceeded the 5 million euros mark, although ROI had significantly decreased (daily ROI 4%). Drawdown was still not an issue, but I had noticed I was executing way too many trades comparing to how I had started a year ago (40% more!). Maybe being overconfident or eager to return to previous levels of winnings forced me to overtrade, a recipe for disaster.

I kept making steady profits in the following months, never exceeding the EUR10,000 mark again. Worst month ever was March 2006 when I made EUR1,750 while November 2005 had been the month of the biggest turnover (7.5 million euros in 4,700 trades!). The last record of betting history is May 2006 which was also a profitable month. I traded 6.6M euros, made EUR5,800 after commissions and executed 3,000 trades, seriously trying to cut down on overtrading. Yet ROI once again dropped and the first signs of drawdown made their impact on the performance graph.

For a more detailed view of my sports trading system performance I’m afraid we have to wait for Betfair’s response to my request of betting history records. Until then I hope publishing my trading results will help some traders figure out how good or bad they are doing in sports trading, or what to expect in today’s difficult market conditions. I myself have stopped trading the odds of horse racing markets and you may find me nowadays day trading the US stock market or running backtests to find out how my custom indicators would perform in the past!

For those who skipped reading all the above, as a synopsis my sports trading system executed 100-130 trades per day with an average of about 100% monthly ROI for 2 consecutive years.

After half an hour had lapsed, Netflix shares were traded at last day’s high, having filled the opening gap. I continuously entered multiple long positions at that level, being very confident that the stock will at least test the support level. I was long twice at 87.25, which was proven to be the day’s low, but exited tens of cents higher missing the forthcoming uptrend. Perhaps I should have scaled out and let some of the positions run, but the high stock price didn’t allow me to buy a lot of shares. Most of my trades included just 200 NFLX shares, which were enough though to secure meaningful profits due to the volatility.

Day trading Netflix stock didn’t require more than price action in order to make money yesterday. No need to watch for sophisticated indicators, to apply complicated technical analysis or monitor all NFLX-related news. Entering long when the gap was filled even after the support level confirmation and using a trailing stop right below the most recent retracement would have led day traders to exit their positions at the day’s close, making about 10 dollars per share! By setting a tight stop loss a little lower than the support level when the gap was filled (1-1.5 dollars per share) would define that trade as an excellent trade in reward-risk terms! Using lower time frames would obviously improve that ratio enormously! It would be then up to trade management for day traders to take advantage of Netflix uptrend.

Day trading Netflix stock at 15-secs chart - Gap filled

]]> http://www.tradinggraphs.com/stocks/charts/day-trading-netflix-stock-dollars-share-nflx/feed 2 http://www.tradinggraphs.com/trading/beginners/how-to-choose-right-broker-for-you?utm_source=rss&utm_medium=rss&utm_campaign=how-to-choose-right-broker-for-you http://www.tradinggraphs.com/trading/beginners/how-to-choose-right-broker-for-you#comments Mon, 02 Jan 2012 09:50:03 +0000 Amanda Tradwick http://www.tradinggraphs.com/?p=2286 Deciding to start investing or trading stocks can be intimidating for many. Even understanding how to read the stock market pages and graphs can seem like trying to read hieroglyphics. Working with a broker can help you better make sense of your options and learn what you need to know to make smart investing decisions. Choosing the right broker to work with is just as important as determining what stocks to trade. Here are some key issues to consider to help you determine the right broker for you:

Type of Firm

There are two types of brokerages:  a discount brokerage and a full-service brokerage. As their name implies, discount brokerages offer charge lower fees, but their services are pared down. Full-service brokerages charge higher fees, but they offer a more extensive range of services. Full-service brokers can provide reports and research about stocks and other investment options, give trading tips, and offer professional guidance throughout the investing process. If you are comfortable doing your own research online, then a discount brokerage may be right for you. But if you are a beginner, or need more guidance, you would benefit from a full-service broker.

Fees

There are many possible fees associated with your trading account. Some brokers may charge you a regular maintenance fee just for keeping the account open, whether you are actively trading or not. Others may simply charge you an inactivity fee if you have not made any recent trades. All brokers will charge you a commission when you either buy or sell your investments. Some will charge by trade, but others will charge by the share. So if you are moving a large number of stocks, a broker that charged a commission by the trade would be a better deal. Determine how active you expect to be with your trades when you decide what type of fees your budget will allow.

Account Requirements

Different brokers have different account requirements. Most often, a minimum account balance may be required. This can be as little as $100 for a discount broker, or several thousand for other brokers. Make sure you are comfortable with these requirements and are willing to invest that much to start. Other requirements could include minimum trade balances, time limits, and more.

Investment Options

Not all brokers trade in all types of investments. Some only trade in domestic markets, while others will trade in markets all over the world. Some only deal with certain types of investments, such as particular types of stocks, commodities, or shared investments such as mutual funds. If you have preferences for the types of investments you want to make, be sure to look for a broker who can accommodate them. Choosing a broker with a range of options is also a good idea so that you don’t feel limited once you become more comfortable in your investing knowledge and are ready to try out new risks.

Service and Support

Finally, one of the most important qualities of a broker is the type of service and support you will receive. Can you reach your broker easily by phone or e-mail? What type of support services are offered? Do you have to pay extra for these services? You need to trust your broker and to feel that your needs will be met. If you don’t feel this way during your initial interview, or in the early days of your relationship, switch to another brokerage.

Choosing a broker is an important decision that can affect the success of your financial planning. Be sure to consider each of these issues when you are researching brokerages and interviewing individual brokers. Your long-term financial success may depend on it.

The 2012 holiday calendar showing all stock market holidays of this year has been made available at Interactive Brokers website. Traders may keep the PDF files in their computers or install the application in their mobile devices to keep track of not only NYSE holidays but Europe and Asia-Pasific holidays as well. A holiday calendar can help traders prepare their trading schedule or plan for spending time with their families when most stock markets are closed. Besides financial and stock news are mostly expected to hit the street when markets are open, so the 2012 holiday calendar might come in handy to people interested in economics and finance in general. Finally, currency trading is not recommended during stock market holidays, therefore forex trading should be avoided during 2012 holidays.

EUR/USD tested the resistance level of yesterday’s pivot point at 1.3242 before falling down to the S2 pivot point for a 200 pips’ decline, hitting the low at 1.3009. The breakout pattern at the 15-minute forex chart was the signal that triggered my trading order and I was short EUR/USD in the middle of the day at 1.3158. Twenty minutes later I was scaling out 80% of my position buying 80,000 euros back at 1.3100 and letting 20,000 short, in case the currency pair decides to go to uncharted depths. From the looks of the daily chart Euro is not going up any time soon.

The candlestick that initiated the breakout signal at the 15-minute forex chart was a candlestick with no shadows, which is interpreted as great selling power overcoming the support level. The inverted hammer at the hourly EUR/USD chart had already got me prepared for a possible downtrend. Besides, I already predicted a decline a week ago.

The common question that comes up after a breakout forex signal is how far down or up the currency will move. This time I based my exit strategy on the daily pivot points. Quite often I find the pivot points levels quite reliable when forex trading either the cable or other currency pairs. So, I traded out 80% of my initial position at 1.31 winning more than 500 US dollars.

I am now short EUR/USD for a remaining 0.2 lot. Certainly that isn’t a big amount of money when forex trading is in question, but having the opportunity to make more money at zero risk is an investment I am always willing to make. Zero risk is due to setting my stop loss right below the price I entered the market, close to 1.3150. Scaling out allows me to take advantage of the downtrend, since the remaining 0.2 lot may actually win more than the 0.8 lot I traded out! And I have no doubts Euro will end its decline in the next weeks or months.