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January 20, 2013 / redman59

Adjusting My Forward Trading Strategy

One of the most difficult things as a trader, parent, and having a full-time job is creating that balance between them all.  As of late I have had the most difficult time balancing all three.  More recently trading has come to the least priority of those three.  I am grateful in that I have a full-time job that lets me have a comfortable life that allows me to trade.  But recently assignments have come to where I must let that full-time job override trade priorities.

If you have been a reader of my blog you know that I love options.  Unfortunately many of the strategies I use require intra-day monitoring or intra-day adjustments.  With recent life demands, I haven’t been able to monitor these intra-day moves as much, thus creating slippage beyond what I deem comfortable.

Sure you may say that alerts can negate these demands, but also at times I may not be able to see these alerts from 2 hours minimum to maybe EOD.  Not exactly what I like.  So with this I have created a trade strategy adjustment instead of taking myself out of the game.

Right now I am concentrating more on pairs trading more than anything else.  What I love about pairs trading is that it can be very beneficial during times of volatility and be beneficial when you can’t monitor the market that much.  I believe in a a rising tide lifts all boats, and if you pick a leader over a laggard you can benefit (even thought the rate of pace not be as high); or if the market falls then your position should be neutral or leading.

Recently I posted on the stream a trade I took in a pairs trade.  In this trade I went long Vitamin Shoppe (VSI) and shorted GNC Holdings (GNC).  These two stocks are within the same industry and below is the chart I was looking at focusing on oversold signals in RSI and %R aligning with a support point:


This trade was posted Jan 12th on Twitter, taken by me on Jan 11th at a cost basis of 19.79, so a trader could have entered at a lower price. I posted this trade on the 12th as shown below in my tweet that was retweeted by @Rhino_Cap (thanks!):


These were some patterns I noticed that also aligned with my current trading monitoring and strategy.  With these I will look at them more on of EOD basis while setting profitable stops instead of stop losses.  Call me a skeptic but HFT and other market hunting phenomena has me leery of sell stops and that is what I love about the options market as your stops will not be sought/hit.

As a trader you have to know when to adjust your overall strategies as I am quite picky with my entries when looking at those intra-day option strategies as cents can make a difference.  So when other factors come into play that make me sacrifice those cents then I must adjust my plan.  As of right now I must say that pairs trading (no options) is my strategy.  This requires less monitoring and less position volatility.  Hopefully I can return to a more active stance on market monitoring, blogging, and stream posting; unfortunately for now it will be more haphazard.

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  1. redman59

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