Another recap of what I was doing in October on my trading adventures. I had written a September Recap previously. FYI, I have gotten more involved in the past and this is just my latest attempt. I find this stuff really interesting, so it is easy to put an hour into it here and there.

Super Trader - Van Tharp

I read this book next. It has a number of short chapters about a variety of topics for people wanting to trade actively, techniques, controlling emotions, creating a plan, etc. Not a great book to start with, but a nice easy read if you already have some good background knowledge.

The Complete Trading For A Living - Elder

Another read recommended by someone. Quite interesting and discusses a lot of different strategies in depth. He also proposes his own strategies. Worth a read and you will find it quick to read if you already have read similar books first (like Van Tharp's).

Continued Paper Trading

Same as last month. Used a few techniques and the TradeScores website. Decided I will publish my results. You can read more about it my Paper Trading Results, which also has a link to my spreadsheet where I kept track of them. If you care to try and decipher what I did...haha.

Interesting profit/loss behaviour at this point too. Because you get stopped out of bad trades earlier, I had losses for the first while in terms of actual closed out trades. Now I'm left with my winners which are slowly getting stopped out as I've adjusted the stops higher, so the P&L is starting to get back to even and my spreadsheet doesn't show it, but the increased stops are locking in quite a bit of the "fake" profit.

All trades in here were done using the "Basic Long" and "Basic Short" market scans available for free from StockScores website (basically just a way to filter down some stocks to ones that might be of interest to you...you still have to do your own analysis after that point).

Overall, the markets were stronger in September and October for what I was trading. So I do believe my performance was skewed a bit as I rode the general market.

Wrote Down My Plan

Created documents on Google Documents for the following things:

• Trading Objectives - What do I really want out of this and what do I think is realistic in terms of risk, time I can allot (I do work), and other criteria.
• Self Assessment - What are my strengths and weaknesses and how can I leverage them for the better or reduce their impact if they are negative.
• Strategy #1 - Detailed description of my system to find stocks in a bullish trend and the criteria they need to pass to be trade-worthy.
• Strategy #2 - Detailed description of my system to find stocks in a bearish trend and the criteria they need to pass to be trade-worthy.
• Spreadsheet for tracking the performance of my "real money" trades and calculating the statistics on them as a whole.

Lower Commissions Trading Account

Opened a trading account with Disnat and transferred over my existing self-directed portfolio. There is a promotion to receive materials from Stockscores, plus there platform is a little more full-featured with very cheap commissions.

Membership at StockScores

Got "Pro" access to StockScores. Reviewed strategies and watched all the "Advanced" videos and a few of the "Pro" strategy videos. Received the book in the mail too, which has a bit more depth and is just easier to read in book format too. A lot of it is similar to the book "Trade Your Way to Financial Freedom", but it is a bit simpler so is a good refresher. The value in Pro membership are the more detailed 'market scans' you can use on their site to find stocks trading in an unusual way that may indicate an opportunity.

I've gotten through 1/3rd of the printed book, so still have some time to spend there.

Started Trading Again

Did my first "real money" trades using either of my two strategies.

Trading Journal

Created a binder to serve as a "journal" that contains the following:

• Objectives
• Strategies
• Instructions on how the journal works.
• Two page layouts of each trade. First page (left hand side) is chart with lines drawn on it and basic information about why I did the trade. Second page is the chart on exit with analysis and final metrics. Google Documents is a great way to do this as you can write everything in there (even put the chart images) and just print off the pages for the binder as needed.
• Lessons I've learned at various points and changes I will make to my strategy.

Helpful Software

Installed SnagIt. A great tool to take a screenshot of a chart and then mark it up with areas, lines, and some text. I use these in my journal entries.

Mentorship

Email conversations with the StockScores group. They will answer educational type questions, which has been helpful.

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I wrote about starting to paper trade again in September. I had developed a good little system for myself and was using the sight TradeScores as the helpful tool to manage it all.

I ended up creating my own spreadsheet to review numbers the way I wanted too. If it looks confusing, it is probably because I created it and I like a lot of numbers. Check out my Paper Trading Results. Note: This gets updated occasionally, so you may notice the figures change from what is stated below.

The Quick Summary

Anyways, as of the end of October, this is the quick review of how it went and what I noticed:

• I had 38 trades throughout September and October. Several factors get to this number. One being how often I took the time to sit down and look for trades. Second, I was using two simple strategies for filtering so was limited by what it was able to find. Third, I did try to not trade too much to simulate what I would be able to do with a real account size (only so much money to invest with). Fourth, I did want to clear 30 trades to get an realistic view of the strategy (for this market).
• My expectancy, as of October 29th, is 0.42. That means that on average, I would expect a return of 0.42 x my risk across all my trades. So if I risk $200 a trade. Then I would get $84 a trade. Across 30 trades that would have been $2,520. I like that it is a profit, but the number should definitely be higher. If you don't understand this concept, you should read Trade Your Way to Financial Freedom. I prefer thinking in these terms vs. percentage.
• If I analyze profit/loss for closed out trades (I no longer own them), I was negative up until today. Because I closed out my losers (stopped out) early so thus took early losses. While my winners take longer to form and I'm still in a lot of them (though I have stop losses in place to protect a lot of the earnings). So the lesson being, when starting out, you would definitely need some buffer room to protect yourself until you start to get out of the winners.
• Some of my trades were actually bigger than what I could do. I was using risk technique to say how many shares I should buy. That would be larger than what I could actually do in some scenarios. So that can help rule out a stock sometimes.

Conclusion

I like the system and learned a few things from it. I will continue to use it. I find that I am doing some real trading now, so stocks that make the final round of consideration, but not the cut have been going in there to keep track of. I also use it for testing alternative strategies I'm looking at.

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So I started learning more about stock trading again as of August 30th, 2010. I have done lots in the past, but have been more passive about the past few years (since 2006/07 maybe).

What have I done so far? Well here is a list:

• Paper Trading (fake stock trading) using the TradeScores website to keep track of the trades. It is a good tool as it will execute stop losses automaticaly for you, provides comments section to write down information, and keeps the basic metrics that I am measuring my system on. I use StockScores website to filter stocks I want to trade and apply other strategies I have learned for when to exit on how big the trade should be.
• Read the book Trade Your Way to Financial Freedom.
• Started to read Super Trader.
• Took Dr. Van K. Tharp's Trader Test to see what personality of trader I am and then read the free documentation he has to go along with it. It is a PDF with some links back to his website too.
• Did some reading on-line. In particular, there is a decent blog that lines up with my other readings called TraderMike.net.
• Read up on Wikipedia about Fibonacci Retracements and then again on Investopedia's Fibonacci Retracement page. It is a form of exit strategy on stocks.
• Created a trade tracking spreadsheet to monitor my progress, provide position sizing recommendations for stock purchases, and record brief notes on each trade.
• Wrote out my Objectives for what I want to do for my trading program.
• Documented my first "system" that I want to use. It appeals to my personality, but enforces some rules to keep me on track. I'm testing the system right now in paper trading.
• Created a to-do list for what I want to do next. Items like re-evaluate trades and what went wrong/right with them, pretend I used a different stop strategy on them and see what results would have been, research some other topics I have heard of, book list to read, accounts that need to be set up, etc.
• Downloaded Van K. Tharp's positioning sizing game. It shows you how results might change based on how you size the trades you make.

I am not trying to be too vague here either, but I am not putting much detail into each item at this time. I will try and do separate articles on them. I think I may recap my learnings for each month as well with a highlight of some of the trades I did (paper or real) and an analysis on where I went right or wrong on them.

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I've started paper trading again. I'm always interested in the stock markets and I wanted to prove out if I could find a system that works for "me".

My doubts are that I want to spend too little time on it so it may be too "lazy" a system and it isn't really possible to earn money off it consistently.

Criteria

Basically, I have a full-time job, but do have time in the evenings (as I find trading super interesting) to do a bit of reading and check up on things. My goal is to have a system that has the following objectives:

No more than an hour a day of my time (once system is developed...will put in more effort for first few months).

I cannot conflict with my employer. So do it after work so it would be looking at end of day data. With trades and stops being inputted in the off hours.

Trading trends with a goal of not holding a stock for more than a month (unless that trend still looks good of course...but I want to see good movement within the month). Otherwise I consider it a failure and will get out of it.

Long and short trades.

Wouldn't risk anymore than 1-2% of capital on any trade (so stop out with commissions no more than 1-2% of total account size). I realize that stock could gap overnight and I would get burned occasionally.

Tracking Progress

I read a book called Trading Your Way to Financial Freedom which provides useful metrics and tools to evaluate your system. I created a spreadsheet to track this and I'm also using the Stockscores trading simulator to handle my fake trades. It allows you to enter stops, comments, and records performance data of your trading.

Update: October 30th, 2010

I have posted my summary of results and a link to the paper trading spreadsheet I keep in it.

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I'm reading Trade Your Way to Financial Freedom right now. Excellent book, in my opinion. I had stopped doing any type of trading personally a couple years ago, but I have always found it interesting so decided to get active in it again.

I'm only going to "paper" trade for right now. This is "fake" trading to see how your performance is before ever risking any real money. A way to prove out a system somewhat to see how it would have done if you traded real money (though if you traded real money it would then have some "effect" on the market and may change the outcome).

"Trade Your Way to Financial Freedom" is a great book that isn't about teaching you any specific system on how to trade, but it is more about how you evaluate the system you are using and yourself. It does briefly cover a variety of strategies and their basis. Not recommending one or the other, but discussing what is commonly used out there and why it may appeal to different individuals.

Personality

Chapter 3 has a great list of questions that you need to answer about yourself and try to gauge your capabilities. Items like:

• How much time do you have to trade? Do you already have a full time job?
• What is your risk tolerance? Will you lose sleep at night if you have money tied up in the markets?
• What skills do you have? Good at math? Good with computers? Analytical?

Analyzing the System

A lot of terminology is used here but explained very clearly. Reward to Risk ratio is commonly used to guage how good your returns are compared to the risk you are taking. Position sizing is touched on. I'm only 3/4's of the way through the book, but it has been excellent. I recommend the read to anyone thinking of getting into it.

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I have always wanted to do a site for fake trading stocks and options, but I get it started and just don't take the time to polish it up.

I recently found a site that does just that and has an excellent interface and layout. It is called The UpDown. Basically, you sign up and get a $1,000,000 of fake money and you can make trades. What makes this site different is the communication and analysis tools.

Why The UpDown Is Great

It almost feels like a real web brokerage with the various tools you can use to research the stock. It also allows you to post your analysis of the stock when you do a trade (or even if you aren't doing a trade). These short analysis articles by users are viewable by all and have a rating system. You can see the top rated ones for bullish and bearish perspectives. You also can see the other users' performance and portfolio values.

You Can Earn Real Money!

On the site, they describe how you can earn money fake trading. Basically, you have to outperform the S&P500 over a given time period and refer friends to use The UpDown.

I'm going to try my hand at it to see if I can learn more and maybe get paid out a few pennies here and there.

Areas Of Improvement

First of all, I live in Canada. I cannot trade any of the TSX stocks on there yet. Some of the stocks that are traded in both countries make it not a big deal (like the Nortels and the RIMs), but it would still make it a lot more useful.

Secondly, there are no options. This would be quite handy to test out more aggressive trading strategies.

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Well, I decided to get back to my stock picking exercises on a more regular basis to see how it goes. Lately, I have been playing with the StockScores method. You can read more about it in my StockScores and Analyzing Stock Picks article. I have yet to get it to work consistently by the way, but I haven't given it a fair chance yet either.

On August 24th, 2007, I picked Polar Resources on the Venture Exchange here in Canada. (VLR is the symbol). You can read about my reasons in the Polar Resources article. Basically, it fit criteria that I thought were a good fit for the StockScores method. This would be good StockScores, good chart pattern, and unusual volatility.

Anyhow, I am sad to say that, as of August 30th, it halted trading. The news release on the TSX website stated it was because of pending news, but that has not come out yet.

So this is definitely the worst paper trade I have had so far with this method. A full loss at this point as I cannot even sell the stock. The only thing worse is if they actually went off the market. I will wait and see where it goes. If there is positive news, then things might be all good.

Where Did I Go Wrong?

As far as using the technical indicators, I think it was still a good pick. Stockscores does not look at the fundamentals, but if I had, I would have noticed it has a negative earnings-per-share right now. But because of the positive technical indicators, it suggested perhaps a positive announcement was coming out.

I'll revisit this stock in a couple weeks or when it goes back trading once the 2 weeks now, pending news comes out.

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It has been a while since I did the stock picks, so I think I'm going to get back into it. I'm in the process of developing another side of my website that caters to this sort of thing. I find that paper trading is difficult to keep up with. An organizational scheme and a bit of automation should help with it.

Anyhow, I was playing with the StockScores website again and came across Polar Resources Corporation. This is a stock by the symbol of PLR that trades on the TSX's Venture Exchange.

If you remember my articles on StockScores, then you know that it takes certain criteria to make a stock worth picking in their system. I'm still trying to see if I can paper trade (fake trade) using this system and get some sort of steady results.

PLR has a signal score of 98 and a sentiment score of 73 at the end of today. This is worthy of taking a look when it has these scores. Looking at the graph, you can see that it recently broke through to a new high price on unusually higher volume of trading and has been increasing consistently over the past 6 months.

PLR

If I bought into the stock today, I would pay $0.265/share. I would also say it is reasonable to expect support at $0.17. If it falls below this, it would be time to sell the stock, no questions asked.

So let's pretend we purchased the stock and I will recap in a week and a month where it has gone.

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This is part of my recap series for stocks I selected based on the StockScores strategy. If you didn't read the original article, here it is.

Stock Picks for February 16th

I wrote another article on this strategy called StockScores and Analyzing Stock Picks. The basics are certain statistics being in the recommended zones and a good chart pattern. I wanted to prove this strategy for myself and try paper trading.

Recap of My Picks

If I sold everything from the 16th today I would have had an actual return of -14.6%. The markets have been brutal so read on to see why.

All my picks met the criteria of a StockScores Sentiment score of at least 60 and a Signal score of at least 80. These are two numbers calculated and provided free of charge by StockScores Analytics using there "secret" formula.

The first was ETG on the Toronto Stock Exchange (TSX). It broke resistance. Bought at $2.03 and put in a stop loss at $1.75.

Since Then: Last traded at $1.60. Nothing but down.

Action: I would have sold at $1.75 and taken a loss on the position.

Where Did I Go Wrong? There was resistance in November at a little over $2.00. This could have limited the gains. I think the biggest problem with this stock in the short term was a small upside in comparison to the downside.

T.ETG

Next up is TTH on the TSX. It had recently broke through some resistance and had dropped. I thought it was a good opportunity to buy a correcting stock and then ride it farther up. Buy at $2.20 and stop at $2.00.

Since Then: It did go up to $2.30, but has since dropped to $1.88.

Action: It was sold. Another loss.

T.TTH

Now for PTM. This trades on the TSX as well. It was classic. Broke out on high volume. Buy at $2.98 and stop loss at $2.55.

Since Then: Big drop shortly after my buy, but not too my stop loss. It is down to $2.58 right now.

Action: Hold on, but keep a watchful eye.

T.PTM

Last is CPX on the TSX. Broke resistance on volume. Buy at $6.83 and sell at $6.00.

Since Then: It has slowly dropped since it's big spike. Trading today at $6.14.

Action: Hold on, hold on, hold on.

T.CPX

Overall

Here are my overall numbers. We will assume I put $2,000 into each stock and paid $30 on commission when I bought and would pay the same if I sold. If I exited all my positions from the 12th today. Here are the numbers.

Stock	Purchased	Sold	Change	Profit After Commission
T.ETG	$2.03	$1.75	-13.8%	-$335.86
T.TTH	$2.20	$2.00	-9.1%	-$241.82
T.PTM	$2.98	$2.58	-13.4%	-$328.46
T.CPX	$6.83	$6.14	-10.1%	-$292.05
Total			-11.6%	-$1168.19

What a brutal set of picks. For your information though, the market has been dismal the last couple days. There has been turmoil overseas and the DOW had its biggest one day drop since 911 five years. When I factor in my commissions I would suffer a loss of -14.6%. Also, I would have only held on to 2 of the stocks, so I would have the leftover money from the sales to enter into new positions in the future.

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Okay, this is my first recap of my stock picks from February 12, 2007. If you did read that post, here it is.

Stock Picks for February 12th

Basically, I am trying a strategy I learned at a seminar put on by StockScores. Tyler Bollhorn was the speaker and it was a very interesting look at technical analysis. I wrote another article on this strategy called StockScores and Analyzing Stock Picks. The basics are certain statistics being in the recommended zones and a good chart pattern. I wanted to prove this strategy for myself and try paper trading.

Recap of My Picks

If I sold everything from the 12th today I would have had an actual return of -2.6%. Read on to see why.

All my picks met the criteria of a StockScores Sentiment score of at least 60 and a Signal score of at least 80. These are two numbers calculated and provided free of charge by StockScores Analytics using there "secret" formula.

The first was THR on the Toronto Stock Exchange (TSX). I said the stock looked like it was trending up. I purchased it at 11 cents and had a stop loss if it went below 9 cents.

Since Then: Last traded at 10 cents. It has gone as low as 9.5 cents but has not crossed the stop loss threshold. I would still be holding on to it and today it had a 72/69 Signal/Sentiment. It looks like it is ready to make a move in one direction in the near future.

Action: I'm going to hold onto it and we'll look at it again in the next review.

T.THR

Next up is HNT.UN on the TSX. It had recently broke through some resistance and things looked positive. I purchased at $2.74 and my stop loss was $2.40.

Since Then: It did get up to $2.80, but has gone back down to the $2.70 I purchased it at. The Signal/Sentiment is 63/67. It looks like it has leveled off for a bit after its burst through resistance.

Action: I will definitely hold this for a bit longer to see what happens.

T.HNT.UN

Now for RBO.UN. This trades on the TSX as well. It had broken through resistance on lots of volume just like a good stock is supposed to, so I had a buy at $9.35 and a stop loss at $9.00.

Since Then: It went a little bit higher after I purchased, but has slowly gone down since. Closed today at $9.10. Only 10 cents until my stop loss. The Signal/Sentiment has gone to 64/70 as well.

Action: Same as the rest so far. Hold on.

T.RBO.UN

Last is EMC on the TSX. It broke through resistance on a ton of volume on the 12th. I had a buy at $11.38 and the stop loss was $10.50.

Since Then: This has been the most interesting stock since then. It cleared $14 shortly after. It has dropped recently and is down to $13.05 as of today. This is still pretty good though (14.6% before commissions). However, what will happen next?

Action: Hmmm, this is a tough one. Can get out with money and feel like a real winner, right? Exit strategy was not taught by Tyler in the seminar. Signal/Sentiment is still 79/76, which is pretty respectable. I would be tempted to hang on, but it has dropped off pretty good of late. I am going to hold though. I think it has more room to grow.

T.EMC

Overall

Here are my overall numbers. We will assume I put $2,000 into each stock and paid $30 on commission when I bought and would pay the same if I sold. If I exited all my positions from the 12th today. Here are the numbers.

Stock	Purchased	Sold	Change	Profit After Commission
T.THR	$0.11	$0.10	-9.1%	-$241.82
T.HNT.UN	$2.74	$2.70	-1.5%	-$89.20
T.RBO.UN	$9.35	$9.10	-2.7%	-$113.48
T.EMC	$11.38	$13.05	14.7%	$233.50
Total			1.5%	-$210.99

Okay, before you scream out load. How is it possible I have negative profit but positive percentage change? Overall, my one gainer outweighed the three losers, but my commissions would eat into all those gains. With the puny little $2000 I am putting into these stocks, the commission eats up 3% of my initial purchase price. I calculate this by taking my stock costs (4 x $2,000 into each stock = $8,000) plus the commissions (4 x $60 = $240) for a total investment cost of $8,240 and dividing into it my gains/losses which are -$210.00. So my actual return is -2.6%

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