[zdo]

The $!(V@# / DOW Spread

This is a MANY / MULTIPLE years trade campaign of Long Silver – Short Dow.
Have worked this position 7 of the last 10 years
Refer to http://www.traderslaboratory.com/forums/blogs/zdo/
This spread is what has really been going on in that blog. Since the Dow side has had and most likely will have general strength nominally (due to the very money system itself and the symptoms of “quantitative easing”, etc.) I don’t just let the position ride when the Dow is running up. ie I am not extremely patient with this trade – even though for various reasons (vacations, other priorities, etc) I will sometimes just let it ride without any legging. I work it – mainly because that’s just the way I am and also because, for me personally, I’ve learned that most leveraged positions require watching and working them to allay risk anyway. Hence the legging in and out of the Dow short ( and even the occasional long!). Basically, ten 40 point losses is preferable to one 1000 drain and that’s sorta close to the results since around Oct 09 when I started the blog.

The exploration and development of Stay Lines was implemented to give me a very quick, fairly consistent way to leg in and out of the Dow side of this trade.
The long silver side of the position is much more fixed or ‘slow’ - illustrated by the use of a weekly chart for it compared to a half day chart of the Dow and I only leg out of the long on seriously confirmed downtrends .

Note: this trade is in leveraged paper using futures contracts (and leveraged ‘fx’ for fine tuning the sizing of the silver side at times) The campaign is run distinct from long term ‘trades’ in physical metals and campaigns, in distinct accounts / allocation of capital, and in distinct methods and systems. It is also completely unhooked from my intraday trading sessions and other shorter term systems. Generally, I like to spend just a few minutes a day with it during mid session congestion

Charts
Blog used half day futures chart (running 12 to 12 to 12…ET)
Thread will use half day cash index chart (running 1st and 2nd half of day session…ET)
Am running analysis on actual Dow index ($INDU) instead of futures charts, and also being less specific about entry points on the futures because this whole Stay Line deal is one off experimental, unproven, and so antithetical to my usual trading style and methods that I think it’s prudent to even further reduce any appearances that it is ‘trading advice’
Stay LInes are current on the new chart. If you need to catch up, see http://www.traderslaboratory.com/forums/blogs/zdo/

The Stay Lines are a quick and easy, time efficient process. I don’t even look at background to see if my numbers could be tweaked with SR etc.
If price action is below an active red line, I’m short.
If price action is above an active green line, I’m back flat / out.

Enough background . Start afresh – hootless!
If I can (well sort of) frame this as Day 1 (of this whole 10 year campaign so far )…then certainly you can – since it really is Day 1 for you . Point is – the position has not really made its real long term anticipated move and it may be years before it does…

Happy spring to all.

[zdo]

Try this image
Will keep working on image quality.
Suggestions?

[zdo]

Line Changes:
Extended new Active Red Line same angle
Tentative green stay line updated
Alternative dark red trend line added. Will resolve soon.

Position Changes:
None. Flat
( and long Silver btw. This will go unmentioned most of the time…)

Order Changes:
Sell stops at ~ 10,590 Jun to go short 25% net allocated

Comments:
... the scent of a possible trend change...

Also... And throughout this and any subsequent posts
Disclosure! This is not trading advice. Only idiots would consider or construe it to be trading advice

[zdo]

Some comments about Legging in and out of spreads.
I am an intraday ‘high frequency’ trader (HF for me, not for a server farm, btw). Always was, always will be. Yet it was an almost completely opposite type of trading, seasonal positions and spreads , that way back when allowed me to survive the learning curve to intraday proficiency and stability. When I first started trading spreads many years ago, I learned the ‘easy’ way to leg in and out of spreads. I messed up / f - arbed up many a trade but I learned to cease and desist the tricking myself with those tricks. It took me a while to finally learn the hard way not to do it.
But at the same time I quit doing those tricks, I promised myself I would get good enough to come back and leg in and out of spreads profitably… With work and experience, I learned the hard way how to do it appropriately. I laugh now about how naïve I was. If you are a beginning trader and if part of your brains want to leg / spread / arb / whatever in and out of spreads, you can learn from the experiences of others to ‘Don’t do it yet’ or you can learn the hard way to ‘Don’t do it yet’ … either way you will learn… all the best. zdo

[zdo]

Note: Made a small session time frame adjustment / correction to chart setup which required recalibrating some of the lines. This produced no changes to orders / action points

Line Changes:
Extended tentative new red Line same angle. Will activate it (and may raise it by ~ 40 points if aggressive) Monday
Switched to new alternative dark red trend line. Will most likely drop lower one soon.

Position Changes:
None. Flat

Order Changes:
Sell stops moved to ~ 10,614 Jun to go short 25% net allocated

[zdo]

Line Changes:
Activated new Red line, same angle, whole line raised ~ 30 points
Original lower angled dark red trend line deleted. Also lowered whole new trend line ~ 50 points
(“Trend Lines are meant to hold. Stay Lines are meant to be broken” Stay Lines blog circa 12/09).

Position Changes:
None. Flat

Order Changes:
Moved Sell stops to ~ 10,742 Jun to go short 25% net allocated

[zdo]

Line Changes:
Added new tentative Stay Line, same 0 angle

Position Changes:
None. Flat

Order Changes:
(Errata: from 3/29
“Moved Sell stops to ~ 10,742 Jun to go short 25% net allocated”
should have been
“Moved Sell stops to ~ 10,680 Jun to go short 25% net allocated”
I grabbed numbers from cash chart instead of futures )

Moved Sell stops to ~ 10,729 Jun to go short 25% net allocated

[zdo]

Line Changes:
Extended red entry line at slightly lower angle
New tentative Stay Line, same 0 angle

Position Changes:
None. Flat

Order Changes:
Moved Sell stops to ~ 10,890 Jun to go short 25% net allocated

Comments:
Glad I’m long Silver
Glad I’m not short Dow…