tactical trader

Those of you who know me will be well aware of the contempt I hold for the 'gurus', the media tarts who ply their wares week in week out on the popular programmes or hard sell their foolproof seminars and systems with no accountability whatsoever.

Rob and me have tested (and foolishly bought) enough of these over the years to know from direct experience that they are not worth a dime.

With this in mind I was delighted to recently be invited to spend time with a very private group of traders who very few would know existed. The reason? These guys (and two ladies) just get on with making money and have no interest whatsoever in being in the public eye or teaching other people what they do and how they do it. I suppose it is a bit like the traders in Jack Schwager's famous book and my aim in meeting them was the same as his, to see if I could learn from them.

What an eye opener, to spend a day shadowing each of these people is probably the most illuminating learning experience I have had as a trader and I urge every one of you to do the same if the opportunity should present itself.

Meanwhile back down to earth I thought the Queen had died and I had missed it all, there were minutes of silence all over the place, extended news reports and all the other hallmarks of the recreational grief we became so good at after the passing of Diana.

What had actually happened was that a footballer had died. A footballer that had his fame years ago and was widely known to be a womaniser and a drunk. Not only was this person a relic of a bygone era (what is it with nostalgia and this country?) but he appears to have brought the illness that killed him on himself.

So why is this person subject to such an outpouring? It beats me.

Back in October I posted about a new indicator I was intending to test out (Introducing CTI350). It's been 4 weeks since I starting posting so here's a summary of the results so far.

• Amusingly, after a bad week last week, the "success" rate for the indicator has fallen to just 50% - out of 20 days CTI350 was right 10 times.

• The most consecutive days where CTI350 was correct was 4.

• The most consecutive days where CTI350 was wrong was 3.

• The biggest range on a day where CTI350 was correct was 169.78.

• The biggest range on a day where CTI350 was wrong was 172.82.

Now you may think with these results that it's not worth carrying on, but 20 days is hardly enough data to draw any real conclusions. In this short time a number of patterns have emerged though.

One example is that the weeks where CTI350 did well had larger ranges that the weeks were it did badly. For example the best week for CTI350 (4 out of 5 days correct) had an average range of 49.66, whereas last week where it did its worst had an average range of just 25.02.

I don't intend to make any changes to the settings used by this indicator at this point. I'm going to carry on as is for at least another month and see how things develop.

ClearType is the technology used in Windows XP and 2003 to make text appear smoother on LCD screens, however the default settings may not be the best for your system.

If you use Internet Explorer you can tweak your ClearType settings online here: ClearType Tuner.

Alternatively you can download a PowerToy for Windows XP here: ClearType Tuner PowerToy.

The screenshots below show how different ClearType settings change the appearance of the Tactical Trader website.

ClearType Off

Here you can see how text has no smoothing making it appear jagged.

ClearType On - No Tuning

Here you can see how the default ClearType settings make the text appear blurred but smoother than when it is turned off completely.

ClearType On - Tuned

Here you can see how tuning the settings makes the text appear clearly, making it easier to read. This is how I have my system configured.

For the past week and a half I've been doing lots of reading on energy (particularly oil), covered warrants and ETFs. This was prompted by the scare stories that were beginning to circulate on the news about our most severe winter ever and the doom this will spell for all of us (the Met Office were a little more realistic - forecasting "colder than average temperatures").

Now things may not get quite as bad as in The Day After Tomorrow, although stocking up on thermals may not be a bad idea, but if this cold spell does come there could be some good trading opportunities.

As in many parts of the UK, the USA has also been seeing some warmer than normal weather this autumn, which has lead to lower demand for energy to heat homes (last week the reduction was estimated to be 20 - 35%), which in turn lowers demand for oil and gas, taking prices lower.

One of the aspects of my research has been to look for ways to potentially profit from a surge in demand if and when the big freeze happens and one type of product I've been looking at is the covered warrant.

If you're not familiar with warrants, there is a good introductory guide on Incademy and I'll also be writing an article on them in the next month.

Having read the theory and understood the products available, the next step was to get a real understanding of how they work when real money is used with a real trade!

So yesterday we (Steve and I) became the proud owners of several oil warrants. If oil goes up above $60 a barrel in the short term, we make a profit. If it falls to about $55 a barrel we lose.

Obviously we're looking to make a profit on the trade (it'd be nice to see oil turn back up!) - however that is only one reason for the trade. The other is to see how the price of the warrant changes in relation to the underlying, to appreciate how many times the warrant is traded in a day, and how easy or hard it is to simply place the order.

So look out for some articles on warrants and energy trading from me in the near future - and I'll post an update on the warrant position when I know how it's gone!

So much for Branson cleaning up the financial services industry, I read recently that the Virgin UK All-Share Tracker fund has the second highest expense ratio and it is more than twice that of the top five.

Now correct me if I am wrong, trackers are not based on differentiation, one all share tracker is meant to do the same as the next so how can these high charges be justified, especially when they occupy the St Branson platform?

This is a disgrace especially when the website claims that you will always get one of the most competitive deals around.

So if you have fallen for the Virgin myth one thing can be in no doubt, you are losing money so do something about it.

I happened to turn on the TV this morning, something I try to avoid at all costs because it is so annoying. Anyway, they were all shocked that a young lady had been knocked out of some kind of talent show at the weekend, nothing particularly newsworthy there but here is the shocking thing, thousands of people had texted and emailed to express their indignation (although I suspect that might be too big a word for the people who do this kind of thing)

I was amazed, have these people nothing better to do? Are their lives so lacking in purpose that they feel compelled to take part in this nonsense? Maybe it is me, my wife constantly tells me I am turning into Victor Meldrew but I have to say I would rather be him than someone who has to text a TV station in support of someone they do not even know on a show that is pure Saturday evening pap.

So, with that out of the way what does this week have in store in the markets for me? Rob has been refining some new indicators which will be tested on a basket of US indices so I am looking forward to that. I have another free seminar to do at Interactive Brokers and GNI have asked me to talk to some of their clients about Psychology which should be fun.

I will also be making some purchases in Gold and Japan, Gold for obvious reasons and Japan because the news is making me feel a bit contrarian on this one. I am also keen on Silver but I think this particular cat is out of the bag now and that is not always the best time to get in so I will tread carefully on this one.

Finally on the equity front we are going to ditch several of our 'rangers' and replace them with new ones, several great opportunities have revealed themselves in recent weeks and I think these will allow us too maintain the 10% monthly target for this particular strategy.

That's it for now, I am off to do some texting...

The first port of call on my CFD account adventure is to look at the service providers offering direct access products.

The word on the street always seems to be that DMA is better for the active trader.

I will be looking at the non-direct accounts later, but for now I am finding as much information as I can about the DMA platforms.

So far I have found 3 providers that offer direct access CFD accounts - IG Markets, e-TRADE and GNI Touch.

This is currently a brain dump - at some point I will be tidying this up and knocking up some comparison tables.

The features of these accounts are outlined below.

IG Markets Pro

http://www.igmarketspro.com

Trading is based on actual market price, with IG taking commission on trades.

For UK stocks the commission is taken as a percentage, with a minimum commission per trade.

UK Stocks SETS 0.15% £10 minimum
UK Stocks non-SETS 0.15% £15 minimum

For US stocks the commission is in cents per share, again with a minimum commission.

US Stocks 4cents/share $15 minimum

For European and Australian stocks, it is also percentage based.

European stocks 0.20% €15 minimum
Australian stocks 0.20% AU25 minimum

Funding rates that apply will be the inter-bank offered rate for the currency that the trade is denominated in, plus/minus 2.5%. For example, a funding rate of LIBOR +2.5% will apply to long positions in UK stocks.

Personal accounts include following data feeds free:

LSE Level 2 data
NYSE Level 1 data
AFX News

There are various fees for additional exchange data.

Margin levels vary depending on stock type.

I can see neither monthly fees nor funding requirements.

e-TRADE CFDs

http://www.etradeprofessional.co.uk

Offer a 10% margin on a minimum deposit of just £3000 (or equivalent in EUR or USD).

E-TRADE offer two pricing structures - first is commission based:

UK Stocks SETS 0.2% £20 minimum
UK Stocks non-SETS 0.2% £20 minimum

For US stocks the commission is in cents per share, but handled slightly differently as it changes depending on the price of the stock.

US Stocks ($0 - $10) 3cents/share $19.99
US Stocks ($10 - $20) 4cents/share $19.99
US Stocks ($20+) 5cents/share $19.99

The second pricing structure is flat fee based:

FTSE 100 £9.95
FTSE 250 £9.95 + fixed spread of 4 basis points
European Shares £9.95 + fixed spread of 4 basis points
US Shares £9.95 + 2 cents per share
UK Indices £9.95 Flat-rate with fixed 2 point spread
European Indices £9.95 Flat-rate with fixed 3 point spread
US Indices £9.95 Flat-rate with fixed 5 point spread

CFD Long Overnight Positions You Pay: LIBOR plus 2.5%
CFD Short Overnight Positions We Pay: LIBID minus 2.5%

Level 2 Interactive is free to all E*TRADE CFD account holders.

GNI Touch http://www.gnitouch.com

GNI also offer two pricing structures - one for 'standard' traders and one for 'active' traders.

The main difference is active traders have a minimum £12.50 fee, versus £25, a commission of 0.2% versus 0.25% and don't incur platform charges. Standard traders must pay a platform charge, and both active and standard traders can select from additional feeds.

To be an active trader requires you to trade 15 times or more a month.

What next?

The next step is to pull out all the metrics of these offerings to compare them based on the figures. I will also have to look at the platforms themselves to perform a subjective analysis.

When I embarked on the 'I want to open a CFD account' trip then I never expected it would involve quite so much work to select an account!

Why bother? Because my CFD account and I will be spending significant time with each other over the coming months - so I need to be sure I pick the right one!

Just googling for something and this came up as a result...

DATAFOUNTAIN: MONEY TRANSLATED TO WATER
This fountain is connected to money currency rates on the internet. It is realtime! Refreshed every five seconds. This mobile fountain measures 5x4x3 meters. The relation between money and water is evident. On our datafountain we display the Yen, Euro and Dollar. Currency rates are closely interconnected; their interdependence is visible in water. The design of the casing was kept as minimal as possible. The water is the thing to look at and listen to.

Find out more

Should impress the neighbours having one of these in the garden