3/22/11: Taking what the market gives me

[brosin]

I'm sure by now my monopoly world acct is far from interesting, but the trading strategy was simple - take what it gives you, don't be greedy, and chip away. I really believe this could be a successful strategy for those willing to employ it. It was my buys in BP, HPQ, RIMM, etc that made me start to think about it last summer.

It could be like anything else in that it'll work until it doesn't, but 7 months into my monopoly account (inception 9/7/10), I have a 89.1% (246/276) success ratio on closed trades, beating the mkt by 27%. Even having been on the wrong side of the market for the past 3 months (in early March I was heavily on the wrong side and approached capitulation levels), but am only 7% off my high. I take profits when I get them, while trying to have average into a position as many times as I can before it turns. So basically it's a never ending shift from my winners into my losers until the losers eventually come around and free me. It is actually good for me when the trade doesn't work out right away. I only play big cap stocks... because those will always come back to you at some point. It's the mid and small cap stocks that trap people much easier (may happen to me with LNG for example). When I hear it said to cut your losses fast and let your gainers run, I always cringe a little bit.

I have tried to make this as realistic as possible with the assumption that this is a high net worth account - started with $1M, would later add $.5 & $.25M from my other two monopoly accounts that are no more. The only thing that is probably a stretch is the DRV position since DRV has a small market cap. I did go with the assumption that it would've been difficult to be short a similar amount of DRN shares since you would get them called in at some point.

Anyways, my point is just that for people with a lot of money, I find this approach very useful. If the market is giving things away, take them. Sell them later when the market is giving away the opposite things. It is no coincidence that my account is positioned how it is - the market has been giving away short positions for many months. Just as it was giving away long positions for many months last summer. Too bad I can't register as a bank with the Fed and get in on POMO! I'd love to get free money every day to keep shorting into this fake rally


Current Positions
Symbol Shares Cost/sh Current PPS Cost basis Market Value Unrealized Gains Unrealized Gain % Date(s)/Shares/PPS
DRV 96500 $17.76 $15.50 $1,714,231.00 $1,495,750.00 -$218,481.00 -12.75%
12/10/10 7500/$20.32
12/14/10 7500/$19.73
12/22/10 15000/$18.75
12/27/10 7500/$18.66
12/28/10 7500/$18.25
1/11/11 7500/$18.62
1/20/11 7500/$17.72
1/27/11 7500/$16.40
2/22/11 7500/$15.20
3/11/11 7500/$15.15
3/15/11 7500/$16.10
3/15/11 7500/$15.90

FAZ 17500 $44.96 $41.68 $786,799.00 $729,400.00 -$57,399.00 -7.30%
12/10/10 15000 $10.11
12/15/10 15000/$10.10
12/16/10 --10000/$10.44-- ("-- denotes a partial sell--")
1/5/11 15000/$8.83
1/11/11 15000/$8.92
1/24/11 25000/$8.56
3/18/11 2500/$41.72

CHK -21500 -$32.25 $33.70 -$693,475.00 -$724,550.00 -$31,075.00 -4.48%
1/20/11 5000/$27.41
1/31/11 4000/$28.46
2/4/11 5000/$30.15
2/15/11 --3500/$30.65
2/15/11 --3500/$30.70
2/22/11 4000/$31.85
2/23/11 3000/$33.50
2/23/11 3000/$33.95
3/14/11 3000/$33.55
3/16/11 3000/$35.07

LNG -75000 -$8.36 $9.00 -$626,749.00 -$675,000.00 -$48,251.00 -7.70%
3/14/11 15000/$7.98
3/14/11 15000/$8.32
3/15/11 15000/$8.12
3/16/11 15000/$8.80
3/16/11 15000/$8.60
3/17/11 --15000/$8.30--
3/21/11 15000/$8.34

BIDU -2000 -$122.98 $127.09 -$245,964.00 -$254,180.00 -$8,216.00 -3.34%
3/18/11 1000/$121.65
3/21/11 1000/$124.30

NFLX -3500 -$209.24 $221.39 -$732,349.00 -$774,865.00 -$42,516.00 -5.81%
3/10/11 500/$195.15
3/10/11 500/$202.15
3/15/11 500/$207.00
3/15/11 500/$214.15
3/16/11 500/$215.35
3/16/11 500/$216.10
3/21/11 500/$214.70

PCLN -2500 -$442.01 $455.70 -$1,105,019.00 -$1,139,250.00 -$34,231.00 -3.10%
12/3/10 250/$406.20
12/28/10 250/$406.00
1/5/11 500/$427.50
2/16/11 250/$458.10
3/10/11 250/$461.15
3/10/11 250/$466.90
3/16/11 250/$455.50
3/17/11 250/$455.50
3/21/11 250/$455.50

AAPL -2000 -$337.57 $341.20 -$675,148.00 -$682,400.00 -$7,252.00 -1.07%
12/15/10 500/$320.50
1/6/11 500/$334.65
1/19/11 500/$338.10
1/19/11 500/$344.20
2/4/11 500/$344.75
3/16/11 --500/$332.60--
3/16/11 --500/$328.80--
3/16/11 --500/$333.00--
3/17/11 500/$338.00
3/21/11 500/$339.10

[deadmoney95]

good work bros. one question:

are you realistically taking into account the impact of your unrealized losses? i mean, what's up with almost 100,000 shares of drv since december? how realistic is to average down over four months from a starting position of just 7500 shares? i ask because i know you are trying to be disciplined about this monopoly trading, but is it realistic that you could maintain such a position on a 3x etf with the strict margin requirements for all 3x etfs?

i ask because i understood a bedrock rule of trading to be to talk about your unrealized losses before any winning positions. the latter are easy to focus on; the former tell you how you're really doing.

[brosin]

no that's a fair question - that's why i mentioned the DRV as being the one that was probably a stretch from a reality standpoint

i decided in jan that i wouldn't "force" liquidate myself only because it was to my own disadvantage not to, since the position has clearly hemmoraged so much more money than I could have lost on any position that i might have switched it into

so had it been real life, i would've been more protected from myself than i was here... ;D

[maxi]

Another question re: the FAZ shares.. They reversed split. So how many shares do you actually hold now? I know the dollar value remained the same but how many do you have to sell now to exit the position?

[Clinton SPX]

The problem with monopoly trading is there are no emotions because it doesn't involve real money.

[brosin]

and we would still be talking about a drop in the bucket as to the overall acct - before december, i had only had 1 or 2 trades in a 3x fund. so had i closed out the faz/drv for losses in say, january, we'd have only been talking about 4-5 additional losing trades out of 280

[Rich]

whatever....

you still can't beat 126-0

hmmm,

if it helps you learn

[brosin]

Mar 22, 2011 20:07:35 GMT -5 Clinton SPX said:

The problem with monopoly trading is there are no emotions because it doesn't involve real money.

that's your opinion - i have taken this experiment pretty seriously as seen by the amount of time i've put into it!

Mar 22, 2011 20:07:16 GMT -5 maxi said:

Another questin re: the FAZ shares.. They reversed split. So how many shares do you actually hold now? I know the dollar value remained the same but how many do you have to sell now to exit the position?

the current avg / unrealized loss figures are updated - the entries prior to the one last week just need to be multiplied by 5... i.e 12/10/10 15000 $10.11 = 12/10/10 3000 / $50.55

[brosin]

Mar 22, 2011 20:11:20 GMT -5 Rich said:

whatever....

you still can't beat 126-0

hmmm,

if it helps you learn

i was happy to be above 80% for a long time, but as i've been stubborn and kept moving towards 90% i started thinking about it

at least i actually DO document them in real time

[Clinton SPX]

Im not dogging you, its good practice what your doing. Its just capitulations and short squeezes are the emotional parts of the market. where psychology takes over from charting.

[jack]

Mar 22, 2011 20:07:35 GMT -5 Clinton SPX said:

The problem with monopoly trading is there are no emotions because it doesn't involve real money.

Define "real money"

[Clinton SPX]

real money can be used to buy beer

[dino]

Mar 22, 2011 20:11:20 GMT -5 Rich said:

whatever....

you still can't beat 126-0

hmmm,

if it helps you learn

C'mon Rich. It's "In case it helps you LEARN", not "if it helps you learn". LOLOLOL...

messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_D/threadview?bn=87811&tid=472760&mid=472804

[papasloth]

Mar 22, 2011 18:47:36 GMT -5 brosin said:

When I hear it said to cut your losses fast and let your gainers run, I always cringe a little bit.

You are not alone. Conventional wisdom is:
1). Never catch a falling knife
2). Always set a stop-loss

I really believe, if you've done the right due diligence and you believe that a stock is a bargain, if it goes down more then it's more of a bargain. In the absence of new news that changes my valuation, then a drop in price is just a better entry price to add to my position.

Buy low, sell high. That doesn't mean let a stock run up and up and up, and only then buy it hoping for a few more notches before it tops out. They call them bubbles because they get over inflated and then they pop (and you usually get soap in your eye).

Of course, I always try to temper this with two indisputable facts:
1). No one is right all the time. It's important not to hurt yourself too badly when you're wrong, and sometimes it's hard to tell the difference between being correct and stubborn vs. merely being pig headed.
2). The market can stay irrational longer than you can stay solvent. I repeat that one almost every day.

[ask2lern]

Mar 22, 2011 20:19:49 GMT -5 jack said:

Define "real money"

GOLD............

[brosin]

Mar 22, 2011 20:19:38 GMT -5 Clinton SPX said:

Im not dogging you, its good practice what your doing. Its just capitulations and short squeezes are the emotional parts of the market. where psychology takes over from charting.

when my position is hemmoraging, that is especially the time i add to it - that is when there is the volume to make it most realistic too

i have done very little real life trading since early 2010 - mostly longer term plays first in FAS until Dec and then FAZ since then. so this acct was where i spent most of my time - so in some sense at least, the emotion is still there. plus in case you guys couldn't tell, i am a "little" competitive so the gains/losses feel pretty real ;D

[brosin]

Mar 22, 2011 21:16:13 GMT -5 @papasloth said:

Of course, I always try to temper this with two indisputable facts:
1). No one is right all the time. It's important not to hurt yourself too badly when you're wrong, and sometimes it's hard to tell the difference between being correct and stubborn vs. merely being pig headed.
2). The market can stay irrational longer than you can stay solvent. I repeat that one almost every day.

Papa, I couldn't agree more with your whole post - especially the caveats to it all as you put so perfectly with these 2 facts

There is definitely that fine line between stubborn and stupid - for me, the capitulation zone was the mid to high 1330s; on 2/17/11 I started circling the wagons, but luckily the market spared me from a full capitulation: fastopia.proboards.com/index.cgi?action=gotopost&board=exchange&thread=15994&post=162178

[huh?]

Here's one thing I take from Brosin's experiment...they say trading should be done without emotion. So if Brosin loses some emotion because it isn't real money, than it is a good case experiment to see if this is true. Brosin just might be supporting this theory somewhat.