Trading RM, LLC.

The Trading RM Oscillator has continued to decrease in value and has continued to slope down.  The Trading RM Oscialltor value of 29.33 has not been seen since the last week of September.  (However at that point in the year the Oscillator crossed through 29.33 on an upward slope.)  This is a function of the holiday trading and the declining volatility in the market.  We will continue to try and trade less, be more selective, and manage our losers carefully.  When we see the Oscialltor slope up we will know it is time to get aggressive and trade more. 

Trading RM tracks the number of "waves" in the SPX every day, week, and month.  I looked up some stats for what we define as "waves."  Being shorter term option traders I am curious as to how this expiration is shaping up as compared to the most recent expirations.  from this I can gauge my expectations for PnL, # of trades, and aggressiveness against how I did previously. Here is a brief table with the stats (# of "waves" per day):

Day                                                              September          October         November           December  
Wednesday before expiration Friday         38                          48                    38                         19
Thursday before expiration Friday              58                          97                    67                         18
expiration Friday                                             30                          62                    66                           ?

What signs have we seen at Trading RM that we are in a range bound market?:

• When I feel like adding to my longs or shorts they stop working.  That feeling of adding and pushing was correct in September and October.


• The Trading RM Oscialltor is sloping down.  (see below post)


• Increasing frustration on our trading desk


• The SPX has been honoring several levels on upside and downside.  One of several charts that show this is posted.  920 on the SPX seems to be a top of one range.  Any longs in front of 920 this afternoon around 1:30pm cst were hurt on the afternoon mini sell off. 

• Book profits when you have them


• Less positions


• Be Active - sitting in a long or short for a long time is not working.  When the market sells off the strongest names are going down the most and vice versa.   Today we saw several REIT names drift up, pick up a little acccelration, then sell off sharply.  Below is the REIT etf, IYR.  Depending where you got in the up move was quickly erased.   Pick a REIT name they all looked the same today (URE, SPG, VNO, BXP, FRT, etc...)

What follows is an introduction to the Trading RM Oscillator. 

Trading RM developed and uses the oscillator to tell us when trading is "good" and when it is slower/ "bad."  In a perfect world we trade more and more aggressively when the oscillator is high and/or trending up.  Likewise when it is trending down/or at a historically low level we trade less and less aggressively. 

We will be posting the Oscillator with commentary on what we are seeing at the beginning of every week. 

December has shown less opportunities for us than September and October.  The slope of our Oscillator and the upcoming holiday period confirms this.  It may be a good time to think about winding down for 2008 and to look forward to 2009 trading.

Trading involves ebbs and flows.  Market conditions can persist for long periods of time or change rapidly.

The key is to be consistent: to create and execute a game plan that can be profitable and sustainable over the long term.  I have noticed that when I get caught up in the short term factors (making money, not missing out, what are others doing) it takes away from the plan I have established for myself. 
    
    Many of us at Trading RM are focused on maintaining our consistency each and every day, week, and month.  By implementing a consistent plan, I am laying the foundation for profitable trading.  At the end of the year, I will not remember specific trades on a given day. However, I will look back and  reflect on whether I executed my plan, and whether I kept putting myself in positions to succeed. By focusing on positioning myself for long run success, short term fluctuations are mitigated and I can focus on what's really important: my trading.

 

Trading RM is proud to introduce our website: www.tradingrm.com

At the site you will find additional information on the Five Pillars of Trading RM, our proprietary indicators, access to a morning report, and information on learning how to trade, live on our trading floor.

The Morning Report:  Each morning, veteran trader Michael Osacky, prepares his morning worksheet on what he is watching for the coming trading day ahead.

If you have any questions or comments, please feel free contact Nandan Shah at ns@tradingrm.com or 312-640-1601.