Wednesday, May 27, 2009

Ambush - Potash Corp./Saskatchewan (USA) (Public, NYSE:POT)

After early weakness, POT retraced 62% from morning high/low. it printed 3 IBs, the last of which was NR7 with body in the shadow of the previous bar (red on red) - very bearish.

Normally on the ambush trade, we take half off when price approaches lower fib, but today the market was starting to rip lower, so hang on for 3 WRBs. Price carved out a hammer reversal stick at the 50% FE so I tightened stop. It ended up being just a pause, as price eventually tagged the 100% FE.

The SPY formed a mini flag after breaching its trendline, setting up a low risk short.

5 comments:

Jim said...

Jamie,

I am trying to recall - do you trade thru IB? If so, you can trade both stocks and futures thru a single account, right?

Those questions to get to my main question. Are costs comparable between trading ES and SPY, or are the futures significantly lower in transaction costs? I know it is somewhat a function of position size, so just a rough apples-to-apples size comparison. Thanks.

Jamie said...

Jim,

Yes and yes to your first two questions.

Futures commissions are $2.40 per contract and shares are $0.005 per 100 shares one way. So if you sold 2 ES contracts at HOD and covered at LOD you would have generated profit $2225 - $9.60 fees vs. 1000 shares of SPY profit of $2220 less $10.00 fees. So answer to last question is no, they appear to be equal.

Day Tradr said...

Jamie,

I will appreciate if you could take a look at my loser - JPM, POT trades today and share your views.

Thanks,
Day Tradr

Jim said...

Thanks for the comparison Jamie.

Jamie said...

Jim,

I think one of the reasons traders like futures is the minimum capital needed to trade them.