Paper Trades: ES/GOOG/ZB for 27 Dec 2010

by Tom Nunamaker on December 28, 2010

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The markets are still slow which helps our positions. GOOG is the only position causing problems. We are in a good position to turn it around but will keep a close eye on it. If it starts showing signs of a rally, we’ll have to adjust to what the market it telling us. I’d like to reduce the margin on the GOOG trade or even take it off as we have a nice profit on the other two positions. Let’s see what happens with today’s price action.

I started using T+1 for the Risk Charts to show you where the standard deviations are. “T+1” means “Today plus one day” (ie..tomorrow). The magenta bar at the bottom is one day, one standard deviation of movement. The blue bar underneath it is a one day, two standard deviation move.

Standard Deviation Refresher

1 Standard Deviation with a normal distribution has a 68.2% probability of being in that range on the specified date.
1.96 Standard Deviations has a 95.0% probability of being in that range on the specified date.

You can download a free standard deviation calculator on our website.

Portfolio Overview

Combined Starting Margin: $18,794
Combined Current Margin: $13,212 (GOOG trade. ES/ZB are both riskless)
Combined Profit +$1,283 (+6.827% on original capital)
Days in Trade: 6

These are PAPER TRADES ONLY! DO NOT USE LIVE CAPITAL FOR THESE TRADES! This is for instructional purposes ONLY! You’ve been warned!

Download PowerPoint slides of the entire trade history, charts and trading rationale

GOOG Ratio Spread

GOOG Ratio Spread

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