# ASX Momentum Trade Book - Part 2



## peter2

Welcome to the "ASX Momentum Trade Book - Part 2" thread.   

This is a continuation of the Pavilion103's LIVE ASX Momentum Setup Trading Thread. Please read that thread as I've posted my introductory remarks, goals of the portfolio and many notes on my trade management style in that thread. 

We're here to increase our trading capital by trading ASX stocks that we anticipate to move higher. As this thread will contain more short term trades than medium term trades I've called it a trade book rather than a portfolio. 

Why do this? I found this a tough question to answer. Fun, yes!  Ego, yes, but my name is not on the thread title. The market does a good job of ego control and we must remain humble in order to deal effectively with uncertainty. 

Blogging seems to provide additional motivation as I know someone is watching and waiting for the next update. I manage several ASX portfolios of various sizes so it's important to stay in touch with the small caps as well as the others. This is my contribution to the ASF community.

I'm happy to contribute opinions and suggestions to others through this forum. I've done this sparingly in the past and have included much more in the Pav's thread. I enjoy helping others get those rare "ah ha!" moments that we need to experience on our trading journey.

Comments and questions: Yes please, feel free to join in. If you don't ask then I may not tell you. I'll assume you've read Pav's Momentum thread. This thread will only be educational to you if you ask.


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## peter2

This thread builds on what we have accomplished in Pav's thread. That means we take the capital and the profits earned last FY and grow them this FY. This thread will be more of a trade journal rather than an educational demonstration of a trading methodology. We've done that in Pav's thread. The addition of a new strategy and improved flexibility turns our trading activity into a small business that can operate in all market conditions. I assume this is what you want to see. 

The additional trading activities that we will employ may make this thread seem busy all of a sudden. Effective organisation is key. Adding another strategy to your trading tools will only work if everything is organised. It's not organised if it's not written down and handy to reference. A new strategy will mean new scans, another watch list and maybe some slight modifications to your trade management rules/guidelines. I can't do that for you. I will try to introduce new topics as we need them.

I will continue using the records and spreadsheet from Pav's thread.  Accountability is mandatory and so is integrity. I'll be trading every one of these trades myself. It's a new FY and I have to earn my keep. This will not be a signal service. I'll post the charts with a description of the setup and any targets AFTER the entry. Occasionally I might post a setup or some stock codes before they trigger, but don't hold your breath waiting for them. I've been known to pre-empt a BO. Be warned. 

I'll continue providing my comments on trade management, but I won't divulge my exact exit plans ahead of time. 

There will be no trades started before July 1st. I'm giving you advanced notice to help you get organised if you are going to follow along. The next post will show why you will need to be organised.

Are you ready to rumble?


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## myrtie100

Woo who peter! THANK YOU
Yes I'm ready


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## debtfree

More than ready Peter, thanks for continuing this journey. 

I'm know there are many out there like me that needs to be more organised in their trading plans, so this is just ideal.

I'm sure you knew I'd be following you over to your new thread with a lot of interest and hunger, as I'm not finished with you yet.   This thread will be viewed, explored, studied and the hints and tips ripped out it for years to come by ASF members. Good Luck Peter and thanks again.

Cheers ... Debtfree


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## get better

Thanks Peter for all your efforts. As always, am very eager to learn more watching your trading style/activities and will watch this thread closely like Pav's thread.


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## peter2

Pavilion103 showed us his enthusiasm to trade break-outs from small price consolidations. We traded many and noticed that the number and profitability of these opportunities vary due to current market conditions. It's time to create more opportunities by expanding our range of BO setups and adding another strategy. A new strategy means more scans, another watch list, but we should be able to slip it into our existing ASX equity trading system. That's going to be your first organisational challenge. We'll go through these extra setups soon.

(1)  We are going to expand our break-out opportunities. 
(2)  New strategy. We are going to trade the anticipated price swing after a corrective pull-back. I'll explain the setup and multiple entry triggers later. 

I'm going to give a an extra challange and you have less than a week to get organised (I sound like a TV reality show, sorry). There's no rush and no pressure the markets will be there when you're ready.

We are also going to add another trading system to our trading business. 	

We've seen that the market can go down and being long only is not fun. When the index goes down, we reduce our open risk and protect our capital, but we can't profit from the move or offset the loss of open profits unless we can short. I'm going to include shorts on the index only. I've thought about shorting individual stocks but there can be issues with availability and we will be exposed to the occasional stock shocks. Trading indicies removes the stock shock and they are available to trade almost 24hrs. Most cfd providers offer an ASX index that we can use. 

(3) Trading the ASX200 index (long and short). 

That should make you both excited and overwhelmed. We will go through the extra BO setups first, then the pullback setup and multiple entry triggers. I'll leave the ASX200 index trading system until we need it, but you've been warned that it's coming. At first we'll only use it when we are near fully invested (long) and it looks like the market may turn down. We'll use it to offset the loss of open profits and if the market continues lower we might make a profit as well. This is not a hedging system.


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## tech/a

> At first we'll only use it when we are near fully invested (long) and it looks like the market may turn down. We'll use it to offset the loss of open profits and if the market continues lower we might make a profit as well. This is not a hedging system.




Looks like hedging?


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## peter2

More opportunities DOESN'T mean more profit. More setups to go long won't help if the market goes down. In fact, more opportunities should frighten you. It means you'll have to make a subjective choice from the many opportunities that will be available. Think about how you are going to make that choice as we go through these additional setups. I'll give you a few suggestions on how to cope but ultimately it's your job and your business. 

"Business" is the new key word for this thread. You are the manager of this business, but there are many times when you should think of yourself as an employee as well. As the manager, how would you ensure that your employees executed their duties correctly every time? Yes that's right. You'd give them written instructions until they learned what to do.


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## sinner

peter2 said:


> We've seen that the market can go down and being long only is not fun. When the index goes down, we reduce our open risk and protect our capital, but we can't profit from the move or offset the loss of open profits unless we can short. I'm going to include shorts on the index only. I've thought about shorting individual stocks but there can be issues with availability and we will be exposed to the occasional stock shocks. Trading indicies removes the stock shock and they are available to trade almost 24hrs. Most cfd providers offer an ASX index that we can use.





It is possible to profit from longs during downturns.

A crude mean reversion strategy which "percent ranks" the rolling 2 day Rate Of Change (ROC) and only buys when the rank is in the lowest decile (i.e. buy when the 2 day ROC is in the 10% of lowest readings for last 252 days) and holds cash when above had decent returns from a few selective trades on indices (basically buying on the steepest down days and exiting within ~5 days) during the GFC.

2007-07-02 till 2009-03-12

ASX:STW


		Code:
	

                          daily.returns
Annualized Return                0.0739
Annualized Std Dev               0.1555
Annualized Sharpe (Rf=0%)        0.4754


NYSE:SPY


		Code:
	

                          daily.returns
Annualized Return                0.1731
Annualized Std Dev               0.2080
Annualized Sharpe (Rf=0%)        0.8325


This is without any position sizing or stops. You can also improve this strategy by using limit orders at the daily lows and raising the threshold for moving to cash, but I just wanted to demonstrate it's possible to harvest mean reversion longs during protracted bears.


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## peter2

Examples of BO setups: These are pretty obvious but there are subtle differences.

This chart of SBM shows three types of BOs. The first setup is an ordinary BO-NH formed over a few weeks (note the HL). In this chart it's a reversal BO but they are generally trend continuation setups with variable R:R parameters. The second setup has taken several months (note the HL) and when the supply is finaly exhausted or withdrawn price may go higher quite quickly. The last is the small consolidation Pav likes to trade as they have good R:R possibilities.

In this thread we will add to our initial position if there is another setup and the TS on the initial position is at BE.  Adding to winning trades is going to be a new aspect that we will be working on. It's easy to add when we start at the right place and price moves immediately in our favour. It's when things don't work out that we need our management rules.




Sorry. Didn't I mention pyramiding in the intro's?  This means some of our trade management rules/guidelines will need to be modified to include when/how we pyramid and then how we manage the new larger position. We will have the same max position size of 20% so only the smaller priced stock trades will be able to handle a pyramid opportunity.


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## Trembling Hand

sinner said:


> It is possible to profit from longs during downturns.
> 
> A crude mean reversion strategy which "percent ranks" the rolling 2 day Rate Of Change (ROC) and only buys when the rank is in the lowest decile
> 
> This is without any position sizing or stops. You can also improve this strategy by using limit orders at the daily lows and raising the threshold for moving to cash, but I just wanted to demonstrate it's possible to harvest mean reversion longs during protracted bears.




Interesting. It's these "not common sense" approaches where edges are now found I reckon.


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## sinner

Trembling Hand said:


> Interesting. It's these "not common sense" approaches where edges are now found I reckon.




The returns on short term mean reversion shorts during periods spiking volatility are much much better (i.e short 90% decile) and broader (i.e. short 50% decile) but I think it's important to know that long alpha does exist (even if only briefly) in bear markets.

Here is a two part post on a much more refined version which is obviously curve fit but demonstrates how you can explore the parameters (you can adopt an adaptive algorithm to vote on the parameters in real use instead of hardcoded parameters).

https://engineeringreturns.wordpress.com/2010/07/13/tsi_rsi_system_parti/
https://engineeringreturns.wordpress.com/2010/07/14/tsi_rsi_system_partii/


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## tech/a

Thought these looked interesting.


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## peter2

I've posted my initial thoughts about expanding our BO opportunities and mentioned that we're going to look at pullbacks and some index trading. Over the last few days I've been thinking that I should slow down. There's no benefit in having too many opportunities and it could be a disadvantage. I don't want to confuse new traders and I've always suggested that they master one type of setup before adding others. For July I'm going to stick with BOs and let the other strategies appear when the time is right. It's quite possible that a BO setup occurs at the end of a corrective pullback. When I see one like that I'll point it out and we'll introduce other aspects of these pullbacks at that time. 

There are lots of charts showing corrective pullbacks right now as the market has dropped. If the market rallies then most stocks will rally. All setups will look promising. If the market falls further then these setups will fail. Stocks showing the greatest relative strength will be those stocks making new highs. I prefer to be buying new highs in all market conditions as these are the strongest charts. Of course they don't all work out. That's why we manage our exposure (heat). 

(1)  I'm looking for charts with clearly market horizontal resistance in a weekly or monthly up trend. They're for my SMSF. (Weekly Darvas scans)
(2)  Next I'm looking for charts near their yearly highs with shallow consolidations (in weekly charts). (Daily Darvas scans)
(3)  Then I'm looking for 10d BO with volume (thrust bars) You can see these in all three of tech/a charts HSN, SIQ, YOW. (Daily pm scans)
(4)  Then I'm looking for small consolidations in strong trends (hope this rings a bell,  Pav response)

Every weekend I find all the stocks that are stronger than the index (XAO) over the past 13 weeks (RSC(XAO,13) > 0). I throw them all in a watch list and sort through them. Charts with clear resistance levels go into a pending BO list. Charts showing corrective pullbacks go into a pullback list. Charts that are going sideways after a down trend go into a reversal list. Every PM I review those watch lists and wait for perfect low sized risk setups to buy them. There are approx 20 charts in each list. I don't let them get too big. When the chart looks poor and the anticipated opportunity isn't progressing as I'd like I ditch it. 

I only mention this as it might help some of you organise your thoughts and procedures. 

For July, focus on finding those perfect BO setups. They're out there. 
ALU > 4.80, APE, BAL, CDA, DNA >0.80, FLN >1.40, NUF>8.00


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## peter2

I'm pleased to be waiting for new FY for our trade book. Patience is a good thing when dealing with the markets. There will be a time to act. So, enjoy the show. This happens every time market outlook becomes uncertain. I'm excited. I love this sort of market. People that stick to their plans can do very well. This "panic" can provide us a good start to the year.

I want to point out a classic divergence that I love to see and take advantage of. The divergence between the market index (XAO, XJO) and the banks. The indices are making new lows, but the banks are not. The banks are not even half way to their recent low. This sort of price action sets up the first HL in the banks and many other charts. I'm looking for charts that show the weekly trend is still up, this pullback is corrective and price is back at a prior BO level that coincides with the 50% retracement. 

If the market continues to fall and the banks do make new lows then I don't lose anything and just wait for that first HL. 

The value investors should be loving this panic as well. Good companies going much cheaper if the investors have managed their cash well. 

Trading update: I'll sell both ISD and FLN this pm unless they close above their TSs. Apologies we should have sold ISD on today's open after those 4/5 down days that ended 0.02 above our exit trigger. This is a trading mistake and costs us money.


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## bonkerrs

Peter. You are definitely not talking to yourself . Including myself, I'm sure there are many many who read this thread. I for one am constantly checking on it, throughout the day on my phone then a in the evenings I try to re-read when I have more time.

A few pages back in the other thread, I mentioned letting life get in the way of documenting some setup rules/money management. The beginning of this thread is a good opportunity. After so much wasted time reading and off track reading (I have a focusing issue ). I've decided to focus on one style of setup, this is a great thread to start with.

In my journal/rules book. It'll include as much info as I can think of and will be added to as I go, as we go. It'll be broken down into sections such as "entry" "exit" rules.

Anyway, I just wanted to say thanks for your time and efforts, it's appreciated. Also to pav for getting the ball rolling, tech/a (and others) who have contributed. All appreciated.

Back to the topic. A couple of questions:
How does volume play a role in determining a BO setups? Is it an important enough factor to give consideration?
Will an RSI be beneficial? Again... Is it an important enough factor to give consideration?
The universe we're working with here will be the ASX 200?
Could you please tell us your criteria for determining an up trend in the index again?

Cheers and sorry if the questions seem a little ""newbie''.


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## peter2

Trading update:  A new FY, a new start or a restart. 

AMA: Sold at our TS (0.59). 
BAL: New trade, bought 4.40. Liked this little consolidation. (iSL 4.00) 
PPS: New trade, bought 0.36 (iSL 0.32). 

PPS is an example of what I call a pull-back trade. After the huge impulsive move to 0.44, price has drifted down with the market blues. Now there is a little 123 Low which creates the BO entry for us. The first target is the old high (0.44) which provides an acceptable RR. 

Open trades: ISD, SEN FLN. They're hanging on in spite of the thin MD. 

Interesting charts: CDA, SRF.  
There are lots of nice PB setups, but I'll like to see the market start to rally first. That may not happen until the Greek tragedy is sorted.


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## peter2

bonkerrs: No need for the apology. I'm happy to help anyone who asks. The effort to get more consistency in your trading actions will definitely pay off. There are two payoffs, more profit and less stress. Win, win.

Volume: is a confirmation factor for me not an essential. Obviously we want to see lower volume during the consolidation and then higher volume on the BO. I do have the volume indicators OBV and TMF on my charts and I prefer to see them rising as price gets closer to the BO level.

RSI: is helpful when looking at PB opportunities, not very helpful with BOs. In PB setups the RSI should be <30, but I wait for price to move up first. In my charts (see PPS chart) you'll notice that the bars turn blue when price moves >2ATR(10)   [It's actually the SuperTrend (10,2) indicator]. I scan for this crossover, check to see the pullback is corrective in nature, RSI(7)<30 and then .... Sorry about that, you've got me talking about my PB setups and it's a bit early for that.

The universe is anything with enough volume for me to trade myself. There are about 300 - 500 stocks with enough volume. 

Index: Weekly, I look for HH and HL.  Daily is similar but I'll place a line on my chart as an indicator.


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## myrtie100

Hi Peter

With the PPS entry, would you watch or set an alert, to see it trading above .36 and then place the order checking market depth?
Or would you enter a buy stop in the system beforehand?

I often wonder whether my buy stop "lazy" entries on these types of stocks give me a dud inflated price, and whether I should learn to read the depth to avoid this.


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## peter2

myrtie100: Tough question as I don't think there is a best procedure. It will depend on whether you can watch the market during the day. When I was working (for others) I used pending buy stop orders and only found out if I'd bought something when I got home. Most of the time the close was higher than my entry. Sometimes it wasn't. The buy stop orders got me into the best trades. Slippage increased since those days and I stopped using the conditional orders when I "retired". I don't know whether this is a good thing or not, because now I miss the trades that go through the BO level and take off. I hate chasing the next day, so I do miss some good ones. Missing a good trade is probably worth a lot more than accumulated slippage in thin markets. You would have to check this, of course. 

If we've found a high probability setup then we should just take it asap. Slippage is frustrating but a cost of doing business.


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## sammy84

It's been a while since I've posted on here, but have been lurking for ages.

Today I tried something you alluded to earlier Peter which is entering a trade at the close of the session. The market has been too erratic lately, so I was cautious about entering. Hopefully entering at the close is a good alternative to get some more confirmation from the market.


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## peter2

Thanks sammy84. There seems to be more liquidity at/near the close. This helps me get the price I'm happy with and get it all done rather than waiting for the bots to pick at my order. We can also see the volume that has gone through before us and that might provide some confirmation.

I don't like to see that word hopefully. Keep your downside exposure under control and you'll be OK.


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## bonkerrs

peter2 said:


> (1)  I'm looking for charts with clearly market horizontal resistance in a weekly or monthly up trend. They're for my SMSF. (Weekly Darvas scans)
> (2)  Next I'm looking for charts near their yearly highs with shallow consolidations (in weekly charts). (Daily Darvas scans)
> (3)  Then I'm looking for 10d BO with volume (thrust bars) You can see these in all three of tech/a charts HSN, SIQ, YOW. (Daily pm scans)
> (4)  Then I'm looking for small consolidations in strong trends (hope this rings a bell,  Pav response)
> 
> Every weekend I find all the stocks that are stronger than the index (XAO) over the past 13 weeks (RSC(XAO,13) > 0). I throw them all in a watch list and sort through them. Charts with clear resistance levels go into a pending BO list. Charts showing corrective pullbacks go into a pullback list. Charts that are going sideways after a down trend go into a reversal list. Every PM I review those watch lists and wait for perfect low sized risk setups to buy them. There are approx 20 charts in each list. I don't let them get too big. When the chart looks poor and the anticipated opportunity isn't progressing as I'd like I ditch it.
> 
> I only mention this as it might help some of you organise your thoughts and procedures.




Brilliant! Is there any way to bookmark posts in threads? I would like to bookmark the above.

Which charting software and data provider does everyone use? I'm using Incredible Charts which was/is OK but am looking to get something with more features, price sensitive.

Here is a chart screenshot, my first post of one.


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## tech/a

bonkerrs said:


> Brilliant! Is there any way to bookmark posts in threads? I would like to bookmark the above.
> 
> Which charting software and data provider does everyone use? I'm using Incredible Charts which was/is OK but am looking to get something with more features, price sensitive.
> 
> Here is a chart screenshot, my first post of one.




Short answer is NO

There is so much technically here that needs to be
Pointed out and placed in context.
It actually reads like a small book.
And is easily followed bar by bar which is how you
Should read a chart which is being held.

I don't have the time right now but will give a complete run down tonight.
Pete I don't want to clutter your thread with this stuff

As you can seedy bonkers query perhaps the suggestion I made via PM may be
Worth considering so your message remains clear and not lost.
I'm sure Joe would oblige.


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## bonkerrs

tech/a said:


> There is so much technically here that needs to be
> Pointed out and placed in context.
> It actually reads like a small book.
> And is easily followed bar by bar which is how you
> Should read a chart which is being held.




That would be awesome, I will sponge it all up. Tech - Will you PM me?


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## captain black

bonkerrs said:


> Brilliant! Is there any way to bookmark posts in threads? I would like to bookmark the above.




At the top right of each post is a hashtag with a number. The post you want to bookmark is #14 (post number 14 in the thread). If you click on the #14 it links to that post.

ie.

https://www.aussiestockforums.com/forums/showthread.php?p=873428#post873428

You can then bookmark that link and it will take you straight to that post.


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## tech/a

bonkerrs said:


> That would be awesome, I will sponge it all up. Tech - Will you PM me?




Ill post it here.

CB
I didn't know that!
Thnx


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## bonkerrs

captain black said:


> At the top right of each post is a hashtag with a number. The post you want to bookmark is #14 (post number 14 in the thread). If you click on the #14 it links to that post.
> 
> ie.
> 
> https://www.aussiestockforums.com/forums/showthread.php?p=873428#post873428
> 
> You can then bookmark that link and it will take you straight to that post.



Thank you for the handy hint


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## grah33

thank you Peter for doing this.  i  hope to pick up a few things here and there. i understand most of your abbreviations, but it was a little rattling at the start. maybe some kind of attachment or link to a previous post where you have the abbreviations laid out would be good (part of your slogan or somehow on every post you do). not for me, but for all the newbs that are going to be viewing this. just an idea.


regards scanning stocks, for newbies: another method is to just  eyeball them one by one. this is a viable method as well, according to Wilson (author). it's easier i think for newbies to first do that and learn to trade, then later add scanning to their repertoire.  and look for cheaper stocks, say from 20c to 5$, as these are the ones that are for short term trading.


someone asked about charting software: amibroker is highly sophisticated and cheaper than the other big names.
i got that recently. from memory, IC is good but you just can't flip through lots of stocks quickly enough which is what you will need to be doing.


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## captain black

grah33 said:


> someone asked about charting software: amibroker is highly sophisticated and cheaper than the other big names.
> i got that recently. from memory, IC is good but you just can't flip through lots of stocks quickly enough which is what you will need to be doing.




+1 for Amibroker, I've been using it for over 10 years.

There's a great Amibroker FAQ thread on ASF if any help is needed:

https://www.aussiestockforums.com/forums/showthread.php?t=1679


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## bonkerrs

peter2 said:


> The universe is anything with enough volume for me to trade myself. There are about 300 - 500 stocks with enough volume.
> 
> Index: Weekly, I look for HH and HL. Daily is similar but I'll place a line on my chart as an indicator.




So trading the ASX200 index is the new part of this thread (as previously stated) and not used to find BO setups. You use volume to identify the 300-500 stocks that show BO potential. Do you do this on the ASX500?

In regards to eyeing off the index to see the general trend direction. Can you please explain using daily, weekly and monthly charts? Why you use each and what you're looking for.


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## peter2

I mentioned the possibility of using the ASX200 cfd when the market looks like going down. This is to offset our long only portfolio. This system is completely separate to our long only system. Trades in the ASX200 will only appear occasionally, unless there is more interest. 

I use daily volume or more accurately average value traded per day to look for our long only setups. I use two value filters across the whole ASX, >$40K/day and >$600K/d because I have portfolios of different sizes. There are always plenty of short term moves in stocks outside the XAO500.


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## peter2

tech/a was referring to his suggestion (via PM) that we lock this thread to keep it on track and open another thread for all questions and discussions that arise from our posts. There is some merit in that but I don't want the extra work  I also don't want to make this thread about me. I'm willing to share some aspects of my trading and this means sharing my beliefs about market behaviour, but I don't want to see a solid thread of my posts. I don't want to feel like I'm talking to myself or that I'm telling you what to do. 

Real life trading is about focussing on your business inspite of all the distractions that are out there. That's why it helps to have everything written down, so when we get distracted and then return to the job we don't miss something. 

I want the forum interaction. I want to see posts by other experienced traders. I want them to question my opinions and point out my mistakes. I love seeing others become excited by the prospects as they grasp an idea. 

The thread will stay on track as I'll always post a trading update when I do something in the portfolio and there will always be an EOW report. Trading is a serious business but I do it because I love it.


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## VSntchr

peter2 said:


> The thread will stay on track as I'll always post a trading update when I do something in the portfolio and there will always be an EOW report. Trading is a serious business




Yes trading is a serious business...and it is informative to see how you are showing the development of a full business. Some people may find success with a 'one strategy business' but I think that the best trading businesses will have a number of strategies and plans to deal with a variety of market conditions and situations. I think that the idea of a "play-book" is a great idea, along with the approach to business development that you have taken in this addendum to the momentum thread. 

I find that business analysis is important for looking at listed ASX business when value investing, just as it is when assessing your own trading business. I like to ask myself questions like: how variable are my returns over daily, weekly, monthly periods? How many strategies do I have? How correlated are these strategies and how do they perform in bull/bear periods? How efficient is each strategy in terms of $ and time employed? 



peter2 said:


> but I do it because I love it.



A necessary component for success in this business I feel.


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## Triathlete

bonkerrs said:


> In regards to eyeing off the index to see the general trend direction. Can you please explain using daily, weekly and monthly charts? Why you use each and what you're looking for.




*Monthly chart*

If you are a medium to long term trader/investor you should always start with the monthly chart as it provides us with valuable information, which is often missed by traders who rely on only the weekly or daily charts, as it provides a  view of the stocks movements. Always start your analysis of any stock or index by looking at a monthly chart to understand the longer term direction. The benefits are below:

A complete history of the stock.
Major trends in price and support and resistance levels are easily recognized
Able to recognize major lows and what stock cycles are present.


*The weekly chart *

Which is the most important chart in technical analysis,provides us with some valuable information that is not evident in the daily chart.This is the chart you should rely on the most in your analysis. The benefits are below:

Major support and resistance levels of previous highs and lows.
Recognizable patterns eg continuation, accumulation, reversals, head and shoulders, double tops , bottoms etc
Easy to recognize major moves and long term trends.


*Daily chart*

The daily chart is fast moving  and at times quite deceiving, which for the inexperienced trader can lead to inconsistent trading results. A lot of traders find they become too reactive to the emotions in the market if they use daily charts to carry out their analysis, *which can lead to very costly mistakes*.The daily chart is used primarily to fine tune entry or exit points in the market.
Typically  medium to long term traders rarely need to refer to the daily chart.


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## grah33

peter: i noticed you limit your exposure/heat to 6%, why is that?  Hull uses portfolio risk (aka. heat) limited to 20% .
6% means going through less trades over time, as opposed to going through more trades and profiting more, so i'm unclear on why u limit to 6% in uptrending market conditions

also, i'm just wondering, if we offset the long positions by shorting the asx200 cfd, doesn't that mean we get zero profit. what is happening here? the long trades yield profit, while the shorted cfd yields negative profit (ie loss), so that makes zero profit.   ??

(if i ask too many qs and you don't have time, that's ok.  and others can feel free to jump in if you have the answer. )


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## tech/a

*API*

Analysis as promised

Long term outlook is that this resistance is going to be tested again.
Supply needs to with draw or be absorbed before price can make new highs.
Good setups have failed at resistance.

*Click to expand*


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## peter2

Hello grah33, 

re: Portfolio heat. I'd be surprised if Mr Hull advocates a portfolio heat of 20%. That's worth checking. It doesn't matter to me what others use. I know that it's best for me to limit the capital risk to 6%. If I can't get into one good trade in 6 attempts then starting more won't help me. Once my portfolio starts collecting winning trades and the market trend is up, I'll let the total downside exposure sneak out to 10% (most of it open profit), but never more than this. The aim of these limits is to reduce the chances of a 10% draw down. If I was comfortable losing 20% then yes, I could start twice as many trades. 

The important point here is to know your own risk tolerances before you feel that queasy knot in the stomach feeling. 

re: ASX200 shorts: Let's assume our downside exposure (heat) is 8% comprising 4% profit and 4% capital exposure. When the market turns down, we'll give up some of that profit (eg -2%, heat = 6%). If the market looks like it might go down some more, we'll reduce that exposure by raising our exit triggers or even closing the worst trades (saves 3%, heat now 3%). It's at this stage that we start an ASX200 short (risk 1%, total heat is 4%, but net long 2%). The market continues down and we lose another 2%, save 1% from the remaining 3% heat. Our index short will be in profit. If the index continues down we will add to that trade and our short trade profits will rise and offset our earlier loss of capital and open profit. 

During this change in trend we lose ~50% of our downside exposure (heat), by implementing our portfolio safeguards. Hopefully our index short will repay some of that lost value. If the market doesn't go down then we lose 1% in that short trade but our surviving open long positions will start to rise again with the market. 

We are discussing hypotheticals here. When the time comes for an ASX200 short we'll discuss it again then. I mentioned this strategy at the start to provide more flexibility.


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## grah33

peter: i'm getting it, not all, but i'm getting it. nifty stuff


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## debtfree

*Tech/a:* Thanks for your chart and analysis on API, lots of info packed into a little chart, very good indeed. Appreciate the time you put into others.

Cheers ... Debtfree


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## peter2

*API*: I was watching those last three bars, the retest of the low (1.45), but not enough volume done on that last bar to convince me the low is support.

-----------------------------------

Trading update: 

New trade: Bought *DNA* today as it closed above 0.80 yesterday (SL 0.72). 

SRF: On watch list, missed out due to very low market depth. 
CDA: On watch list, Very thin bid depth also. I can buy it but will I be able to sell it when I want to.


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## tech/a

> API: I was watching those last three bars, the retest of the low (1.45), but not enough volume done on that last bar to convince me the low is support.




Volume isn't *always* a preceding indicator of strength.
If Supply is withdrawn then price will rise un abated
with our without volume--anywhere in a trade.
Often volume is a sign of weakness.


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## peter2

EOW update:   ASF Momentum Portfolio  *+5.9%*  ( 62% invested in 6 trades )   XAO *-6.3%* (18wks)

This weeks sells: AMA
This weeks buys: BAL PPS DNA

Bright new colours for a bright new FY.  When the market turns up we'll jump into a few short term trades and bag some quick profits (+1R) to kick us along. Many of the large caps have formed higher lows and their BO-NHs look promising.


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## tech/a

Considering the market---basically marking time since you took over.
Not a criticism. That in itself is hard enough!


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## peter2

I agree, and I'm pleased to hold the portfolio steady as the market drops. The market will find a bottom at some stage and then we'll profit from the rally. Then we'll hold through the next dip and profit from the rally . . . 

The XAO ended up almost even for the year and I think the market will remain in this range for another year. We'll be lucky to see a 10% rise. Today's dip was totally irrational, but a good buying opportunity for the longer term investors with div yields much better than term deposits. 

The market is forming nice buy setups (HLs) that we will probably use next week.


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## lindsayf

Really enjoying your work Peter.
You articulate your processes (technical and psychological) very well.
When i eventually clear away some time committments i will be referring here when I begin to draft my new trading plan.
Thanks


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## maglincer

My personal trading plan is buying stocks near 52 week high whenever they breakout and holding for the short - medium term. Is that similar to what you are doing Peter? Can you tell me what do you think about the technicals of ACX if you have time.


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## peter2

Trading update:  The markets will need further resolution of the ongoing Greek tragedy. 

ISD: Exit next open. 

Comment: There's not much to do at present. I notice that the number of charts stronger than the index (RSC(XAO, 13wk) has dropped by >65%. 
----------------------------

Welcome maglincer, yes, most of the stocks I prefer seem to be near their yearly highs. 

ACX: There is not much to say about this chart. It's up and was one that I was very close to buying for this thread.


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## bonkerrs

peter2 said:


> I use daily volume or more accurately average value traded per day to look for our long only setups. I use two value filters across the whole ASX, >$40K/day and >$600K/d because I have portfolios of different sizes. There are always plenty of short term moves in stocks outside the XAO500.




OK I'm confused  Between this post and a previous one. You do (or don't) only use daily charts for scanning. My confusion may be more apparent with the below break down.



peter2 said:


> (1) I'm looking for charts with clearly market horizontal resistance in a weekly or monthly up trend. They're for my SMSF. (Weekly Darvas scans)



This scan is to search for BO patterns. You scan the weekly charts.



peter2 said:


> (2) Next I'm looking for charts near their yearly highs with shallow consolidations (in weekly charts). (Daily Darvas scans)



This is a scan to help confirm scan (1) for break out? You use the weekly charts but with a daily Darvas scan for this one?



peter2 said:


> (3) Then I'm looking for 10d BO with volume (thrust bars) You can see these in all three of tech/a charts HSN, SIQ, YOW. (Daily pm scans)



Now you break it down further by using only the daily charts. And now you will consider volume to hone in on opportunities.



peter2 said:


> (4) Then I'm looking for small consolidations in strong trends (hope this rings a bell, Pav response)






peter2 said:


> Every weekend I find all the stocks that are stronger than the index (XAO) over the past 13 weeks (RSC(XAO,13) > 0). I throw them all in a watch list and sort through them. Charts with clear resistance levels go into a pending BO list. Charts showing corrective pullbacks go into a pullback list. Charts that are going sideways after a down trend go into a reversal list. Every PM I review those watch lists and wait for perfect low sized risk setups to buy them. There are approx 20 charts in each list. I don't let them get too big. When the chart looks poor and the anticipated opportunity isn't progressing as I'd like I ditch it.



This is a great idea. One I will employ once I have a better charting software to make the scans, also once I understand why and how to scan.

Currently using Incredible Charts, am struggling to create the scans. For example... trying to figure out how to re-create these parameters (RSC(XAO,13) > 0). IC is OK for $19.95 a month for the software and EOD data but would like to upgrade to Amnibroker soon.


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## debtfree

bonkerrs said:


> Currently using Incredible Charts, am struggling to create the scans. For example... trying to figure out how to re-create these parameters (RSC(XAO,13) > 0).




Hi Bonkerrs: I'll let Peter2 answer all your questions you have for him to put more clarity into the scanning process he uses.

I still use I/Charts, for whatever reason it does not matter here. Yes the scanning ability is limited but you can do it, you have to think it out a little to get it to produce what you want to see in the results of your scan. In regards to Peter2's 13 week RSC Scan this is what I would do in I/C, there might be a better way of doing it but I wanted to answer you asap. Time frame below is from 2nd April to 3rd July - 3 months or roughly 13 weeks.




Then go to your scanner and input -5 into the (min% box) in the Percentage Price Move Section, now press (add) now press (run screen) once you have the area you want to search such as Watchlist or Index as you want it. You will now have all the stocks that have outperformed the XAO over this period. Naturally this might result in still a lot of stocks to view but after adding more filters such as volume or value and others to knock this list down a little.




Hope this comes out right and helps.

Cheers ... Debtfree


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## peter2

Nicely done debtfree. 
--------------------------------

It's important to have a clear idea of what you're looking for and what you're trading before you run your scans. Most of my scans are designed to help me find opportunites that I might trade in my SMSF and other momentum portfolios. I've had to make minor mods to find charts for this portfolio.

Weekly procedure:
1. Review all market sector charts, note strong / weak sectors.
2. Weekly Darvas scans for BO setups.
3. Weekly scans for other setups, candlestick patterns, 10wk BOs
4. Weekly scan for stocks stronger than the XAO, relative strength scans (RSC(XAO,13wk)>0). I then look at each chart from this scan and sort into my watch lists (BO, PB, ... ). I will review these every afternoon.

Daily procedure: (pm before close)
1. Look through watch lists for charts almost ready to trigger entry or have triggered that day.
2. Daily scans (re; this thread)  10d Darvas, 10d BOs, price/vol spikes, 
3. Other daily scans for my own purposes. 
4. Other daily scans done EOD.

Volume: I use different volume filters to reduce the amount of results in the scans (weekly and daily) and to ensure there is enough daily volume for the appropriate position sizes required for the portfolios. A 50K portfolio can trade stocks with lower daily volume traded than a 1M portfolio. 

Adding a volume filter to your scans can be tricky. eg. Volume generally increases in an up trend, but decreases when price forms a consolidation. A high vol filter may miss charts in a low volume consolidation. These are the charts I want to find. 

Small cap stocks can have great strong looking trends (like ACX) but their daily volume is too low for a large portfolio so they can be missed with a high vol filter. They are picked eventually when their volume and price increases, generally too late into their trend for me. 

It's a balancing act especially when I'm looking for opportunities in both a small portfolio (this thread) and a larger one. If I use a low volume filter to pick up every chart then I'll have too many and won't have enough time before the market closes to select/pos size/place orders.


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## bonkerrs

Thanks debtfree and Peter2. I'm still rereading your replies. Takes a few read overs for it to start to sink in 

debtfree: Just wanted to bring up a quick point. Peter2's 13 week RSC scan is done on a weekly chart however in your example (thank you for the break down on creating it, was very helpful) you've created it over a daily chart.


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## bonkerrs

Just tried the scan in both weekly and daily. Yielded the same result.


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## debtfree

bonkerrs said:


> Peter2's 13 week RSC scan is done on a weekly chart however in your example (thank you for the break down on creating it, was very helpful) you've created it over a daily chart.







Edit: Just seen your post bonkerrs, anyway done now.


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## peter2

EOW 10/07/15 update:   ASX Momentum Portfolio  *+3.9%*  ( 48% invested in 5 trades )   XAO *-7.1%* (19wk) 

The ongoing drift lower in the market has finally impacted our portfolio which shows a 2% drop this week. 

This weeks sells: ISD
This weeks buys: nil

Trading updates: 
*SEN*: has hit our sell trigger and is to be sold next open (Mon).
*BAL*: TS is at BE. 
*PPS, DNA* have not gone higher after our entry and it's time for a action. Close them both on the next open. 
Let's also place re-buy orders to buy if price does break higher after we sell.  PPS: Buy 0.365.  DNA: Buy 0.805.  
[Note: My personal exit triggers on both these stocks are lower. I won't be selling on next open.]

As the image shows, our portfolio has hit a new low EOW draw down. 

Comment: What a boring start to the year for this portfolio. Can't help that. I'll show you what I'm waiting for in my next post (XAO chart). There are always a few stocks charging up and you're wondering why aren't we in them. Well, for every one that does go higher there is ten that don't. I'm not going to risk money when the odds for success are lower than random.


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## peter2

I'm waiting for the index (XAO) to get above 5600 and the sloping resistance line. There are a few large caps (banks) close to breaking resistance and if they do, they'll push the index higher. This assumes that BHP and RIO don't continue lower and offset any rise in the banks. 

I'm willing to trade any ASX stock in this thread and if the banks provide a low risk setup. We'll be on them like flies on dung. 




What about the ASX200 trading?   Some of you must be wondering about this. 

I've decided to not clutter this portfolio with something completely different. I'm leaving this thread for ASX equity long only trades. We'll maintain the focus of this thread on trading break-outs and pull-backs in ASX stock charts. Don't worry, this thread will continue to beat the index. The easiest way to do this is to stay out when the market goes down. Like now. 

There will be times when it's advantageous to use the ASX200 and I'll not forget to post the setups.


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## PeterJ

Hi Peter

great simple analysis,
that double bottom on the chart is nice to see !


*What about the ASX200 trading?   Some of you must be wondering about this. *

I am definitely :bounce:

Peter


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## peter2

Trading update:

DNA, PPS, SEN : Sold on open, but watch them closely. I've placed some pending buy stops if they go up.

I'm getting excited. I see many large caps waiting to break higher. Here's a few of them. 




ASX, CSL have traded above their BO levels. If all these large caps go higher so will many other large caps and this will push the index higher as well. I'll check the ASX200 chart for a setup so we can profit from any lift in the market.


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## peter2

Trading update: 

*SEN*: Traded at 0.155, Bought 0.15 , iSL 0.125.  
Got to love the market's sense of humour as we sold this yesterday. 

New trades to revitalise the portfolio. 
*AGI*: Bought today's 10d BO at 2.75 (iSL = 2.60)
*DWS*: Bought today's 10d BO at 0.63 (iSL = 0.58)


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## peter2

Trading update:  Went berserk, for me that is. Break-outs galore in the large caps. Three new trades for this portfolio.

CAT: Bought BO-NH (1.25), iSL = 1.15. It's taken me two days to partially fill my order in this one. Supply was withdrawn and placed 0.10 higher.
JHX: Pre-empted the BO on this one knowing the overnight US strength (Bought the open).
CTX-cfd: Pre-empted BO on this one too, bought the open. Had to use cfds as we are running low on cash.

Now that the market seems to have started to move higher and opportunities are plentiful we won't be staying with any laggards. 

Note: Trades in higher priced stocks (like the break-outs in JHX, ASX, CSL, BEN, CWN, CTX, HSO, WBC even WOW) are done to collect quick profits in a market rally (+1R to +1.5R). IMO they're ideal for cfd traders as the leverage helps start more of them. One still has to be mindful of proper risk control of course. 

Yes, I'm disappointed that I didn't start an ASX200 long trade (for this portfolio) after the "aGreekment" on Monday evening. One trade can catch the rally instead of many.


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## Nortorious

peter2 said:


> Trading update:  Went berserk, for me that is. Break-outs galore in the large caps. Three new trades for this portfolio.
> 
> CAT: Bought BO-NH (1.25), iSL = 1.15. It's taken me two days to partially fill my order in this one. Supply was withdrawn and placed 0.10 higher.
> JHX: Pre-empted the BO on this one knowing the overnight US strength (Bought the open).
> CTX-cfd: Pre-empted BO on this one too, bought the open. Had to use cfds as we are running low on cash.
> 
> Now that the market seems to have started to move higher and opportunities are plentiful we won't be staying with any laggards.
> 
> Note: Trades in higher priced stocks (like the break-outs in JHX, ASX, CSL, BEN, CWN, CTX, HSO, WBC even WOW) are done to collect quick profits in a market rally (+1R to +1.5R). IMO they're ideal for cfd traders as the leverage helps start more of them. One still has to be mindful of proper risk control of course.
> 
> Yes, I'm disappointed that I didn't start an ASX200 long trade (for this portfolio) after the "aGreekment" on Monday evening. One trade can catch the rally instead of many.




Nice work Peter, you mentioned you were getting set for the rally and good to see the updates following the last two days. 

I found yesterday quite profitable after setting some bets last week, noting that I don't usually buy in a dropping market but the set-ups looked good last week so went with some courage/foolishness and placed my trades. See EDE and CYY as examples of two micros that looked good on the charts... Only small positions though in order to limit total portfolio risk to 2% for each trade. Looking good at the moment.

I'm still not convinced in the broader strength of the market longer term but the short term burst is certainly helping push a few positions up to the point where I can be adjusting my trailing stops. Happy to ride the momentum for as long as it is there and jump out once the charts say it's gone....


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## peter2

Nortorius: Thanks for the compliment. I've enjoyed that past few days as well and it's nice to see the portfolio starting to rise. Once people feel happier with the performance of their large caps they will start buying small and mid caps. Keep on eye on Daffy's charts. 

Thinking about it, when we see the value investors getting interested and a few chartists seeing lots of potential opportunities, that's probably a great indication of a market low. 

Well done on CYY. I looked at it but I've stayed clear of resource stocks.


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## VSntchr

peter2 said:


> Thinking about it, when we see the value investors getting interested and a few chartists seeing lots of potential opportunities, that's probably a great indication of a market low.



Agree. I did some buying recently for the SMSF, but didn't expect it to be the bottom - although you have said "market low" not bottom, which is likely more correct. 
One question on the large caps that you have traded this week Peter: They are slightly different in pattern to the previously identified "perfect" setups with the mid and smaller cap stuff. Do you therefore have different targets set for your exits? I think you touched on this, but would you be more concrete on taking the full exit at 1.5-2R profit when you get it? As opposed to the mid-cap stuff where you might just lighten up a bit at this level.

Bit of a recap with my BO trading as I've been quiet in here for a little while: I've been busy with some other trading so haven't entered too much in the way of BO this week, except for *1PG *which was backed by a news catalyst. 

Got burnt on *UBN *- in my trade review I realised that I held onto this one for far too long. I was strict with my exit stop, but I disregarded the situation and just let the stock meander for too long. It's fitting that the stock gapped below my stop, I think I deserved that punishment.

*LOV *- did get some off when it moved higher but the bulk of that got stopped out too. 

*VTG *- still hanging on (was very close to dropping this) and its starting to look very nice again.

*RIC *- this was the BO-PB trade that I waited ever so patiently for. It has turned out pretty well, have taken 20% of the position off now that its above 1.5R and it has been testing resistance so watching closely. This one was certainly much more challenging psychologically at the beginning of the trade than most of the BO-NH trades have been, there's certainly nothing better than being in the green from day 1.

Happy trading Peter and other contributors - it's good to see the thread pumping along.


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## peter2

VSntchr: You understood my comments regarding the large caps trades correctly. They don't make large percentage moves, so I tend to use profit targets more often with these. I regard +1.5R as a good result with these and one can generally get a few of them at the same time (correlation). A quick +1R and a +1.5R, makes a good result over the short term. 

re: the large cap setups, they're not small consolidation trend continuation setups. I didn't make that very clear, sorry to see you're the only one that commented on that. Most of the BO's in the large caps stocks I mentioned were break-outs at the end of a pullback. I classify them as PB trades, but I used a BO-NH as an entry trigger anticipating that the PB had finished and the weekly UP trend resumes. Their initial targets are the old highs, but I'll grab +1.5R when I can get it for this momentum thread. These setups are great for getting into larger weekly trends as well. In this case don't take the quick profit, hold them for as long as you can. 

1PG: I'll admit to being a "dick for a tick" on this one. I didn't want to pay 1.99. I missed it and so did this thread.
UBN: You can't do anything about a gap down. 
LOV: has bounced off support.
VTG: I like this chart and will be buying the next break-out.
RIC: going nicely. I assume you still like BAL and CZZ.


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## peter2

Please ask if you think I've done something different or deviated from the plan or just not certain what I'm doing. This thread remains true to the break-out entry trigger but the price action before the BO setup may be different to what we used in Pav's thread. 

Pav's thread was all about using a small consolidation in a strong trend. The JHX chart shows this perfectly. This is a good chart with higher lows before the BO. In this thread I'll use them when I see them but I'll also be looking for something slightly different. This is what I'm calling a pullback in a weekly time frame. We're still trading with the trend, but sometimes what looks like it'll be a small consolidation turns into larger price dip. These larger dips generally send the daily chart watchers into a tizz. It's frightens them to see large red bars eating into their open profits. I know because I feel their anguish. 

Of course, as soon as we sell, price goes back up.  We need a re-entry rule to get back into the now blindingly obvious "why didn't I see that before" up trend. You won't see these trends unless you look at the weekly chart. 

Pullbacks in strong trends are corrective price structures. They can be messy or to some eyes they can be a thing of beauty with a classic 3-wave abc structure. I like seeing the 3-wave structure, but I realise that if the price action is messy, it's corrective. It's my belief about market behaviour is that once the correction is over there will be a clean impulsive move in price. They're what I want to be in. 

In this thread I'm using a setup with a BO trigger to get into (or back into) a strong trend. There aren't many classic BO opportunities after the messy market correction that we've just had. There are always some, like JHX, but there are plenty of pullback opportunities. 

There's your introduction to my pullback trading methodology. Classic BO setups are my top priority, second is the pullback strategy and the third is the reversal strategy. I get into all my reversals using a BO setup as well. I don't know what the market will produce, but I have my team warmed up and readily available. 

JHX chart:  I've shown the familiar small consolidation BO setups using boxes. Right in the centre is a nasty red pullback in price that I'm certain scared a few retail traders into selling. My blue circle shows a 10d BO setup to get back into the strong weekly trend. Look at the weekly chart (on the left) and see where this entry occurred in the larger time frame.


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## VSntchr

*VTG *has now officially broken out. 
Also, here's one of the most interesting charts from a BO perspective I've seen. Some excellent higher low formation going on in the recent pattern...but if you going to get into bed with a biotech...be prepared for a gap or two 
*SRX*


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## peter2

VSntchr: You must be looking at my pending BO list. 
Yep, SRX is on it (close >31.00) Don't think I'll trade it though. It's a butt ugly chart.

After a week we've had it's very satisfying creating the weekly updates. The market conditions over the past few months shows why patience is such a valuable characteristic for a trader. I'm savouring this feeling of immense satisfaction, as it's rare. I'm even drinking my coca-cola from a champagne glass.  Ah, the serenity.

----------------------------------

EOW Trading update:  ASX Momentum Portfolio *+8.5%*  ( 108% invested in 8 trades )  XAO *-4.2%* (20 wk)

This weeks sells: SEN, PPS, DNA  (Don't forget about those re-entry orders)
This weeks buys: SEN (see!), AGI, DWS, CAT, JHX, CTX, missed 1PG (mea culpa)

There are some minor mods to some TSs. Remember they are not in the market. 

The portfolio added 4.6% in open profits this week as the market (XAO) went up 3%.  As you can see in the spreadsheet the portfolio is accumulating plenty of open profit. In case you haven't noticed this in your acount, this is a good thing. 

Comments to the newer traders: Can you see the benefit in knowing exactly what I wanted to see in the XAO chart to trigger my bullish opinion and get me buying those break-outs (post #56). It doesn't matter what analysis style you use there is only one correct time and price entry. Our job is to know what that is and then act.

This thread has gone quiet. Have you all been stupefied by the recent volatility? Where's that passion?


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## tech/a

Luck = great timing

Back in 2001 Tech Trader was launched
7 yrs of excellent returns well in excess
Of the AXO 

7 yrs of bull market
7 yrs of luck.


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## Nortorious

Nice work Peter in keeping the thread ticking along. I'm a bit passive in the contribution to this thread but do check-in on it regularly. 

It is great to see the opportunities arising and this portfolio stepping up again with the level of activity.

My own portfolio this week was up a massive 14% aided by some trades that went crazy but also on a couple that I had been patient with during the drop and sideways movement of the broader market. It's the best week I have had in the market in a long time but still no time for complacency...

One book thread readers may enjoy (and it is probably the 400th+ book I have read on trading) is "The Mind of a Trader" by Patel. Really easy book to read (as in you don't get bored) and some great content...

I've found once I settled on my strategy, the biggest challenge comes from within.... letting profits run and cutting losses short. That is either dictated by your plan or your emotions.... Seeing a position that was up 40% in less than a week was gut wrenching to hold and not to sell out of (and pat myself on the back with a 40% gain)... that profit is now over 80% and was as high as 100% today... and I'm still in. The inner battle is ongoing but sticking to the game plan makes it so much easier.... 

It's a tough game, but you gotta love it!


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## tech/a

So if 100% isn't enough
What is "The Plan"
Is it the same for all holdings?


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## Nortorious

tech/a said:


> So if 100% isn't enough
> What is "The Plan"
> Is it the same for all holdings?




Good question and one that I am continuing to explore myself. 100% is an amazing result but why get off something that is rising? I would certainly get off a sinking ship quickly as that is consistent with my plan and the stop loss method. 

When it comes to taking profits, what I am looking for is for the chart to start curling over... as with the Wyckoff method, distribution appearing. This means I don't get out at the top but I'm happy to get out near the top..... other times, re-accumulation happens and I get out, only to get back in later. HFA is setting up like one of these examples at the moment. I was in at $1.78, enjoyed a ride up to $2.30+, got out at just above $2.00 and now it's edging back to its highs... if it breaks again, I'll be back on.

The great thing about trading is that it is an ever evolving landscape and one that requires ongoing study. I love the game but at the end of the day, it's about making money and finding a way to do that consistently.


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## peter2

Trading update:  

API and SIP came up in my scans recently. Both have bouncing off a recent low (support?) and equally likely to produce a winning trade. Cash is running low, I need to use cfds, selected API as it's been good for this portfolio. 

new trade:  API: Bought on close (bid 1.62, got 1.61)  iSL - 1.40 

[1]  When cash is running out and there are plenty of opportunities, why waste it in a trade that's going nowhere. Look at your worst trade and make plans to ditch it if it doesn't go up. In our portfolio the worst trade is AGI (currently 2.71) which hasn't moved since purchase (2.75). I'll give it another few days to get above our entry. If it closes <2.69 then we'll sell it next open. 

Obviously this sort of sell is a discretionary exit (DE). I mark them with a DE, so that I know when I review my performance.

[2]  Our portfolio heat (downside exposure) has risen above the 10% limit. This is an indication to raise a few TSs and reduce some of this exposure. The following modifications reduces the heat from 11.3% to 9.2%. 

JHX is using  20% of our account as it's not a cfd trade. I'm placing a limit sell in the market at 19.65 (+1.5%). TS raised to BE(18.30)
CTX-cfd: TS raised to BE (33.60)
DWS: TS raised to 0.68. Our best open trade.
CAT: TS raised to 1.25. Sell order in the market, due to thin depth. 
FLN: Going sideways, but can jump higher at any time, not far from recent high.


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## grah33

it's great that your portfolio has gone back up again.  maybe you should have just sat out during the downturn.  i don't think i'll go long again when the market goes hurdling down.  but it's okay (didn't lose anything i  couldn't afford).  i might be jumping in soon - gotta check my market indicators.  i use hull's suggestions (when a 10 day ema crosses above a 30 day ema, both pointing up). very similar to what you are using.  should be good.


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## debtfree

*Peter2:* Post #67 - 17th July
Closed Trades - SEN shows profit of $66.00 but was brought for .13 and sold for .13
What am I missing here?

Cheers ... Debtfree


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## peter2

Trading update: 

DWS: TS raised to 0.70 (locks in +1R)
SEN: Sell on next open. I closed my personal trade at 0.19 today. To be consistent this portfolio should sell next open with a limit of 0.185. 

[SEN:  Spreadsheet not showing the third decimal place, sorry. Open price on the 13/7/15 was 0.132. ]


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## debtfree

Ahh, as simple as that, thanks Peter


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## grah33

Peter: just some questions:   say the xao is in an upchannel (short term) and approaches the top channel line. technically it's still in an uptrend, but is predicted to bounce down off the top channel trendline, even just a little distance.  would you still buy shares as the market is in an uptrend still?  or wait till it bounces off the top channel boundary .   also, i take it that we correlate share moves with the xao  simultaneously, in that if the xao is going down e.g. 3 days in a row, that's a bad thing for all our long positions.  just trying to explore this idea a little more.
thanks


----------



## tech/a

> SEN:* Sell on next open*. I closed my personal trade at 0.19 today. *To be consistent this portfolio should sell next open with a limit of 0.185. *
> [SEN: Spreadsheet not showing the third decimal place, sorry. Open price on the 13/7/15 was 0.132. ]




Where did you re buy it?


----------



## peter2

grah33: If the price of the XAO can be described in an up channel (short term) and is at the top channel line, then price must be making a new high (right?). If the index is making a new high I want to be fully invested long. 

Can price go down from here, of course it can, but it can also stay near this level or go higher. If I anticipated a dip then I could short the ASX200 to offset some of my longs. 

If the market is dipping but still classified as up then I'm still looking for buy setups if I'm not already fully invested. 

If the market goes down for three days then the portfolio will lose open profits. 

The market can dip and still be called UP, but if it dips and closes below the last HL then the up trend is in doubt. 

The description of the XAO trend determines the amount of portfolio heat (downside exposure) I'm prepared to tolerate. It's a crude attempt to objectively determine the market risk and provide guidelines for what I should be doing in the portfolio. Should I be buying or selling, adding or reducing risk and how much do I risk on the new trades.

 Let me show you a page from my SF trading plan. The time frames are longer because I'm trading weekly charts.


----------



## peter2

Trading update: (before close)

SEN: Sold on today's open (0.185). The re-entry was recorded in post #59. 

JHX and CTX: Short term trades like these are great when the market goes up and but go down just as quickly when the market dips. I've moved their TSs to BE and as price is getting closer we may as well close these trades at today's close. This avoids an ugly gap down if the US market has another down day. 

Note: They won't be closed in my medium term portfolio as their exit triggers are much lower and I can allow a HL to form here. A short term momentum portfolio like this can't or should I say doesn't allow this. 

JHX and CTX to be sold at today's (22/7/15)  closing prices.


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## peter2

Trading update: EOD

One down day (-1.5%) doesn't change the daily trend, which is up. Selling the short term large cap trades provides cash for others. 

JHX and CTX: These didn't bounce on the close at all. They were thumped.

AGI: Sell on the next open. This one is not going up just yet. Keep on eye on it though. I'll re-buy >2.80 if price doesn't close below 2.60.

Comment: As I've mentioned (as has tech/a and Pavilion103) getting out quickly is a requirement for a portfolio like this (*). The entries on both JHX and CTX were perfect. Prices went higher immediately and they added almost 2% to the open profits. Another up day and they might have hit their profit targets. JHX was very close. Not to be.

As we've seen today, a down day in the US markets and a down day in the ASX sees their prices drop quickly. We exit these trades as quickly as we start them. I don't see any reason to wait another day (and hope they go up tomorrow). 

Those trades didn't provide anything, but this market dip creates other opportunities. There's a small price consolidation out there waiting for us to find it and trade it. 

*  If you can't sell or buy quickly then this style of trading is not for you. There's nothing wrong with using a more relaxed style. In fact if it feels better for you then you should do it.


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## VSntchr

What was the exit signal on SEN?

VTG breaking 200 today looks good against a profit taking market! In fact, most of my BO trades went up today..


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## tech/a

SEN

Yes I remember now.
Both you and I made a glaring error in our stop
Placement at 13 c

That's AT Support where we would expect it to hold
It did--- twice.
Stop should have been at 12.5 or 12 c when the stop
Is triggered.

Cost me a lot more.


----------



## peter2

Comment: I love it when people ask questions. Why aren't there more from less experienced traders?

My discretionary SEN exit was based on the high volume (12M*) on the good profit news. Generally good news is sold into by the larger holders. I was surprised to see price hold up as well as it did near the close. This indicates that there may be more demand and higher prices. Since I had sold my parcel I thought I should close this public trade as well. I mentioned that it was a DE (discretionary exit). 

tech/a: re SEN exit trigger. Yes, I agree with you completely. 0.13 was a DH decision for the reasons you mentioned. Sometimes thinking about BE and preventing losses makes us overlook the chart obvious. 

The SEN chart is good example. Every now and then a price movement will end up in an either/or situation for discretionary traders.  The price of SEN drifted lower, on low volume, in a neat 3-wave abc correction to its 61.8% fib level, that coincided with the prior BO level. (This can be considered a pullback buy setup, not a sell.)

Do we exit at BE or allow the corrective move to complete (which may mean a small loss)? Most corrective pullbacks that go back 61.8% give up a significant amount of profit. and a quicker exit will prevent giving too much back. The pullback in SEN took back all our open profit but this pullback was only 4-5 price increments (ticks). This thread exited at BE, but got something from the re-entry trade.

It was that neat abc pullback that made me place the re-entry stop at 0.155 and was fortunate to be able to buy at 0.15 for the re-entry trade. 




* Just noticed that the daily volume figure in my chart shows only 7.4M. I was watching ETrade and it was showing 11.5M before the close and there was ~300K at the close. That's interesting. 

Is the CXA volume included in the ASX EOD data?  I would like to know.


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## VSntchr

peter2 said:


> IT companies seem to be the sector of the moment. Good news from ASZ, DTL have produced huge gaps up in their prices. MLB has been on fire.
> 
> TNE is currently in a corrective pullback and I'm watching the chart closely for a buy signal.
> 
> I want to mention SMX as another contender for consideration. Price seems to have started to climb off it's two year lows (support?).



Been holding SMX on a support reversal play trade which has transformed into somewhat of a BO. 
Agree that this sector looks like it is awakening from hibernation/leaving the dog house/insert your favourite euphemism. 
I like TNE and also have it on watch.
RXP is another sector contender, the daily (and weekly) chart shows a series of higher lows since March. Although the background context may prevent some from entering. With results out shortly perhaps it would be better to wait for some fundamental confirmation before considering this one.

That brings me to another question. With reporting season kicking off imminently, do you have any rules around holding through results?


----------



## peter2

Trading update: EOD

*AGI*: Sold on open (2.65) for a loss $354 (-0.7R)

New trade: *TNE*: Bought BO-HR at 3.77 (iSL 3.55)   
The larger price pattern is a pullback and I used the BO-HR as the entry trigger to see if price resumes the weekly up trend.

TS raised on *BAL* to 4.60, *API* to 1.55. 

_Holding through results_: Makes me feel like a "long-tailed cat in a room full of rocking chairs". Does that answer your question? 
I won't knowingly start a short term trade with a low size risk a few days before scheduled news. Trades that have been going for while (this means they are profitable) I'll let them go and wait for the surprises.


----------



## peter2

Does anyone know if the Chi-X (CXA) volume traded is included in the ASX EOD data?  

OR is there something about the ETrade volume figure that I don't know?


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## craft

peter2 said:


> Does anyone know if the Chi-X (CXA) volume traded is included in the ASX EOD data?




ASX data doesn't include Chi-X.  Looks like your E-trade includes both. Comsec only displays ASX data although trades may be executed through Chi-x.  Not sure what the standard policy (if there is one)  is for EOD data suppliers, or what the likes of yahoo finance include in their free data. Probably a pretty important question if you use volume in your TA.




peter2 said:


> Makes me feel like a "long-tailed cat in a room full of rocking chairs".



Classic!

ps
SRX chart.... Ugly.... how rude!!!

Great thread


----------



## skc

peter2 said:


> Does anyone know if the Chi-X (CXA) volume traded is included in the ASX EOD data?
> 
> OR is there something about the ETrade volume figure that I don't know?
> 
> View attachment 63559
> 
> View attachment 63561




It would appear that the ASX data contains only volumes traded on the ASX...


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## bonkerrs

peter2 said:


> Comment:
> 
> View attachment 63540




Can't work out why my chart has red candles where yours is blue, can see it after the consolidation period, during the breakout portion of the attached photo and I've noticed it in other charts.

Tech/a talked about placing the stop at 0.125 or 0.12 instead of 0.13. Could you please expand on this? Sorry I don't know how to make multi quotes but it was just before your above post.


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## bonkerrs

Not related to momentum trading but be good to get an understanding on this. How do you read this?


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## CanOz

Bonkers, I believe that Peter has a trend filter that is painting his bars in certain predefined conditions, could simply be a moving average or volatility. Where as you bars are only being painted based on close up, or close down.


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## debtfree

CanOz said:


> Bonkers, I believe that Peter has a trend filter that is painting his bars in certain predefined conditions, could simply be a moving average or volatility. Where as you bars are only being painted based on close up, or close down.



*Bonkerrs:* 1st July Post #18 - Peter covered this for you in saying "you'll notice that the bars turn blue when price moves >2ATR(10) [It's actually the SuperTrend (10,2) indicator]." A little different in I/Charts as CanOz stated.

If you want too see when Peter2's bars/candle would change colour add indicator 'Average True Range Trailing Stop,Daily10 / 2ATR Close
Cheers ... Debtfree


----------



## craft

bonkerrs said:


> View attachment 63563
> 
> Not related to momentum trading but be good to get an understanding on this. How do you read this?




Before you even try to read it, a few considerations.

In relation to what Peter was talking about in his previous post. Does what you are looking at include the Chi-x order book?

It definitely doesn’t include ASX Centre Point orders and that's where the big block orders tend to hang out looking for a cross match with anonymity. 

There’s also the algo’s where you might only see the tip of a potential iceburg.  

Then of course there is all the liquidity that is just hanging in the background that could hit the market at any second. You don't show your hand early when playing cards for money.


----------



## tech/a

> Tech/a talked about placing the stop at 0.125 or 0.12 instead of 0.13. Could you please expand on this?


----------



## peter2

The market is providing another situation that we must be prepared for, "disappearing buyers, very thin bids". This is happening right now in two of our trades (FLN and CAT) and it is occurring at/near our exit triggers. 

*CAT*: The big down bar two days ago alerted me that something had changed (our open profits disappeared). That means it's time to look for the exit, but the buyers' bids have thinned out. The portfolio needs to sell 5132 shares and our exit trigger is 1.25.  We could have placed our sell order in the market today and we might have sold, but unless we really did this we don't know for certain. I took a snapshot of the MD just before the close today. The pic shows that there wasn't enough bid to sell our order at one price level and selling at market would have produced an average sell price of 1.222.  It's a loss on the trade after being nicely in profit. This happens. 



*FLN*: No big down day, but looking at the bids thin out is a concern, especially as it's also near our exit trigger (1.20). We need to sell 5296 shares and again (like CAT) must go through several price levels to get our market order filled. Our average sell price is 1.22.



This is another situation where I think selling is the right thing to do even though price hasn't closed (FLN) below our exit trigger. I would label this type of exit as discretionary (DE) also. 

Sometimes, getting out when you can anywhere near your exits is a good exit. Don't be a dick for a tick in this situation.

Personal note: My personal trades in these stocks have not been sold as the parcels are larger. I can be a bit more patient and it might take me a few days to sell. I may get a better or worse sell price. I know where my must sell price is and I'll be keeping a close eye on the MD.


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## peter2

EOW Trading update: ASX Momentum Portfolio  *+10.0%* ( 46% invested in 4 trades )  XAO *-5.8%* ( 21 weeks)

This weeks sells: SEN, JHX, CTX, AGI, FLN, CAT
This weeks buys: API, TNE

TS adjustments (in yellow in xls): API, BAL

This portfolio ended the week a little higher even after losing approx 2.5% of open profits as the market dropped. Closing trades reduces our downside exposure and this can be seen in the rise of the red line in the chart. We are poised to start more trades next week if the market rallies. If it continues lower we'll protect our capital.


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## grah33

Peter: thanks for the detailed response, including pictures, it was quite helpful. never thought of shutting positions off if the market is no longer uptrending.  do u think that for daily short term trading,  if the market changes from being in an uptrend to going horizontal like now (or even downward), one should just shut off all their open positions, or wait and see what happens to them?



ATR stop loss question: I've been reading about this in  my books but they are unclear in terms of applying it.  if u use e.g. 2 ATR for your stop loss, is that isl set at 2 ATR, and from then onwards as well 2 ATR - as price increases so does the  stoploss ( a trailing 2ATR stop loss) .

and by the way, FP markets have been chasing me hard and they offered to give me a share-cfd trading account with .09% brokerage.   that's like $1.8 brokerage for every 2000$ worth of shares.  i'm thinking of taking it up , and they are dma as well. seems to good to be true.  if anyone knows of any significant drawbacks to using cfds for short term trading let me know.  i may save quite a lot of money, which is good for a newb.


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## peter2

grah33: I think you may have misunderstood. I closed the positions because the market was disappearing. I don't want to be left holding something that no-one wants to buy. I expect the buyers will return but I don't know at what price they will be willing to buy. Short term traders should avoid these situations.

I am concerned that the thin MD is here to stay and would advise you to stay with the higher volume stocks. 

How you manage your portfolio in response to the market conditions is up to you. I've explained my guidelines several times already. 

Trailing stop sizes: You have to find what works for you. You will have a different tolerance for risk than others. 

Be sure to match the style of your trailing stop to the style of trading you intend doing. IMO there are only two types of effective TSs, either tight or loose. If you think back to the TS discussion on SEN. A TS at 0.12 would have been loose and a TS at 0.14 would have been tight. My selection of 0.13 was in the middle and a stupid place to put it.


----------



## peter2

Trading update: 

BAL: Seems to have been sold off today and price is near our exit trigger. Sell next open (Wed 29/07) for this portfolio. (I'll give my trade another day or two to see if any demand appears at the 5.00 level.) 

Outlook:  Precarious, tricky. I want to see the market bounce from this level before starting more trades. Things could get ugly if it goes down to test the lows. On the bullish side there are a few nice looking large cap charts (JHX, CSL, WBC, BOQ, BEN, QBE).




SEN: BO-NH today after 4 inside bars with low volume.


----------



## peter2

Trading update:

BAL: Sold on the open as mentioned early this morning. 
DWS: Exit trigger (ET) raised to 0.78 and limit sell placed in market (0.89). 

New trade:  SPK: Bought today's BO-NH (2.68)  iSL = 2.55. 
Looking at the larger timeframe this is a reversal, but I like the daily chart which gives us a low sized risk opportunity to get into a new trend if it continues.  I'm not expecting a fast trade like DWS. This will be slow and steady.




Outlook: Pleased to see the market find support here. Hope it holds and there is some follow through immediately.


----------



## peter2

Trading update: Before close.  New trades as the market is starting to look bullish.

AAD: Missed/ignored BO-HR but after seeing quick retest of BO and small TC pattern bought today's open. Bid 2.40 got 2.40 iSL = 2.25.

ELD: Another BO-HR with a low sized risk setup. Bid 4.00on open, got 3.97 iSL = 2.75

JHC: Sector seems to be in demand, missed BO yesterday, bid 2.80 on open, got 2.79. 
Not a perfect setup like the others as there is a recent high to the left, but there's room to geta  reasonable start to trade on a move to 3.00.




Comment: I've been cautious and waiting for the market to start going up. This can mean you miss a few perfect entries, but the extra confirmation improves the probability. Remember that next week anything can happen.

I've a few more comments in the EOW update, later.


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## peter2

I'm deliberately targeting a different price range and company type to Daffy's (tech/a) trades. Occasionally we'll trade the same stock (SEN) but that will be rare. 

You should also see a difference in activity between our styles. Daffy's is much more active than mine. I don't want to look at the market during the day until late pm. I'll make most management decisions EOD when the market is closed. I'll occasionally buy a BO late in the afternoon before the close, but will mainly buy on the open like most EOD traders. 

We're lucky to be able to see different styles traded at the same time. These chart based methods contrast nicely with the longer term value investor threads. (Personally I'm really going to miss craft's input. He earned my respect years ago with his unique way of interacting in the market.) 

Patience, I keep on mentioning this, but I do it to get it into my thick head. Patience means keeping your exit triggers away from the market. It's very tempting in a thread like this to get cute and raise them when we don't really need to. Daffy can use tight stops, because he's watching prices closely. I'm not. 

Some of you will have noticed that prices in many of our recently closed trades have bolted higher (SEN, AGI, FLN, CAT). That's trading. 

SEN was closed as I saw very high volume on the day relative to what was on my charts. My mistake was not realising that the CXA volume is not included in the ASX daily reported volume. I'm happy with the exit based on my information at the time. I learned something. The trading mistake was not re-entering at 0.19 after I realised my error. 
AGI: My mistake here was placing the SL too close and not allowing price to form a HL at the 50% retracement level which was right where my iSL was. 
FLN, CAT trades were closed due to disappearing bids near the exits. I'm happy with these decisions as capital protection is very important. Price has bolted higher in both stocks as demand reappeared quickly. Who knew this would happen? 

Always review your decisions when the emotions of the trades have dissipated.


----------



## peter2

EOW Trading update:     ASX Momentum Portfolio *+11.7%*  ( 103% invested in 7 trades)    XAO *-3.7%* (22wk)

This weeks sells:  BAL
This weeks buys:  SPK, AAD, ELD, JHC

TS adjustments (in yellow in xls): DWS, TNE

This portfolio drifted higher as there seems to be more of a "risk on" sentiment. This is flowing into the mid cap industrials. The portfolio started four trades this week with the improving bullish outlook.


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## debtfree

*Peter2:* A few things on Volume 
 I have noticed of late that you have had a little difficulty getting out of some stocks when you wanted to, due to liquidity/volume disappearing or thinning out. Has the latest conditions of volume in stocks changed enough for you to review your criteria in your different strategies? 

Some of the things I know you have stated before on volume:
_I use an average of $120,000 per day level when scanning.  
I use different volume filters to reduce the amount of results in the scans. 
A high vol filter may miss charts in a low volume consolidation. 
Small cap stocks can have great strong looking trends but their daily volume is too low for a large portfolio so they can be missed with a high vol filter._

I understand all the above are related to scanning, trying to find potential candidates and that's all ok with me. But, after  your scan  has completed and when you're reviewing a chart that has good potential,  naturally you would look back at the volume for that stock once again.  What various things  grabs your attention in relation to volume that makes you chuck it out as a candidate even though it having good potential. 

A couple of things I thought about was maybe: One or two huge days that has distorted the average volume and on all the other days there is just not enough volume to get out safely. Or, the stock has a few really low volume days at times mixed amongst good volume days. Is there a lot more things to consider in regards to volume than this after scanning that I'm not thinking about?

Even with your weekly trading if you have an exit signal you would sell on Monday I guess, so you would still need to make sure of volume levels but I suppose in this style of your trading you would be in even higher volume stocks, would that be right? 

Any extra thoughts on chucking out good candidates because of volume problems scenarios you can think of would be appreciated. Thanks Peter for any tips and your continued work here.

Cheers ... Debtfree


----------



## peter2

Trading update: Open trades will be managed EOD. 

*DWS*: Sold at our sell limit (0.89) which has been in the market for a week (post#101). I did notice the increasing bid depth and considered pulling the order. This sort of decision is best made just before the open or soon after. I'm generally not available at the open and I am going to manage these trades on an EOD basis. As the order wasn't pulled, we sell at our limit (0.89). 

A good result for a reversal trade (+5R) using the BO-HR as our setup. 

This sell realises a good profit and makes some cash available for further trades. The portfolio was 100% invested for a while and without cash one can't keep opening trades. This aspect is often overlooked by paper traders as they start heaps of trades without realising they have no available cash. 

I'd love to start five trades tomorrow. Cut the losses quickly and let the good ones go higher. It's real time trade management practice, which is good, but overlooks the consequences of limited capital. This portfolio has enough cash for one trade with a tight SL or two trades if the SL's are further away. We can't start five trades and if there are five great setups, we can only choose one. What are the odds that the one we select to trade will give us the best result? Sometimes we get lucky (DWS) but mostly we get average results. 

Some of you are probably thinking so what? Well, how would you feel seeing the one you selected going sideways while three of the others are charging higher? Would you be ruing the ones that you missed? Would these emotions sabotage your daily trade management decisions?  I'm going to say yes and you'll end up making mistakes that will cost you dearly. 

Summary: If you're paper trading then keep an eye on the capital used and available cash.


----------



## peter2

Trading update:  The index was thumped by an unexpected sell off in the banks. 

*SPK*: New trade that gapped down but hasn't recovered quickly.  SELL next open. Re-buy if trades at 2.70. 
We may have been a bit early on this one, so take the small loss and get ready for another BO-HR entry at 2.70-71.
If your iSL was at 2.50, then you can be patient and wait.

API, TNE, AAD, ELD JHC:  Patience, prices have paused while the index dips. 

XAO outlook: Currently between recent high and recent low, so we're cautiously bullish. If the index drops <5500, we'll reduce open risk quickly by culling the losers and raising exit triggers. 

I don't mind having two attempts on a BO provided I've kept the first loss small (-0.5R). The first loss doesn't mean I'm wrong. I prefer to think of it as a matter of timing and the first attempt was too early. Don't ask me what I think if it fails on the second attempt.


----------



## grah33

Peter: i've been looking at your trades in these sideways market conditions, and wondering how hard is it to profit now? both bedford and Hull suggest avoiding uptrending share strategies when the market isn't going up , although you seem to be fairly active at it.  just wondering can one profit well or is it really hard in these times (sideways XAO conditions)?   and are there other more suitable strategies to use for sideways market conditions?  the impression i get is that  many people only trade when the market is bulling upward, but i'd like to be able to trade even when it's going sideways. thanks again, and glad you did well with DWS.  and thanks for journaling your trades.  it's helpful to me on a practical level.


----------



## peter2

Firstly, thank you for your post. I'd hope that there would be many more posts from others like you, struggling to get something going. 

grah33: You've asked this question at least five times now. If you don't like the answers then it's time to figure it out for yourself. If you think it's hard to make a profit going long in a down market then for you it will. You're stopped, waiting for a push, without turning the ignition key. 

Even though the overall market (index) has been going down there are >120 stocks that trade $200K/d and have their 10EMA>20EMA>50EMA.  You only need to trade a few of them to create an overall profit. I've been doing it, Daffy's been doing it. What have you been doing?  What is your favourite chart setup? Have you written your first trading plan yet?

I don't want the answers. Consider this a helpful kick in the pants. You've got to select something to start with and stick to it in every market condition. That's the only way to learn. Your experiences will be more meaningful than anything you read or hear. 

The pattern that got me going in the ASX market was the Darvas box pattern. I've paper traded this pattern over one hundred times, then traded it live ever since. When the going gets tough I go back to this pattern. It gets me into the strongest trends. This pattern doesn't trigger very often in a down market (that keeps me safe).  I can trade this pattern, short, medium and long term. 

It always was and will always be, up to you. 

*ps*: I mentioned that the next ASX trading game was due to start soon. Did you even consider having a go? 
I wonder if kushi212 will try his "simple momentum strategy" in the game. I bet he won't.


----------



## peter2

EOW22 Trading update:  ASX Momentum Portfolio  *+9.0%*  ( 72% invested in 5 trades )      XAO *-7.0%* (22wk)

To the CEO of ANZ, thanks for nothing. The portfolio lost it's open profits and followed the market down. The only thing to do now is to protect our capital and reduce the open risk. Prices are getting closer to their exit triggers but haven't yet breached them. 

This weeks sells: DWS, SPK
This weeks buys: nil

DWS: Our best result yet and it's a great example that our management rules/guidelines will not always give us the best result in every situation. I use sell limit orders to catch spikes in price that hit high targets because I don't watch prices during the day. It would have been easy for me to say that I'd pulled the sell order and we're still in this trade. The market doesn't allow you to change your mind and you should never change your mind when you paper trade. 

"Show me the money". 
You'll notice how taking the profit and raising the exit triggers reduces the downside exposure (red line moves up, locking in profit).


----------



## Nortorious

peter2 said:


> Firstly, thank you for your post. I'd hope that there would be many more posts from others like you, struggling to get something going.
> 
> grah33: You've asked this question at least five times now. If you don't like the answers then it's time to figure it out for yourself. If you think it's hard to make a profit going long in a down market then for you it will. You're stopped, waiting for a push, without turning the ignition key.
> 
> Even though the overall market (index) has been going down there are >120 stocks that trade $200K/d and have their 10EMA>20EMA>50EMA.  You only need to trade a few of them to create an overall profit. I've been doing it, Daffy's been doing it. What have you been doing?  What is your favourite chart setup? Have you written your first trading plan yet?
> 
> I don't want the answers. Consider this a helpful kick in the pants. You've got to select something to start with and stick to it in every market condition. That's the only way to learn. Your experiences will be more meaningful than anything you read or hear.
> 
> The pattern that got me going in the ASX market was the Darvas box pattern. I've paper traded this pattern over one hundred times, then traded it live ever since. When the going gets tough I go back to this pattern. It gets me into the strongest trends. This pattern doesn't trigger very often in a down market (that keeps me safe).  I can trade this pattern, short, medium and long term.
> 
> It always was and will always be, up to you.
> 
> *ps*: I mentioned that the next ASX trading game was due to start soon. Did you even consider having a go?
> I wonder if kushi212 will try his "simple momentum strategy" in the game. I bet he won't.




Hi Peter,

Great work on the thread and I can confess to reading the content religiously but not contributing a whole lot so my apologies for not providing additional comments and posts.

Interesting you mentioned the Darvas Box System. It is simple and it is effective. The strategy I have been trading  is a combo of Darvas, Wyckoff and Stan Weinstein and as you mentioned above, you need to trade to find what works for you.

I think many people can learn from this thread if they take the time to reflect on the lessons being taught (and shown) as well as trading for themselves. My own portfolio has been doing well this year despite the choppy market, the last few weeks have seen overall portfolio gains of 18%, 6% and 24% for each respective week and then this week I dropped 6%. 

For all the newbies and those learning, what Peter is showing is that whilst it is nice enjoying the prosperous times, when the storm clouds start to form, it's time to risk manage and reduce the open risk for your positions. I can't encourage people enough to pay attention...

The hardest thing for people entering this game is the need to be "right". Watching a position go from profit into loss is gut wrenching when you are starting out and your emotions will play havoc. Trade your plan... It took a number of knocks before it got into my thick head but now I'd prefer to exit a position at a small loss and preserve my capital for the next trade. In the end, trading is a numbers game and you trade with the positive expectancy formed through the probabilities of your setups. What's better? To be right or to be profitable....

The ASX game now provides a pretty good platform to test your strategies out on. I will be participating using the same strategy as my real portfolio but this is more for entertainment (and hopefully prize money) value. The list of stocks available is fairly limited (in my opinion) but there will still be opportunities to take positions, plan your trade, position size, manage your exit/stop loss etc. I'd encourage those "paper traders" to play the game.... and commit to it as if it was your real $$$ on the line.

Anyhow, I'm starting to ramble and it's Saturday morning, so I'm outta here!

Thanks again Peter for your great work. Keep it up!


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## grah33

Hi Peter

Thanks for the kick in the pants, but i'm not getting slack with it.      I've been learning and back-testing manually - going back in time manually to see how my share picks would have turned out for the recent down market while following bedford's advice for shorting (she advises to increase isl space since conditions can be volatile).  seemed to get ok results in profit. this kind of back-testing is really good - u get practice this way, go through many stocks straight away and learn what you would do to manage the trade as the days pass (quickly).  I should also back-testing my normal strategy for these current sideways market conditions too.  I've also been reading about hull's strategies for sideways/down  markets but i just don't trust everything out there really works.  and experienced people can give different answers  . some other forum members seemed to recommend trading other instruments in sideways markets while you are trading shares.  if it's possible to profit now with the same strategy than that would be best since i know shares already (to some degree).so i'm glad i asked you as well .  can i ask what expectancy (roughly) drop do you get when you trade sideways markets, and what exposure do you use?  no need to measure or hash numbers out, but just roughly your impression.

I'm currently waiting for an uptrending xao and xso (hull's indicator,  a 10ema to cross over a 30 ema, for both indices).  i guess it means that i wait a little longer than you b4 i trade so the market is trending up truly. i've enrolled in the game from b4 and played another sim. still learning...

i assume the darvas box is just breakouts in an uptrend, aka new high, what you have been using most of the time. you look for these breakouts cause they are strong. i trade this and bounces off support trendlines in uptrends (the easy peasy) for now.

my radge newsletter (i'm subscribed talked about a trend following system failing in horizontal market conditions + hull doesn't recommend his trend following system in sideways markets, so that is also why i ask...). but if there is a way to profit in sideways markets with shares, then I must find out what it is.

thanks again.


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## debtfree

*Nortorious:* It's  nice to see you jumping in here and I just wanted to say thanks for the encouraging post and also the reinforcing of Peter's message on Trade and Risk Management, excellent.

*grah33:* Good to see you still seeking answers for your questions. You're not the only one to get a kick in the pants so keep going and move ahead. I've asked questions before, got a kick in the pants and when I've reviewed previous post the answers were there for all to see but sometimes as Nortorious stated "It took a number of knocks before it got into my thick head" as well.

It was only a week ago I asked Peter a few things on Volume, he didn't answer me! It made me think about it, he knew it would and this was his way of giving me a kick in the pants. I thought it was a fair enough post when I posted it but on reflection, I was trying to get perfection in my trading plan down to a nitty gritty and I realise that no one's trading plan is absolutely perfect and one that only spits out winners. It's about Trade and Risk management after you have some potential candidates to trade. Well I think that's why Peter didn't answer me  Keep searching grah33.

Cheers ... Debtfree


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## peter2

grah33: This pic is just for you. The colours indicate my edge over the last eight years trading ASX equities. 

You'll notice that when the trend of the XAO is unclear ( = sideways) there are less opportunities, or it could be that I decide to start less trades because the trend is unclear. The strategy that works best for me in sideways conditions is the pullback(PB) strategy. Many of these setups might be described by you as buying off support. Remember that my daily PB setups require an up trend in the weekly chart. I don't purposely trade channel setups, however some turn out like that as the initial target is the old high (top of channel). 




*ps*: There's no point replying when commonsense provides the answers.


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## debtfree

*Peter2:* The market is looking a little poor tonight, prices are close to the Trailing S/Losses. I know Capital at Risk and Total Portfolio Risk are low from your trade management. If overnight markets turn out very poor would this be enough for you to sell all stocks at Open in the morning rather than waiting for the next day's open? Or, is this a case of just sitting tight and letting your T-S/Ls take you out?

Cheers ... Debtfree


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## peter2

Trading update: Thanks for the prompt.  I may not have thought about this portfolio tonight. The weakness in the index is mostly due to the banks which have been killing me. While the nurse dresses my "bank" wounds, let me have a look at our open trades.

API: Price has made a 3-wave correction to our exit trigger. Yes, I think we should SELL next open (12/8) as I sold mine at today's close. If I had a little more patience our original SL (1.40) is a great "must sell" line in the sand.  I like the 3-wave correction, I'll be keeping an eye on this one for a re-buy (>1.75). 

ELD: Price is testing the BO level. Another down bar would make me sell on the close. Yes, let's SELL this one on the open also. we can always re-buy when price close >4.00 again. 

JHC: Price could be making a HL and I'll like to give it a chance, but this is a momentum thread so SELL this next open. 

TNE: Nothing to do with this one as long as the HL holds. 

AAD: Nothing to do here. There is enough depth so I'd sell if 2.25 trades, and also sell if it looks like closing <2.30.  A good re-entry would be the BO-NH (>2.45). 

Low volume retracements when the market is being sold off are hard to sit through. It's important to manage them consistently. For this thread if there is any doubt I'll sell, knowing that we will re-buy them when prices start to rise again. A medium term trader should let the HL's form as they confirm the trend.


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## debtfree

Peter2:
I hear what you're saying in regards to "The weakness in the index is mostly due to the banks which have been killing me." since the banks are such a large part of our market. I also noticed on my daily sector chart that Health and Energy over the 8 trading days has taken big hits as well, the weakness is a little more widespread and I'm sure many other traders  have suffered a few  wounds also. 

Thanks for the update, I thought you might be a little proactive today due to market conditions at this time for your momentum trades. All trade management makes sense and I like the way you're still looking forward by mentioning re-entry and at the same time marking your re-entry point/price, another important part of our trading plan. 

Thanks Peter and hope you have health insurance for your wounds. 
Cheers ... Debtfree


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## debtfree

Peter2: 
What's your thoughts on TNE today? It rallied higher before heading down with sellers coming in as well, do you think momentum is over now? Is it time to sell today or do you still sit tight? AAD - I presume that's sold today?

Cheers ... Debtfree


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## peter2

Trading update: Huge down day. Daily - DOWN, Weekly - DOWN, Monthly(incomplete) - DOWN

AAD: Sold at 2.25. 
TNE: Looking OK to hold. I would be concerned on a close <3.80 and would sell if 3.75 trades. 

The best way to handle losses is to close the position. All the emotions and that queasy feeling in your guts disappear. Open wounds dry up and the healing starts. 

As for the insurance, I'm sorry that we didn't start an ASX200 short to offset our longs. Mea culpa. This is one aspect of my trading that needs to improve.


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## peter2

EOW24 Trading update:   ASF Momentum Portfolio   *+8.0% * ( 41% invested in 3 trades )    XAO *-9.1%* (24wks)

Another fun week in our market (4/5 down days). In the past two weeks the market has dropped 5.6%. Our portfolio has dropped 3.7%. We managed to protect a little bit. 

This weeks sells: API, ELD, JHC, AAD
This weeks buys: NXT, ELD

ELD: Noticed it spiked up through 4.00 this afternoon and looked like closing >4.00. This was our predetermined re-buy entry trigger. We bought 4.05 (iSL at 3.70). 

NXT: Bought BO-HR (at 2.67) iSL placed conservatively at 2.45. 

Are we there yet, another low that is, or will it go to 5100 (Oct14, Dec14 lows)?  It doesn't really matter. We'll just start a few trades and protect our capital as best we can.


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## grah33

thanks for the diagram peter.  i don't know if they are percentages taken from winning trades or what but it is interesting to note that the pullback trade is your main shot (i assume you mean a pullback from a breakout).  would like to ask you something, again if you don't mind: i've been paying attention to market depth as you do and i'm wondering if there is a setup that looks good (chart wise) that we would like to take but the depth is badly against us then should we take it?  or perhaps the depth can change very quickly so we shouldn't worry too much about it and if the setup looks good go for it?



the market has been horrible hasn't it, terrible for a newby trader


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## VSntchr

grah33 said:


> the market has been horrible hasn't it, terrible for a newby trader




The market in general hasn't been ascending upward. But that doesn't mean that there hasn't been a wide array of opportunities for breakouts. In saying this though, it has been tough and if gains haven't been taken at key levels/desired targets then profits have often been washed into BE or even losses. I've had this happen with more than a few trades and it can be disheartening, but it's all part of the trading business. 

In my opinion, the market is always providing extremely valuable lessons to traders - especially those who are experiencing certain conditions for the first time. So instead of calling the market terrible, I like to view it in a way that it is terribly constructive - I like to focus on what these market conditions provide in terms of opportunities, how I feel when I am forced to trade in them, how my trading stats look and what I could have done to better mitigate risk. By capturing all of this data I am able to be better equipped for the next time that we enter market conditions that are similar to this. 

If the market was just going up through the period that Peter had been running this journal then all we would have learnt would be how to count money  and while I love the thought of that as much as the next guy...I think that these sort of conditions have allowed Peter to display risk management in a strict and mechanical fashion that will provide the core skills for traders to ensure that they can stay in the game and grind out singles and doubles day after day. I try hard to focus on process over outcome and trust that overtime the results will correlate with progress on process improvement.


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## VSntchr

While I am here, thought I'd offer a candidate - not a BO yet...but worth the watchlist.
REG. 
EHE has already broken out, and I noticed the recent trade in JHC - so the sector is hot.

I was considering a pre-emptive trade here..but with the result coming out shortly I decided to wait. If it does BO, then that tight consolidation offers a pretty good low risk setup IMO.


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## peter2

Vsntchr: Thanks for dropping by (RFN looking good btw). My focus has been on other markets (indicies) while the ASX has been falling. Have we made another low here? It's only one up day, but, about time.

REG: I like it a lot and will wait for scheduled report(28/8) and close >6.00
UXC: Liked today's BO of small TC pattern, but again, must wait for scheduled report (21/8).
JHC: Watching it.  (>2.80)
SRX: Yes, even this BU chart BO (>31.00) Very crafty.
MEB: VTX: I like both of these recent BOs, but will leave them for Daffy. 
SEN: Price going sideways, not far for another BO.
BKL: Great TC pattern, but price not for this thread. 

I mention "must wait" as my trading plans state to not knowingly buy before major scheduled reports. 

Grah33: MD does vary and it can do it very quickly. I'll overlook thin MD if the daily volume is adequate (10x my parcel size.). I've used this guide for quite a while now and maybe I should increase it to 20x my parcel size.


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## peter2

Trading update: Looks like the XAO is going down to 5100. Plenty of large caps with 6% yields available. We should be close to a low. 

TNE: Sold at 3.75. Thought this one might hang in for us. A small loss (-0.1%).

AAD: Bought again as price traded at 2.45. I place the re-buy stop orders for only three days and then remove them as price drops lower. Yesterday's large up bar alerted me to replace the order. The difficulty here was selecting a reasonable SL price. I chose 2.20 as this is about an 80% retracement of the range from the low to the entry price. I prefer to place my exit stops below the 50 - 61.8% retracement level and create a HL without triggering my exit stops.

A conservative SL for a longer term trader would be 2.10, but this increases the size of the "risk" to 0.35 and would mean a lower parcel size and price must move at least 0.35 to create a +1R win.


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## peter2

EOW25 update:     ASF Momentum Portfolio  *+7.8%*  ( 37% invested in 3 trades )      XAO *-11.4%*  (25wk)

Our portfolio ended the week lower by 0.2% while the XAO dropped 2.3%. I hope you see the advantage of sticking with stock in strong up trends. They sell off with the market but not as much and they recover quicker. If you stay with the weaker stocks, you get hammered. 

This weeks sells:  TNE
This weeks buys: AAD


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## skc

peter2 said:


> EOW25 update:     ASF Momentum Portfolio  *+7.8%*  ( 37% invested in 3 trades )      XAO *-11.4%*  (25wk)
> 
> Our portfolio ended the week lower by 0.2% while the XAO dropped 2.3%. I hope you see the advantage of sticking with stock in strong up trends. They sell off with the market but not as much and they recover quicker. If you stay with the weaker stocks, you get hammered.




Plus the fact that you are only in 3 positions so >60% in cash. The ability to quickly go to a high % of cash will protect you from the worst falls. It would also cost the trader some missed profits if and when the market turns. 

But, managing risk is more important and there is no such thing as a free lunch!


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## IFocus

skc said:


> Plus the fact that you are only in 3 positions so >60% in cash. The ability to quickly go to a high % of cash will protect you from the worst falls. It would also cost the trader some missed profits if and when the market turns.
> 
> But, managing risk is more important and there is no such thing as a free lunch!




Apologies haven't followed the thread if my comments are out of contex

Being long in a down trend is a flogging to no where particularly if it follows through , Peter has done well to hold the losses to where they are.


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## peter2

Trading update: Well, we don't see a -4% day very often. 

ELD: Sell if 3.70 trades again (in market).
NXT: Sell if 2.45 trades again (in market).

AAD: nothing to do.


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## VSntchr

VSntchr said:


> While I am here, thought I'd offer a candidate - not a BO yet...but worth the watchlist.
> REG.
> EHE has already broken out, and I noticed the recent trade in JHC - so the sector is hot.
> I was considering a pre-emptive trade here..but with the result coming out shortly I decided to wait. If it does BO, then that tight consolidation offers a pretty good low risk setup IMO.





peter2 said:


> REG: I like it a lot and will wait for scheduled report(28/8) and close >6.00



Well for anyone with big balls, today the price initiated the BO. Report coming in a few days, so I am still waiting...given that JHC didn't take off on their report despite a prospectus beating result - I think waiting will be prudent. Perhaps this will turn into a nice BO-PB pattern by the time it is suitable to enter.



peter2 said:


> UXC: Liked today's BO of small TC pattern, but again, must wait for scheduled report (21/8).



Report out of the way (good result IMO) and I still like this chart. Holding up against the market despite some wild volatility.


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## peter2

EOW 26 update:    ASF Momentum Portfolio *+5.5%*   ( 13% invested in 1 trade )     XAO *-10.6%* (26wk)

Almost overlooked posting the weekly update. That's the result of one very interesting week. Who would have thought that this week would have ended higher. 

This weeks sells: ELD, NXT sold during volatile movements. 
This weeks buys: nil

Comment: There are not many BO opportunities in the market for this portfolio due to the big dip. As a result I will be selecting a few pull back setups. The basic scan finds charts where price has moved >2 ATR(10) higher than a swing low point. The setup checklist has additional filters that narrow down the trading candidates. I want the recent swing low to be a HL on the weekly chart. I want the weekly RSC(XAO) > 0 (stronger than the index), plenty of daily volume, swing low (HL) should be at the end of a corrective move that is appropriate (size) for the prior impulsive move (think EW abc correction or equal time correction), price at 50% - 61.8% level of prior impulsive move.

That's a little bit subjective, but I've got to leave a little mystery as we're discretionary traders after all. As a matter of record we're going to forward test this strategy. Therefore we're going to start more trades than normal (in a bear market) and probably be fully invested a little more often.


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## peter2

Trading candidates for this week are;
Break-outs:  REG, RCG, TGR
Pullbacks: CSL, HSN


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## VSntchr

FPH seems to fit the bill for a breakout. A close above 695 looks like a good entry to me. 
Weekly trend up, daily chart shows a higher low. I'd opt for 630 stop. 



On a side-note, REG is a good example of how a report can ruin a perfect setup!


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## peter2

I've been focused on other markets while conditions were unfavourable for this thread's system (*). Two up days doesn't change the daily trend but the bounce makes a higher low which is good to see. Of course we must be mindful that this bounce may be only a short lived rally. 

(* Kudos to tech/a for continuing Daffy's thread in a strong down swing.)

VSntchr:  Thanks for the notice on FPH. I like it a lot. 
REG: Our caution in waiting for the news saved us from a loss. That's why we have that rule. 

Trading update:  AAD remains open. 
BSL: Bought BO of the small trend continuation pattern (after the BO-HR at 3.80). SL = 4.00
TPM: Bought the BO-HR, SL 9.00

Watching the BO levels in NUF, TGR and multiple pullback setups (123Low).. I remain cautious in this rally. 
I anticipate some resistance at 5400 (XAO) and I'd like to see a HL above 5400 (XAO). That would induce me to risk more.


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## VSntchr

peter2 said:


> I've been focused on other markets while conditions were unfavourable for this thread's system (*). Two up days doesn't change the daily trend but the bounce makes a higher low which is good to see. Of course we must be mindful that this bounce may be only a short lived rally.
> 
> Watching the BO levels in NUF, TGR and multiple pullback setups (123Low).. I remain cautious in this rally.
> I anticipate some resistance at 5400 (XAO) and I'd like to see a HL above 5400 (XAO). That would induce me to risk more.



Agree with all your points. I'm cautious as well. Have traded various strategies throughout the last two weeks, although all of them have been at reduced size so that I can maintain some sanity!

Another one I found this afternoon: *HFA*. Have traded this one successfully before and like the look of the consolidation at the HR (its a pretty wide resistance range due to illiquidity). I like the fundamental backdrop of this one as it is a 'fund of hedge funds' manager - so it _should_ be performing well for clients against traditional FUM plays in the current environment. 
It is a bit tricky to decide on where to enter this one as an aggressive trader may take an entry now in anticipation, but I guess the clear entry is a close above 250. I'd really like to buy only on a close above the break as it can wick around a bit. For the same reason I'd have a stop at a close below 226. Some real nice and sexy lower highs on a few charts now!


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## peter2

EOW 28 update:     ASF Momentum Portfolio *+5.3%*   ( 51% invested 3 trades )      XAO *-13.5%* ( 28wk) 

This weeks buys: BSL, TPM, JHC  (break-outs)

Outlook: I'm getting a little bullish here as the market goes sideways. I'll remain bullish even if the market makes a new low but doesn't stay there (bear trap). I'm personally using weekly lows to ensure my exits aren't triggered by the daily volatility. Although I'm bullish I must restrict my bargain buying and stay within my risk limits for a market that is trending down. 

Charts that I'm watching for BO opportunities:  
AHY APE CIM DTL EHE FLT FPH GNE HUB NTC PBG PRG PRO RCR SGF SIQ TGR TRS 
Lots of them are slowly appearing.


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## peter2

Trading update:  

*RCR*: Bought the BO (2.10)  SL 1.90 
I like that the small consolidation is above the 2.00 level and the old highs.


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## peter2

Trading update:  New trade (BO-HR, also an ascending triangle pattern) 

*GNE*: Bought at the BO level 1.70 over several days (thin depth). SL 1.58 
Stock is CD (0.09NZD) soon. We may have to reduce the SL by the div amount after it goes XD (30/9). This will depend on the price movements at that time. 




Raised several exit triggers to reduce portfolio heat and keep it within our bear market limits (<5%). 
JHC: Raised to 2.65
TPM: Raised to 9.20
AAD: Raised to 2.30

Outlook : I remain cautious anticipating a retest of low. Upcoming FED news might be the catalyst.


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## peter2

Trading update: 

BSL:  Today's large down bar triggers our exit on tomorrow's open.  We earn the 0.03 div, but that's a pittance as the price dropped >0.30. Looking at the chart our exit is late. My mistake. Each mistake erodes our edge.


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## tech/a

peter2 said:


> Trading update:
> 
> BSL:  Today's large down bar triggers our exit on tomorrow's open.  We earn the 0.03 div, but that's a pittance as the price dropped >0.30. Looking at the chart our exit is late. My mistake. Each mistake erodes our edge.




Brutal

Least it wasn't like TNG!!!


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## VSntchr

Alot of nice BO plays kicking in this week:
*TGR *in play after the 385 break...
*PRG *looking good with a very tight range right on the BO level.
*FLT *looking good and despite going ex-div this week looks like it will finish at the upper end of the range, maybe a trigger next week.
*TPM *coasting nicely after the 960 break
*SRV* had a bit of burst the last few days..
The aged care providers (*EHE*, *JHC*) are having a bit of a breather but are still in play.

I'm not unhappy to see FPH pull back a tiny bit, I haven't wanted to enter too many trades in the current environment, more consolidating at the current level should provide a better risk adjusted entry if the BO occurs.


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## peter2

EOW 29 update:    ASX Momentum Portfolio  *+7.5%*   ( 81% invested in 6 trades )     XAO *-11.9%* ( past 29wk)

This weeks sells:  BSL sold after huge down bar. This exit was several bars too late as the BO (our entry) didn't go on with it. By not acting decisively at the correct time (proactive) we are reacting to moves by the market. 

This weeks buys: RCR, GNE and TGR (Bought BO-HR at 3.85, SL is 3.60)   
The new trade in TGR replaces BSL, which was sold for a loss (-0.7R). 
[VSntchr: Thanks, I was all over it. It's in several portfolios.]

Outlook: I'm now mildly bullish from cautiously bullish and having a hard time restricting my portfolio heat to bear market limts. A few market sectors are going up (XEC, XNJ, XSO and XGD) and I'm happily buying into those sectors (except gold).  

Our portfolio is 81% invested and the remaing 9.7K will be used for leveraged trades when the portfolio heat is a little lower. It's too early to start using leverage. My trigger would be after the XAO closes above 5300.


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## peter2

After a huge down day (upcoming retest of low) it's good seeing two of our stocks in the top 5 ASX200 gainers table. May they continue higher.


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## skc

peter2 said:


> After a huge down day (upcoming retest of low) it's good seeing two of our stocks in the top 5 ASX200 gainers table. May they continue higher.




TPM reporting tomorrow FWIW.


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## peter2

Thanks, that's useful info re TPM. 
Luckily, in this instance price is not close to our sell trigger, so we can "let it ride". However, price can be a bit volatile sometimes after the news and I'd like to place a limit sell at 10.87 (+2R, good until 11.00am) in case price opens higher or spikes up after the open. This is notification in case that does happen before I see the market.


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## peter2

Trading update:  TPM price volatility after news allows me some intraday speculation. My intention was to take profit at +2R or sell at our BE level. 

Price opened slightly higher (10.55) than yesterday's close (10.48) and went up but didn't hit our sell limit order. Price then went down below yesterday's close and I sold it at 10.47 to preserve our existing open profit (+1.4R).

The report looked all good to me and I considered buying them back at a lower price (10.23) locking in a small profit for the intraday intervention. I didn't rebuy them as I knew you were watching and this sort of trading is not part of the plan. I'm trying to set an good example so I've got to stick with the plan. 

As an aside, I do trade these price movements after news occasionally and I'll admit my record is not great. Actually, my record sucks at this type of trading because I don't do it consistently. The reason that I would have been profitable with this TPM trade was due to the slow price movement. Generally price movements are too quick for me to react manually. 

We've stuffed the +1.4R result into our swag and on to the next trade.


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## peter2

Trading update: New trade.

ACX: Clearly in a strong trend up.  Bought BO-NH (4.40),  SL arbitrary placed at 4.00


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## peter2

Trading update: Lots of opportunities, even in this depressing market. Missed BO's in NUF, HUB. 

Placed buy orders (with limits) to buy BAL (<8.05) TPM (<10.55), ELD(<4.05) for myself. 

This portfolio is back in TPM, SL at 10.00. This trade will be managed aggressively with a tight exit stop. Price continues to go higher or we exit. I'll know what to do at EOD. If today remains up, I'll raise the exit trigger and remove most of the risk. If today ends up down I may exit next open and keep the loss low. Let's wait and see. 

We've now invested 95% and my bullish enthusiasm has the portfolio risking more than planned in this down market (Capital risk 6.4%, Bear mkt limit <5%). This means the trades will be managed a little more aggressively to ensure that the portfolio doesn't lose that 6%. 

We may also use the remaining cash for margin in an ASX200 short if I see a low risk setup. I anticipate a retest of the low, but if it looks like going lower we'll offset the portfolio with a short.


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## VSntchr

Did anyone get the HFA 251 BO? Flying off again today :dance:
PRG/SKE have the merger vote today so could be worthwhile watching PRG closely for the BO!


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## peter2

VSntchr: Yes, thought of you yesterday as HFA broke higher. Thank you.
I see your HFA and I'll raise SGF for your attention.


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## VSntchr

peter2 said:


> VSntchr: Yes, thought of you yesterday as HFA broke higher. Thank you.
> I see your HFA and I'll raise SGF for your attention.



hehe!
Would you call me silly if I told you I prematurely accumulated SGF in anticipation? I Promise I thought of you as I did it as you brought it to my attention in your earlier post! I treated 300 as the level rather than the more clearer 307 level its currently bumping on right now.


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## McLovin

VSntchr said:


> hehe!
> Would you call me silly if I told you I prematurely accumulated SGF in anticipation? I Promise I thought of you as I did it as you brought it to my attention in your earlier post! I treated 300 as the level rather than the more clearer 307 level its currently bumping on right now.




You were thinking of peter2 as you prematurely accumulated?


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## peter2

back at you. I've also been pre-empting a few break outs lately (eg FPH). It's the thin MD that has me buying in anticipation of the BO rather than waiting for the BO. 

There are heaps of opportunities just now.  DTL, TME are worth a look. 
We rarely see price go sideways for three weeks (ignoring TO offers): SIQ, SRX have been rock solid.


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## VSntchr

McLovin said:


> You were thinking of peter2 as you prematurely accumulated?




I was hoping someone would pick up on my not-so-discreet attempt at humor!


> I've also been pre-empting a few break outs lately (eg FPH). It's the thin MD that has me buying in anticipation of the BO rather than waiting for the BO.
> 
> There are heaps of opportunities just now. DTL, TME are worth a look.
> We rarely see price go sideways for three weeks (ignoring TO offers): SIQ, SRX have been rock solid.



I think we are running the same book this week!


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## peter2

EOW 25/09/15 update:    ASX Momentum portfolio *+10.3%*  ( 95% invested in 7 stocks )  XAO *-13.9%* (last 30wk)

A good week for the portfolio (+2.8%) compared to the XAO (-2%). The portfolio has been rewarded for buying stocks that are going up and are performing stronger relative to the index. 

This weeks sells: TPM
This weeks buys: ACX, TPM

We've done a good job collecting winning trades, considering the market is still classified in a weekly and daily down trend. I hope this performance devalues the idea that we should revert to cash and stop trading in a bear market. We've been very cautious and will remain cautious, yet we find the portfolio almost fully invested. We can use our remaining cash ($2751) to leverage into trades in a few large caps (cfds) or keep it for trading the ASX200 index. We'll grab the next opportunity whichever it is when it's recognised. 

There was a moment this week that we had too many trades and that our capital at risk (6.4%) was above our bear market limit (<5%). However now that the prices in many of our trades have gone higher, we're able to raise our exit stops and reduce the downside exposure within our limit. We've been able to reduce it to 3%, so theoretically we can start two more trades. Only, we don't have the capital. To become fully invested in winning trades should be the goal of every portfolio manager. 

Enough rambling from me. Let me show you the xls. Modifications to our TS's are highlighted in yellow.


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## peter2

Trading update:  new trade IPL

IPL-cfd: Bought BO (3.89) of small consolidation using cfds (as we are running out of capital). Target price shown. (SL = 3.65)


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## peter2

Trading update: We knew today was going to be an interesting day, probably down. 

TPM: Sold early as price traded our tight TS (<10.50)    Average sell price 10.43 (Result -$100, -0.2R)

As the market is making new lows, we must protect our portfolio and reduce our total risk. We took the opportunity to invest more as the market went sideways. Things would have looked very rosy if the market bounced from here, but as it didn't, it's important to minimise the losses.

AAD: Place Sell limit 2.70  Lock in profit.
TGR: Place Sell limit 2.28  Lock in profit.
ACX: Place Sell limit 2.15. Take the small loss. We'll re-buy this on BO > 4.40

GNE: Let it ride, although I'm inclined to exit at BE if price trades back down there. (0.09NZD XD 30/9)
JHC: Leave TS at 2.65, 
RCR: Leave TS at 1.95, showing some demand 

IPL-cfd: Nothing to do here as there is not much room to work with. Will exit if 3.65 it traded (exit in market). 

Note: If the DOW drops another 200pts over night ( more irrational panic) I may just sell the top three on the open. 
Aside: I'm personally considering buying the US ETF (VTS or GGUS) if there is more panic selling now or early Oct. These ETFs won't be traded in this thread. I'll be prepared to buy in halves as I won't buy the bottom.


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## peter2

Trading update:   Trades closed:  TPM, AAD, TGR, ACX 

These trades were closed to grab some profit and to reduce risk as the XAO closed below 5000. The close <5000 indicates that there might be further falls and I think it wise to protect what we've earned and our capital.

Although I anticipated a retest of the Aug low it was by no means a certainty. We continued to trade in this bear market as there were plenty of setups and if the market rallied we were positioned to take full advantage. When the market went down, it showed that our postion was in danger, hence the immediate protection which has been consistently applied in this thread.

Being nimble is a state of mind. Intraday traders must be both nimble of mind and action. We can also be nimble trading EOD and weekly charts. Two days ago I was getting very bullish as the number of opportunites were growing each day. One huge down day and the XAO closing <5000, changed my mind immediately and I got protective. Now that I've taken some basic protective measures I'm keen to see what opportunities are available now. 

TPM: Obviously the daily volatility means it's impossible to use tight exit stops. The price has recently broken out from a long period of consolidation. These break-outs are perfect for a medium term trader who is more patient than this threads portfolio manager. 

GNE: We earned the div as it went XD today and dropped by the amount of the div. This puts price back at our entry and BE. We'll try to hold on and see if price recovers quickly. 

TGR: Price didn't drop much on the large down day. This is bullish and is worth re-buying at 4.40. 
ACX: We'll re-buy at 4.40 provided price makes a HL (and forms an ascending triangle).

Other opportunites from my BO watchlist: 
ALU, APO, ASZ*, BAL, CGC, EHE, GNC*, HSN, HUB, NTC*, OML, PRO*, RCR, SGF, SIQ, SYD*, TME*, TRS, ZIP*
(* triggered today/recently)   How many do we need?


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## peter2

Trading update:  new trade ASZ

ASZ: Bought BO (1.005) SL = 0.92.  I liked the fact that the small consolidation (box) was located above the prior BO level (0.93). The initial target is the old highs (1.10). Then we'll see what the demand is like.


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## peter2

Trade update:  new trade APO

NTC: Considered, but rejected as price nearing 1.50 resistance. 
OML: Considered, rejected due to thin bid depth

*APO*: Bought (3.81, SL 3.60). Price at recent BO level (retesting this level) and we'll know within 3 days if  the demand was real or if supply is withdrawn again ("tech/a").


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## VSntchr

ASB.
Defensive industry if the market does keep collapsing (unlike today). 
Great chart, good recent announcements, tight consolidation above the recent BO-HR...
What's not to like here?


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## peter2

*ASB*: Thanks. I looked at this at the 1.90 and 2.10 (BO levels), but declined to buy. I've traded this successfully in the past (huge trend up), but it's prone to large spikes down. Not suitable (imo) for a tight exit stop, but trending up solidly. Great weekly chart since the BO back at 1.00.

Unfortunately I do glance at the fundamentals occasionally and in this case I'm biased against it. I'm wary of companies that rely on one large customer especially when they are governments (or public service organisations). They can change their minds overnight or make a stupid statement that drives the price down significantly. 

Do you find yourself consciously biased against certain companies?

ps: Bought BO-NH in *ALU* this morning.  Haven't needed to look beyond the letter "A" yet for a BO opportunity.


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## skc

VSntchr said:


> ASB.
> Defensive industry if the market does keep collapsing (unlike today).




*Defense *Industry. Not necessarily *Defensive *Industry.


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## VSntchr

peter2 said:


> Do you find yourself consciously biased against certain companies?



I certainly do, sometimes they look like excellent candidates for investment/BO/mean reversion etc, but for whatever reason I don't want to take the trade. 



> ps: Bought BO-NH in *ALU* this morning.  Haven't needed to look beyond the letter "A" yet for a BO opportunity.



 Got that one too, but fat fingered the trade (well skinny finger) and left a zero off the order. Got filled and price zoomed off, leaving me with a small parcel and the remaining order lonely in the depth!




skc said:


> *Defense *Industry. Not necessarily *Defensive *Industry.



Yep. My argument would be that the multiple government contracts would tend to be more reliable than a few corporate or retail clients. However, thinking a bit more in-depth I can see how this is a bit naive. Governments can appear so reliable, until they aren't.  I guess we only have to go back a couple of weeks to see how quickly a government can change it's leader let alone a few defense policy conditions. Contract, what contract!
In saying that, the company appears to be on it's way to diversifying revenue sources, with additional governments becoming clients, new regions and industries (European catamarans, Middle Eastern oil vessels etc). However these lines aren't exactly defensive either, in-fact they seem highly cyclical.


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## peter2

EOW update:   ASX Momentum Portfolio *+10.9%*  ( 95% invested in 7 trades )   XAO *-13.7%* (31wk)

The index ended the week +0.2% but was hardly calm. The retest of the Aug low on Tuesday caused a bit of activity that was documented as it happened. 

This weeks sells: TPM, AAD, TGR, ACX
This weeks buys: IPL-cfd, ASZ, APO, ALU 

Outlook: Have we seen the low?  Does it matter?  The XAO remains in a weekly and daily down trend.  We've started more trades as the number of opportunites grew and we had capital to risk. We will monitor the open risk carefully and take protective action when indicated.


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## peter2

Trading update:  new trade (UGL)

Raised a few exit stops, which reduces our downside exposure (portfolio heat), which in turn allows us to start another trade. 

UGL: Bought BO-HR (2.08), SL 1.80  This is a second time has gone through the BO level (~2.05). 




ASL: Chart shows a nice low risk setup, but can't bring myself to trade in this sector. 
OML: This was also re-considered for a trade.


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## peter2

Trading update:  

IPL trade closed at price target (4.10) +0.8R result.  Not a great trade but it's still a good one to stuff in the bag. 
I was aware that I entered late in this chart. IPL came up in my scans at 3.60 level (123Low pattern). This provided an acceptable 2:1 RR. I dismissed it at this time due to the bearish market sentiment, however when this sentiment became more bullish I bought the BO of the small consolidation (box pattern) overlooking the now poor RR.

We all make poor decisions at times and once I recognised this I was determined that it wouldn't cost us. Considering that it was a late entry, the increased costs of a cfd trade, I thought it best to grab the profit at the logical chart price target. 

The chart shows the difference in the RR for each entry.


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## peter2

Trading update:  Many trailing exit stops have been raised to reduce downside exposure (portfolio heat). 

Many of our BO's have started well, but have not gone as high as +1R or +1.5R levels. So there is no thought of taking profits. We must let price do it thing, and this means letting it fall so it can make a HL if there is enough demand. Raising our TS's too tightly would not help us generate sufficient profits to offset our previous losses. 

We can however raise them a little to reduce some "heat". Saving a little across many trades helps reduce our heat by 1%. 

I should remind you that these exit stops are not in the market. They are used EOD as an indication of when to sell next open.


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## peter2

Trading update:  GNE exit procedure (notice to sell)

*GNE*: Price has fallen after going XD and the trade has lost its short term upward momentum. I notice that the bid depth is becoming very thin for the sellers (us). It's time for us to sell our parcel (~4400 shares) and I'll do this at 1.65/66 over the next few days if the volume allows. We'll use the money to buy another BO (RIC, MNF?) when we get the cash.

As a medium term holder I'm not selling my position unless price fall further. I have dropped my exit stop by the amount of the div (0.09NZD) and I can be more patient with this NZ electricy/gas supplier. I'm always prepared to let price drop to that often seen 50-62% retracement level and my exit stops are below that. 

Comment: Another example of the subtle difference in trade management between a short term momentum trader and a medium term trend trader. The trend trader has to allow price to fall back and form a HL while the short term mom. trader hates to see 50% of their profits disappear.


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## peter2

EOW update:   ASX Momentum Portfolio   *+16.3%*   ( 75% invested in 6 trades )     XAO *-10.0%*  (32wk)

It's been a good week for our market (+4%) and especially this portfolio (+5%). The portfolio's downside exposure has been kept below our max DD limit (<10%) by raising a few exit stops. We have cash (~15K) to start new trades and we'll do so next week.

This weeks sells:  IPL-cfd, GNE (reasons posted earlier)
This weeks buys: UGL 

Outlook: Moderately bullish. 

Note:  This good week has seen our portfolio hit a new high and this recovers the latest draw down (DD). This last DD has been our biggest so far at -7% and this recovery has taken 10 weeks.  I've shown the graph of the portfolio's EOW DD. My goal has been to try and avoid a DD of 10%. So far so good. 

Now think back over the last ten weeks. The market went straight down and we were selling to reduce losses and didn't start many trades at that time. We were patient (some of you would have been impatient and frustrated). This portfolio has gone sideways for 6-7 months. I felt the frustration and impatience too, but I didn't let them interfere with the execution of this portfolio's trading plan. We knew there would be plenty of opportunities in the future.


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## peter2

Trading update:  A brief note to mention our re-entry (buy) into a BO-HR in *ACX*. 

I like the recent HL and there is now a clearer ascending triangle pattern. I've pre-empted the BO by a few ticks and the iSL is at 4.00. This is our second attempt at this BO.


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## tech/a

Smacking along Pete.

Looks like a KING tide!


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## peter2

Thanks, tech/a. 
Like you I'm grabbing a bit every time the tide comes in and not giving it all back when it goes out. Loved your recent +8R result in SBM. That one win covers 8 routine losses. Don't they feel good.


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## grah33

it's been a while since i was on here, but the market is starting to rise again...  glad to be back. was learning about forex while away, but i regret that. it's WAY too much to learn too soon.   seemed like a good idea before, but i feel like a fool now.  anyway, i have to go through all the other posts yous wrote. main thing is i still got my money.


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## peter2

Trading update:    A new trade and time to sell one.

REG:  Bought at open after closing above BO level (5.50). SL = 5.20. This is a pull back setup as the weekly trend is up (HHs and HLs)
This is not a full size position as we ran out of cash. 

ALU: Time to sell this one after so many down bars and closing < 4.40. I probably left this one a bit too long, but we could give it more time as the rest of the portfolio is doing well. Selling this will free up some cash for new opportunities.


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## peter2

Trading update: at the close.  Two new cfd trades as we're low on cash (ALU sold earlier)

CGF-cfd : Bought BO-NH (7.52) SL - 7.25  Price target 7.95 (sell limit in) 
MND-cfd: Bought BO-NH (7.32) SL - 6.70

These cfds trades must continue up immediately (next week) or we'll exit within 3 days. 

SEN: Missed it as price "jumped the creek" and over my buy limits. 
LSR: Missed it as Barney was late with his potential BO warning. Just kidding Barney. 
I missed the sideways price consolidation as the average daily volume was below my scan limits.


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## VSntchr

peter2 said:


> Bought BO-NH (7.52) SL - 7.25  Price target 7.95 (sell limit in)




Hey mate, 
Quick question on the execution of CGF. Assuming that the order was pre-meditated based on the new HL pattern and holding above the approximate resistance line - why exactly was 752 chosen as opposed to say...today's open?

I'll proffer my own response and say that you waited for the morning price discovery to get out of the way and then bought on the BO of the days high?


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## peter2

Thanks for the question. 
OK first we had to sell ALU to raise some cash. That was done at the open price, while I was asleep.

2. Then I had to wake up and see what the market was doing. I was watching the late US rally so anticipated a good day for us today (= sleep in).

3. In the CGF trade I wanted to see if price was going to close >7.50 before buying. CGF can get quite volatile and now that it's finally closed above 7.50, it might race up to 8.00 next week. 

I don't day trade ASX stocks, but I will day trade the indices. If a swing starts either in the UK or US sessions I'm onto it before the ASX opens.


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## peter2

EOW33 update:    ASX Momentum Portfolio   *+18.1%*   ( 121% invested in 9 trades )     XAO *-10.1%* (33wk)

Another good week for the portfolio as the BO entries got us into strong stocks (RSC(XAO)). As we were low on cash we have used the leverage provided by cfds to start our new trades. We were able to start these trades as our capital risk level was well below our limit for the current bullish market conditions (daily trend is UP). 

8/9 open trades in profit, with exit triggers >BE in 5 of them. We are well poised to profit if the market continues higher next week and if it falls, we'll protect our profits.

At the EOW our total portfolio heat (downside exposure) was above our portfolio limit (>10%) so we must raise a few exit stops to reduce this to <10%. Remember, our goal is to avoid a 10% DD, even if it's all profit. After these adjustments the portfolio heat drops to 7.4%. The current exit triggers are shown in the pic (latest changes with yellow background). 

This weeks sells: ALU (price drifting down), realised the small loss and bought something going up.
This weeks buys: ACX, REG, CGF, MND 

Note: The CGF-cfd postion has been restricted to our max size limit (20%). This size limitation and our tight iSL reduces the initial trade risk to 0.8%. This is a good thing as CGF can become quite volatile at times.


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## peter2

Trading update: Thoughts on short term management of our open trades.

JHC: We can sell it at 3.07 and re-buy at 3.17 OR give it one more day. I'm inclined to give it 1MD.
UGL: I gave this 1MD and price went up nicely. Our exit trigger is 2.20. 
RCR: Headbutting resistance at 2.50, I'm giving it 1MD.
ASZ: Headbutting resistance at 1.10 and our open profit is not  > average win, let it go.
APO: Attractive small sideways consolidation forming, pyramid opp if it's part of your plan, we won't as we're low on cash.
ACX: Let it go . . . 
REG: Price testing BO level, we must let it go and see what happens next.
CGF-cfd:  Near our initial target level (8.00), will sell this at 7.97 for an average sized win. No point selling it below. 
MND-cfd: Price rose on good news today, let it go . . . 

Personally: My medium term management will be to let them all go and see if they form a HL. We've bought them at lower levels and if price breaks higher that'll be great. We're seeing resistance where we expect it (at old highs). Nothing to do, other than buy more when they BO-NHs. 

We've got 5K cash, so I might duck into Daffy's thread and see if there's a setup for us in the lower priced charts.

I've got no thoughts on shorting the index atm as it's forming a shallow sideways consolidation pattern. It could be an bullish asc tri pattern or bearish ending diagonal pattern. We'll wait and see.


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## grah33

peter, would like  to ask you a few things.  i haven't had the 'experience' yet so i'm wondering about your initial stop loss for your breakout (with volume) pattern setups. assuming there are good market conditions are you using atr stop loss (if so what atr value) , or a pattern stop loss ( a smaller distance under the BO level)?  still have to read your posts of course (learning from multiple sources including different books).  i ask as i'm wondering if the smaller distance stop loss will actually work in real life.  i'm going to try and manually backtest my strategy when i get a chance.

would also like to know what is your take when  you are getting into an uptrend which happens to be approaching some past level of previous resistance ( a past distant peak)? do you expect greater resistance to be there and so don't get into the trend (the trend may come to an end)? perhaps this might show in the market depth as lots of waiting sellers.  i've seen cases where the selling depth has 10 times greater volumes than the buyers.

as always i'm grateful for your and everybody else's assistance.  thank you all


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## peter2

Trading update: Intraday transactions.

CGF-cfd: Sold 8.07 after raising sell limit overnight.
RCR: Sold 2.40 (near TS), but price seems to be struggling near the significant overhead resistance (~2.50). This trade has also earned the 0.075 div. EOD readers, sell at 2.35 - 2.40, next week. 

I'm wary when the market has a good day and a few my trades don't also have a good day (RCR, UGL). UGL profit not high enough to sell. 
I'll review the others at EOW.


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## tech/a

> I'm wary when the market has a good day and a few my trades don't also have a good day (RCR, UGL). UGL profit not high enough to sell.
> I'll review the others at EOW




Often not driven by the same factors.

Certainly I find in the small end of town
Macro factors "tend" not to be as influential.
Mind you a change of Commodity demand and price 
rises all boats.


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## peter2

Tech/a:  Yes, I agree with you that the small caps are less influenced by a good day in the large caps. The mid caps may or may not be influenced by the top end of town. RCR and UGL are both engineeering companies and perhaps I'm conscious of that and desire to grab some of the profit before it disappears. 

grah33: I prefer to place my ISL below a recent higher low (pattern). However sometimes this HL is too far away and the open risk too large. I'll then place my iSL at approx 80% of the swing. I allow price to pullback 50-61.8% so my ISL must be below this level. I've noticed that these SL placements are approx 3xATR(10). 

Smaller sized SLs are much better because it's easier to get larger wins (+R multiples) when the trades go your way quickly. The disadvantage of smaller sized SLs is that they will get hit more often, especially during periods of high volatility. It's important for you to understand both the advantages and disadvantages and assess if the disadvantages will play on your mind. If your SLs are close you may get frustrated and then sabotage your trading by revenge trading, doubling up or just procrastinate and miss some good wins. 

I think a new trader should use conservative stops while gaining experience. If you can exit quicker when price doesn't go your way >95% of the time, then you're ready to use tighter stops. 

Overhead resistance: Yes, I'm very wary of it and often sell (all or 1/2) at these levels. Our recent trade in CGF is a good example. We bought the BO (>7.50) and sold at the old high (~8.00). Initial risk = 0.27, profit 0.55 which is +1.9R with costs. 

 I won't buy a BO if the resistance level is too close and I can't get >+1R. The trend may not end at these levels but the price momentum generally stalls as there's supply at these levels.


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## peter2

EOW 34 Update:   ASX Momentum Portfolio   *+20.2%*  ( 86% invested in 7 trades )    XAO  *-8.6%* (past 34wk)

Another positive week for our portfolio. This makes it seven consecutive positive weeks. It's nice to see some reward for our efforts. You may notice that by raising our exit stops as prices go higher we are protecting our profits (see chart: red line rising).

This weeks sells: CGF-cfd, RCR
This weeks buys: nil (time to start a few more)

Outlook: Daily trend is UP, weekly remains down. I remain moderately bullish and protective of our open profit. There seems to be some demand for the large caps and we might trade a few of them next week for quick profits if this rally continues.


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## tech/a

Belting along Pete.
Is brokerage included in 
Your figures?
Can't see it on the spread sheet.
Probably blind.


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## peter2

Pav started his thread with IB brokerage ($12rt) and I've continued on with it. (I pay a lot more). 
The cfd trades have $22 rt commission with a few extra dollars for interest. 

Our total brokerage costs are $1170 (2.3% of our starting capital).


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## grah33

Peter: thanks for that.  3 atr seems really big according to the books i've been reading - 2 books suggest 2 atr for standard market conditions, and 3 atr for volatile, but if it works then it's good . 2 atr is similar in size to the pattern based stop loss which is the only one i'm familiar with at present.  i've noticed you don't exit on the day but the next day (just for your trailing stop loss i think), risking it going further down. but that is probably to stop you from getting stopped out from market fluctuations.  i might look into that.


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## maglincer

peter2 said:


> EOW 34 Update:   ASX Momentum Portfolio   *+20.2%*  ( 86% invested in 7 trades )    XAO  *-8.6%* (past 34wk)
> 
> Another positive week for our portfolio. This makes it seven consecutive positive weeks. It's nice to see some reward for our efforts. You may notice that by raising our exit stops as prices go higher we are protecting our profits (see chart: red line rising).
> 
> This weeks sells: CGF-cfd, RCR
> This weeks buys: nil (time to start a few more)
> 
> Outlook: Daily trend is UP, weekly remains down. I remain moderately bullish and protective of our open profit. There seems to be some demand for the large caps and we might trade a few of them next week for quick profits if this rally continues.
> 
> View attachment 64742




Hey peter, could you tell me what software you use in that picture or is it a spreadsheet?


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## peter2

It's a section of an excel spreadsheet that copies data from other columns into this table. 

This table makes it easier for me to manage each trade and to monitor the portfolio heat (downside exposure).


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## grah33

that's nifty (making it automatically copy), and saves time.   just wondering peter, do you spend lots of time, even several hours looking for trades?  i go through 200 stocks visually and it takes  several hours by the time i've done my trades. i'm thinking this would be normal and part of the job.  and do you get stock pick tips off people like n. r. (won't say the full name, make it non searchable that way)?  maybe that would save me more time . i've just been doing breakouts and breakout retraces mainly. that's it for now.   wouldn't mind asking you a few more qs if u don't mind...i'm assuming that most of the time when the market conditions are trending, the profits usually (but not always) turn over in the lead, but what when one enters positions at the start of a market downward exit phase (ie at the start of several down days, which take the market out of the uptrend it was in). will most of those trades (BO and retraces from BO, but other too) fail, or not so.  i'm just wondering what to expect.  i've been getting a few winners (mainly BO retraces was all i could find) but i don't know what to expect.  keeping it small for now with little position sizes while i learn.

as always other people feel free to chime in . you may know the answer and that stops me from bothering peter so many times.  and thanks again peter for whatever you have and if  you're busy u don't have to get back to this.


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## VSntchr

grah33 said:


> i'm assuming that most of the time when the market conditions are trending, the profits usually (but not always) turn over in the lead, but what when one enters positions at the start of a market downward exit phase (ie at the start of several down days, which take the market out of the uptrend it was in). will most of those trades (BO and retraces from BO, but other too) fail, or not so.  i'm just wondering what to expect.  i've been getting a few winners (mainly BO retraces was all i could find) but i don't know what to expect.



The answer to this question can be found by retracing through this thread. Operating when conditions turn south - it requires excellent management of the portfolio to ensure, which Peter has shown in spades.


grah33 said:


> keeping it small for now with little position sizes while i learn.



This is a good idea and will give you good experience without excessive psychological stress.


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## peter2

Yes I look through a lot of charts, mainly on the week-ends. I sort the charts into watchlists that I review each afternoon if I have capital available to risk. 

Looking through the "BO-soon" list I notice that ADA, BAL, BLA, BPS, 3PL, ISD, have all broken higher this week. They're easy to miss if you're not watching or placing alerts for them.

Trading update:  new trades, and close one that's going the wrong way.

*EGH*: Bought BO-NH (0.63), a little late, SL is 0.55.  
*TPM-cfd*: Bought after BO-NH (10.96), SL is 10.46 (risk 0.50).

*MND-cfd*:  Sell this next open, as it hasn't gone up on the recent good news.


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## Nortorious

peter2 said:


> Yes I look through a lot of charts, mainly on the week-ends. I sort the charts into watchlists that I review each afternoon if I have capital available to risk.
> 
> Looking through the "BO-soon" list I notice that ADA, BAL, BLA, BPS, 3PL, ISD, have all broken higher this week. They're easy to miss if you're not watching or placing alerts for them.
> 
> Trading update:  new trades, and close one that's going the wrong way.
> 
> *EGH*: Bought BO-NH (0.63), a little late, SL is 0.55.
> *TPM-cfd*: Bought after BO-NH (10.96), SL is 10.46 (risk 0.50).
> 
> 
> *MND-cfd*:  Sell this next open, as it hasn't gone up on the recent good news.




Nice work catching EGH Peter, looks good to me which is why I bought in at the start of October (average entry was 0.59). 

There are lots of opportunities in the market at the moment.


----------



## Nortorious

grah33 said:


> that's nifty (making it automatically copy), and saves time.   just wondering peter, do you spend lots of time, even several hours looking for trades?  i go through 200 stocks visually and it takes  several hours by the time i've done my trades. i'm thinking this would be normal and part of the job.  and do you get stock pick tips off people like n. r. (won't say the full name, make it non searchable that way)?  maybe that would save me more time . i've just been doing breakouts and breakout retraces mainly. that's it for now.   wouldn't mind asking you a few more qs if u don't mind...i'm assuming that most of the time when the market conditions are trending, the profits usually (but not always) turn over in the lead, but what when one enters positions at the start of a market downward exit phase (ie at the start of several down days, which take the market out of the uptrend it was in). will most of those trades (BO and retraces from BO, but other too) fail, or not so.  i'm just wondering what to expect.  i've been getting a few winners (mainly BO retraces was all i could find) but i don't know what to expect.  keeping it small for now with little position sizes while i learn.
> 
> as always other people feel free to chime in . you may know the answer and that stops me from bothering peter so many times.  and thanks again peter for whatever you have and if  you're busy u don't have to get back to this.




PM me graph and I can give you some insight into how I scan the ASX quickly using free software plus data (data is a subscription service so costs money) and allows me to find all the new breakout opportunities in less than a minute. After that I look at each chart and dismiss, add to the watchlist or put in an order...


----------



## tech/a

Nortorious said:


> Nice work catching EGH Peter, looks good to me which is why I bought in at the start of October (average entry was 0.59).
> 
> There are lots of opportunities in the market at the moment.




The luck of a Duck I reckon.


----------



## peter2

EGH: My entry is about 0.03 - 0.04 late and that usually means I'll have to suffer through the next pullback (dip). My buy here was a little impulsive. Yes, the Duck's entry was more professional than mine. 

However I think I've spotted one that even the Duck might like. Although less than $1 it's near the upper limit and probably too high a price for our duck. Sorry, I'm not going to mention it by name tonight as I want to place it in a few of my portfolios as well as this one and don't wish to be outbid by people I've warned. It's a dog eat duck market out there. If we buy it tomorrow, I'll mention it in the afternoon.


----------



## VSntchr

peter2 said:


> However I think I've spotted one that even the Duck might like. Although less than $1 it's near the upper limit and probably too high a price for our duck. Sorry, I'm not going to mention it by name tonight as I want to place it in a few of my portfolios as well as this one and don't wish to be outbid by people I've warned. It's a dog eat duck market out there. If we buy it tomorrow, I'll mention it in the afternoon.




I don't think that this is the chosen one, however *EML* is a <$1 stock which has just broken out of a nice tight consolidation. Low risk entry here at 76c with a stop at 71c. However, it is reporting a 4C this week so I'll be waiting for that to come out first as the stock has clearly run up expecting something good and the outcome of the BO will be hinged on it's contents.

*AGI *also looks okay at the moment with a bit of a retest going on today. The chart is a bit less clear here with some higher spikes above current levels. 

Interesting that you took *EGH*, I really wanted to take it at about 56-58 level after the recent raising but I get so nervous taking some of these lower priced stocks - maybe I need to spend more time watching the duck!
I did take *GTY *which is in the same sector and is doing equally as well.


----------



## peter2

Trading update: New trade

*SIP*: Bought today's open (0.81),  SL 0.75, target 0.95 
There is strong support at 0.72, and price has risen slightly making a HL. The RR is acceptable, but there is no volume confirmation. I may as well enter this one into the monthly comp.


----------



## Nortorious

peter2 said:


> EGH: My entry is about 0.03 - 0.04 late and that usually means I'll have to suffer through the next pullback (dip). My buy here was a little impulsive. Yes, the Duck's entry was more professional than mine.
> 
> However I think I've spotted one that even the Duck might like. Although less than $1 it's near the upper limit and probably too high a price for our duck. Sorry, I'm not going to mention it by name tonight as I want to place it in a few of my portfolios as well as this one and don't wish to be outbid by people I've warned. It's a dog eat duck market out there. If we buy it tomorrow, I'll mention it in the afternoon.




Well played sir.


----------



## peter2

EOW 35 update:       ASX Momentum Portfolio    *+22.5%*  ( 96% invested in 8 stocks )         XAO *-10.3%* (past 35wk)

Our portfolio (+2.3%) bucked the market drift downward (-1.8%) thanks to our position in APO which gapped higher on good news. We've taken this serendipitous profit and sold at 4.80 this afternoon. Yes, another discretionary exit, but the result is well above average. It also realises a major portion of our open profits and can now be used to increase our initial trade risk (compounding). 

This weeks sells: MND-cfd (small loss),  APO (huge profit)
This weeks buys: EGH, SIP, TPM-cfd

We have 13.5K cash and can use it to start further trades next week. Come'on the break outs!

Outlook: I remain moderately bullish and this little dip mollifies any media bullishness.


----------



## grah33

i made a mistake misquoting a book. 1 of those books actually suggests 3 atr as an initial stop loss

Peter: just wondering, what is your trailing stop loss approach (in terms of atr if applicable)?  and do you take profits at some point if it's strung high , or let it run until it hits your trailing stop loss?  

thanks again everyone.  and sorry for repeatedly asking questions about market conditions.  i got a few newsletters telling me stuff and putting doubt into these approaches. so that's probably why i was repeating myself unknowingly.


----------



## peter2

grah33: I've mentioned that I prefer to use higher lows (price patterns) for my placement of iSLs. There is no best method for placement of iSLs. There's no best method for trailing your exit stops. Having a consistent procedure for both is essential as this will allow you to record and then assess the effectiveness of what ever method you do use. 

I've tried to be consistent with the setups, entries, SL and exits during this thread and the record shows what happened. Now, because I have this record I can review the effectiveness of each part. I can copy the xls and resize the parcels based on a smaller SL and see the results. I can apply a trailing 3xATR exit on every chart and see how the results change. I can measure the effect of my discretionary exits against any objective exit method. This is valuable information for my trading. It won't help you. 

This is the record so far. . . (open trades at the far right)


----------



## Trembling Hand

peter2 said:


> . Now, because I have this record I can review the effectiveness of each part. I can copy the xls and resize the parcels based on a smaller SL and see the results. I can apply a trailing 3xATR exit on every chart and see how the results change. I can measure the effect of my discretionary exits against any objective exit method. This is valuable information for my trading. It won't help *you*.




 And neither will these,



grah33 said:


> *i got a few newsletters telling me stuff *and putting doubt into these approaches. so that's probably why i was repeating myself unknowingly.


----------



## grah33

Trembling Hand said:


> And neither will these,




fair enough peter, but do you ever take profit earlier on?  i know, there probably is no wrong or right here as well, but i'm just wondering if you do.  sometimes, maybe you're at 3R-5R, and i'm wondering if you take it while you can.


----------



## VSntchr

grah33 said:


> fair enough peter, but do you ever take profit earlier on?  i know, there probably is no wrong or right here as well, but i'm just wondering if you do.  sometimes, maybe you're at 3R-5R, and i'm wondering if you take it while you can.



These questions have been answered in this thread already. Perhaps not via a question asked - but through the trade journaling process. 
Many times Peter has described why he has chosen to take profits at 1.5R, or sometimes at 2-3R in the event of spikes.
I think if you go back through the thread and have a good read you will find some nuggets of information that will answer alot of your questions.


----------



## VSntchr

*REC *- 
For comments on the situation regarding this stock head over to the REC thread, it is under takeover so might not be everyone's cup of tea trade. 

Bought at 770 on the open in anticipation after the acquirer (IRM.NYS) popped over 3.8% last night. Nice consolidation at this level. 
Stop at 755 and a target of 840 being just under the cash offer - where I'd expect some supply to come into the market. 





Also, *UGL *BO today looks very good to me.


----------



## Nortorious

VSntchr said:


> *REC *-
> For comments on the situation regarding this stock head over to the REC thread, it is under takeover so might not be everyone's cup of tea trade.
> 
> Bought at 770 on the open in anticipation after the acquirer (IRM.NYS) popped over 3.8% last night. Nice consolidation at this level.
> Stop at 755 and a target of 840 being just under the cash offer - where I'd expect some supply to come into the market.
> 
> View attachment 64877
> 
> 
> 
> Also, *UGL *BO today looks very good to me.




I would see $8.00 to $8.09 as a bit of a danger zone for supply. Be wary at those levels as that will take some effort to get through if it is to move up to your target zone. The stop at 7.55 seems pretty tight but if it conforms to your trading strategy, stick with it.

UGL has too much resistance for my liking. It might make it up to the $2.70s without too much trouble but battle through to reach $3.

I feel there are better options in the market at the moment.


----------



## peter2

New trade:    *ISD*: Bought after seeing price has traded at a new high (>4.25).  
Bought 4.22, SL at 4.00.


----------



## Nortorious

peter2 said:


> New trade:    *ISD*: Bought after seeing price has traded at a new high (>4.25).
> Bought 4.22, SL at 4.00.
> 
> View attachment 64902




Nice work Peter2. This looks to have had an increase in volume today which will power it up some more one would hope.


----------



## peter2

We had a bit of cash handy and liked the second BO-NH attempt in ISD. Supply stopped the first one and we'll see what happens this time.  




pixel was getting me interested in SOR but it drifted down in the afternoon. If price gets back to 0.19/195 tomorrow, that would be interesting.


----------



## Trembling Hand

Pete what is that trailing squiggly line on your chart?


----------



## CanOz

Trembling Hand said:


> Pete what is that trailing squiggly line on your chart?




Looks like the index...


----------



## peter2

Yes, it's the XAO. I try to trade stocks that are stronger than the index using the RSC(XAO),21) indicator (not shown). 

The XAO (gray line) is there for visual reference and helps me see the strong/weak sectors when scrolling through the charts of the other indicies.


----------



## peter2

Anything can happen: We exited our trade in AAD a month ago. I was considering the recent break-out in AAD as a re-entry trading candidate (SL at 2.65). I hadn't checked for any scheduled news. I settled on ISD instead of AAD and CGC. 

It's good to get a reminder that anything can happen and that's why I post charts like this.


----------



## peter2

Trading update:  I've mentioned earlier that I keep an eye on the XAO index to gauge market trend and short term sentiment. The weekly trend remains down and the daily trend was up but that's now unclear. I've drawn a line across the 5200 level. If price closes below that line it would be a trigger to reduce portfolio heat by tightening exit stops and protect half the open profit. 

JHC: ISD: Nothing to do
UGL: Limit sell at 2.70 (>+2R), TS raised to 2.30
ASZ: TS raised to 1.07
ACX: TS raised to 4.40 (BE)
REG: TS raised to 5.60 
EGH: Has continued higher, raise TS to 0.59 (saves 0.5R). 
TPM-cfd: Not much room to raise TS, leave it at 10.50. The late buying this pm was encouraging. 
SIP: Raise TS to 0.78, price action is not looking promising. It could be an abc corrective pattern to retest the BO or a dead cat. 

Those modifications reduce heat by 1% and allow price some room to move around.


----------



## peter2

EOW 36 update:   ASX Momentum Portfolio   *+23.4%*  ( 115% invested in 9 stocks )      XAO  *-10.7%*  (past 36wk)

Overall, another positive week for our portfolio. Thanks mainly to UGL this week. Our newer trades have not started well (SIP, ISD).

This weeks sells: nil
This weeks buys: ISD

Outlook: Detailed in the previous post, I remain cautiously bullish. We have reduced downside exposure as the market goes sideways.


----------



## Nortorious

That's a might fine looking chart Peter2!

Well done


----------



## grah33

VSntchr said:


> These questions have been answered in this thread already. Perhaps not via a question asked - but through the trade journaling process.
> Many times Peter has described why he has chosen to take profits at 1.5R, or sometimes at 2-3R in the event of spikes.
> I think if you go back through the thread and have a good read you will find some nuggets of information that will answer alot of your questions.




i had a look but it wasn't easy to search though (might have to find something online that searches through heaps of related online pages .).  my approach might be like this. if a sudden big move occurs , it's good to liquidate, as a pullback may occur soon.  seems better to get out then and start another trade elsewhere because this trade might pullback and then start to move again at a normal pace. the same can happen in another new trade (move at a normal pace up). but i really don't know.just seems good to liquidate immediately if a big move occurs, but if it's ascending 'normally' then let it run all the way.   but i don't know, and it could be better to hold on to it. it's just an idea of mine.  i'm asking too many questions aren't i.   thanks again.


----------



## peter2

Your plan must have a range of exit methods. Mine are based on price movements, price patterns.

1. A disaster exit. This is your initial SL. No excuses, you must exit immediately.
2. An exit that reduces the initial risk to approx one half. 
3. A break even exit (should include costs). This removes the risk in the trade. 
4. Price target exit. This is decided at the start of the trade.
5. Profit protection exit. The profits should be allowed to get above average before this is employed.
6. Serendipitous exit. Price moves very quickly in your favour. Selling half is a suggestion. (eg Takeover offer)
7. Time exit. Exit if price hasn't moved within a specified period after entry (and there are other opportunities).


----------



## grah33

interesting and helpful to me peter.   regards your profit price target which is decided at the start, what is that about?  you aren't doing the conventional "let your winners run" it would seem to me


----------



## peter2

Trading update:  The XAO has closed below 5200 indicating its time to reduce our downside exposure. It doesn't matter that I think the dip is due to the weakness of a few stocks that dominate the index and is most likely temporary. 

ASZ:  Sell next open.  Re-buy at 1.13
SIP:   Sell next open.


----------



## peter2

Trading update: Sold ASZ, SIP on the open. Also decided to sell the losing trades in TPM-cfd and ISD this afternoon as the market is still going down. 

We're culling the losing trades first, to reduce our downside exposure.


----------



## peter2

*Executive decision*:  All profitable trades were sold at today's close (JHC, UGL, ACX, REG).

EGH is the only open trade remaining.

				---------------------------------------------------------

My immediate goals for administering this thread were to support Pav, support ASF and to see this portfolio to a respectable profit. I think I've completed all three and it's time for something new.

The ASX Momentum Portfolio has reached an important milestone. It has earned (realised) over $10K profit. I consider +20% within a year to be a respectable profit trading equities with minimal leverage. In the current market conditions any delay might have seen these open profits disappear and that would have delayed the implementation of some changes I'm planning. Hence my executive decision to realise the profits while we have them.




The ASX Momentum Portfolio will remain a long only ASX equity trading account and I hope a good educational resource. I plan to continue this thread for a full year (16 weeks left). At the end of one years trading I'll ask if there is any interest in continuing. 

This thread will continue and re-establish a new portfolio of trades. Of course I'm interesting in re-buying some of the trades we were in today if their prices rise to my triggers.
JHC: Rebuy if trades at 3.20
ACX: Rebuy if trades at 4.80
REG: Rebuy if trades at 5.95

My outlook remains cautiously bullish and I'll be on the lookout for other break-out setups.


----------



## peter2

It's time to announce some minor changes to the ASX Momentum Portfolio and something new.

1.  Brokerage costs will be increased to $30rt from the current $12rt. The new cost will be closer to the average costs that retail traders pay. This cost of brokerage is the biggest hurdle to be overcome by small accounts. Currently our trading capital is approx $60K so brokerage costs of $30 is 5% of our individual trade risk of 1%. This $30 cost will be included within the initial risk of every trade. This means every trade will have to make $30 to get to break even. 

Yes, this extra cost will slow the portfolio performance, but it won't stop us. 

2. We'll trade more sub $1 stocks when the setups are identified. While tech/a's thread was going I didn't even look at any stock that was <$1. I have no intention of trading in a similar manner as tech/a. His style is unique to him. My style is much more relaxed and I prefer to manage these trades on an EOD basis.

Before I announce something new. Are there any suggestions from you that might make this a better thread?


----------



## myrtie100

No questions yet.
Just wanted to let you know I'm watching with interest


----------



## PeterJ

myrtie100 said:


> No questions yet.
> Just wanted to let you know I'm watching with interest





Ditto Peter


keep up the great thread


----------



## peter2

NOW FOR THE SOMETHING NEW (and the main reason for grabbing those open profits)

The first 10K profit earned by the ASX Momentum Portfolio will be allocated to another trading account. This account will trade in the forex, index and commodity markets. 

Our trading business will operate two accounts. 
50K for ASX long only equity trades (and a few cfd trades)
10K for trades in the forex and futures markets.

The individual trade risk for a trade in either account will be based on the combined starting capital plus the realised P&L of both accounts. Currently this total is $60,534.


----------



## grah33

great stuff peter.  it's great how your portfolio made some new highs . and yeah, i'm definately interested in following the thread.


----------



## grah33

rather than limiting your exposure, have you ever thought of just trading US shares while the ASX is trending down?


----------



## peter2

Trading update: 

ACX: Bought near new high (4.77)   SL is 4.40    Desperate to get back in this one.
GEG: Bought new high (1.07)   SL is 0.95
SMA: Bought new high (0.049)   SL is 0.042

Increased cost of brokerage applied. 

grah33:  I almost started a US portfolio and even prepared a spreadsheet for it, but in the end decided to trade leveraged markets instead. I'll trade both long and short the world's major markets.


----------



## peter2

EOW 37 update:    ASX Momentum Portfolio  *+21.3%*    ( 41% invested in 4 stocks )    XAO *-13.3%*  (past 37wk)

Our portfolio lost value this week along with the market. 

This weeks sells: ASZ, SIP (Sells triggered),  TPM-cfd, ISD ( losers sold to reduce risk)
JHC, UGL, REG, ACX (Sold to realise profits for second trading account)

This weeks buys: SMA, GEG, ACX
Both SMA and GEG have started well, so their TS have been raised to reduce downside exposure.

Outlook: My cautiously bullish outlook is under pressure and we'll be protecting our portfolio if the market continues lower next week. 

                                                                 [ DE means Discretionary Exit ]


----------



## grah33

Peter: when u do trade US shares, which universe do you look at (there are several)?  And congrats on getting really good results.  U profited a fair bit considering that you traded during the recent bear market.


----------



## peter2

grah33: When I do trade US equities, I stick to the SP500, NDQ100 and Russell2000. I also have a list of optionable stocks that I've trimmed over the years (approx 2500). There are so many to select that I try to find perfect setups.


Trading update:  SMA placing a sell limit at 0.065 (+2R) to catch any spikes in the next few days.


----------



## peter2

Ka-ching!  
SMA traded today at 0.066 and our sell limit was taken out producing a quick +2R result in 4 trading days for this portfolio. 

This trend is capable of continuing much higher given time. Personally I've sold half and will continue to hold half.


----------



## peter2

Trading update:  Buying back in on these favourites.

TGR: Bought new high (4.40), SL 4.10
JHC: Pre-empting break-out (3.18), SL 3.00

APO: Love it, but I shouldn't get carried away with one bullish day. 
That's why I have to have limits on how much I put at risk.


----------



## grah33

peter, others: I didn't think SP500 was good as the shares are expensive but i now see that they too rise just as fast and just as much as cheaper stocks (or enough anyway) .  so why are we focusing on usually cheaper stocks in ASX trading (like a few dollars or so)?    i know the expensive shares cost more but often enough the total number of required shares to buy is still under 20% of our capital (it would seem). (and i'm sending you a little PM  after this)


----------



## Nortorious

grah33 said:


> peter, others: I didn't think SP500 was good as the shares are expensive but i now see that they too rise just as fast and just as much as cheaper stocks (or enough anyway) .  so why are we focusing on usually cheaper stocks in ASX trading (like a few dollars or so)?    i know the expensive shares cost more but often enough the total number of required shares to buy is still under 20% of our capital (it would seem). (and i'm sending you a little PM  after this)




It's a psychological thing grah33. 

People think with cheap stocks say a stock trading at $1.00, it only needs to go up by 10 cents to cash in a 10% profit. They think a stock at say $80, would need to increase by $8 in order to realise a 10% profit.... What's the difference? Not much really...

I personally think that larger operators are able to control the price of a stock which isn't backed by the large institutions a little more effectively. This means there action shows up on the ticker/chart and can easily be observed (and acted upon). 

All depends on what theories you subscribe to but think about the operators like Jesse Livermore back in the day. Whilst these type of players aren't well known in the public, I'm sure they exist and play the market as they need to in order to walk away with $$$. 

When looking at purchasing a $1.00 stock or an $80 stock, always consider the risk % of the trade to your overall portfolio - regardless of whether your position size is 10,000 shares or 100 shares.... I define my risk first and then position size accordingly.


----------



## Nortorious

peter2 said:


> Ka-ching!
> SMA traded today at 0.066 and our sell limit was taken out producing a quick +2R result in 4 trading days for this portfolio.
> 
> This trend is capable of continuing much higher given time. Personally I've sold half and will continue to hold half.




SMA looks great if it can hold above 0.065!


----------



## kid hustlr

Peter are you in APO? One of the systems I trade had a trigger to BOO the day it gapped up and I never bought thinking it would fill the gap. Price action was a give away over the last several days but I haven't being paying attention and can't bring myself to buy it on open tomorrow. Tough lesson I should have just bought it on the initial trigger


----------



## peter2

APO: This portfolio sold on the 30/10 when the price gapped higher and the close ended below the mid point. Today was definitely another BO buy signal, but I had already started trades in TGR and JHC. 

I find it hard to remember that the XAO is still in a weekly and daily down trend. There are so many stocks breaking out each week. 

It is tough to buy after a substantial move up, but that's a bias we must overcome as break-out traders. OR, we can avoid this bias by making sure we buy on the first buy signal.


----------



## grah33

nortorious, peter, other: thanks Nor.  That is informative and helpful to me.  i was wondering as one of my share trading books suggests using a filter to get  stocks priced from 20c to 5$, but it turns out that the sp500 has mainly higher priced stocks.  book reckons your capital can be over exposed with higher priced shares. although i did some tests and with a 1% risk often the capital required is still less than 20% of our total capital (for heavy priced shares e.g. cba).  but if you use a 2% risk than much of your capital gets used up on expensive shares (your over exposed to 1 share).  also, many shares in the asx200 happen to be cheap , which is convenient.  still not exactly sure though why we don't buy e.g. CBA on a day frame though since our risk is 1% here. can't remember if peter had a filter for looking for cheaply priced stocks and why. anyways, thanks again everybody. and enough of me rambling on.


----------



## peter2

We're using fixed fractional position sizing in this thread. The fraction that we are risking per trade is 1% of starting capital plus profits. This means the % gain of a stock is not what's important. The important aspect is the reward/risk ratio. We're risking 1% on each trade regardless of the price of the stock. If we can get a +2R result it doesn't matter if the stock price is 0.05 or $50.  

If you use a small initial SL on a higher priced stock, then yes the parcel size becomes too big relative to your account size. In this thread we apply a 20% limit.


----------



## Nortorious

peter2 said:


> We're using fixed fractional position sizing in this thread. The fraction that we are risking per trade is 1% of starting capital plus profits. This means the % gain of a stock is not what's important. The important aspect is the reward/risk ratio. We're risking 1% on each trade regardless of the price of the stock. If we can get a +2R result it doesn't matter if the stock price is 0.05 or $50.
> 
> If you use a small initial SL on a higher priced stock, then yes the parcel size becomes too big relative to your account size. In this thread we apply a 20% limit.




grah, I use a similar method for position sizing. Basically I define my risk on each trade (individual basis), and it might be say 20% upon entry. I then look at my total portfolio value at that point in time and use an excel spreadsheet (I have my own template set up) to work out how much capital to apportion to the trade to stay within my overall portfolio risk parameter (I have a limit of a 3% risk to my total portfolio on any one trade).

My capital allocation on any one stock does not exceed 25% of total trading capital but it is unlikely that I would purchase a stock with 25% of my capital in the one purchase. I would be more likely to scale in and average up along the way....

Continue to follow Peter2's thread as the information and approach is pretty sound and you will learn a lot if you read, listen, reflect and apply yourself. The best way to learn is through your own experience but all of us here at ASF can provide some pointers to help minimise the chances you'll make big mistakes that might wipe you out of the game.


----------



## peter2

Trading update: and having a bit of fun while demonstrating the fixed fractional position sizing calculations on a high priced stock.

*BKL*: Placed order to buy 29 shares at 175.00 before open. Done at 174.95.  SL is 155.00  (risk = 20.00)

1% risk = $618, less $30 brokerage = $588 / 20 = 29 shares

Comments: Strong trend and clear trend continuation BO level with an acceptable risk.


----------



## PeterJ

*BKL*: Placed order to buy 29 shares at 175.00 before open. Done at 174.95.  SL is 155.00  (risk = 20.00)

1% risk = $618, less $30 brokerage = $588 / 20 = 29 shares

Love it Peter !
nb
Bal close above $ 10.00 is another candidate

Peter


----------



## peter2

Phew, for a moment there I thought my avatar had been hijacked and I'd moved to Perth. 

BAL: Yes, how high can this go? 
HUB: is another I'm too scared to buy.
EML: Setting another TC pattern


----------



## peter2

EOW 38 update:   ASX Momentum Portfolio *+26.0%*   ( 78% invested in 6 trades )   XAO  *-10.1%*  (past 38wk)

Nice up week for the market and our long only portfolio. Our portfolio profited from the quick +2R result in SMA and the price rise of JHC. The effect of compounding is very noticable now. We'll notice it on the losses also, don't forget. 

This weeks sells: SMA (+2R) 
This weeks buys: JHC, TGR, BKL 

Outlook: There are so many BO opportunities I have to remind myself that the index remains in a weekly down trend. The daily trend is unclear even though a HH and HL have been formed the index is in a range between 5000 - 5400. It's great to see the banks finally moving off their lows and this forces the index up (which improves sentiment). 

Apologies for not doing anything with the leveraged account.


----------



## grah33

thanks Peter for the example and Nort. too.  I have to ask though Peter, how come you never bought any expensive priced shares b4?


----------



## peter2

Trading update:   Oops, REG hit our re-buy entry trigger (5.95) last week.

I've had to pay a little extra this morning (5.96)  SL is 5.66. 

This portfolio is now fully invested and for other opportunities we'll have to use a little leverage in the second account. 

grah33: We've used cfds on the larger priced stocks to lower the upfront outlay. Over the past few months the larger priced stocks have been going down (ie banks) and the mid cap sector has been on fire. We've been trading the section of the market that is moving up. Now that the banks have moved off their lows they are certainly on the radar (BEN was a classic shallow sideways pattern, ideal for a BO trader).


----------



## grah33

peter2 said:


> Trading update:   Oops, REG hit our re-buy entry trigger (5.95) last week.
> 
> I've had to pay a little extra this morning (5.96)  SL is 5.66.
> .




thanks for explaining . i get it.

I've noticed you catch some of your breakouts really early.  in this example u entered right on the BO level.  why is that?  shouldn't you wait till it breaks out past the BO level ?  and shouldn't you go in near the end of the day, to ensure that it really is a break out and not a false break out?


----------



## peter2

There's an exact time and price for every BO. My job as a BO trader is to buy them at that exact time and price It's impossible to do that all the time (slippage) and I often buy them late or buy them early (pre-empt the BO). 

REG: The portfolio bought the BO in REG much earlier at 5.51 and this trade would still be open if we hadn't sold out to realise the profits for our second account. A re-buy trigger for REG was selected at 5.95 which was traded two days ago. I noticed this over the weekend and bought the open. My own portfolios did not sell REG and I'm adding at this level. 

You seem to be sweating on the small stuff, long or short, ASX or US, price range of setups, exact entries. 

We're buying stocks that are going up (recent momentum) and then managing each trade to earn an overall profit. At the same time we're keeping our total risk (downside exposure) within our comfort level. This is not rocket science. It's a simple and robust trading methodology.


----------



## kid hustlr

Pete, tremendous thread.

Whilst on the discussion of breakouts and slippage:

I find most break out trades I take receive slippage (lower caps, buying on open usually) and revert back below my entry. As such my trades are often in the red from the outset and may take some time for the underlying momentum to take hold.

It irks me because I often think 'I should just be patient and set a limit' rather than enduring the slippage cost.

I wonder if my views are warped given my knowledge only expands back say 3-4 years and I haven't witnessed a surging bull? In your experience during heavy bull markets do stocks 'gap and go' more often or is it non-influential.


----------



## grah33

thanks peter. and yeah, i probably am sweating a bit aren't I.  it's one of my weaknesses. glad to know though why those trades were taken so early.


----------



## peter2

grah33: We've all got inherent biases and weaknesses. Recognise yours and minimise their impact in your trading business. If you want to trade then you have to make some decisions about how you're going to go about it. Are you going to trade ASX or US? Long only or short as well? What type of trader are you?  etc, etc.  I can't help you with those decisions, but I know they must be made and then you start your trading journey. 


kid hustlr: Thanks for the compliment and glad you're enjoying the journey. Before the GFC it was possible to buy most BOs at the best price and at the right time. The depth was thick enough to get set with little slippage. Since the GFC the ASX market depth has thinned considerably. Conditional orders don't work as effectively as they did. I've stopped using them and they should be free. I prefer to buy the BOs on the day of the BO even if it's late in the day and price has moved up a liitle more. 

If you're buying them on the second day, the best BOs just zoom higher, some hang aroung the close and a few drop quickly. Limit orders may miss the best BOs. We can't afford to miss these and I'll pay the few extra ticks and adjust my SL after the close. The best BOs never threaten the initial SL. 

I've noticed a lot of BOs are "jumping the creek". Check out that Wycoff term if you don't know it. If you recognise these, most of them are real deal. Buy them asap.


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## peter2

Trading update: Comments on trade management as the portfolio goes sideways.

The prices of most of our trades have been dipping and going sideways. Hey, we can't win every week. I've raised most of the exit triggers today to reduce some downside exposure. Every % we save goes into the bank. You'll see the current exits at the EOW review tomorrow. There is no need to have our exit triggers too tight while the market consolidates at this level. 

While this portfolio is fully invested, of course there are other stocks charging higher (SMA, LYC, TNE ... ). We can't get into all of them. Don't worry about them. There will be others when we have cash available. We've had a run of good luck and now we wait for our next period of good luck.


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## peter2

EOW 39 update:    ASX Momentum Portfolio  *+27.3%*  ( 100% invested in 7 trades )         XAO  *-11.0%* (past 39wk)

The market drifted lower this week (-1%) while our portfolio increased a little (+1%).  

No buy or sells this week. Exit triggers have been raised to lower downside exposure.

Outlook: Remains uncertain as the index is stuck between the last high (5400) and the last low(5150). Without ongoing demand for the banks our index will most likely stay in this range (5000 - 5400). This will make trading interesting and we may have to adapt our tactics to those of a sniper and grab the easy (profit) targets.


----------



## Nortorious

peter2 said:


> EOW 39 update:    ASX Momentum Portfolio  *+27.3%*  ( 100% invested in 7 trades )         XAO  *-11.0%* (past 39wk)
> 
> The market drifted lower this week (-1%) while our portfolio increased a little (+1%).
> 
> No buy or sells this week. Exit triggers have been raised to lower downside exposure.
> 
> Outlook: Remains uncertain as the index is stuck between the last high (5400) and the last low(5150). Without ongoing demand for the banks our index will most likely stay in this range (5000 - 5400). This will make trading interesting and we may have to adapt our tactics to those of a sniper and grab the easy (profit) targets.
> 
> View attachment 65126




Your performance with this portfolio has been fantastic peter2. Keep up the great work and hopefully you can close out the year strongly despite the sideways trending market.


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## peter2

Trading update:  The market continues to drift lower along with our trades. It's time to take some defensive action. Not too much, just a little in case the fall accelerates. We don't want to be caught off guard. 

*TGR*: Back at our entry price. Clearly there is no current upward momentum. Sell on open. Re-buy order at 4.60 for three days only. 

*EGH*: Demand showed up once price dropped to 0.60.  We'll sell if 0.60 trades again (in market).


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## VSntchr

A few BO-PB contenders I like at the moment:
*SPK*



*SRF*



And on the "S" stocks, a BO-NH for good measure.
*SRV*




Others of note: *APE, TNE, ORL, FPH, DMP, CCP. *
Conditions remain suited to sniper like traders with certain BO's going well before retracing rapidly (UGL, TGR etc), Peter still doing an excellent job of showcasing trade management skills. I'm learning lots!


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## peter2

Trading update:  New trade, very much a reversal setup against the prevailing down trend. This trade is to take advantage of any EOY rally and grab a quick +1R or +2R.

*TLS*: Bought BO-NH (4.51) SL is 4.30 and this parcel was limited to 20% account. 

(We may even hang around for the div.  Just joking. I never buy for the div. The price action would have to be very favourable for us to hang on that long.)


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## peter2

Can't tell you about the other trade because of this . . .


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## peter2

Trading update:  Whoa, my bank manager has told me that we've run out of cash in this account and we must fix it. 

The *TLS* trade will be removed from this portfolio immediately to fix the overdrawn status. This will leave enough cash for the open order that has been partially filled. This sort of error can't happen in an ETrade acount, but it can happen in a Commsec account. TLS must be sold in the next two days and before their T+3 settling deadline.

*EGH*: Has triggered an exit, in the closing auction. We'll sell EGH on the next open and take the small loss.  The lack of upward momentum this past week is our reason to exit this trade in this portfolio. Personally I will let this trade go as the weekly trend is so strong. 

This will leave us with a little cash ($3.7K), enough for a trade in a small priced stock.


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## peter2

Trading update: (after yesterday's over indulgence) 

*EGH*: Sold on open for -0.4R loss. 
I remarked that our entry into EGH was a little late and it was this tardiness that contributed to this result. An earlier purchase at the better price/time would have allowed us to watch this price pull back and see how it resolves. 

*CGC*: Bought 1 share yesterday and the rest on the open today (2.65). I hate getting stuck with 1 share. Our SL is set at 2.30. 

*GEG*: Sold at a price limit of 1.25 today (+1.4R). I'm sorry for not mentioning this in an update, but the bid depth on this is low and I didn't want any possible interference. It's taken me a few days to sell part of my parcel at the limit price. The trend up remains strong, but the thin depth is a concern when the market sentiment is as skittish as it is right now. 

*BKL*: I will mention it in here that I've placed a limit sell order in the market (199 - 200) in case of a price spike up. 

Outlook: The market is very jumpy right now and any minor negative comments are getting hammered. 
Another reason for a discretionary exit; "skittish market" or should that be "skittish trader".  

Taking the profit also reduces our downside exposure (heat) and allows us to be a bit more patient while the market is stuck in this uncertain postion. I'll be looking at some of the lower priced stocks for our next trades. They should be less influenced by the general market sentiment.


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## peter2

EOW 40 update:    ASX Momentum Portfolio   *+23.4%*  ( 74% invested in 5 stocks )    XAO  *-11.8%*   (past 40wk)

That was an up and down week (-1%). Our portfolio lost 3.9% due to today's huge sell off in the healthcare sector. Our trades in JHC and REG were thumped as the prices fell. Price closed below their exit triggers so we'll sell both on the next open. 

It doesn't matter what type of trader you are, we will all get thumped one day. 

This weeks sells: TGR, EGH, GEG
This weeks buys: CGC

OUTLOOK: Remains uncertain, so we will act cautiously and wait for the XAO to get above 5300 again.


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## grah33

not hard wiring trailing stop losses seems like a good idea. i might use that too (helps avoid drastic market fluctuations) . i take it the next day you just sell on the open at market?  hopefully the open price isn't too different. but I don't think i'll be using it for the initial stop loss.which alters risk


(sniping seems more complicated for beginner traders. might just let the trades do their thing .  )


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## peter2

Flexibility with the exits suits my temperament, but it's still very important that you have some guidelines to help keep you consistent and trading to your plan (momentum or trend).

Yes, I've mentioned that this type of short term trading (like tech/a 's) is not for beginners. The profits rely on cutting your losses quickly, something that beginners don't always do.  

Trading the trend, stops under swing lows is an easier trading style that beginners can master, before attempting something that requires an additional skill set. 

Sell stops should IMO be either tight or very loose. Anything in the middle will get picked off and that is very annoying.


----------



## grah33

i thought momentum trading was another word for trend following trading?  it's a bit of a throwback that term. what is the difference?  I'm just doing mainly breakouts within existing trends.


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## sammy84

I also got killed with JHC. I'm similar to you as I do not keep my stops sitting in the market. But I did sell JHC near the close on Friday, just had to reduce risk. 

Question - what do you do if JHC bounces nicely on Monday. Will you still exit or do you reconsider?


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## grah33

while i'm waiting for my  trades , wouldn't mind asking Peter another question.  your intending to add a few forex trades into the portfolio, but what advantages could that bring you.  there are just so many other share opportunites out there.  could it be that by having some 4h and 1h forex trades thrown in,  you will turn over some of the money in the portfolio faster?  i mention 1h and  4h timeframes since these are regraded as being not too difficult to profit from (as well as the daily forex timeframe of course).


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## Newt

grah33 said:


> i thought momentum trading was another word for trend following trading?  it's a bit of a throwback that term. what is the difference?  I'm just doing mainly breakouts within existing trends.




You might find the posts by Peter in this thread helpful Graham? (posts #7-9)

https://www.aussiestockforums.com/forums/showthread.php?t=27976&p=811984#post811984


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## grah33

Newt said:


> You might find the posts by Peter in this thread helpful Graham? (posts #7-9)
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=27976&p=811984#post811984




yes, it's an eye opener for me today .  i hope that i've got a feasible and normal enough strategy.  i've put it together from reading parts of different books.  LET ME KNOW IF I'M MISSING SOMETHING FUNDAMENTAL IN ALL THIS, PLZ.  just need to get my foot into the door with this stuff. my approach is to get into trends on the daily time frame, following them as much as i can.

(daily time frame, end of day trading, find uptrends, get into them and let them run as much as i can)
- find trend  continuation breakouts (aka new high) with volume to get into the trend. 
-if successful trail about 3 atr as price advances.
- initial stop loss 3 atr or outside the low (like peter does). 
- use the hul* indicator which tells me when the market is uptrending  and therefore when i'm allowed to buy shares (when a 10 and 30 ema of xao and xso is crossed up.) 
-when the hul* indicator is crossed down, i can't buy anymore shares.  if this happens i don't exit positions but let the share stop losses take care of that.

and that's it.  these are the rough details of what i'm attempting. i'm hoping it will work.


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## peter2

Trading update:  I love to buy when I see demand and this one fits the brief today.

API: Bought BO-NH (2.12), iSL is 1.98.  We only need 4370 shares. 

I know it's a psycho market atm, but API has remained very strong over the past few weeks.


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## peter2

Sorry, Sammy didn't notice your question re *JHC*. For this thread I sold all. 

Personally I sold half as I saw the late demand (daily pin bar). I did anticipate a quick bounce also on Mon. We didn't get it, so I'm very close to selling the rest. I do this knowing that I can always re-buy on a BO > 3.20 again. Saving the account always comes first, then I can wait for price to start rising again to re-buy.

Other markets: The main advantage in trading other markets (like forex) is diversification. Other markets are not highly correlated to the ASX market. 

I consider the term momentum trading as a newer term for swing trading. However there is another trading style based on price momentum that is not swing trading. This is the rotational/replacement portfolio that selects stocks by ranking their momentum over a period (3mth, 6mth, 12mth) and buying into the top 10 (or 20) ranked each month/quarter. It's not new either and it recent popularity is due to recently published books and the growing popularity of ETFs. 

grah33: That's the first time I've seen you post something that looks like a plan. Well done. Write it out and stick it next to you and get it into your head. Make minor adjustments as you get experience, but don't change the foundations.


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## The Bear

grah33 said:


> yes, it's an eye opener for me today .  i hope that i've got a feasible and normal enough strategy.  i've put it together from reading parts of different books.  LET ME KNOW IF I'M MISSING SOMETHING FUNDAMENTAL IN ALL THIS, PLZ.  just need to get my foot into the door with this stuff. my approach is to get into trends on the daily time frame, following them as much as i can.
> 
> (daily time frame, end of day trading, find uptrends, get into them and let them run as much as i can)
> - find trend  continuation breakouts (aka new high) with volume to get into the trend.
> -if successful trail about 3 atr as price advances.
> - initial stop loss 3 atr or outside the low (like peter does).
> - use the hul* indicator which tells me when the market is uptrending  and therefore when i'm allowed to buy shares (when a 10 and 30 ema of xao and xso is crossed up.)
> -when the hul* indicator is crossed down, i can't buy anymore shares.  if this happens i don't exit positions but let the share stop losses take care of that.
> 
> and that's it.  these are the rough details of what i'm attempting. i'm hoping it will work.




Good work getting a rough trading plan together Grah33.

Now you have some basic entry & exit criteria, you'll have to set up the more important money management side of this (eg How much are you going to risk per trade, what is your portfolio heat etc)..

Once you have this written into a trading plan make sure it suits your personality. eg If your index filter is keeping you out of trades will you be tempted to place trades anyway as you're bored and don't like sitting on your hands?

You could also kerb this by trading different markets and instruments (FX, commodities, futures, ETFs etc) or trade the stocks in the ASX short when the filter allows it too. I wouldn't jump into this straight away get some experience with ASX stocks first.

What are you going to use to scan for trading opportunities?  Some people like Amibroker, Metastock, Beyond Charts, Bullcharts use a website like ASXIQ (not sure if this site is still maintained), Finviz (US Stocks) or go through the charts manually.

Whatever you do I suggest you keep it simple at first and like Peter said try not to change the trading plan too much as you go as you will need a fair few trades as samples to test the plan properly.

I think Peter has said this already also but you should consider starting your own thread taking on trades and documenting it as per your plan in real time like Peter is doing. I think this would test your plan out and give you confidence and provide yourself and other ASF users some invaluable learning material while you save your $$$!

Good work on the thread too Peter, it's been tough conditions and you've done exceptionally well!!


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## peter2

The Bear: This thread tries to attract comments from newer members, thanks for yours. Have look at this. . . 


*REVIEW OF DISCRETIONARY EXITS USED IN THIS THREAD*

As I'm a discretionary trader I think it's important that I review the effectiveness of my actual exits against some popular exit strategies every now and then. Are the reasons I exit my trades helping or hindering my performance? 

I've spent the past four hours going through the 93 closed trades and calculating the P&L of every trade using three exit strategies that I was interested in looking at.

*1.* 3 x ATR(21).  Exit on the next open after a close below this indicator. 

*2.* Exit on the next open after the first red bar. My chart candles are coloured blue/red and are based on the supertrend indicator (2 x atr(21)). This is a slightly tighter exit trigger. Should I take more notice of them? 

*3*. Waiting for price to trade at +2R target then exiting on the next open after the first red bar. Am I exiting too soon on the good trades? 

RESULTS:  Results based on history may not be applicable in the future.


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## myrtie100

Gee that third one looks interesting Peter.
I like the idea of a firm exit rule, to take the emotion out of it.

Your candle colours, are they similar to Jim Bergs overbought/oversold indicator?


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## The Bear

peter2 said:


> The Bear: This thread tries to attract comments from newer members, thanks for yours. Have look at this. . .
> 
> 
> *REVIEW OF DISCRETIONARY EXITS USED IN THIS THREAD*
> 
> As I'm a discretionary trader I think it's important that I review the effectiveness of my actual exits against some popular exit strategies every now and then. Are the reasons I exit my trades helping or hindering my performance?
> 
> I've spent the past four hours going through the 93 closed trades and calculating the P&L of every trade using three exit strategies that I was interested in looking at.
> 
> *1.* 3 x ATR(21).  Exit on the next open after a close below this indicator.
> 
> *2.* Exit on the next open after the first red bar. My chart candles are coloured blue/red and are based on the supertrend indicator (2 x atr(21)). This is a slightly tighter exit trigger. Should I take more notice of them?
> 
> *3*. Waiting for price to trade at +2R target then exiting on the next open after the first red bar. Am I exiting too soon on the good trades?
> 
> RESULTS:  Results based on history may not be applicable in the future.
> 
> View attachment 65240




Very interesting as you can see the tighter stops are doing significantly better in this choppy market.....which you would expect.

Since the 3rd option has given you the best results and you might be worried about exiting the good trades too soon, have you tried say exiting 50% (or any value you come up with) of the trade at 2R and letting the rest run? This will increase commission cost but I find this can be effective sometimes when stocks to run.

Another method of exiting you could experiment with are count back bars which is what Radge and Guppy teach.


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## peter2

EOW 41 update:     ASX Momentum Portfolio   *+25.4%*   ( 51% invested in 4 stocks )   XAO  *-13.9%*  (past 41wk)

The market continues its downward movement (-2%), while our portfolio held up well (+2%). 

This weeks sells: JHC, REG
This weeks buys: API

A few exit triggers have been raised. This reduces our downside exposure a little and allows us to start more trades. However the market trend remains down and we'll remain cautious. 

*BKL*: limit sell order (199) removed once price broke out (>191). We'll let it get to $250.  

Outlook:  Well I don't know. I'm just going through the motions (more selling than buying).


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## The Bear

peter2 said:


> EOW 41 update:
> 
> Outlook:  Well I don't know. I'm just going through the motions (more selling than buying).
> 
> View attachment 65256




All you can do is trade your plan Peter.......stick to it it's done you well so far!

In regards to the market outlook we can't predict the future but if you have a plan that has positive expectancy stick with it.

Looks like the ASX200 is forming a Symmetrical Triangle who knows how it will unravel!


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## grah33

interesting results Peter.  3ATR trailing didn't do too well for you which is what i'm using (trend following), but i wouldn't have traded when you would have (bear market) so maybe 3 atr would have done well for me.  i would have been there during that little up-spurt in october (if i was more ready )and during some parts of the ranging market afterwards which didn't continue to rise.  and i would have traded US market if my market filter said SP500 was rising (assuming the aussie was down).


Bear: great tips Bear, thx.  

trend following vs swing trading: you know, i'm getting newsletters from a popular author you have all heard of and he talks about mean reversion (a type of swing trading) and the problems with trend following. my impression is that i'm going to get 'escaped profits' when the market starts to range so that's a bit of a concern .  i hope trend following will still work well enough if i'm using it with the market filter.  maybe in the future if i start to see that i'm losing too many open profits i can have some forex trades out there (replacing some of the stocks) 
and that will make me more immune to bad market conditions?   or trading the same breakout setup but exiting differently?  let me know if  you have any tips on this.  i wonder which brings bigger profits out of swing or trend following


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## peter2

EOW 42 update:  ASX Momentum Portfolio  *+23.8%* ( 51% invested in 4 stocks )    XAO  *-12.7%* (past 42wk)

The XAO bounced this week (+1.2%) after a surprisingly horrible Monday. Our portfolio lost 1.6% this week as the high volatility continues. 

This weeks sells/buys: nil

*CGC*: Priced closed below our exit trigger. Sell next open.
*API*: Price at our exit trigger. Sell next open. 

*Outlook*: The trend remains down and I'm getting tired of seeing it. It would be easy to trade a lot more in this portfolio as there have been plenty of break-outs, but would it be worth the extra effort? I estimate that for every ten extra trades, nine of them would total break-even or more likely a small loss of 1 or 2 units. I'd need to be lucky and get into one very good result to make it worthwhile. IMO the reward for the extra effort is not worth it atm. I can be patient. 

I'll look around for a few more trades next week, as we'll have more cash and less portfolio heat. 




ps: Only ten weeks left to my year here.


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## skyQuake

Hey pete, do you bother looking at the corp actions behind the stocks? Eg if a stock breaks to new highs because of takeover, or in the case of CGC and API - S&P ASX 200 index adds.


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## peter2

If the price action gaps up, then yes I'll look at the news expecting to find the reason for the jump. I don't routinely look at the corporate news releases and these sometimes lower my results. 

If CGC and API broke out on the news that they are being added to the ASX200, then I didn't notice it. Once upon a time, being added to an index helped the share price.These days most of the insto analysts have worked out the short list of the index additions and have already started buying in anticipation of the news (the break-out?).

This laziness of mine, does cost me money, every year. While I don't knowingly buy just before a scheduled report, I don't often check and sometimes get caught with a price spike. I also don't routinely check for scheduled news on my open trades either and get caught out sometimes. SUN was the latest example of my laziness. 5K open profits turned into 6K loss very quickly. If I'd bothered to look at a corporate calendar and seen the scheduled update I would have had the option to realise some of those profits before the news. 

I estimate that my edge would improve significantly with a readily available "skc info analyser " app.


----------



## peter2

Trading update:   TGR is trading our buy trigger (>4.60). I mentioned this trigger when we last sold.

*TGR*: Bought BO (4.63)  iSL is 4.40

Note: I'm always wary of BOs in the holiday weeks as the volume is lower than usual. Although, when you think about it, any BO, at any time of year can fail.


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## kid hustlr

TGR looking strong.

Any thoughts on SIQ Pete?


----------



## Nortorious

kid hustlr said:


> TGR looking strong.
> 
> Any thoughts on SIQ Pete?




TGR is nice, I would like to see more volume come in to keep it moving upwards. Might happen today.

SIQ, that looks pretty strong as well. Has advanced beyond an entry point in my opinion as the risk is too high to get into it now. Without much background, it is also hard to put some structure to it. It is trending up and had a nice kick of volume last week.... You could do a lot worse that's for sure.


----------



## VSntchr

peter2 said:


> Trading update:
> ACX: Bought near new high (4.77)   SL is 4.40    Desperate to get back in this one.



Desperation proving worthy today. This one has been a good performer for a while, although there has been some churning around $5.00. This appears to have been overcome with a big push up. The low liquidity of this time of year clearly helping, so I have reduced size on the spike and will look to re-enter on a new setup.


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## grah33

peter:
i've got to worry about news and reports as well.  got a blast from ckf recently but it could have been the other way too.  where are u getting scheduled reports and scheduled news from?  my broker doesn't inform me of future news/report dates, just on the day. and which kinds of reports and news do you pay attention too ? as much should be ignored. just wondering what technical traders do to manage their trades /avoid trades  in connection with news/reports.


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## VSntchr

grah33 said:


> peter:
> i've got to worry about news and reports as well.  got a blast from ckf recently but it could have been the other way too.  where are u getting scheduled reports and scheduled news from?  my broker doesn't inform me of future news/report dates, just on the day. and which kinds of reports and news do you pay attention too ? as much should be ignored. just wondering what technical traders do to manage their trades /avoid trades  in connection with news/reports.




FNArena is pretty good for a basic calendar. This will keep you in the loop for ex-div dates, reporting dates, investor days etc. Some stocks won't be covered - but they do a pretty good job at the ASX200 at least.

Also try morningstar, they have a comprehensive dividend calendar and their earnings calendar is pretty decent too.


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## peter2

EOW 44 update:    ASX Momentum Portfolio  *+25.2%*  ( 47% invested in 3 stocks )     XAO  *-9.4%*  (past 44wk)

The market rallied nicely over the past two weeks adding +3.5%. This portfolio benefited a little (+1.4%) while I took a short break and totally missed the opportunities to profit from this rally.  

This update ends 2015 and there are only eight weeks remaining of my ASF "tour of duty". However let's not dwell on the end but look forward to the new year. The portfolio has plenty of cash and I'll look for opportunities to use it immediately. (Note: HFR has an interesting chart.) 

Outlook: I'm cautiously bullish, but to a long only trader that has to be the outlook.   I'm expecting similar market conditions next year, plenty of ups and downs with high volatility. Our strategy of predominantly trading with the price momentum worked out OK for us last year. There is no need to change our trading style. We'll be buying price when it starts to move up and sell it when it starts to reverse provided that it's gone >+1.5R. 

What's new: Remember that 10K I removed from the portfolio a while ago? Well, it's time we put it to work and the new year is an opportune time to do it. Further details to follow.


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## peter2

Trading update: new trade

*HFR*: Bought today's open (1.65)  after last week closed > 1.60 (BO-HR). iSL is 1.50. 
This iSL has been chosen to provide decent opportunity for good RR if price continues higher. Target is old high and +2R. 
A iSL below 1.40 is a more conservative place for a weekly chart trader and what I've used personally.


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## grah33

Thanks ValueSnatch for the morningstar tip. i think i'll use that.


Peter: you mentioned diversification as a key reason to introduce forex trades. it may have been helpful if some forex trades would have trended while the ASX was ranging.  but  do you think US shares would also provide adequate diversification  too, or maybe it's just too correlated?


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## peter2

IMO the best diversification is to incorporate shorts into a long only trading business. Shorting only one extra market, the index, will quickly offset some of the losses from the longs.


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## The Bear

grah33 said:


> Thanks ValueSnatch for the morningstar tip. i think i'll use that.
> 
> 
> Peter: you mentioned diversification as a key reason to introduce forex trades. it may have been helpful if some forex trades would have trended while the ASX was ranging.  but  do you think US shares would also provide adequate diversification  too, or maybe it's just too correlated?




Grah33 I tired to reply to your private message last year but your inbox is full.

Peter is correct going short can give you the added diversification you need but again if the market is just chopping about between a range this can whipsaw you around on the short side too. 

You have an index filter right, go and look over the ASX AllOrds & the US S&P 500 for say the past 5 years...you will see there are periods when the S&P 500 is still above the filter and the AllOrds is below the filter chopping about especially between Sept 2014 to Feb 2015. This is when you could of taken opportunities in the US Market. Using Forex is just another instrument to achieve this also.

If you only want to go long and both the US & Australian Markets are risk off....then sit on your hands and leave your money in cash and learn how to trade the short side, while coming up with a trading plan that is backtested and has a positive expectancy.

With a small account overtrading and not sticking to your plan will just rob you of your money, you might as well save it and enjoy a holiday!


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## peter2

EOW 45 update:   ASX Momentum Portfolio  *+22.9%*  ( 59% invested in 4 stocks )   XAO  *-14.4%* (past 45wk)

That was a remarkable start to the year. The XAO fell 6%, although only -5% relative to our starting point (Mar15). Our portfolio lost only 2.3% in the general panic selling. 

This weeks sells: nil
This weeks buys:  HFR 

*HFR*: I did not notice that HFR closed on our sell stop yesterday (mine is a lot lower) and it has closed higher today. In practice I would sell if price trades back at 1.50 (our sell stop), but prefer to make all trading decisions in this thread at EOD. So, sell HFR on Monday's open as it did close at a price we didn't expect yesterday. The obvious re-entry is on a BO-NH (>1.70). 

Outlook: For long only traders it's grim with both weekly and daily trends, down. IMO the selling was overdone and somewhat irrational, but I can't ignore the obvious. I trust the value investors are licking their lips over the lower prices and circling like vultures. I need to see them fighting over the remains before I become interested.


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## grah33

thanks Bear and Peter .   i always get encouraged by everybody's answers. the markets have been tough to  trade (amazes me how many of you were trading when the asx was trending nicely all the time, wish i did it back then too), and i hope the future is a better one. hope it doesn't all get worse, or there wont be any investors around to give us trends ...  Bear: i fixed my account. you can send me the message  .i've looked at the charts of US and ASX index, and i will check it out more.  if it is as you say Bear than i should probably do it.  i thought it was highly correlated b4, but now i still think it is but probably not as much.  by doing this i'm guessing it stops us from getting caught completely in the best of bullish times and the worst of bearish times (since positions are in both  markets), keeping the account balance not as volatile.  perhaps combining with forex is much better though as there is less correlation at all. 

yeah, i could do with a holiday. would be nice .    maybe later when i get a decent money flow going . don't get what you mean by "If you only want to go long and both the US & Australian Markets are risk off....then sit on your hands and leave your money in cash and learn how to trade the short side, ".
===


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## peter2

Trading update: There were two break-out candidates today to consider adding to our portfolio (BPF, BFC).

*BFC*: Bought todays BO (0.525), iSL is 0.45. Let's see if all the "crypto" hype helps us earn a profit in this company.


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## peter2

EOW 46 update:    ASX Momentum Portfolio *+22.6%*  ( 44% invested in 3 trades )    XAO  *-16.1%* (past 46wk)

Our portfolio has retained its value while the general market fell 2%. Our cautious approach during this bear market has helped protect our capital. 

This weeks sells: HFR, BKL

*BKL*: Sorry I didn't post that I'd raised our sell trigger to 205 early in the week. This was done to try and protect a +1R result after not selling when price traded at the +2R target. Price closed <205 on 12/1 and sold next open (13/1 at 202). This gave us a +1.2R result and reduces our portfolio heat a little. I'm still bullish BKL and have not sold my shares as my sell stop is down near break-even (~178). 

*BKL*: I'm looking to re-buy/add this if price stays above the 190 low and looks like breaking out again. 
*ACX*: Price is dancing around our +1R level and I'm tempted to grab it, but I won't as the sell trigger is slightly above BE and under the 5.00 number. 

This weeks buys: BFC

Outlook: is ugly. :screwy:  Weekly and daily trends are down. If you're like me, you'll be itching to buy shares that are much cheaper now but I have to remind myself that prices can get lower and buying as prices go down is NOT our trading plan.


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## VSntchr

APD looking interesting as a candidate after an upgrade today.



NOTE: volume spike on 31st was director buying.


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## Wysiwyg

peter2 said:


> *ACX*: Price is dancing around our +1R level and I'm tempted to grab it, but I won't as the sell trigger is slightly above BE and under the 5.00 number.



At first glance it appears ACX survived the $4.40 (initial stop loss) low on 8th December?


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## peter2

*APD*: Thanks, it appeared in my 10 day BO scan this afternoon. Now at yearly highs, OBV, TMF indicating increasing demand. The chart is all good in a crappy market. 

*ACX*: Yes the trade survived because we don't have the sell stops in the market. Price did trade at the exit trigger but closed above it and continued higher the next day. There was no EOD sell triggered. 

Other charts that are interesting: DTL, MOY, NST, UGL, VLA


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## VSntchr

peter2 said:


> Other charts that are interesting: *DTL*, MOY, NST, UGL, VLA



*DTL* poking its head above the consolidation range today. Volume isn't great but that might be a good sign while it's heading north.

*NST* heading for the moon...! I'll consider a PB around 2.90  if it becomes available...its moved a bit too fast for me to get onboard.


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## peter2

VSntchr said:


> *NST* ..its moved a bit too fast for me to get onboard.




So did *APD* today, didn't want to pay 0.44 on close. Dick for a tick, again.


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## stock84

Hi peter2 and others contributing, 
Great thread. I'm an absolute novice, but trying to follow along. If I could ask a dumb ques , can you explain a bit more about 'TR' and '+1R'.
I found in a previous post "TR is trade risk and in this thread we are risking 1% of our account on each trade using the fixed fractional method to calculate the number of shares to buy"
What is this fractional method? What would be the TR for an account with e.g. $50K? 
Also haven't yet got my head around this +1R, +2R etc.


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## debtfree

Welcome stock84,

You might know this already but I thought I would bring it to your attention in case you don't know.

Part 1: Pavilion103's LIVE ASX Momentum Setup Trading Thread. You can find this by using this link https://www.aussiestockforums.com/forums/showthread.php?t=29536 

Part 2: ASX Momentum Trade Book - Part 2. You can find this by using this link 
https://www.aussiestockforums.com/forums/showthread.php?t=29971

Peter2 took over Part 1 and continued into Part 2 and you will find a lot more questions than you have here already asked and answered within these 2 threads. It's great reading and also an eye opener, make sure you read them both for a better understanding and your answers. Don't read it once, read it lots of times, take notes, create your plan. 

All the best, hope it helps.

Cheers ... Debtfree


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## peter2

stock84: Welcome, I love newbies, because once upon a time I was a newbie myself. 

debtfree: Thanks.

*TR* is the initial trade risk that every trade starts with and is clearly defined before the trade is started.

The fixed fractional method is the preferred position sizing model that we use in this thread. This portfolio risks 1% of capital in every trade we start and it doesn't matter what the stock price is. An example of this model is given in in post #245. Higher priced stocks use more capital than lower priced stocks and no trade is to use more than 20% of our capital. 

In that trade the TR was 20.00 and the result of the trade was +27.00. This means that the result is 27/20 = +1.35R. The actual result is less (+1.2R) because we should the costs of brokerage. eg +40.00 would have been a +2R result, +60.00 would be a +3R result.


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## debtfree

*Peter2*



peter2 said:


> Higher priced stocks use more capital than lower priced stocks




I've seen this said before and it sent me digging into my notes. My thoughts are if a higher priced stock has the same iS/L % as a lower priced stock, it makes no difference. The amount of our bank used is the same. The % of our bank being used is totally depended on how far our stop loss is away from our buy in price. This is correct isn't it or am I missing something?

I have attached a spreadsheet from my notes and any correction would be appreciated.

Prints out on 1 page if wanted.

Cheers ... debtfree


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## debtfree

*Peter2:* EPD I noticed price has come down for you  do you jump in now?


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## peter2

debtfree: Yes, you're right if you consider iSL amount as a % of stock price. 

You mentioned the "d" word. We prefer to buy prices going up, not down. Our best pattern is a break-out to a new high, however I have mentioned a pull-back setup. We haven't traded many of them in this thread as there have been plenty of BO setups to use. However now that the index is down there will be plenty of pull-back setups forming and we may use a few when the market starts to rally. 

*EPD*: The daily chart is too ugly. The weekly chart looks better. You may notice the huge morning star reversal pattern back in early Sept15. That was a big buy signal and I'd need to see something like that again before buying EPD.


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## peter2

OK I think you might have meant to say APD not EPD. I just noticed that price has been sold off significantly today and is below the BO-level. I removed my 0.43 buy order yesterday. So do we buy it now? 

Good question. 

Today's early price action is unexpectedly down and our basic strategy is to buy prices when they are going up. So to be consistent with this strategy we could buy it if price trades back up to 0.43.


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## debtfree

Oh my god, now it makes sense. Yes I did mean APD, sorry about that Peter. 

Thanks for your thoughts and replies and a breakout of 0.43 makes sense to me.


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## peter2

Thanks debtfree, you raised an interesting problem that is caused by missing or ignoring the original signal. Do we take the second opportunity? Who wouldn't like to buy something that is cheaper now than a few days ago. 

Let me mention that we should take the original buy signal everytime, afterall we know it's a great time/price to buy. The best trades  take off and don't provide a second chance. Miss them and we miss out on above average wins. 

Second chances: Let's describe them as failed BO's as price has reversed and closed well below the original BO level. Recent examples are HFR and BPF, both have traded below their original BO levels (APD, too early yet as price hasn't closed below the BO level). I'm willing to trade these when price trades back above the original BO level, provided that price has formed a HL before the second BO.


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## peter2

Break-out trading gets an undeserved bad reputation because it's a strategy that is very easy to understand and attracts newbies who think it's a fast way to trading riches, until they try it and lose money. They then blame the strategy not understanding that it was them that failed. The strategy had nothing to do with their failure. They failed because they haven't applied the trading skills required to earn the profits. 

Break-out trading in a bull market works great. Our few mistakes are easily offset by the general rise in the market. Make these same mistakes trading a break-out strategy in a volatile sideways or down market and you're going to pay heavily for them. If you haven't noticed, current market conditions are highly volatile. Expect more break-outs failures in these conditions. It's your decision to cut the losses quicker, or trade fewer break-outs until conditions improve for your BO strategy. In this thread we've opted for trading fewer BO's while the market falls. Personally I've opted to place my iSL's below weekly lows. This gets my stops out of the daily noise. 

The market is a great teacher if you take notice of your results and what's happening.


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## debtfree

peter2 said:


> Second chances: Let's describe them as failed BO's as price has reversed and closed well below the original BO level. Recent examples are HFR and BPF, both have traded below their original BO levels (APD, too early yet as price hasn't closed below the BO level). I'm willing to trade these when price trades back above the original BO level, provided that price has formed a HL before the second BO.
> 
> View attachment 65582
> 
> View attachment 65583




Many thanks for the above Peter, I'll look into this but on first view I really think this is a great approach in regards to second chances. It will more than likely be added to the trading plan. Excellent!!


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## stock84

Thanks @debtfree and @peter2 both for your replies and suggestions. 
@debtfree I did find those two threads, a lot to take in initially, but as you said, need to read few times to understand better. 
@peter2, thanks for referring to post#245. I think I understand now how to work out the trade size.
TR is something that we get from the chart (support-resistance level), right? 
How do you get the trade result (+27 in your example). Is it something that is dictated by the chart or just arbitrary (based on trader's appetite for desired reward/risk ratio)


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## peter2

The trading style in this thread can be described as a rule based discretionary style. The BKL trade was followed with a wide trailing sell stop that was tightened once BKL hit the +2R level and the index started to fall. The sell stop locked in the +1.2R result. BKL went lower and is now higher. 

Trading update: New trade DTL

*DTL*: Bought BO-NH after two months of sideways price movement.
Average buy price 1.12, market depth very thin. iSL is 1.05. Initial target is the old high at 1.25.
Warning: Daily traded volume is LOW, probably too low and I'll most likely use a limit sell order near one of my targets.


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## debtfree

Thanks for the update Peter. 

One good one we missed yesterday was MCT, which I dare say Tech/a would have been all over it.


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## debtfree

Thanks Peter

Amazing how they jump out at you now. Our very first trade from PAV, we have traded this 3 times with good results.


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## peter2

I've got my eyes on SEN also, but not here. I won't buy 0.195 as it's just below 0.20 which is a significant round number. I anticipate that there would be some resistance at 0.20. Price could "jump the creek" and stop at the old high at 0.22. Just something to consider. 

The number of BO opportunities are rising as the market pauses and I'm tempted to start a few more in my own account provided they're not highly correlated to the index. 

New Trade:  LPE - newly listed NSW electricity retailer growing it's business

*LPE*: Bought BO-NH (0.036), iSL is 0.030.


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## peter2

EOW 47 update:  ASX Momentum portfolio *+23.4%*  ( 70% invested in 5 trades )   XAO *-15.8%* (past 47wk)

End of another volatile week and the ASX looks like pausing at this level. Both the index and our portfolio ended higher this week. We've started two new trades this week as their prices made new highs. This could be the calm before another storm. I don't know. 

This weeks sells: nil
This weeks buys: DTL, LPE

Outlook: remains ugly, although I'm relieved by the pause in the relentless selling. We will stick to our strategy of buying break outs and ignore the temptation of buying bargains.


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## CanOz

Absolutely amazing result Peter, very inspirational. Long only as well, really great results.....just imagine what a nice bull market could do for you!


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## stock84

Great result in such volatile market over past few months. Fingers crossed with BFC  Following along...


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## debtfree

peter2: I do need to reorganize my spreadsheet, I had it pretty well laid out before starting to follow your threads (well that's what I thought at the time).  Thanks to you I have since added columns for info I was not recording that I really needed to be aware of such as: 1ATR, #ATR at Risk, Initial Target Columns, % of Bank in Trade, Type of Trade/Reason and now I need to add the daily XAO EOD amount to construct a graph displaying my XAO - Portfolio - Exposure levels. I guess you record this each day.

I'm aware it's a bit all over the shop so to say and thought I must reorganize this properly. If I may ask, do you use or should I say have you purchased a spreadsheet already setup to the way you are organized or have you done it yourself? If you have done it yourself ok but then at the same time are you aware of a spreadsheet that's available (for sale) that is very much the same as yours. I have looked at many and most do not suit as most don't record the things that I should be aware of. 

Just thinking of saving time with still not having it setup properly. I don't want to do it and find I've left out things that are needed.

I thought this would be also a important area to cover as well, if I'm struggling setting this up I'm sure there are plenty of others out there with sub par spreadsheets. I not looking for a free spreadsheet or someone doing all the formulas, I don't mind doing this at all, I just want to set it up properly to cover all that we speak about here.

I have other questions in regards to this area but I'll leave it for the next post.

Thanks ... debtfree


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## peter2

EOW 48 update:    ASX Break-Out Portfolio *+23.9%*  ( 70% invested in 5 stocks )   XAO *-14.3%* (past 48wk)

The market index rose 1.5% this week. The portfolio also went higher but gave back most of the gains today (-2% Fri). Due to a lack of sustained upward price movement I'm modifying the title of the portfolio from momentum to break-out. We are going to stay with our main strategy of buying break-outs and manage every trade according to what happens after our entry (as usual). If we see a strong move that gets close to our +2R level then we'll manage with a tight trailing exit stop to lock in most of the profit. If we see a slow ponderous move then we will manage with a wide exit stop and allow the pullbacks to form a HL. Current market conditions are creating deeper pullbacks. 

This weeks sells/buys: nil

Outlook: Have we seen the low? Does it matter? If we see another good setup we'll buy it, because we've got the cash and risk capital to use. Of course if the market falls, we'll be quick to protect what we've earned so far. 

This week I'm showing you another chart of our journey (% Invested each week). It's worth looking at this along with the movement of the index (XAO) in the chart above.


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## peter2

debtfree: I haven't replied as I thought you've answered your own questions. I add columns whenever I think the additional data might help me identify an aspect of my trading performance (both good and bad). 

General data like % invested, portfolio heat, movement of the benchmark (XAO) etc . .  I collate EOW only.


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## kid hustlr

interesting how rarely leverage has been used


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## peter2

Trading update: Our portfolio has weathered the selling storm quite well, until now. 

*TGR*: Sell next open, after two large down days. My medium term exit hasn't been hit but the upward price momentum has totally reversed and signalled the exit for this portfolio.

Selling has also started in our other trades, BFC, DTL, LPE. We'll be monitoring the closes for the next few days. 

kid hustler: Good observation. This is mainly due to the underlying down trend in the general market and partly due to the low level of portfolio heat used in these market conditions. We would have used more leverage if we included shorting (via cfds) in this thread. I didn't want to add another level of complexity as I don't short stock cfds myself.


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## peter2

EOW 49 update:    ASX Momentum (?) Portfolio  *+21.3%*  ( 33% invested in 3 stocks )   XAO *-14.8%* (past 49wk)

Trading ASX equities for a profit gets tougher and tougher as the high volatility and thin market depth continues. Our portfolio lost 2.6% this week as the selling finally hit our stocks. Overall, the general market only fell 0.5% but there was significant profit taking in the market darlings BAL, BKL, ACX, ALL, TGR, TWE etc.  I noticed there was some demand for these shares in the last hour of trading and you can see this in the EOD charts (creating weekly pinbars and tails).  BAL, BKL, TWE, BGA  all bounced late. 

This weeks sells: TGR, ACX
This weeks buys: nil

*ACX*: Triggered an exit as price closed on our exit trigger (4.90). The next day's open was 4.90, but the volume was low and I didn't get all my selling done at that price. My last sale was 4.80 so I am going to include this slippage in the portfolio as a reminder that this happens to us all when we want to sell in a low volume market. 

Outlook: Remains a volatile bear market that I'm reluctant to be involved in as it's very difficult to earn a profit with tight stops in these market conditions. My personal ASX stock trading has switched to the weekly charts in an attempt to avoid the daily price swings. There are bullish opportunities developing right now and if it means we trade a weekly chart to earn a profit then I don't think you'll mind.


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## debtfree

Peter2, 

I'm not ignoring you or the thread, I'm still following with great interest and passion but getting swamped with the new venture just at the moment. Will most likely have time tomorrow to jump in with a post.

Cheers ... debtfree


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## debtfree

Peter2,

*Peter2 wrote:* *"General data like % invested, portfolio heat, movement of the benchmark (XAO) etc . . I collate EOW only."*

Once again this makes sense ... weekly will be enough to keep me on track, thanks. I love this graph, a quick picture telling a thousand words ... beautiful.

My comments in regards to the spreadsheet a couple of weeks ago came from wanting to tidy up my spreadsheet, over the course of the 2 threads you have mentioned quite a few things we should record and be aware of so I had a look around the web for already made trading spreadsheets and found none that really suited what I wanted and needed. That's why the question did you know of one or did  you buy one that suited all your requirements.

 I went back over the 2 momentum threads once again and seen your comments:

*Peter2 wrote: **"I keep detailed stats and record my description of the market condition when I start every trade. I also record the type of trade setup (break-out, pullback and reversal). I know my edge for each type of setup in every market condition. These stats show me that trading with the trend does improve my edge."*

*"I'm not going to provide anymore details of these stats as they are personal and assist me to improve my overall edge. However it should indicate the level of commitment I've made in order to be consistently profitable."*

and that's fair enough as well. 

Your comments below also tell me that you must construct your own spreadsheet, as you say, you add to it when needed as below:

*Peter2 wrote:* *"I add columns whenever I think the additional data might help me identify an aspect of my trading performance (both good and bad)."*

So yes, I have answered my own questions in a way. 

Chasing this area up in the last couple of weeks has pushed me to find excel data forms which makes entering data easier and quicker for me but it only works up to 32 columns. I keep a record of all your trades in a spreadsheet that has 28 columns so this is perfect, I only need to fill in 8 of them as the others fill in automatically by formulas. Using this data form saves time scrolling down and clicking on individual cells across the page entering data. Probably nothing new for most out there but new for me and I find it very helpful for smaller spreadsheets.

My main spreadsheet that I want to reorganize has heaps more columns than 32 so to do this in the same manner I will have to use UserForm1 and set it up and enter formulas to make it work so to enter data the same way but this is a lot more work and time but it's a road I'd like to travel. This way I just enter the data then press the button and away it goes and into a new row and across the spreadsheet  into the right cells. Once again nothing new for most but new to me.

Anyway that's enough from me but that's why the questions about spreadsheets out in the market and also what is a great list of data info we should be collecting at least to have info at our fingertips like yourself that we probably have not even thought about.

Thanks Peter for your updates, support and even a couple more tips to be aware of in the *Outlook* section of your last post. Very good.

Cheers ... debtfree


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## peter2

Trading update: Probably one day late, but it might be a prudent decision to close all our remaining trades while this panic selling continues.

DTL, BFC, LPE - Sell at next open. 

If you have already sold them as their prices started lower then you've done well.


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## VSntchr

peter2 said:


> Trading update: Probably one day late, but it might be a prudent decision to close all our remaining trades while this panic selling continues.
> 
> DTL, BFC, LPE - Sell at next open.
> 
> If you have already sold them as their prices started lower then you've done well.



Ive had quite a few get stopped this week, BFC is one of my last ones left.
Hope you managed to avoid carnage with ACX, I had a tight stop get me out at 5.15 and was very anxious for a re-entry...clearly still waiting on that one 

I have noticed certain stocks that are doing well in the current environment. *SPK* is one that I like, as investors head to quality in times of fear.


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## peter2

EOW 50 update:     ASX Momentum Portfolio  *+19.5%*  ( 0% invested )    XAO *-18.1%* (past 50 wk)

The market continues to fall and our exits have us completely out of the market. 

This weeks sells: BFC, DTL, LPE
This weeks buys: nil (argh)

Mea Culpa: Yes, I have to admit that I missed the latest gold rally. I chose to ignore the many setups in the gold stocks thinking that gold was unlikely to rally harder than the minor rallies it has shown. Thinking that one knows what is going to happen is a costly bias for a trader. My scans were showing me lots of gold charts (MOY, DRM, RRL, NCM, NST) and I ignored them. Argh.

There are only two weeks left of my yearly task and seeing that we're completely in cash and I'll be away the last week, it seems that this is an opportune time to close the year off. 

Overall I was going to give myself 8/10 for the work, but missing the gold rally, I'll reduce it to 7/10. That's the lot of a discretionary trader. Sometimes we're in sync with the market and other times we're not. The missed opportunity reminds me that the scans do their job and I should take the hint when so many charts in the same sector start appearing.


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## skc

peter2 said:


> Overall I was going to give myself 8/10 for the work, but missing the gold rally, I'll reduce it to 7/10. That's the lot of a discretionary trader. Sometimes we're in sync with the market and other times we're not. The missed opportunity reminds me that the scans do their job and I should take the hint when so many charts in the same sector start appearing.
> 
> View attachment 65860




Personally I give you 9 out of 10 for the significant alpha you've generated... and an extra point for demonstrating to the followers what is the right attitude for trading. Treating it like a business, admitting to mistakes rather than looking for something else to blame (did anyone see a single mention of bots, shorters, manipulators, CFD stop hunters, company management etc etc?), and continuously seeking improvement.

Awesome effort. Awesome thread.


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## Ves

skc said:


> Awesome effort. Awesome thread.



+1

All publicly documented and open to discussion / criticism, and communicated with a passionate,  all-inclusive, friendly and hands-on attitude.


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## peter2

More than fifty weeks ago I volunteered to administer Pav's ASX Momentum thread as I trade in a similar manner and thought it time for me to contribute to the ASF community. Although a little disappointed by the lack of participation it has been enjoyable and rewarding.

I hope the equity curve is instructive. It shows that we earned most of our profits in a three month period and there were long periods where we broke even. We earned our profit by trading every month. If we had selected the times to trade we may have missed the best time. 

102 trades were completed. 
W% = 40% which is below average and again mainly due to the falling market. In a rising market the W% would approach 60%.
AW = $682 (+1.3R)  This number was close to the estimate of +1.4R
AL = $299 (-0.55R)  This number was close to the estimate of -0.7R
AW/AL = 2.3




2015 was a great year to learn how to trade ASX stocks. The markets presented all sorts of conditions. Our trading plans were stress tested and we came out on top. 2016 will be another great year to learn. This year we have the benefit of a stress tested trading plan. We're prepared, so bring it on.

I'd hoped to cultivate a vibrant group of people that traded or wanted to trade in a similar manner. Unfortunately this hasn't happened. Even attempts by others to stimulate interest in break-out opportunities hasn't kicked on. I don't know the reasons for this but whatever they are they're just excuses. I can only assume that most people aren't really motivated enough or become disheartened when they realise how much work/effort is involved. If it was easy ..... 

Outlook: The Aust economy will remain sluggish. The market can't go up without demand for the banks and the price volatility will remain high. It's time to incude other markets in our attempt to grow our capital. We've got 60K now and I'm thinking that we will take advantage of our leverage account that will allow us to trade other markets.

I'll be back in March to start Peter's Momentum Portfolio.


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## craft

peter2 said:


> More than fifty weeks ago I volunteered to administer Pav's ASX Momentum thread as I trade in a similar manner and thought it time for me to contribute to the ASF community. Although a little disappointed by the lack of participation it has been enjoyable and rewarding.




Peter

You have my admiration for what you have done here.  Maybe the participation wasn’t as high as it could have been but that says nothing about the calibre of the thread. Sometimes it takes a while for the classics to really be appreciated. As long as ASF lives on I’m sure for many years people will stumble across and be helped on their journey by what you have left behind here. 

Peter2
Take a bow.





peter2 said:


> I'll be back in March to start Peter's Momentum Portfolio.




Looking forward to the encore.


----------



## lindsayf

Teriffic educational and enlightening example of the successful traders mindset.


----------



## Newt

Have read every word at least 3 times, and looking forward to the momentum trades with great interest.
The ASF community should be very grateful Peter for your time, energy and commitment - know I am!


----------



## Wysiwyg

Thank you for showing me you can beat the market by trading up trending stocks in a down trending market. The kicker for me was the after trade entry management and to a lesser degree the stock selection from various candidates. A skill that you have obviously developed. 

Short selling with the market trend would have seen astronomical returns. 

Thanks for taking the time to expand on this thread.


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## kid hustlr

Great thread Pete.

Your points about lack of interest I agree with. I think most are generally lazy and underestimate what it takes.

For me personally given how time poor I am mon-fri the idea of learning anibroker, running scans, checking charts, building an outlook etc for me right now is a little much. I've instead opted for nick's signals for the near future to take any decision making completely away with the goal to move more towards what you are doing when my life opens up a fraction. Threads like this are a good reminder of the fact the more time you have to put in the more return you should be achieving.

Perhaps I'm lazy? Not sure. Regardless congrats on the thread.


----------



## Newt

kid hustlr said:


> Great thread Pete.
> 
> Your points about lack of interest I agree with. I think most are generally lazy and underestimate what it takes.
> 
> For me personally given how time poor I am mon-fri the idea of learning anibroker, running scans, checking charts, building an outlook etc for me right now is a little much. I've instead opted for nick's signals for the near future to take any decision making completely away with the goal to move more towards what you are doing when my life opens up a fraction. Threads like this are a good reminder of the fact the more time you have to put in the more return you should be achieving.
> 
> Perhaps I'm lazy? Not sure. Regardless congrats on the thread.




It will be interesting to see if Momentum trading "ala Peter" is by nature a longer term beast with less day to day maintenance.  I'm prepared to give up some performance to be more realistic with my weekday (night) time.  Switching my primary focus from daily to weekly has been a valuable learning experience, so keen to see how the future thread pans out.  ASF readers have no right to expect Peter to front up for another round of detailed diarising - but we'll be pretty stoked if it happens!


----------



## debtfree

Peter

What a fantastic thread ..... *+19.5%* and I still can't believe it when looking at the XAO chart, it's basically all downhill since you took over. I have certainly benefitted immensely Peter by your input and I appreciate it very much, so many areas of my trading was so out of order  with how  I really wanted to go about my trading. A Trading Plan operated in a business manner is a must as you say, clear instructions from the boss to the worker (trader) on how to perform each task and also clear instructions on what to do if things go wrong. Perfect, just what I was after! I have now taken the apron strings off and no longer need to use trading websites for trading tips and trade management. 

Thank you .. Thank you .. Thank you .. I love it!! 

Watching you control your 2 money management boxes was a joy, it was like driving a car to a destination safely. (Capital at Risk = When driving, you stayed in your lane) and (Total Portfolio Heat = Controlling the accelerator and brake to get us home safely without a bad crash. 7% Drawdown (approximately)  was outstanding! 

I give you a 10/10 and I echo the nice comments others have stated in their posts above. As Craft mentioned, many people will be helped for years from your contribution. In regards to people getting involved, I've noticed forums get very quite when the market is heading down and I suppose that reflects also in the market with Peter mentioning lower volume in the market depth of late. But, at the same time there has being a strong following of this thread with lots of people viewing it.

I look forward to your "Peter's Momentum Portfolio" thread in March. I gather that will be using a CFD supplier?
Once again thanks Peter and enjoy your week away.

Cheers ... debtfree


----------



## VSntchr

peter2 said:


> Overall I was going to give myself 8/10 for the work, but missing the gold rally, I'll reduce it to 7/10. That's the lot of a discretionary trader. Sometimes we're in sync with the market and other times we're not. The missed opportunity reminds me that the scans do their job and I should take the hint when so many charts in the same sector start appearing.





skc said:


> Personally I give you 9 out of 10 for the significant alpha you've generated... and an extra point for demonstrating to the followers what is the right attitude for trading. Treating it like a business, admitting to mistakes rather than looking for something else to blame (did anyone see a single mention of bots, shorters, manipulators, CFD stop hunters, company management etc etc?), and continuously seeking improvement.



Agree on the 9/10 SKC. I was going to say 10...but then there would be no room for improvement...and what good is a trader if he is not constantly seeking self-improvement? :



Ves said:


> All publicly documented and open to discussion / criticism, and communicated with a passionate,  all-inclusive, friendly and hands-on attitude.



It's one thing being a good trader, another thing to be a good teacher. I think it's pretty clear that the attributes you describe above are well covered in this thread.



peter2 said:


> View attachment 65861



This chart says it all...great management of losing trades.


peter2 said:


> I'd hoped to cultivate a vibrant group of people that traded or wanted to trade in a similar manner. Unfortunately this hasn't happened. Even attempts by others to stimulate interest in break-out opportunities hasn't kicked on. I don't know the reasons for this but whatever they are they're just excuses. I can only assume that most people aren't really motivated enough or become disheartened when they realise how much work/effort is involved. If it was easy .....



I am certainly a beneficiary of the thread and have tried to participate where appropriate. If I may, perhaps one of the issues holding back wider participation is a clear indication of *how* to participate. At times I have been reluctant to post in order to avoid hijacking the thread. You've done a great job at keeping the trades documented and updated in the journal weekly, that it almost seems like a distraction for me to come and post my own trades or thoughts on a potential. 


peter2 said:


> We've got 60K now and I'm thinking that we will take advantage of our leverage account that will allow us to trade other markets.
> I'll be back in March to start Peter's Momentum Portfolio.



I think if I had have been you, I would have found it too difficult to stick to another trader's style within the journal for so long. Maybe that has been another good learning tool as it stimulates thought and demands mechanical-like action to avoid discretionary style trading mistakes. In any case, I am super excited to watch the move into new markets, very relevant for me and will no-doubt put the learning curve into hyper drive once more. :bier:


----------



## peter2

VSntchr said:


> If I may, perhaps one of the issues holding back wider participation is a clear indication of *how* to participate. At times I have been reluctant to post in order to avoid hijacking the thread. You've done a great job at keeping the trades documented and updated in the journal weekly, that it almost seems like a distraction for me to come and post my own trades or thoughts on a potential.




You've made an excellent point. I don't know how others could participate other than by contributing their trading ideas/comments to the general ASF stock threads or the break-out threads. I read all the trading related threads and occasionally construct a trading opportunity from them. What we trade and how we do it is not a group decision. 

The community at ASF is what it is and will only get better with more thoughtful contributions.


----------



## Nortorious

Hi peter2,

Great thread and well done on the performance of the portfolio. Exceptional result given the prevailing market.

I'm one of the guilty members for not keeping certain threads going. When the interest isn't there though, it's a reward for effort scenario for me. Luckily for all of us, you persisted and kept this thread going.

All the newbies and experienced members have all gained something and I am also another one of the members looking forward to the encore.

Let's hope for better conditions, plan for the worst and see where we come out. 

Top effort and thanks for the time you have invested in keeping the thread alive and vibrant with useful content.


----------



## Huskar

I am not a momentum trader but I still find your thread (a) fascinating and (b) very instructive, particularly for your disciplined after trade management and measured self-reviews (both things that I need to work on). I am guilty of being not involved enough in the conversation but that is mainly because everyone else has already said it much better than me ! Enjoy the break.


----------



## peter2

Comment:  We're out of the market as all our open trades hit their exit triggers and the sentiment so bad that it was not worth starting any more. I'm also planning a week away, so it was an opportune time to have a break. Personally I'm 90% cash also and my only position is a trade in an ASX index ETF. 

Well it's amazing how ones outlook changes when there's no emotional ties. The market drops 200pts, who cares I'm out. The market rallies 100pts, who cares, I do, I want to get back in, the market is going up. . The bullish bias or the fomo psychological bias doesn't disappear. I'm starting to see bullish setups all over the market even though my daily market filter is still bearish. 

I'm going to sit on my hands until I get back, but I can tell you that I'm champing at the bit to start earning more profit for the/my portfolio. I'm so keen that I might even buy break-outs of sloping resistance lines instead of waiting for horizontal resistance. 

---

If one hasn't got a mentor then the self review process is so important. It's not easy and I only do it long after (weeks/months) the trade is done. I wait until the emotions have died down and I've forgotten the market sentiment that existed at the time of the trade. It's easier then to see if the setup wasn't perfect or the exit was too early or late. Counting our mistakes isn't fun, but it's very instructive. 

When I start the non-ASX trading thread there won't be a suitable benchmark to use as the trades will be in a variety of markets and timeframes (incl intraday). How will I know if I'm doing a good job? I'll only know if I monitor my trading mistakes against a standard mark (<5%). I'm thinking of including a performance review figure after each trade. We'll see.


----------



## Modest

peter2 said:


> When I start the non-ASX trading thread there won't be a suitable benchmark to use as the trades will be in a variety of markets and timeframes (incl intraday). How will I know if I'm doing a good job? I'll only know if I monitor my trading mistakes against a standard mark (<5%). I'm thinking of including a performance review figure after each trade. We'll see.




Ooo...Can't wait peter! Enjoy your break.


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## PeterJ

Peter enjoy a well deserved break
and i look forward to an interesting 2016

Peter


----------



## xr06t

I would like to echo Debtfree's comments. This thread has been great for me, and have found this type of momentum trading seems to sit well with me.

For Peter and any others worried about their threads not being followed, please please take notice of the increasing thread views, as i think this is a much greater indicator of how a thread is going. I for one never felt i had anything meaningful to add but very much enjoyed the constant posting and analysis, and was able to reflect on my own trading with the rhetorical questions posed.

10/10 for the thread from me. I think the results speak for themselves as to the score /10 for the plan.

Many many thanks.


----------



## 5oclock

PETER , you have done a fantastic job of this thread, with an equally fantastic bottom line !! I will be waiting along with many others for your return ! Like other people i have not contributed,but I have read all your posts and enjoyed and learnt a great deal from your work----its really amazing to have an inside look at how others trade let alone an inside look at someone who can get an healthy return while the index goes through the floor. I for one have learnt more from your thread than a number of trading books. Thanks again for your efforts,have a nice little rest, and hurry back !!!


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## peter2

Thank you for the compliments. 

A brief preview before my short holiday.

This thread will continue as an ASX, long only, short term price momentum trading, *educational* journal. The individual trade risk for every trade in this thread will continue to be 1% of total capital. The minimum price target will be >+1R and if market conditions are suitable we'll let a few get bigger (>+3R) using trailing exit stops.

Our preferred trading setups/entries are break-outs of horizontal resistance (BO-HR) and break-outs to new highs (BO-NH) in a trending market. Currently the weekly trend is down and this reduces the number of BO opportunities for us, so we may look for other setups that I categorise as pull-backs and reversals. The inclusion of these extra setups will provide plenty of opportunities. 

We'll continue to manage our portfolio heat using our market risk filter based on the weekly and daily trend of the XAO index. The XAO index is also our benchmark that helps us monitor our performance. 

As this is an educational thread, perhaps I should describe the perfect (imo) pull back and reversal setups, but right now I won't (tease . I've mentioned previously that trading reversals when the general market is going up is a waste of time and money. However if the market is down and turning up then it's a perfect time as the probability of earning an acceptable reward/risk is much better. The oil price will turn up, some time in the future and the oil stocks will follow. Demand for our banks will resume one day. We'll keep an eye on them. Until then, we'll trade the stocks most in demand now using price break-outs.

The spreadsheet and graphs of our performance will continue rather than restart. This will remind us that trading is a long term commitment and that we can expect to have losing periods, frustrating periods and rewarding periods. We can't have the good times without weathering some bad.


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## debtfree

Sounds fantastic Peter. Will you using all the funds you accumulated, roughly $60K or are you keeping the other $10K dry for something else on the side ...... or maybe your holiday   

Enjoy your break Peter.

Thanks ... debtfree


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## peter2

The current trading capital (60K) will be allocated across two trading threads. The current ASX Momentum Portfolio will have 50K and the new business/new thread will start with 10K. Trades in the new thread use leverage and won't require as much upfront margin. If one thread needs to borrow cash from the other thread, that'll be done if there's cash available. 

Trades in either thread will be sized according to the total capital of both threads (50K + 10K = 60K). Accumulated profits in either thread will help increase the trade risk in both threads (faster compounding). 

This thread will continue trading ASX stocks (long only) and will be the main educational thread. The new thread will mainly be a trading journal. Educational comments will only be provided if people ask. 

No more comments about the new thread. It won't commence until the first trade is opened.


----------



## Nortorious

peter2 said:


> The current trading capital (60K) will be allocated across two trading threads. The current ASX Momentum Portfolio will have 50K and the new business/new thread will start with 10K. Trades in the new thread use leverage and won't require as much upfront margin. If one thread needs to borrow cash from the other thread, that'll be done if there's cash available.
> 
> Trades in either thread will be sized according to the total capital of both threads (50K + 10K = 60K). Accumulated profits in either thread will help increase the trade risk in both threads (faster compounding).
> 
> This thread will continue trading ASX stocks (long only) and will be the main educational thread. The new thread will mainly be a trading journal. Educational comments will only be provided if people ask.
> 
> No more comments about the new thread. It won't commence until the first trade is opened.




Looking forward to seeing how you manage risk when using leverage. It's an area I haven't ventured into too much other than feeling like a superhero with a massively leverage trade that went well.... to then only give back those profits plus some on a couple of trades that went wrong following the initial home run.


----------



## peter2

There's nothing tricky about it. I'll be risking 0.5% - 1% of the trading capital in each trade. That's $300 - $600 as the current capital is $60K. 

If it's an intraday forex trade with a risk of 32pips. I'll adjust the lot size of the trade so that 32pips = $300AUD. If it's a trade in the SPI with a risk of 40pts, I'll adjust the lot size so that 40pts = $600AUD. Obviously I can't do this with the futures contract but I can use a cfd contract to do it. CFD providers have mini-sized contracts in many futures markets (mini- Copper, mini-Crude Oil etc..).

It's the same fixed fractional position sizing model that we use when trading ASX shares. Unlike shares which require 100% of the trade value to be paid up front, leveraged markets require only a small amount to be deposited as margin for the trade. We will be able to trade a 60K account with only 10K quite easily.


----------



## Nortorious

peter2 said:


> There's nothing tricky about it. I'll be risking 0.5% - 1% of the trading capital in each trade. That's $300 - $600 as the current capital is $60K.
> 
> If it's an intraday forex trade with a risk of 32pips. I'll adjust the lot size of the trade so that 32pips = $300AUD. If it's a trade in the SPI with a risk of 40pts, I'll adjust the lot size so that 40pts = $600AUD. Obviously I can't do this with the futures contract but I can use a cfd contract to do it. CFD providers have mini-sized contracts in many futures markets (mini- Copper, mini-Crude Oil etc..).
> 
> It's the same fixed fractional position sizing model that we use when trading ASX shares. Unlike shares which require 100% of the trade value to be paid up front, leveraged markets require only a small amount to be deposited as margin for the trade. We will be able to trade a 60K account with only 10K quite easily.





Ok so you focus on the total value of the trade and the risk related to that rather than looking at the margin put up.

Makes sense


----------



## VSntchr

UGL was a great trade for anyone who took managements hint just prior to results.
Recent consolidation gave opportunity for the BO-NH (albeit at a much higher price) around $2.90.
One of the things I am working on at the moment is knowing when to add to positions that are deeply in profit. My urges are to take profit but clearly this chart was screaming to be added too in the last few days.
Some of the guys in the futures threads have mentioned struggles like this and "making the tough trades".




One that I saw, but missed :



Now that reporting season is out of the way there should be some new trends forming. Some sectors might go out of favour and may be replaced by new ones. I haven't been taking many BO trades over the last few weeks due to both market conditions as well as my focus being on trading the reports. Looking forward to finding some good trades over the coming weeks.


----------



## peter2

I'm back and ready to rumble. I'm not going to jump right in (today) because I've been away from the market for more than a week and I'm not in touch with what's hot and what's not. I'll scan the market over the week end and see what's been happening while I've been on holiday. 

Naturally I'll see all the great BO trades that have triggered last week and I won't notice all the BO's that failed. That's normal and it's also history and not worth wasting time thinking about it. There will be great BOs next week. My job is to find them. 

Taking a complete break from the market is important. When you notice that you're reacting to the market moves rather than anticipating what might happen.:nono: take a break.
If you feel like the market is beating you up :bonk: take a break. 
If you don't know what to do next :dunno: take a break. 
If the market conditions are unsuitable for your trading style  take a break. 

A few weeks ago the market was a highly volatile bear market, the start of another ASX reporting season and I knew that I was going to be away for a week. A good time for a break. 

I'm back and ready to go. I've reviewed all my trading plans. My SFund trades the weekly charts. This thread trades the daily charts and I've been preparing another plan to trade other major world markets.


----------



## kid hustlr

Sounds good Pete. Will you continue with the same format here of daily trades based around break out strategies


----------



## peter2

*Trading Plan review*: ASX Momentum Portfolio. 

*Goal*: To grow our capital faster than the growth of our benchmark index (XAO).
*How*: To identify strongly trending daily price charts that seem to be pausing and buy into the resumption of the trend anticipating that it will continue long enough for us to create an edge over the long term.
*Setups*: Small trend continuation patterns (box patterns, triangles,123L patterns etc.)
*Scans*: Darvas box scans, 10d BO scans (every pm before close)
*Money Management*: Fixed fractional position sizing model that risks only 1% of our total capital in each trade. Maximum position size to be limited to 20% of capital. 
*Risk Management*: Portfolio heat (total downside exposure) will be managed by a market risk filter. We will invest more in a low risk market (XAO going up) than a high risk market (XAO going down).
*Trade Management*: Price targets will be used In a high risk market. Trailing exit stops will be used in a low risk market. Prices must be allowed to get to +1.5R before considering an exit. 
*Entry*: We will buy the break-out either by a conditional order or after the BO is triggered.
*Exits*: Sell orders for our price targets will be placed in the market. Other exits will be done at the next open following an exit trigger event (close below our exit trigger or a discretionary exit). A discretionary exit can break any rule/guideline  provided the decision is made to protect the portfolio capital.

*Disclaimer*: I will be trading most (not all) of the trades posted in this thread. However I may manage my trades differently than this purely educational thread. 

The main purpose of this thread is educational with a strong emphasis on consistency. Consistency cannot be achieved without a trading plan.


----------



## Newt

Peter you've mentioned before you trade at least one of your portfolios weekly.  Any chance you could share pointers on what you perform differently for weekly timeframes?  (only if you're using momentum principles there too, presumably with different trade plan parameters).


----------



## peter2

The main differences in the weekly plan is the use of the weekly price bars. This means the initial stop loss is further away, out of the daily volatility and has a lower prob of being hit. The parcel sizes are smaller because the trade risk is larger. To overcome this disadvantage I am more likely to add to a winning trade until my max parcel size is reached. 

The larger exit stops in each trade create a larger portfolio heat but this is offset by the lower probability that the portfolio will have to close everything quickly. There's plenty of time to action both the entries and the exits and I can use limit orders more than when trading the daily charts. 

I use a momentum trading style on the weeklies similar to this thread and take profit (sell 1/2) at +2R or higher levels. The average trade lasts about 8-10 weeks/bars although some campaigns (buy, add, sell1/2, add, sell all) can last up to 30-40 weeks. Think of ALL, APO, BAL, BKL, SIQ type charts.

I use the three basic strategies, break-outs, pull-backs and reversals for trade setups. Break-outs get me into the start of a trend (from a basing pattern, think oil right now) or a trend continuation. To trade pull-backs in a strong weekly trend I wait for a bullish weekly price bar at a logical pull-back zone (support). Reversals require a HL and a break-out before I'll buy into them. 

I traded the weekly charts while working and it is a much more relaxed style as you don't have to look at the market during the day. I have a sneaky suspicion that it's more profitable than trading the daily charts.


----------



## Newt

peter2 said:


> I traded the weekly charts while working and it is a much more relaxed style as you don't have to look at the market during the day. I have a sneaky suspicion that it's more profitable than trading the daily charts.




Yes, although I've greatly admired your daily trades, the reality is I can't always must the time (or energy) every weeknight.  Also have a suspicion the longer timeframe is suiting my personality better.  Greatly appreciate those insights.


----------



## Telamelo

peter2 said:


> I'm back and ready to rumble. I'm not going to jump right in (today) because I've been away from the market for more than a week and I'm not in touch with what's hot and what's not. I'll scan the market over the week end and see what's been happening while I've been on holiday.
> 
> Naturally I'll see all the great BO trades that have triggered last week and I won't notice all the BO's that failed. That's normal and it's also history and not worth wasting time thinking about it. There will be great BOs next week. My job is to find them.
> 
> Taking a complete break from the market is important. When you notice that you're reacting to the market moves rather than anticipating what might happen.:nono: take a break.
> If you feel like the market is beating you up :bonk: take a break.
> If you don't know what to do next :dunno: take a break.
> If the market conditions are unsuitable for your trading style  take a break.
> 
> A few weeks ago the market was a highly volatile bear market, the start of another ASX reporting season and I knew that I was going to be away for a week. A good time for a break.
> 
> I'm back and ready to go. I've reviewed all my trading plans. My SFund trades the weekly charts. This thread trades the daily charts and I've been preparing another plan to trade other major world markets.




Welcome back Peter and trust you've enjoyed your break.

Only new across this forum/thread and wish to point out the excellent posting by you and some other's that is so educational/informative etc. as a real eye opener to say the least.

Just curious about any 'potential trade set ups' for the week ahead 07/03-11/03 respectively that you may have come across (if you could be so kind to share your thoughts/ideas).

I have a few set ups on watch such as:

IBG (potential breakout @5c+ looming - have entered @0.045c avg but am looking to add to my position etc.)

PDN

DKO

CXO

IMF

BPF

DTX

PAN

please dyor as always (since not intended as investment advice)


Be interested to know your thoughts (as IBG caught my eye on last week's 'bullish weekly chart' funnily enough)

Happy trading for the week ahead!


Cheers tela


----------



## peter2

Trading update: 
We're not going to chase last weeks break-outs. We're going to wait for the small consolidations to form that we trade as trend continuation patterns in the strongest trends. 

*EGH*: Bought todays BO at 0.61, iSL placed at 0.55. Our initial target is the old high at 0.69

*JHC*: Bought at last BO level 3.06, iSL is placed at 2.90 for this thread. This makes it a 50/50 trade. A more conservative iSL for a medium trader (me) is ~2.70. 




Hi tela, I had a look at those codes you posted and reviewed them using the setups that we use in this thread (TC patterns). 
IBG: Nice resistance at 0.05. I'll keep an eye on a second chance BO. Price rallied with last weeks commodity rally. Needs further follow through. 
PDN: Good move up today. I noticed the the POU is also rising.
DKO, CXO   Lithium explorers. The charts do look promising. 
IMF: I'd rather be looking for Li than these guys. Not for me.
BPF, DTX: Prices going down. No
PAN and other Ni/Zn producers need more time to form more dependable base accumulation patterns (IMO).

A nice selection overall.


----------



## peter2

EOW 54 update:  Naturally the market rallied as I was on holiday. That happens and I didn't want to chase prices this week after missing last week's BOs. We'll start slowly and safely. I'm building a watchlist of charts with BO opportunities. 

This weeks buys: EGH, JHC


----------



## Telamelo

peter2 said:


> Trading update:
> We're not going to chase last weeks break-outs. We're going to wait for the small consolidations to form that we trade as trend continuation patterns in the strongest trends.
> 
> *EGH*: Bought todays BO at 0.61, iSL placed at 0.55. Our initial target is the old high at 0.69
> 
> *JHC*: Bought at last BO level 3.06, iSL is placed at 2.90 for this thread. This makes it a 50/50 trade. A more conservative iSL for a medium trader (me) is ~2.70.
> 
> View attachment 66031
> 
> 
> Hi tela, I had a look at those codes you posted and reviewed them using the setups that we use in this thread (TC patterns).
> IBG: Nice resistance at 0.05. I'll keep an eye on a second chance BO. Price rallied with last weeks commodity rally. Needs further follow through.
> PDN: Good move up today. I noticed the the POU is also rising.
> DKO, CXO   Lithium explorers. The charts do look promising.
> IMF: I'd rather be looking for Li than these guys. Not for me.
> BPF, DTX: Prices going down. No
> PAN and other Ni/Zn producers need more time to form more dependable base accumulation patterns (IMO).
> 
> A nice selection overall.





Hi Peter, 

Thanks very much for your response and analysis/insight given...... appreciate it mate. I like your trading style/analysis etc. so looking forward to your ongoing feedback on this thread.

Cheers tela

P.S. Only trade for me last week, bought ARC @50/51c avg (has only 8.9M shares on issue and top20 hold 85% of tight register so is illiquid (be warned) - market depth looks strong etc. in anticipation of a possible acquisition soon (please dyor though as not intended as investment advice) as I personally like uptrending illiquid stocks driven by potential positive news flow to come

P.P.S. Other stocks on my watchlist for week ahead are PPS, ORL and RNT respectively (please dyor)


----------



## Nortorious

peter2 said:


> *Trading Plan review*: ASX Momentum Portfolio.
> 
> *Goal*: To grow our capital faster than the growth of our benchmark index (XAO).
> *How*: To identify strongly trending daily price charts that seem to be pausing and buy into the resumption of the trend anticipating that it will continue long enough for us to create an edge over the long term.
> *Setups*: Small trend continuation patterns (box patterns, triangles,123L patterns etc.)
> *Scans*: Darvas box scans, 10d BO scans (every pm before close)
> *Money Management*: Fixed fractional position sizing model that risks only 1% of our total capital in each trade. Maximum position size to be limited to 20% of capital.
> *Risk Management*: Portfolio heat (total downside exposure) will be managed by a market risk filter. We will invest more in a low risk market (XAO going up) than a high risk market (XAO going down).
> *Trade Management*: Price targets will be used In a high risk market. Trailing exit stops will be used in a low risk market. Prices must be allowed to get to +1.5R before considering an exit.
> *Entry*: We will buy the break-out either by a conditional order or after the BO is triggered.
> *Exits*: Sell orders for our price targets will be placed in the market. Other exits will be done at the next open following an exit trigger event (close below our exit trigger or a discretionary exit). A discretionary exit can break any rule/guideline  provided the decision is made to protect the portfolio capital.
> 
> *Disclaimer*: I will be trading most (not all) of the trades posted in this thread. However I may manage my trades differently than this purely educational thread.
> 
> The main purpose of this thread is educational with a strong emphasis on consistency. Consistency cannot be achieved without a trading plan.




If there was a thumbs up button on this site, I would have hit it for this post. Great summary of the plan of attack. Hopefully some others looked at this post and are using the structure to create their own trading plan. You don't need lots of pages to create a trading plan, an outline like this is perfect.


----------



## Telamelo

Telamelo said:


> Hi Peter,
> 
> Thanks very much for your response and analysis/insight given...... appreciate it mate. I like your trading style/analysis etc. so looking forward to your ongoing feedback on this thread.
> 
> Cheers tela
> 
> P.S. Only trade for me last week, bought ARC @50/51c avg (has only 8.9M shares on issue and top20 hold 85% of tight register so is illiquid (be warned) - market depth looks strong etc. in anticipation of a possible acquisition soon (please dyor though as not intended as investment advice) as I personally like uptrending illiquid stocks driven by potential positive news flow to come
> 
> P.P.S. Other stocks on my watchlist for week ahead are PPS, ORL and RNT respectively (please dyor)





ARC strong close today @58c (+13.73%) on reaching new 52 week high's! 

Stochastic Oscillator
%K(14,3): +72.7 %D(3): +76.8 

RSI (14) : +76.7 

dyor 

Cheers tela


----------



## grah33

Hi Peter and others,

I'm finally back after a good while.  and read all the posts i missed out on... I too would like to thank Peter for his contributions in teaching us. on a practical level i find it helpful, and read every post from when i started regularly following it.  recently i have been  very busy back testing, reading parts of different trading books (increasing my all round knowledge), developing an excel file,  other misc tasks...i gotta say, by the time you get an excel file which incorporates all your different broker accounts and relates their open profit/losses all together etc, it's lots of work.  

the market wasn't good for me this year, or any new guy wanting to learn how to trade. hopefully good times will be back.  
my approach  is somewhat of a classical approach, like what you get from the popular share trading books.  i basically let all my winners run, use atr to trail my stops (don't vary the atr), and don't really cut positions until there done (although i do sell 1/2 if i get a good smash occurring...). i'm a 'trend trader' for now (taking a bite of trends), but i grab BOs from horizontal consolidations too, and will probably grab the odd triangle as well. for those new to the game  i recommend manually back-testing your approach in different market conditions (rising, ranging). you'll see so many charts and you'll feel like you've learned how to do it. it's laborious but worth it.


anyway, hope to keep learning 

if i could ask you something peter (no need to answer if you have your reasons, others welcome as well to answer after some time if not answered),  about your recent egh trade.  what do you think of it since you are buying near another old high at 0.63?  i've been coming across a few of these (where the BO NH is next to an old high), trade looks good but have avoided them.the old highs can be a few months away, or even a few years away . it didn't stop you this time though, as you went in.


----------



## peter2

grah33: Now that's a good question. It shows me that you've been thinking about the charts. 

*EGH*: I'm not worried by the old high at 0.63. It is a minor swing point. The older high (0.68) would provide an acceptable profit if hit. I liked the fact that the gap provided support and anticipated price to go higher immediately. Hasn't happened yet. I'll get concerned if it doesn't soon as price likes to fill the gaps that are left. The other concern is that this price swing is a "b" wave of an "abc" corrective pattern. After the "b" wave comes "c" which would be another swing down. 

I saw the bullish gap support and risked it, however if price turns down I'll exit quite quickly.


----------



## VSntchr

Navitas has a share buyback program going on at the moment which is adding to the demand side of the stock. Enrolment numbers in the northern hemisphere looking strong and presumably the contract loss impacts of SIBT are already price in.
Price action has looked pretty good since the results-day spike trapped a few traders. 
To me it looks like a decent candidate for a buy on a close above $4.90 with a stop on a close below $4.68. Have used closing prices as it can spike around a bit despite pretty strong depth.


----------



## peter2

Trading update: New trade

*NVT*: Bought break-out at 4.91, iSL is 4.60 

Looks like a nice asc triangle on the daily chart. A bit spiky as you mention, so we'll use a close below 4.60 as our iSL. There have been a few disappointments in the past, another one and it gets put in my never to be traded again bin (3 strikes policy). There has been a lot of activity between 4.80 - 5.50 in 2014. This band may provide stubborn resistance and I'm expecting a bumpy ride on this one. Tight exit stops could be perilous.


----------



## peter2

Trading Update: New trade.

*JHX*: Bought BO-HR at 18.45, iSL is 17.45.  This was bought late pm after price traded above the BO level (18.50). There is an acceptable RR up to the old high ($20).


----------



## VSntchr

peter2 said:


> Trading Update: New trade.
> 
> *JHX*: Bought BO-HR at 18.45, iSL is 17.45.  This was bought late pm after price traded above the BO level (18.50). There is an acceptable RR up to the old high ($20).



I really like that chart...and a nice day to buy given the FED news overnight, especially since JHX has a large US presence.


----------



## Telamelo

VSntchr said:


> I really like that chart...and a nice day to buy given the FED news overnight, especially since JHX has a large US presence.




Happen to mention ORL @$2.20 the other week.... since hit $2.85 yesterday!?  PPS @35c other week ... last traded @37c

Agree that NVT, JHX and MYX all look good as well.. (great work/analysis there)

-----------------------------------

HZR with only 50M on issue.. breakout to new 52 week high's @35c!

17/03/16 HAZER GROUP AGREEMENTS FOR GRAPHENE AND DEMONSTRATION PLANT SCALE UP
● New agreement with UWA to develop Hazer technology for production of graphene
● UWA will identify conditions to improve quality and quantity of graphene
● New partnership with chemical engineering group Kemplant to assist in development and design of demonstration plant
● Hazer will continue to own all IP through both agreements

Stochastic Oscillator
%K(14,3): +72.2 %D(3): +59.0 

RSI(14) : +70.1 

33 buyers for 1,113,573 units vs only 8 sellers for 103,671 units

Please dyor as always

Cheers tela   (disclosure that I bought on breakout to new high's)


----------



## grah33

peter (and valuesnatcher): I see now , the swing point was minor. makes sense, thx peter. 
i'm not sure though if i would have liked to get into MIN as valuesnatcher suggested. i bought another one like this and it got me thinking...  my impression is that consolidations need to have  a few points (at least 2) to form a trendline to breakout from. or to have several points at similar levels if they cannot be joined by a horizontal trendline. the MIN breakout snatcher suggested only has 1 point to breakout from, so perhaps that isn't regarded as a  consolidation (though it did fly up nicely).


----------



## peter2

grah33: I agree with you that there is a subtle difference between a BO of two equal highs and a BO of one high. I also prefer to use the BO-HR. 

Another tip when looking at your charts, "look left, structure leaves clues". Not my quote, but I like it. VSntchr's BO level can be drawn touching another older high. 

There is a tech/a type buy setup on the chart. The stock price is way above his preferred price range though.


----------



## VSntchr

A couple of charts that are worthy of a look in my opinion:
Breaking out: *NXT*, *GEM*
Watch: *CCV, MNY* (this sector has a pending government review for SACC)


----------



## davidosan

Hi guys,

Was wondering if I could get some feedback on LIT? Small volume atm but it looks like it could breakout any day. 

Thanks.


----------



## Telamelo

VSntchr said:


> A couple of charts that are worthy of a look in my opinion:
> Breaking out: *NXT*, *GEM*
> Watch: *CCV, MNY* (this sector has a pending government review for SACC)




HZR - Nice strong bullish close with a pick up in volume/momentum...  should see it make further new high's tomorrow imo

Investor's only have till 29/03/16 to snap up their option entitlements @1c (this is the gift of a lifetime imo) with 30c exercise price (noting expiry 31/12/18)

26 buyers for 850,813 units  vs  only  6 sellers for 63,675 units

please dyor and due diligence

Cheers tela


----------



## Telamelo

Telamelo said:


> HZR - Nice strong bullish close with a pick up in volume/momentum...  should see it make further new high's tomorrow imo
> 
> Investor's only have till 29/03/16 to snap up their option entitlements @1c (this is the gift of a lifetime imo) with 30c exercise price (noting expiry 31/12/18)
> 
> 26 buyers for 850,813 units  vs  only  6 sellers for 63,675 units
> 
> please dyor and due diligence
> 
> Cheers tela




HZR nice +9% surge today to 39c!  at all time high's.

35 buyers for 1,029,793 units  vs  only 6 sellers for 136,456 units

please dyor

Cheers tela


----------



## peter2

EOW 56 update:   ASF Portfolio *+19.6%*  ( 73% invested in 4 trades )    XAO  *-12.7%* (past 56wk) 

Our portfolio is treading water, like the general market. Although the banks are starting to sink again. 

*JHX*: Price touched our exit trigger yesterday but closed above. If price trades back at 17.50 we will sell asap or next open.

There hasn't been much activity in this thread as our trades have stalled. I'll keep an eye out for other short term opportunities, without being tempted into day trading ASX stocks.


----------



## Nortorious

peter2 said:


> EOW 56 update:   ASF Portfolio *+19.6%*  ( 73% invested in 4 trades )    XAO  *-12.7%* (past 56wk)
> 
> Our portfolio is treading water, like the general market. Although the banks are starting to sink again.
> 
> *JHX*: Price touched our exit trigger yesterday but closed above. If price trades back at 17.50 we will sell asap or next open.
> 
> There hasn't been much activity in this thread as our trades have stalled. I'll keep an eye out for other short term opportunities, without being tempted into day trading ASX stocks.
> 
> View attachment 66121




Very much like my portfolio Peter. I have only had two new trades in the past month: long on NXM and AWV. The rest are treading water and some are providing some dividends in the meantime. 

An interesting phase ahead for the market. Let's see where it goes. My charts still have it pointing downwards, it did make an effort to break the down trend but appears to have failed.


----------



## Telamelo

Nortorious said:


> Very much like my portfolio Peter. I have only had two new trades in the past month: long on NXM and AWV. The rest are treading water and some are providing some dividends in the meantime.
> 
> An interesting phase ahead for the market. Let's see where it goes. My charts still have it pointing downwards, it did make an effort to break the down trend but appears to have failed.




A bit off topic.. but thought I'd share the below trading/investing tips with you all as applicable to both newbie's and us a little more experienced one's alike ......... Enjoy and Good Luck! for the trading week ahead. 


TRADER PSYCHOLOGY

1.	Be flexible and go with the flow of the markets price action, stubbornness, egos, and emotions are the worst indicators for entries and exits.

2.	Understand that the trader only chooses their entries, exits, position size, and risk and the market chooses whether they are profitable or not.

3.	You must have a trading plan before you start to trade, that has to be your anchor in decision making.

4.	You have to let go of wanting to always be right about your trade and exchange it for wanting to make money. The first step of making money is to cut a 'losing trade' short the moment it is confirmed that you are wrong.

5.	Never trade position sizes so big that your emotions take over from your trading plan.

6.	"If it feels good, don't do it." – Richard Weissman

7.	Trade your biggest position sizes during winning streaks and your smallest position sizes during losing streaks. Not too big and trade your smallest when in a losing streak.

8.	Do not worry about losing money that can be made back worry about losing your trading discipline.

9.	A losing trade costs you money but letting a big losing trade get too far out of hand can cause you to lose your nerve. Cut losses for the sake o your nerves as much as for the sake of capital preservation.

10.	A trader can only go on to success after they have faith in themselves as a trader, their trading system as a winner, and know that they will stay disciplined in their trading journey.

--Bring your risk of ruin down to almost zero.

RISK MANAGEMENT

1.	Never enter a trade before you know where you will exit if proven wrong.

2.	First find the right stop loss level that will show you that you’re wrong about a trade then set your positions size based on that price level.

3.	Focus like a laser on how much capital can be lost on any trade first before you enter not on how much profit you could make.

4.	Structure your trades through position sizing and stop losses so you never lose more than 1% of your trading capital on one losing trade.

5.	Never expose your trading account to more than 5% total risk at any one time.

6.	Understand the nature of volatility and adjust your position size for the increased risk with volatility spikes.

7.	Never, ever, ever, add to a losing trade. Eventually that will destroy your trading account when you eventually fight the wrong trend.

8.	All your trades should end in one of four ways: a small win, a big win, a small loss, or break even, but never a big loss. If you can get rid of big losses you have a great chance of eventually trading success.

9.	Be incredibly stubborn in your risk management rules don’t give up an inch. Defense wins championships in sports and profits in trading.

10.	Most of the time trailing stops are more profitable than profit targets. We need the big wins to pay for the losing trades. Trends tend to go farther than anyone anticipates.

--Develop a winning trading system that fits your personality.

YOUR ROBUST METHOD

1.	“Trade What's Happening...Not What You Think Is Gonna Happen.” – Doug Gregory

2.	Go long strength; sell weakness short in your time frame.

3.	Find your edge over other traders.

4.	Your trading system must be built on quantifiable facts not opinions.

5.	Trade the chart not the news.

6.	A robust trading system must either be designed to have a large winning percentage of trades or big wins and small losses.

7.	Only take trades that have a skewed risk reward in your favor.

8.	The answer to the question, “What’s the trend?” is the question, “What’s your timeframe?” – Richard Weissman. Trade primarily in the direction that a market is trending in on your time frame until the end when it bends.

9.	Only take real entries that have an edge, avoid being caught up in the meaningless noise.

10.	Place your stop losses outside the range of noise so you are only stopped out when you are likely wrong.

www.traderplanet.com/articles/view/165953-30-great-trading-rules/

======

ASSAD'S RULES OF TRADING

Trading rule No 1. Never chase. Forget about the Dollar loss for a moment as the real damage comes from the distraction it creates.

Trading rule No 2. Wait for the break. Most traders buy inside the range, get impatient and as a result they sell on first sign of strength which ends up being the breakout.

Trading rule No 3. Don't ride the ticks and Dollar profits. It creates emotional turmoil and is draining. Prevention is best cure. Takes the fun out of the game.

Trading rule No 4. Price action trumps everything. Management lie or mislead but price action (money flow) never lies.

Trading rule No 5. Sell the news or a least sell partials. Markets discount everything and over the long run you will be better off.

Trading rule No 6. Always stay in control. Do NOT put yourself in news related coin toss trades, where the risk cannot be managed.

Trading rule No 7. Mind your own business, avoid conflict. If you take offence because someone has disagreed with your trade, then you are such a precious little petal.

Trading rule No 8. Do NOT set targets as all this creates is a premature EXIT. Run a trailer and let that take you out.

Trading rule No 9. Minimise whipsaw at all costs. It's a trader killer. The root cause of trading failure more often than not, starts with whipsaw.

Trading rule No 10. Do NOT buy stretched breakouts. More often than not they recoil back into the range to flush traders out.

Trading rule No 11. Start with long term charts and look to catch major breaks/moves. These tend to follow through and it makes it easier to run with winners.

Trading rule No 12. DO NOT trades Forex short-term. It is a mugs game, news driven by central banks. It is like betting on the greyhounds.

Trading rule No 13. Turn trading rules into habit. There is no point in having trading rules if you dont apply them!

Trading rule No 14. And the most important; only tell your wife about your losers.  

Trading rule No 15. Hit those stops, no questions asked. Hitting your stop and watching a stock rally hurts but not htting your stop and watching the stock fall hurts a hell of alot more.

www.asenna.com.au/asenna/node/34842

--------------------------------------------------


Cheers tela


----------



## Telamelo

EMC - Nice bullish chart breaking out to new high's imo with tightly held register being a bonus too 

*underlying market depth looks quite strong showing:

70 buyers for 2,678,292 units  vs  only 13 sellers for 221,887 units

Please dyor as always

Cheers tela

---------------------------

29/03/16 Emefcy is pleased to announce the initial shipment of SABRE modules to its first commercial municipal waste water treatment plant thereby achieving the first commercial goal three months ahead of schedule. The plant is expected to be commissioned by the end of Q2 calendar 2016. Once operational, the plant at Ha-Yogev Israel will provide important commercial validation of Emefcy’s SABRE solution at a municipality which will use the treated water for irrigation, providing a reference site for municipal, agricultural and water reuse customers.

“We are proud to ship production units from our factory to our first commercial customer,” said Emefcy CEO Eytan Levy. “All 18 SABRE modules required for the plant have been manufactured and our production line is ready to support the manufacture of thousands of similar modules per year.”

“We expect this first commercial plant to prove to prospective customers and partners that Emefcy’s technology is ready to change the world of waste water treatment,” said Richard Irving, Executive Chairman. 

“This is another important step in our journey, to be followed by international deployments, sales of water instead of product, and our entry into the China market.â


----------



## peter2

Trading update: Daily chart shows XAO rolling over below 5100 and provides a warning for us to protect our short term momentum portfolio. 

*EGH*: Fell on thin market depth. We will sell this if it closes <=0.59. 
*JHX*: Very close to being stopped out at 17.50.
*NVT*: Price falling back to BO level. Not very concerned, although we'll raise our exit trigger to 4.80.
*JHC*: Price going nowhere and we might even earn the div soon (7/4).


----------



## Telamelo

AVG volume/momentum breakout to new 52 week high's @57c  (shows breakout on 5yr chart as well)

Please dyor as always

Cheers tela


----------



## padman

Telamelo said:


> AVG volume/momentum breakout to new 52 week high's @57c  (shows breakout on 5yr chart as well)
> 
> Please dyor as always
> 
> Cheers tela




looks like a doji on the charts now. preferably will need to break above 57c before buying.


----------



## peter2

EOW 57 update:  ASF Portfolio  *+18.6%*  ( 73% invested in 4 trades )   XAO *-14.0%* ( past 57wk) 

Another up and down week that ended down. Our portfolio lost 1% with the general market. I've raised the exit triggers on a few trades to reduce our downside exposure as the market falls. This is always a delicate balancing act as we don't want to get caught by the day to day volatility. 

There is no room to move the exit stops on JHC and JHX. 

_This weeks buys/sells_: nil

There are quite a few nice BO setups appearing and its very tempting to buy more, but this would only increase our downside exposure at a time when the general market is going down. Our plan states that we should be reducing exposure at this time not increasing it. We must sit on our hands. 

I even looked at the inverse ETFs (BEAR and BBOZ) today. They would partially offset our long only exposure. I think the real reason for me looking them is that I'm itchy to buy something. Patience Peter, you're not a "desperate" pairs trader.


----------



## kid hustlr

Do you think there's any merit in being short the overall market (via BEAR) and then trading your system with 'less restriction'?

Often thought about this.


----------



## peter2

No, that is, if I understand your question.

If I was short the market without a proven edge, then I'd be gambling with that money. Overall losses from the gambling would offset the profits from the long system and I'd be worst off. A discretionary edge is a precious and very fragile thing. If I lose focus and make mistakes because I'm thinking about the short strategy, then this will be costly. 

If the long only strategy is a system with a proven edge, then the short the market strategy must also have a proven edge. If both systems have an edge, then running both at the same time would enhance the profits (and reduce draw down). 

So if you're asking me, is there any merit in running a long and a short system (both with an edge), then I'd say yes, but there is a catch. It's much easier for a purely mechanical/automatic system trader to run both long and short systems at the same time. A discretionary trader will have a much harder time running both systems to the best of his/her ability as one system will go against the inbuilt bias of the trader. I'm good at trading bullish reversals and trend continuations patterns in equity markets but don't know if I could create an edge shorting equities at the same time (never tried). That's why my first reply was no. Trading both long and short discretionary systems at the same time would warp my brain. I could create a market switch to indicate which system to use, but some of the best RR long trades start when the market seems to be going down. The best RR short setups are when the market is near a top and I'm looking for BO setups.

If you're asking is there any merit in having a little short side insurance and then trading the long system with a higher risk profile. Well, insurance always costs money and that will have to be paid from the long profits. Long only systems will always show a large draw down in a bear market. It's unavoidable and what I'm demonstrating (hopefully) in this thread is how one can minimise this draw down when it happens. If we were to trade with a larger risk profile, then prepare for a larger draw down. 

It's much easier for me to trade both long and short in forex and futures markets because I'm looking at shorter time frame charts.


----------



## kid hustlr

Great reply Pete


----------



## weird2

Great read Peter.  Personally appreciate your efforts in your posts and contribution. Cheers.


----------



## peter2

Trading update: Wow, stocks are breaking higher all over this market (esp. lithium stocks). There are too many to list. 

*AMA*: New trade Bought as it traded >0.90.  iSL 0.84 support at 0.85


----------



## CanOz

peter2 said:


> Wow, stocks are breaking higher all over this market (esp. lithium stocks). There are too many to list.




Some nice underlying context there too



> Model 3 Gives Musk an iPhone Moment and Big Test for Factories


----------



## ukulele

I'm following NMT and LIT, can you list some other codes on the lithium play?


----------



## peter2

I can refer you to an ASF lithium/graphite thread, that is mainly lithium, but there was a good post from pixel with a link to an outside source. 

http://www.australian-lithium.com/lithium-stocks.html


----------



## ukulele

Cheers mate


----------



## peter2

_Whoops_: Sorry I missed the exit trigger on *JHC* yesterday as it closed below 2.90. The correct exit price was today's open at 2.87. Paper traders will put in the 2.87 exit price, but we can't do this in the real world. 

The next open is the next best exit, but there is a problem with that. JHC will trade XD tomorrow (div 0.0575). Orders are purged by the system on XD morning, so the order book might be very thin. I'll place a limit sell at 2.79 (executed if 2.80 trades) and re-consider the exit after tomorrow. We have to accept the larger loss due to the mistake, but the loss is mitigated a little by the div. 

_Mea culpa_: This mistake is the result of moving my routine ASX stock trading to weekly charts. I no longer look at the ASX charts regularly each day. My personal exit trigger on JHC is approx 2.70. This allowed for the div payment and gives price plenty of move to move as the market decides where it's going. 

*AMA*: Immediate rejection of higher prices. We'll give it one more day for demand to reappear at this level. 
*EGH*: Low volume sideways movement.
*JHX*: Low volume sideways movement. The next move up/down will depend on the US market. 
*NVT*: Retest of BO and 5.00 levels.


----------



## Wyatt

I have dragged this over from the derivatives "Frustrating markets" thread. As it is equities based question, it is possibly better served here. I have edited the original question and follows on from a previous question about trading multiple systems during varied market conditions.

Posted by peter2 
Hello wyatt;
Systematic traders do not try and match their methods to the market because nobody knows what the market conditions will be. They will have multiple systems that work best in different market conditions.

Thanks Peter2 for your reply. I'll be more specific this time around. I intend to run a momentum /TF system with a 200 day MA filter on the XAO, it can leave you partially/fully on the sidelines for extended periods, which is not a bad thing as avoiding losses is as good as winning trades. Even great stocks go down in difficult periods, only to jump back up quickly when the market relaxes.

Which brings me to my question, which is when the higher momentum stocks do dive they seem to reverse at defined points of support/resistance, nothing new there I guess. Maybe my bias is only allowing me to see what I want to see, but there seem to have been a few examples of this recently. Check out ACX, BKL, PME, BAL, DMP, SGF, CKF etc etc. With a tight stop, could this be a worthy concept for a bit on the side and what would you call it? oversold reversal? Can one code up support resistance lines over various timeframes?

Cheers,
Wyatt


----------



## VSntchr

Might not be everyones cup of tea due to the longer term downtrend, but I quite like the look of the BO for *IMF*. Fundamentally things seem to be starting to head in their favour too - with a few recent settlements in their favour and announcements regarding new cases 



Also like *GEM *which is consolidating at the BO level after going ex-div at the end of March.



Have been riding *ALU* for a while, not sure if I mentioned that here or not. Anyhow, it looks to be coming for a retest of the latest BO level after a bit of a blow-off top yesterday.


----------



## rnr

VSntchr said:


> Might not be everyones cup of tea due to the longer term downtrend, but I quite like the look of the BO for *IMF*. Fundamentally things seem to be starting to head in their favour too - with a few recent settlements in their favour and announcements regarding new cases
> View attachment 66220




Maybe potential for a 2 - 3.5R profit depending on how it plays out (my concerns are mentioned on the chart).


----------



## peter2

Trading update:  new trade by popular acclamation (2 posts)   (replacing JHC)

*IMF*: Bought BO-HR at 1.38, iSL 1.25 

BO of shallow sideways range, price acting stronger than XAO.
Initial resistance anticipated at 1.50 (< +1R), we'll see what happens then. 

_Note_: I will not trade companies in this business sector.


----------



## peter2

Trading update: New trade, brought to our attention by pixel.

*AHF*: Bought BO of 0.30 level (at 0.305), iSL placed at 0.25.


----------



## peter2

EOW 58 update:    ASF Portfolio  *+18.5%*  ( 58% invested in 3 stocks )   XAO * -14.9%*  (past 58wk)

Portfolio and market drifting sideways. No update necessary.

*JHC*: Sold one day late at 2.81 earned 0.0575 div.  Still, it was a slightly larger loss than planned. 
*AMA*: Bought BO of sideways price range.

EOW 59 update:    ASF Portfolio  *+20.2%*  ( 84% invested in 6 stocks )   XAO  *-11.4%*  (past 59wk)

Wow, the market jumped +4% this week after four consecutive days up. I'm pleased to see the demand for the banks. Our market can't go higher without them. The XAO chart looks much more bullish with the HL and price at the sloping resistance line. 

Finally, our portfolio starts moving higher with AMA, IMF and JHX moving up. I was just about to start looking for lithium in my back yard. 

This weeks sells: nil
This weeks buys: IMF, AHF

_Outlook_: I'm not going to get very bullish just yet even though my weekly and daily trends have turned UP. Our market is still in a wide range and our economy is not looking like improving quickly. This leads me to anticipate more sideways trading between 5000 - 5400. In addition the US markets get a bit jittery around May when all we read about is the "sell in May" phenomenon.

We're going to remain cautious and protect our portfolio. You will notice that we've already moved a few exit stops higher to reduce our downside exposure (yellow outline in graph). 

*AMA*: We have a limit sell order (profit target) itm at 1.05 (+2R). 

Recent break-outs in MLD, CTD, CGF, SUN and TNE have got my interest.


----------



## peter2

Interesting price action in our* JHX* break-out momentum trade (ASX momentum thread).  OK it was sad. 

*JHX*: price was at +1R, but we want more ( at least +1.5R) and I thought another day up and we might get there. JHX was sold off heavily today even though last night's price action in the JHX-ADR on the US NYSE was positive. No news other than an overnight disappointing US housing starts number that didn't impact the JHX.us.

I notice that *BLD* was also sold off today. Perhaps a little profit taking in both JHX and BLD after such good price rises.

I'm thinking that today's lower price is a good buy opportunity or the opportunity might be to short sell JHX on the US market tonight. I'll be watching as I have no research to support either idea.


----------



## peter2

EOW 60 update:   ASF Portfolio  *+19.0%*  ( 84% invested in 6 stocks )  XAO * -10.2%* (past 60wk)

The market is moved up 1% this week and our portfolio drifted down 1%. We're not in any of the hot sectors atm and we've got some cash to use for another trade. 

In an attempt to stimulate a bit more action in the portfolio I'm going to look for charts where price has left a gap from the previous day. I'm going to scan for these gaps in the afternoon and we'll trade a few of them. This will be in addition to our normal trend continuation break-outs. 

That should provide a bit more action and interest.


----------



## skc

peter2 said:


> EOW 60 update:   ASF Portfolio  *+19.0%*  ( 84% invested in 6 stocks )  XAO * -10.2%* (past 60wk)
> 
> The market is moved up 1% this week and our portfolio drifted down 1%. We're not in any of the hot sectors atm and we've got some cash to use for another trade.




One of the difficulties in trading. The hot sectors at the moment are the very dog sectors up until 4 weeks ago. It's often hard to adjust your mindset to buy with confidence when you are so used to seeing it dropping week after week. There has been quite a few false starts but they were just that... so one normally waits for confirmation which sometimes ruins the R:R.

P.S. ACX blew up today.


----------



## Telamelo

Short term momentum candidates that am watching/liking at the moment are (in no particular order):

BNR
MSM
BAU
BAR
ANO
PGC
PPS
SEH
AVH
AVB
CLQ
SMR
MRM
OTC
OPT


Please DYOR as always and feel free to contribute thoughts etc. as to how some of the above may play out etc.

Cheers tela


----------



## peter2

Trading update: I'm reluctant to include intra-day decisions in this mostly EOD trading thread, but occasionally things happen. 

*AHF*: Sold at 0.255, just above our exit trigger. This was sold as price is going sideways and there is a lower high within the trading range. There is also an info related concern. *MGC* is due to report tomorrow am. If this report is bad (any downgrade) then AHF may also be impacted and our trade may get a little slippage as our exit would be on the following open. 

We're taking a comfortable loss now. I'm still bullish AHF and have placed a re-buy order at 0.305 if price is not hit by sector sentiment. 

Thanks to skc reminding me of the MGC TH.


----------



## peter2

Thanks Telamelo for those codes. I've looked at the charts in view of this thread's trading plans.

OK: *MSM* (break out of small consolidation),   *AVH* (gap up setup)

Volume too low: BNR, BAU, ANO, OTC, OPT
Too late (missed entry): BAR, SMR, MRM
No setup for this thread: PGC, PPS, SEH, AVB, CLQ.


----------



## peter2

Lets review the setups in our trading plan. We plan to buy at the start of a trend which is usually a BO-HR. Our next opportunity is to buy the first/second trend continuation setup that is a BO-NH after a small price consolidation. These small trend continuation patterns are Pav's (original thread starter) favourite. 

Using this chart of *BAR* as an example.

*#1*: The price up-trend started with the BO-HR (>0.025) Price also gapped up and closed above the 0.025 level. This sort of price gap is our latest trading setup to use. This will ensure we buy stocks in demand and create a little more action in the thread. 

*#2*: BO-NH after a two bar consolidation. the up-trend is now confirmed with a HL. This bar also creates another gap up.

*#3*: Another BO-NH after a two bar consolidation. 

Today's bar created another bullish gap that looks like the other gap setups. However the current risk:reward is much higher than near the start of the trend and this makes it not suitable for this thread's trading plan. If you were to place an oscillator on the chart it will most likely show very overbought. Higher prices are very probable but is the RR worth it at this stage? 




You can buy the BO-HR or you can scan for these (30d, 60d, 90d break-outs) and place them in a watch list and wait for the first price pause (quick, shallow consolidation) to use for your trade (BO-NH). 

I hope this thread inspires you to create your own TP. You only need one robust strategy. Validate it to your satisfaction. Trade it and manage your risk carefully.


----------



## fiftyeight

Great post Peter, one of many in this great thread


----------



## Telamelo

peter2 said:


> Thanks Telamelo for those codes. I've looked at the charts in view of this thread's trading plans.
> 
> OK: *MSM* (break out of small consolidation),   *AVH* (gap up setup)
> 
> Volume too low: BNR, BAU, ANO, OTC, OPT
> Too late (missed entry): BAR, SMR, MRM
> No setup for this thread: PGC, PPS, SEH, AVB, CLQ.




Thanks very much Peter for your thoughts/analysis.. as excellent work/contributions from everyone to this thread.  

P.S.  MSM am quite happy with.. as 'bit the bullet' on earlier low vol backtest @ 0.105c support last week 

Cheers tela


----------



## peter2

EOW 61 update:   ASX Portfolio  *+18.4%*  ( 71% invested in 5 trades )   XAO  *-9.9%* (past 61wk) 

Our portfolio continues to drift down while the market pauses after it's recent rally. Our portfolio didn't profit from this rally and I'll post a few thoughts on that next. 

The trailing exit triggers have been raised on all trades now. This reduces our downside exposure (heat) in case the market falls again. 

_This weeks sells_: AHF
_
Outlook_: I remain cautiously bullish even though I think our market will trade mostly sideways for the rest of the year until the sentiment for our economy improves. This may even take a lot longer. Who knows. We will continue to see short term bullish rallies in sectors throughout our market and one will need to be quick to spot them and even quicker to trade them profitably.


----------



## peter2

I've been a bit disappointed in the recent performance of this portfolio. There have been plenty of trading opportunities but I've been focused on my own systems (ASX weekly and other markets) to the detriment of this one.  

I want to continue this thread and that'll mean getting back into the daily charts and trading the shorter time frames. The ASX has been very volatile this year with ~50% days moving +/- 1% (info from Coppo). This increased volatility is what sent me to the weekly charts and I've been pleased with the results. My weekly system is doing much better than this thread with the same amount of downside exposure. If we're doing extra work trading shorter time frames then we expect better results (more trades, more profits, if you have an edge). 

Most of the good price rises lately, have been in small cap companies, especially resources. I haven't been interested in either sector for a while as I've been trading mostly medium cap industrials. Looking at the chart of *BAR* I posted last week made me realise that my scans were not finding the _initial_ break-outs in these small caps as their daily traded value (not volume) were not big enough. I've spent some time creating new scans that will find the_ initial_ BOs in stocks like BAR, EDE, TAS, GMM. GXY etc. There's no value in finding them once they've already doubled in price. We want to buy when the trend starts or after the first pause. I've created a gap scan and lowered the value traded parameter in the 10d BO scan. These scans now produce many more charts and the task now, is to sort the wheat from the chaff.

The best way for me to ensure a proper level of commitment is to allocate some money to trade the trades in this thread. Shoosh, don't tell anyone. I trade most of these setups but use a wider exit stop to give price more time to move higher. If I trade them with the same tighter exit stops I'll be more focused. 

I'm also going to add another setup to our list (BO-HR, BO-NH) and it will be a daily pullback (PB) setup in a weekly up-trend (details later). This will allow us to buy after a market dip and increase our opportunities to buy into price momentum.


----------



## peter2

Other observations. 
The portfolio is currently experiencing its largest draw down (-8.9%) from its last equity high. 
The portfolio is currently losing "alpha" as the market gyrates up and down. Our risk management procedures have avoided losses when the market fell but my inattention to the daily charts has caused us to miss out on the rallies. 

If we want to trade the daily charts then we must go through our daily procedures every day. We can't decide to miss a few days and scan the market when we feel like it. We can't do this on a part-time or "hobby" basis. If you haven't the time each evening, then trade the weekly charts and make the time on the week-end to do the work. 




The reason I have all these charts is to provide the often necessary "kick in the pants" moment that I need.


----------



## VSntchr

peter2 said:


> The reason I have all these charts is to provide the often necessary "kick in the pants" moment that I need.



Good stuff Peter, I have similar charts to provide my own ass-whooping when required. I really like that bottom one on alpha .

The recent market has certainly been that requires a bit of mental readjustment, as those sectors pushing the market have been the ones most of us have been shunning for a looong time.

While I'm here, some interesting charts I noted this week: *CAT*, *AB1*.


----------



## peter2

Trading update: New trade

*SEK-cfd*: Bought after yesterday's BO-HR (todays open). iSL = 15.80 
This is a trade using cfds for the leverage and lower margin. This position was limited to 20% realised equity. 
A profit target near +1.5R is in place.  




*TZL*: Tried to buy this at 0.105 a few days ago but only got 20% of my order.  I only mention it because this does happen when we procrastinate on a BO and it takes off without us. 

*IMF*: Price drifting lower, clearly no upward momentum at present. We may sell this soon to utilise the cash more productively.


----------



## peter2

EOW 62 update:    ASX Portfolio  *+21.5%*  ( 91% invested in 6 stocks )     XAO  *-9.2%* (past 62wk) 

Our portfolio had a good week adding 3% while the index rose 0.7%. It's good to see that our patience in the open trades that seemed to be going nowhere is paying off, finally. 

_This weeks sells_: nil
_This weeks buys_: SEK-cfd

_Trailing exit triggers_: Latest moves highlighted in yellow.
_Profit targets_( limit orders in case of price spikes):  AMA (1.05), JHX (19.92), SEK (17.65) 

Note: My calculations of the current draw downs were wrong. I didn't calculate them from the highest point of our equity which was 27% higher than the start (compounding). You can see the latest DD chart and our largest DD was only -7% (not -10%). Percentage calculations can get tricky. 

Outlook: As we've seen, the index can't go higher unless both the banks and materials participate. This tug of war will most likely continue for a while yet. We should be cautiously bullish, with an eye on the "sell in May" craziness that stems from the US. 

Our portfolio could probably use more leverage (cfds) as our capital risk is low (only 1.8% with a limit <5%), but I prefer to be conservative at this time. If your risk tolerance is greater, then yes start a few more trades, but be wary of any sudden changes in market sentiment from the US.


----------



## peter2

Comments on those draw downs. I like the DD chart because it shows the journey. Even though we're managing each trade to prevent a large individual trade loss we can overlook the cumulative effect of all our trades. Our trades in the ASX are highly correlated. When the market falls most of our trades will fall and our portfolio takes a hit. The DD chart shows us what is a "normal" hit and what is a larger hit. Opening five trades each risking 1% means a -5% portfolio hit is normal and must be expected to happen. If you allow 5% of your account to be lost then expect it to happen often. It's a normal sized loss and nothing out of the ordinary. If you can't tolerate this amount then you shouldn't trade with that amount of downside exposure. 

I have chosen to avoid a 10% loss in portfolio value (in this thread) and have a process to help me. You've been seeing how that works in real time each time the market falls. Please don't assume that this portfolio will never lose 10%. It might and probably will if the market falls another 10%. The current DD is ~-5%. There is nothing preventing the open trades and the next few that we start from being losers and creating the -10% DD. 

Is a -10% the end of our trading journey? No of course not. We'll just restart when the market conditions are right for our strategy and carry on. We know that in good market conditions we can earn much more than 10% to get us back in front. If we never allow any trading loss to get big enough to hurt us, we will prevail.


----------



## peter2

Trading update: New trade

*TPP*: Better late than never, doesn't usually work out well in trading. 
Bought BO (at 0.30), iSL is 0.26


----------



## Telamelo

peter2 said:


> Trading update: New trade
> 
> *TPP*: Better late than never, doesn't usually work out well in trading.
> Bought BO (at 0.30), iSL is 0.26
> 
> View attachment 66583




Thanks Peter and best of luck with TPP  (unfortunately got stopped out a few months back at about 0.11c only to see it 'take off big time' soon after - couldn't believe it!?).. should've bought back in on break above 0.20c (but wasn't game to try chase it).
--------------------------------

http://www.starpaymentsystems.com.au/images/pdf/media/STL_Initiation_Note_Final.pdf  has a 12 month price target on STL of 0.081c (so 100% upside potential from current price of 0.04c).

Meanwhile, chart is shaping up nicely imo for a potential breakout.

Please dyor ........  Cheers tela


----------



## peter2

Trading update:  

*JHX*: Sold today at price target (19.92 just under 20.00 level) for a profit of $808. This was above our AW. All good. 

*AMA*: Price going down after retest of 0.95 BO level. Time for us to sell it. Sell next open. 
If price closes >0.95 soon, next 3 days.  I'd be tempted to re-buy for a move to 1.05.

*SEK-cfd*: Did not go up with market the last few days and is now slightly below our buy price. Sell next open. 

*NVT, EGH*: Moving higher, slowly. Trailing exit stops raised. 
*IMF, TPP*: On tight leashes. Go higher or get lost. 

These changes will allow us to revitalise the portfolio with some new blood. 
I'll have a look at STL, but I'm concerned about low volume and where to place iSL. I like to see a recent HL.


----------



## Nortorious

I haven't caught up with the latest in this thread as I've been somewhat occupied with ACL surgery and a new job in the last month or so.

Did a scan of the markets tonight and wowee... There's a few opportunities around!


----------



## peter2

Trading update:  Two new trades.

*LPE*: Bought BO-HR (0.038), iSL 0.033. There is supply at 0.04 that must be overcome (or withdrawn). 

*EDE*: Bought BO-NH (0.31), iSL 0.25. As we're late to this party we'll look to grab a quick drink (anything >+1R).


----------



## peter2

EOW 63 update:  ASX Portfolio  *+21.4%* ( 79% invested in 6 trades )  XAO  *-8.5%* (past 63wk)

The portfolio had an up and down week ending level. The index rose slightly (+0.7%). 

_This weeks sells_: *JHX, AMA, SEK-cfd*
_This weeks buys_: *EDE, LPE* 

We won't hang on to trades in small caps that have lost their upward momentum. So, if the prices of TPP, EDE, LPE don't move higher next week, we'll sell them. 

_Outlook_: The XAO chart is looking more bullish than I feel. I'm cautiously bullish. The 5400 level is a key level to hold. It's the "sell in May" crazies that keep me cautious at this time of the year. We'll control our portfolio heat like always.


----------



## Telamelo

Thanks very much Peter for the update - great work on your portfolio.

re: "We won't hang on to trades in small caps that have lost their upward momentum. So, if the prices of TPP, EDE, LPE don't move higher next week, we'll sell them".  -  Completely agree with you.

P.S.  STL mentioned earlier.. bullish breakout today closing +15.38% on it's day high of 0.045c! - plenty of room to move higher imo (with open gaps to fill etc.)  please dyor

Have a good weekend everyone.

Cheers tela


----------



## skc

peter2 said:


> EOW 63 update:  ASX Portfolio  *+21.4%* ( 79% invested in 6 trades )  XAO  *-8.5%* (past 63wk)
> 
> View attachment 66670




Looking over 63 weeks this is a good result.

I think it is interesting to look more closely at the equity curve... From Mar to Sept 2015 (6 months), the blue line grinded out ~5% profit in choppy fashion. Then from Sept to Dec 2015 (4 months), the portfolio enjoyed great traction and gained some 22%. Since 2016 however, it's been a slow grind in a 5-6% drawdown that's now 5 months long.

This is perfectly normal and within expectation for many trading strategies. But for new beginners, if they started 6 months ago and experienced a performance similar to Peter's equity curve from either of those two flat periods, they could easily be discouraged and find it all a waste of time. Many might even give up at this juncture, or switch strategies, blame the broker, market manipulation etc etc. 

A big part of being a trader is accepting prolonged period of 'blah' performance. Not easy and doesn't feel great... but if the strategy and approach is value then eventually the equity curve will turn back up in the right direction.


----------



## Newt

skc said:


> Looking over 63 weeks this is a good result.
> 
> I think it is interesting to look more closely at the equity curve... From Mar to Sept 2015 (6 months), the blue line grinded out ~5% profit in choppy fashion. Then from Sept to Dec 2015 (4 months), the portfolio enjoyed great traction and gained some 22%. Since 2016 however, it's been a slow grind in a 5-6% drawdown that's now 5 months long.
> 
> This is perfectly normal and within expectation for many trading strategies. But for new beginners, if they started 6 months ago and experienced a performance similar to Peter's equity curve from either of those two flat periods, they could easily be discouraged and find it all a waste of time. Many might even give up at this juncture, or switch strategies, blame the broker, market manipulation etc etc.
> 
> A big part of being a trader is accepting prolonged period of 'blah' performance. Not easy and doesn't feel great... but if the strategy and approach is value then eventually the equity curve will turn back up in the right direction.




Golden post skc.  For those starting out their trading career its invaluable to see an honest consistent reporting for a strategy - as Peter has spent so much time doing here.  It IS possible, but just as important though is the illustration of how hard you have to work to hold even and manage risk in the choppy times.  

The only curve missing is perhaps "trader skill versus time".  I've got a suspicion most 3 year uni degrees are easier to obtain than sufficient hard-won experience to be a reliably profitable equities trader.  And against that dangerously low barriers to entry for most who think "how hard could it be!?"


----------



## VSntchr

skc said:


> This is perfectly normal and within expectation for many trading strategies. But for new beginners, if they started 6 months ago and experienced a performance similar to Peter's equity curve from either of those two flat periods, they could easily be discouraged and find it all a waste of time. Many might even give up at this juncture, or switch strategies, blame the broker, market manipulation etc etc.
> 
> A big part of being a trader is accepting prolonged period of 'blah' performance. Not easy and doesn't feel great... but if the strategy and approach is value then eventually the equity curve will turn back up in the right direction.



Great post. My pairs trading has felt "blah" at times throughout this year, but given past results I know that it is worth hanging around for. 
Peter's "alpha" line is a great tool in this situation, because it gives the beginner trader (or any level trader) some sense of achievement when they see that a grindy 5% is alot better than a falling benchmark. 



Newt said:


> The only curve missing is perhaps "trader skill versus time".  I've got a suspicion most 3 year uni degrees are easier to obtain than sufficient hard-won experience to be a reliably profitable equities trader.  And against that dangerously low barriers to entry for most who think "how hard could it be!?"



The easier part about achieving an undergrad uni degree is that it is predominantly laid out for you. The path to completion is known and one of the most important factors is just getting the work done. 

The difference with trading is that it is largely self-motivation required. YOU have to decide how you are going to educate yourself. YOU have to decipher the BS and know what to accept and what to reject. YOU have to decide when to size up, and when to take losses. The lessons are much more brutal than those gained during university education, although I suspect that this is true for most vocations...after all, university is just the preparation stage for what is 'the real world'.


----------



## 5oclock

This is a great thread!! With the markets so choppy it would be so easy to just suffer loss after loss,death from a thousand cuts,great to watch in real time how you handle the trades Peter. Agree with what SKC posted. Thanks for your time and effort on this thread Peter much appreciated !!!


----------



## Telamelo

5oclock said:


> This is a great thread!! With the markets so choppy it would be so easy to just suffer loss after loss,death from a thousand cuts,great to watch in real time how you handle the trades Peter. Agree with what SKC posted. Thanks for your time and effort on this thread Peter much appreciated !!!




I re-iterate 100% all of the above.....   Cheers tela


----------



## peter2

Trading update:  

*TPP*: Closed below our exit trigger, sell next open. 
_
Review_: Looking at the weekly chart, our BO entry was the fifth BO-NH setup. Trends that start to go geometric/parabolic do not last long before running out of demand (buyers). This was a poor setup selection. 
The reminder is to look at the bigger picture (weekly chart) and to select first/second BO's.


----------



## peter2

_Random confession_: We trade break-outs in this thread and manage them to earn an overall profit. Simple really. 
Well the idea is, but we find it difficult to do consistently. Our psychological biases get in the way and sabotage our discipline. 

Here is a great break-out opportunity that I have great difficulty buying. Did I say difficulty!  I find it impossible to buy a break-out after a terrific run up in price, like in this chart of *CIM*. I love to see shallow sideways price movement. No-one is selling but I can't bring myself to buy the break-out. The original BO at 25, no problem bought and still holding, but I can't make myself add to this position after such a good run up. 

I know, you're agreeing with me in that the apparent reward:risk is not as good here, but how do we know. Anything can happen. *CIM* could go straight to 100 for all I know. If you agree with the poor RR here then you suffer from the same psycho bias that most of us have. 

I won't get over this bias and that's another reason for me to make sure I find and buy the initial break-outs.


----------



## VSntchr

peter2 said:


> _Random confession_: We trade break-outs in this thread and manage them to earn an overall profit. Simple really.
> Well the idea is, but we find it difficult to do consistently. Our psychological biases get in the way and sabotage our discipline.
> 
> Here is a great break-out opportunity that I have great difficulty buying. Did I say difficulty!  I find it impossible to buy a break-out after a terrific run up in price, like in this chart of *CIM*. I love to see shallow sideways price movement. No-one is selling but I can't bring myself to buy the break-out. The original BO at 25, no problem bought and still holding, but I can't make myself add to this position after such a good run up.
> 
> I know, you're agreeing with me in that the apparent reward:risk is not as good here, but how do we know. Anything can happen. *CIM* could go straight to 100 for all I know. If you agree with the poor RR here then you suffer from the same psycho bias that most of us have.
> 
> I won't get over this bias and that's another reason for me to make sure I find and buy the initial break-outs.



First of all, great post 
I certainly have this problem and BAL is a great descriptor for me to use. From memory I got a BO that did a range from around $3-5.50 or thereabouts....but my psychological barrier stopped me from taking multiple new signals that kept re-firing all the way up to $13!

One question. As you have bought the first $25 BO, wouldn't your position size, and thus overall single name-risk now be large enough to warrant just a hold, rather than a buy-more on new BO signal approach? Id assume that given the strong run up, even with an updated stop, that your position risk would be larger than any initial trade that you would now take if you didn't have prior exposure to the stock.


----------



## grah33

hi all
been away for a bit but i'm back now. made a little money with IFN, would have probably made more if i traded more (not much of a priority though as the weekly has been in a down trend for a long time). gave me a chance to learn.  looking forward to when both daily and weekly are running up as they normally do so i can hopefully get something good out of all this.

some helpful posts here... 

never thought of worrying about which wave to go in ie early waves. but i'll keep it in mind (early waves are better, as trend likely to run longer).  thing is, if you kept going in on bal, you wouldn't be going in on an early wave but much later on .

peter, just wondering, you mention trading weekly charts. when i trade daily, i like to wait till it's about 3pm and then go in on the breakout (or next morning ).  so for weekly i'd do the same, but with the weekly candle (so i 'd come in at end of the week ie Friday i guess).  although you do seem to use daily chart to come in? so you would come in earlier than me i guess.  shouldn't u just use the weekly charts?(really like the idea of leaving stops out of the market, although i still put them in just very far away -  in case we get the 1987? crash where shares went down about 70% in one day. better not )


----------



## peter2

Re *CIM*: Yes, I can't add to this one as it's already above max position size (12%). The setup of a shallow pullback in a strong trend makes it perfect for this thread, but my irrational bias keeps me out. A quick +1R in a week is always nice, but I find it hard to take. Maybe I should frame the trade and put it in this thread as a form of therapy. 

If you're trading weekly charts you have a little more time to enter and exit if you want it. I may buy the daily breakout (trading the weekly charts) as the levels are generally the same in both time frames. This thread only uses the daily charts.


----------



## systematic

peter2 said:


> Re *CIM*:The setup of a shallow pullback in a strong trend makes it perfect for this thread, but my irrational bias keeps me out. A quick +1R in a week is always nice, but I find it hard to take.




Just for interest, I have it as probably my top ranked stock (of decent size) and will most likely be picking some up.  So I hope that it turns out to be a case of bias and that it keeps going!  It was interesting for me to look at this thread and see the chart.  I don't often look at charts anymore, except for pure interest (i.e. no effect on trading decision), so it was an interesting thing to see it and go, 'woh!' for a second.  I totally get what you're saying.


----------



## grah33

peter2 said:


> Re *CIM*:
> If you're trading weekly charts you have a little more time to enter and exit if you want it. I may buy the daily breakout (trading the weekly charts) as the levels are generally the same in both time frames. This thread only uses the daily charts.




the thing is, if you come in same time as you would  if trading the daily chart, it could be in the middle of the week, so the volume might not be there (on the weekly chart that is, so setup not therefore validated).  i'm thinking i would come in after the weekly candle completes (monday) or just b4 the end of the weekly candle (e.g. friday, late thursday). that way my weekly candle will have completed or near completed  and i can avoid false breakouts    , and the weekly candle will have the volume behind it.  


i've been under the impression that regardless of the timeframe one uses, they need a full or near full candle's  worth of data before they make a decision. else you can buy into false breakouts.


----------



## peter2

Trading Update:  *EDE* trading halt for capital raising.

Normal market dynamics between supply, demand will be interrupted by the news of the capital raising. The price will now move according to the details of the raising once they're released (Mon 23/5).  

As a short term trader I hate these events, because they interfere with the market. *We will exit this trade on the next open*, hoping to get at least 0.29.

Investors are in their element as they have another report to analyse once the news is released.


----------



## skc

peter2 said:


> Trading Update:  *EDE* trading halt for capital raising.
> 
> Normal market dynamics between supply, demand will be interrupted by the news of the capital raising. The price will now move according to the details of the raising once they're released (Mon 23/5).
> 
> As a short term trader I hate these events, because they interfere with the market. *We will exit this trade on the next open*, hoping to get at least 0.29.
> 
> Investors are in their element as they have another report to analyse once the news is released.




Market's respond to capital raising is difficult to gauge. Although I'd say in many instances it'd be down at least initially... MTR today and APN last week are examples where the stock price has held up well despite capital raising.

It's worth paying some attention on the ex-date for capital raising. Some companies put an ex-date at some date after it comes out of trading halt... in which case the dilution is yet to happen (theoretically) while punters seek to establish a position to take advantage of the cheaper new shares. You might get lucky and exit at a good price (or choose to hold to qualify for the offer).

I guess what I am saying is it's good to have a plan but also good to be open to change the plan based on new information.


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## peter2

EOW 64 update:    ASX Portfolio  *+21.9%*  ( 66% invested in 5 trades )     XAO *-8.2%* (past 64wk)

Both our portfolio and the market showed a small rise this week. A good outcome for the portfolio as we had to take a slightly larger loss on TPP. 

_This weeks sells_: *TPP* plus a bit of slippage as price slipped lower. 
_This weeks buys_:  nil

We've got plenty of cash available and I'll be on the hunt for some more trades next week. Perhaps in the small cap sector as they may not be impacted by a market dip. I'll also keep an eye on gold stocks as the POG has dipped.

_Outlook_: I must admit to being a little bearish this week as the US traded at the 2040 support level. It may still fall below this level soon. I even thought about hedging a fraction of our long only portfolio by buying an inverse(bear) ASX ETF (*BBOZ*). For educational purposes only of course. If I see a good low risk short setup I'll short the index in preference to buying a bear ETF (less margin, 24hr market). Buying a put option on the ASX would also be a low cost solution for a little insurance in case of a market dip. 

If we do see a dip soon, I would think it to be a good opportunity to buy into some strong weekly trends on the ASX.


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## grah33

peter2 said:


> ...
> The reminder is to look at the bigger picture (weekly chart) and to select first/second BO's.
> 
> View attachment 66698




but value_snatcher thought it good to get back into BAL well after the 2nd or third weekly breakout... can you clarify?   had a quick look , seems  like there are many trends that just keep going up and up for ages..


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## peter2

Trading update:  New trade. There are a few attractive charts atm (LHC, PRG, EPD).

*EPD*: Bought as price traded >0.40, iSL 0.35. 
A nice BO-HR after trading sideways for a few months.


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## skc

peter2 said:


> Trading update:  New trade. There are a few attractive charts atm (LHC, PRG, EPD).




I have all 3 of these. The charts look good and the breakouts all driven by company news.


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## VSntchr

skc said:


> I have all 3 of these. The charts look good and the breakouts all driven by company news.



I have 2/3! Looks like its a ASF party on the BO's today :bounce:


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## skc

VSntchr said:


> I have 2/3! Looks like its a ASF party on the BO's today :bounce:




Don't jinx it...


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## VSntchr

skc said:


> Don't jinx it...



I need to jinx something, my month is in the red for the first in a while 
While I am here, another good looking chart is *AAD*. I bought an earlier short term BO-PB setup, but it is flirting with the BO-HR level now.
View attachment 66831


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## Telamelo

RLE perhaps a goer as chart shaping up nicely indeed imho .. please dyor

http://www.rigzone.com/news/oil_gas/a/144667/Real_Energy_Commences_Fracture_Stimulation_Program_at_T...

25 buyers for 1,310,265 units  vs  17 sellers for 552,266 units

Cheers tela


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## Telamelo

Telamelo said:


> RLE perhaps a goer as chart shaping up nicely indeed imho .. please dyor
> 
> http://www.rigzone.com/news/oil_gas/a/144667/Real_Energy_Commences_Fracture_Stimulation_Program_at_T...
> 
> 25 buyers for 1,310,265 units  vs  17 sellers for 552,266 units
> 
> Cheers tela




RLE now @14c (+16.67% today) on good volume..  looking bullish!


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## Telamelo

Telamelo said:


> RLE now @14c (+16.67% today) on good volume..  looking bullish!




Well RLE finished up strongly +25%! .. bring on tomorrow.  Cheers tela


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## peter2

EOW 65 update:   ASX Portfolio  *+22.7%* ( 66% invested in 5 trades )    XAO  *-7.3%* (past 65wk)

Our portfolio edges higher with the market. We've raised a few TS's higher to protect open profits. 

_This weeks sells_: *EDE*: Sold after news of the capital raising ( -0.7R).
_This weeks buys_: *EPD*

*LPE*: Traded at our T2 target price 0.049 today, but I pulled our limit sell order before it traded there. I have raised it to 0.054 (T3) as the trend looks strong atm.

_Outlook_: The ASX is actually looking more bullish for the first time in a long while. We'll remain cautiously bullish. I must admit that I'm battling my bias against buying BO-NHs after quick rises in price. There are many good chart trading opportunities atm and I will start more trades next week. No dip yet, but we're getting near the EOFY and the tax selling (and the election).


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## peter2

Trading update: New trade

*GXL*: Bought BO-HR (at 7.75), iSL 7.40 for this short term portfolio. 
Price can get a bit volatile and our iSL is placed to maximise our RR if price goes higher immediately. 
_Note_: My own iSL is much wider to allow some price volatility.


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## grah33

gxl - interesting pic, but no volume . TME had a gap up 2 days ago, but also no volume ...


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## peter2

grah33 said:


> gxl - interesting pic, but no volume. ...




Correct and that makes the tighter iSL the more riskier selection. 
As this is a shorter term trading thread we can keep an eye on the price movement and take precautions to protect our capital quickly.


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## peter2

Trading update: My daily market risk indicator has turned down indicating that there is a higher probability of lower prices in the short term. This change means that its time to reduce our portfolio heat slightly and be a bit more defensive. However our recent cautious approach has kept the portfolio heat at comfortable levels and we've been able to raise our exit stops on many of the trades. Raising them higher would only strangle the trades and force their closure. The market risk indicator is there as an objective warning signal and if we hadn't already raised the exit stops, now is the time to do it. Let's review our open trades. We're going to close a few to refresh the portfolio but there is no hurry to do it. 

*NVT*: We've been in this trade for quite a while (78d). This is unusual for a short term momentum trading style, but as the trend was reasonably strong we stuck with it. The price swing up is not impulsive which means it's corrective in nature and we can anticipate that the next impulsive move may be down. For this reason we're closing this trade with a sell limit of 5.32 to reduce our heat. 
Note: My personal exit stop for this stock is at 4.80 and from a medium term perspective (weekly chart) there is no reason to sell. 

*EGH*: Continues to move slowly higher and is now at our T2 target price (and yearly high). I've been concerned by the thin market depth for some time and the price can fall 0.03 - 0.04 easily on any day. We are going to sell this one at 0.74. 
Note: My personal exit stop is at 0.60 (BE) and there is no reason to sell looking at the weekly chart. 

*EPD, GXL*: Price remains near the BO levels and I'm inclined to leave them. There is no point (room) raising our exit stops without strangling the trade. 

*IMF*: Nice bullish day yesterday (1/6/16), with some selling today. Price is near the 1.50 level and we can anticipate some resistance at this level. Our exit stop is at 1.30 which leaves enough room for us to wait and see where price goes next.

*LPE*: The opportunity to sell at 0.049 is passed. Now, do we allow price to fall further or take the +1R profit. As this is a short term trading thread lets take the profit. 

These exits will allow us to refresh the portfolio with newer opportunities and we'll be on the lookout immediately. The market pause will create the setups that we want to trade and if the market dips then we will wait for our setups without concern for our portfolio value.


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## peter2

EOW 66 update:   ASX Momentum Portfolio  *+21.8%*  ( 37% invested in 3 trades )   XAO  *-8.6%* (past 66wk)

Our portfolio went down with the market this week. Nothing out of the ordinary. 

_This weeks sells_: NVT (+1.3R), EPD (+2R), LPE(+1.1R) 
_This weeks buys_: GXL (BO-HR)

After holding on to NVT for 78d and EGH for 86d I was starting to feel like a medium term investor. My thoughts were getting slow and sluggish. 

We grabbed the profits and will refresh the portfolio with "new blood" asap. I may even add another setup to our arsenal to keep our minds active. 

_Outlook_: Anything can happen from here, a new break-out above 5400 or an EOFY dip below. We'll wait for our chart setups to get us into the market.


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## Quant

I dont mean to be pedantic but if you are comparing your returns to the Index it would be a better , fairer more equitable way to compare to a total return div adjusted accumulation index such as   SPAX2F15 .... just saying  . You are not alone doing this as many are guilty of same thing . I am not denigrating your returns at all they are great outperforming market spectacularly  , well done


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## peter2

Thanks for the suggestion of using SPAX2F15 as our benchmark. I've included the SPAX2F15 in this chart. The difference between SPAX2F15 and the XAO is due to dividends and franking credits. This difference compounds over time. 

The XAO is far from a perfect benchmark. especially when compared to a portfolio with only 5 - 8 stocks in it at anytime. These half a dozen stocks will never refect the composition of any general market index. An index like the XAO does illustrate why there are times when the equity curve goes down, sideways and eventually up. 

We overlook/ignore the positive aspects of dividends in this thread. I agree that the positive effect of compounding dividends over time should never be dismissed. However the emphasis in this thread is on compounding profits from trading with an edge. This is primarily an educational thread demonstrating the basics of trading profitably.

We also ignore/overlook the effect of taxation on our profits. This would cut 15 - 49% of our profits each year (outside of SF).


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## peter2

Trading activity: One sell and one buy.

*GXL*: Closed below our exit trigger (7.40) yesterday (7/6/16) and this means sell next open (today). 
It was an unusual price gap down with huge volume in huge parcels. My own exit stop is 7.00. Will watch the next few trading days with interest.

*EGH*: Our re-buy order triggered today and we paid a little slippage to buy (0.765). Our iSL is 0.72. 

*NVT*: We'll re-buy this if it closes >5.50. 

I'm considering the charts on AZJ, CAT, CL1, GXY, ILU, IPL, NMT, SEN this evening.


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## peter2

Trading update:  New trade

*ADA*: Bought the BO-NH after the BO-HR. we have bought the BO of a trend continuation pattern (retest of BO-HR level). Initial SL is 2.50. There have been a series of HLs indicating some underlying demand prior to the BO.




*CL1*: Opened higher than our buy limit. I'll leave the buy order in for a few days only. A minor gap fill may help us get filled. 

*GXY*: Opened higher than our buy limit and undergoing merger with GMM. Removed buy order.


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## peter2

EOW 67 update:    ASF Portfolio  *+21.3%*  (31% invested in 4 stocks)    XAO  *-8.6%* (past 67wk)

The week ended at pretty much the same level it started. No joy for the ASX portfolio managers. 

_This weeks sells_: GXL as it closed below our exit trigger.
_This weeks buys_: EGH, ADA

*EGH*: We have been trapped in another capital raising. Our trading plan states that we exit asap next open. 

_Outlook_: More of the same directionless trading is expected due to EOFY and election blues. I remain cautiously bullish, but a close below 5350 (XAO) would make me reduce my portfolio heat a little. This portfolio is only moderately invested so we have no need to do anything yet. 

We could start a lot more trades as there have been plenty of opportunities, but I've noticed many break-outs have failed to go higher and some have reversed. There have also been a few price spikes down after poor news. This volatile and directioness environment would see our portfolio suffer many small losses. Losses of this type do add up and I prefer to avoid this outcome when the general market is listless. Unfortunately this will mean we miss a few winning trades. That's trading. You may trade for the action, but this portfolio trades for profit. 

It's time we diversified our trading business into other markets. I've mentioned this in the past and it's time I got off my ... seat and got things started. I'll get myself organised over this long week-end and start something next week.


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## peter2

EOW 68 update:    ASX Momentum Portfolio *+20.4%* ( 24% invested in 3 trades )  XAO *-11.0%* (past 68wk)

The market lost 2.5% while our portfolio lost 1%. Our cautious approach saved us a little once again. It's quite likely that a few readers are thinking that this thread is dying. No it's not. The trading activity has slowed due to the markets trading sideways and now falling. We follow our trading plan and when our market risk filter indicates risky conditions we take notice and reduce our activity.  

_This weeks sells_: *EGH* (resumed trading after news of cap raising.)
_This weeks buys_: None, as the market fell.

Outlook: Expect continued volatility in all markets due to uncertainty in the outcomes of many political events. 

No chart this week as nothing's changed.


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## grah33

yeah, would be great to learn some forex here.. not much opportunities with shares...


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## peter2

This thread is experiencing a lull in activity as the market conditions have become unfavourable for our strategy. This happens to every strategy at some time. There are always plenty of opportunities to trade short term momentum strategies in the ASX. You just have to look for them. The micro cap sector (sub 10c range) always has a few "pump and dump" type opportunities. These rallies only last for a few days (eg LNG). Price and volume activity scans will find them. We haven't traded in this sector although it was Pav's and tech/a's favourite source for short term momentum trades because it requires watching the price action during the day. I prefer to manage the trades at the EOD. 

A lull in activity doesn't mean we abandon the strategy and look for something else. This is the reaction of losing traders. We will stay with our strategy because we know that we can be profitable using it. 

What we can and will do is to add another entry setup. Currently we use a BO-HR setup to buy at the start of a trend and a BO-NH of a shallow price consolidation as an entry into a trend continuation. Often these pull-backs get much deeper and the RR of the BO entry is unfavourable. We need another entry mechanism to buy into these trend continuation opportunities. Currently our market index is experiencing a pull-back within its weekly and daily up trends. This means many of the charts will be showing the same thing. If the market makes a higher low and starts going back up, we want to buy into this resumption of the up trend much earlier than waiting for the BO.

Let's call this a pull-back (PB) setup and define it. 
_Stocks_: Any stock that is very liquid, traded heavily every day with good market depth. It's important that we can buy and sell whenever we want using limit orders. This is not a strategy for thinly traded stocks.
_Context_:  Weekly trend is UP. Daily trend is UP, although the recent price action is going down. 
_Location_: Price should be near the 50 - 61.8% retracement zone or approaching a previous break-out level. Price must not have closed below the prior swing low as this would negate the daily up trend. There is one exception to this guideline and that is the formation of an abc corrective pattern. This abc correction must end in the 50 - 61.8% zone.
_Entry_: We won't buy when price is going down. We wait for price to go up and close above an entry trigger. The entry trigger is based on a 2 or 3 bar count back level off the higher swing low. This trigger level is similar to a 1.5(2) x ATR(10) increase off the higher swing low.

The addition of another setup is to increase our trading opportunities but we mustn't overlook our best setups, the BO trades. We'll prioritise the setups so that we don't overlook the best ones when the market conditions are not providing them. 
1. BO-HR to get the best trend starts.
2. BO-NH to join the established up trend.
3. Pull-backs in persistent up trends.


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## kid hustlr

Sounds good!


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## Telamelo

Excellent post above Peter as really well explained.

See link below that I use as a quick guide to see what is trending up/down in the short/medium/long term (currently above/below 200dma etc.)

http://au.bannronn.com/   e.g. alerted me to uptrending stocks such as DUE on b/o above $2.35 and MTS on b/o above $1.90 (both offered short term gains) ............. don't know if this may help anyone but happy to share and hear people's thoughts.  

Cheers tela

P.S. currently waiting on BAP and APE for pb's? but bought MEP last week on b/o


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## Lone Wolf

G'day,

Let me start by saying that I think everyone agrees you've done an excellent job Peter, nothing I write below is meant to detract from that in any way.

I have a query on how to develop consistent profits. This strategy, like any, works best in certain market conditions and treads water for the rest of the time. This exercise has run for over a year and the bulk of the profits were made in a two month period. That's fine, you can't knock a strategy has made a very good annual return and limited losses during unfavorable periods. I agree it should not be abandoned.

But if for some reason you had been unable to trade for those two months the equity curve would be looking a bit flat. What would be the best way to achieve more consistent profits? I figure you need higher trade frequency if you want more consistency? For the discussion, lets assume you have the capital required to effectively run two systems in parallel. You are looking for consistent returns and accept that you may need to sacrifice some total return to get it. But lets also stick with end of day systems.

- As you've suggested, add more entry opportunities to the same system. This will get you into more trades. But if all ships fall with the tide, won't you still struggle during market downturns?

- Run a different stock system in parallel that works during times this one is flat? Mean reversion maybe? Since you'll need to take capital out of the first system to run the second, the second will need to have a similarly decent annual return and a comparable draw down. We want the second system to compliment the first, not eat away at it.

- Trade other markets. Index CFD's/futures, commodities, forex. This would offer diversification compared to adding more stock trades. It could also offer the advantage of not having to split out so much of your capital. As CFD's/futures are leveraged, most of your capital can remain in the stock system while you add a second system. Total heat of the two systems combined to be considered. However, you would need to be able to trade these different markets successfully and since they behave differently to stocks there's a learning curve in there.

- Pair trading seems to be a way to avoid the affect of overall market conditions. But from what I've seen on this forum, I think successful pair traders are successful because of the work they put into understanding the companies they are trading. Probably not suited to systems traders or pure technical traders.

Thoughts?


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## peter2

Telamelo: Thanks for the interesting resource. I hadn't seen that one. 

LoneWolf: Thank you. I've been waiting six months for those suggestions having hinted at the possibilities myself. I wasn't willing to start something else unless there was a genuine interest. A mean reversion strategy would compliment our momentum strategy. It's not something I use as IMO it requires some degree of automation to do it consistently well. Pairs trading: I think this has been well demonstrated in this forum by people who do it regularly. They use finesse, but I'm sure brute force will work as well. You didn't mention shorting ASX stocks to try and profit when the market falls.

I'm willing to include a few shorts in this thread when the time is right (about a week ago, ). We can use the same three setups that we have to go short, BO of support, BO-NL of shallow sideways consolidation and we can short a rally in an established down trend. We'll have to use CFDs for the shorts and the leverage provided will mean we have enough capital to do it. 

As for your suggestion of trading in other markets using leveraged products, yes well that has me licking my lips. :taz:  That's what I do. I trade these other markets in different time frames to capture short term movement (days) and very short term movement (hours) in price. 

To reply to your query about generating consistent profits, multiple systems is the answer. Do you think it's time for us to diversify our trading business?


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## PeterJ

Hi Peter
I personally look forward to learning more about diversifying our trading business !
:bounce:

Peter


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## Lone Wolf

peter2 said:


> You didn't mention shorting ASX stocks to try and profit when the market falls.




I did consider shorting stocks as an option, but I wasn't sure how the two systems would work together if simply using the same setups in the opposite direction.

My impression was that adding short trades to a stock system generally hurt the performance. I have no evidence of this, I just seem to recall thinking years ago that I can improve my profits by trading in both directions but was disappointed in the results. I think the problem was that shorting improved performance during a market downturn, but was actually more of a detriment when the market was going sideways. Although that might've been due to poor system design on my part.

In any case, that's why I felt a different system, or different markets would be preferable to "fixing" the current system to work in unfavorable conditions. But I'll be quite happy to be corrected.



> To reply to your query about generating consistent profits, multiple systems is the answer. Do you think it's time for us to diversify our trading business?




I don't feel comfortable commenting on what you should do with this excellent exercise you're running. I for one am very interested in diversification. Even if you didn't include it as part of this journal, one day I'd like to hear your suggestions on how you approach trading other markets. But whether you do that, or add short trading the the current system, or simply continue as you are, it's all appreciated.


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## peter2

Normally I'd say that using the long setups in an opposite way to short would be a losing strategy. I'm aware that many back tests show this. However this thread uses discretion that back testing can't model. As this is an educational trading thread we can do a few short trades at the correct times for educational purposes. With a bit of luck we may add to our performance. I've noticed that ASF has a few canny contrarians in the community and I might use their intuition at times. 

I prefer to keep this thread trading ASX stocks only. The majority of trades will be long, using our three setups but I think a few shorts every now and then might be educational as well as profitable. 

As for those other markets, that's a flame that needs fanning.


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## lindsayf

Happy to do some fanning.
Would like to see some forex trades in here.


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## Lone Wolf

Sounds like a good plan Peter.


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## Wyatt

Hi Peter2,

Love your work and generosity to other investors/traders. This thread is gold for both novice and recovering investors (recovering from past lessons)
I am also pleased you are expanding your trading arsenal for our viewing pleasure, and in particular the pullback setup.

What are your views on this chart, it is the sort of setup you are considering?
After a capital raise, RCG lost all the wind from it's sails. $1.25-$1.27 did provide a solid support area for entry and is now back up to resistance @ $1.43.




Cheers,
Wyatt


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## tech/a

Hi Pete and all.

Like many I'm in the silent viewers. Great job Peter and very real
for those who trade in a discretionary manner.

Lone Wolf has mentioned some astute observations which are very real in my own experience
Such as the period of profit.
Id like to just add a little.

Its often touted that we can code discretionary trading methods and this can be true to an extent
but I believe that clever people with flexible code language can program most.
Even the discretionary recognition of ("Your Mothers Face") as T/H once put it--can be coded.

Its my own personal belief that while not all maybe coded enough to answer some very important
questions can be tested. E.g. ---How often is your mother portrayed by an imposter.
What is a good way to filter a flat or down period--buy less--don't buy at all--include other methods.

Without some of these answers or *indications* we are at best relying on our past experience
at worst a wing and a prayer.

One issue with fanning out into Leveraged instruments like Futures.
The leverage in the example we are linking it to will skew loss AND return.
A losing streak could kill profit gained over our 2 good months but could greatly
improve it in the others---which if it did poses the question---why not trade just that.

I again personally think that Discretionary traders are at a disadvantage without at least SOME answers.
The big drawback for most of us is.
(1) What do we really need to know--what's important--what's enough--what's pertinent.
(2) What are the tools I need---is what's currently available enough---Amibroker---Etc
(3) What skills do I need for most of us we aren't Howard Bandy.

Perhaps changing long and short CFD's would be a help.
Cheers


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## peter2

Thank you for your thoughts tech/a. I appreciate your perspective as it's slightly different to mine but we agree on the main aspects on how to trade profitably. 

Gamblers call themselves discretionary traders because it sounds better. Most people who call themselves discretionary traders don't have a trading plan. I'd call them gamblers. I use a structured rule based TP that probably could be coded properly. However I use some discretion in the selection of which buy order from the batch of buy orders is executed. Some of that discretion is based on my opinions of the current relative strength of the sector the company belongs and general market conditions. Even this can be coded, I know. 

Prospective traders must know one of two things. They must know if their trading system has an edge. This can only be proven with thorough, proper back-testing. Or they must know how they are going to create their edge going forward. I belong to the second group and past experience shows me that it's not based on a wing and a prayer. 

IF I start a leveraged trade book, the results will be kept separate from the ASX trade results. The only connection will be the combined realised equity which will determine the position sizing for each account.  

ps: I'll PM you about the very significant five words you used in that post.


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## peter2

Wyatt: re *RCG*:  In the context of this thread's TP,  no, the move down has gone too far and the weekly trend is down. I would classify this setup as a reversal opportunity since price seems to have found support at 1.30 again. 

A very interesting chart. I notice that the weekly chart did not close < 1.30 indicating some demand at the lower prices. For a reversal setup I want to see a HL and there is one on the daily chart. I could buy a partial parcel at 1.40 with a iSL at 1.20. The low in June looks like a Wyckoff  spring as price immediately bounced of the new lows. A move back to the old high at 1.80 makes the RR acceptable. The weekly doji followed by a close above the high of the doji is one of my bullish patterns. The weekly chart supports the daily chart for a reversal setup.


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## VSntchr

peter2 said:


> *NVT*: We'll re-buy this if it closes >5.50.



It's back there now. Just see how it holds up this afternoon...


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## peter2

Trading update:  New trade started

*NVT*: Alerted by yesterday's up day (traded at 5.45).  Bought BO-NH at 5.51. Our iSL at 5.20 should provide sufficient room for us to stay in the trade if there is some resistance at 5.50. 

*APX*: Limit order is in the market to buy todays BO-NH. 
I passed on the best entry at 1.80 due to my mistaken view that this was a property trust. Lazy due diligence. 
My only concern now is that price has had a good run up and I'm always wary about buying in too late. However, price can always go higher and knowing that we can sell quickly we bought today. We'll be looking for a quick win on this one (~+1R or slightly higher).

Miscellaneous observations on recent break-outs.
*AZJ*: Nice BO, but I'm reluctant to buy this slug.
*MOC*: Thought this was a slug also (BO >1.80).  I got slimed by this one (hit 2.10 in 4d).
*REA*: I passed on the chance to buy the BO on this one. I thought the high price tag would floor a few of you. 
*S32*: Nice BO-HR (>1.70), but I can't be tempted by this sector.
*IFM*: Chart is tempting and the gap fill would provide an acceptable RR. Recent price gaps down (x3) puts it in my never to be traded list. One for the "value" seekers.


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## peter2

Trading update:  New trade

*APX*: We're in at 2.51.  Our iSL is 2.30, mine is 2.20 below weekly low. 
Price will continue higher or we're out. The chart shows the missed earlier setups to explain my comments.

*ADA*: In case of price spike a limit sell order is in the market at +2R.


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## peter2

EOW 69 update:    ASX Momentum Portfolio   *+18.7%*  ( 62% invested in 4 stocks )   SPAX2F15  *-7.9%* (past 69wk)

Benchmark changed to an index that includes accumulated dividends and franking credits (*SPAX2F15*). The reason for the change is academic and it's easy to get the current value of this index than the XAOAI.

Our portfolio lost a little value today as the Brexit result induced some panic selling. It remains to be seen whether our open trades survive the volatility over the next few days. If they do then we'll know the demand for the stocks is substantial. We'll be ready to defend our portfolio next week if prices fall further. 

_This weeks sells_: *EPD*   Sold on today's open after closing below exit trigger yesterday. 
_This weeks buys_: *NVT, APX*

_Outlook_: This dip in the market will create many more pull-back opportunities for us. However we don't buy when prices are going down. We'll wait for the market to find support and start to rise.


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## peter2

EOW 70 update:  ASX Momentum Portfolio  *+23.3%* ( 62% invested in 4 stocks )   SPAX2F15 index  *-5.3%* (past 70wk) 

Good to see that our open trades survived the Brexit volatility. NVT was almost closed, but they all survived due to the logical selection of their iSL. Ha, I can say that, but I know it's due to luck. So instead of four losses we're up 3% in open profits. 

No sells/buys this week as we waited out the Brexit reaction. 
We've raised the TS on IMF and ADA. Too early to raise TS's on NVT, APX.

_Outlook_: Cautiously bullish. The recent Brexit low will mark the weekly trend trigger for a down trend. 

_Observation_: I've found it difficult to find high quality setups over the past month. There have been plenty that have looked good, but the uncertainty in the market (and pre-Brexit) have made me very wary about the possible RR. This caution has been justified as many of the recent break-outs have failed to go higher and are now below their BO levels (WHC notable exception). 

I only mention this in case a few of you have been finding it difficult also. You're not alone. The day traders have been reaping some rewards but the volatility has not been good for the short and medium term traders. One big down day cancels several up days. 

Lone Wolf: There is another reason that the portfolio value has remained steady for a while. You and others must have realised it but were too polite to mention it. This portfolio has not traded in any gold, lithium or graphite stocks. What have been the best performing sectors for the past few months? Yep, _mea culpa_. I disregarded (correctly) the initial gold rally but didn't notice that this rally created a HL and it was then a better time to buy into the gold sector.  A few trades in these sectors would have certainly helped kick it along. That's history, but it shows what can happen when you get distracted.


----------



## skc

peter2 said:


> I only mention this in case a few of you have been finding it difficult also. You're not alone. The day traders have been reaping some rewards but the volatility has not been good for the short and medium term traders. One big down day cancels several up days.




May I suggest setting some alert levels for some of the worst performing stocks during FY16... statistics have shown that, sometimes the tax loss selling is done and these stocks kind of just find their own upward momentum. That's how one would get lots of signals in the gold sector, for instance.


----------



## peter2

Worst performing stocks (?) 
Do you mean prices that are clearly in a downtrend like EHE, BOQ, WOW . . . ? Where we need a reversal setup?
or
Do you mean those in longer term up trends that have gone done this month (June) like TWE, CGF, CGC . . .? Where we wait for the up trend to resume?


----------



## History Repeats

peter2 said:


> Worst performing stocks (?)
> Do you mean prices that are clearly in a downtrend like EHE, BOQ, WOW . . . ? Where we need a reversal setup?
> or
> Do you mean those in longer term up trends that have gone done this month (June) like TWE, CGF, CGC . . .? Where we wait for the up trend to resume?




I think he means the former.


----------



## rnr

Hi Peter

Would RCR be considered a candidate for your retracement trades?

Buy @ $1.75
iSL @ $1.66

Cheers,
Rob


----------



## Lone Wolf

peter2 said:


> Lone Wolf: There is another reason that the portfolio value has remained steady for a while. You and others must have realised it but were too polite to mention it. This portfolio has not traded in any gold, lithium or graphite stocks. What have been the best performing sectors for the past few months? Yep, _mea culpa_. I disregarded (correctly) the initial gold rally but didn't notice that this rally created a HL and it was then a better time to buy into the gold sector.  A few trades in these sectors would have certainly helped kick it along. That's history, but it shows what can happen when you get distracted.




Hi Peter,

Thank you for adding this. I wouldn't have commented on it though. Even if you say you were distracted and could/should have done better, I think it's realistic to assume everyone will have times when their system doesn't perform optimally. Maybe you chose the worst time to take an overseas holiday, or got sick, or picked the wrong sector to invest in, or were just unluckily invested in the lowest performing stocks at the time despite following the rules. It happens. It is important to recognise when you've made less than optimal decisions, but I don't think we can ever eliminate poor performance. There will always be times when you miss the train.

My post wasn't a complaint about poor performance (you have significantly outperformed the index). It was just to say, we accept the fact that we will always have periods where our system doesn't turn a profit - What can we do in addition to improve consistency?

The way you filter out certain sectors is interesting to see though. Some people have very little filtering on their stock selection, thinking "you can't guess where the next big move will come from". Others simply turn the system on/off with an index filter of some kind. Some even use an equity curve filter. I do believe in filtering stock selection, but there will be times you miss the best gains because you were sitting out. There will also be times when you jump back into a sector on perceived strength just to see it immediately tank. Once again, you can take steps to limit risk of under performance, but sometimes it's just not going to work out.


----------



## skc

peter2 said:


> Worst performing stocks (?)
> Do you mean prices that are clearly in a downtrend like EHE, BOQ, WOW . . . ? Where we need a reversal setup?
> or
> Do you mean those in longer term up trends that have gone done this month (June) like TWE, CGF, CGC . . .? Where we wait for the up trend to resume?




This is what I meant... It's research by Wilson's and I have not done the analysis myself. But it's an interesting enough concept to explore.




Looking at the chart, there seems to be a fair bit of variability across different years.


----------



## skyQuake

skc said:


> This is what I meant... It's research by Wilson's and I have not done the analysis myself. But it's an interesting enough concept to explore.
> 
> View attachment 67319
> 
> 
> Looking at the chart, there seems to be a fair bit of variability across different years.




That note actually excludes the top 2 and bottom 3 sectors to avoid momentum override. Eg. Oil stocks in July last year were still tethered to the plummeting US oil price.


----------



## skc

skyQuake said:


> That note actually excludes the top 2 and bottom 3 sectors to avoid momentum override. Eg. Oil stocks in July last year were still tethered to the plummeting US oil price.




Yes they have a fair bit of discretion in their analysis. I think if I find a collection of stocks in the same sector (e.g. oil stocks), I would watch overall sector exposure carefully, or hedge it against the oil price or something.

Personally I think looking at the worst performers over June among stocks which have -20% return for the FY (i.e. tax loss candidates who actually got sold leading into EOFY) might yield better candidates.


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## peter2

Thanks skc, for the suggestion. 

Hello Rob (rnr), re *RCR* (in the context of this threads TP) 

Is the weekly trend up? I'd say no and that is the first requirement to consider for a pull-back setup.
I'm not suggesting that price can't go up. I'm only saying that this chart doesn't fit with this threads PB setup atm.

I note that your bars are coloured the same as mine. I like them, but not every change to a blue bar is an auto buy. I scan for the first blue bars and then put the charts through a checklist to find the higher probability opportunities.  The weekly trend is on top of the list. I look at the weekly charts and the "nature" of the recent price swings. 

On the daily chart, RCR shows that the recent price swing is corrective and the prior swing was impulsive. This would indicate that the next swing will be impulsive and go up.  This is a valid "ambush" PB setup for a short term trader.  Ignoring the weekly context I'd wait for a close >1.80 with a iSL at 1.65 (very similar to your suggestion).  

I would prefer to trade this type of setup in charts where the weekly trend is clearly up and there is much more volume. One could become awkwardly stuck in RCR if there were to be a rush to sell (check for scheduled news is a must).


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## peter2

Wyatt:  Nicely done presenting the *RCG* chart for comment (post #480). That was a very timely post (before today's news) and I'm thankful for your contribution.    (*)
I did consider including a trade in RCG for the thread, but declined as it was more of a reversal setup rather than a trend continuation. 

(*) We need a "cheque's in the mail" smilie.


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## Nortorious

Hi Peter2,

RMS is shaping up as a nice trade for this portfolio. Check out the chart and see what you think. Broke above the trading range it had been in with excellent volume supporting the move today.

Stop can be pretty close to the entry price as well which is nice from a risk management point of view and being able to leverage the position up.


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## Nortorious

Nortorious said:


> Hi Peter2,
> 
> RMS is shaping up as a nice trade for this portfolio. Check out the chart and see what you think. Broke above the trading range it had been in with excellent volume supporting the move today.
> 
> Stop can be pretty close to the entry price as well which is nice from a risk management point of view and being able to leverage the position up.


----------



## Wyatt

peter2 said:


> Wyatt:  Nicely done presenting the *RCG* chart for comment (post #480). That was a very timely post (before today's news) and I'm thankful for your contribution.    (*)
> I did consider including a trade in RCG for the thread, but declined as it was more of a reversal setup rather than a trend continuation.
> 
> (*) We need a "cheque's in the mail" smilie.




Gee thanks Peter2, pity I wasn't on it, although I was earlier in the year, but the capital raise put a spanner in the works, just as it did to EML and NTC which ended up being losers 4 me. The latter 2 may get a 2nd chance if they behave. EML is respecting support @ $1.20 and NTC is similar @ $2.20 ish

I note that in your system, stocks experiencing a C/R are shown the door immediately. I may have to follow you on that one, which is unfortunate as I was eyeing VOC until the recent C/R. Great chart tho.




Cheers,
Wyatt


----------



## Nortorious

Wyatt said:


> Gee thanks Peter2, pity I wasn't on it, although I was earlier in the year, but the capital raise put a spanner in the works, just as it did to EML and NTC which ended up being losers 4 me. The latter 2 may get a 2nd chance if they behave. EML is respecting support @ $1.20 and NTC is similar @ $2.20 ish
> 
> I note that in your system, stocks experiencing a C/R are shown the door immediately. I may have to follow you on that one, which is unfortunate as I was eyeing VOC until the recent C/R. Great chart tho.
> 
> View attachment 67358
> 
> 
> Cheers,
> Wyatt




I was in NTC too but sold out just before the big run 

Did the exit conform to my trading strategy? 

Pretty big lesson on lost opportunity with my friend NTC


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## peter2

Trading update:  New trade and we take profit on another.

*S2R*: Bought the break-out today (0.315),  iSL is 0.26.  	

*ADA*: Sold today at its +2R target.  Our other option is to let it go and employ a TS, but as the market conditions are volatile we'll grab the above average profit now. Personally I've sold 1/2 and will let the remainder run with a loose trailing stop. We can't sell 1/2 in this portfolio as the parcel sizes are too small and the extra brokerage will be an added drag.


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## peter2

skc said:


> One of the difficulties in trading. The hot sectors at the moment are the very dog sectors up until 4 weeks ago. It's often hard to adjust your mindset to buy with confidence when you are so used to seeing it dropping week after week. There has been quite a few false starts but they were just that... so one normally waits for confirmation which sometimes ruins the R:R.   ...




Saw this while looking for a old post. It's so right. There are periods when we're in sync with the market and there are times when we're not. I agree with the idea that we get out of sync because of our recency bias. Another reminder for the chartists, to trade what we see, NOT what we think.


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## peter2

The old post I was looking for mentioned my problem (bias) that I can't buy stocks after a sustained price rise. Some of them continue higher and some of them don't. The chart I mentioned at that time was *CIM* and I couldn't buy the new break-outs even though they complied with this thread's TP because imo the reward:risk wasn't acceptable.

I love it when the market shows that we've made another good decision. A decision that was based on opinions about probability and whether the RR is acceptable at that time. 

Every moment in the market is unique. Thank-you Mark Douglas (rip).


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## peter2

Trading update:  New trade

*AZY*: Bought today's BO at 0.061, iSL 0.054

Yes, this was on my list as well and it might be a quick one.


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## peter2

Trading update: New trade (cfd)

*CCP-cfd*: Bought today's BO at 12.51, iSL 11.70. 
Used a cfd to reduce cash required for trade.




I'm watching another one as well (MND).


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## VSntchr

peter2 said:


> Trading update: New trade (cfd)
> 
> *CCP-cfd*: Bought today's BO at 12.51, iSL 11.70.
> Used a cfd to reduce cash required for trade.



Entered this one today also, but with a tighter stop, hoping for a quick spike. 
MND I got brexited, considering second attempt...


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## peter2

EOW 71 update:  ASX Momentum Portfolio  *+25.3%* ( 79% invested in 6 stocks )  SPAX2F15 index  *-4.5%* (past 71wk)

Our portfolio fared well this week as demand for some of our stocks continued. 

_This weeks sells_: *ADA* sold at T2 target. result +2R or +$1255. An above average result that helps raise our ave win. 
The limit sell order has been in the market for a while anticipating a spike and as the price rise was steady I considered replacing at the next level T3 (3.34).  I decided to leave it at T2 because the market is still quite volatile and the daily up trend is weak (hasn't made a new high). 

_This weeks buys_: *S2R, AZY, CCP* (Note: we didn't need to use a cfd for this trade as there was plenty of cash. )

*AZY*: We got a bit lucky with this purchase at 0.061 this afternoon as price spiked to 0.065 soon after our buy. It returned to 0.062 as someone was playing with their sell order. Basically the supply of stock was pulled higher after the BO. It will be interesting to see what happens on Mon. morning.  Our TS has been raised already as today's BO was quite strong. I would be concerned by a close below 0.06 and that's why our TS has been raised.

_Outlook_: Anything can happen. If there is a pull-back in gold next week, we'll be looking for a PB setup in a gold producer to join the trend which has been quite strong.


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## VSntchr

IPD chart looking pretty good for a BO trade. A couple of HL and a break above recent resistance..



With a 4C out at the end of the month, there is no messing around with this trade and it either goes up now, or it doesn't stay in my trade book. I took the close at $1.05 and have a tight stop at $0.985. There are some clear levels for other longer term traders who might want to give it more room.


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## VSntchr

Didn't get a chance to post in market hours and it has already popped so could be seen as hindsight trading - in any case I'll post the chart up of *WBA*.
One of craft's favourites in the agri space. Cotton futures tearing up recently have helped to turn the chart. Potentially a good candidate for the tax-loss list too...



Entry at 1.22 with a stop at 1.09. Lots of overhead resistance so may not suite everyone.


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## peter2

Trading update: New trade.

*A2M*: Bought the BO-HR today at 1.82, iSL is 1.71.  




*IPD, WBA*: Nicely done Vsntchr. Both spiked higher quickly (jumped the creek). I'm seeing a lot of that lately due to the thin depth.

APX: Limit sell order in at 3.15 (+3R)


----------



## peter2

We're running out of cash (only 1K left, can't do much with that) and with plenty of opportunities we are going to use cfds which don't require as much cash up front. 

To free up some cash the first thing we do is get rid of any losers. This portfolio doesn't hang on to any losers, but I know you do. Get rid of them and use the money to buy stocks going up. We're going to raise a few TS's which reduces our portfolio heat and if any prices start going down we'll sell to realise some cash for other opportunities. 

APX: A small error, the +3R price target is 3.18 but I'm tempted to wait until closer to their next news update (Aug?) as the demand is strong.


----------



## peter2

EOW 72 update:  ASX Momentum Portfolio  *+28.2%*  ( 98% invested in 7 stocks )    SPAX2F15 index  *-1.3%* (past 72wk) 

Our portfolio continues to go up with the market and hits a new equity high this week. We'll celebrate quietly and continue on. 

_This weeks sells_: nil
_This weeks buys_: A2M

We've raised our TS's higher on all trades to reduce our downside exposure (portfolio heat) and to ensure we quickly exit any trade that doesn't continue higher. We want to re-use the cash to buy something going up. We don't want to hold on to any losers for long.

We've just worked our way through a seven month draw down. How good does that feel? Everybody gets into a draw down. It's a natural occurence in trading and we spend most of our time in one. 

What did we learn seeing this happen in real time? 
We didn't panic. We didn't change the way we traded. We showed patience. We followed our TP when it indicated that we should protect the portfolio during the down draft in Jan/Feb. This is the key point. *We didn't let the DD get too big.* We limited the DD to -7% which is only three more losing trades away from our goal to avoid a DD of -10%.  How easy is it to have three losing trades? 

We knew the market would rally eventually and we knew our TP would profit from it. Working through every DD builds confidence, in ourselves and in our TP. Next time it happens, we'll know how to handle it and we'll know that we can work through it. 

That's what I meant by celebrating quietly. Pat ourselves on the back. Learn the important lessons and continue on. We haven't conquered the market, we conquered ourselves.


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## Boggo

peter2 said:


> That's what I meant by celebrating quietly. Pat ourselves on the back. Learn the important lessons and continue on. *We haven't conquered the market, we conquered ourselves*.




Bingo 

Have you had a look at weekly charts peter, that's where my winners are coming from at the moment.


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## peter2

Thanks Boggo, I love weekly charts (ASX equities). They keep me out of the daily volatility. I buy break-outs and pull-backs in strong weekly trends. Trading the weekly charts requires a lot less work during the week and that allows me plenty of time to look at other markets during the day/evening/night.


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## peter2

Trading update:  Taking more profit. :

*APX*: Sold at T3 (3.18) which is +3R or +$1802.  
Personally I've sold 1/2 at 3.15 and will let the remaining half go with a looser stop. 

We've closed the last two trades at price targets (discretionary exits). ADA at +2R and APX at +3R.  
Why not let them get bigger like all the text books say? Well, in the case of APX, our entry was a little late and whenever I know I'm late I'm happy to take what I can get. In this case +3R is excellent. 
Our entry into ADA was better and perhaps we could have let it get higher. It has hit T3 since our exit.  I decided to take +2R as the market hadn't yet made new highs and there was always a chance that the market would stall at 5400 again. 

Larger parcel sizes allow some flexibility (like selling 1/2) while smaller accounts must be wary of the erosion by brokerage ($54K is a small account).


----------



## Nortorious

RMS on the move again and a fairly tight stop can come into play. I've backed this horse some more based on the action recently and the fact my position was already free carried. Other stock to look at for this portfolio would be MGX.


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## peter2

Trading update:  New trade. 

*AYS*: Bought BO-HR at 2.04, iSL 1.80

A classic chart setup and if price fills the gap to 2.40 it will be an acceptable RR. Today's BO coincides with an announcement that the company will introduce a broadband service. 

*S2R*: Don't like the close <0.30 as it indicates the upward momentum has reversed, but today's trading halt prevents us selling. We can only hope the news keeps price >0.30 when it's released.


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## VSntchr

Hope that the S2R halt works in your favour Peter. I see the announcement is out now.

A few candidates in the hospital space at the moment:
*SHL*



*LHC*



Also, *HSO* and *PRY* (t/o rumours) look pretty good too.

Outside of healthcare there are some other opportunities such as *AAC*


----------



## peter2

VSntchr said:


> Hope that the S2R halt works in your favour Peter. I see the announcement is out now.




Thanks. I did smile this morning. I love this business.


----------



## VSntchr

peter2 said:


> Thanks. I did smile this morning. I love this business.



I'll take it that by "this business" you mean the business of trading.
Me too :iagree:


----------



## peter2

Trading update: 

*S2R*: Sold on this mornings gap open (+1.8R). 
Surprised me also as the TH prevented us from selling at a 0.5R loss due to the falling price. 

This is a discretionary exit to cash in on the opening exuberance after the overnight news. I would have missed this completely if Vsntchr hadn't told us that the news was released last night. The news didn't excite me and I watched GC continue to drift lower overnight. I was pleasantly surprised by the buying frenzy at the open. 

I'll be watching the close to see if demand holds up and if there is a cause to consider a re-entry.


----------



## peter2

Trading update:  The market deals another lesson in humility. 

While feeling good about the S2R trade we got an alarm that the AZY trade was in trouble and by the time I looked at it, price was below our exit trigger. 

*AZY*: Sold at 0.054 which was the initial SL and well below the exit trigger at 0.058 (Loss -1R). 

EOD traders will take a bigger hit in AZY selling next open, but you won't have to sell S2R as price closed back at the open price. 
Sorry for the intraday action, but sometimes IT happens. Especially after news in this thin market. 

_Our lessons again_: Humility and always check for news on our open trades.


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## peter2

EOW 73 update:    ASX Momentum Portfolio   *+31.5%* ( 83% invested in 6 trades )   SPAX2F15 index  *0.0%* ( past 73wk)

Our portfolio continues higher along with most of the market. 

_This weeks sells_: *APX* (+3.0R), *S2R* (+1.8R), *AZY* (-1R with slippage)
_This weeks buys_: *S2R*

*S2R*: Bought again on the open with a limit order at 0.425, iSL at 0.37. 
The trade risk is less than 1%. That's due to the lower buy price. We have to position size for our limit price. 
I mentioned that there was a possibility for a re-buy if I saw a reason. This was worth re-buying as yesterday's close was back at the open. The initial selling had been offset by additional buying late in the day. Overnight the POG rose significantly. Unfortunately I can't mention this before the open as the market depth is too thin. Sorry.
Trade Mgt: This is now a very short term momentum trade possibility. Our TS is moved to 0.42, offsetting most of our risk (except the risk of a gap down). Minimum price target is 0.485 (+1.5R). I'm aware that price traded above this price today but I won't post an intra-day trade in this blog after doing it. This trade remains open and we'll accept the risk if the POG drops overnight. 

I was looking to buy another gold stock to add to our portfolio (pull-back setup) and finding it difficult. It may be much easier to just trade gold. 

_Outlook_: We have to be bullish with the market near new highs, but I remain cautious as we're seeing many stocks getting hammered after reporting poor news (CIM, SIV, AHY) and dips in commodity prices (high volatility). Short term traders like us need to be very vigilant and aware of scheduled news dates. I seriously considered buying the BO(>2.10) in AHY recently.  Our caution paid off on this occasion (avoided -3R loss). Just lucky.


----------



## grah33

valuesna. choice of SHL is a good idea or not?  it happens to be at a weekly overhead resistance level at around 22.5?


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## peter2

I'm very disappointed seeing the first part of that question in this thread. 

I would like to rephrase it.  

Hi, Vsntchr your suggested break-out in *SHL* has started well, were you at all concerned by the weekly overhead resistance that is shown in this chart?  Would it have prevented you from starting a trade in *SHL* even though the chart looks like a perfect BO-HR setup?


----------



## grah33

Sorry for that, I'll try to have better etiquette.  I may have been  trying to be brief as some people prefer short questions.  The market hasn't been good too, and its future uncertain, which puts lots of pressure on beginning traders.  You chart though looks better than mine.  Perhaps overhead resistance wasn't as close as I thought it was  (there may be enough R:R distance)


----------



## peter2

Thanks grah33 for your understanding. No-one knows if any trading opportunity is a good idea or not and it's a beginners question that doesn't belong in this thread. I concentrated on the second part of your post.

The SHL chart shows us one of our setups and if we assess the RR as acceptable then it's a valid setup to use. Your question about the weekly overhead R is a good one and should be considered when assessing the RR. I personally wouldn't be concerned by it as it's an all time high. It's pretty bullish when price gets close to all time highs. 

Yes, you're right the market has been tricky. The bouts of high volatility, especially after news has made it more difficult to earn any profit. Beginners will always find trading difficult as they haven't yet learned the basic trading skills. Beginners must apply very good risk management rules just to survive. They should forget about making money. Their goal should be to trade small and survive. They'll gain experience if they can last long enough to learn the lessons that the market provides. 

Beginners also have the false expectation that they'll win every month or every seceond trade and when they don't they'll look for something to blame other than their own false and ignorant expectations. They'll forget about patience. They'll ignore appropriate risk management. They'll ditch their current trading strategy and look for another. 

Right at the beginning of this thread I mentioned that this threads trading style (short term momentum trading) is difficult. That's why our TP is so important. It tells us what to do. Beginning traders should not have to make any discretionary decisions at all. They should buy and sell exactly according to their TP. 

I sorry this thread hasn't helped you grah33. I hope this thread has helped others.


----------



## Nortorious

peter2 said:


> Thanks grah33 for your understanding. No-one knows if any trading opportunity is a good idea or not and it's a beginners question that doesn't belong in this thread. I concentrated on the second part of your post.
> 
> The SHL chart shows us one of our setups and if we assess the RR as acceptable then it's a valid setup to use. Your question about the weekly overhead R is a good one and should be considered when assessing the RR. I personally wouldn't be concerned by it as it's an all time high. It's pretty bullish when price gets close to all time highs.
> 
> Yes, you're right the market has been tricky. The bouts of high volatility, especially after news has made it more difficult to earn any profit. Beginners will always find trading difficult as they haven't yet learned the basic trading skills. Beginners must apply very good risk management rules just to survive. They should forget about making money. Their goal should be to trade small and survive. They'll gain experience if they can last long enough to learn the lessons that the market provides.
> 
> Beginners also have the false expectation that they'll win every month or every seceond trade and when they don't they'll look for something to blame other than their own false and ignorant expectations. They'll forget about patience. They'll ignore appropriate risk management. They'll ditch their current trading strategy and look for another.
> 
> Right at the beginning of this thread I mentioned that this threads trading style (short term momentum trading) is difficult. That's why our TP is so important. It tells us what to do. Beginning traders should not have to make any discretionary decisions at all. They should buy and sell exactly according to their TP.
> 
> I sorry this thread hasn't helped you grah33. I hope this thread has helped others.




It's a great thread to follow Peter2. As you have said (in other words), you need to survive the market before you can expect to thrive in the market. My recommendation to grah33 is to focus on what he/her is doing as a trader and forget about the commentary that is everywhere in the media and online. It's within that the answers are rather than something you will find from another source.


----------



## grah33

(Nort's post got in just before mine...slightly edited)

it's definitely helped me.  if  not i wouldn't be checking up on it. i got some really good tips like 3 atr stop loss and leaving stops out of market, and several other things too that i could mention.  the former was very helpful since the stops in the main trading books are more tighter and don't seem to work well.  perhaps 2 atr was something used in the past, but isn't the case anymore due to a deficient stock market.  it may be that the weekly timeframe is more profitable as you say.

with all this talk of helicopter money and stock market short circuiting , and the asx rallying alongside a bonds rally the future doesn't  look good . i guess i'm a bear.  i wonder how the new investors will go .seems even worse for them.  looks like the government and wall street wrecked it for everyone.  I wonder what will happen this year. 

i wasn't too concerned about trading before during the recent bull market (as the weekly trend was down) but i've come on the scene again now that the weekly trend is up.  when both weekly and daily is up then it's share trading time (but yeah, would have been good to be in that little bull spurt not long ago). currently doing good.  on about 7R (trading small test positions).  might have been about 10R if not for brexit and a stock split which i was just too busy to manage properly (small positions so not that important). thanks again for all the help.


----------



## peter2

Reviewing the chart of one of our open trades (*IMF*) prompts me to try to explain another subtlety when using price targets. 

_+1R target_: Don't use it unless your W% > 55%. This thread's W% is 41%, so routinely selling at this level is a losing strategy. 
However, we can sell at this level when this level is a trailing stop level and we've let our profit get bigger and now we're protecting +1R.  We may sell at +1R when using leverage or extra margin ( >100% invested) and the initial aim of the trade was a quick profit in a few days. 

_+2R target_: You've seen me sell at this level because it's higher than our Ave Win and when market conditions are volatile (like now). 

The current price of IMF is near it's +2R target (see chart) and market conditions are tricky.  
_Are we going to sell at 2R?_ *No*. 
The reason we won't sell at 2R is because price has recently broken out to a new high. This is a bullish break-out and is a valid buy signal according to our TP. If we had bought this BO-NH, would we have sold so quickly? No, of course not. We'll wait to see what happens to the price after the BO and see if it gets to our 3R level. This is the next logical target. 

The subtlety I'm trying to explain is to move your price targets higher when price needs a break-out to hit them.


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## peter2

Trading update: New trade

*BOL*: Bought today's BO at 0.094, iSL is 0.088.

There is not much apparent support below 0.090 in the mkt depth so we'll have to be vigilant.


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## VSntchr

Recent guidance from *APE *has been digested by the market. My interpretation was that there was a seller in there that used the liquidity to get out. A couple of bigger trades yesterday looks to have cleared the line. 
Consolidation looks to be broken to the upside now:
View attachment 67541

Like SHL, there is some overhead resistance, however in this case I feel the recent price action is more relevant to focus on given the recent news and consolidation. 

Well done on *BOL * Ripper trade right from the get go!

Some other charts of interest: *API, RXP, MNF.*


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## peter2

Trading update:  

*S2R*: Favourable SPP for the retail traders and we've earned the right to participate, but these details are not part of this thread.  We've sold near the close at 0.53 and I'm pleased to get it, considering many other gold stocks have dropped today with the gold price. Our two trades in S2R have provided +1.8R and +2.4R or +$2308 (+4.6%). I've sold my remaining half as well. If you'd like to stick with the company that's OK. The recent price rise in S2R is all due to company specifics rather than the gold price. 

Our initial purchase of S2R was at 0.315 and finally sold at 0.53, while enduring two trading halts, good drill results and a capital rasing. Yes, we've earned our momentum profits. 

*BOL*: Started well, but there wasn't enough volume traded for us to sell at our T2 target (0.11). We'll hold on and see if we can get better. On the way down there was a lot traded at 0.12. That might provide some resistance and a rewarding initial target.

We've completed 120 trades and I'd like to show you the performance of each batch of 20 trades. 




I've mentioned the importance of consistency and that table shows it nicely. 

I don't need to do 100 trades to know if a strategy is going to be profitable or not. Twenty trades is enough. Mark Douglas in his book "Trading in the Zone" suggested the idea of considering your trading in batches of twenty for two reasons. Firstly, the current trade or the next one is not overly important as they are only two trades within a batch of trades. Secondly,  he challenged readers to stay committed to the same method for twenty trades before considering any changes.


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## peter2

Trading update: Closing a few trades due to falling prices. 

A2M:  The close <1.80 nullifies the break-out. Sell next open.
AYS:   Another break-out nullified. Sell next open.
IMF:  Unfavourable news causes some selling. Sell next open.
NVT:  Sell next open, limit 5.85 (T1)

It's unusual to close so many trades at the same time without the general market falling, but we'll follow our TP and protect our portfolio value.


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## peter2

Trading update:  Trades closed and a new one. 

*APE*: Bought at BO-HR level (12.20), iSL 11.50. 

_Note_: I'll be keeping an eye on the AYS, A2M and NVT charts for re-entry setups. The volatility (and thin MD) may have caused us to sell before price hit our exit triggers, but taking small losses and being prepared to re-buy is part of our edge.


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## peter2

Trading update:  New trades

*TPP*: Bought today's break-out at 0.255, iSL is 0.21.

*MYX*: Bought today's BO at 2.03, iSL is 1.90


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## peter2

EOW 74 update:  ASX Momentum Portfolio  *+31.1%*  ( 76% invested in 5 stocks )  SPAX2F15 index *+1.1%* (past 74wk) 

The portfolio maintain its value after a bit of schuffling. Our benchmark index finally gets back above zero thanks to the divs and franking credits (~6%). 

_This weeks sells_: IMF, NVT (+1R), A2M, AYS (small losses)
_
This weeks buys_: BOL, APE, TPP, MYX

*BOL*: May not last long as supply seems to have overcome the fleeting demand.

_Outlook_: Still cautiously bullish as we're at new highs and still in reporting season. 
I may have closed A2M a bit quick, we'll see and we can re-buy it if it makes a new high (1.90).


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## Boggo

Nice work Peter


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## peter2

peter2 said:


> I may have closed A2M a bit quick, we'll see and we can re-buy it if it makes a new high (1.90).




*A2M*: Bought 1.905, iSL is 1.75.

I made a mistake selling this when price dropped. Price was only retesting the break-out, which we must expect to happen occasionally. This mistake cost us $585.


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## skc

peter2 said:


> *A2M*: Bought 1.905, iSL is 1.75.
> 
> I made a mistake selling this when price dropped. Price was only retesting the break-out, which we must expect to happen occasionally. This mistake cost us $585.




CCP is reporting tomorrow. They did have a market update 2 months ago which spurred the recent upleg so perhaps much is known.

What's your approach to reporting season? 

P.s. I may have asked that question before but I can't remember!


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## peter2

skc said:


> What's your approach to reporting season?




I'm not a "pro" like you, so I use the foetal position and try to avoid getting hit in tender places. :

Thanks for the warning re CCP tomorrow. CCP is near our +1R level so I am willing to let it go and see what happens. I may even sneak a sell order in at our +2R level in case of a spike up. I'm inclined to risk open profit rather than capital when deciding to hold through news. I usually see more price rises than falls because I'm in strongly trending stocks (AHY recent exception). 

I don't knowing start a trade in the days before a scheduled news release. 

The last time you asked, I mentioned during reporting season, I feel like a long-tailed cat in a room full of rocking chairs. That hasn't changed.

Edit: CCP is just below all time highs. This would have to be bullish with good news.


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## peter2

Trading update:   Excellent report by CCP

*CCP* Sold at 15.95 (+4R) 
I've sold half mine and will leave the TS well back on the remaining half.


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## Telamelo

Thoughts please on LAU per link http://au.investing.com/equities/lindsay-australia-ltd .. thanks tela

P.S. Bought yesterday's breakout >50c on over 4.5m volume traded.. but today only 52k volume traded!?


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## peter2

Trading update:  New trade

*MCR*: Bought 0.405, iSL is 0.36 

With a SL this close and above the last BO level (0.35), we are anticipating that price will continue higher immediately. 



ps: Just noticed the rising three pattern with diminishing ranges. Probability of further rises <50%. Hmm.


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## peter2

*LAU*: Weekly chart looks better than daily. Weekly trend is up and price in huge consolidation pattern. The probability that price goes higher when it break out (>0.52) looks good. However the daily traded volume is too small for me to consider it a trading candidate. 

This is one for the FA guys to consider as a longer term investment.


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## Telamelo

peter2 said:


> *LAU*: Weekly chart looks better than daily. Weekly trend is up and price in huge consolidation pattern. The probability that price goes higher when it break out (>0.52) looks good. However the daily traded volume is too small for me to consider it a trading candidate.
> 
> This is one for the FA guys to consider as a longer term investment.




Hi Peter, thanks very much for your feedback as really appreciate it.  

Cheers mate and best wishes with your trading.


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## peter2

EOW 75 update:   ASX Momentum Portfolio  *+37.0%*  ( 80% invested in 6 trades )  SPAX2F15 index *-0.1%* (last 75 wk)

Another good week for the portfolio thanks to CCP's good report. We grabbed the +4R result on the day of the news. An above average win for our break-out entry. You may notice that compounding is kicking in. We risk 1% of current account, but it's equivalent to 1.3% of our starting capital. The +4R win in CCP was worth +4.8%. A 1R loss will be a loss of 1.3%. Another reminder to keep our losses contained to -1R. 

_This weeks sells_: CCP (+4R)
_This weeks buys_: A2M, MCR

Our portfolio has four stocks that haven't moved much since purchase and with literally hundreds of stocks going up it's easy to think we're missing out in this mid cap rally. Don't worry about things we can't control. We don't chase prices. We buy break-outs. Stick to your trading plan.


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## peter2

There's one aspect of my portfolio management that I've probably not clearly explained. It deals with the figure I call capital risk. This shows the amount of our capital that we've put at risk with the trades that we've recently started. It's a part of portfolio heat that also includes any open profits that we're risking. 

The aim of this portfolio is to grow without experiencing a 10% draw down. If we started 10 trades, risking 1% each and all lost. We would have the 10% DD that we wish to avoid. The question then is, how many trades are we comfortable starting to give us the best chance of success and avoid the 10% DD. The number I use is 5, that gives us the capital risk limit of 5%. This doesn't mean I must start 5 trades. When I'm bearish, I'll start less. When I'm bullish I want to start heaps, but the capital risk limits my number to 5. This limit stops me chasing a runaway market. It stops me buying heaps at what might be the wrong time (a market top). 

For the past few weeks our portfolio showed a capital risk of 5% and we had cash available (~20%) to start more trades and I've been quite bullish lately. Four of our trades hadn't moved. They were risking 4% of our capital and not providing any growth. It would have been easy to succumb to the temptation to start a few more trades and increase our risk to 6% or 7%. No problem, this is just an educational forum thread. Go for it. Who cares. Well, I do. This limit works for me. If I can't find one stock that continues to go up out of five then I'm a lousy chartist or I'm very unlucky (btw I always think I'm unlucky. lol). 

What I'm advocating here is, restraint, because we never know what is going to happen next. 

*Trading update*: Those four slugs have finally started to move higher and we've been able to raise the TS's. This lowers the capital risk and this lower value allows us to start another trade. 

*BKL-cfd*: We're anticipating a break-out soon and pre-empting it by buying today at 159.10, iSL 150.00. 
Since this is a huge price and we would use all our remaining cash in this parcel. I've decided to use the leverage provided by cfds.


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## peter2

*EOW 76 update*:   ASX Momentum Portfolio  *+41.0%*  (100% invested in 7 stocks)  SPAX2F15 index  *+1.0%* (past 76wk)

A good week for our portfolio as most of our trades moved higher with the general market. 
Our aim is to collect winning trades, so it's good to see the portfolio all green when 100% invested.

_This weeks sells_: nil
_This weeks buys_: BKL as explained earlier today. 
What happened here? The price was 159.3 when I posted. The close >160 confirms the break-out. 
I posted the entry a bit earlier than usual as I had a pm appt. I hope it wasn't you buying. 

_Outlook_: Well, you'd have to be bullish.


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## Boggo

Nice to watch this process Peter, well done.
I hold one of these, MYX.


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## Lone Wolf

peter2 said:


> There's one aspect of my portfolio management that I've probably not clearly explained. It deals with the figure I call capital risk.




Thanks Peter. This post comes at an opportune time for me as I had taken this past week off work to focus on getting back into trading.

What is your view on the optimal number of open trades?

You started this account with $50,000, 1% risk, maximum 5 initial trades open to keep the capital risk at 5%. But if you had a larger account, would you risk say 0.5% and open 10 positions?

My limited system testing doesn't give a clear answer. More open trades doesn't mean greater profit. But it does seem to reduce result variance and max system draw down, probably from reducing impact of single outlier results (good and bad).


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## peter2

Lone Wolf, welcome back. Your question is a difficult one for a discretionary trader like myself. If your system is able to be back tested then of course you could find the right number for your risk tolerance with a little bit of computer work. 

This 50K portfolio risking 1%/T will be fully invested with about 6 - 8 trades using my position sizing method. The optimum # of trades is not a concern. Are these numbers scalable?  Ha, that is the question. 

300K- 2M portfolio: I use a trade risk of 1% on the weekly charts (less likely to be hit) and only 0.5 - 0.7% on the daily charts. Risking less each trade means I'll have more open trades to manage. How many open trades can you manage properly, is an important question.  I struggle with 16 open trades (based on daily charts) when the market turns down suddenly.  It happened and I'll never forget that day. The current mixture of trades based on the two time frames lowers the risk of having too many to manage. Trades based on the weekly charts require less work than those based on the daily charts. Let me mention that if I used the monthly charts, there would be even less work required.

After managing my portfolio through the GFC and the years since, I better understand my risk tolerance. I manage my portfolio risks to suit my comfort level.  Gary Stone (SWS) produced a white paper that looked at variable amounts of trade risk (which directly influences the number of open trades) on the performance stats of his system. I was nicely surprised to see that my numbers (based on gut feel over many years) matched his best estimates for reward to risk (draw down). 

I know I haven't answered your question with a direct number, but no-one will know your number other than yourself. Managing my portfolio to reduce the normal DD that a medium trend following system gets was/is my main concern.


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## Lone Wolf

peter2 said:


> This 50K portfolio risking 1%/T will be fully invested with about 6 - 8 trades using my position sizing method. The optimum # of trades is not a concern. Are these numbers scalable?  Ha, that is the question.




Thanks Peter,

You answered my question just fine. I wasn't looking for a specific number. I was just wondering if you might prefer to have more open trades but were being restricted by the account size.

You could be fully invested with only one stock. But it's not optimal due to high capital risk, as well as opportunity risk in that you're likely to miss many of the best trades while tied up in just one. So we open 5 trades, reduce the capital per stock while casting a wider net. But there seems to come a point were casting a wider net no longer gives better returns.

Good point on how many open trades you can personally manage. A system trader could manage more than a discretionary trader who needs to closely watch each chart.


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## grah33

thanks Peter.  helpful instruction


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## peter2

Trading update:  New trade included after realising that we won't exceed our cap risk limit by too much. 

*GXL-cfd*: We can include this trade I placed for myself today, in this portfolio. 
Chart posted in break-out thread.  My entry was the break out at 7.26, iSL is 7.00. 
This is a small stop size for this priced stock, meaning that we will be limited to our max parcel size of 20%.  Our risk on this trade is only about $512 or 0.76% of current realised equity. We won't be blowing our cap risk limit too much by including this trade. 

Both *BKL* and *GXL* will report next week. We will only hold them over their reports if they are profitable. We won't be holding losers when they report. We're trading price momentum, not gambling on what the reports may do to the prices. 

Cap Risk is ~5% spread over 8 trades and we have invested 105% using the leverage of cfds. We've got 9% cash left for more trades, once we can safely reduce the cap risk by raising some exit stops or closing open trades.


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## peter2

Trading update:  A quick exit due to a BO failure. 

*GXL*: Sell on next open. Price has reversed quickly following the break-out and closed below our exit stop. 
Normally I'd watch this stock and re-buy on a BO>7.25. However it's reporting next week, so we'll wait. 

*MCR*: Traded below our exit stop but closed above. We'll sell if it trades below again. 

Our portfolio has taken a hit today (-4%) with most of our trades falling. We've started defensive measures by raising a few exit stops to reduce heat and protect our portfolio value.


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## peter2

EOW 77 update:   ASX Momentum Portfolio  *+41.5%*  ( 77% invested in 6 trades )     Max draw down  *-7.0%*
SPAX2F15 index (includes dividends and franking credits)  *+0.8%*        Max draw down *-15.8%*    (past 77wk)

Our portfolio held up better than it started this week. The market index continues sideways and masks the underlying strength in the mid caps. 

_This weeks sells_: GXL, MCR
_This weeks buys_: nil

_Note_: Adjustments to many of our exit triggers. 

*GXL*: The market challenged our iSL and triggered us out, before going back up. Placing our iSL at 7.00 was probably wrong. It should have been below the 7.00 level, say 6.95. We must respect the round number levels. We mark that decision as an error and learn from it. The best way to learn from this mistake is to write into our TP,  "adjust all exit triggers below round numbers".

*BOL*: Traded at our price target of 0.12 today. We weren't taken out and we'll raise the limit sell order to 0.145. This trade has the potential to be a great result if we let it happen. 

_Outlook_: We continue to be bullish and aim to be fully invested. This weeks sells provides capital risk for two new trades next week. If we can't find any break-outs we'll buy some pull-backs.


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## peter2

Trading update: New trade, enough cash leftover for cfds trades.

*IMD*: Bought on the close at 0.56, iSL is 0.49 (below 0.50). 
I really liked the little ascending triangle pattern on the daily chart, but we had to wait for today's report and subsequent price action. The close was at the high after some initial selling that fell through quite a few levels (thin MD). Encouraged by the high close. we bought. 

Other charts under consideration today: PRG (pull-back entry), IMF (Break-out entry), SVW (Missed BO)

Holders of APO, OML, BLA understand why short term traders must be careful in reporting season.


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## Lone Wolf

peter2 said:


> *IMD*: Bought on the close at 0.56, iSL is 0.49 (below 0.50).
> I really liked the little ascending triangle pattern on the daily chart, but we had to wait for today's report and subsequent price action. The close was at the high after some initial selling that fell through quite a few levels (thin MD). Encouraged by the high close. we bought.




I know some who would consider today's action a pattern fail of the little ascending triangle and remove it from their watch list. It's interesting to see you consider the action today as a sign that buying demand still exists, rather than focus on the break of pattern.

Would you feel any different about the price action if wasn't due to reporting day volatility?


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## peter2

Yes, today's price action did invalidate the ascending triangle pattern. However we knew this might happen due to the scheduled report. I bought some on the close after seeing today's price action. Today's pin-bar setup was the second bullish sign after the bullish AT pattern. I've pre-empted the BO (if it happens) but feel comfortable with the risk/reward. It's a non routine entry on a chart being monitored for a routine BO buy. I'd like to see the BO in the next few days when I pre-empt a BO.

There was been a lot of trading activity between 0.50 - 0.80, three years ago. This may be a level of some resistance and price stagnation. We'll see. 

ps: Ignoring the news aspect, but I wouldn't, we can now draw a box pattern around the price data and treat it like any other break-out opportunity.


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## Lone Wolf

Thank you for the detailed reply Peter, it's very much appreciated.


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## peter2

Trading update:  I mentioned yesterday that IMF was being considered for a trade opportunity. 

*IMF-cfd*: Bought at 1.70, iSL at 1.60. 

The main purpose of these cfd trades is to use the leverage available. This allows us to open more trades when the market conditions are favourable. I don't expect to hang onto these cfd trades for very long, just long enough to grab +1R - +2R. 

BKL may be reporting tomorrow. It will be a quick gain or a quick loss. We'll see. 

_Note_: I also considered CPU today as price made a new high. With 8 open trades, it might be best to wait a while for more of our trades to prove themselves worthy of remaining in our portfolio. BOL, APE and MYX haven't moved for a while.


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## peter2

Trading update: Busy morning

*APE*: Closed yesterday below our raised exit trigger (11.80) and had to be closed today. This was made difficult due to the thin market depth. I'd noticed this yesterday as the price fell on low volume. We sold all eventually when price climbed off the floor. Ave price 11.70.
Edit: APE reported today also. This didn't help our exit.

*BKL*: Reported today, what I thought were acceptable results, but the market thought otherwise and sold off quickly. Our average selling price was $145 (incl cfd interest), below our iSL. 

While all this was happening I noticed the market lopped 10% off A2M. MYX, IMF have fallen also. We'll wait to see what happens this afternoon and decide if we sell them tomorrow.


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## Lone Wolf

peter2 said:


> While all this was happening I noticed the market lopped 10% off A2M. MYX, IMF have fallen also. We'll wait to see what happens this afternoon and decide if we sell them tomorrow.




I'll be interested to hear what you decided on these. For me:



A2M - A substantial gap down, the only positive being that it closed near the high for the day. So I guess you hold for now? Today's bar doesn't look too inspiring to me though. Sell if you need the cash for a better looking prospect, or move the stop up and let it play out?



MYX - This has been weak for a few days and under performing the index. I'd be looking to close, except that it's already so close to the initial stop that I would have just left it yesterday. I would've been stopped out today as I tend to have my stops active in the market. (I should check if this works for or against me). If looking for a positive, depending on how you like to draw your support lines, it could now be sitting on support.



IMF - Wide spread down bar yesterday, but closed strongly. I'd have held. Another down bar today, but closed near it's high again. Not so bad considering the index was down today. I would still hold. The decision would be harder for me if I was an intraday trader, as it started the day above our entry and proceeded to move lower.


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## peter2

All decisions must be made in the best interests of the portfolio as a whole and must comply with your trading rules/guidelines. Applying these rules/guidelines _consistently_ produces our profitable edge. 

1. Keep our losses small is our most important rule. MYX is close to triggering it's sell for this portfolio. It may have been sold earlier after price closed below the 2.00 level. This portfolio will sell at 1.90.
2. Let winning trades get bigger than average. Both A2M(current TS at BE) and IMF (current stop is iSL) are winning trades, so, we'll let them go. 

Moving our exit triggers too early and too close when there is no significant open profit to protect is a newbie mistake. 

I agree of your comments related to those charts. My stops are always out of the market unless there's heaps of depth. 

If the portfolio had needed the cash, the best time to cash in would have been the day before the news and take the news out of play. If we had applied this action to A2M, APE and BKL we would have saved heaps. It's an action worth researching over many reporting seasons.


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## peter2

EOW 78 update:  ASX Momentum Portfolio *+36.9%*  ( 91% invested in 6 trades ) 
Benchmark index SPAX2F15 (includes divs and franking credits)  *+0.8%*  (past 78wk)

78 weeks that's 18 months!  This week the market slaps our hands just as we were thinking "gimmee, gimmee". The fall in our portfolio was entirely due to price "swoons" after scheduled news. No wonder I get wary during reporting season. The portfolio heat is our buffer. This week we lost a bit of that buffer. The market remains up, so no additional defence is required.

_This weeks sells_: *APE, BKL* (our biggest loss -1.5R)
_This weeks buys_: *IMD, IMF-cfd*

_Outlook_: We remain bullish but wary at this time of the year. The US election campaigning may provide a distraction to the familiar Sept/Oct dip.


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## peter2

Wow, eighteen months has gone by so fast. I hope this thread has helped a few of you in your trading journey. 

I've been thinking about my reasons for continuing this thread?  I've taken ~90% of the trades shown in this thread in my own accounts and banked the profits. I know I can trade ASX stocks profitably over a reasonable period. I knew that when I took over from Pavilion103, 18mths ago. So, why continue? 

Well, it's profitable, but more importantly posting the weekly updates and the setup charts are now part of a profitable routine and this routine keeps me in touch with what's happening within the ASX market. If I stopped posting, would I be as diligent or as focussed?  I'm not so sure. I'm like most people and become distracted by other aspects of trading  (auto systems, US markets, options, futures, fx ...). Even living gets in the way of my trading sometimes. Missing rallies like I did in the gold sector earlier in the year (along with graphite, lithium and iron ore) are lost opportunities. I think the ASX market will remain challenging for quite some time (years) and it's important to get something from every small sector rally. 

The profitable routine is a plus for continuing, but it's not enough. Maybe I should use this thread to challenge myself and push my comfort zones (risk tolerances). No, I don't mean trade low priced, low volume crap! 

Well that's settled then, I'll continue but with a few personal challenges. 

The first change is to state the end goal and that will be growing the starting balance of $50K to $100K.  
Currently it's $68K, so another 50% has to be earned.  At the current rate (135 trades in 18mths with an expectancy of 0.25) that's going to take another 200 trades over 27mths. Yikes, I'll be an old man unless we increase the trade frequency and improve the expectancy. 

I think we can do both with a few modifications to our TP and BP.


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## Lone Wolf

peter2 said:


> Wow, eighteen months has gone by so fast. I hope this thread has helped a few of you in your trading journey.




I admit that my heart sank when I started reading this as I thought it was a game over post. My disappointment was soon replaced with a sense of excitement. I look forward to seeing the changes you make. And also what trade offs, if any, need to be made to portfolio heat and max draw down tolerance in order to chase the higher returns.

37% over 18 months, in challenging market conditions while keeping draw down in single digits. I think you've proven well enough what you can achieve playing safely.


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## Newt

Also overjoyed to hear you're not only continuing, but accepting more personal challenges Peter.
Inspiring and incredibly helpful stuff  for those finding their way through the trading wilderness!


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## Wysiwyg

peter2 said:


> At the current rate (135 trades in 18mths with an expectancy of 0.25) that's going to take another 200 trades over 27mths. Yikes, I'll be an old man unless we increase the trade frequency and improve the expectancy.



Peter, what is your estimated average hold time per trade? Those lulls after a break out consume time. Time being the cost of holding to hit a winner.


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## Wyatt

> Also overjoyed to hear you're continuing




Indeed we are incredibly fortunate to have someone of your skill sharing their art with any and all who are interested.

There are plenty of story tellers around the traps who speak of successful trading, but few, if any, take the time to not only openly show their method, but explain the finer details of trading and pitfalls to watch out for as it is happening without the benefit of hindsight, and without obvious personal gain. (We hope it helps your trading)

Especially considering your practical method which does not required sitting in front of a computer all day everyday, so it is realistic for the average punter to follow. No doubt a life of trading experience for all to see and enjoy. 

They say to be successful in this game one must be open with little ego and Peter you are truly a giver, at the pointy end of the 5% of traders who apparently succeed. Life on ASF would be poorer without you, so do feel the following audience but without any pressure.


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## peter2

Wysiwyg:  Average hold time = 22 calendar days, median = 14 days
10 trades > 50 days, 2 trades >100 days

Lone Wolf: I won't be increasing the cap risk or portfolio heat limits as our existing position sizing method uses the capital efficiently. I'll be a little more aggressive using the available risk. 

For example: Recently we closed two trades and raised the TS higher on TPP. This reduces the cap risk to 2.2%, so rather than waiting around for another BO, find another setup and use the 3% risk that is available now. There are opportunities every day and our market risk filter low (= XAO trend UP). I could have started two or three trades this arvo, but they wouldn't have been BO's and would not have complied with our current TP. 

There's no rush. I'll outline the TP and then we'll be right into it. 

Have thought what the initials BP stands for?  Knowing that should get you excited. I know I am.


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## Wysiwyg

Wyatt said:


> Indeed we are incredibly fortunate to have someone of your skill sharing their art with any and all who are interested.
> 
> There are plenty of story tellers around the traps who speak of successful trading, but few, if any, take the time to not only openly show their method, but explain the finer details of trading and pitfalls to watch out for as it is happening without the benefit of hindsight, and without obvious personal gain. (We hope it helps your trading)
> 
> Especially considering your practical method which does not required sitting in front of a computer all day everyday, so it is realistic for the average punter to follow. No doubt a life of trading experience for all to see and enjoy.
> 
> They say to be successful in this game one must be open with little ego and Peter you are truly a giver, at the pointy end of the 5% of traders who apparently succeed. Life on ASF would be poorer without you, so do feel the following audience but without any pressure.



I can't find anywhere here the initial stop loss, raised stop loss and take profit plan. Can you point me in the right direction so I can turn a price breakout into a successful strategy?


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## Boggo

Wysiwyg said:


> I can't find anywhere here the initial stop loss, raised stop loss and take profit plan. Can you point me in the right direction so I can turn a price breakout into a successful strategy?




Starting here may help you
https://www.aussiestockforums.com/f...=29971&page=19&p=899858&viewfull=1#post899858


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## peter2

Wysiwyg:  I stated at the beginning that the trading style to be used in this thread is discretionary. The TP is structured, rule based but still allows some discretionary application of these rules/guidelines. 

The iSL is always placed below the last higher swing low (daily chart).
The trailing exit trigger is only moved higher once profits get above +1R. The exit stops are not in the market.
Taking profits is the most discretionary aspect of all. Our main aim is to allow price to go higher, but there are occasions when taking what we've got is appropriate (eg. when the XAO falls). As well as rules/guidelines for the individual trades we have guidelines for the portfolio has a whole, mainly defense when the general market falls.


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## peter2

The following modifications to our TP are designed to increase the frequency of our trades and to improve our edge (expectancy). The biggest modification will be to our entry technique. I love break-outs, as you know, but I want to get in earlier and in many charts there are earlier opportunities before the obvious BO level is hit.

If you've followed the thread then you'll be aware that chart break-outs happen in batches. At times there will be plenty (too many to use) and at other times we have to wait for them to form. When the obviously trending stocks pause (go sideways) money is flowing into other sectors lifting them off support levels. We're missing out on those that are moving up while waiting for our preferred setup. [Note: Inexperienced traders should wait for their preferred setups and only trade perfect examples. Trading too many types of setups means they won't master any one type. eg. If you haven't traded BO's only for a reasonable period then you wouldn't know that they form in batches.]

I'm pushing my boundaries a little with these new modifications to the setups and because there are always plenty of opportunities all the time our portfolio should always be near the capital risk limit (5 trades at 1% each). Many of our new entries can be described as pull-back setups, channel setups or reversals. We'll still trade break-outs though.

Plenty of opportunities won't mean more trades unless the trade duration is shorter. Pull-back and channel setups have obvious targets (prior highs). We are going to sell at these targets provided the RR is big enough. We'll let the trending stocks go higher and grab more frequent profits from the pull-back and channel setups.


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## skc

peter2 said:


> Wow, eighteen months has gone by so fast. I hope this thread has helped a few of you in your trading journey.
> 
> Well that's settled then, I'll continue but with a few personal challenges.




Good on you Peter. Well done.



peter2 said:


> The first change is to state the end goal and that will be growing the starting balance of $50K to $100K.
> Currently it's $68K, so another 50% has to be earned.  At the current rate (135 trades in 18mths with an expectancy of 0.25) that's going to take another 200 trades over 27mths. Yikes, I'll be an old man unless we increase the trade frequency and improve the expectancy.
> 
> I think we can do both with a few modifications to our TP and BP.




May I offer you some suggestions as well to juice up the returns.

1. Look for short set ups. You can have a set of positions such that you are close to 130% long / 30% short. You get to put on more trades with some hedge against market beta.

2. Increase your risk per trade. Your drawdown is really well controlled so you can afford to loosen that a bit.

3. Avoid scheduled reports, but buy price jumps after reporting. You'd dodge some bullets while ride some fundamentally backed trends.


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## peter2

skc: Thank-you once again. This makes me feel good about the community when experienced traders take the time to post suggestions. Another recent example is Captain Black's posts in Modest's thread. 

1. Include shorts and hedge market beta. Yes, this would be a personal challenge to implement and well worth pursuing as we'll be using cfds for leverage. 

2. Increase risk per trade. Dangerous for a newbie, but once you've established a reliable record you can push a little. Our AL is only 0.6R in this thread. That's as good as it gets (imo) without wrecking the W%.

3. Good advice for reporting seasons.


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## peter2

Technical Note: Supertrend indicator 

There's an indicator on my charts that changes the colour of the price bars when price has moved a certain distance from a low (and high). They turn blue when price crosses above the indicator line and red when price crosses down. One nice thing about Bullcharts is that I can hide the lines and still have the bars painted blue and red. I can see the effect of the indicator without seeing it on the charts. 

Fact: Every significant swing up includes a first blue bar. 

Note: This indicator is nothing special. If you back-test it on it's own it will NOT be profitable. Don't waste your time or mine complaining about it. 

The main reason for mentioning this indicator is that the software can scan and find every instance of the first blue bar throughout the market. The scan will find all the charts where price is starting to go higher based on this indicator. I run this scan in the last hour before the close and select the best charts to buy before the close. The scan finds charts that are ready to buy immediately. 

Some charts will show a price break-out, some will show a pull-back, some will show price moving off support (channel), some will show a reversal and many charts will be crap. 

How do we select the charts with the best attributes to put the probabilities of success in our favour? 
We use a checklist. 




*ps*: You'll notice that we can use this indicator to scan for shorts in a cfd list also. 
(skc you read my mind and pre-empted the BO of an idea.)


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## Lone Wolf

peter2 said:


> Have thought what the initials BP stands for?  Knowing that should get you excited. I know I am.




I did think about what BP stood for, no I didn't know what it means.

I started to guess - "TP and BP"
So if TP = Trading Plan, BP is something not already covered within the TP... Then I gave up, figuring that with a little patience all will become clear.


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## debtfree

Hi Peter

1st of all I must say a huge THANK YOU once again for all your work, time and assistance in the ASX Momentum Trade Book that  you have given me and others. I too like Lone Wolf had heart palpitations when reading your post as I know my education from you is still not finished. 

Yes I'm one of the guilty ones of being distracted from your trading thread but with our new business up and running it required me to be a little more on deck  than I first thought. But, I haven't lost my interest at all one little bit in this form of trading and your teachings. I been jumping in and out of ASF along the way to quickly read new posts to keep up to speed and when time permits  brushing up on my excel for a better spreadsheet as to review trades at a later date.  

I have been able to mimic your graph with the balances of the Portfolio/SPAX2F15/Downside Exposure (I love this Graph) and also the conditional formatting that you have in your EOW Update (It's a quick story in 1 cell) As for the trading plan I still waste a lot of time with deciding a stop loss criteria. I should stop procrastinating about it and just pick any and get on with it.

I'm also very excited about your plan to continue forward with a few modifications. I've been thinking about this BP and the only thing I can think of is maybe Breakout Plan or Pattern .... Maybe Brokerage Platform, moving to all CFD Platform to increase amount of trades held at once.

Looking forward to learning more, thanks again Peter and also everyone else participating in this thread ... it's just been fantastic.

Cheers ... Debtfree


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## Habakkuk

BP = Business Plan

how to make 50% return in 1 year rather than 2

I'm also looking forward to it!

Thanks for your continued contribution, Peter2.




Lone Wolf said:


> I did think about what BP stood for, no I didn't know what it means.
> 
> I started to guess - "TP and BP"
> So if TP = Trading Plan, BP is something not already covered within the TP... Then I gave up, figuring that with a little patience all will become clear.


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## captain black

peter2 said:


> skc: Thank-you once again. This makes me feel good about the community when experienced traders take the time to post suggestions. Another recent example is Captain Black's posts in Modest's thread.




Thanks for the acknowledgement Peter, much appreciated 

Well done on picking up this thread from Pav, for keeping it going for 18 months and also for the returns you've achieved using a discretionary trading plan. It's obvious from comments from people posting along the way that you've earned a huge amount of respect from everyone. 



peter2 said:


> The profitable routine is a plus for continuing, but it's not enough. Maybe I should use this thread to challenge myself and push my comfort zones (risk tolerances).




Pushing outside our comfort zone is one area that's always tough for traders. It's important for our confidence to operate within our comfort zone but it's equally as important to always be on the lookout for new ideas or new ways to adapt our ways of doing things.

I try to take a systematic approach to it. While I'm trading current systems I'll be paper trading/testing/sim trading at least one new system or trading plan each 12 months. At the same time I'll be researching and looking for new ideas to be testing in the following 12 months. 



peter2 said:


> The following modifications to our TP are designed to increase the frequency of our trades and to improve our edge (expectancy). The biggest modification will be to our entry technique. I love break-outs, as you know, but I want to get in earlier and in many charts there are earlier opportunities before the obvious BO level is hit.




This is one area that's been of real interest to me over the last few years, particularly with day trading index futures. Whether it's someone taking 20 trades a year on a weekly system or someone like me taking 80+ trades a day the end result always comes down to the expectancy equation. The word "confirmation" is used a lot when technical analysis setups are discussed and I often wondered whether waiting for confirmation to enter a trade had more to do with people's fear of making a "wrong" decision rather than the pure maths of expectancy.

I've posted a bit in Modest's thread on the subject, hopefully I'll get time to post a bit more on it.

I'm interested to see the approach you take to reach the target you've set and the process you use to increase your trade frequency. 

Once again, congratulations on your results so far and particularly the humility you show in your posts, it's one trait I've seen that's common in most of the successful traders I've met.


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## peter2

Habakkuk said:


> BP = Business Plan
> 
> how to make 50% return in 1 year rather than 2




Thank you, yes trading is a business. Currently there is only one trading activity in this business, I'm hinting that there may be another added soon to help reach the end goal.

Whoa there, don't make up any deadlines. IMO deadlines kill traders. 

We'll go one trade at a time until we get there.


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## peter2

Hmm, it looks like I've lost a post. Where was I?  Checklist.

With lots of 1st BlueBars appearing every day, we need to filter the number of opportunities to a manageable number. Some ideas; 
(a) In the XAO index (~500)
(b) Highest 1000 by traded volume
(c) Highest ranked by Stockdoctor or similar FA ranking system
(d) Price delimiter (<2.00)
(e) etc...

Select something that makes sense to you. 
I can look through lots of charts quickly because I know what I'm looking for. 

The first thing I look at is the _weekly chart_. I want to see the trend in the weekly time frame. I have a similar indicator in the weekly chart. There are only four possible combinations on the weekly charts. 
1. Strong trend UP with shallow pullback (EMAs UP, Blue bars)
2. Trend UP with deeper pullback (EMAs UP, Red bars)
3. No trend (EMAs useless, Red bars)
4. Trend DOWN (EMAs DOWN, Red bars)

I prefer to trade in charts were the weekly trend is clearly UP (types 1,2). 

This chart shows our favourite break-out setup (BO-HR) that coincided with the appearance of the first two blues bars. The second setup is a perfect pull-back setup in a strong trend.


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## peter2

I don't want to confuse the issue with examples of price moving off support levels (in channels) or reversal setups. We know there are lots of break-out opportunities, now we've added an objective pull-back setup and entry signal. 

When I see perfect examples of types 3 and 4 (list in prior post) and I want to trade them I'll show the charts soon after entry as I have in the past. 

The huge advantage of using an objective pattern like this one (1stBB) is that everyone interested will be able to do the scans and see the same charts I will. 

Before I forget to mention it. My parameters for the supertrend indicator are slightly different on the weekly charts. The weekly charts are less volatile than the daily charts. 




Of course the other huge advantage of this indicator is that I can scan a list of shortable cfds looking for the first red bar.


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## Lone Wolf

peter2 said:


> Technical Note: Supertrend indicator
> 
> View attachment 67903




I spent most of Sunday and this arvo trying to get supertrend to work. Looking back at your old charts, my blue/red bars don't always line up exactly (out by a bar or two). So I wasn't sure it was exactly the same as bullcharts supertrend.

But I managed to find the stock in the picture you attached and my line matches it exactly. So it seems ok, I'll be able to confirm as candidates turn up. Should still get similar candidates anyway, if not always identical. Good news is my Amibroker skills have moved up from "rusty beyond recognition" to "dull".


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## peter2

Hehe, some of my old charts might have had different parameters for the supertrend indicator. It's like moving averages, there is no best fit for every price swing or chart. I use the same parameters now. 

It's just a tool that we'll use to find charts where the price is going up from a recent low. Other indicators like RSI, STO, CCI, pSAR and W%R moving up from oversold levels will find similar charts. I prefer 2ATRs as it's a distance outside the normal ATR or average daily range.

Edit: That chart was SVW (Feb16 - June16)


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## peter2

Trading update:  More selling has us closing two trades. 

*A2M, MYX*: Closed as they both traded below our exit triggers (1.90). 

Our market filter has moved to weekly - UP, daily - DOWN. There is nothing to do as our trades are being closed by their price falls (auto-defense). 

We'll let the market dip and look to start more trades when the dip seems over.


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## peter2

EOW 79 update:   ASX Momentum Portfolio  *+34.9%* ( 57% invested in 4 trades ) 
Benchmark index SPAX215F (incl. divs and franking credits)  *-1.5%*   (past 79wk) 

Our portfolio drifts down with the market. Giving back a portion of open profits is all part of the business. Naturally we don't want to give too much back and that's how our exit triggers protect the portfolio. I notice that the index is back into the red over the past 79 weeks. Even the dividends haven't helped keep it up. 

_This weeks sells_: A2M (-0.2R), MYX(-1.1R)
_This weeks buys_:  nil

*IMD*: have announced a capital raising. We'll exit asap when they next open in accordance with our trading plan. 

_Outlook_: We'll get plenty of buy signals when this dip is finished. We have to be patient until then.


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## peter2

Trading update:  new trade

*RSG*: Bought today's break-out at 2.04, iSL 1.70.  

DCN: Also looked very attractive this pm. However these will need the POG to go higher from here. I always feel more comfortable trading gold directly rather than through the ASX gold producers. 

*IMD*: Sold at open (0.595). price dropped to SPP price of 0.55 then demand pushed it back up to the open, quite bullish for the SPP. Being eligible for the SPP at 0.55 looks worth something at this early stage. Any profits earned through the SPP won't hit this account.


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## grah33

HI Peter, everyone
thank you once again for teaching us (peter). i'm still following.  i'm hoping to follow it more frequently rather than less frequently with longer reading times...  my concern is a little old, relating to news, that i 'd like to mention.  as you mentioned peter APO was a bit of a dud after news came out....  even worse if someone had a more tighter stop like 2 atr.  just wondering do you ever read bad news on the day and decide to put in a  sell order before the market opens?  i'm just thinking if any disastrous /fatal news comes out, whether you think about doing that as leaving your stop out of the  market might take you to nought if it's really bad....  sorry for my strange questioning.  i don't really even know what i'm asking  


most of my recent wins (the bigger wins ) came from the news  (jbh, web, bap, alu gave some terrific windfalls i got onto,  I'm on test position sizes still so to increase a little i just took out more positions to keep it balanced hence landed several windfalls as i had many shares going, my brokerage is always a percentage so it's still relatively small, great way to transition with position sizes....) some of them i was up about 1R roughly b4 news came out, so something like APO would have still hurt me.  perhaps even 2 weeks away from a news event for a trend trader might be too soon but u seem to not think so? i don't know. i take it if price is between entry and isl and news is coming out you might exit at e.g. -1/2R. interesting... thanks again


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## peter2

Trading update: new trade

*AMA*: Bought today at 1.055, iSL 1.00. 
The best entry was the BO marked earlier. We missed it, so the next best entry is to wait for a higher low, which has happened. While our buy looks OK on this chart, we bought just below the all time high (ATH) noted on the chart. We'd anticipate some resistance there and I noticed the large sell order in the market at 1.06. If this supply is pulled, price can go higher quickly. 

Nice BO's in EDE and CDD today. There are always a few opportunities, but getting further demand is the issue.


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## tech/a

RSG Boom!
Had this from 79c
Bought more at $1.98 close to your buy while I was away.
Nice when it all goes to plan.


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## peter2

EOW 80 update:   ASX Momentum Portfolio  *+38.3%*  ( 76% invested in 5 trades ) 
Benchmark Index  SPAX2F15 (incl divs and franking credits):  *-1.9%* (past 80 wk)

The index ends down for the third consecutive week. Our daily market filter has been down for two weeks but today's low close switched the weekly filter to down as well. This is our warning indicator to protect our portfolio by closing losing trades and raising some exit stops. However on this occasion we don't need to do much at all. We've closed trades earlier as their exits were triggered and we haven't start too many new trades as the market was moving down. 

Our portfolio held its value thanks to our trade in BOL. This open result is currently at +5.6R and we've moved our exit stop a little higher. The BOL trade is doing so well because the size of the initial risk was reasonably low (0.006) and once price went higher than 0.10 the minimum price step changes from 0.001 to 0.005. This is almost 1R and makes the trade result very volatile.  We've removed our sell order at 0.145 and will just let it go. If price moves higher quickly we'll watch it closely.

If you weren't aware of this anomaly at the 0.10 level then this should be worth considering. There are some traders who specialise in trading stocks around this price level. 

_Outlook_: Our market risk filter has switched to WD DD so we'll wait it out. When the market turns up it will provide plenty of setups. We'll probably see the setups before the index turns so don't take your eyes off the market.


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## debtfree

*Good Morning Peter,* 

With our XAO Market Risk filter switching to WD DD and in view of the overnight market losing +2%, should we have our Total Portfolio Heat up as high as 6%? With this in mind, have your thoughts changed since yesterday or are you still happy to sit tight in the thought that they are strong stocks at the moment? I know in this style of trading you have stated we need to buy quickly and sell quickly, so I just wanted to know your thoughts if this is a time to react. 

Thanks ... debtfree


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## peter2

Wow, what a night in the US. The overnight damage has already been done and the ASX will open much lower than it closed. Selling immediately will be more of a panic reaction rather than a pre-planned response. 

Comments on our open trades. 
*BOL*: has open heat of 2% (1/3 of our total heat). No doubt this is were most of our portfolio heat is. I think this is fair as it allows price to oscillate between 0.11 and 0.13. 
*TPP*: Price is near all time highs and we are allowing price to oscillate between 0.26 and 0.30. That's reasonable.
*RSG*: Gold producer. I am surprised that gold didn't rally with the huge fall in stock indicies. Maybe it will next week. Nothing to do here.
*IMF*: Hasn't gone higher immediately and is one we could sell if it closes < 1.70 Monday.
*AMA*: Another one near all time highs and it's prudent to let price oscillate between our buy price and the ATH. 

In summary, we're not going to sell because of a big overnight dump in the US markets. We'll wait for our EOD exit triggers for the trades. 

_Outlook_: You must know that this time of the year the markets are generally weaker. In Aus the banks pay their divs and in the US they get a little troppo after their summer holidays. This US dip seems a self-fulfilling panic move. When this dip is done we are going to see plenty of buying setups and this dip will create more room between current prices and their old highs (ideal pull-back setups). 

The overnight move means we're probably too late to short something (espec the index). The reasonable time to short was last week after the lower high. I did consider it but I haven't committed myself to the diversification of this trading thread just yet.


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## debtfree

*Peter2:* Thanks for your response and breakdown of all trades. I remember about a year ago we were roughly in the same position and a bad night was had in the USA the night before and you handled it much the same way. As you say be consistent in applying your trading plan. 

I noticed your page out of your SF Trading Plan describing the XAO Trend determining Portfolio Heat. I know it's longer time-frame (Monthly and Weekly). Why is it that when your SF XAO Trend is MD & WD the Portfolio Heat is <1% whereas in this shorter timeframe (WD & DD) we carry a higher Portfolio Heat? Is the reason with the longer SF Trading Plan the stops are a lot further away and can be reduced quite a bit when needed whereas the shorter timeframe the stops are closer and there is not much we can do about it?

Cheers ... debtfree


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## peter2

My SF tried to use the mthly/wkly as a trend filter but I was never comfortable with the larger loss of open profits. Total portfolio heat has always been limited to 10% as this is the DD I wish to avoid. That 1% number must have been a misprint, should be 10% total and 1% per trade. 
Yes, if the exits are further away we can exit earlier to reduce downside exposure. 

One big down day in the US mkt is not a reason for panic. IF I thought my portfolio heat was too much then yes I'd reduce it. The key to being in control is never let the heat get too high, so that only one down day causes a panic response.


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## skc

peter2 said:


> *RSG*: Gold producer. I am surprised that gold didn't rally with the huge fall in stock indicies. Maybe it will next week. Nothing to do here.




FWIW, most goldies have broken down much more decisively than RSG. Apparently RSG is/will be included in some global Gold ETF so perhaps there's some passive demand. Whilst I am not macro-ly bearish gold... most stocks in the sector tell a different story. 

Not trying to influence your trading... looking across the sector sometimes helps and sometimes hinders. But being a pairs trader I often look at significant outperformance as having a higher chance of mean reversing.


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## debtfree

peter2 said:


> My SF tried to use the mthly/wkly as a trend filter but I was never comfortable with the larger loss of open profits. Total portfolio heat has always been limited to 10% as this is the DD I wish to avoid. That 1% number must have been a misprint, should be 10% total and 1% per trade.
> Yes, if the exits are further away we can exit earlier to reduce downside exposure.
> 
> One big down day in the US mkt is not a reason for panic. IF I thought my portfolio heat was too much then yes I'd reduce it. The key to being in control is never let the heat get too high, so that only one down day causes a panic response.




Makes sense to me now Peter, thanks for your reply ... debtfree


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## debtfree

*Peter:* Just looking at TPP at the moment and I'd dare say you would have to be a little concerned with it  now after finishing below .26 as it looks like it's lost all momentum now. Would this be your thoughts?

Cheers ... debtfree


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## peter2

Trading update:  exit triggered

*TPP*: The exit has been triggered for this portfolio and we'll sell on the open. 
From a medium term perspective: The pull-back in price is minor and has been done on decreasing volume in a falling market. This one is worth monitoring for another trade when price trades >0.30 (asc tri pattern) or if price bounces off 0.20 (abc corrective pattern).

This trade result will be about break-even. Should we give it more time thinking it's a reasonable medium term prospect? NO. If we do that, then we won't be trading our strategy of short term momentum. We all fall into the trap of turning a short term trade into a longer term trade (or investment). I do it too many times, so I know you do it too.


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## debtfree

*Peter:* When you first started Capital at Risk in a Bull market was 6% and 4% in a Bear market. Now we have 5% in a Bull and I'm not quite sure what your limit is in a Bear market at the moment. I am interested in the fine tuning of this area and the reasons behind it so I know what to be aware of and the way you adjust to cater for the reasons if there is any. Is it simply the cost of brokerage that was $12 ($6 in & out) and then going up to $30 (in & out)? So brokerage was going to be a bigger factor and to overcome this make each trade slightly bigger, resulting in cutting down the number of trades and also cutting down  brokerage cost at the same time?

Thanks for the update on TPP ... debtfree


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## peter2

Sorry for your confusion about the capital risk limits. The difference between 4% and 6% is only two trades. The value of 5% shown in the EOW pic doesn't change as it's not linked to a market risk descriptor. 

Basically you don't have to worry about my application of the capital risk number if you're comfortable with the usual max DD's that accompanies momentum/trend trading strategies (approx 20%). If you want similar rewards with lower DD then you have to be more aggressive with exits and entries. 

My endeavours to be more aggressive focussed on the amount of my own capital that I'd put at risk rather than the open profits that were at risk. It became clear that I could reduce the DD with the inclusion of a market risk filter to guide when I risked my capital in the market. 

Every market risk filter is a lagging indicator and although it lowered the number of losses it caused me to miss many setups that triggered before the filter turned bullish. An off/on filter works nicely with large rallies, but works badly with small ones and markets that go sideways. I needed a risk more/less filter.

I monitored the capital risk number and used it with the market risk filter to indicate the appropriate number of trades to be started for the current market conditions. Sometimes the market conditions become unclear and thus the correct number of trades to be started is unclear. This is probably where the confusion appears. If you've undertood me so far, then you'd realise that it doesn't matter if the number is 4% or 6%. I use the number that feels right for the conditions. 

Before I had this cap risk number I had no problem getting out of trades because I always used the exit triggers. My problem was getting back in quickly when the market turned up. My participation  (% invested) lagged the market as my opinion of sentiment is a lagging indicator. Again not a problem if the rally is large enough, but deadly when the rally is small or the market goes sideways. The number (whether its 5% or 6%) is there to remind me to start more when I'm feeling bullish and the market turns up. The number also prevents me from starting too many trades when I get overly bullish. If I can't get into one or two good trades out of five tries, then starting more won't help. 

Think of 5% or 5 trades as a guide. If you prefer to use a lower amount of risk/trade (eg. 0.7%) then you can start more trades before hitting the 5% limit. 

This parameter and applying the guidlines I've outlined helps keep the max draw down to <10%. I don't believe one can reduce the max DD any less and still earn a reasonable reward (trading one system based on momentum or trend). 

I hope this explanation helps clear your confusion. 

ps: The increased brokerage hasn't influenced any trade management decision. I ignore it.


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## debtfree

Thanks Peter for your detailed response, that has certainly answered all my questions in regards to the Capital Risk Limits area plus a few extra details within your post has helped the clarity as well, appreciate it.

Cheers ... debtfree


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## Newt

peter2 said:


> If I can't get into one or two good trades out of five tries, then starting more won't help.




This bit should be gold plated and hung on the wall.

Even an experienced trader can't expect (or afford) to try and be right in almost every case.
But, its also wise to pay heed and reduce trading or size if you're not succeeding in hitching any rides at all....


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## peter2

Trading update: New trade

*RAP*: Bought today's BO-HR at 0.420, iSL at 0.36


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## peter2

EOW 81 update:   ASX Momentum Portfolio *+39.6%*  ( 77% invested in 5 trades )
Benchmark index : SPAX2F15 (incl. divs and franking credits)   *-2.0%*  (past 81wk)

The market bounced a little at the end of the week after going down hard Monday. One up day (today) doesn't change the down trend, but it's a start. Our portfolio gained a little thanks to price rises in IMF and AMA. 

_This weeks sells_: *TPP* (loss of brokerage only)
We may have sold this a little early and not given price a chance to test the BO that we bought. Market sentiment was quite bearish at the time and called for a little portfolio defence. I'm comfortable with that. We've got re-entry conditions in place should price kick up from here.

_This weeks buys_: *RAP*

_Outlook_: After ducking for cover on Mon I'm peering out from behind that cover and feeling a little bullish. Another up day and our daily trend will turn UP (Wkly DN). Enough for us to consider another trade or two next week as we've raised a few stops this week.  Late Sept/early Oct is no time to be over extended.


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## peter2

Trading update:  New trade

*EMC*: Bought today 0.845, iSL 0.72.  
Might have bought this a little early today, but can't ignore my optimism and the temptation.


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## peter2

*I think it's time to diversify our trading business*.  
This will lessen our reliance on a bullish ASX and increase our trading opportunities via the major world markets. 

Now that I've posted an end goal I want to get there. 

This thread will continue trading the ASX Momentum Portfolio exclusively. 

A new thread titled "*P2 Trade Book*" will journal trades in the major world markets using futures, forex and cfd financial products.


----------



## debtfree

Congratulations on your 1,000th post Peter but most importantly, Congratulations on the content of them. 

I look forward to the new Thread and will be following with great interest, see you over there as well.

Cheers ... debtfree


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## debtfree

peter2 said:


> _Outlook_: After ducking for cover on Mon I'm peering out from behind that cover and feeling a little bullish. *Another up day and our daily trend will turn UP*




After last Friday why would another up day turn the daily trend UP? 
I couldn't see the XAO going above a previous high.
I know you have a personal criteria to change the background color of your charts to green if bullish, was this criteria close to triggering?
OR
Was it because  price had gone above the 2ATR 10day line and changed your bars to Blue on your charts?

No big deal but just interested and thought it might get me into the bullish trend a little earlier.
*
Another question if I may Peter while I'm here:*

In your weekly wrap-up on Fridays you have a column in the middle of each trade that is colored with *SL*, *TS*, *BE*, *+*, *++*, *+++*
I can see the SL, TS & BE changes once you update the Current exit stop so no questions for these.

I know that the +, ++, +++ must also change with the updated Current exit stops but what do they mean or represent? I know and I can see that the Current exit stop level is now above the BE level and is in profit but does "+" mean the exit stop is now above 1 risk profit and "++" mean the exit stop is now above 2 risk profit and so on or does it represents a different level of profit? Naturally I do understand if this is a personal criteria for your own use.
I love the story it tells in 1 cell. 

Thanks for your time Peter ... debtfree


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## peter2

The daily bars turned blue when it closed above 5400 (> 2ATR off low). That was enough to turn my daily trend to UP, but the weekly is still down and it needs to do a lot more. Once the daily turns up, it's my reminder to think about starting one or two trades if the capital risk is low, but don't over do it. If I exit quickly then I must also enter quickly or I'll lag behind the market.  I don't chase price so it's important that I buy at the correct time. 

I view every dip as a buying opportunity, but I must wait for the daily trend to turn up for confirmation. Until the market gets above 5700, I'll be buying in the dips and selling at the old highs. 

Yes, you're correct regarding the "+" signs. They're markers. I order the list by the open risk. The winners float to the top.


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## peter2

Trading update:  New trade. Second attempt at a BO-HR.

*MYX*: Bought at 2.05 today, iSL is 1.90. 
This is our second BO attempt in MYX. The reason I have a second go is due to presence of the HL. 
OBV and TMF values are rising indicating accumulation.


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## debtfree

I appreciate the speedy and informative reply Peter, plenty to be aware of and nice of you to point it out.

Cheers ... debtfree


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## peter2

EOW 82 update:  ASX Momentum Portfolio  *+42.5%*  ( 102% invested in 7 trades )
Benchmark index:  SPAX2F15 (incl. divs and franking credits)  *-0.2%* (past 82wk)

The market continued higher this week and so did our portfolio which hit a new eow equity high (another DD mastered!). It's nice going through a dip in the market and not having to close many of our trades. It shows that we're in stocks that are in demand. 

_This weeks sells_: nil
_This weeks buys_: EMC, MYX

_Outlook_: We should be bullish after seven days with higher lows. It was good to see demand for the banks. 

_Note_: The closing prices of AMA, RSG have been adjusted for their divs. Yep, we earned the divs just like real investors. IMF is going XD (0.07) on Mon. That's why the TS is further back than it could be.

_Note 2_: I'm going to remove the red line that tracks the portfolio heat in the weekly chart. The heat values will be visible in the results header and of course they'll be monitored as usual. I'll be removing the heat line to include another line. The new line will show the combined performance of this ASX portfolio and the new P2 trade book.


----------



## peter2

Before the portfolio heat red-line leaves the weekly chart it's worth pointing out a few things. This line shows how we've managed the portfolio heat or downside exposure during the last 18 months (82wk). When the market went down, we reduced the heat. When the market went up, like now, the heat is allowed to get bigger. The heat waxes and wanes due to a consistent application of a plan. Without a plan or an indicator (like our market filter) to guide our actions we are easily misled by the market commentary and our emotions. 

Managing your overall risk is the most important aspect to profitable trading. Get this right and you must be profitable. Get it wrong and any edge you think you might have will disappear along with your capital. 

Looking at the chart. I can say, we did a good job overall. Sure there were plenty of mistakes, but the overall job was done to a high standard. 

I hope I've shown that portfolio risk management is not just about managing each trade. Every portfolio has its own risks that must be managed at the same time as each trade.

This chart shows each trade result in chronological order. 




I've got to repeat, that profitable trading/investing is all about managing the downside exposure within your personal risk tolerance. You must do this to a very high standard to be able to profit from the financial markets.


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## captain black

peter2 said:


> This chart shows each trade result in chronological order.
> 
> View attachment 68206




Very nice, well done


----------



## peter2

Trading update: 

*RSG*: (1.995) Insto only cap raising causes the price to fall (along with the falling POG). The SPP was at 1.96 and might provide some support, although that depends on the POG not falling further. We'll leave our exit trigger at 1.90, but we may sell soon regardless. We want to see immediate demand. 

*IMF*: Good demand today to immediately recover from XD. TS raised to 1.75. We are allowing the price to continue higher rather than taking an acceptable +2R profit. 
*EMC*: Raising our TS up to 0.79. This will allow price to test the BO level at 0.85. 
*MYX*: Still looks like accumulation and I'm happy to hold.
*RAP*: Not enough traded at our +2R price to exit. Waiting to see if the 0.50 level provides support. 
*BOL*: Exasperatingly low volume being traded, but the price stays at the recent high. Looks like the market needs some new info to move the price. 
*AMA*: Letting price consolidate at all time highs here. Our TS is now at BE.

Considered WTC, but it was too high priced for our remaining cash supply. 

Our capital risk is only 2.1%, so we can start another 1 or 2 trades with our remaining cash (~7.7K).
CLQ, FCT, SSM are interesting candidates.


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## peter2

Trading update:  New trades. Bought with limit orders placed overnight. 

*CLQ*: Bought BO of recent level at 0.62, iSL 0.53. 
This entry is not as good as the BO-HR at 0.50 earlier.

*SSM*: Bought BO-NH at 1.10, iSL 1.00. 
Bought on the back of the HL. 

I've bought both of these myself, but this portfolio didn't have enough cash for both unless I converted one of them to a cfd. As SSM has the highest daily volume I've made it the cfd with 25% margin. I prefer to include both rather than select one. I'm a lousy stock picker. 

This makes our portfolio fully invested and we'll have to be patient and see what happens next. 

ps: Didn't try to buy the third candidate (FCT) as I don't understand what they do. The chart looks great though.


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## peter2

EOW 83 update:  ASX Momentum Portfolio  *+41.9%*  ( 123% invested in 9 trades ) 
Benchmark index:  SPAX2F15 (incl. divs and franking credits)  *0.0%*   (past 83wk)

Our portfolio drifts sideways with the market. We're almost fully invested (1.7K left). Probably enough for another cfd trade if one leaps out at us next week. When the portfolio is fully invested it's easy to let it drift and wait for price to trigger a sell. I find it important to continue the daily and week-end processes (scans) to stay in touch with what's happening in the market.  There may be a better looking opportunity that we could switch to instead of being stuck in a trade going nowhere. 

_This weeks sells_: nil
_This weeks buys_: CLQ, SSM

RAP: In a trading halt that we can't do anything about until trading resumes. We can only hope the news is good. 

_Outlook_: Bullish, if that was the Sept dip.


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## peter2

Trading update:  RAP, RSG, EMC

*RAP*: After touching our +2R target (0.55) price has fallen a little on low volume. A trading halt is always a concern but there is nothing we can do other than be prepared for the halt to be lifted. RAP released some news that seemed like good news to me but the market had other ideas and sold off throughout the day.  We've now lost most of our profit in this trade and the upward price momentum is surely gone after today's sell-off. 

Time for us to close this trade. Sell next open. 

We'll be keeping an eye on this chart for a possible re-entry if price trades > 0.50 in the next week or two. 

*RSG*: (1.92) Price is very close to our exit trigger (1.90). 
We're going to sell this next open unless the price of gold goes up overnight. If the POG goes up overnight I'll let RSG have another day. 

*EMC*: After today's strong up day we'll raise our exit stop to BE (0.85).


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## VSntchr

Some great trades lately Peter; EMC very nice!

One that looks decent and on its way through today is *TGA*


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## peter2

Trading update:  *AMA* trade. 

Our entry is shown by the blue ellipse. It was a BO-NH setup following the BO-HR. We've raised our exit trigger as price went higher immediately.  Price has pulled back to near our trigger forcing us to think about selling at BE to protect our portfolio or letting it ride. 

We will sell this if it trades back at our exit trigger (1.05). Sell order is in the market. This disciplined action is a huge part of our edge. 




_Observation_:  This chart is a good example of what happens to us repeatedly. We get a little profit immediately and then the market turns down and we're back to where we entered. Losing traders will hang on, hoping that price will miraculously reverse and go up. We gave price plenty of time to go higher and remain higher, it hasn't. It's time for us to sell. 

In the context of the whole prior swing up from 0.90 to 1.15 this pullback is small (< 38% so far). We know pullbacks often test the prior BO or 50-62% levels so we can expect price to fall even further and still remain in an up trend. 

Our trade is now in difficulty (no profit) from this small pullback due to our late entry. Had we bought the BO-HR earlier we would have been able to consider taking a +2R profit or tolerate this pullback comfortably. Even though the setup and entry was according to our TP, it's important to realise that it's late relative to our preferred BO-HR setup. Late entries don't have the same reward potential as our preferred setups and it's acceptable to consider taking smaller +1R profits. Late entries will create more BE results also. If we don't accept these frequent BE results, we'll turn a profitable TP into a losing plan. 

If you realise that your entry is late, be prepared to accept a smaller profit and raise your exit stop to BE asap. 

Take your best setups every time you see them.


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## VSntchr

peter2 said:


> *If you realise that your entry is late, be prepared to accept a smaller profit* and raise your exit stop to BE asap.
> 
> Take your best setups every time you see them.



Great points. The late entries require more attention and may require a few more transactions due to scaling at lower R values (at least they do for me). The A+ setups are not only the most profitable, but also the most rare. The late entries (along with other strategies) can still be part of a solid plan as they allow the trader to hit a few singles while waiting for the home runs.


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## peter2

Yes, I wrote that post for both educational reasons and as a reminder to myself that the AMA trade should have been a nice single rather than hoping for a triple base hit. A couple of singles (+1R) plus a multiple base hit each month adds up to a nice return.


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## debtfree

peter2 said:


> Yes, I wrote that post for both educational reasons and as a reminder to myself that the AMA trade should have been a nice single rather than hoping for a triple base hit. A couple of singles (+1R) plus a multiple base hit each month adds up to a nice return.




Thanks Peter, the value and importance of this continued thread is once again displayed above ... as you've told me before it's a business *(yours)* and you need a detailed plan to direct your employee *(you)* on how to run this business and what to be aware of when it happens and if you come across a problem and it's not in the plan or spreadsheet or even your blog/diary put it in for the next time. So the *"reminder to myself"* above did not surprise me at all and just shows the commitment that we all should have to our trading plan.

Once again Peter thanks for the continued education and tips and also to VSntchr, I always appreciate your your thoughts and input very much as well.


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## VSntchr

While gold stocks don't like rising US rates...some other stocks do.
*CPU *has just made it's second BO:



*QBE *is another on the interest rate theme, although doesn't have a BO setup.


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## peter2

EOW 84 update:   ASX Momentum Portfolio  *+39.8%*  (100% invested in 6 trades )
Benchmark index:  SPAX2F15 (Incl divs and F Credits)  *+0.6%*  (past 84wk)

Our portfolio dropped a little as a few of our trades were sold off. 

_This weeks sells_: RAP (+0.4R), RSG (-0.4R), CLQ (-0.9R)
_This weeks buys_: nil

_Outlook_: Market filter has turned up to (WU DU) and we can start a few more trades since our cap risk is only 1.5%.


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## peter2

Trading update: 

*EMC*: We had a sell order in the market (placed days ago) at T2 (1.12) and this was actioned this morning on the open (1.14) after some news. An above average result of $1436 (+2.2R) is realised. 

*SSM*: This trade is another example of a "late" entry as we bought after the earlier BO-HR (at 0.86). We'll manage this one with a tight exit stop since it's now >+1R.  We'll place a sell order at T2 (1.31) in case of spike up. 

We have abundant cash after closing so many trades and we'll be looking to start more immediately. 

@Vsntchr: TGA nice one and I liked CPU as well.


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## peter2

Trading update:  New trades

*RXP*: Bought new high at 0.85, iSL at 0.78. 
Looks like a strong move up after consolidation. 

*TSN*: Bought at 0.026, iSL 0.023.  
Pre-empting the BO here, but I like the symmetry of the corrective move compared to the prior impulse move.


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## Rypieee

Hey Peter2,

What are your thoughts on SRG?

BTW Great thread, I am learning and benefiting a lot from this. Started investing/trading earlier this year and trend/BO trading has been my two strategies since starting.

Cheers,
Rypieee


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## peter2

Trading update:  Another new trade.

*RAP*: Bought after the BO of the 0.50 level (bought 0.505, iSL is 0.44 ).
We were ready for this after our recent exit. 

Did we exit our recent RAP trade too early? Maybe, maybe not. We'll know in a few weeks. 
We closed our trade in CLQ for the same reason (huge down bar) and it saved us money. The exit strategy saves us money and allows us to profit from the trades that don't pullback.


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## peter2

Thanks for the compliments Rypieee. Glad you've found some useful info here. 

If you've read both threads then you'll know that I'm a big fan of a written TP. When we write stuff we realise if we know what we're supposed to be writing about. If an idea is not clear in our heads then we will have difficulty writing about it. 

The TP for this thread describes all our setups and states our preferred setup (BO-HR) that gets us in at the start of a trend. Have a look at your TP. Does it describe your setups and do you have a favourite? 

Now, look at the chart of SRG. Has the price movement formed one of your setups? If so then you know what you should do. If not then you discard the chart or place it in a watch-list to keep an eye on it. 

Are you with me? If you've got your own TP, then what anyone else thinks doesn't matter. 

Thanks for your post and if you have any other Q's. Ask.


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## VSntchr

peter2 said:


> *When we write stuff we realise if we know what we're supposed to be writing abou*t.



Simple stuff with the maximum impact.


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## peter2

Trading update: New trade

*NSL*: Bought BO-NH at 0.039, iSL 0.032. 
Textbook small consolidation on low volume after impulse move up.


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## peter2

Trading update: New trade.

*CWY*: Bought BO-HR at 1.155, iSL is 1.07. 

Text book consolidation after impulsive move up. Higher lows in consolidation make it more tempting.


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## peter2

EOW 85 update:   ASX Momentum Portfolio  *+38.8%*  ( 110% invested in 8 trades ) 
Benchmark index: SPAX2F15  (Incl divs and  F credits)  *+0.0%*  (past 85wk)

Our portfolio of trades seems to be out of demand this week as the prices drifted lower on low volume. It's very hard to keep a short term equity trade book in the highest demand stocks all the time. We closed a few trades and started others to  revitalise our portfolio. 

_This weeks sells_: EMC (+2R), MYX (-0.9R), IMF-cfd (+1.5R with div)

MYX: Sold in this portfolio as it traded at our exit trigger (1.90) on two days. 
Personally I'm managing this trade using the weekly charts and my exit trigger is lower. 

IMF - Sold this one Friday as the price dropped significantly and the cash was required for a new opportunity. 

_This weeks buys_: RXP, TSN, RAP, NSL, CWY

A few TS's have been raised slightly on some trades with falling prices. This is minor defensive action as our portfolio seems out of favour atm. 

BOL: Seems to be lacking a pulse. We've placed a limit sell order itm at 0.130 for half our parcel. This will realise some profit and reduce our open risk in this trade if the order is filled.


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## peter2

Trading update:  New trade, some exits and a caution.

Our portfolio seems out of sync with what's moving up in the market. Yes, it's frustrating. We'll turnover our trades a little more frequently and see what happens. That means we'll raise our exit triggers a little more aggressively (NSL, CWY). This will see us selling more often for small losses until we get into a few sustained moves higher. 

*RAP*, *AMA*: Sold this morning as their exits were triggered. 

*BSE*: Bought today's BO-HR at 0.175, iSL is 0.145. 




_Note_: If BO's aren't getting us into the better swings then we'll look at our alternate pull-back setup (1st blue bar off a recent low in a weekly UP trend).

If you're trading these types of setups in the medium term like myself then we have to be patient. It's frustrating seeing our portfolio value going nowhere when there are so many stocks going higher each day. Don't fall into the temptation to try and trade shorter term unless you're a good trader. This thread is all about shorter term trading so it's appropriate for us to turnover trades in this thread in order to get into a better batch.


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## kid hustlr

peter2 said:


> Trading update:
> 
> Our portfolio seems out of sync with what's moving up in the market.




So does mine and I'm worried.


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## Porper

kid hustlr said:


> So does mine and I'm worried.




A lot of companies have taken a decent hit over the past couple of weeks, despite the XJO moving sideways.

More failed breakouts too. It's much more difficult to latch onto trends at the moment. A few good looking a-b-c corrections starting to offer opportunities though.


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## Joules MM1

peter2 said:


> Trading update: ... That means we'll raise our exit triggers a little more aggressively (NSL, CWY). This will see us selling more often for small losses until we get into a few sustained moves higher.




hello, Peter
...do you think you're seeing more offer or just less bid than you would expect to see for your portfolio?


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## peter2

Thanks for the comments. This portfolio is not the only one "out of sync" at the moment. Many of us trading ASX stocks will be having a frustrating time.  A sideways market has got to be the toughest conditions for a trader and we've got to wait it out. 

Most of the selling has been on low volume, what I'd describe as "profit taking" by the very short term traders. Prices have dropped due to lack of bids imo. Knowing this, makes it tempting to hold on through it, but every large loss starts small. 

We'll stick to our TP knowing that conditions will change. Increasing our portfolio heat with more open trades is not the way to go as the few winners may not pay for the extra losers.


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## peter2

Trading update:  New trade and finally closing an old one. 

*BOL*: Finally sold it for 0.125. Missed 0.13 and it took me three days to sell at 0.125. MD is very thin. 
This exit is discretionary and it realises a good result ($2884, +4.9R). 
Worth keeping an eye on when it trades at 0.13 and above. 

*A2M*: Bought late this arvo at 1.91, iSL 1.78. 
Late purchase (one day late) as I wanted to exit BOL trade first. Had to pay extra for late entry. 
We'll keep our exit stop close as we only want to be in trades that go higher quickly. 

Others I was watching: ZML (thin MD),  MGV (missed it)


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## peter2

EOW 86 update:   ASX Momentum Portfolio  *+41.0%*  ( 74% invested in six trades ) 
Benchmark index: SPAX2F15 (Incl. divs and F credits)  *-0.1%*  (past 86 wk)

Our portfolio gained a little this week (+2%) due to renewed demand for a few of our stocks. I'd like to assume that our actions to revitalise the portfolio has started to pay off, otherwise it's due to luck. 

_This weeks sells_: *RAP, AMA, BOL, TSN*

*TSN*: Sold on the open (21/10) as part of our revitalisation efforts. TSN was pre-empting a BO that didn't happen. The price was going nowhere and this made it suitable for sale. I hadn't noticed today's news release when I sold. 



The revitalisation process is about getting rid of the losers and trades going nowhere especially as this thread is all about trading in stocks that are going up (nobody mention KAR, please).

*RAP*: Prices rebounded higher after we sold due to our exit being triggered. Happens often and we are not concerned by this. 

_This weeks buys_:  *A2M*

_Note_: You'll notice that realising the BOL profits has lowered the portfolio heat significantly. Closing losers and raising some exit stops has also helped. The capital risk parameter is now well below our 5% limit and this gives us permission to start more trades next week. 

_Is it just me or can you see an ascending triangle pattern in our portfolio performance chart. This has got to go higher. _


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## peter2

Trading update:  

*RXP*: Traded above our +2R sell limit. Trade closed at +2R (+$1320). 

This above average result is consistent with our short term trading style. 
Personally I'll continue to hold RXP as my exit stop is at BE and the trend looks strong. 

Looking for more setups this afternoon.


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## peter2

Trading update:  Something different, a reversal.

*WBA*: Bought today at 1.195, iSL is 1.14. 
This appeared in yesterday's 10d BO scan and I waited to see if there was any follow up buying. I'd have to call this setup a reversal and we're using the 1st blue bar as the entry.



_PS: Please don't tell craft, he may get excited._


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## peter2

Trading update: New break-out buy.

*FMG*: Bought today's BO at 5.25, iSL placed at 4.95.
Classic ascending triangle pattern with a target near 6.00. This provides an acceptable RR.


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## peter2

Trading update:  Closed trade.

*NSL*: Price has reversed after the recent break-out. Sold today at 0.034 for a loss (-0.7R, -$478).


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## jjbinks

peter2 said:


> Trading update: New break-out buy.
> 
> *FMG*: Bought today's BO at 5.25, iSL placed at 4.95.
> Classic ascending triangle pattern with a target near 6.00. This provides an acceptable RR.
> 
> View attachment 68545




Hi peter

Been reading your thread with interest. Trying to keep up.

Would you be able to explain how you worked out the target of $6. 

THanks

Jubba


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## peter2

Ascending triangle target is calculated by adding the height of the triangle to the break-out level. In this chart of *FMG* that is 0.86 + 5.20 = 6.06 and I've rounded it to 6.00. 

It doesn't mean that price will get there but it's a possibility. 




Well Jubba, I hope you continue to enjoy the thread and have learned the importance of having a written trading plan.


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## peter2

EOW 87 update:  ASX Momentum portfolio *+40.0%*   ( 83% invested in 5 trades )
Benchmark Index: SPAX2F15 (incl divs and F credits)  *-2.8%*    (past 87wks) 

It was an ugly three days to end the week. The market fell 2.6% this week and our portfolio only -1%. This shows the value of getting into stocks in demand as they tend to fall less than the general market. Our actions to revitalise our portfolio probably saved us a little. The most valuable aspect was taking profits when they were there (those +2R results). We didn't grab all the profits (the +1Rs) and we lost those this week. 

While I'm pleased with the performance of this portfolio it's worth mentioning that other portfolios under my management didn't hold their value nearly as well this week. This acknowledges the importance of luck in the short term. If your portfolio was smashed this week then you were either unlucky or you ignored the early warning indications last week. I'll post more about this later.

_This weeks sells_: *RXP (+2R), NSL (-0.7R), A2M (-0.6R)*

_This weeks buys_: *WBA, FMG*

_Outlook_: The last 3 day falls took me by surprise. I was getting a little bullish at the start of the week. Doesn't it change quickly. Where to now? I have no idea and I'm pretty pleased that I don't have to know. The market risk is high, so we'll take it easy and manage the open trades that we have. Our portfolio heat is low (3.3%). Prices on a few of our trades bounced of their exit triggers and if prices go back down we'll close them. 

*A2M*: Bounced off its TS, but then went back down to it. Closed next open (Fri).


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## peter2

This was an interesting week because it's these types of weeks that test short term traders. Let's review the past two weeks.  Reminder: We use the XAO chart to define market risk. 




14th Oct:  I remarked that our portfolio seems out of demand as many of our trades were drifting lower on low volume. We closed a few trades to grab profits  (+2R, -0.9R, +1.5R) and started others to revitalise our portfolio.

*[#1]* 17th Oct.  1st red bar indicates that market has moved >2 ATR(21) from recent high. This is our early warning that the risk of further market falls is rising. We didn't do anything on that day because we were already aware that our portfolio was "out of sync". 

18th Oct: We raised a few exit triggers and closed a few trades as they were hit (small losses). 

21st Oct: EOW; Closed four trades during the week and started only one. We were trying to get into stocks that were in demand and this seemed to be working as our portfolio started to go higher. 

*[#2]*  24th Oct: Realised another +2R profit (RXP). 
XAO makes a double bottom and this makes it easy to draw a support line. A close below this line would turn the market risk filter to high for this threads porfolio risk filter.

*[#3]*  26th Oct. Market slammed lower and closed below our "line in the sand". This is our indication to take defensive action, close losing trades and reduce total risk (heat). 

On this occasion we didn't need to do anything as we had already noticed that our portfolio was "out of sync" with the market and had started to take action to get "in sync". Grabbing those few +2R results and closing trades going sideways in the prior week pre-empted any action that we would have had to do in response to this weeks change to high risk. 

I mentioned that another portfolio I managed got thumped this week. That portfolio is managed with a medium term outlook (weeks - months). One bad week will always whack this portfolio as the portfolio risk is much higher.  I'll start defensive action in this portfolio next week. 

If you are trading a mixture of time frames (daily, weekly) then make sure you manage each trade properly. Don't let three down days sabotage your management of your medium term trades.


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## tech/a

peter2 said:


> On this occasion we didn't need to do anything as we had already noticed that our portfolio was "out of sync" with the market and had started to take action to get "in sync". Grabbing those few +2R results and closing trades going sideways in the prior week pre-empted any action that we would have had to do in response to this weeks change to high risk.
> .




Excellent management Peter.
THIS is never seen let alone explained!


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## Wysiwyg

tech/a said:


> Excellent management Peter.
> THIS is never seen let alone explained!



Yes this 'warts and all' is rarely seen. Great long term conservative example. I like too.


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## peter2

> ... Prices on a few of our trades bounced of their exit triggers and if prices go back down we'll close them.




*SSM*: Price opened below our exit trigger and we had a little slippage selling at 1.10, which is our BE price. 
A small loss of commission and interest only. 

Today's price bar is interestingly bullish as the close is well above the low on above average volume. No official news, but there must have been something about. If I was an ASX short term trader then this would be a re-buy if it trades at 1.15 tomorrow with a small iSL.


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## peter2

Trading update:  The market continued lower and we had ample opportunity to close a few trades as price traded back to our exit triggers this afternoon. 

*CWY*: Price traded back down to our exit trigger (1.10) and we sold at this price (loss -0.7R, $435).
*FMG*: We didn't grab the +1R as we were letting price go higher. Price sold off today with the market and we sold at 5.20 for a small loss (-0.2R, $142). 

These break-outs started well but have been caught in the general market selling. Our strategy in this thread is to profit from the short term upwards price movement. 

Our remaining open trades are *BSE* and *WBA* which have held up OK so far. Our portfolio has quickly reverted to cash as the market falls. 

Note: Medium term (weekly), I have not sold these trades as my exit triggers are further away and had not been raised. It is difficult for me managing these examples using different methods. I see this portfolio going quickly to cash and preserving its value, while my own portfolio experiences larger falls. I have to remind myself that I'm not trading a short term strategy.


----------



## peter2

EOW 88 update:   ASX Momentum Portfolio  *+37.1%*  ( 33% invested in 2 trades ) 
Benchmark index:  SPAX2F15 (incl divs + f credits)   *-4.8%*  (past 88wks)

Our portfolio lost value this week as the market fell. 
As the selling continued we closed more trades and now have only two left open. 

_This weeks sells_: SSM (-0.05R), CWY (-0.7R), FMG (-0.2R) 
_
This weeks buys_: nil

_Outlook_: Our market filter is down and we've reduced our exposure in response to the falling market. Our current DD is only -3.8% which is insignificant as can be seen in the DD chart. If our remaining trades are closed the DD will be ~-5% which is within our comfort zone.


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## jjbinks

hello  p2

I've been testing mechanical systems and back testing gives you a reasonable idea of what draw downs to expect.

How do you know what level of draw down you can expect from semi discretionary system such as this? Is it via experience/ manual back testing?


cheers


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## peter2

You're familiar with the warning that historical results are not predictive of future performance.  Well it's correct. 

The red chart posted earlier shows the historical DDs that this portfolio has experienced since the start 88wks ago. I don't know what sort of DD distribution or max DD this portfolio will experience in the future. However I do know that we're managing the portfolio to avoid a 10% DD. This was one of the important goals stated right at the start. So far, the real-time risk management has been successfully keeping the max DD below that limit. 

From the knowledge you've learned testing mechanical systems you should know if this DD limit is within normal operating parameters for the type of strategy and trade risk we're using in this thread.


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## tech/a

Peter.
You have successfully minimised exposure and perfectly timed!

I'm interested in how you intend to proceed from here?


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## peter2

Our market filter is still showing high risk (WD DD). However last night's miraculous V reversal on the day following the US election result must be interpreted as bullish. 

Hence we'll look to start a few trades in stocks that have been more resilient than others over the past few days. However I don't want to chase the market. Looks like there will be many opening gaps today.


----------



## peter2

Trading update:  New trades.

*MLX*: Bought after yesterday's BO. Buy 1.55, iSL 1.45

*NSL*: (iron ore) Re-bought NSL at 0.040 this morning. iSL 0.035.  

FMG huge gap up shows the demand for iron ore remains strong.


----------



## peter2

Here's the chart for *MLX* showing the recent pullback in the weekly up trend. We've used the second BO-HR as our entry.  Some may see the H&S pattern with a target of 1.85. This target coincides with the old high creating an acceptable RR for us.


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## peter2

Reflections: 

Anything can happen in the markets. Everyone knows this but few really understand what it means. If anything can really happen at anytime then it's a priority to control our risk in every trade and our portfolio.

If anything can happen at any time then it's vital to have a structured process (trade plan). Our TP indicates what to do and when. This means selling when we'd rather see another day and it means buying at our indicated time and price not giving it another day just to be sure price is going up. 

The short term trading that we're doing in this thread is hard. I've mentioned this before. The mechanics of buying and selling is not hard. That's easy. The difficulty is applying our TP consistently when we are so easily influenced by our emotions and media. 

The market is a great teacher if you watch it and review your actions. Did you learn anything (about the markets) this week?


----------



## Rypieee

peter2 said:


> Reflections:
> 
> Anything can happen in the markets. Everyone knows this but few really understand what it means. If anything can really happen at anytime then it's a priority to control our risk in every trade and our portfolio.
> 
> If anything can happen at any time then it's vital to have a structured process (trade plan). Our TP indicates what to do and when. This means selling when we'd rather see another day and it means buying at our indicated time and price not giving it another day just to be sure price is going up.
> 
> The short term trading that we're doing in this thread is hard. I've mentioned this before. The mechanics of buying and selling is not hard. That's easy. The difficulty is applying our TP consistently when we are so easily influenced by our emotions and media.
> 
> The market is a great teacher if you watch it and review your actions. Did you learn anything (about the markets) this week?




Still fairly new to the game but this week I learnt that you had to be preemptive of volatile "indecisive" situations and match your portfolio accordingly like when you, P2, started to cut out certain positions in the lead up to the election. In fact, I was taught this lesson during Brexit and have changed my strategy accordingly to accommodate these sorts of events. I also realised that a single TP which is not adaptive is another way to throw money out of the window 

Great stuff P2!


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## peter2

Thanks for your comments Rypieee. I'd like to make it clear that the portfolio heat was reduced because the market was going down. We took profits and raised the exit stops. Both actions reduced the portfolio heat. There was no mention of the US election.

It's important that your adaptive indicator be completely objective to avoid emotional input. 



> 28th Oct: The market risk is high, so we'll take it easy and manage the open trades that we have. Our portfolio heat is low (3.3%)



. 


> 28th Oct: Displayed chart of XAO showing how the market risk went from low to high as the index fell.





> 4th Nov: Outlook: Our market filter is down and we've reduced our exposure in response to the falling market.




It's probably simpler to have several systems suited to different market conditions than try to make one system adapt to different conditions. Our psychological biases will probably sabotage the overall performance.


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## Rypieee

peter2 said:


> Thanks for your comments Rypieee. I'd like to make it clear that the portfolio heat was reduced because the market was going down. We took profits and raised the exit stops. Both actions reduced the portfolio heat. There was no mention of the US election.
> 
> It's important that your adaptive indicator be completely objective to avoid emotional input.
> 
> .
> 
> 
> 
> It's probably simpler to have several systems suited to different market conditions than try to make one system adapt to different conditions. Our psychological biases will probably sabotage the overall performance.




So many can judge market risk through different ways but you do so with the XAO? Technical bullish/bearish signals from the XAO charts would determine your stance on the market?


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## peter2

EOW 89 update:  ASX Momentum Portfolio  *+39.0%*  ( 62% invested in 4 trades )
Benchmark index: SPAX2F15 (Incl. divs and f credits)  *-0.9%*  (past 89 wk)

What a week! Enormous volatility in an amazing 24hr covering the US election result. The index has ended +3.5% and our portfolio +2%. We couldn't match the index gains as we only had two open positions. However we couldn't lose much if the market fell. A good defence is a huge part of our edge. 

_This weeks sells_: nil
_This weeks buys_:  MLX, NSL

_Outlook_: Weekly DOWN, daily UP after the miraculous rebound. This indicates that we can start a few trades but to not go overboard. We started two and will add to them next week if we can keep the portfolio heat at a comfortable level for the indicated market risk.  The hottest sectors are coal, iron ore, copper and now steel.


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## peter2

Trading update:  Another one bites the dust.

*MLX*: Sold at our initial stop loss (1.45) after price opened gap down.  We take the loss (-1R). 

This is now our sixth consecutive loss (only -3.3R though) during the past three weeks. Our open trades are +2.7R, so no real damage to our portfolio value during this volatile period. 

We're going to place two sell limit orders at +2R in the market for our trades in *BSE* and *NSL* in case of spikes.


----------



## peter2

I remarked some time ago that I would push this thread with more trades in order to get to our end goal faster.  We increased our trading setups (adding pullbacks and reversals) to take advantage of more opportunities. However trading more of the same style doesn't always produce more profit. We are dependent on the current market conditions and when they are volatile and trading sideways, more trades aren't going to help us. 

Back at the eighteen month review, skc, made a few suggestions that are worth considering in the current environment. 

One of his suggestions was to trade price jumps after good fundamental moves. Skc has shown his prowess in this style before (ancient thread, "lost in time" but worth looking for). Short term momentum trading is what this thread does.  We've shown that we've got the skills to do this, but we need to be prepared in order to do it properly.

This momentum phenomenon is not only restricted to individual stocks but can be applied to sectors. eg. Since the US election, bank stocks have rallied hard. These sorts of rallies tend to last a few days to a week, but they are high probability. A trade like buying CBA after the election result is known, at 74 (iSL at 72.5) and selling at 77 four days later for a +2R result is our sort of cfd-trade. Other banks like BEN, BOQ and NAB have also rallied hard. 

We need a process to find the right stocks/sectors to trade. We don't have to be sitting at the monitor all day like the pro's. We can do this EOD and find what the pro's have bought and join in at the next open. 

This is another long only trading style, but includes a little fundamental commonsense. We're going the call this trading style "News" trading to differentiate it from our existing long only chart trading style. 

I'd like a better name so that we take ownership of this trading style. "Chili" Trading , because we're trading hot stuff.  
Any suggestions? 

*TO DO*: Create a process to find the stocks we want to trade. Modify our trade management to grab quick profits and use tight exit stops.


----------



## peter2

IMO the ASX market will continue to trade sideways until interest rates rise. Until then, trading ASX stocks long only will continue to be tricky. 

Another one of skc's suggestions to be considered.

"Look for short setups." I think it's time to do something about this. This will require another TP with the setups outlined and some modifications to trade management. 

I've mentioned the benefits of including some short selling to our trading business. However knowing this, shorting is not something I've done regularly.  It's time for another personal challenge. Avoiding stocks/sectors going down is a lost opportunity. Could we have earned some profit by shorting the REITs sector while going long the materials sector? 

*TO DO*: Create a process to find the stocks we want to short sell. Modify our trade management to grab quick profits and use tight exit stops. 

*Well that's a lot to consider*. We need a TP for the news trading and another to guide our short selling activities.

Please post your comments. Is this all to much? Is this an "about time" moment for you? 
After all, this is an educational thread.


----------



## skc

peter2 said:


> *TO DO*: Create a process to find the stocks we want to short sell. Modify our trade management to grab quick profits and use tight exit stops.
> 
> *Well that's a lot to consider*. We need a TP for the news trading and another to guide our short selling activities.
> 
> Please post your comments. Is this all to much? Is this an "about time" moment for you?
> After all, this is an educational thread.




Scan your charts upside-down...


----------



## VSntchr

peter2 said:


> I'd like a better name so that we take ownership of this trading style. "Chili" Trading , because we're trading hot stuff.
> Any suggestions?



As these types of trades are already up, or gapping up in pre-market they are already "in the money" for longs. I do alot of this type of trading and my code is MT for "Money Trade". I think I may have borrowes this from Mike Bella in "One Good Trade".


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## Lone Wolf

peter2 said:


> Please post your comments. Is this all to much? Is this an "about time" moment for you?
> After all, this is an educational thread.




I would certainly like to see some expansion to allow for more opportunities in different market conditions. Who knows what the world has in store, we could find a number of years where conditions are difficult for long only systems.

I wouldn't worry about it being "all too much". You do a good job of identifying why each trade was taken, so anyone who isn't interested in short or "chili" trades won't get confused by their addition.


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## grah33

the other option is forex - can go both long and short, and it's more liquid.  although i just hate the prospect of getting caught in an unlikely   disastrous flash crash situation (zero account balance is tolerable, but a debt would be very bad for me, but most people wouldn't be too concerned about that...)

it's a pity the market has been down. hope my countless hours learning share trading wasn't a waste of time.  i never knew i was going to actually need money until much later on...


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## peter2

EOW 90 update: ASX Momentum Portfolio *+38.3%* ( 44% invested in 3 trades )
Benchmark index: SPAX2F15 (Incl. divs and f credits) *-0.7%* (past 90 wk)

The market pauses as it waits for more concrete information from the US president-elect. The USD is about the only market moving atm.  We have to be patient. Our open trades are all showing some profit and we can stick with them a little longer in order to let them get bigger. 

_This weeks sells_: *MLX* (-$680, -1R) This one didn't go higher and we're out. 
_This weeks buys_:  nil

_Outlook_: I posted the comment that it feels like we're flogging a dead bourse. It's easy to lose focus and ignore the market while waiting for it to start moving again. Force yourself to do the scans every day. A good trade can start at any time, but they can also start before the market moves.


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## peter2

Trading update:  

Our XAO index is looking bullish with the daily trend clearly up. The weekly trend remains down but it's close to changing. A strong close >5500 would satisfy me. I can also place a clear trigger line at 5350 that marks the bullish/bearish trigger. 

This indicates that it's time for us to start more trades as we've only got a capital risk of 1% and total heat of 2.5%. We should start at least two trades soon. 

Scanning the charts using the 10d BO scan, 1st blue bar scan and reviewing the watch lists that I maintain each weekend. I'll even check out tech/a charts to see if he has something we can use. 




ps: I hope you can understand the process. Our portfolio heat has been low due to the uncertain conditions. Now the conditions look better (according to our market risk filter), we should start more trades.


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## peter2

Trading update:  New trade.

*GXY*: Bought today's BO at 0.380, iSL placed at 0.33. 
This chart is appearing more bullish with the higher lows and the moving averages turning green. 
I also notice other Li stocks have bullish bars.


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## peter2

Trading update: New trade

*CIM-cfd*:  Bid 30.90 at open, bought at 30.84. iSL placed at 29.50. 
A similar chart to GXY, so I'm biased. Price looks like its busting to go higher and this pattern provides an acceptable RR. 

I've used cfds in this trade hoping that it's a quickie (<10d) to conserve cash for other trades.


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## peter2

_mea culpa_: Didn't place a bid for *ALC* this morning as I bid for others and watched their opening auctions. 

This is one of tech/a charts that I liked. Cheers to the duck. 

I've another trade at the close (if I can get set).


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## peter2

Trading update:  New trade

*IBG*: Bought earlier today at 0.096, iSL is 0.085.

If we don't buy the initial BO-HR, then our next best entry is after the first test of that BO level. This chart shows our preferred setup, the BO-HR. Then there is a small retest of that level and the additional demand has pushed the price back to a new high. This new setup is a BO-NH and we can place our initial SL below the higher low. 

There are a number of charts showing this first consolidation pattern,which is a reasonable RR setup for us to use as an entry into the new trend.


----------



## peter2

EOW 91 update: ASX Momentum Portfolio *+38.7%* ( 91% invested in 6 trades )
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+2.0%* (past 91wk)

A rather bullish week for the ASX, rising 2.6%. Our portfolio maintained it's value but did not rise with the market. The index went higher due to demand for the banks and the large cap BHP and RIO. We attempted to get into that demand for the large caps with our trade in CIM, but it appears we'll have to be patient. This bullish sentiment will flow through to the medium/small caps eventually.

_This weeks sells_: nil
_This weeks buys_: *GXY, CIM, IBG*

_Outlook_: The close >5500 (XAO) is bullish and I anticipate that the bullish sentiment will flow through to the medium/small caps and our portfolio soon. This portfolio has demonstrated a good defence when it was indicated, now we must show a quick offence when conditions turn bullish. Our capital risk is 3.6% (limit of 5%) and there is ample cash for a couple more trades.


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## peter2

About five weeks ago I posted five charts that showed bullish setups that were consistent with a previously posted weekly TP. 
(Sorry, these posts were placed on a customer only forum and won't be reproduced here.)

These five trades that I used for demo purposes have progressed in such a way that they now perfectly represent the fact that trading/investing is an exercise in probability.  The current position of these five trades show an average distribution of expected results.  Overall these five trades show a profit (+0.8R). Individually they're a mixed bag. We see a couple of winning trades, a couple of break-even trades and one losing trade. 




It's hard developing a mindset that accepts and allows us to act in a probabilistic environment like the financial markets. We spend too much time trying to find the next winning trade, rather than an opportunity where the probability seems to be in our favour. 

IMO equity traders don't do enough trades to create the correct probabilistic mindset. Even in this thread we're only doing three trades per fortnight.  That's not enough to stop us obsessing over each buying opportunity. Medium and longer term traders/investors do much less.

I need to constantly remind myself and you that;
1. Anything can happen after we buy. 
2. We don't need to know what is going to happen next in order to make money. 

[Classic reference: Mark Douglas - Trading in the Zone] 

That's why we've started three trades this week and will start another two next week. I know that we'll pick a loser, a couple of break-evens and maybe a couple of winners that will help our portfolio grow.


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## lindsayf

Good stuff P
So very the case


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## Trendnomics

peter2 said:


> IMO equity traders don't do enough trades to create the correct probabilistic mindset. Even in this thread we're only doing three trades per fortnight.  That's not enough to stop us obsessing over each buying opportunity. Medium and longer term traders/investors do much less.
> 
> I need to constantly remind myself and you that;
> 1. Anything can happen after we buy.
> 2. We don't need to know what is going to happen next in order to make money.




I fully agree. Hence, the reason why I don't apply an index filter to my trading and why my primary objective is to remain fully invested (as permitted by the available trends).


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## peter2

Trading update:  New trade.

*DTL*: Bought today's BO-NH at 1.72, iSL 1.60.
I like the latest BO of the small consolidation so soon after the BO-HR. 
_Caution_: Low volume and thin MD.


----------



## peter2

_Portfolio risk management_: 

After starting the latest trade (DTL) our portfolio capital risk is 4.7% (limit 5%). 

This risk limit is to prevent us from starting too many trades at the same time. The reason is that we don't know what's going to happen next and we're trying to prevent a large draw down. We have enough cash for another trade and our market filter is bullish so how can we start another when we're close to our limit. 

The answer is simple, reduce the open risk by raising some exit stops. If none of our open trades have improved then of course we won't be able to reduce the risk.

WBA: Today's price spike up is bullish so we can raise our TS to 1.18. (reduces cap risk by 0.5%)
GXY: Price went higher today and we can raise our exit stop to 0.35.  (reduces cap risk by 0.3%)

These minor adjustments lower the cap risk number to 3.9% and allow us to start another trade. 

Just to be clear. We're not raising the exit stops to start another trade. We're raising these TS's as prices rise to lower the initial risk of each trade. Good risk management of each trade allows us to safely establish our portfolio.


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## jjbinks

peter2 said:


> _Portfolio risk management_:
> 
> 
> Just to be clear. We're not raising the exit stops to start another trade. We're raising these TS's as prices rise to lower the initial risk of each trade. Good risk management of each trade allows us to safely establish our portfolio.




But by lowering the initial risk you total capital risk goes down so you coud make an additional trade if desired right?


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## peter2

Yes if we altered our initial risk per trade to 0.5%, then we could start two, instead of 1 x 1%.

Varying the trade risk is not a good idea. It assumes that we know which trade will work out well from those that don't. 

A medium/longer term trader may divide an amount to be risked across a sector or commodity to increase probability of getting into the better/best trade in that sector. 

Remember that these sorts of variations in risk management are designed to reduce DD when the normal DD for the strategy is too much to handle. If you can tolerate 20-25% DD then manage the trend trading strategy with weekly charts or wider exit stops (like trendnomics does in his thread) to get most of the medium term moves.


----------



## debtfree

Hi Peter,

Were you tempted to lock in profits of 4R on WBA when it hit 1.415 or was there not enough volume?

Sorry about being missing of late but still following for sure.

Cheers ... Debtfree


----------



## peter2

Trading update:  a few trades need to be managed.

*WBA*:  Our +4R target is a little higher to account for brokerage ($30rt). Price came close until a little supply hit the market forcing prices to fall back to our +3R price.  This trade in *WBA* was closed with an average price of 1.37 (+3R). 

_Note_: *WBA* was one of the few reversal setups that we have traded. We bought as price moved off a higher low on the weekly chart. This was not a BO setup even though we found it with a 10d BO scan, but rather a buy off support. We had to be patient and wait a month for further significant demand to appear. 

The main reason for buying into possible reversals is the opportunity to get a better than average winning trade. When *WBA* closed at 1.35 yesterday this was higher than our +2R target and a little higher than the July16 high.  A +2R result is above average, but we waited one more day (today) to see what happened. Getting +3R for this trade meets our aim for a better than average result from this reversal setup. 

[I've not sold closed my medium term trade in *WBA* as the latest demand is an indicator that higher prices are probable. This maybe sooner or much later. Who knows.] 

Steel and it's related commodity prices fell overnight. This created a little panic selling from the short term momentum traders today. 

*NSL*: We'll sell at tomorrow's open which should be close to our entry price. 
*IBG*: Looked like we were going to hit +2R quickly, but not to be. We'll sell at tomorrow's open which should be close to our entry price. 

*BSE*: Moving our exit trigger up to 0.19. If 0.20 isn't support, we'll sell.
*CIM*-cfd: Our exit trigger remains below the bar before the gap (30.50).
*DTL*: Looks like this BO has failed immediately. Give this another day for demand to reappear as price is above our iSL and the last BO-HR. This always gets tricky when the MD is as low as it is in DTL now. 

These trade managements are due to the individual price movements rather than any concerns about the market. Our market filter remains bullish, WU DU. 

[Now I must collate the EOM yearly comp details. Only one month left. ]


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## kid hustlr

I find the comparisons between this thread the VOC thread very interesting. I honestly think both side will make money in the end and I really respect the (good) fundamental guys on this site but boy oh boy the risk management in this thread is really highlighted.


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## tech/a

kid hustlr said:


> I find the comparisons between this thread the VOC thread very interesting. I honestly think both side will make money in the end and I really respect the (good) fundamental guys on this site but boy oh boy the risk management in this thread is really highlighted.




As with any business/financial opportunity.

I've never seen risk management in any business areana explained and implemented in 
As much detail as here.
A great deal can be taken from Peters lead --- in many areas.


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## Boggo

peter2 said:


> Trading update:  *a few trades need to be managed.*




And there is the clue, trade management.



kid hustlr said:


> I find the comparisons between this thread the VOC thread very interesting. I honestly think both side will make money in the end and I really respect the (good) fundamental guys on this site *but boy oh boy the risk management in this thread is really highlighted*.






tech/a said:


> As with any business/financial opportunity.
> 
> *I've never seen risk management in any business areana explained and implemented in
> As much detail as here.*
> A great deal can be taken from Peters lead --- in many areas.




Excellent thread and excellent results as a result of dealing directly with and managing reality rather than pages of theory.

Hat off to you Peter2.


----------



## tech/a

Boggo said:


> And there is the clue, trade management.
> 
> 
> 
> 
> 
> Excellent thread and excellent results as a result of dealing directly with and managing reality rather than pages of theory.
> 
> Hat off to you Peter2.




Even so you can't manage your way out of a flawed trading plan.


----------



## peter2

EOW 92 update: ASX Momentum Portfolio *+43.3%* ( 59% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+0.8%* (past 92wk)

The index lost 1% this week while our portfolio increased by 4.6% and hit a new EOW equity high. :dance:
If you're wondering how that happened. It even surprised me. It seems our trade and portfolio management is having a good period at the moment. WBA bounced off it lows and we grabbed the 3R profit. Ka-ching. We closed our trades in NSL and IBG for small profits as their prices dropped. GXY rose faster than DTL fell while our other trades held on. The portfolio had more winners than losers this week. 

_This weeks sells_: WBA (+3R), NSL (+0.3R), IBG (+0.1R)
_This weeks buys_: DTL

New equity highs are worth celebrating as all portfolios spend most of their time in a draw down. This last DD has taken 10 weeks to overcome. Our longest DD lasted 33 weeks. 

_Outlook_: Our market filter remains bullish. Our cap risk is low (only 1.2%) and indicates that we should start a few more trades next week.


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## peter2

Trading update: What goes up one week can go down the next. 

*DTL*: Trade closed today at an average price of 1.57 (-1.2R). This includes slippage due to the low market depth. 

*GXY*: Trade closed today at 0.45 (+1.3R) after getting close to our T2 target last week and falling today. 

The profit from GXY offsets the DTL loss. The portfolio loses a little open profit on a down day, but that's normal. Closing these two trades reduces our portfolio heat on a bearish day in case of further falls. We can always re-buy if prices go up. 

*CIM*: Opened below our exit trigger this morning and went higher as I was getting ready to sell it. Still open but we'll close it if price trades back at 30.50 or below tomorrow. Remains open.

*BSE*: Remains open.


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## peter2

Trading update:  

*CIM*: Trade closed as it traded down to our exit trigger for the second time. We accept the small loss (-0.3R) as price hasn't continued higher. The chart remains bullish but requires a much larger leash than this thread uses. 

*GXY*: We sold this two days ago when the market appeared bearish. Today the market seems bullish and we re-bought as price moved up. Bought 0.465, iSL 0.42, but we will sell if price falls below 0.43.  
Lithium stocks seem to be quite strong and I'm trying to take advantage of this with the trade in GXY. 
PLS and SYA also look good.




_Comment_: We try to be proactive by following our TP but every now and then the market causes us to react like we have with our actions in GXY. Recognise this and acknowledge that we're doing so in order to protect our portfolio. Re-read your TP and get back in control. 

Traders who get stuck reacting to the market gyrations soon lose hope, emotional control and a lot of money. All of them don't have a written plan to turn to.


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## peter2

EOW 93 update: ASX Momentum Portfolio *+42.1%* ( 29% invested in 2 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+3.0%* (past 93wk)

The market gained 2.1% this week and our portfolio lost a little as we closed trades. The gains in the market are due to the demand for the few large caps that dominate our indices. The mid cap sector that we mainly trade in has been a minefield. So far we've managed to avoid being blown up by any of the IEDs that have been released. Our turn will come. The mid cap index (XMD) has turned up, but the small cap and emerging company indices (XSO, XEC) haven't. 

[IED = Improvised Earnings Declaration]

_This weeks sells_: DTL (-1.2R), GXY (+1.3R), CIM (-0.3R)
_This weeks buys_: GXY re-bought

We tried to get into a large cap (CIM) but were shaken out by the volatility. That happens. 

_Outlook_: Our market filter remains bullish. Our cap risk is very low (only 0.4%) and indicates that our fund manager has been a bit slack or is taking too many long lunches.


----------



## peter2

Trading update:   New trade

*AMP*: Bought at 4.82, iSL 4.62.  
This is a reversal setup as the trend is down. There's been a HL and price has now broken higher. The gap fill provides an acceptable RR.


----------



## peter2

Trading update:   New trade

*BKY*: Bought today at 0.780. iSL 0.74. 
Another reversal as price is moving off support at 0.70. Target is 0.90 which provides an acceptable RR.
This trade is a little risky as price can move quickly when the MD gets thin.


----------



## peter2

Trading update:  New trade.

*MYR*: bought 1.295, iSL at 1.24.  
Price looks like closing at 1.30 which is the level I was looking at. 
All today's trades will be managed with a tight exit trigger. 




I was thinking that there weren't many good setups around, but looking today, there are plenty.

EPD: Going through 0.50 again, 2nd chance BO
ABX: BO-NH
OZL: BO-NH, although I think copper is extended, but that's a bias.
MDL: Price sneaking higher.


----------



## VSntchr

peter2 said:


> EPD: Going through 0.50 again, 2nd chance BO
> ABX: BO-NH
> OZL: BO-NH, although I think copper is extended, but that's a bias.
> MDL: Price sneaking higher.



Some nice trades there Peter.
Heres one I don't mind:
*EPW*


----------



## peter2

EOW 94 update: ASX Momentum Portfolio *+43.9%* ( 99% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+2.5%* (past 94wk)

Our portfolio gained a little this week as the index went sideways. We've no cash available for trading (99% invested) so we have to wait while prices go up and exit quickly if they reverse. 

_This weeks sells_: nil
_This weeks buys_: AMP, BKY, MYR

*BSE*: We've been in this trade for 63 days and we've been patient while price moves sideways. Price is not moving up and we may sell this at 0.210 to realise some cash for further cfd trades.

Outlook: Our market filter remains bullish.


----------



## VSntchr

Looking at your equity curve there I think I'd be taking a full position in your system Pete! Impending BO-NH!


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## peter2

Trading update:  A few trades closed to free up cash.

*BSE*: Sold at 0.20 for a +0.8R win
*GXY*: Sold at 0.505 for a +0.8R win
We can re-buy GXY if it trades back at 0.52 or breaks higher again. 

I record these exits as discretionary exits (DE) so I can evaluate their effectiveness later. The reason for selling was to grab the profit and free up some cash to start cfd trades in some larger cap stocks that are in demand. The resource sector seems a little subdued so we grabbed the profits.

Note: I'm happy to hold my trades in these for longer, but this portfolio's strategy is short term, momentum based.

*IVC*: A reversal setup that I wanted to buy, but missed, as the cash wasn't available. IVC must have seen me coming as it bolted higher today. I don't chase. I show this as it's a nice example of what we're looking for in a reversal setup.


----------



## peter2

Another two examples of what I classify as reversal setups. I like to see the initial bounce off the low and then a retest of that low. I prefer it if the retest makes a higher low.  Whykcoff traders might prefer to see a spring as their setup, but again I'd like to see a HL after the spring.

*PMV* has triggered but *REA* hasn't. There's quite a few of these in the market atm. 

Don't go "gung ho" on these as they are reversals and many occasions the market needs more time or the down trend resumes. I start with a partial position and add as price forms subsequent buy setups. 

So regular BO's aren't working for you right now? Don't "throw in the towel". 
You can use your experience trading BO's in these reversals. These work great when the market index is also reversing. That's not happening now, but there is renewed demand for the large caps and most of them have been going sideways for a while now and we can buy them as they rise off support.


----------



## peter2

A quick jog through my large cap list shows that there are plenty of opportunities right now.

*AIA AMC ASX BLD CAR JBH SEK TCL TLS VCX WES WFD*

Some charts are better than others, but it all up to you. You can stay frustrated with all the "ASX shockers" (great thread idea btw skc.) or you can get in the right trading mindset to earn some profits in another sector. 

We may not get +2R profits on many of these but 3 x +1R in a month is OK with me.


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## Boggo

peter2 said:


> A quick jog through my large cap list shows that there are plenty of opportunities right now.




Seeing the same here on the weekly, big end of town seems to be getting attention.

Bear in mind that this is weekly, just a heads up as signals are not accurate until bar completion at close of market on Friday.

(click to expand)


----------



## VSntchr

peter2 said:


> Some charts are better than others, but it all up to you. *You can stay frustrated with all the "ASX shockers" (great thread idea btw skc.) or you can get in the right trading mindset to earn some profits in another sector. *



We can only be as good as the stocks we trade!


----------



## peter2

Trading update:  Another stocking stuffer. 

*AMP*: Sold at 5.14. This result is an above average profit at +1.5R ($1042). 
Price filled the gap which was the primary target for this trade. 
Note: Personally I've sold half here and will add after the next pullback and buy signal.

*REA*-cfd: Bought at 54.00, iSL placed at 51.00. 
Nice ascending triangle with an initial target of 59. See chart posted yesterday. Any result >+1R will be acceptable. 

*BKY*: Sell limit placed at 2.3R. 
*MYR*: Sell limit placed at 1.6R, almost there.

*ps*: In case you're wondering about the difference in performance between this short term trading style vs medium term. This portfolio is beating my own medium term portfolio over the last four months due to the price volatility of many mid-cap stocks.


----------



## peter2

Trading update:  New trade

*BLD*: Bought at 5.43, iSL at 5.10.  Initial target near 6.00.
Another reversal using the BO-NH after the first HL setup.


----------



## peter2

*JBH*-cfd: Bought today's BO-NH at 28.01.  iSL placed at 26.50 although I'd sell on a close below 27.00. The extra 0.50 is to account for price volatility. The initial target is near 30.00.
Another reversal although the up trend on the weekly chart looks intact in spite of the recent pull-back.
The retailers seem to be in demand (HVN, MYR, WES, PMV).


----------



## peter2

Here's a couple of charts that I really like, but they're companies I've never traded. I thought I'd log them here and see if I might learn something.


----------



## peter2

Perhaps I should comment on why there seems to be more action lately. 
It's OK to ask if you're wondering about anything. This thread is primarily educational. 

Our core strategy is to profit from short term moves.  That means we have to look for charts that have started to move or look likely to move soon. Trading break-outs fits that description nicely. 

In the last two weeks our portfolio has been in resource stocks (BSE, GXY twice, BKY, NSL, IBG). This sector has stopped moving higher as the bullish sentiment has moved to another (banks). Our trades were showing small profits but with the sentiment changing we could have been stuck in these trades or even lost our open profit if prices drifted lower. 

We made a discretionary decision to grab the profits (however small) and re-position the portfolio into stocks that have started to move higher. We didn't profit from the bank sector as we were invested in other trades and the bank rally started from a very low position. We're anticipating that the bullish sentiment for the banks will spill over to the next level of large caps as the money looks for better than bank returns. 

I don't know what is going to happen next, but I thought you might like to read my reasons for all the recent activity.


----------



## jjbinks

is the reason for using CFD's to increase returns?


----------



## peter2

jjbinks said:


> is the reason for using CFD's to increase returns?




No, definitely not. Cfds allow us to use 10-20% of the value of the parcel instead of 100%. This is helpful when the parcel sizes are larger than usual. 

If we have cash available we can start more trades if the existing trades prove themselves profitable. 

Currently the portfolio is 113% invested and we still have 14K left to use.


----------



## peter2

On the eve of a change in forum software and the impending holidays it's an opportune time for me to thank you all for your support in this thread. This thread started with Pavilion103 (all my best to you Pav.) a long time ago and it's progressing comfortably. 

I hope that I've helped a few of you only the way. I'd like to help more, but you're too shy to ask. Use these holidays to decide if you really want to actively manage your capital in the world markets. Every one of us can learn the skills to be profitable over time. I'm willing to help and I know there are others in this community who are willing to help you also. 

I'm hoping that the new forum software will allow us to create members only threads, maybe even invite only threads. I don't know.  

I'm willing to start another portfolio using weekly charts with a larger account size. I know many of you can't actively manage your trading account during the week. Perhaps we could get together for a few hours every weekend via this forum and plan our trading activities for the next week. It's just an idea to inspire further suggestions. 

We can't tell you what to buy and when to sell, but we can provide suggestions to help you organise your trading process. We can help you get a trading plan together. You know you can't win without one. I'm not interested in reading about your should haves, would haves and could haves. I'll ask you why didn't you follow your plan or do your preparation. The forum can provide additional accountability if that's any help. You're not alone while this forum exists. 

Finally. My results are all due to my work. Your results are all due to yours. If your results are not good enough, then what are you going to do differently? If you don't know, then ask.


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## Newt

Hope you have a great Chrissy Peter.  On behalf of all the lurkers here, that probably don't interact enough, I'd just like to add my thanks again for all the blood sweat and tears you've invested for learning traders here (and realistically do we ever stop learning?).  

Your posts are always one of the first things I look over on ASF, and I hope there will continue to be a chance to do that in the New Year.

:xmastree


----------



## lindsayf

Thanks  for your work on this thread and your generosity with your time.
I am interested in the weekly time frame as I can access the asx300 within my super account.
I just need to get myself organised with some scanning software and a few other things.
Currently do some daily/weekly forex trading with a fast take profit methodology.
It would be good to expand and develop my trading over the next few years.
I will keep an eye out for developments here and think about drafting a trading plan with reference
To some of your work here.
Have peaceful xmas/new yr break.


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## Lone Wolf

Thank you for your continued efforts Peter.

I hope I can contribute more in 2017. I've allowed trading to take a second seat to other things. It's time to stop spinning the wheels and put trading first, 2017 is do or die. First is a written trading plan and a process of discovering appropriate candidates. I'll see how much progress I make over the Christmas break, otherwise I'll need to look at taking my 10 weeks long service.

As for the weekly chart idea, I think everyone would be able to learn something from the exercise. But it's not for me. One of my biggest issues is having confidence in a system with low trade frequency. How do you know it's not just a lucky run when you only have a small sample size? I also have no confidence that the global economy will produce long bull runs in the future. I'd rather develop the ability to react quickly to changing market conditions, including profiting from bear markets. Weekly trading would react slower, which for many is a good thing, but with lower trade frequency and greater exposure to market pullbacks I'm not sure I could personally trade weekly.

Whatever you do, don't burden yourself. I liked the direction the P2 Trade Book thread was heading in. But I get the feeling it interfered with your actual trading. We aren't paying you for your contributions, so contribute in a way you enjoy and can comfortably sustain.


----------



## peter2

EOW 95 update: ASX Momentum Portfolio *+46.5%* ( 86% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+4.0%* (past 95wk)

_This weeks sells_: BSE(+0.8R), GXY(+0.8R), AMP(+1.5R), MYR(1.6R)
_This weeks buys_: REA, BLD, JBH

Our portfolio gained a little this week as we cashed in on a two larger cap trades.  Another portfolio equity high. It's very satisfying seeing our trading actions slowly accumulating profit. Sure we've made a few mistakes, missed a lot of good opportunities and have felt frustrated. However on the other hand we haven't been hit by a shocker and we've been profitable in every batch of 20 trades. That's very consistent. 

The latest batch of 20 trades has been our best yet (55% (11/20) winners and a massive $7200 profit). See table. 



_Outlook_: Our market filter remains bullish and we've got plenty of cash to take advantage of opportunities as they appear next week or more likely in the new year. At this time of the year the market depth is thinner and trading volumes very low. Stops that are in the market can be triggered more easily. Don't leave them in the market at this time. 

I'd like to remind you of what happened last year. The XAO dropped 500pts during January 2016. I don't anticipate this happening in Jan 2017 (Trump inauguration Jan 20th 2017) but don't get complacent.


----------



## peter2

I've expanded the Batch of 20 performance table. The effect of compounding will distort the $ values but the true performance is shown by the R multiples. The edge per trade for each batch is Total R /20 trades. 

After a slow start the overall edge  is improving (0.17 -> 0.259). I'm hoping we can get this to >0.30 before we hit the end goal. 

I monitor my performance to see if I'm improving or trading well. Are you monitoring yours?


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## debtfree

Hi Peter,

I must say a big thank you for your amazing thread which certainly displays the tenacity of sticking to your plan through tough and tougher times over the duration of this educational exercise. I appreciate the time and effort you have given to us to better our trading habits.

Wishing you and everyone else following Peter2's thread a Merry Christmas and Happy New Year.

Cheers ... Debtfree


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## Boggo

debtfree said:


> Hi Peter,
> 
> I must say a big thank you for your amazing thread which certainly displays the tenacity of sticking to your plan through tough and tougher times over the duration of this educational exercise. I appreciate the time and effort you have given to us to better our trading habits.
> 
> Wishing you and everyone else following Peter2's thread a Merry Christmas and Happy New Year.
> 
> Cheers ... Debtfree




x 2


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## ianna

Hello Peter
Just wanted to add my thanks for your great work on this thread.  I've been following it for a while now and learning as I go.
Thanks again.


----------



## Lone Wolf

peter2 said:


> Trading update:  New trade
> 
> *BLD*: Bought at 5.43, iSL at 5.10.  Initial target near 6.00.
> Another reversal using the BO-NH after the first HL setup.
> 
> View attachment 69158




Peter,

Looking at the recent BLD reversal trade. BLD had been in a significant downtrend since late August, with a substantial gap down on 24-Nov on news. What in your eyes made this a better candidate than other options at the time? You don't seem put off at all by that recent large gap down. Any comments on what, if anything that large gap down means to you?

Did you hold an opinion on whether the gap down was overdone, or was the decision purely technical in reasoning?


----------



## peter2

1. At the time there wasn't any promising break-outs and my next preference is to look for pull-backs or reversals in ASX300 stocks. This bias to look for reversals (buying bargains) in a bullish market is a weakness and is something I'm trying to minimise. 

2. I'm anticipating that the bullish sentiment for the banks will flow to others within the ASX300 soon. The best RR setups in the ASX300 currently are the pull-backs/reversals off support. I started five (AMP, MYR, REA, BLD, JBH) at the same time trusting that a few will work out. AMP and MYR have created +3R for us so far. If the market goes down then we'll exit the others quickly to minimise any losses. If the market remains strong then we'll start more ASX300 trades hoping to profit from the current bullish sentiment in the larger cap stocks. 

3.* BLD setup*. Perfect setup in a bullish market. Except for the gap. [I'm a chartist primarily, but I do use commonsense as well.] It's was commonsense to look at the reasons for the gap. This gap was created by a corporate restructure. BLD sold its 40% stake in Boral:CSR and raised additional capital (creating shares at a lower price) at the same time. 

The gap down was due to a corporate restructure rather than any deterioration of their business. I was comfortable ignoring this gap.


----------



## Wyatt

Hi Peter,
As an avid follower of this thread, I would love to see your trading style from a weekly perspective. I like many, as you suggested, find it nigh on impossible to follow the market intraday, so your weekly perspective would be very interesting.
 In particular, the discipline in your trade exits, which are my / everyones? weakness, are a revelation and your ability to eke out returns in a market that has had a few of the regulars grumbling, displays adaptability to market changes. We have much to learn from you.

[/QUOTE]Finally. My results are all due to my work. Your results are all due to yours. If your results are not good enough, then what are you going to do differently? If you don't know, then ask.[/QUOTE]

I guess waiting for a systematic backtested approach to get back to sync with the market is not gunna cut it?

Cheers Wyatt


----------



## peter2

The significant disadvantage of demonstrating a weekly system is the much lower number of completed trades. In any year a portfolio might only do about 30 trades based on weekly charts. Any profit earned over 30 trades, even if it beats a benchmark could still be considered lucky. It's even easier to be unlucky and not beat the benchmark even though we followed the TP perfectly. There's not much entertainment value in seeing a portfolio earn 5% even if the index lost 10% over the same period. 

People are only getting interested in this thread as the gain nears +50%. They overlook the 95 weeks it's taken to get here. 

My SF portfolio comprises trades from both weekly and daily time frames. It's a difficult juggling act when one's personality (risk tolerance) favours one trading time frame over the other.  The difficulty is maintaining consistency in both systems. 

When we trade the weekly charts we need our trades to last months instead of weeks needed for our daily system. If the market doesn't trend for months then every weekly system will struggle for gains. Our ASX has gone up one month and down the next. Weekly systems struggle in these market conditions. Over the past six months I've earned more from the shorter term trades than the weekly trades. 

I love the weekly time frame and it was all I needed while working during the week. (The 2007 bull market also helped.) I am still considering a forum portfolio thread using weekly charts as I'm managing a few portfolios in the same manner. The extra work would be in the composition of the explanatory posts. I'm having difficulty seeing if there's any extra educational value in a weekly portfolio thread compared to this short term trading thread. The setups are slightly different, but the risk and trade management are very similar. The basic aim is the same, make more profit than losses, while managing the risk. 

ps: One main point of difference for the weekly portfolio would be the stock universe. A much larger account size would exclude trading in lower volume stock codes. Earning 20%pa, while trading only ASX300 stocks would be a challenge in a sideways or down year.


----------



## Lone Wolf

peter2 said:


> The gap down was due to a corporate restructure rather than any deterioration of their business. I was comfortable ignoring this gap.




Thanks for the reply. My mistake was in only skim reading the news. The article I saw made it sound like the price crashed 17% on fears that the company paid too high a price for the acquisition. I missed the capital raising part so it makes sense now.


----------



## Lone Wolf

peter2 said:


> People are only getting interested in this thread as the gain nears +50%. They overlook the 95 weeks it's taken to get here.




How are you tracking this out of interest? Do you check the thread views?

The 50% gain looks pretty and will be a nice milestone, but if that's what people are excited about then they are missing the point. The portfolio has always been running at around 25% pa and still is. The more exciting figure to me is the single digit system draw down. As you say, the real value here isn't the end figure but in how you managed the portfolio in order to achieve it.


----------



## peter2

I'm pleased you understand the importance of the consistent management of the individual trades and also the management of the portfolio has a whole. 

I'm not tracking interest at all and maybe you caught me exaggerating a little.


----------



## peter2

Trading update:  Whoops, trade closed.

*BKY*: Sold at 0.88 this morning (+2.3R, $1640).
I meant to raise this sell order yesterday but obviously forgot and it was pinged today. If price trades almost to a target but backs off a little and it requires another BO to hit the order I should raise the order to the next target.


----------



## peter2

Trading update: New trade

*FBU*: Bought today (10.33) after yesterday's BO-HR, iSL is 9.80.
A couple of higher lows makes the ascending triangle pattern with the target ~11.30. Price must make a new yearly high to get there. Break-outs during low volume periods are like BO's at any time. They work out or they don't.


----------



## peter2

EOW 96 update: ASX Momentum Portfolio *+49.6%* ( 84% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+5.2%* (past 96wk)

_This weeks sells_: MYR (+1.6R), BKY(+2.3R)
_This weeks buys_: FBU

The market continues to drift higher over the holiday period. Our portfolio gained a little this week as we bagged profits in MYR and BKY.  Another equity high. 
We've raised a few TS to reduce risk. These trades will work out or we'll close them.

_Outlook_:  Our market filter remains bullish and we'll start more trades next week to fill our quota for risk.


----------



## peter2

Trading update:   New trades to increase portfolio heat to our limit (5%).

*NWH*: Bought at 0.68, iSL at 0.60. 
Explained this setup in the ASX Weekly Portfolio thread. 

*GXY*: Bought at 0.535, iSL at 0.48.
Break-out of small consolidation, box pattern. Also near all time high. 
The chart also shows our two previous trades in GXY.


----------



## peter2

Trading update: New trade to increase risk to limit in bullish conditions.

*KDR*: Bought 0.63, iSL at 0.55. 
One of the outstanding stocks in 2016 as it develops it's Li and gold resources in WA.


----------



## grah33

merry christmas and happy new year to all. still following here. and thanks again peter for the instruction.

not too many ideal opportunities here for me in this recent bull run (it's mainly the few big stocks that are driving the asx, so not many ideal breakouts to find). but i probably should have picked more 'imperfect' setups and looked harder.  anyway, hopefully the market will work well for us soon.


----------



## peter2

EOW 97 update: ASX Momentum Portfolio *+51%* ( 115% invested in 7 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+6.8%* (past 97wk)

_This weeks sells_: nil
_This weeks buys_: NWH, GXY, KDR

Our portfolio drifted  higher this week along with the market. There were no standout performers and the only management required is to raise a few exit triggers to reduce the portfolio heat. We'll monitor the open trades and exit earlier if prices go down. 

_Outlook_: The market filter remains bullish as it has the past seven weeks. During this period the XAO has risen 8% and our portfolio +12%.  The small caps are starting to appear in my scans so there will be an effort to get into them as the heat is lowered.


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## fiftyeight

Massive lurker of this thread. Your consistency constantly impresses me


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## lindsayf

Hi Peter
Do you still use Protrader for your scanning?
Thks


----------



## jjbinks

peter2 said:


> ps: One main point of difference for the weekly portfolio would be the stock universe. A much larger account size would exclude trading in lower volume stock codes. Earning 20%pa, while trading only ASX300 stocks would be a challenge in a sideways or down year.




hi peter,

what account sizes are you thinking about?
I assume you mean there is not enough liquidity in the smaller caps. At what position sizes do you feel that that liquidity of the smaller caps becomes an issue?

cheers
j


----------



## Lone Wolf

jjbinks said:


> hi peter,
> 
> what account sizes are you thinking about?
> I assume you mean there is not enough liquidity in the smaller caps. At what position sizes do you feel that that liquidity of the smaller caps becomes an issue?
> 
> cheers
> j




I had the same question. Do you have a general rule for the liquidity required for a particular position size?

If the account was several hundred thousand as opposed to $50,000, would you change anything management wise aside from the stock universe?

You could increase the number of open trades at any one time to reduce the position size, but I recall you saying that you try to avoid having to manage more than 10 open positions at a time.


----------



## peter2

Thanks fiftyeight, I appreciate your support.

Yes, lindsayf, I still use the Protrader Darvas and market activity scans.

The weekly portfolio started with 222K and the plan is to hold 8 - 12 trades using the weekly charts. My general guideline is that the stock trades 20x my average parcel size of 10%. That's ~$400K/day, or $2Mill/week. I'm more interested in the market depth because I want to be able to sell whenever the sell signal is triggered. Generally I have no problem buying, its the selling that gets tough because I'm not the only one selling when price starts to go down. 

Stocks trading $2M/d can have either thick of thin market depth. You never really know until you look. 

A 50K portfolio has parcel sizes of 4K - 10K. There's very little problem getting these filled in one go. Larger portfolios have larger parcel sizes and some small cap stocks can't accommodate a larger parcel when we want to sell. Large orders stand out in thin market depth and I don't like to have my orders so exposed. It's a horrible feeling needing to sell and there are not enough buyers near the price you want to sell at. You wait for more buyers but the price falls and now your losses are bigger and you still can't sell. 

The more relaxed style of trading the weekly charts means I use limit orders exclusively. I'll rarely hit the offer and I'm comfortable waiting days to be filled.  I'll always hit the offer when buying for the daily momentum thread.  

I trade less with the larger accounts and this is because I don't exit as fast as I have in this thread. Sometimes this works out OK and after a small dip price makes a new high. Sometimes I wish I'd sold when I did in this portfolio. Over the past 97wks this portfolio has performed better than my own portfolio that contains a mixture of both weekly and daily trades.


----------



## PeterJ

Hi Peter
also here regularly


----------



## Rypieee

Good evening fellas,

I was going to PM Peter2 directly but instead, I have decided to post my question on the thread so that others may possibly benefit from it even though it seems like only seasoned veterans of the game follow this

My strategy is very similar towards your ASX Momentum Book and your P2 ASX Weekly thread and I wanted to know what your perspective is on diversification within a portfolio (short-medium term time frame). Based on this thread and the weekly thread, it seems like diversification is something out of the picture for the strategy as it is sole based on each individual stock within it's own parameters.

The dilemma I am having right now is that there is an abundance of "opportunities" coming up within the resource/energy space and my current portfolio is made up of 25% resources and 10% with about 40% held in cash - meaning my open trades are made up with about 60% resources and energy stocks. 

My mindset towards portfolio management lends from a lot of the books that I have read prior to trading and authors tend to say something along the lines of "you should have no more than 25%(fixed) of your PV invested in a given sector" or "you can have between 10-30%(variable) of your PV invested in a given sector".

Do you recommend using diversification within a portfolio to control yourself from over-exerting? 

I know Warren Buffet (kind of irrelevant to a technical analysis thread but anyways..) has a saying about diversification being something "ignorant people use to protect themselves" and that "if you know what you are doing then diversification isn't necessary" [quote is not word by word!!]

Thoughts?
Happy for anyone else to add it, I shall take on all the feedback provided to formulate my own perspective


----------



## debtfree

Rypieee said:


> Good evening fellas,
> 
> I was going to PM Peter2 directly but instead, I have decided to post my question on the thread so that others may possibly benefit from it




 Good idea Rypieee. 

Others will be using this thread for years to come and any info or questions that we have will surely be asked by them at some time so, if it's all in here you will be doing them and us all a favor. Thanks for you input, appreciate it.

Cheers ... debtfree


----------



## peter2

"seasoned veterans" sounds like something you'd eat with fava beans and a nice chianti. 

I'm assuming your second paragraph asks about, allocation of assets to different systems within a portfolio. How much is allocated to short term trades and the weekly trades. I have no set parameters for this. Which ever system/method is winning at the time gets the assets. The level of activity of the short term system is much greater than the weekly system. The short term system turns over trades much quicker than the weekly system. This re-uses capital rather than requiring additional capital. The activity of the ST system waxes and wanes with the market. It gets busy when the market rallies and slows when the market falls. The weekly system attempts to ride out the daily gyrations. 

What happens to most stock prices when the market falls 20%. They also fall significantly. Will a portfolio holding twenty different companies avoid this market fall? NO. Diversification is a misunderstood, over-rated, over mentioned and mis-represented concept.  I use common-sense and restrict my portfolios to a limit of two trades in the same corporate activity. Note, I mention corporate activity not market sector. Production of iron ore, gold, lithium or uranium are related (same sector) but their stocks prices move with different commodity prices. I'll buy gold stocks when the price of gold moves up and I'll buy lithium stocks when the sentiment for Li is bullish. I'll buy iron ore producers when the price of iron ore rises. If these three things happen at the same time then I'm long a heap of resource stocks. 

The fact that most commodities are priced in USD means that commodity prices often move together. I'll go with the flow and manage my portfolio heat closely.


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## Rypieee

Hi Peter2,

Thank you for that response, and your second main paragraph have given me some sort of enlightenment on how I would approach diversification within my portfolio. I love the fact that you use "corporate activity" over sectors of the market because that was what I was thinking as well... The example I was looking at was that Gold stocks and Mining stocks are in separate sectors - Gold and Mining Ex-Gold respectively, but they do the same thing, mining things out from the ground... and I went further down to see why iron ore should be classified within the same sector as say lithium? Both are vastly different and their underlying commodities don't hold any connection. You have given me some confidence in my thinking so thank you for that.

If you don't mind, I just want to take this a bit further so I understand your concept completely. When you mention that you have a limitation of 2 stocks within the same corporate activity - let's use iron ore mining as the example, if you have FMG and GRR, you won't be able to add another iron ore miner such as MGX to your portfolio as you already have two doing the same thing. 
Example/Question 1:
Can you add another stock such as BSL though? Because the corporate activity is different but the underlying commodity is the same?
Example/Question 2: 
Can you add another stock such as AWC who is involved with Aluminium which has a part component of iron within it's manufacturing?

Hope you don't mind the long questions as I am using these insights to further formulate my TP and polishing up the end bits!

Thanks for your assistance once again
Ryan


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## peter2

Trading update:   Trade management.

*KDR*: I didn't like yesterdays close below 0.60. Sold today as price traded lower at 0.58. 
We'll re-buy this if price goes back up to 0.65 quickly. 
If there's a fake-out price bar at 0.55 (obvious retail stop loss level). We'll buy it sooner.

*FBU*: Price is trading near our iSL (9.80). We'll sell this when it trades at 9.80 again. 
This will close the daily trade but the weekly trade is still open and uses an iSL of 9.50. 

*GXY*: Our second Li stock is going great guns. Price is currently at our +2R target price (T2). We're going to let this go higher as the price momentum is strong and there hasn't been any climactic volume. We'll move our TS up to +1R (0.60) and place a limit sell order at our +3R target price. 

*JBH*-cfd: TS moved to BE. 
*REA*-cfd: TS moved higher to 55 locking in small profit, while allowing price to go higher.
*NWH*: TS moved to 0.66 under the new HL. 

_Summary_: These actions reduce our portfolio heat and this allows us to start more trades. Our trade management also allows prices to go higher.


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## peter2

If I've got open trades in FMG, GRR and then notice a buy setup in BSL. I won't just buy it until I check the total open heat (downside exposure) of the open trades within this corporate activity (iron ore, steel producers). 

If the trades in FMG and GRR have been recently started their total heat will be 2 x 1% (2%). I won't start another trade in the same activity. However if the FMG trade has been open for a while and I've been able to move the TS above BE,  I'm allowed to start another trade in this sector as the total heat is <2%. I'll buy the setup in BSL. 

This is a refelection of my guidelines for pyramiding in that I don't add more risk until the initial risk is gone. 

AWC: This aluminium producer/retailer is comfortably different than steel producers. I don't think I've ever traded AWC. 

I hope this helps you create your own risk management gudelines.


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## Rypieee

Hi Peter2,

Yes it does help me with my developing TP so I thank you once again for your input on the matter  

Especially when you went into portfolio heat and how reducing risk through increasing stop losses can allow an additional position to be taken as long as the total heat is below your target levels! First time of hearing the term pyramiding so that will be something I shall investigate further!

Shall post up again should i come across another dilemma

Ryan


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## peter2

EOW 98 update: ASX Momentum Portfolio *+52.3%*   ( 65% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+6.2%* (past 98wk)

_This weeks sells_: KDR (-0.6R), FBU (-1R), BLD (-0.4R)
_This weeks buys_: nil

Our portfolio continues to drift higher, while the market just drifts. We closed three losing trades this week as their prices fell. BLD has been going sideways for two weeks and was sold as it touched our exit trigger today.  Like KDR, BLD will be re-bought if price breaks-out again. 

I've been a bit slack not actively looking for new opportunities. Sorry about that. We'll put some of the available cash into use next week. There's bound to be plenty of break-out, pull-back or reversal setups for us to use. 

_Outlook_: Remains bullish. One down day won't change that. If the market continues to fall, we won't worry as we've already taken defensive measures (closing our losing trades).


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## peter2

Trading update:    New trade

*MGX*: Bought at open 0.38, iSL at 0.35.
Liked last weeks bullish key reversal bar (mentioned in Weekly thread).
Price moves slowly and it could be a long ride. 

I'll do normal BO scans after 2.30pm.


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## peter2

Trading update:  Comments on trade management.

Our market filter has been downgraded to mildly bullish with the daily XAO chart turning red. This is notice to reduce heat by closing losing trades, raising exit triggers and locking in better than average profits.

We closed our losing trades and raised our exit triggers last week. Occasionally, individual trade management pre-empts these general market indicators. If you're paying attention.

*REA-cfd*: Closed today as price traded at it's exit sell stop (56.00). Our exit price (55.75) has been reduced to account for cfd interest paid throughout the 28 days of the trade.

*JBH-cfd, NWH*:  exit triggers set at BE, to allow price to go sideways but not down.

*GXY*: We didn't sell at +2R, electing to let price go higher. It hasn't and the market has dropped enough to downgrade our market filter. We have two options in the management of this GXY trade. Sell now, near the +2R level in response to the market downgrade or let it go with the TS at +1R knowing that GXY has been one of the markets strongest stocks (RSC(XAO)).
Since we have the portfolio heat well under control, I've decided to leave GXY open with the TS at 0.61.

*MGX*: Newly open trade that needs more time to prove itself.

edit: If the portfolio had two trades at/near +2R profits then I would have closed the weakest looking one and leave the stronger open. This is similar to taking 1/2 profits.


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## peter2

Trading update:  New trade

*BLD*: After closing this trade five days ago when the price dropped, we have re-bought today at 5.51 as price traded back at 5.50. I mentioned the possibility of a re-entry if price reversed quickly. The setup is our standard BO-HR (5.50). The only wrinkle is that the position size is limited to our max size (20%) due to the tight iSL (5.30). 

There'll be no re-entry into KDR any time soon as price has fallen further.


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## peter2

Trading update: Trade closed and I'm to be pilloried.

*GXY*: Trade closed as price traded at our exit trigger (0.61). We gave it a chance to go higher but it didn't. This was our third trade in GXY during this latest rally. Our results are +1.3R, +0.8R and +1.3R. Seems pretty good heh? If we'd held on to our initial purchase and sold at our last exit price the result for the one trade was +4.4R. 

A short term trader can't beat buy and hold if the price trend is reasonably smooth with shallow pull-backs. Of course when a rally starts we don't know how deep the pull-backs will be or when they'll happen. That's why we need a plan. In this thread our plan is to exit early and re-enter if price does reverse quickly after a shallow pull-back. This was demonstrated nicely in the latest GXY campaign. 

We'll allow a larger pull-back after entry, if price barely makes it to +1R. This pull-back is seen as a re-test of the BO level. Once price gets to +1.5R or higher we'll protect our profits aggressively. 

_MEA CULPA_:  Whoops I did it again! I ignored an exit trigger and it has got me taking a -2R loss. It wasn't in this thread. It was in my own portfolio. It's a stupid error. I only mention it here to remind you that nobody is perfect. I make this mistake about once per year and it always hurts.


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## debtfree

Thanks for the updates and the sprinkling of tips and insights into your posts Peter, always so informative.

With your personal trading do you write as much info and thoughts into a blog/diary each day or week as you do here or do you just keep brief notes in your spreadsheets?

As much as it hurts thanks for your open honesty about your personal trade, it is a good reminder for all and something to take on board.
In regards to the picture, I didn't imagine you to have quite that much hair 

Cheers ... Debtfree


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## debtfree

debtfree said:


> With your personal trading do you write as much info and thoughts into a blog/diary each day or week as you do here or do you just keep brief notes in your spreadsheets?




I looked at this again this morning and thought you idiot, I've gone back to square one and asked a question that I know we have covered and I know what I have to do. I know everyone is different but if *I* need a detailed daily log like you do here of each trade and my thoughts on each day to review at a later date, *then put it into* *my plan! *If I only need brief descriptions in a spreadsheet, so be it, put it into the plan. It did make me go back and look up where this was mentioned in March 2015 which I included below to remind me. 



peter2 said:


> I have no doubts that it's easier for me to start trades when the market is going up, but does it really add to my edge? I keep detailed stats and record my description of the market condition when I start every trade. I also record the type of trade setup (break-out, pullback and reversal). I know my edge for each type of setup in every market condition. These stats show me that trading with the trend does improve my edge.
> 
> I'm not going to provide anymore details of these stats as they are personal and assist me to improve my overall edge. However it should indicate the level of commitment I've made in order to be consistently profitable.[/ATTACH]




Thanks for not replying and giving me a boot up the ...., although I think you did by not replying.

Cheers ... Debtfree


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## peter2

EOW 99 update: ASX Momentum Portfolio *+50.7%* ( 72% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+5.0%* (past 99wk)

_This weeks sells_: REA-cfd (+0.5R), GXY (+1.3R)
_This weeks buys_: MGX, BLD

Our portfolio drifted down with the market as a little profit taking reduced our open profits. 

_Outlook_: Our market filter switches to a milder bull as the daily trend turned down. Hopefully we'll soon get the opportunity to buy stocks in strong weekly/monthly trends a little cheaper than last week.


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## peter2

Trading update: New trade

*FPH*: Bought today's BO-NH at 8.59, iSL at 8.25.  Parcel size limited to 20%.


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## peter2

Trading update:  New trade

*PRG*: Bought today in anticipation of further demand (pre-empting the BO) at 1.915, iSL at 1.78.
I know I shouldn't pre-empt a BO, but I like that price traded <1.80 and has risen immediately. 
Buying now allows price room for any resistance at the 2.00 and 2.10 levels.


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## peter2

EOW 100 update: ASX Momentum Portfolio *+51.7%* ( 77% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+6.1%* (past 100wk)

_This weeks sells_: JBH-cfd (+0.1R), price adjusted down to account for cfd interest over 35d.
_This weeks buys_: FPH, PRG

Our portfolio is drifting with the market, one week down, the next, up. We've only one trade that's moving higher (BLD) and we'd like a few more. In order to get into more we have to be a bit more pro-active. I might just post on this over the week-end. 

_Outlook_: With the re-bound in the market we can modify our market sentiment to moderately bullish.


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## peter2

Here's an update on a post I made over one year ago. Some of you may wonder about my memory, but it's average. My spreadsheet has these records and it's not too much work to update the results. Why, because it's important that a discretionary trader get feedback on the effectiveness or not of their performance. 

*Review of Discretionary Exits used in this thread*. 

Back then (post #276) I showed the performance of the exits used in this thread against three objective stop loss strategies.
(i)  3 x ATR(21)
(ii)  2 x ATR(21)
(iii) 3 x ATR(21) until price gets to +2R, then using a tighter 2 x ATR(21). 

Here's an updated table after 167 trades.




Our discretionary exits are still earning more than both the 2x and 3x ATR(21) methods. We still lag the third method which let's the trades go higher before tightening the exit stop.  This difference of $3800 was due to two outliers (our recent trades in CIM and BKY where we exited too early (with hindsight)). I can live with the fact of missing out on more profits in 2/167 trades.

Overall our discretionary exits are working better than either fixed strategy. However, the lesson is clear. We can earn more if we let the profits get bigger on a few trades where price is going up strongly.


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## peter2

Trading update:   Trades closed

FBU: Trade closed near TS as price fell and market depth became too thin. Result -0.7R.
BLD: Trade closed on further general market weakness. Trade closed to realise average win +1.5R

Charts will be monitored for re-entry if price break-out again soon.

_Note_: My personal medium term trades are still open as my TS's are further away.


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## peter2

Trading update:  New trade

*CDD*: Bought today's BO-HR at 1.10, iSL at 1.00.


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## maglincer

I like your work peter. Good volume past 2 days on CDD looks like another good breakout trade. Was just wondering how you know when to sell? Do you have a set target for each trade or just let it ride with the stop losses.


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## peter2

In this thread we're trading short term price movements. Many times we don't see enough follow through after we buy, so these trades are managed with a trend following style (allow a pull-back and a hopefully a higher low pattern) until we get that upward momentum. Once we get that upward price movement and the trades get >+1.5R we tighten the exit triggers. Price targets are used with higher priced stocks because they won't have large % moves. Targets are also used when there is a recent swing high on the chart that may provide some resistance. 

Occasionally our market filter indicates it's time to reduce portfolio heat and so we close our losing trades first and raise a few trailing stops or even take above average profits if we have any.


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## peter2

I'm sure I've mentioned this before. It's important to know what sort of price movement you're attempting to trade. If you're trading short term price swings (momentum) then your trade management needs to be appropriate to get those swings before they disappear. If you're trading price trends then you need to allow the trend with it's series of higher lows to unfold. The trade management of these two trading styles should be different as the price movements are different.


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## peter2

My thanks to those who liked the review of the discretionary exits post. I'm pleased to provide further observations from that work. 




1. The main reason that the 3 x ATR(21) exit hasn't produced as much profit as the other exits is that this exit strategy gives too much back when price falls. This strategy lets the price go higher (AW is larger) but the loss of open profits is also larger. This exit strategy suffers during periods of increased volatility and changes in market sentiment to bearish. We've experienced quite a few periods like that over the last two years.

2. The 2 x ATR(21) doesn't give back as much open profit but it doesn't allow any set back soon after entry. If price doesn't continue higher immediately after entry then this strategy gets out too quickly some times. This strategy exits when price retests the BO and then isn't in when price resumes the move higher. 

3. I hope you can see the benefit of giving your trades more room at the start. Only consider protecting your open profits when they're big enough to be worth protecting (>+2R).

4. Fixed exit strategies don't take into account changes in volatility and aren't aware of current market sentiment. Our discretionary exits can be successfully implemented as soon as we notice a change in volatility or market sentiment. We can let our profits get bigger then when the market sentiment changes from bullish to bearish we can tighten our exit stops to protect them. You can see the effectivness of doing this in the table.

_Note_: These observations/opinions only apply to ASX stocks that we traded over the past two years. Other markets move differently, so don't try and apply these exits to different markets. The basic principles of profitable trading will apply across all markets. You know them. Keep your losses small. Let your winners get bigger. Protect your capital at all times.


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## peter2

Trading update:   New trade

*FPH-cfd*: We've re-bought this one as price as turned up again. Bought 8.55, iSL at 8.25.
Price has resumed going up after a vicious two day fall that had us closing our first BO trade for a loss. Part of the reason for selling was the thin MD as the price fell. Bids disappear quickly when price falls in these moderately traded stocks. Our exit was to avoid excessive slippage should price fall further. The old high near 9.50 presents a good RR possibility.


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## Wysiwyg

Just one thing new traders may not be aware of is the lower up trend line possibly becoming resistance. Not sure how much volume is still caught on the evening star formation.


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## peter2

Wysiwyg has a good point regarding the FPH chart shown above. Supply has appeared both times price traded at 8.80 and this would have to be overcome or withdrawn for price to proceed higher.

This setup is not an "A" grade one because of that nearby resistance.

No, this is not a "revenge" trade because we recently exited the first setup, but it is worth considering. I'm happy having two attempts to get into a swing. If I get knocked out twice then price is unlikely to go up soon.


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## peter2

EOW 101 update: ASX Momentum Portfolio *+49.4%* ( 71% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+4.4%* (past 101wk)

_This weeks sells_: FPH, BLD
_This weeks buys_: FPH-cfd

Our portfolio lost a litle as the market fell this week. 

_Outlook_: Mildly bullish but if the index falls and closes <5650 we'd be more cautious.


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## peter2

Trading update:  A surprisingly bearish day after Friday's bullish day in the US. Our market filter is close to turning bearish and we're reducing portfolio heat in response. 

*PRG*: Closed today after price fell to our exit trigger (loss -0.9R).
*FPH-cfd*: Another down day tomorrow will trigger an exit in this trade.

_Comment_: It's a little late to start thinking about shorts, but perhaps we might short the index if it falls again. This reminds me that I haven't seen anything for a while from our stock contrarian, *notting*. I hope he's well.


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## peter2

Trading update:  First "turbo" trade. 

*AMP-cfd*: Bought BO-NH (after news) at open 5.15, iSL at 5.00.


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## peter2

Trading update:  Another turbo trade.

*MYX*: Reversal setup. Yesterday's 10d BO on above average volume showed up in the scans. 
Bought 1.35, iSL placed at 1.25. The tight iSL and our planned aggressive trade management, makes this another turbo trade.


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## peter2

EOW 102 update: ASX Momentum Portfolio *+51.1%* ( 103% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+6.2%* (past 102 wks)

_This weeks sells_: PRG(-0.9R)
_This weeks buys_: AMP-cfd, MYX-cfd

Our portfolio gained a little as the market rose. Reporting season seems like we're walking in a minefield once more. We have to be cautious about starting a trade a few days before a scheduled report. I considered buying the BO in CNU but declined as it reports in a week and it's not likely to rise enough in a few days. 

_Outlook_: Mildly and cautiously bullish. I've decided to try to increase the frequency of trades. These trades will be started with a smaller iSL size and managed with a quicker exit strategy.


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## Kryzz

peter2 said:


> _Outlook_: Mildly and cautiously bullish. I've decided to try to increase the frequency of trades. These trades will be started with a smaller iSL size and managed with a quicker exit strategy.
> 
> View attachment 69914




Hi Peter

Can you shed any light on how your exit strategy will change if moving to one that will be quicker in nature?

Will you still favour the discretionary exit?


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## peter2

The end goal is to double our starting capital. I'm going to make a greater effort to reach this goal before the end of Feb 2018. We need to earn +33% of our current capital to get there. That's 33% in 12 months. 

It's dangerous placing a time limit on a trading goal because we're at the mercy of the market and it could go down for 12 months. However, doing the same things will probably not get us there in time either. Our options are to increase frequency (by being more aggressive), include shorts (which is against my natural bias) and/or trade other markets. 

This thread is primarily an educational thread, not a recommendation to actively trade stocks or to buy/sell any specific stock.

The first thing I'll do is the addition of a more aggressive TP to increase trade frequency.  There's no way I'll be able to manage lots of these trades simultaneously so most of the account capital will be employed by our current momentum TP and a smaller amount used for turbo trading.  

This means we'll have to outline a Turbo TP.


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## peter2

*Turbo Trading Plan* 

_Strategy_:  Pure swing (momentum) trading with smaller iSL sizes and faster exits than our current momentum TP. We're going to anticipate an immediate continuation of the price swing and exit quickly if we don't see it.

_Setup_: Undeniable bullish price bar with above average volume. These bars may or may not be BO bars.

_Entries_: in the last hour of the trading day. Higher priced stocks may be traded using cfds (less capital required).

_Position sizing_: (Fixed Fractional) Trade risk starts at 1% of realised capital PLUS 10% of cumulative profits from turbo trades only. This compounding stops after losing >-2R and resets, resumes after the first winning trade.

This modification is used to compound profits quicker in winning sequences and prevents losing sequences from destroying most of the profit.  

_Exits_: 
1. Initial Stop Loss below signal bar or prior low or below prior gap. 
(_Note_: Much smaller than our current TP which is below a recent higher swing low.)
2. Trailing exit trigger for longs will be two down bars with lower lows or one large down bar. 
3. Profit targets at prior swing highs or placed at +1R to +2R wrt price levels.
4. Open turbo trades can be closed in batches when the open profit of the batch >0.5R/T. 

_Note_: This plan's trade management won't wait through small pull-backs and retests of BO levels like we currently can. 

_Precautions_: 
Avoid entries just prior to scheduled news events (earnings reports). 
Avoid thin market depths. 
Avoid trading through XD days.

_ps_: This is a strategy that one might use when trading after gaps or after missing huge break-outs that increase original trade risks to unacceptable sizes. 

_ps2_: We could use this TP (with appropriate modifications) to short stock-cfds after clearly bearish bars. 

_ps3_: This is much closer to tech/a's small cap trading style. We may even use a few of his chart suggestions.


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## peter2

Trading update:  Trade closed.

*MGX*: We were in the queue at 0.42, but decided to take 0.415 (Don't have centre-point orders ie 0.417.) 
This trade closed at +1.1R after almost being stopped out. Price surges for 4 days then pulls -back over the next three weeks before surging again. Frustrating price action for a BO trader. 




GRR would have been a better iron ore trade. grrr


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## peter2

Trading update: New trade.

*WBA*: Bought this BO-HR, although a little late we were still able to buy at 1.40 today, iSL 1.35.



MGX: Too impatient to grab reasonable profit after almost exiting for full loss. Missed out on bonus R's.


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## peter2

Trading update:  New trade

*ASL*: Bought today's BO at 1.51, iSL at 1.40. [Reports 23/2 next week.]




*NWH*: Our limit sell order at 0.845, touched but didn't fill. Damn. 
Don't you just love it when your broker posts that the report is due tomorrow instead of today! 

Our turbo trades (*AMP, MYX*) have paused. We can allow them to go sideways, but we'll exit on a significant down day. 

*FPH*: Price is not going up and we'll exit tomorrow at 8.35 - 8.40 if we can.


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## peter2

EOW 103 update: ASX Momentum Portfolio *+52.6%* ( 94% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+7.9%* (past 103 wks)

_This weeks sells_: *MGX (+1.1R), FPH-cfd (-0.6R), NWH (+1.2R)*
_This weeks buys_: *WBA, ASL*

Our portfolio gained a little as the market rose earlier in the week and gave some back today.

Our turbo trades (*AMP, MYX*) have stalled and we'll exit them on the next open at near break-even prices. They were started in an attempt to profit from the bullish sentiment that caused our market to rise. In hindsight it would have been better to buy the index rather than try to select stocks that would rise with the market. Trading futures markets is the role of the P2 Trade book that I haven't followed up on. Sorry about that.   It may even be the right time to consider an index short as the market is near a possible resistance level.

*MGX*: Sold at T1 as price rose. Our mistake was not letting price go higher before considering selling. Another 2R missed by this costly mistake. The market reminds me, again, that I don't know what will happen next. Don't pre-empt market action.

*NWH*: Closed on the open after failing to trade at our T2 target and falling down to our T1 level yesterday. This is in accordance with our management guidelines to let the profits get bigger and selling when price falls.

_Outlook_: Reasonably bullish but cautious as the index is near a new high. Reporting season is causing the usual price spikes in both directions. Even good reports are attracting sellers that take advantage of the increased volume to realise some profit.


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## peter2

Trading update: New trades

*GNG*: Bought the BO-NH at 1.71, iSL at 1.55. Target is the recent yearly highs at 2.00. 
Our iSL allows a little room, but we anticipate that price will slowly continue higher.

*KDR*: Bought BO-NH at 0.54, iSL placed at 0.49. Target is the recent high at 0.65.
We'll be managing this one like turbo trade with this tight stop.


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## peter2

_Note_: You may or may not have noticed that we're going to compound the trade risk a little more aggressively with the "turbo" trades. Our normal amount put at risk in every trade is 1%. The turbo trades will also risk 1% plus 10% of all profits earned from these turbo trades. 

Currently 1% = $759. The profit earned by the turbo trades so far is +$286 (AMP, MYX turbo trades were closed for small profits on Mon.) The current turbo trade is KDR and we've risked approx $787 (759 + 28). 

I'm demonstrating this strategy because we have a proven track record of good risk management. If you can't exit when you should then please don't increase the amount you put at risk. I'm restricting this to only a few trades at a time as I'm unable to monitor too many at once. 

This strategy works well when your trading strategy produces sequences of consecutive winning trades. It's also important to stop the aggressive compounding in losing sequences. I mentioned we'd stop at -3R, but I might change that to -2R as we'll be exiting quickly and usually before our iSL level with these trades.

This position sizing method is a good fit with the short term active trading style that *tech/a* demonstrates provided you can keep your losses very small.


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## peter2

_Thoughts_: Really liked this BO-NH setup in *MYX*, but declined, due to scheduled report in two days.
The BO is above a strong R level of 1.40.




_Edit_:  
*WBA*: Decided to sell this after closing below 1.40.  Initial SL was too close for this thinly traded stock. Reports Mon.

*KDR*: Not liking down day, another down day will trigger an exit in this trade.


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## peter2

EOW 104 update: ASX Momentum Portfolio +50.6% ( 34% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +7.1% (past 104 wks)

_This weeks sells_: *AMP-cfd (+0.2R), MYX (+0.2R), WBA (-0.8R), KDR (-0.6R)*
_This weeks buys_: *GNG*

Our portfolio lost a little this week as the market drifted down. Our turbo trades didn't get the immediate follow through that was anticipated. There were plenty of other charts with acceptable momentum but we didn't get into them. That's a matter of luck in a sideways market. 

Our defensive trade management has us only 34% invested at the moment. We'll find some bullish momentum to trade next week. 

_Outlook_: Cautiously bullish as the reporting season ends. It's been one of the most dangerous reporting seasons for a short term trader that I've seen for a while. Prices in many stocks went a little too high too fast and many have been corrected.


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## peter2

_Happy second year anniversary!_

This portfolio has now been active for two years (104 weeks). IMO the performance has been average. We could have done better or we could have done worse. A few mistakes were costly, but that's what really happens. This is probably the right result for an educational thread. Profit has been earned by applying a consistent approach and the potential for more has been presented. 

This table shows the results during each six month period.


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## tech/a

peter2 said:


> _Happy second year anniversary!_
> 
> This portfolio has now been active for two years (104 weeks). IMO the performance has been average. We could have done better or we could have done worse. A few mistakes were costly, but that's what really happens. This is probably the right result for an educational thread. Profit has been earned by applying a consistent approach and the potential for more has been presented.
> 
> This table shows the results during each six month period.
> 
> View attachment 70096




Great effort 
Peter.

Wouldn't mind 50% on my Super over 2 years!
Very low risk shown in the equity curve.
I wonder what the result would be if given to 50 different practitioners to trade over the next two years! How varied the results would be.

In particular your dedication in time and patience is most impressive.
So from the Duck a big THANKS.


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## peter2

Thanks *tech/a* and the others who liked the effort.
Different people, absolutely, different results. I think the spread of results could be +5% to +100% over the same period. I would hope that all would be profitable as this thread has emphasised a conservative attitude for risk. 

People following this thread and managing some or all of their own money, please do NOT compare your performance to this thread's performance. You should be comparing your performance against your own benchmark. Our aim in this thread is to better the benchmark index. We've done that. In fact, we've thrashed it and done it with less draw down. The maxDD of the benchmark has been -17%, this portfolio -7%. 

To anyone who has beaten their benchmark on both the up and down sides. Well done. 

Do we bask in our own radiance? No way. We look back at our mistakes. Have we been reducing them or are we getting sloppier? I see indications in my trading that I'm getting sloppy. I've made some basic mistakes by forgetting/overlooking/ignoring my trading process. My trading business will suffer if this continues. 

The market is relentless. Scratch that. The market doesn't have any attributes it just exists and we've decided to interact with it to grow our capital. *We* have to be relentless plus a lot of other adjectives. Our profitable edge is such a small thing that can never be taken for granted. We have to earn it one trade at a time.


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## 5oclock

peter2 said:


> _Happy second year anniversary!_
> 
> This portfolio has now been active for two years (104 weeks). IMO the performance has been average. We could have done better or we could have done worse. A few mistakes were costly, but that's what really happens. This is probably the right result for an educational thread. Profit has been earned by applying a consistent approach and the potential for more has been presented.
> 
> This table shows the results during each six month period.
> 
> View attachment 70096



The Duck is 100% right Peter, a great effort on your behalf and much appreciated ! There are plenty of fund managers that would be happy with 50% return.Looking forward to the portfolio continuing ! A great insight to how a successful trader trades! The honesty and transparent posting is a great stand out. HAPPY SECOND ANNIVERSARY !!!!!!!!!


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## peter2

Trading update:  Volatile price movements as CDD and GNG reported today.  + New trade.

*CDD*: Closed with a little slippage as price traded at our exit trigger. Small loss on trade (-0.2R).
We'll keep an eye on this chart for a another setup. 

*GNG*: Huge price range today. Close is above our exit trigger, so we'll hold on. Price weakness tomorrow will see us exit.

*CDA*: Bought as price looks like closing above our R level. Bought at 2.21, iSL at 2.00.


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## debtfree

XAO Chart: Price movements of (Mostly 2014) section looks and feels a little like (Mostly 2016) section. Hope 2017 doesn't follow suit with (Mostly 2015) section.
It caught my eye and I kept going back and looking at it. 
To have a plan and follow it is a must as you say and it will take the worry out 2017 if it does go down.


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## peter2

Trading update:  New trade

*HZN*: Bought at 0.065, iSL 0.060.
Liked yesterday's close at 0.065 and bid for 0.064, didn't get it, so paid higher this morning.
First trade in an oil/gas stock for quite a while. Don't think the POO will go higher, but this setup too good to decline.



CDD: Did you notice that the price rebounded nicely after we sold it yesterday. If we hadn't sold it may have gone down even more today.


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## peter2

Glad to see the current reporting season almost over. I've not seen a more volatile period in the last ten years. We've traded through it and our trading experience has been enriched. Our portfolio hasn't made any progress but it also hasn't lost. It survived intact. 

We've seen one sector of the market (emerging companies, mid-caps) have a great rally (Feb - Aug 2016), stall and now fall. All booms, bust. Prices in most of those emerging companies and mid-caps went too high, too fast. Recent company updates have highlighted this and panic selling to lock in some of those profits have caused the increased price volatility.

Of course I feel frustrated by the perceived lack of progress, but I overlook that our defensive risk management and our plans to avoid trading before scheduled reports most likely protected our portfolio. I should be pleased rather than frustrated. 

In addition to what we feel we must be optimistic for the future. Perhaps there'll not be so many break-out opportunities, but there should a heap of pull-back opportunities if companies with good prospects have been sold off indiscriminately. 

I'm reminded to focus on the process, not the results.


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## peter2

EOW 105 update: ASX Momentum Portfolio *+48.7%* ( 33% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+7.3%* (past 105 wks)

_Note_: The SPAX2F15 gained while the index (XAO) fell. This is due to dividends (+ F credits) earned during the week.

_This weeks sells_: CDD (-0.2R), ASL (-0.2R)
_This weeks buys_: CDA, HZN

Our portfolio continues to drift lower as we close out recent trades for small losses. We've not found ourselves in a sustained move for a while. That's the luck of trading. We'll keep trying. 

Over the past nine weeks (YTD) this portfolio has lost 2%, meanwhile our weekly portfolio (in members only section) has gained 9%. You can read the details in that thread. Don't believe anyone who states that we must trade shorter time periods to be reasonably profitable. 

_Outlook_: Our market risk filter remains cautiously bullish while the XAO is above 5650. This portfolio will get back "in sync" with a few moves soon.


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## Boggo

Nice work Peter.


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## peter2

Thanks for that @Boggo . I'll assume it's for the 2 years. I've been a bit frustrated by the lack of recent progress in this portfolio. When I noticed the difference in the weekly portfolio, well, I had to chuckle. You know this as you trade both time frames as well. Sometimes it's just better to let the market do it's thing and not jump in and out. The underlying weekly trend just rumbles on and gives us plenty of notice when it reverses. 

Trading both time frames does have it's advantages. While I'm hopping around on the daily charts I'm not worrying about the weekly trades. That MGX trade was a classic. I jumped out of the daily trade too early, but the weekly trade carried on to nice result.

I'm glad I'm posting portfolios in two time frames as it's reinforcing the differences to me once again.


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## skc

peter2 said:


> EOW 105 update: ASX Momentum Portfolio *+48.7%* ( 33% invested in 3 trades)
> Benchmark index: SPAX2F15 (Incl. divs and f credits) *+7.3%* (past 105 wks)
> 
> _Note_: The SPAX2F15 gained while the index (XAO) fell. This is due to dividends (+ F credits) earned during the week.
> 
> _This weeks sells_: CDD (-0.2R), ASL (-0.2R)
> _This weeks buys_: CDA, HZN
> 
> Our portfolio continues to drift lower as we close out recent trades for small losses. We've not found ourselves in a sustained move for a while. That's the luck of trading. We'll keep trying.
> 
> Over the past nine weeks (YTD) this portfolio has lost 2%, meanwhile our weekly portfolio (in members only section) has gained 9%. You can read the details in that thread. Don't believe anyone who states that we must trade shorter time periods to be reasonably profitable.
> 
> _Outlook_: Our market risk filter remains cautiously bullish while the XAO is above 5650. This portfolio will get back "in sync" with a few moves soon.




It's been a slightly different reporting season. I don't remember seeing so many positive reports reverse very quickly, especially in the smaller end. It hasn't been easy to trade the daily bars even if you have the fundamental news behind you.

This is a chart compiled by Morgan Stanley... it shows how this year (the dotted line) there's a remarkable lack of follow thru in the "beat" reports.


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## peter2

Interesting and I suppose we could make a story to explain it; 
(i) too many stock prices went on a bullish rampage and got ahead of the actual results
(ii) ASX is at new highs and investors are getting too cautious
(iii) We're acting like "stunned mullets" as the US markets stampede to record highs
(iv) We still can't believe that Trump is president.
(v) We're looking for reasons that things are bad, when they're not

In a way, it's very like your awesomeness, impossible to really grasp.


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## debtfree

*Peter: *I compared the 1st graph (93 trades) with the 2nd graph (167 trades) of different Exits that you displayed towards the end of January. 
I have divided the Win amounts by the Loss amounts to give me a Ratio to compare the difference between the two sets of figures. 

The best Exit (NO:3) has drop the biggest % (7.56%) in Win/Loss Ratio while at the same time the poorest (NO:1) had improved by over 14%. 
Is this an early indication of the markets turning towards the longer time frame rather than the short time frame. Like, say your weekly system? Something to keep an eye on, do you think? 
I'm not saying to jump from one system to another because of this but to use this to understand what is happening behind our own systems.


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## peter2

That's interesting. I wouldn't agree that those stats imply that the longer time frame was more profitable in the second half.

The wider (3xATR) stop may be producing the larger AW/AL because it's more able to tolerate an increase in volatility. Staying in longer should then produce bigger AW/AL. Any increase in volatility would hurt the smaller (2xATR) stop strategy. I would accept that volatility increased in the second half.

I would caution you about using these dollar amounts for your stats for two reasons. Firstly, wins/losses don't mean much on their own without knowing the dollars initially put at risk. Secondly, compounding will increase the amounts won/lost as the positive edge is earned. 

This table posted earlier shows the R values won throughout the last two years. 


Compounding doesn't distort these results. They show that the expectancy (edge) earned in the second year was larger than the first (1st year: 20R/102T = *0.196* vs 2nd year: 24.2R/75T = *0.32*). It's quite an increase(+63%). 

We traded less and made more. That could imply we were in the trades for longer (less trading) or we were more selective in the prevailing market conditions. Examination of the trades shows that the average time in a trade in the first year was 20 days, for the second year 23 days. I haven't looked at the average times for the winners vs the losers. 

Knowing that our edge was bigger in the second year, it would mean that our wins and losses in dollar amounts are larger in the second half due mainly to compounding rather than anything else.


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## debtfree

peter2 said:


> The wider (3xATR) stop may be producing the larger AW/AL because it's more able to tolerate an increase in volatility. Staying in longer should then produce bigger AW/AL. Any increase in volatility would hurt the smaller (2xATR) stop strategy. I would accept that volatility increased in the second half.
> 
> We traded less and made more. That could imply we were in the trades for longer (less trading) or we were more selective in the prevailing market conditions.




Yes looking at the XAO it was all downhill for the 1st year with any rallies only lasting weeks at the most. Not good for building profits.
Looking at XAO for the 2nd year the overall trend has been UP with some rallies lasting longer than a month. There was (2) good runs of 2 months and (1) great run of 3 months. Much better for profits.

Thanks for your post above Peter.


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## peter2

*Trading update*:  Another trade closed.  Open trades CDA and HZN.

*GNG*: Closed today for full loss. (-1R)

I've been unable to find reasonable probability low risk setups in this market lately. I'm not going to trade just for something to do. This only leads to many small losses that add up. Our last five trades have all ended with small losses. We have to be patient, again. I've been looking at other markets and will trade them while we wait.


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## coopers

Hi peter2,

I have just finished reading this whole thread. I just wanted to extend my thanks for your continued updates and clear explanations for your decision making, and basis for your trading plan, and all in a public forum. This is quite rare in my experience.

I have been slogging away developing my own weekly trend-following system for many years now and it's great to read your posts that reinforce many of the things that have assisted me to become much more successful. The aspects that resonate most with me have been the importance of developing a written trading plan, journaling all of my decision making, risk control/position sizing, and measuring my performance. 

I look forward to following more of your threads. Thanks again 
coopers


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## Kryzz

peter2 said:


> *Trading update*:  Another trade closed.  Open trades CDA and HZN.
> 
> *GNG*: Closed today for full loss. (-1R)
> 
> I've been unable to find reasonable probability low risk setups in this market lately. I'm not going to trade just for something to do. This only leads to many small losses that add up. Our last five trades have all ended with small losses. We have to be patient, again. I've been looking at other markets and will trade them while we wait.




Hi Peter - what other markets are you preferred ones when Aus equities aren't the main focus?


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## peter2

The easy answer would be whatever's moving. Most likely this will be forex and some commodity markets. I'll include these trades in the P2 Trade book thread when I spot them.

I'll still do my daily ASX scans as we can't ignore our main market. The ASX charts that I like atm are a few banks, CSL and WES. All higher priced stocks that require more outlay to get a reasonable reward.


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## peter2

Trading update:  New trades

*SFI*: Bought today at 0.095, iSL at 0.085.
*DCC*: Bought today at 0.047, iSL at 0.039.


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## peter2

_Update_: Another batch of 20 trades completed.

This latest batch shows our worst result so far with a profit of only +1.3R over the 20 trades. I have no explanation for this as our trade management has been consistent. Our mistake in the MGX trade may have cost us a few R but even this wouldn't have pushed our result to average. I just accept that this is what we got and get on to the next batch. We've had 3 batches with above average results and 6 batches with below average results. 

I'm pleased that all our batches have been profitable so far.


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## peter2

One that I missed this morning as price jumped my limit buy order.


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## peter2

Trading update:  New trades

*FPH*: Third attempt to get into this one. The signal bar and best entry was 8.60 7 trading days ago. I've been dithering and finally placed a bid in this morning at 8.65. I've also bought this for the weekly portfolio as price is finally near the resistance level. Parcel sizes in both portfolios have been limited (daily 20%, weekly 12%) due to the close iSL. 

*AMP*: Bought today's BO at 5.06, iSL 4.90.  Parcel size limited to 20%. 




ps: Nobody inquired about the WES chart I posted a few days ago. Hmm.


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## Lone Wolf

peter2 said:


> ps: Nobody inquired about the WES chart I posted a few days ago. Hmm.




I almost did, since you posted the image but didn't actually say if you bought. But then I figured all would become clear in the EOW report.

If you did buy, today was a good day.


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## debtfree

WES: When I didn't see it marked up as a purchase I thought you must have had second thoughts about it, was it was just filling the October gap and left it alone.


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## peter2

peter2 said:


> The ASX charts that I like atm are a few banks, CSL and WES. All higher priced stocks that require more outlay to get a reasonable reward.




I posted the quoted comment after noticing quite a few attractive trend continuation setups in the higher priced stocks (MQG, ANZ, NAB, WBC, WES, PPT, CSL). I like it when a lot of them form simultaneously as it shows the demand for the market leaders is strong. However we need more capital to trade these high priced stocks unless we use cfds. We're cleared to use cfds in this thread and we've done so before. The problem for us with all these setups is that the position size that we would have to buy to risk 1% would be well above our self imposed limit of 20%. 

eg The position size for the WES setup would have been 40% of our current capital. The size limit is there for a reason and we must not ignore it even though the setups look good. 

I posted the WES chart to see if anyone would ask about it (no), as evidence of my quoted statement and as I took it for myself. (Another movie quote: "You keep what you kill", Chronicles of Riddick.)


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## grah33

Hi Peter 
i've noticed you report better results with the weekly trading system.  is that really true, or maybe you mean better R/Trade, but not more money? if it's more money or similar money, than i should have done it as well, but for now i'll just stick to daily  (can't jump around everywhere)

been following along from time to time. find it interesting that you don't seem to pick setups which are backed up by a higher weekly timeframe (as they say, trade with the higher timeframe aligned) , so that's interesting to me. you're very flexible in your choices, but if it makes money than it's gotta be right.

cheers
grah


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## peter2

EOW 106 update: ASX Momentum Portfolio +45.9% ( 65% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +8.0*% (past 106 wks)

* The SPAX2F15 website hasn't published the index data for a few days. Very slack.

_This weeks sells_: GNG (-1R), HZN (-0.6R)
_This weeks buys_: SFI, DCC, FPH, AMP

Our portfolio continues to drift lower as we close out recent trades for losses. I wrote that last week. 
We're definitely "out of sync with the market index. Let's see if the recent trades help us. It's too late to turn to "pot" as that sector went for a dash last week. Taking BOs will get us going again soon. 

_Outlook_: We remain bullish as the index pauses. The banks(XFJ) are near new highs and that is promising for the market.


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## Boggo

I was a bit slower than you on exiting HZN, in at .056 on the weekly and out at .058 on the daily.
Not how I normally do it but with the eviction from the All Ords selling pressure took over.


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## peter2

If we follow our rules it's a good trade regardless of the result. (We know that).

No follow through after the break-out was a big red-flag. I closed the daily HZN trade the next day after price touched our exit trigger (although it didn't close below it). I also saw the big overnight fall in the oil price. 

I hate sideways markets. They tempt me to keep having a go, but then disappoint.


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## peter2

EOW 107 update: ASX Momentum Portfolio *+46.2%* ( 65% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.5*%* (past 107 wks)

*** An estimate, as the SPAX2F15 website hasn't published the index data for more than a week. I mentioned it to them but their auto reply bot said it doesn't care. 

_This weeks sells_: nil
_This weeks buys_: nil

Our portfolio continues to drift with the market. We've been able to raise a few exit stops, thus reducing the portfolio heat. We've got enough cash (10K) to start one or two new trades if the opportunities are perfect. 

_Outlook_: The market risk remains bullish.


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## Hocky27

Hi Peter,

I'm still half way through this thread but just wanted to say thanks for your contribution in this and Pavs old thread. Trying to learn how to trade is not straight forward and you can spend hours reading to realise you haven't learnt much.

You're willingness to be open and transparent in all of this has been incredibly educational and rewarding.

Thank you.


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## peter2

Trading update:   New trade and an exit triggered on another.

*CDA*: Exit triggered with the close <2.15. We'll try to sell this at 2.15.

*CDD*: Bought today's BO at 1.20, iSL at 1.10. 
We may get some resistance/supply at the recent highs (1.25). I was swayed by the huge volume traded over the past two days and the low sized risk.


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## peter2

Trading update:  Our market risk indicator has gone from Wkly UP, Daily UP (bullish) to WU Daily DOWN (cautiously bullish). There is only another 100pts before the indicator changes to bearish (WD DD) due to the index going sideways over the past 3 months.




With this change, our TP states that we reduce portfolio heat.
1. Close losing trades (unless they're new)
2. Raise exit stops to BE and above to protect profits.
3. Take profits (or sell 1/2) if they're substantial (>+1.5R).

Our current portfolio does have a few losers and unfortunately no big winners. 

*SFI*: Closed for -0.6R, *AMP* closed for -0.9R and *FPH* closed at BE.

This leaves us with *DCC*, a small cap that won't be influenced by the general market conditions and *CDD* which is a new trade.


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## peter2

_Comment_: I hope this doesn't seem like it's a panic response to a large down day. It isn't. We're responding to a change in our market risk filter that governs our portfolio heat. This action in turn reduces our draw downs and hopefully keeps them with in our risk tolerances.

This change will reduce the number of daily trades in my portfolio. It's really quite enlightening to get rid of those losers that have been hanging around for a while. There's no action required in our weekly portfolio as it's not the EOW.

Should we be considering shorts? I ran my short scan and 17 possibilities appeared. There are a few nice looking opportunities (BLD, JHX) but I'm not comfortable taking shorts on individual stocks. I'll be monitoring the indicies (SPI, ES) for a low sized risk short setup.

I should mention that since we're in a bullish market (especially the US markets) that this dip might be a good time to consider adding to existing positions. I keep a watch list of charts to consider buying when the market dips. I've been able to buy dips and take profits a few times on strongly trending stocks like ALL, CGF and the ETF GEAR. 

It's this bullish bias to consider buying the dips that makes it harder for me to consider shorting stocks.


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## skc

peter2 said:


> Should we be considering shorts? I ran my short scan and 17 possibilities appeared. There are a few nice looking opportunities (BLD, JHX) but I'm not comfortable taking shorts on individual stocks. I'll be monitoring the indicies (SPI, ES) for a low sized risk short setup.
> 
> It's this bullish bias to consider buying the dips that makes it harder for me to consider shorting stocks.




Peter, you are very close to the market so I think you can sense the themes (or context) out there like a seasoned trader could. Perhaps taking trades (and in particularly short trades given you find it harder to pull the trigger) that align with your feel with a chart that you would trade anyway... it might give you more conviction to take such trades?

With one bad night and we are talking about potential unwind of the Trump trade (at least partially)... JHX might be one that fits the bill. You try to sail with the wind but you are still trading the chart and manage your risk prudently. BSL might be another one on the break of $12...


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## peter2

skc said:


> I think you can sense the themes (or context) out there like a seasoned trader could. Perhaps taking trades (and in particularly short trades given you find it harder to pull the trigger) that align with your feel with a chart




Are you suggesting that I start a few shorts in order to become more comfortable with the action? Then after a while I'd be more comfortable handling the mix of long/shorts that I'd intuitively create a portfolio of both long and shorts that would be aligned with my view of the short term market direction.

This would provide more trades and reduce my requirement for long only trades and a rising market.


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## debtfree

peter2 said:


> I keep a watch list of charts to consider buying when the market dips.




Are you talking about potential pullback trades here Peter?


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## peter2

Yes *debtfree*, that's right. We have to watch the market fall, pause and then start to rise before buying pull-backs.

*skc* has suggested once more, to consider including some shorts to increase the number trades and to profit from both rises and falls in the market. I know he's right and I recognise the potential if it's done properly. I'm also aware that it's probable that we won't reach our end goal without a bull market or unless we make significant changes to our trading plans to profit when the market goes down as well as up. 

Theoretically, the increased number of trades should also improve the month to month consistency and reduce the draw-downs provided the short system is profitable. 

So, , that leaves me with some creative thinking, reorganising, planning, back-testing then writing another TP.   I love it when a good plan comes together.


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## peter2

EOW 108 update: ASX Momentum Portfolio *+43.8%* ( 17% invested in 2 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.1%* (past 108 wks)

_This weeks sells_: CDA (BE), SFI (-0.6R), AMP(-0.8R), FPH (BE)
_This weeks buys_: CDD

The mid week dip had us closing the losers and even though the fall in prices didn't continue we're glad to be out of losing trades. We could discuss the current losing sequence and draw down but we've managed this portfolio consistently so there's not a lot to discuss. Losing sequences will happen. Draw downs will happen. We've only two trades open (17% invested) so if the market does go down next week it won't bother us. If it goes up then hopefully we'll buy a BO that continues higher. 

_Outlook_: The market risk remains cautiously bullish. We're still on the look out for perfect setups. 

We'll find a few trades in the P2TB while we're waiting for the ASX to go either up or down. Our trading style is not suited to this sideways movement of the market.


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## peter2

Trading update: New trades in case our market continues higher.

*ALL*: Bought today's BO at 17.72. iSL 17.20.
This is a nice trend continuation setup although I know I'm very late into this strong weekly trend. 

*ILU*: Bought today's BO at 7.25, iSL 6.85.
A typical trend continuation setup but it's location makes it more of a reversal setup. There's an acceptable RR target near 8.00.

Both of these trades will be managed with a minimum risk strategy. If price doesn't continues higher in the next two bars we'll look to exit. 




.


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## peter2

Trading update:  Another trade (our fourth) in AMP. Knowing the US market were UP overnight.

*AMP-cfd*: Bought on the open at 5.06, iSL 4.90.
This is another attempt at the BO-HR. We've previously had two wins and a loss (+1.5R, +0.2R, -0.8R)
Why AMP again? I like the rising OBV and TMF volume indicators. They indicate accumulation and I've been anticipating a sharp rally, at least to the prior highs.


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## peter2

EOW 109 update: ASX Momentum Portfolio *+46.9%* ( 95% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10.2%* (past 109 wks)

_This weeks sells_: nil
_This weeks buys_: ALL, ILU, AMP-cfd

The market quickly reversed after that 1% down day two weeks ago. That's volatility. It has us thinking about shorts* and goes up. We quickly bought a few break-outs and joined in the rally. I'm not a stock picker, that's why we bought three break-outs hoping that a couple of them would go higher with the market. 

*DCC*: We've got stuck in this one as the bids dried up at our exit price. The exit has been triggered and we'll attempt to sell next week near our SL. 

_Outlook_: Mildly bullish. (*) Our Short(ing) TP is a work in progress.


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## peter2

Mid-week update: This might be a little premature as the week hasn't ended. You're getting it as I'm feeling it.

As you know the portfolio has been going through a rough patch.  Sorry, scratch that. The portfolio doesn't have feelings.

The _*portfolio manager*_ has been feeling frustrated by the current rough patch. Our last equity high was back in the middle of Feb and since then we've had 10/11 losing trades for a total of -5.7R. We've kept our losers small (average -0.5R) but lots of small losses add up. Imagine how much worse we'd feel if we'd allowed the losses to get bigger by refusing to take the smaller ones. 

Our response was to slow the frequency of trades and to quickly exit our losers when the market fell. The fall turned out to be only one day, but how could we have known that. The market immediately rallied higher and we quickly started trades in ALL, ILU and AMP hoping to catch the rally in the larger cap stocks that was fueling the rally. 

This mid-week update is because the portfolio manager is feeling better (winning trades help a lot). 

*DCC*: Managed to sell at our iSL (0.039) for a full loss (-1R). Our timing was a little early and I'll watch this one for another opportunity (maybe on a close >0.05). 

Our current turbo trades were done to grab quick profits from the market rally and sell limts at T1 levels were placed in the market. 
*ALL*: Opened above our sell limit and was filled yesterday at the open for a +1.1R result. 
I'm happy to take that as I know we were late into this rally. Now that we've banked 1R we can raise the sell limits on the other trades (*ILU*, *AMP*) allowing them to get bigger.  Grabbing the first 1R is like taking partial profits on a trade and letting the remainder get higher.  The upward momentum in *ILU* has paused and *AMP* is still acting sluggish. We'll see if we can get +1.5R each on these. Exit triggers have been raised to BE on both. 

*CDD*: Sold as price traded at our +2R price (1.42) today. No need to close my weekly trade in this one. 

The outcome after this little bit of activity is that we've got heaps of cash, low portfolio heat and a bullish market. The astute among you will realise why I'm feeling better all of a sudden. We've cashed +3.1R and have our two open trades nearing +1R each (+5.1R total). How much did we lose in our "rough" patch?  Hmm.


----------



## peter2

Lessons for those of you who are having difficulty making profits, keeping profits or just generally not doing it correctly. 

1. We're all going to have rough patches. Get ready for them and don't let them take you out of the game, financially and psychologically (emotionally). Plan to trade less, risk less on each trade, but keep trading your plan. 

2. Don't give up or start trading another strategy. Our strategy is to buy break-outs. We're not going to start trading reversals or use the "top secret skc" prop trading plan.  We know that break-outs get us into those charts that are moving up. Just because our favourite sector (mid-caps) has stopped moving higher we don't abandon the strategy. If the break-outs are happening in the small caps or the large caps then we should be trading where the action is while the market is rising. 

3. This portfolio is still in a draw-down. We're not out of our rough patch yet. Once we do get out (new equity high) we'll accept the high fives, but more importantly we'll enhance our experience and strengthen our confidence in ourselves and the TP. 

If you abandon your TP in the rough patches then you won't experience the joy when you trade through them. 

btw: The Top Secret SKC TP is available. For details click on @skc 's signature link.


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## Rypieee

peter2 said:


> Lessons for those of you who are having difficulty making profits, keeping profits or just generally not doing it correctly.
> 
> 1. We're all going to have rough patches. Get ready for them and don't let them take you out of the game, financially and psychologically (emotionally). Plan to trade less, risk less on each trade, but keep trading your plan.
> 
> 2. Don't give up or start trading another strategy. Our strategy is to buy break-outs. We're not going to start trading reversals or use the "top secret skc" prop trading plan.  We know that break-outs get us into those charts that are moving up. Just because our favourite sector (mid-caps) has stopped moving higher we don't abandon the strategy. If the break-outs are happening in the small caps or the large caps then we should be trading where the action is while the market is rising.
> 
> 3. This portfolio is still in a draw-down. We're not out of our rough patch yet. Once we do get out (new equity high) we'll accept the high fives, but more importantly we'll enhance our experience and strengthen our confidence in ourselves and the TP.
> 
> If you abandon your TP in the rough patches then you won't experience the joy when you trade through them.
> 
> btw: The Top Secret SKC TP is available. For details click on @skc 's signature link.




I am a culprit of tip no. 2 in the past, just made my P/L worst and my emotions out of whack  And when your emotions aren't in the right state and you're aimlessly wandering around wondering what to do with your portfolio, there was where I did the most damage to my portfolio.

Thanks for your advice and lessons through your own journey Peter2, I have most definitely become a better trader since following your journey and from what I have learnt off ASF, you have been the biggest contributor to my progress.

Thank you kindly for sharing this


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## peter2

Rypieee said:


> Thanks for your advice and lessons through your own journey Peter2, I have most definitely become a better trader since following your journey and from what I have learnt off ASF, you have been the biggest contributor to my progress.




I'm pleased to read that and I think the ASF community shares that pleasure also. We've a good community here, with potential for so much more.


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## Kryzz

Rypieee said:


> I am a culprit of tip no. 2 in the past, just made my P/L worst and my emotions out of whack  And when your emotions aren't in the right state and you're aimlessly wandering around wondering what to do with your portfolio, there was where I did the most damage to my portfolio.
> 
> Thanks for your advice and lessons through your own journey Peter2, I have most definitely become a better trader since following your journey and from what I have learnt off ASF, you have been the biggest contributor to my progress.
> 
> Thank you kindly for sharing this




Echo your sentiment here Rypieee. 

Peter's posts throughout this thread and others have been extremely useful!


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## peter2

Trading update: New trade

*ORE*: Bought break-out at 3.07, iSL 2.65. 
This is a "cute" setup in the weekly chart. I'll post that chart later in the ORE thread. 
All the EW aficionados help me out there.


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## peter2

One of the attributes (skills) of a profitable short term trader is flexibility. Day traders must be able to trade both long and short and they must be able to do this quickly in response to price action. 

Although this thread isn't about intra-day trading the attribute to be flexible is an essential skill to learn. The flexibility I'm thinking about isn't about going long/short, but exiting and re-entering quickly. If you want to be an active trader and use tight exit stops then it's essential to aquire the skill to re-enter quickly in response to price action.  The ability to re-buy one or two days after selling is a skill worth acquiring. 

I'm sure I've mentioned this aspect before when we had consecutive trades in a GXY price rally. The opportunity to show this flexibility occured in the current price rally in ALL. We sold at our price target (T1) when price gaped above our sell order. We were comfortable with that exit as previously explained. 

A gap up on opening is a bullish indicator and in a strong swing up it can be a one bar bullish setup worth considering. Tech/a gets a lot of his setups using this technique. 

ALL is in a strong bullish rally atm and the gap up and subsequent price action provided a great opportunity to place a re-entry buy stop order.  I wasn't able to post this trade last night so I won't be including it in this portfolio. However the educational content and the real-time example may be of some value.


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## peter2

I've mentioned how to handle this scenario before and I've suggested you include it in your trade management rules/guidelines. Here is another example and it's happening in our open *ILU* trade now.

Our T1 price target is at 7.70. Price has traded close to it but has now paused just under our level. We need another break-out to get to T1. Another BO-NH would be a bullish indicator, so why would we leave our order there? We've raised our order nearer to the 8.00 level. 

Our T2 target is just above the old high. There is no point placing a sell order here as the old high and round number (8.00) may provide resistance. 

We have two reasons to place our sell order below the old high. 




Medium and longer term traders don't have to consider these suggestions. You're riding the prices higher and the dips don't matter.


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## Cam019

Rypieee said:


> Thanks for your advice and lessons through your own journey Peter2, I have most definitely become a better trader since following your journey and from what I have learnt off ASF, you have been the biggest contributor to my progress.
> 
> Thank you kindly for sharing this




I'd also like to say thank you for your insights and lessons throughout this thread and Pav's momentum thread @peter2. There are many outstanding pieces of information throughout these two threads (among many others) that I am adapting to fit my own preferred trading style (as I'm sure many others are doing too). I appreciate the time taken to manage this portfolio and share your trading thoughts and processes.

I have noticed that the iSL, B/E SL and TS sell orders are only triggered by you manually on the next trading days open, after the current price closes below the sell order trigger price. I prefer EOD portfolio management because I don't have to be concerned about getting stopped out if the smart money drive prices down to shake out trailing stop orders. On the other hand though, if I didn't have a trailing stop order in place and the price didn't close back near the open, I would loose the profits that have not been locked in by a trailing stop order. In your opinion, is this just part and parcel of EOD portfolio management and do YOU just manage this potential risk by keeping the portfolio heat percentage under 10%?


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## peter2

The current market depth determines the ease of selling at our exit price. We can use in market stops when the MD is thick, but not when it's thin. Yes, we'll have slippage in thin markets and I'll remind myself again to try to avoid them.

I prefer to maintain the portfolio heat to 10% as I don't wish have a DD >10%. This is a personal risk tolerance and something I've continued to manage in this portfolio. There's a pic of the portfolio DDs so far in this EOW update.


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## peter2

EOW 110 update: ASX Momentum Portfolio *+50.3%* ( 53% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10.2%* (past 110 wks)

_This weeks sell_s: DCC (-1R), ALL (+1.1R), CDD (+2.1R)
_This weeks buys:_ ORE

Our portfolio has finally earned a bit of profit from this current rally. This good fortune was probably due to culling our losers and starting trades in a different sector of the market. We're not out of this current DD yet. 

_Outlook_: We remain bullish along with our market filter. We'll look to start new trades this week to invest more into this market that is near new yearly highs.


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## peter2

Trading update:  New trade

*API*: Bought the BO at 2.11, iSL at 2.00.
This is a tricky stock to trade as the price swings up/down frequently. Hoping that this BO will be followed up by further increases.


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## peter2

Trading update:   A couple of exits for this portfolio.

*AMP*: Sold today at our target (T1.5) price 5.32. 

*GXY*: Sold today as today was the second consecutive down day after the BO. This BO has failed to follow through with higher prices. The immediate reversal after the BO indicates that supply remains and it's not ready to go higher now. A re-buy order is in the market at 3.10 until the EOW (3 days) in case of another quick reversal.

This portfolio is still in a DD so cutting the losers quickly is prudent.
(Medium term, I'm holding on to both of these with a wider TS. )

_Outlook_: We need a few more trades as the market is making new highs. Reviewing the indices...
XEC - Emerging markets Mkt Cap (350 - 600) are being hammered.
XMD - Mid caps are making new highs. Just have to find them.
Energy, financials, materials (esp gold) are all going up.


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## peter2

Trading update:  New trades

*CSR*: Bought today's BO-NH at 4.61, iSL at 4.40

*BOQ-cfd*: Bought today at 12.28, iSL at 11.90
Be aware of impending XD date.

I also liked CIM and QBE for opportunities, but I'd better not get carried away.


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## peter2

EOW 111 update: ASX Momentum Portfolio *+48.9%* ( 69% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10.7%* (past 111 wks)

_This weeks sells_: AMP (+1.5R), ORE (-0.4R), ILU (+0.6R)
_This weeks buys_: API, CSR, BOQ-cfd

Our portfolio fell a little as the market sold off on Thurs. Our trade in ILU was also closed as it fell to it's exit trigger (7.50). The market gave us a glimpse of a new equity high but it was only a mirage. We've still got more work to do yet. 

_Outlook_: We remain cautiously bullish with our market filter. If the market falls continue next week we'll close our open trades as they'll follow the market down.


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## Triathlete

Hi Peter, I enjoy your thread.

I just have a question regards your BOQ-cfd trade as I trade cfds myself so it caught my interest....just taking a look at my own chart I can see that there is resistance just above at $12.50...I would have thought it would have been better to wait for a break and close above this level for the next run up????

Being so close to the entry price and a dividend on the way I would expect price to move towards this resistance and then pull back , a bit risky for me at this time but is on my alert now above $12.50...just my own opinion of course...

Keep up the great work Peter..


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## peter2

I agree with you on both points. I occasionally trade the micro pattern without looking at the larger time frame chart. 12.50 could present resistance as it's also a new yearly high if hit. I'm more concerned about the pending div which seemed a long way in the future. Public holidays can sure shorten the weeks.

I started a weekly trade in BOQ at the same time after noticing the weekly ORB. The iSL is much further away and takes into account the div.

The banks appear to be the main sector responsible for the slowly rising index and if you don't have any banks (like me) then it's been almost impossible to beat the index over the past six months (Trump rally).




@Triathlete , keep posting your charts to the stock threads. I enjoy seeing them (along with Boggo's, pixel's and tech/a's)


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## peter2

Short term traders like us must be aware of scheduled news so that we can avoid unfavourable price spikes. I have been caught out not knowing again today (due to not investigating) with API and ILU. 

Our open trade in API has not been adversely affected although price has traded at our exit trigger (2.00). Price has closed above it once and may do so again today. We'll exit if price trades down there again. 

ILU was the other stock with news today. Our trade ended a few days ago and I was waiting for an opportunity to re-enter not knowing that there was a qrtly production report today. This report was good news and the price opened much higher, leaping over my re-entry order. 



BOQ, our trade was closed yesterday before the XD today. I don't like paying the div and in skittish markets the price falls further than the XD amount. We'll take the small loss. 

Our open trades are API and CSR. We're looking for more as our market filter is cautiously bullish. The daily trend is down but the weekly trend is still up.


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## peter2

Trading update:  New trade

*BLD*: Bought today at 5.91 (pre-empting the BO), iSL at 5.70. 
Turbo trade, price continues higher or we're out. 



ORI: Seriously considering this one also.


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## peter2

Trading update:  New trade

*ORI-cfd*: Bought today at 18.06 (pre-empting BO), iSL at 17.50



_Note_: Pre-empting the BO is not a good habit as the BO to a new high hasn't happened yet. The BO and close above the BO level confirms the demand and creates the BO entry opportunity. Until then, pre-empting the BO is wishful thinking.


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## peter2

EOW 112 update: ASX Momentum Portfolio *+48.7%* ( 96% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10.0%* (past 112 wks)

_This weeks sells_: BOQ-cfd (-0.3R) sold before going XD
_This weeks buys_: pre-empting BOs in BLD and ORI

Our portfolio value remains the same and we've added new trades, anticipating further demand next week. I've intentionally targeted the larger cap stocks atm as the demand seems to be with them and they have enough liquidity so that I don't have to watch them during the day. My stop orders get filled with minimal slippage. 

Have a look at the recent chart of ILU. The short term traders (us) get kicked out for a small profit while the medium term traders scoop a lot more thanks to the good news. That's the difference between the trading styles. 

_Outlook_: Cautiously bullish. The daily trend is down, but may have found some support while the weekly trend remains up.


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## peter2

Trading update:  New trade

*BAL*: Bought today's BO at 4.80, iSL 4.40. 
A nice little ascending triangle pattern and the BO, a sign of strength (SOS). The 5.00 level may provide some overhead resistance, however the initial target provides a good RR for this setup. The iSL is placed conservatively in order to give this trade some room top move around. Price will need lots of time to get to the initial target. I'm hoping that the good results of A2M apply to BAL. I think A2M is in the same position BAL was two years ago, great sales, great profits and ramping up production into China. BAL couldn't handle it, can A2M? 

Even though we're using a BO technique, but this trade is very much a reversal opportunity. 




Good to see BLD and ORI BO today. Pre-empting the BO can lead to disappointment. On another note, I can't get over that I pre-empted the EOM in the yearly comp. D-oh!


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## peter2

Lots of good break-outs today but we're out of cash. The portfolio is only 108% invested but the higher priced stocks use more capital. We'll raise some exit stops to close trades that go down. 

We may also use some of the cash that's in the P2 Trade book account, after all it's part of our trading business. 

Another benefit of the market risk filter is to smooth our emotional state. Over the past five months the market gone up and down in 200 point swings. This is hard on our emotions. remember last week when the market tanked hard for three days. Our emotions had us heading for the exits, but our market filter reminded us that the weekly trend is still UP. No reason for panic. We closed one trade (ILU) because the large down day is an exit strategy in the turbo trade plan. 

We started a few new trades (BLD, ORI) based on our low heat level and the fact that our filter was bullish. We weren't overly bullish but only cautiously bullish. Emotionally it's always easier to procrastinate and watch. 

The combination of a market filter and knowing your own tolerance for risk (portfolio heat level) makes trading more comfortable.


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## peter2

If you're not trading comfortably then you're probably risking too much or just gambling. If you're gambling then I can only say, "Stop it". You're risking too much if you get that queasy feeling in your guts when the market or the price of your trades go down. That queasy feeling is your exit stop trigger. Take notice of it. 

Once you're trading comfortably it's easy to relax and it's then that we can get careless. Being relaxed and not checking your daily stops every day, that's careless and costly. 

If you're not comfortable because the market action is so up and down and you don't know what's going to happen next. Welcome, we all feel like this at times. Having an objective market risk filter will help. 

It doesn't matter what it is. Mine is based on the daily and weekly trend of the XAO index. Yours, can be anything. You may even use a "guru" and be bullish when they're bullish and turn bearish when they do. Make sure your risk tolerance matches theirs. Some of them wait for a 20% drop before getting bearish. Be careful. 

[One last thing: Don't use the news or any media as a market filter. ]


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## grah33

once again thanks Peter for guiding us with so much practical information.  those of us who are yet to break through undoubtedly appreciate it.  as someone in the forum said, one can do loads of reading but that's not enough.  as for me, i'm sitting on roughly the same  - made some gains before but lost them.  although i didn't trade when i should have . at the very least i'm improving in doing what i'm supposed to be doing  and doing it more correcly. 

bought 2 parcels this morning - consolidation range brakeouts they were (normally don't buy CBA).  hopefully these kinds of picks are good enough.  (yellow lines mark trade's entry and isl levels, ignore red, stops out of market, isl 3atr,  and trail 3 atr after price moves well out of the isl zone, stops out of market.)

sometimes i think my stops are too big for trend following on the daily timeframe (they seem a tad too big when looking at them on the weekly timeframe),  but i semed to get good results in a few manual backtests so i'll see what happens...

https://app.box.com/s/mms5fsl7o48hyf7d86cpqt8s1oveoh8c
CBA

https://app.box.com/s/88sea83ehbtc00dbd29mwh9p7bz8smuf
BRG


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## peter2

@grah33  Thank you for your comments and the charts. I like both break-outs and hope they continue higher for you. 

3xATR is OK to use as an iSL. I would suggest tightening it when your profits get larger than normal. You should know what is normal (Ave Win) for your trading system. Leaving the TS at 3xATR allows too much loss of open profits when price falls. 

You need large stop sizes when trading the trend to allow price to pull-back and form a higher low. This is the huge difference between trading trend and trading swings (short term momentum). Match your exit strategy to your trading style.


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## peter2

“The game is afoot.” 
― Arthur Conan Doyle, Adventure of the Abbey Grange

*Hey Sherlock the market's going higher. All our open trades are winning.* 

“Excellent!" I cried.
"Elementary," said he.” 
― Arthur Conan Doyle, The Complete Sherlock Holmes

*We've run out of cash and can't start any more trades.*

“There is nothing more deceptive than an obvious fact.” 
― Arthur Conan Doyle, The Boscombe Valley Mystery

*What are we going to do? *

“You know my method. It is founded upon the observation of trifles.” 
― Arthur Conan Doyle, The Boscombe Valley Mystery

*Umm...*

“You have a grand gift for silence, Watson. It makes you quite invaluable as a companion.” 
― Arthur Conan Doyle, The Complete Sherlock Holmes

*So, that means we have to raise some money from somewhere or get another case to solve?*

“How often have I said to you that when you have eliminated the impossible, whatever remains, however improbable, must be the truth?” 
― Arthur Conan Doyle, The Sign of Four

*How are we going to get another case? *

“No man burdens his mind with small matters unless he has some very good reason for doing so.” 
― Arthur Conan Doyle, A Study in Scarlet

*So, you want me to borrow Mrs Hudson's housekeeping money and trade it?*

“I am somewhat exhausted; I wonder how a battery feels when it pours electricity into a non-conductor?” 
― Arthur Conan Doyle, The Adventure of the Dying Detective


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## peter2

EOW 113 update: ASX Momentum Portfolio *+57.7%* ( 85% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+11.2%* (past 113 wks)

_This weeks sells_: *CSR*(+1.5R)
_This weeks buys_: *BAL*-cfd

The market continues to sneak higher. Meanwhile this portfolio has had a HUGE week (+9%***). We had numerous +5% weeks but this is a record for this thread. Trading in the larger cap stocks was the right move. The larger cap stocks use more capital and I'm sure you've felt my frustration at not being able to start more trades as we were fully invested. 

*CSR*: Sold today for a +1.5R result. There were three reasons for this sale.
(i) Price traded at our +1.5R target, which is an above average result. Don't sell for a below average result unless price is going down. This is the most important reason and I only placed the limit sell when price was getting close to our level. I didn't think it would get there and it wouldn't have mattered if it didn't.
(ii) Today's price move is abnormally high for a large cap stock. The ATR(14) is 0.10. Today was a 3xATR spike without any obvious news. Unsustainable and I'm happy to grab the profits in a short term trading portfolio. My weekly trade remains open of course (go, you good thing).
(iii) We needed some cash for more trades. This sale allows us to start more trades next week (probably using cfds in the large caps).

After such a good week we can raise all our exit stops. This reduces our portfolio heat to only 0.5% and we're nearly fully invested (85%).

_Outlook_: I'll try to remain cautiously bullish, even though I'm feeling outrageously bullish. We've got some cash and on the prowl for more setups. May I remind you how good it feels when everything works out well. 
[***=  % gain on our starting capital, compounding increases these results as we accumulate profit]


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## grah33

nice result Peter.   considering market conditions since the beginning that's a great result.  and you're pulling little trades from all over the place in other markets ... it's something people here may dream to be able to do, but they may not realize it's also a great deal of  hard work too.

quite a few quotes there. i'm going to have to re-read them again to discover their meaning...

i'll take your tips on board.  when i get more real data i'll start to see what is the best way.  it's challenging. i got great results in a few bull market manual backtests and was treading in a range or 2, but whether it will work in real life i'm yet to see. 
thx again.


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## peter2

Trading update:  New trade.

*CIM-cfd*: Bought at 37.00, iSL at 35.80.
Closed at 37 on Friday, forming the BO-NH. Placed a limit buy at 37 overnight. 
Mentioned this chart a few days ago and it's taken it's time to BO.



Also liked the BO's in AAC, AMP and the WTC charts.


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## peter2

Trading update:  New trade.

*MMS*-cfd: Bought 13.63, iSL at 13.00. Target 15.00
Price has been climbing strongly for the past six months. Our iSL is conservative and we'll raise it when price goes higher. 



Looking for smaller priced stocks to trade, but there's none I like atm. The small caps may come into demand once the larger caps have gone higher (XAO>6000) and people start chasing more risk.


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## peter2

You may have noticed that I've started a few reversal type trades (ACX, BAL, ORE) in the weekly portfolio. We included BAL in the daily momentum portfolio as well and it's started nicely. This BAL trade started as a cfd as we were low on cash at the time of entry. Today we've converted the BAL-cfd trade to a BAL share trade. We paid the commission to end the cfd trade and brokerage to buy the shares. We had the cash and the BAL trade has started so well that it might pay us to hold this trade much longer. We won't sell this at +2R (5.65) instead we'll let it get higher.

The gap-fill target is 6.50 (+4R), then there's no resistance until 10.00. This sort of recovery takes a long time and it's unlikely that the ride will be so smooth that this portfolio will hold it all the way.  

This is the ideal trade to convert from daily monitoring to weekly if you can do it.


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## Cam019

peter2 said:


> Trading update:  New trade.
> 
> *CIM-cfd*: Bought at 37.00, iSL at 35.80.
> Closed at 37 on Friday, forming the BO-NH. Placed a limit buy at 37 overnight.
> Mentioned this chart a few days ago and it's taken it's time to BO.



Hey Peter, just curious about why the buy limit was set at 37.00, instead of Fridays close of 37.03? Any particular reason for this? My thinking is, if today opened at 37.03 and didn't trade lower then the order would not have been filled.


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## skc

peter2 said:


> You may have noticed that I've started a few reversal type trades (ACX, BAL, ORE) in the weekly portfolio. We included BAL in the daily momentum portfolio as well and it's started nicely. This BAL trade started as a cfd as we were low on cash at the time of entry. Today we've converted the BAL-cfd trade to a BAL share trade. We paid the commission to end the cfd trade and brokerage to buy the shares. We had the cash and the BAL trade has started so well that it might pay us to hold this trade much longer. We won't sell this at +2R (5.65) instead we'll let it get higher.
> 
> The gap-fill target is 6.50 (+4R), then there's no resistance until 10.00. This sort of recovery takes a long time and it's unlikely that the ride will be so smooth that this portfolio will hold it all the way.
> 
> This is the ideal trade to convert from daily monitoring to weekly if you can do it.
> 
> View attachment 70923




Good plan. Agree that the weekly trade has a better chance of withstanding the pull back.

$5.65 is also the high post news which often act as resistance, at least temporarily. So it might worth taking partial profits or tighten the stop.


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## peter2

Basically it's pick a price for the limit order. A large priced stock like CIM can move around quite a bit. Yes, prices can open above my limit orders and I miss out. This happens occasionally but it doesn't concern me. I don't like buying an open price that gaps up because it lowers the potential reward and increases the risk. 

I can do this when I'm hunting large game. If I was hunting gazelles, like the micro/small caps then I'd have to bid higher as they can really jump when excited. If I was trading these I'd want to watch the open to see what's happening and adjust my orders up to a limit.


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## peter2

Trading update:  Our perfect run continues. . . 

*API*: Sold at our T2 target (2.35) for a +2R result.  
I'm pleased to get this, as API can be a bit tricky to trade using our BO setup. 

*BLD*: Is trading at our initial target (6.30), which is +1.7R for us. Because we've taken some good profit from API, there is less reason to take this profit. We will trail our exit trigger closely (+1R) and let price go higher. Next target 6.60. 

*BAL*: Wow, did not anticipate demand to be so strong. Price charged past 5.65 (T2) and went straight to 6.00. Good decision to not place a limit sell at T2. Now it might be prudent to place our exit trigger (TS) at this level. This "locks" in  +2R and allows price to go higher. 

[_Observation_: The China trade seems to be back on. BAL, BKL and TWE all jumped higher today. ]

The regular rises in or other open trades (*ORI, CIM,MMS*) seem almost slow, but they're contributing to the portfolio. 

Going through the scan results (10d break-outs) looking for our next trade. . .


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## Quant

peter2 said:


> *BAL*: Wow, did not anticipate demand to be so strong. Price charged past 5.65 (T2) and went straight to 6.00. Good decision to not place a limit sell at T2. Now it might be prudent to place our exit trigger (TS) at this level. This "locks" in +2R and allows price to go higher



*BAL *is an interesting one and part of an idea worth investigating going forwards  . BAL is one of the most heavily shorted stocks in ASX and as a result of that when a swing low is formed the run of lows can be fast and solid due to the squeezing of the high short position  . I am actually going to build a screener/algo to quantify this . I will look but havent as yet but id suggest the total shorts on this have dropped significantly last week and a bit  ..  just a heads up fwiw


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## peter2

@Quant   Thank you for mentioning the idea. All of my recent reversal break-outs (ORE, ACX, BAL) were in the top ten short lists. I think these types of setups still need a catalyst to get them moving. The shorters are a determined lot and seem to be able to tolerate 10% swings against them. A news catalyst that fuels additional demand seems to trouble them and force them to start covering (BAL - new mgt team with a clear plan) and then the rout starts. 

It's worth remembering that one of our forum members (Sir Osisofliver) advocated this idea in a beginners thread. His trade involved the heavily shorted (at the time) JBH and he rode it higher valiantly (even knightly). 

I agree that more "quant" research might be worthwhile.


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## Quant

peter2 said:


> agree that more "quant" research might be worthwhile.



Yes for sure , many investigate these types of thing with minimal context and forget the " catalyst " , volume a large part of this catalyst and is reasonably easily quantified . Without going to of topic here i think the best edges in these events may well be at lows rather than highs , volume breakouts and volume climax swing low type events , Anywho at some stage when ive got time to follow up i will start a thread on this . I really need 3 of me ...


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## peter2

*Trading update*: Nothing like a down day to neutralise the euphoria.  New trade

*JHC*: Bought today at 2.12, iSL at 2.00
Tried to buy this at my price late yesterday, failed and the order was triggered today.


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## peter2

Trading update:  One big bad down day.

So, after a big down day like today (showing that the insto traders are wimps just like the retail traders), what do we do in our momentum portfolio? 

Let me remind you that we're trading upward price momentum and when that pauses and reverses we must exit. Occasionally sentiment reverses so quickly that prices don't pause and we see big reversal price bars. We trade what we see, so big reversal bars are exit signals. 

Obviously our weekly system doesn't care about one down day. We must wait for the EOW. 

I should also remind you that our AW is 1.35R and our AL is -0.59R (194 trades). Taking profit at +1.5 and above improves our edge and keeping our losses below -0.6 also improves our edge. 

*BAL*(5.75, +2.3R): Our current TS is 5.65 (+2R). I'll set an alert at 5.70 and sell between 5.70 and 5.65. It's the correct thing to do in this portfolio. It'll allow price to go up tomorrow, but if there is further selling we'll grab an above average profit.

*BLD *(6.37, +2R): Our current TS is 6.25 (+1.5R) We'll let this go higher tomorrow but sell if 6.29 trades. Our exit stop will be in the market as the liquidity is OK. 

*ORI *(18.42, +0.5R): Our current TS is at 18.10 (BE). 
*CIM *(37.82, +0.6R): Our current TS is 36.50 (-0.45R).
*MMS *(13.65, -0.1R): Our current TS is 13.30 (-0.55R).
*JHC* is a newest trade and regular management applies (-1R at risk)

_Summary_: We're allowing prices to go up (when the traders realise they're wimps) and we're managing our exits to realise above average profits and small losses.


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## peter2

Trading update:  The US market traded down to the support level and found support. It also shrugged off the FOMC news and ended pretty much even. It seems the bearish sentiment is limited to the Aussie market. Overnight I was optimistic that we wouldn't lose any trades. 

*BAL*: Appeared to be opening at our alert and exit so we closed it at the open. Result +2.2R. 
Thought about re-buying this as it traded >5.75, but this would be against our TP and not this thread's trading style. If price pauses at this level we may get another regular buy signal. 

*BLD*: Opened well above our exit stop and I wasn't concerned until the order pinged. Damn. Result +1.7R.

*ORI*: Closed trade today as I'd noted that it was due to report tomorrow. Result +0.6R.
This trade didn't have enough profit to let it ride through the news. Looking at the eco calendar again I see that the ORI report has been moved to Monday. Damn, again. 

The end result is that if we'd none nothing we'd be better off! Prices have traded at and below our exit stops and have found support and are now higher. Is this frustrating ? Hell yeah, but I know we did the right thing. Dealing with the market is always about probabilities. On this occasion our actions have caused us to miss out on more profit, but over time these actions will end up saving us a lot of money. 

We've got our TP and plenty of cash. Let's find some more setups.


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## hallph

Great stuff Peter. A question - how does CTX rate for a setup with the break above 30.8?


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## peter2

Trading update:  New trade.

*JBH*: Bought at 25.50, iSL at 24.00.  Initial target near 30.00.
It's another reversal setup and I'm noticing quite a few of these lately. It's hard to ignore temptation when the RR is so attractive. These stocks have performed worse than the index and there's no guarantees that they'll come back into favour. We must not overlook those stocks that are in demand and making new highs.


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## mikeroxoz

Hi Peter...I have been lurking but just dropped in to tell you I am really enjoying the thread. Re BLD as Nick Radge advises...next 100 trades


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## Lone Wolf

That news release for ADA came as a surprise to me. Of course I was filled at the low of the day for a 3R loss.

I've always had my stop in the market, figuring that if price trades at my stop I want out, rather than waiting and hoping it comes back up. This is an example of the worst possible outcome from doing that.

It's also worth noting that a backtest of this trade would show me filled at open. But the low of the day was hit at 1min 18sec after the open and that's where IG filled my conditional order.

To think I picked this over CSR...


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## peter2

@hallph   Glad you're enjoying the thread. I hope it's helping you get your TP established. 

*CTX*: Interesting chart. In the context of the TP in this thread, no. This thread's TP is all about trading short term momentum swings. I don't see a low risk setup in the CTX chart at this time. 

However, I did say the chart is interesting and I'm going to post my comments in the CTX thread. Thanks for the suggestion. 
---------------------

@mikeroxoz  Thanks for your compliment also. I think Nick's saying is next 1000 trades (he's partially automated). 
Staying in a good trade is probably more successful than finding another, however it's not easier. My orders were in the market and that's what can happen when trading for real. If you read a trading blog without seeing any awkward moments, then you'll know they're not trading for real. 

---------------------
@Lone Wolf  You are not alone. I had no idea about the report either. I was thinking about posting the ADA chart as an example of how a break-out can turn nasty. This is a classic one. 

Wow, that was a tight SL. Price could have easily come back and tested the BO level (2.50) and stopped you out, before blasting higher. I always allow price to fall 62% of the up swing. 

Let me state that there's nothing wrong with a tight SL like yours. You're going to get big R winners and occasionally big R losers like today. Your money management must allow for this to happen. 

Now you know why I don't have my exit stops in the market unless the market is thick. The EOD price closed about where my initial SL would have been placed. I'll suffer an unexpected  -1R loss anytime. Keep an eye on the chart if you can. Today's high close is very bullish.


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## Lone Wolf

peter2 said:


> Wow, that was a tight SL. Price could have easily come back and tested the BO level (2.50) and stopped you out, before blasting higher. I always allow price to fall 62% of the up swing.




On the stop position. I agree. The initial stop was just below the last swing low, about where price is now. I moved the stop last night to just below the breakout bar due to concerns that we've seen the market top. The thought being that if it stops me out and turns around I could always look to get back on. However, there had been nothing alarming about the price action up to yesterday, so the stop was overly aggressive.

I've only just resumed short term trading in earnest last week. I'm only trading with a fraction of my eventual account while I iron out the kinks and make mistakes. Which is fortunate because I learned this lesson on the cheap.

I will be watching ADA out of interest but I won't get back on. It made the low within the opening minutes and got bought up for the rest of the day to close on its high. A sign of strength.


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## VSntchr

peter2 said:


> The end result is that if we'd none nothing we'd be better off! Prices have traded at and below our exit stops and have found support and are now higher. Is this frustrating ? Hell yeah, *but I know we did the right thing*. Dealing with the market is always about probabilities. On this occasion our actions have caused us to miss out on more profit, but over time these actions will end up saving us a lot of money.



Bella from SMB likes to say "Trading isnt about extracting every cent of PnL from the trade. It's about doing the right thing".


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## skc

@Lone Wolf  You are not alone. I had no idea about the report either. I was thinking about posting the ADA chart as an example of how a break-out can turn nasty. This is a classic one.

Wow, that was a tight SL. Price could have easily come back and tested the BO level (2.50) and stopped you out, before blasting higher. I always allow price to fall 62% of the up swing.

Let me state that there's nothing wrong with a tight SL like yours. You're going to get big R winners and occasionally big R losers like today. Your money management must allow for this to happen.[/QUOTE]

Thank goodness that wasn't the initial stop. Had LoneWolf sized the position on a 5c stop as his risk, this would have been a 12R loss...


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## peter2

EOW 114 update: ASX Momentum Portfolio *+62.6%* ( 79% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.7%* (past 114 wks)

_This weeks sells_: API(+2.1R), BAL (+2.2R), BLD (+1.7R), ORI-cfd (+0.6R)
_This weeks buys_: JHC, JBH

The week ended with three down days as the materials sector was thumped and banks were sold off. The index fell 1.5% this week. Meanwhile our portfolio had another great week (+5%) as we closed our winning trades (+6.6R).

Remember yesterday? I mentioned that if we'd done nothing we'd be better off. One day later, we would be worse off if we'd done nothing. That's the fine line we're walking as short term traders. One day really matters, sometimes. Only a real-time trading blog can emphasise this point. 

Another equity high, but so what. I'm so glad that we did the right thing at the right time. That's the most satisfying aspect. Keep doing the right thing and another equity high is not far away.

Thanks  @VSntchr  for the the additional reinforcement from "Bella". 

_Outlook_: Our market filter (WU DD) changes slightly to cautiously bullish. This is our indicator to reduce heat by selling losers and raising exit triggers. On this occasion we don't have to do anything as we are ahead of the market reversal. We have no losers (yeah) and took profits at above average results. Our current open trades are new and the open heat level is low. We've already raised a few exit stops.


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## Lone Wolf

skc said:


> Thank goodness that wasn't the initial stop. Had LoneWolf sized the position on a 5c stop as his risk, this would have been a 12R loss...




Absolutely. Your loss isn't limited to your stop. A limit to the maximum % invested in any one stock is important. And of course, basing the risk calc on a reasonable range of movement.

Although in this case, had I set my risk to 5c, I'd have been out with a 2R profit before the fall.


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## kid hustlr

Just absolutely dominating Peter - very impressive


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## peter2

Trading update:  New trade

*CDD*: Bought today at 1.38, iSL 1.28. Trading back at 1.30 would be an early warning. 
This chart came up in a 10d BO scan on Friday and there seems to be a little follow up demand today (so far). It's too early in the day to confirm the BO (close above). The 1.50 level will provide bigger resistance than the old high (1.44). The 1.50 level will provide a minimum RR. 

[_Disclosure_: I'm holding this one from earlier BO's. I can't buy anymore. I'm maxed out.] 
I've included the weekly chart to show the bullish bars that got me into this trend. The first one was an ORB. The second, a bullish long tailed doji.


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## peter2

Just "_shooting the breeze_". I thought about trading this setup as it looks good (buy 0.39, iSL 0.35). I didn't, as there are too many shares about. I don't like trading specs that have issued over 1 billion shares. EWC has 1.734 billion. They're OK for a quick trade when the day traders "pump" them, but we have to sell them before they get "dumped".



Have you considered a rule/guideline like this for your TP?
(I have to thank Frank Watkins for this one.)


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## Lone Wolf

peter2 said:


> I don't like trading specs that have issued over 1 billion shares. EWC has 1.734 billion. They're OK for a quick trade when the day traders "pump" them, but we have to sell them before they get "dumped".




Thanks for the tip. It's not something I've ever considered previously.


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## peter2

Trading update:  A quick losing trade.

*JBH*: Sold this afternoon at 24.10 to realise the loss (-0.9R). Price traded below our exit then rallied but this rally died and we sold. We didn't sell after yesterday's down day as price close off the low indicating some demand. However today's selling put paid to that hope. 

I notice that HVN is also having a down day. Retailers are still unwanted, it seems.


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## peter2

Our other trades are doing much better.

*CIM* is above our T1 and we're letting it get to T2.
*CDD* is near it's initial target (1.50) and we've sold some of our parcel at T1. MD is a bit thin up here and it may take another day to sell all. As I type this I see we've sold the rest. Ka ching! +1R in 24hrs. This will offset the JBH loss and we'll let CIM get more.



ps: The CDD trade was a bit lucky. I was able to make this trade as I noticed the subtle change in demand quickly enough to get the minimum RR before the 1.50 level.


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## peter2

Trading update:  I've got a little post it note on the monitor telling me we need +21R with 42 wks left. let's get on with it. New trade.

*BAL*: Bought today at 6.00, iSL at 5.50.
I was prepared to buy this if it traded back at 6.10 to confirm the demand. Buying at a lower value is a small concern due to indication of supply above 6.00. I'm assuming the traders are looking at other sectors today thanks to the overnight budget. The iSL is a little larger as price can become volatile. 

If price doesn't continue higher quickly, we'll exit and wait for the proper BO entry.


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## peter2

Trading update:  New trade

*HSN*: Bought today's BO-NH at 3.62, iSL at 3.48.
We must be aware that the chart shows price is in a corrective swing up, after an impulsive swing down. If price fails to continue higher we'll exit quickly.


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## peter2

Trading update:  New trade

*ORE*: Bought today's BO-NH at 3.52, iSL at 3.20.
Re-entering this stock that we've got in our weekly portfolio. ORE remains on the top of the short list, so any move up could be quick.


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## peter2

Today's flurry of activity sees our portfolio 110% invested and we've got 5K left if we see a setup that's too tempting. We're risking (downside exposure) 4% in total across the six open trades. 

*CIM*: TS raised to +2R level and we've placed a limit sell order itm at 40.90 (T3) for tomorrow.

Things are looking good as the market (particularly the industrials - XNJ) continues higher. This portfolio avoided the drop in CSR but our weekly portfolio takes the hit.


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## myrtie100

Hi Peter

It looks like DMP might be a good contender.
It has gapped above horizontal resistance and above MA200, after a couple of weeks trading in a tight range.
It also had a good run up to this resting point.
The RR looks decent.
I know this stock is well shorted, which could help with the momentum - up or down!
What do you reckon?


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## peter2

I agree with all your observations.  There was a low sized risk setup there.


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## peter2

_Update_: The closure of the *JHC** trade today at our profit target (2.26, +1.1R) marks the fact that we've completed 200 trades in this thread. Two hundred trades from entry to exit on a public forum, that's got to be rare. 

Another profitable batch of 20 trades (our 2nd best). We haven't had a losing batch yet. You can compare the results from each batch in the table. The best value to use for the comparision is the total R units as compounding is increasing the dollar values. 

I post this table to show that the results are up and down. Our edge is 0.268, so over 20T we should win 5.36R. There's no month within 1R of this average**. The results are either under or well over. You might say that we're either lucky or not, but I prefer to think of it as "in sync" with the market or not.  Whenever we're not in sync we must do something to get in sync. Trade diversification also helps us avoid losing too much when we're out of sync. 

Being in and out of sync with the market probably applies more to short term traders as we chase what's moving at the time. It's important that we're not too late to the swing up. I've noticed that my weekly portfolios can remain sideways for several months then suddenly increase in value as the demand returns to them. I remember that craft's portfolio (longer term investor) remained in a sideways band for years before going higher and higher. The longer you plan on holding your trades the more patience you must have (know yourself).

After every good batch it seems that we have a poor batch. Hmm. Well, we're warned. 




* JHC probably closed prematurely just to complete the 200. 
** Averages are so misleading yet they're commonly used to spruik performances.


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## debtfree

peter2 said:


> Two hundred trades from entry to exit on a public forum, that's got to be rare.




An outstanding effort Peter, congratulations and a BIG Thank You. 

Cheers ... Debtfree


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## willy1111

peter2 said:


> _Update_: The closure of the *JHC** trade today at our profit target (2.26, +1.1R) marks the fact that we've completed 200 trades in this thread. Two hundred trades from entry to exit on a public forum, that's got to be rare.
> 
> Another profitable batch of 20 trades (our 2nd best). We haven't had a losing batch yet. You can compare the results from each batch in the table. The best value to use for the comparision is the total R units as compounding is increasing the dollar values.
> 
> I post this table to show that the results are up and down. Our edge is 0.268, so over 20T we should win 5.36R. There's no month within 1R of this average**. The results are either under or well over. You might say that we're either lucky or not, but I prefer to think of it as "in sync" with the market or not.  Whenever we're not in sync we must do something to get in sync. Trade diversification also helps us avoid losing too much when we're out of sync.
> 
> Being in and out of sync with the market probably applies more to short term traders as we chase what's moving at the time. It's important that we're not too late to the swing up. I've noticed that my weekly portfolios can remain sideways for several months then suddenly increase in value as the demand returns to them. I remember that craft's portfolio (longer term investor) remained in a sideways band for years before going higher and higher. The longer you plan on holding your trades the more patience you must have (know yourself).
> 
> After every good batch it seems that we have a poor batch. Hmm. Well, we're warned.
> 
> View attachment 71064
> 
> 
> * JHC probably closed prematurely just to complete the 200.
> ** Averages are so misleading yet they're commonly used to spruik performances.



Well done Peter, especially on your willingness and consistency to share.

I enjoy following your journey.


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## peter2

Trading update: Closing our two cfd trades as the market seems very weak today. Prices on our trades rose initially then sold off to go below their opening prices. 

*CIM*-cfd: Closed at 40.04 for a +2.3R result. I'd raised the TS to 39.90, but may as we'll exit now.

*MMS*-cfd: Closed at 13.65 for a tiny loss (BE). Traded above 14.00, but couldn't stay above. 
14.00 is the logical re-entry level. Perhaps next week. 

*HSN*: May have placed the iSL too close on this one. Two down days and price is close to it. 
We may exit this one later this afternoon if price trades below 3.50.


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## peter2

Don't you just love it when this happens at the end of the day. 



Of course I've paid full brokerage as well.


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## debtfree

Those 3.59pm orders don't always come off Peter


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## Triathlete

I feel your pain Peter...Happens to the best of us...


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## peter2

EOW 115 update: ASX Momentum Portfolio *+66.7%* ( 45% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.9%* (past 115 wks)

_This weeks sells_: JBH(-0.9R), CDD (+1R), JHC (+1R), CIM-cfd (+2.3R), MMS-cfd (BE)
_This weeks buys_: ORE, BAL, HSN

The closures of JHC (just lucky), CIM and MMS were defensive as the market fell at the EOW. 

The market ended up about the same as it started this week. The budget bank blues where offset by rises in healthcare and the soaring XNJ (industrials). Our good recent run looks to be at an end with the close of the CIM trade. It's been a good three weeks for this portfolio (and the weekly one, although I'm still sucking lemons after the CSR price plunge). We cashed +11.5R over the last three weeks and ended on another equity high. 

_*The lesson*_ after our good run is to keep going no matter what the results are or how we're feeling. In March we had 10/11 losing trades (total -5.7R). We kept on going, putting aside our frustrations and now we've completed 13/15 winning trades. (total +16R). 

_Outlook_: WU DD.  There's not much room before our weekly turns down also. If the XAO closes <5800 that would do it for me. Once again we're prepared for any downturn, should it happen. We have a small amount at risk (2.6%).


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## peter2

I've received a few likes in this thread recently from new members. Thank-you for that. I appreciate being "liked" and get a warm fuzzy feeling seeing them pop up when I log in. This post is for those newer members. (Although I think you should still read the 22 pages from the first thread and the 46 pages of this one. )

*Summary of the trading activities started in Pavilion103's LIVE thread and continued here. *

_Aim_: To demonstrate the real-time application of a trading plan (TP) in the ASX market. The reason was primarily educational for you and therapeutic for me.  

_Goal_: To grow an account starting with $50K AUD by trading short term price swings (price momentum). There was no initial performance target set other than a strong desire to avoid a 10% draw down (DD) of capital at any time for the duration of the thread. After two years (+50%, CAR 22%, max DD -7%), a target of +100% was announced to mark the end of this contribution. 

_Trading style_: A rule based discretionary trading style was outlined to try to take advantage of *potential* upward price swings. The TP was based primarily on the formation of patterns seen in a price chart. The main discretionary aspects were the selection of the stocks to trade, the amount of portfolio heat (total downside exposure) and occasionally some trade closures. 

_Trading Activities_:

*TP1*: Long ASX equities and ASX equity cfds (trading both trend and momentum swings)

*TP1 (turbo)*: Long ASX equities and ASX equity cfds. (Trading price swings only)
Similar to TP1, but with smaller initial risk sizes, quicker exits and profit targets. 

*TP2*: Short ASX equities. In the planning stage and may be implemented if required (in a falling market) to help reach the final target. 

*TP3*: Trading other world markets using leveraged products (futures, forex, cfds). 
Trading activity is journalled in another thread. Results from this activity is shown on the ASX chart but will not be included towards the final target.


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## peter2

*The basics of TP1
*
This TP primarily trades price break-outs anticipating a continuation of the move higher.

_Setups_:
Break-out of horizontal resistance (BO-HR). Our best setup especially if there's a higher low (HL) before the break-out (BO).
Break-out to a new High (BO-NH). Second best setup and our opportunity to join an established trend.
Pull-backs: Anticipates the end of a corrective price fall and resumption of an established larger time-frame (weekly) trend up.
Reversals: Found at the end of a down trend and generally entered using either of the two BO setups mentioned first.

_Position Sizing_: Fixed Fractional Percentage method used. The number of shares to buy is calculated by dividing 1% of the starting capital +/- realised profits/losses by the size of the initial risk.  (TR = 1%)

_Portfolio Heat_ (total downside exposure of the portfolio if all trades were closed at their current exit triggers) :
This amount is limited to 10% (desired max DD) and is controlled by a discretionary evaluation of a market risk filter (which is based on the weekly/daily trend of the XAO index).

_Trade Management_:
Initial Stop Loss (iSL): Mandatory exit and compulsory for all trades.
Trailing Stop (TS) or Trailing exit trigger:
Used to protect above average profits (> 1.5R) or to reduce heat (downside exposure) in response to a downgrade of the market risk filter.
Profit Target: Exit at logical and acceptable Reward/Risk (RR) chart based targets.
Discretionary Exit: Exit used after atypical price spikes (both up and down).

_Portfolio Management_:
The market risk filter changes to bearish (close losing trades, reduce heat level, protect profits)
The market risk filter changes to bullish (start more trades, increase heat level, don't tighten TSs too soon)

These are educational items to help you create and organise your own TPs. Please ask if you have any questions or want additional suggestions. If I don't have any, other members will.


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## Wyatt

peter2 said:


> _Goal_:  After two years (+50%, CAR 22%, max DD -7%), a target of +100% was announced to mark the end of this contribution.




Peter, you continue to deliver uncommon logic in your momentum thread. In your trading, you are an emotionless, totally disciplined machine, yet philanthropic in your view towards other wannabe traders/temporarily interested passerbys.

One can listen to the many podcast on successful traders and get basic overall concepts to pursue, but there is a disconnect from theory to practice. We are very privileged here to get the granularity in the *many* aspects of what it actually takes to be profitable in the real world of trading. You too Tech/a.

Thank You


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## myrtie100

Wyatt, I second that!
I have learnt so much from these two selfless guys.
They are both invaluable to this forum and anyone wanting to improve their trading. 
Thank you both from the bottom of my heart x


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## SuperGlue

Hi Peter,
Appreciate all that you have done.

With your approval of course.

May I suggest that Joe make a copy of post #911 and #912 and add to the start of this thread.
Else info will just disappear in the thick jungle of postings.

It took me quite a while to find what some of the abbreviations mean and will be very helpful to the newbies too.


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## peter2

Trading update:  New trade, actually a re-entry.

*MMS*: Bought at 14.10 when price traded there for the second time late today (iSL 13.50).
Yesterday's price bar was bullish, but I wanted to see if 14.00 held and placed the "hoop" at 14.10. This is not a turbo or cfd trade so we can place the iSL below recent daily support.


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## peter2

Review of *HSN* trade that was closed soon after it was started. 

_Context_: Price had bounced off weekly support level (3.10), has made a HL, gone higher and closed  >3.50. I thought the setup and entry are OK. 
BUT looking at a larger chart NOW I notice a resistance line at 3.60, very close to our entry. Not good Peter.

I was concerned that the recent move could be a corrective one after the impulsive move down to support. That would be confirmed by price going below the rising support line (pink dashed line). 

The selected iSL level was 3.50. I think this level is more suited to a trade that is expected to go higher immediately. It didn't leave any room for price to test the prior BO level of 3.50. It didn't leave any room for price to test the rising support level. 

This setup should have been categorised as a reversal setup and given more room (iSL at 3.40 - 3.45).

_Summary_: The iSL was too close to recent price action and I failed to notice overhead resistance before the entry. Cost of these errors (-1R).


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## peter2

Trading update:  New trade.

About time for a trade in a gold stock given the unstable political environment atm. Gold has been going up for a few days already, so we're a bit late. I rarely trade gold stocks as it's much easier/quicker/practical to trade the gold price. I'm not familiar with the FA details about the ASX gold companies (costs, hedging) so I'm relying on the charts to indicate the best opportunity.

*SBM*: Bought today's BO-NH at 3.00, iSL at 2.75.


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## peter2

EOW 116 update: ASX Momentum Portfolio *+62.9%* ( 45% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.3%* (past 116 wks)

_Note_: If the divs and franking credits account for 4% pa, then the benchmark index is at the same value it was over two years ago. That's a flat market. 

_This weeks sells_: HSN(-0.9R), BAL (-1R)
_This weeks buys_: MMS, SBM

The market fell 1.4% this week due to the banks. Our portfolio closed two losers and our open trades are also losing. Break-out opportunities are not forming during this selloff. We have to wait for the market to start rising again. 

_Outlook_: WD DD.  The falling market turned our market filter fully down (both daily and weekly trends are down). This is our signal to close losing trades, reduce heat and protect our portfolio. We're ahead of the market and we can be patient now.

US politics and our budget bank levy has spooked the flighty insto traders. I look for pull-back and reversal opportunities during these dips as I expect the market to rally back to the old highs near 6000. I'm not interested in charts with new lows. I prefer charts where price has fallen to the prior BO level. There was demand at that level before and I anticipate demand to appear there again when sentiment turns more bullish. We want to ride any rally back to the recent highs when it resumes.


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## peter2

Trading update:  New trade

*FLT-cfd*: Noticed micro-pattern (ascending triangle) last night. FLT has been moving higher while the index moved lower. So, there's plenty of demand for FLT. 
Bought today's open (limit order 37.10) at 37.00. iSL placed at 35.9. 
We're late into this swing up and we'll treat it as a turbo trade with a tight iSL (<36.00). We want price to continue higher immediately and we'll place a limit sell order above our +1.5R level. We've used a cfd as this trade won't last long and it uses less cash. 

I find taking these trades (knowing I'm late into the swing) hard, but the market can always surprise me.


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## peter2

Here's another one that got away. Price opened above my limit order and it's off and gone.
It didn't appear in yesterday's 10d BO scan because of the down day and price was below prior day's close. Noticed it last night and placed limit order that was treated with contempt by the other buyers.

There are always enough opportunities around to not worry about the ones that get away.



I won't fill the thread with the ones that got away. I only mention it as we recently discussed that this will happen when we use limit orders to enter our trades. Chasing price that opens 0.30 above our limit order changes the RR too much for me.


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## debtfree

One that might be of interest ready for BO-HR is MTR and a couple that just BO are SLC & TCH


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## peter2

MTR is in my BO soon watch list. I'm waiting for a close >3.10 as there's a box pattern forming.
SLC looks good. There's not enough volume for me. 
TCH is undergoing a merger/takeover of AFY. I'll wait until things are settled before trading them.


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## peter2

Trading update:  New trade

*TPM*: Bought today's BO-HR at 6.13, iSL 5.80. 
This is a reversal with an acceptable target, even thought the target requires price to fill the gap first.


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## peter2

@hallph  Thanks for the compliments. The most important skill to master is keeping losses small. It's easy to recover from small losses and keeps us in the game longer allowing us to gain experience and confidence.

You asked a question that I'm happy to post and reply to in the thread for others to read.

_How do I know trading BO-HR and BO-NH is a profitable method? _

I've always been a chart watcher rather than a company fundamentalist (my science background). Almost all charts show large movements in price that we call trends. The rewards are obvious if I could buy into them early and hold on to them. The task was to identify an event that happens near the start of all trends that I could scan for and use consistently. 

Every trend has a moving average crossover near the start. I initially used the 10ema>30ema as an indicator. However the EMA XOR gives lots of useless signals when price is going sideways. It became an early warning indicator and I waited to buy the BO-HR or BO-NH. 

When I finally accepted the responsibility for my trading decisions, I focused on buying BO-HR and BO-NH using Darvas box patterns (2007 bull market). Over the years I've realised that these setups work in all market conditions. Obviously they work best in markets that are going up, OK but frustrating in sideways markets and keep me out of falling markets as the number of opportunities fall as well. 

The key was assembling a set of rules that I would use to take advantage of those trends. What you see in this thread is the real-time application of those rules/guidlines to create an overall profit in a manner that suits my tolerance for risk.


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## peter2

EOW 117 update: ASX Momentum Portfolio *+61.4%* ( 63% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.8%* (past 117 wks)

_This weeks sells_: FLT(-0.9R)
_This weeks buys_: TPM

Our portfolio lost a little again this week as we closed another loser (FLT) and our open trades lost a little as well. It's time to be patient once more and wait for perfect setups. 

_Outlook_: WD DD.  Our market filter remains bearish in both the daily and weekly charts. It hasn't prevented us from starting a few trades hoping that our market will bounce from here. In stark contrast to our market the US markets are making record highs again. 

[Meanwhile, the weekly portfolio is making us eat dust. ]


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## grah33

congrats on more great results peter.  i didn't do too well.  came in while things started ranging these last few months (trend following). lost about 8R (maybe even 9R max drawdown).  i think i also aggressively launched my positions one after another to make the 5% up quickly , all at the wrong time. better do it gradually next time i guess (unless it's a bull market). don't know if this kind of drawdown is too big or not


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## grah33

it's recovered about 2R since, so that's good...later when i get more data, i might try opening up the trailing stop more using spacious swing points, then narrow in after say 2R or 3R profits are  achieved.  would be great to capture trends fully on the daily timeframe.
(hope i don't sound annoying to people out there...)


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## peter2

EOW 118 update: ASX Momentum Portfolio *+61.2%* ( 23% invested in 2 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.5%* (past 118 wks)

_This weeks sells_: *MMS* (-0.4R), *TPM* (-0.6R)
_This weeks buys_: nil

The index has bounced off the recent 5730 level which is now strong resistance as it's been hit three times. Our portfolio takes another hit as two trades where closed for losses. This makes five consecutive losses as the market has fallen. 

When times get tough, we become frustrated by our lack of progress and when we take few losses it's easy to postpone the weekend review. We'll do it later. This is a same inaction as not closing a trade that should be closed. This EOW review is an important part of our business. Ignoring it, is taking our eyes off the business. Would you leave your business unattended? This EOW review forces us to look at what's happened and make sure we're looking for the next opportunities. 

Our recent losing trades: 
HSN: We've already reviewed the incorrect iSL. A minor mistake that was exposed by a bearish market.
BAL: A volatile stock we're our re-entry failed. A normal loss.
FLT: Another stock with a iSL was placed too close in this bearish market. Do we re-enter on this 2nd BO-HR?
MMS: Another re-entry BO with a strong trend up, that has reversed. 
TPM: A reversal BO-HR that has immediately failed to go higher. 

The bearish market with it's normal increase in volatility has created this current losing sequence. Past losing sequences 7L, 9L, 5L, 5L, 6L, 6L, 10/11L, now another 5L. 

_Outlook_: *WD DD*. Our market filter remains down, but the latest rally could change the daily trend if it continues next week. It's important that we trade perfect setups in stocks that have been showing strength, relative to the index.


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## peter2

I didn't want to increase the length of the EOW review, so I'll add a few more comments here.

The recent exits in MMS and TPM were closed before price hit the exit triggers. I do this when market conditions become bearish. I see no point in making the losses bigger while waiting for price to hit the exit triggers. I can always re-enter when prices rally.

MMS: Chart shows two down bars with the second one larger than normal. Clear rejection of the recent highs and our BO level. I use this exit strategy in the turbo TP and when protecting above average profits.

TPM: Exited after three down bars. Price immediately rejected the BO level (and our entry). It's important for a BO trader to be prepared for an immediate rejection of the BO. If after three bars price is not above the BO level, that's enough for an exit. A BO can fail in any market type.

SBM: The recent price volatility confirms why I don't trade gold stocks, preferring to trade the POG directly. The POG jumped after the US unemployment numbers were released so we'll see what happens to the price of SBM on Monday. There's no room to defend our entry in this trade. It'll be a full loss or a winner.

If you're having a frustrating time in the market you shouldn't ignore it. It's easy to take a rest, but if we do we'll miss the next rally and the opportunities it'll produce. The next rally might be the big one that takes the XAO through 6000. I'm not holding my breath waiting for this to happen btw.

Our last five losses were caused by the bearish market rather than too many mistakes. If you're trading poorly and making too many mistakes, then definitely take a rest and review what you've done.


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## grah33

thanks Peter. it's encouraging for me to see the losing streaks peter. it obviously happens.


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## peter2

EOW 119 update: ASX Momentum Portfolio *+61.9%* ( 23% invested in 2 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+7.4%* (past 119 wks)

_This weeks sells_: nil    
_This weeks buys_: nil

The market closed below 5730 last week keeping our market filter fully bearish. Our portfolio held it's value due to the low number of open trades. This short term long only system must get out of a bearish market to avoid losing more than we're comfortable losing. Our current DD is only -3% which is completely normal. If your risk tolerance is larger then you'll have had more trades during the last month and your results may be quite different (either better or worse). It's important to know your own risk tolerance and have a process (TP) to stay within your limits. 

_Outlook_: *WD DD*. We're waiting for evidence of a rally in order to start more trades. I assume you're getting anxious to trade and the inactivity is wearing your patience thin. I've spent my time looking at other markets and researching  ideas (*). I continue building watch lists that I monitor each day. I've also been doing non-market related activities as a mini break from the day to day work. 


* - been learning more about volume by price charts to see if they could help my trading. I've a very good edge trading intraday nick reversals. It so happens that many of these setups occur at low volume levels. Could my edge be improved by including observations from VbP charts? I need to do the research to find out.


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## Kryzz

Does today's big up day change the outlook on your market filter at all Peter?

I've got ELD & FPH on the watchlist after some nice runs up of late:


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## peter2

@Kryzz   Since you asked. 
Today's up bar did close above 2 x ATR(21) from the prior low and turned the daily bar to blue. This changes the filter from WD DD to WD DU which is an indication to consider starting more trades. I'd like to see some follow through and continued demand for the banks. One up day doesn't change the recent down trend. 

Yes I'm looking for perfect setups (BO-HR, bounces off support in a weekly up trend).


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## peter2

Trading update:  New trade

*ALU*: Bought at open (8.84), iSL at 8.50.
Nice ascending triangle and possible BO-HR. Target just below 10.00 makes an acceptable RR.




Thanks to Kryzz for making me look through my charts.


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## peter2

Trading update:  What is going on? I'm pleased to have only a small number of open trades in this market.

*ORE*: Sold this morning for break-even after two down days and a gap erased our profits that had taken one month to build. Our weekly trade will be closed if there's no late buying this afternoon. The weekly bar looks ugly.

*SBM*: Price is flipping around like a fish out of water. 

*ALQ*: Placed buy limit (6.95) yesterday but the open traded above and we missed out or so I thought. Price opened much lower today (not XD) and we bought cheaper than yesterday. The iSL stays in it's place, making the trade risk a lot less.


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## traderxxx

Hi peter2
whats going on could be partly due to conract expiry
for spi today,   market down 150 pts since late yesterday.


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## peter2

EOW 120 update: ASX Momentum Portfolio *+61.3%* ( 52% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.3%* (past 120 wks)

_This weeks sells_: ORE (BE)
_This weeks buys_: ALU, ALQ

Our benchmark index rose 2% this week as the market bounced strongly early in the week. The bounce didn't help our  two open trades (ORE, SBM).

_Outlook_: *WD DU*. The market rally has turned the daily trend UP. The weekly trend remains down and indicates some caution is required. We started two trades this week as the market filter indicated we should start investing more. There may be a little EOFY selling starting soon, but this won't effect us as we don't hang on to losers. We'll start a few more trades while the XAO stays above 5733.


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## peter2

EOW 121 update: ASX Momentum Portfolio *+63.9%* ( 52% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.2%* (past 121 wks)

_This weeks sells_: nil
_This weeks buys_: nil

The index ended down on the week after a mid-week selloff. The banks and materials sectors continue to be sold. Our portfolio held up well with the two new trades gaining during the week. 

_Outlook_: *WD DD*. The mid week selloff closed below 5730 flipping our filter fully bearish once again. We didn't have to do anything as our portfolio has only a few trades open and they're OK. The banks won't recover for a while now thanks to SA wanting to levy them as well as the federal gov't. 

The only positive sectors we've got are mid-caps (XMD) and industrials (XNJ). They won't be able to lift the index on their own. The property sector (XPJ) was looking OK until this week. 

You're wondering why we're not in more winning trades. Well, in order to get into more winners we would have had to start more trades. More trades mean risking more and if things didn't work out we would have lost more. If you want to keep your losses small you must trade lightly in unfavourable market conditions.


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## seans

I really enjoy reading this thread Peter. It's the only one I continually follow. Great work and very much appreciated.

You talk about market filters being turned on and off. Are you using support and resistance lines as your filter or is it something else? I am using a 10wk XMA as my market filter.

thanks


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## peter2

Thanks @seans , hope your trading is progressing well also.

My market filter is determined by the short term trend of the weekly and daily charts of the XAO index. It can have four conditions. Two of them are caution indicators (*WUDD*, *WDDU*) while the other two are either bullish (*WUDU*) or bearish (*WDDD*). I include both time frames as I'm trading in both time frames. This filter is NOT a timing tool but a directional indicator that I use to manage the portfolio heat.

I will also pay attention to recent swing highs/lows to draw "lines in the sand" that tell me when the market is surprising people.


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## peter2

I'm posting this chart of HSN for personal amusement. We started a routine BO trade and took the loss. Upon review we decided that our iSL was placed too close to the price action. A better level was selected and this has worked out OK. 

As I was monitoring the chart we could have bought this latest BO, but I didn't place the order due to thin MD. 

This chart is a good example of why we shouldn't place our iSL too close (unless that is part of your TP) and the importance of patience. If the market does things to make us chuckle, well, that's better than crying. I hope price goes straight to target.


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## peter2

Trading update:

*ALQ*: Sold just now at 7.96 after good news spike. Result +3R for this thread.
Selling 1/2 for myself at the same price. I'm now able to let the price do whatever it does.
This result offsets 6 of the last 7 losing trades. This shows why keeping losers small is so important.


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## peter2

Special cheerio for @Kryzz  for getting my focus back on the ASX with his timely post. 
Both of his suggestions (ELD, FPH) have gone higher and the BO's that I took for this thread at the time were ALQ and ALU.

The "cheques in the mail" as we say Kryzz. Well, only half a cheque, as I've only sold half. 

This shows that we shouldn't take our eyes off the market because good setups are happening all the time. Yes, I know we get frustrated and down hearted at times and it's hard to get motivated to do the scans after a few down days. Think about it. How strong is the demand that pushes price to new highs (BO) while the market is falling? 

Here's a look at our recent losing run and how one good winner can offset so many of them (if you keep them small).


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## Kryzz

peter2 said:


> Special cheerio for @Kryzz  for getting my focus back on the ASX with his timely post.
> Both of his suggestions (ELD, FPH) have gone higher and the BO's that I took for this thread at the time were ALQ and ALU.
> 
> The "cheques in the mail" as we say Kryzz. Well, only half a cheque, as I've only sold half.
> 
> This shows that we shouldn't take our eyes off the market because good setups are happening all the time. Yes, I know we get frustrated and down hearted at times and it's hard to get motivated to do the scans after a few down days. Think about it. How strong is the demand that pushes price to new highs (BO) while the market is falling?
> 
> Here's a look at our recent losing run and how one good winner can offset so many of them (if you keep them small).
> 
> View attachment 71643




Looks like you're banking some nice cheques here Peter, following with interest still. 

What would you say the approx hours you would spend per week with your daily trading timeframe if you don't mind me asking?

CTD is back on the watchlist for me, consolidating at the moment after another pop higher.

Cheers


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## peter2

I'm watching the markets full time Kryzz. I'll PM you a more detailed reply.


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## Skate

peter2 said:


> Trading update:
> 
> *ALQ*: Sold just now at 7.96 after good news spike. Result +3R for this thread.
> Selling 1/2 for myself at the same price. I'm now able to let the price do whatever it does.
> This result offsets 6 of the last 7 losing trades. This shows why keeping losers small is so important.




Hi peter2

You said at 3.22pm: "*ALQ*: Sold just now at 7.96 after good news spike"

The sale of ALQ was a discretionary sale - I would love to know what method you used in selling this holding and why you used this method. (Example: Sale by 'Price Limit' or 'At Market'

skate.


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## Rypieee

Skate said:


> Hi peter2
> 
> You said at 3.22pm: "*ALQ*: Sold just now at 7.96 after good news spike"
> 
> The sale of ALQ was a discretionary sale - I would love to know what method you used in selling this holding and why you used this method. (Example: Sale by 'Price Limit' or 'At Market'
> 
> skate.



Probably because ALQ hit the price target and achieved a 3R return


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## peter2

Hello @Skate   You're correct that this was a discretionary exit (DE) and it was no coincidence that it was at the T3 level (producing a +3R profit). When I first saw the spike and news I raised the trailing stop to below the day's low. This locked in +2R. Surprisingly, price kept going up and towards the EOD was nearing 8.00. I noticed that the T3 level was 7.96 and ALQ was trading 7.95 - 7.97 while I was watching. I sold 1/2 my parcel then and to be fair exited the thread trade at the same time. 

It was just luck that I was watching at that time. If I'd looked later I'd have sold at 7.90 or just left the TS at +2R and waited for the next day.

In this volatile market I'm happy to be taking profits especially when they appear suddenly. +3R is well above the average win stat for the thread so exiting at T3 improves the results.  In this thread and real life I tighten the TS when trades get above +1.5R knowing that these results are rare and above average. 

I track the performance of my discretionary exits and compare the results to a few fully objective exit methods. My DE's perform very well against these other methods. Occasionally I'll miss out on a bigger profit (+5R, +8R) by selling early and not letting price movement take me out of the trade. 

Selling 1/2 is another type of DE and is done to placate wild emotions experienced during an unexpected price spike in my favour. I'm more able to manage the trade properly knowing that I've taken some profit. I'm aware that there is a cost (loss of more profit) for this emotional calming and smoother equity curve.


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## hallph

Interesting to read your sell targets and stop tightening past +1.5R as this is what I always struggle with.
Does your win rate dictate the return you're looking for on each trade? i.e. if W=50% then you'd be profitable at anything greater than T1target (+1R).  

Was a nice setup in TGA with the BO-HR 1.30 level, 10>30 day MA.


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## peter2

This is important. I don't care about my win%. I never exit a trade to improve the W%. 
I care about improving the average win (AW) and try to do it whenever I can. 

The AW for this thread (and it's trading style) is 1.4 (AL = -0.6). Once a trade gets above +1.5R I tighten the exit stop (TS) in order to ensure an above average win. 

If we were in a bull market (XAO >6000) I'd be more comfortable trailing the exit stops and would use targets less. Until then anything better than +1.5R is gold. 

Another trading style or method might have an AW of 2.5. Exiting trades below this figure would hurt it's performance. 

*TGA*: Noticed that yesterday also and I like it as a reversal setup with an obvious target at 1.65.


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## peter2

Trading update: New turbo trade

*REA*-cfd: Bought at 66.10 today with the iSL at 63.5. 
This trade size was reduced to get it nearer our max size. I will be applying a tighter exit stop (two down days) and a target near 70.


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## peter2

Trading update:  New trade, a reversal break-out. 

*FBU*: Bought today for this thread at 7.71, iSL at 7.20. 
Most definitely a reversal setup. It's first task is to overcome resistance at 8.00 then it could "fly".


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## peter2

EOW 122 update: ASX Momentum Portfolio *+64.3%* ( 50% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.5%* (past 122 wks)

_This weeks sells_: ALQ (+3R), ALU (-0.6R)
_This weeks buys_: REA-cfd, FBU

What a nasty thing to do to us on the last day of the fin year. We were getting close to another equity high but that disappeared quickly on Friday. 

*ALU*: Sold slightly below TS as price continued to tumble below the recent BO level. 

_Outlook_: WD DU. The ASX is becoming even more volatile lately but the week ended slightly up and changed our filter to cautiously bullish. My emphasis will be on the cautiously part of the filter. 

We've got a new FY and 8 months left of this thread. I want to get to triple digits before then and I think we may have to do more 3 - 4 day "turbo" trades (and gap trades) to get there. This will require a bit more application and focus in order to get onto short term rallies asap. You'll see them we trade them.


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## skc

peter2 said:


> EOW 122 update: ASX Momentum Portfolio *+64.3%* ( 50% invested in 3 trades)
> Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.5%* (past 122 wks)
> 
> We've got a new FY and 8 months left of this thread. I want to get to triple digits before then and I think we may have to do more 3 - 4 day "turbo" trades (and gap trades) to get there. This will require a bit more application and focus in order to get onto short term rallies asap. You'll see them we trade them.




Great work as usual peter2.

A quick explanation on the maths for the many followers ... this journal has returned 64.3%, so to reach triple digit it needs to return another 35.7%. However, this 35.7% is against the original starting capital of $50k, which is ~$17.85k. The current capital is $82k (being $50k starting + $32k profit), so the percentage return required against current size of account is just under 22%.

22% return in under 8 months is still no easy task but it certainly isn't beyond the capability of this trading strategy. One just never know if the next 8 month will be see the steep inclining part of the equity curve (like Sept-Dec 15, Jun-Sept 16 and Mar-Jun 17), or a relatively flat part.


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## peter2

@skc  Thanks for that. No pressure hey?
I've a little table that shows we need 20R in 34 wks. It was 21R in 42wk when I created the table.

I'm not a fan of time based targets when dealing with the market and I really shouldn't have posted one. We make these crazy goals in ignorance (beginners, newbies) or when things are going really well (ego!).

The only way to remove the additional stress is to simply state that I'll stop at the end of three years regardless of the result or I keep going until I reach the triple figure value. We'll see what happens in 34 weeks time.

No pressure. One trade at a time.


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## skc

peter2 said:


> @skc  Thanks for that. No pressure hey?
> I've a little table that shows we need 20R in 34 wks. It was 21R in 42wk when I created the table.
> 
> I'm not a fan of time based targets when dealing with the market and I really shouldn't have posted one. We make these crazy goals in ignorance (beginners, newbies) or when things are going really well (ego!).
> 
> The only way to remove the additional stress is to simply state that I'll stop at the end of three years regardless of the result or I keep going until I reach the triple figure value. We'll see what happens in 34 weeks time.
> 
> No pressure. One trade at a time.




My experience tells me that, whenever I tried to extrapolate my P&L after a good period, the market will always smell it and show me mean reversion in action! It really is remarkably aware of my mental state.


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## peter2

Trading update:  Lingering trade closed.

*SBM*: Closed today at 2.90 for a small loss (-0.4R). 
This trade has been open for 47 days and price continues to trade sideways. When the POG couldn't hold 1250/oz I've been thinking about closing this trade. I'm a day or two too late, but I gave it every chance to go higher and it hasn't. 

Most afternoons I'll look through a 10d BO scan for trading opportunities. Naturally I'll continue and I'm also going to do two other scans. A gap-up scan looking for those stocks that gap up with good news. We'll be trading the follow up price action if it's bullish. A 1st blue bar scan that will get me into a pull-back that has resumed the pre-existing up trend. I've mentioned this "blue bar" scan earlier in the thread. 

I'm adding these extra opportunities to ensure we have plenty of work to do. These charts will show a few examples. The A2M chart shows a 1st blur bar that was also a 10d BO. A quick +2R missed here.


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## peter2

Trading update:  New trades. I've been busy.

*CAJ*: Bought BO-NH at 0.27, iSL at 0.24.
This company has been whammed recently (WAM, WAA, WMI). 


*CPH*: Bought at 0.56, iSL at 0.48.


*GEM*: Bought BO-NH at 3.75, iSL at 3.50.


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## peter2

EOW 123 update: ASX Momentum Portfolio *+63.1%* ( 45% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.7%* (past 123 wks)

_This weeks sells_: SBM (-0.4R), REA (-0.5R)
_This weeks buys_: CAJ, CPH, GEM

The ASX continues it's wild ride. Day traders should be having a ball. Swing traders like us will be having a difficult time especially if you use tight stops. Longer term traders, well nothing fazes them. 

REA: I mentioned at the entry that I wouldn't like the price to go below 65 and it did, triggering the close the next day at 65. EOW close is 63. [@triathlete  here's your anticipated dip. ]

We started three trades this week but we've had no follow through. The falling prices have triggered a few exits in the weekly portfolio. That's new and shows the selling is becoming more wide spread throughout the market. 

_Outlook_: *WD DU* just. The late buying today kept the daily filter up, but it I can see that it traded below. Overall I'm more bearish when weekly exits are being triggered as well.


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## peter2

Trading update:  New trade

*CLQ*: Bought at 0.76, iSL at 0.65. 
It's a 1st blue bar on the chart after a HL. I'm anticipating that the up-trend has resumed after the low volume pull-back.


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## peter2

EOW 124 update: ASX Momentum Portfolio *+57.7%* ( 51% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.9%* (past 124 wks)

_This weeks sells_: nil
_This weeks buys_: CLQ

The market continues in it's current range ending the week higher. Our portfolio however lost value as prices in our trades drifted lower. It's no fun reporting losing weeks and the compounding effect makes the losses seem bigger than they are. 

I had no thoughts about hiding in the cupboard waiting for a better week to report. "Head in the sand" is not part of my trading approach. We're active traders. It's important to be aware of what's happening every day. When we're out of sync with the market, we have to notice it quickly or we'll miss the opportunity to rectify it. The index rose this week due to demand for the large cap stocks. This portfolio didn't currently have any trades in this sector. That's our bad luck. 

We started a few extra trades in small/mid caps knowing the market was volatile and tricky. It didn't work this time so we'll take our "losses" and try again. 

FBU: A reversal setup that hasn't attracted more demand. This shows why we should be buying stocks that are clearly going higher in preference to reversals with little demand. Our iSL wasn't tight so we can allow it a little more room. 
CAJ: BO failure, a close < 0.25 would be reason to exit.
CPH: Close < 0.50 is reason to exit on next open. I thought I saw renewed interest in this sector (AC8 looking attractive.)
GEM: Our only shining trade. We'll hold and give it a chance to get to initial target (4.20). 
CLQ: Wouldn't like to see C<0.70.

_Outlook_: *WD DD*. Index remains in volatile range. We'll defend our portfolio after our attempt to start more trades in this tricky market hasn't worked out favourably. If we see any low risk setups in the large caps we'll trade a few. 

_Note_: The weekly portfolios are more invested in the large caps for liquidity reasons and they're going great. The manager of the weekly portfolios has been giving me heaps over the week-end. He's got a chart that shows the stark contrast in performances over the last week.


----------



## peter2

_Sorry_: Just found an error in the spreadsheet that displays the % performance. 
The correct value is +61.0% not 57.7%. The P&L on the pic calculates to +61% also. 
A down week but not as bad as it looked.


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## Skate

peter2 said:


> _Sorry_: Just found an error in the spreadsheet that displays the % performance.
> The correct value is +61.0% not 57.7%. The P&L on the pic calculates to +61% also.
> *A down week but not as bad as it looked*.




Some days you win and some days you lose and at its bleakest remember "it could be worse"


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## peter2

"It could be worse" is always a frightening possibility when dealing with the market. 

If we really believed this then we'd all manage our downside exposure much better. This thread has always emphasised strong risk management as it's the only thing we can control to some extent. 

Another day with >1% movement for no reason is bewildering. It certainly makes short term trading more difficult. Profits appear one day then disappear the next.


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## peter2

Trading update:  A few exits.

*FBU*: Sold today (7.15) after unscheduled bad news trading update. Price opened below our SL (7.20) but luckily for us it got closer. A slightly larger loss (-1.1R) than planned but these things happen. 




*CAJ*: Closed <0.25 yesterday. Sold today (-0.7R).
*CLQ*: Closed < 0.70 yesterday. Sold today (-0.4R).

*GEM* our only open trade has pulled back and is testing the BO level. We've raised the TS and have only a little at risk. 

This portfolio hasn't been in the right stocks over the past few weeks, so closing these trades is a chance to rectify that. We've now had seven losing trades in a row for -4.4R. Our current draw down is only -5% so it's well within our comfort level even if it feels worse. We know we will trade our way out of it.


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## peter2

A copy of this famous photo by Philip Plisson is on my office wall. This aerial photo was taken during a gale with wind gusts up to 130km/h.  It represents ME _vs_ The Markets.


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## craft

peter2 said:


> Trading update:  A few exits.
> 
> *FBU*: Sold today (7.15) after unscheduled bad news trading update. Price opened below our SL (7.20) but luckily for us it got closer.




If you're managing exits below stops that's a pretty apt photo. Hope the trading plan for that activity is rock solid. Would't want to get unlucky.


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## skc

peter2 said:


> Trading update:  A few exits.
> 
> *FBU*: Sold today (7.15) after unscheduled bad news trading update. Price opened below our SL (7.20) but luckily for us it got closer. A slightly larger loss (-1.1R) than planned but these things happen.




That's a great exit for a product downgrade. Considering the NZX equivalent was <$6.90... it would have been an easy (and not incorrect) decision to get out on the open.


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## peter2

I don't usually see the open and it was after 11am when I noticed the red figure on FBU. Checked for news and logged-on to exit asap as the sell stops are not in the market. I wasn't going to wait until the afternoon to exit and did so when price was 7.10 - 7.15. The iSL was 7.20 and I didn't wait around to see if price was going to get there.  

If price was below the open I would have sold asap knowing that things can always get worse. 

I don't try to get a better sell price once the exit is triggered. My results early on showed me that I couldn't do it and the quickest exit works out better in the long run. Prices go down quicker than they go up. 

FBU chart (above): Once the BO failed there was a much earlier opportunity to exit (big down bar- arrowed). Not doing so is not a mistake as the initial SL was placed lower to allow a HL to form. It did but today's downgrade thumped the price and forced the exit.


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## skc

peter2 said:


> I don't try to get a better sell price once the exit is triggered. My results early on showed me that I couldn't do it and the quickest exit works out better in the long run. Prices go down quicker than they go up.




No I didn't think you would so I was surprised that your exit was $7.15 rather than the open. But your explanation of not seeing it until 11am makes sense.

The leisure of a EOD/weekly trader!


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## peter2

EOW 125 update: ASX Momentum Portfolio *+59.0%* ( 15% invested in 1 trade)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.3%* (past 125 wks)

_This weeks sells_: CPH, FBU, CAJ, CLQ
_This weeks buys_: nil

The index ended down a little for the week and the general selling forced us to exit most of our open trades for losses. 

*CAJ*: Sold after price closed <0.25. Since then price has closed at 0.265 and is showing signs of going higher. We may re-enter this trade next week at 0.27. 

_Outlook_: *WD DD*. Fully Bearish. Index remains in a volatile range. We started a few more trades hoping that one or more of them would work out OK, but unfortunately none of them did and we took the losses. The current DD is only -4.6% so that's not a concern. Of course it feels worse than it really is due to the compounding of our account. 

Our task remains the same. Look for perfect setups and start only a few trades due to the tricky market conditions.


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## peter2

A reminder for short term traders to check for scheduled news now that we're approaching another reporting period.

*GMA*: Chart shows an attractive BO-HR but won't be traded due to 1H17 earnings due in one week.
1Q17 earnings report reversed prior rising price swing.



I anticipate there'll be more fodder for the ASX shockers thread soon.


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## peter2

Trading update:  Two consecutive up days. 

*CLQ*: Re-bought at 0.77, iSL at 0.67. 



_Comment_: This is the second re-buy after exiting last week (also re-bought CAJ on Mon.) which implies that our earlier exits were a bit pre-mature. They may have been, but they were a defensive response to the high volatility and huge down days.  Our trading will never be perfect. We manage the portfolio and each trade in response to what happens in the market at the time. 

I think that if you are going to be quick to defend your portfolio (trade book) then you need to be able to re-enter just as quickly.


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## peter2

Trading update: There were a stack of 10d BOs to consider today. 
My short list included ASL, BUB, CKF, IDX, SEK

*ASL*: Bought on the close at 1.96, iSL at 1.80. 
This stock is at yearly highs and has been in a strong trend since May. Price has paused, creating this second box pattern that we'll use as our setup. There may be some resistance at 2.00.


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## peter2

EOW 126 update: ASX Momentum Portfolio *+59.8%* (43% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.7%* (past 126 wks)

_This weeks sells_: nil
_This weeks buys_: CAJ, CLQ ASL.

The volatility in the market continues this week (3 up and 2 down days for little change). 

You'll notice that we've re-bought two trades that we closed recently (CAJ, CLQ). I mentioned that I may have been a little pre-mature with these exits but they were a defensive response to the volatility and huge down days. 

If you notice that you're doing this a lot then it's an indication that you haven't fully accepted the initial risk of the trades. We exit early because we don't want to accept the full loss. This is a destructive and very costly trading trait. 

We place the initial SL below support, but exit before this support proves or disproves itself. We're not giving it a chance. We're undermining our analysis and beliefs in price action. 

The weekly pic shows the two losses in CAJ and CLQ from last week. I took the $900 loss trying to avoid a $1650 loss. Obviously I was subconsciously aware that we had too much open risk in this volatile market and reacted by closing these trades pre-maturely. The portfolio has taken a $900 hit unnessesarily and illustrated the high cost of this bad trading trait. 

This is the sort of thing a regular review should pick up. I didn't notice this at the time but one week later I've realised that I've had a Homer Simpson "doh" moment. 



_Outlook_: *WD DD*. Fully Bearish and still waiting to see what happens next.


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## peter2

Trading update:  New trade

*NWH*: Bought today's BO-NH at 0.705, iSL at 0.64. 
I like box patterns sitting on top of support. The initial target is 0.80.


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## peter2

Here's one I overlooked or ignored. There out there if you're really open minded.


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## Country Lad

peter2 said:


> Here's one I overlooked or ignored.




I have been ignoring it as high risk, not really sure about the product and the China risk.  Couldn't ingore it any longer, in at 43 today.



peter2 said:


> There out there if you're really open minded




Like WHA, same sort of higher risk profile.  I had it as a buy if it closed at 48, then 59 but didn't. Latest was a buy if 62 but I thought there would be a positive reaction to the announcement and reinstatement so this time didn't ignore it and bought in open.


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## peter2

EOW 127 update: ASX Momentum Portfolio *+60%* (39% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.1%* (past 127 wks)

_This weeks sells_: GEM (-0.2R)
_This weeks buys_: NWH

The market keeps going sideways and so does this portfolio. We haven't been able to get into something that keeps going up. Our trades look like they might but haven't yet. Perhaps it might be worth our time looking at the small cap stocks that move due to their own company specific sentiment rather than the general market sentiment.

GEM was closed at our TS for a small loss. The trade started well but reversed. 

_Outlook_: *WD DD* Our filter remains bearish and I'm becoming more frustrated. Our index won't move without the banks and our large resource companies all going in the same direction. Last weeks rally in BHP and RIO was offset by the dump in CBA. 

I've included the DD chart that shows this current DD is < 5%. This is within our comfort level and we just have to be patient as usual.


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## peter2

Testing, 1 2 3 can you read me?   Trial post.

I was getting an error and unable to see page 50 after a few posts were removed. If I couldn't post then I'd be unable to mention all the great trades we've been in this week. BAL is going ballistic and we're not on board. ASL is thinking about getting to our +2R target (2.29) and I've sold it at 2.25. CAJ has just gone higher also woo hoo! 

But if I can't post then you won't know what's happening.


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## Rypieee

peter2 said:


> Testing, 1 2 3 can you read me?   Trial post.
> 
> I was getting an error and unable to see page 50 after a few posts were removed. If I couldn't post then I'd be unable to mention all the great trades we've been in this week. BAL is going ballistic and we're not on board. ASL is thinking about getting to our +2R target (2.29) and I've sold it at 2.25. CAJ has just gone higher also woo hoo!
> 
> But if I can't post then you won't know what's happening.



Hi Peter2,

I can see your new post


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## peter2

EOW 128 update: ASX Momentum Portfolio *+61.2%* (26% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+8.7%* (past 128 wks)

_This weeks sells_: ASL (+1.6R)
_This weeks buys_: nil

Friday's selling ended the week on a downer, but price remains in the sideways range. It will be interesting to see if there's further selling next week. I'm looking to find buying setups in stocks that are not as correlated to the general market sentiment. That's hard, as prolonged selling eventually hits everything. 

*ASL*: Watched as price approached our +2R target level (2.29) but sold at 2.23 to take profit (+1.6R). This was a discretionary exit to grab the above average result knowing that we started this trade later than we should have. The market provides two lessons for us. 
(i) Better late into a trade than never. Trends go further than we expect and it's always nice to get something when expectations are low. 
(ii) Try not to be late into a trend. Our job is to find newly started trends and get into them asap for the best results. 



_Outlook_: *WD DD* Our market filter remains bearish and the market remains volatile. If the market falls further that won't be good for long only short term traders, but it will create good buying opportunities for medium and longer term traders.


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## peter2

galumay said:


> BOOM! up more than 35% this morning.




Good to see this portfolio get a nice surprise and @galumay expressed it well. His post was the first notice I'd seen of today's price spike since the trading halt. Price is currently above our +3R level and I'll be using that (0.91) as our new exit trigger. 

Price is still rising, now at 0.94, now 0.96. Could we get 0.98 (+4R!)  YES    SOLD at 0.98 (+4R)


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## peter2

Serendipity. I love it.
The NWH trade in this thread is over and I'm not a bit concerned that price is now 1.00. We locked in +3R, then allowed price to go higher and grabbed the +4R result. 

You may notice that NWH was in my personal weekly portfolio with the weekly sell stop at 0.60 (chart).
I've personally sold 10K at 1.00 and will use that cash to buy my $10K allotment (at 0.68) in the retail SPP. Unfortunately this thread will not see the benefits of the SPP. 

NWH is now at 1.03 it won't get to 1.045 (+5R) ! Time to go for a walk and resettle the emotions.


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## peter2

Who goes for a walk at times like these! Moments like these should be savoured while hot. The momentum portfolio is at a new equity high and this one trade has saved our hide as it's only the fourth winning trade in the past 19 completed trades. Our current batch of 20 was looking at it's first loss until the ASL and NWH results came in. Phew! That was close. 

No results until the EOW as things can change. Time to look for our next opportunities.


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## Wyatt

peter2 said:


> Serendipity. I love it.
> I've personally sold 10K at 1.00 and will use that cash to buy my $10K allotment (at 0.68) in the retail SPP.




As the SPP is only for $5m, that's not many to go around, especially for eligible holders who sold today.
With such a gift on offer, and considering the announcement notes on scaling back, what are the views on getting an allocation in the SPP. Last time in this situation I missed out


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## skc

Wyatt said:


> As the SPP is only for $5m, that's not many to go around, especially for eligible holders who sold today.
> With such a gift on offer, and considering the announcement notes on scaling back, what are the views on getting an allocation in the SPP. Last time in this situation I missed out




At the last annual report there are almost 7,000 shareholders in NWH. Given the difference in subscription price and the last price (40% premium), you'd have to be very financially stretched to not put your money into the SPP. So at $5m maximum and 80% participation you get about $1k each. Obviously actual allocation is up to the Board, but if it's commensurate with the size of your existing holding then it's unlikely to be a terribly meaningful percent.

Obviously there's no point being unhappy about it, given the gains seen in the share price today.


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## Wyatt

skc said:


> At the last annual report there are almost 7,000 shareholders in NWH. Given the difference in subscription price and the last price (40% premium), you'd have to be very financially stretched to not put your money into the SPP. So at $5m maximum and 80% participation you get about $1k each. Obviously actual allocation is up to the Board, but if it's commensurate with the size of your existing holding then it's unlikely to be a terribly meaningful percent.
> 
> Obviously there's no point being unhappy about it, given the gains seen in the share price today.
> 
> View attachment 72259




Thanks SKC,
The insto shares come online in a few days, so we'll see what happens then. Its hard to be unhappy about it all, especially atm


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## peter2

Trading update:  New trade

ALQ: We've recently started a trade in the weekly portfolio and now we have one in this portfolio. 
Bought at 8.05, iSL at 7.70. Initial target is 8.45 (~+1R)
Price has been trading above a recent BO and looks likely to go higher with a bullish market.


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## peter2

Trading update:  New trade.

FBU: Bought at 7.66, iSL at 7.30. Initial target 8.00
Price has been consistently going up after the bad news selling spree. Price BO-NH yesterday but I waited for the scheduled news today. I consider this setup as a reversal and I need to see a HL. There is one on the chart but I should really wait for another once price has broken through the sloping resistance line (SRL).


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## kid hustlr

Pete,

Interested in your stop placement. Any reason it's not below the low of the recent HL?


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## peter2

FBU setup: A conservative iSL would be at 7.20 creating the downside risk of 0.45. Sometimes I reduce this to 80% knowing that an 80% pull-back is rare and if price falls this far it will probably fall further. Placing the iSL at 7.30 is a little aggressive and indicates that I'll be managing the trade a little more aggressively as well. 

Both setups in ALQ and FBU leave little room for a corrective pull-back and if price does fall for two days the trades will be closed quickly. I've started these two trades because they're attractive low sized risk setups with acceptable RR. 

I'm hoping to grab a quick +1R - 1.5R on these trades for this thread but I think they'll provide an acceptable RR for a medium term trader employing a larger iSL size. 

_Outlook_: Three banks (CBA went XD) popped up in this afternoons 10d BO scan. That makes me optimistic about a bullish BO in the index.


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## peter2

EOW 129 update: ASX Momentum Portfolio *+68.1%* (58% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10%* (past 129 wks)

_This weeks sells_: NWH (+4.0R)
_This weeks buys_: ALQ, FBU

The volatility remains high for another week and the index remains in it's recent range. The seasonal reports have contributed to the daily volatility and as short term traders we must be aware of scheduled news that may impact our trades. The index has been stuck in this range for 13 weeks. It's been 14 weeks since our last equity high. However our successful trade in NWH has us at a new equity high! 

*NWH*: It started as a normal BO-NH that subsequently didn't look very promising. You read about the exit as it happened. The above average win was purely due to luck. We happened to be in the trade when the company announced positive news. This win is our largest dollar win (due to compounding) but not our largest R multiple win (DWS +5.1R Aug2015).

_Outlook_: *WD DD*. Our market filter remains bearish and we have to be mindful of that. I was starting to get a little bullish but Friday's fall put paid to that inclination. I never attempt to guess what the market may or may not do. Our market filter indicates our course of action. We're still trading but doing so with a strong defense.


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## peter2

Trading update:   Trade closed

*ALQ*: Trade closed at today's open (7.73) as price closed yesterday below our exit trigger (7.70).
Naturally price has rallied today. Our weekly trade is still open. Result -0.9R.




Edit: We can always re-buy if price closes > 8.00 again.


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## peter2

This trade completes another batch of twenty. This latest batch has an abyssmal W% of only 20%. That's only 4 winners in 20 trades. If you wanted evidence that I'm a lousy trade picker then this is it. However in spite of the poor W% this batch made a small profit (+1.6R, +$1018). Yes we got lucky being in NWH at the right time.

We're trading to earn profit not prove that we're great stock pickers. I really don't care about my W%. It's super important to keep the losses small. 

This batch contains losing sequences of 7 and 8. Would you have kept on going if these were your results? 

This batch also took longer due to the "trying" market conditions.


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## peter2

Trading Update:   New trade

EPD: Bought today at 0.595, iSL at 0.55. 
This is a late entry as the BO-NH was weeks ago. This has recently reports good results and price has remained higher. Trying to select stocks that are impervious to index volatility.


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## peter2

Trading update:
I've added MLD to the weekly portfolio. Last weeks bullish bar and HL met our requirements. Price has been in a range for approx one year so it's time for a move higher.


AMP went XD today (0.145). I've adjusted the sell stop down 0.15 to take this into account. This is the only reason I'll ever move a exit trigger down. Even so, AMP is looking very weak and our trade is likely to be closed soon.

Sorry this should be posted in the weekly thread.  
I did consider MLD for this short term thread but the MD is too thin at times.


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## debtfree

Should this be in the weekly thread Peter? Thanks anyway.
Just seen it


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## peter2

I hope less experienced traders (I dislike the term "newbie") are following @tech/a  as he monitors the price and volume action in UPD looking for another trade. He's looking for a very small initial risk as this creates larger R multiple winners. This is a very active trading style. It's also great fun stalking these types of trades. 

I thought it might be of interest to describe my trading style, which is slightly different using the UPD chart. My last setup was the BO-NH at 1.10. This required an in the market pending buy stop order that triggered a buy when 1.10 was traded. The initial SL would have been placed at 1.00 or just below. As I didn't have the order itm I've missed the trade opportunity. Buying afterwards skews the RR adversely. 

I need more sideways price action (creating a box pattern) or a retest of the prior BO at 1.10 (creating a higher low).  However if pressed to trade UPD I'd place a pending order to buy when price trades at 1.28 (limit 1.30) with an iSL at 1.19. This would be a BO-NH setup and entry to take advantage of the new demand for UPD. This setup is closer to *tech/a's* style than mine.




My setups are slightly larger (more bars) than *tech/a's* as I prefer to see levels tested rather than just daily lows and highs being tested. 

The best trading style is the one that works best for you. Both *tech/a* and I can make our trading styles work for us.


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## tech/a

Great when they work out.

I'm glad you mentioned the reset with a better R/R if
It works out. I take it for granted people see why I closed
Out the trades and wait on the side lines .
UPD is a good trade.

Incidentally my MORE bars are found on lower time frames.
Not that different.


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## peter2

tech/a said:


> Incidentally my MORE bars are found on lower time frames.



Excellent point I'd overlooked that. 

Please keep posting your weekly charts of interest. I think I'll trade a few of your charts in this thread.


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## tech/a

The kiss of death!


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## peter2

Trading update: New trades.

ALQ: The market is playing me. We've re-bought this at 8.01, iSL a little wider this time at 7.60.

SSM: Bought this BO-HR a little late at 1.49, iSL 1.35 conservative. 
There seems to be plenty of supply at 1.50, but if this goes price will go higher quickly.
_Note_: I already own some of these (and added more) and have included them in the weekly portfolio.




I've had limit orders in to buy JIN, EHL but haven't wanted to pay higher. 
This portfolio is almost fully invested with only $1436 left. This may be enough for a cfd trade if there's another promising setup.


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## debtfree

peter2 said:


> This portfolio is almost fully invested with only $1436 left. This may be enough for a cfd trade if there's another promising setup.




The market has been *WD-DD *for the last 7 weeks, is it rare to have a full book in these conditions? Are you drawing confidence that the market has not fallen below this sideways consolidation to do this? (even the 200d MA is supporting it nicely) 

Cheers ... Debtfree


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## peter2

Yes it's rare to be fully invested long when the market filter (MF) is bearish. The MF is not an on/off switch. I use it as a dimmer switch to reduce portfolio heat when conditions are bearish. You've seen that I 've not traded too much and kept the portfolio heat low. After the recent ordinary batch of results I'm now intentionally trading stocks that are not so correlated to the index (less large caps, more small/mid caps). I'm also trying to avoid getting mugged during this reporting season. 

A few of our trades have started to move higher. This means we can raise their sell stops, reducing heat. As the heat is reduced we can start another trade and it's a nice surprise when we realise that we're almost fully invested. I haven't ignored the bearish MF. Our almost fully invested portfolio is due to our careful approach (using the MF) and a bit of good fortune to be holding stocks that are going up. 

Depending on what happens today our portfolio heat will be 3 - 4% at a time when our portfolio is near an equity high. 

I hope you can understand the subtle way I use the MF in these tricky conditions.


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## peter2

EOW 130 update: ASX Momentum Portfolio *+69.7%* (98% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10.2%* (past 130 wks)

_This weeks sells_: ALQ (-0.9R)
_This weeks buys_: EPD, ALQ-2, SSM

Another chronological moment has passed. This thread has been going for 130 wks (2.5 years). Coincidentally the portfolio hits another equity high. The recent six month period ended with average stats. 




The index remains in its sideways range in spite of new highs in BHP and RIO. The banks, especially CBA, are struggling and the index can't go up without them. There are charts with rising prices and it's our job to find them. 

ALQ: The market played with our sell stop during the week and we took the disciplined exit on the open only to see later that price rallied all day. We've started another BO-NH trade in ALQ this week with the iSL slightly lower. 

_Outlook_: *WD DD*. Our market filter remains bearish and the comments about my application of the filter (prev post) are worth reading if you haven't already. The filter is bearish due to the higher volatility and won't change until the index breaks through the top of it's range.


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## Boggo

peter2 said:


> EOW 130 update: ASX Momentum Portfolio *+69.7%* (98% invested in 6 trades)
> Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10.2%* (past 130 wks)




Nice work Peter, well done


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## peter2

Trading update:  One trade closed as another opens.

FBU: Our daily trade closed as price tumbled through our sell stop. Our sell stop was raised to the low of the day after the chairman sent a letter to shareholders apologising for their poor management. Surprising to me that didn't drop the price until today's missile sent our market falling. Sold at 7.50 after the 7.55 trigger alert. This is also a defensive sell as our market filter is bearish. Our weekly trade in FBU is not affected.



JIN: Bought at 2.90, iSL placed very conservatively at 2.60 to allow us to hold through pending XD.


_Note_: Too late and missed out on EHL. 
Decided to buy JIN in preference to UPD today.


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## peter2

Trading update:  Trade closed

CLQ: Sold at 0.90 as price failed to hit our T2 target and returned to our exit trigger that was raised as price neared T2. This was our second attempt in CLQ for results of -0.4R and now +1.2R.
Our weekly trade remains open and the TS will be raised to BE at EOW.


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## peter2

Trading update:   New trade and lots of promising opportunities in the market right now.

*MAH*: Bought BO-NH at 0.185, iSL at 0.165. 
Thought this was still fighting takeover from CIM. Not so. 



Other setups available now: 
CSL:  Pull-back in a strong weekly trend.  BO-HR (ledge)
NUF: Reversal  BO-HR another ledge that provides a low size risk
BGA: Looking likely to BO > 7.00 soon.
ALQ: Looking likely to BO > 8.00 again
SEN: A real specky that looks interesting.

I could go on and that's why I have and apply capital risk limits. Reign it in P2.


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## peter2

EOW 131 update: ASX Momentum Portfolio *+69.1%* (85% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10.1%* (past 131 wks)

_This weeks sells:_ FBU (-0.5R), CLQ (+1.2R)
_This weeks buys:_ JIN, MAH

This week the market and our portfolio ended about the same as they started. We've got six open trades in small/med cap stocks that shouldn't react with the daily gyrations of the market. All of them are poised and look likely to go higher. We've got more cash available but we've risked as much as we're comfortable with in the present market conditions. I'm becoming more bullish and with plenty of opportunities available it would be easy to over extend and risk more than we should. We will risk more when we're able to raise a few exit triggers and reduce the current portfolio heat. 

_Outlook:_ *WD DD*. Remains bearish as the index stays within this range.


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## peter2

_Observation_: Going through this afternoon's scan results I've noticed a plethora of promising trading opportunities. I've really had to restrain myself from starting a few more trades. Many of these trades were on higher priced stocks that we would have used cfds. There were a few at low prices as well. There are a lot of stocks sneaking higher while the index flounders along in it's range.  Do we start more because we've got the cash? 

Is this feeling "the fear of missing out", greed or urgency due to a self imposed target. It could be all of them. 

Our portfolio contains a few trades that have gone nowhere (ALQ, SSM, JIN) and a few going up very slowly (CAJ, EPD, MAH). The new setups appear more promising. New setups always appear more promising than the ones you're holding. 

The real issue is risk. How much are we comfortable risking in these market conditions? Even though all these current setups make me feel bullish, the market generally is stuck in a range and has been for months. I been monitoring my portfolio heat for years and I know what my comfort levels are in all market conditions. It would be easy for me to start a few more and push my risk tolerance a little, but if the market goes down violently for any reason I'd be rushing for the exits like everybody and there'd be no buyers! 

There are plenty of trading opportunities now. There will be plenty of opportunities next week and in the future. Don't let your emotions make you ignore your risk management or modify your trade management.


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## peter2

_The observation that preceded the last one_:  I was having a conversation about price gaps and what I thought about trading them. I like them and think they have great potential for a disciplined trader. It got me thinking and today I've been going through charts looking for gaps and thinking about a set of rules to trade them. 

Then it was time for my pm scans which I try to do everyday even if I'm fully invested. That's when I noticed how many BO opportunities were out there and how many have triggered recently. With so many BO opportunities, why am I looking at gaps? 

Once an analyst always an analyst. Gaps that remain unfilled, can preceed great BO-NH setups. Maybe I can include that in my BO checklist to improve the probability of a winning trade?


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## rb250660

Something I'm experiencing recently is far fewer signals and trades out of my mean reversion systems. Also my momentum trades are ticking further into profit. Small Ordinaries popped its head above this recent sideways range too and at a 230 day high yesterday.


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## Roller_1

rb250660 said:


> Something I'm experiencing recently is far fewer signals and trades out of my mean reversion systems. Also my momentum trades are ticking further into profit. Small Ordinaries popped its head above this recent sideways range too and at a 230 day high yesterday.



My MR systems have been flat all year and fewer trades compared to other years


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## rb250660

Roller_1 said:


> My MR systems have been flat all year and fewer trades compared to other years




I've heard the same from another trader I know too.
However mine made a fair bit of money this year up until EOFY. After that flat. The momentum trades have stepped in and are make the money now.
Another trader I know who trades trend/breakout was flat all year up until a month ago, now he's making profit.
There's clearly a theme here.


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## peter2

Thanks for the feedback. I'm always interested in how other methods are going in tricky market conditions. 

I mentioned yesterday that I had a few setups suitable for cfds. I'll present them for educational purposes only. They will not be included in this thread's portfolio. They will be included in mine. 

CSL: Classic BO-HR of ledge pattern. Target provides >2R potential.
CCP: Great symmetry between SRL, abc correction to fib buy zone. Target thin but may provide more if the price swing is impulsive.
ORI: Another chart with corrective swing ending and next move higher resuming. 




Trade management will allow price to move up but not down by very much.


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## Cam019

Nice setup with that volume range control bar on ORI, Peter. I'm assuming here that your CFD iSL's are in the market. How come the iSL looks to be right on that nice round number of 20? Wouldn't it be prudent to have it at 19.95?

EDIT: I just saw that 19.79. Is that the iSL?


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## peter2

EOW 132 update: ASX Momentum Portfolio *+71%* (85% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.5%* (past 132 wks)

_This weeks sells:_ nil
_This weeks buys:_ nil

The index finished the week a little lower, but our porfolio finished higher and a new equity high. This time it was our trade in ALQ that pushed the value up. The TS's on EPD and ALQ have been raised and this reduction in downside exposure allows us to start another trade next week. 

We'll be looking for another small/mid cap as the XSO and XEC are going up.

_Outlook:_ *WD DD*. Remains bearish as the index stays within this range (copied this from last weeks post).
I hope you can see the benefits of a portfolio (or trade book). Last week it was CLQ that gave us a gain. This week it was ALQ. Next week, who knows, but we've got six trades open and it'll only take one of them to move higher to boost our performance.


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## peter2

Trading update:  New trade

APX: Bought today's BO-NH at 4.82, iSL 4.40.

Lots to choose from today.  Missed A2M and had to choose between ALU and APX.
I'm going to be using more price targets to increase the frequency of trades.


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## peter2

Trading update:   One trade closed, another starts.

EPD: Sold today at 0.61 as I was concerned by the thinning bid depth. Price did hit our +1.5R level and traded at our +1R level but I gave it a chance to go higher. Not to be and a +0.3R result.

EHL: Bought today at 0.195, iSL at 0.165. 
Thought I'd missed this one as price traded above 0.20 and the bid depth was thick. I didn't want to pay 0.205. We got a lucky break as I was watching a big seller took the 0.20 and 0.195. There were 200K at 0.195 available. We bought some quickly. 
My only concern is the very high # of shares (2.4Bill), but the trend is strong. 


We've got 6K cash, enough for a few cfds trades. I'm feeling bullish.


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## peter2

Trading update:   New trade

*ASL-cfd*: Bought at 2.19, iSL at 1.98. 
The chart is messed up due to the cap rsg.  This is a BO-NH after the capital raising at 2.14. Demand seems to be still there and price is in a strong up trend. 



We've maxed out on risk at 6.3%. Now it's important to raise TS's where we can and be ready to defend our portfolio if the market drops. We've found ourselves in a few trades that are not moving up or down (CAJ, SSM, JIN, MAH). I still like all of them and am willing to be patient. 

We'll grab short term targets on the ALQ, APX, ASL-cfd if we get the chance. Limit sell orders itm.


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## kid hustlr

Pete,

can you confirm your risk limits for bearish/neutral/bullish markets? I now you have written it somewhere but I can't find the exact post


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## Cam019

@kid hustlr, here you go.


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## peter2

Thanks Cam019.
 May I mention, that although the market filter I use is fully bearish the market is not going down. The filter turned bearish due to the rise in volatility. The market looked likely to go down, but hasn't. The selloff in the banks has offset the increase of many other sectors. 

The frequency of break-out opportunities has also not decreased. Not typical of a bearish market. 

I'm using slightly more risk than normal for a bearish market filter. This is another example of a reasonable (imo) use of discretion in the system. 

I've also spread the risk across small/mid cap industrials rather than mostly large caps that are more correlated to the sentiment/movement of the index. 

My daily XAO bars will turn blue when the index closes above 5825 but I won't upgrade the market filter until the index closes above 5850. 


ps: A reminder: The main reason for monitoring portfolio heat is to find your discomfort level in all market types. I'm also trying to earn a reasonable reward (15 - 25%pa) without experiencing a 10% DD. Parameters that very few equity trend and momentum mechanical systems can provide.


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## peter2

skc said:


> At the last annual report there are almost 7,000 shareholders in NWH. Given the difference in subscription price and the last price (40% premium), you'd have to be very financially stretched to not put your money into the SPP. So at $5m maximum and 80% participation you get about $1k each. Obviously actual allocation is up to the Board, but if it's commensurate with the size of your existing holding then it's unlikely to be a terribly meaningful percent.
> 
> Obviously there's no point being unhappy about it, given the gains seen in the share price today.




Once more @skc  has been shown to be spot on. This portfolio administrator has been allocated $1.2k worth of NWH shares in the retail SPP. I'm not unhappy with the ~70% premium. However this portfolio will not be seeing the $850 gain (+1%). So sad .


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## peter2

@Cam019   Nicely done with your short term trade on GXY. 
Keep them coming and make sure you keep the losses small. 

The three cfd trades I mentioned earlier have concluded with mixed results. This is generally what happens, one goes nicely (CCP) one doesn't (ORI) and one drifts. (CSL). This also shows why I prefer to start a few if they appear at the same time. I treat them as a mini-batch and manage them to get an above average result across all three trades (3T for +1.3R = 0.43/T which is above this threads average of 0.25).


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## kid hustlr

Aggressive exits Pete - do you feel the index is turning down again?

great fill on ccp


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## peter2

Yes these exits were quick. I knew that I had pushed my risk tolerance a little. I've got lots of open trades at the moment, across plenty of portfolio's.

ORI crashed and burned pretty quickly. CSL was closed before it went XD and probably shouldn't have been started so close to the XD date. We never know about break-outs. This could have gone higher quickly but didn't. CCP was going OK and still has plenty of upside. This exit may have been premature but the profit was acceptable and made this mini batch OK. The CCP price was an average figure from an in the market limit sell order. The cfd provider sometimes fills small orders without going through the real market.

The great thing about short term trading is that I can re-buy CSL immediately or wait for another BO-NH.  Last week the healthcare ETF's in the US made new highs. The sector is hot (ABBV, GILD). 

I try not to get opinions about what the market may or may not do. The XAO is still stuck in a range while the US markets are at record highs. It's my job to manage the open positions and defend the downside exposure. I'm trying to get involved in case of a rally, but getting out quickly when price falls. 

This portfolio finds itself stuck in stocks that are going sideways. That's bad luck and it's my job to manage what happens next. I may close a few trades next week and buy other stocks that look likely to go higher. We'll see. Plans could change tomorrow.


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## VSntchr

peter2 said:


> The cfd provider sometimes fills small orders *without going through the real market*.



Your not using DMA-cfd Pete?


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## peter2

I don't use equity cfds unless I'm fully near fully invested and quite bullish. 
I use DMA providers but one of them will fill an order for a 1000 if the market has only 800 available at my price. The other is strictly DMA and that means I have to wait for a market fill or modify my order to get it filled. It's a real pain when 999 get filled and 1 is left hanging.


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## peter2

EOW 133 update: ASX Momentum Portfolio *+68.9%* (103% invested in 8 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+10.0%* (past 133 wks)

_This weeks sells:_ EPD (+0.3R)
_This weeks buys:_ APX, EHL, ASL-cfd

Two up and three down days sees the index rise a little. This portfolio lost a little value as it's stuck in trades that are not going higher. I've raised a few exit stops and may even close a few trades to start new ones if there are better looking opportunities. The ones I'll  probably close will be those that are currently losing a little. 

_Outlook:_ *WD DD*. Remains bearish as the index stays within this range (copied from last weeks' post).


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## kid hustlr

Pete,

I noticed you raised the stop on SSM - for me theres no technical reason to do so - this is just purely due to it not going anywhere? Do you find you do this often?

My thinking is I'd rather just exit than leave the stop in 'no man's land' - interested to hear your thinking


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## peter2

SSM: Has gone XD (0.03) so I don't need to give it a little more room. I'd be concerned by a close <1.45 and <1.40 I'd be out. The large sell order at 1.50 has reappeared after the XD date. I'm sitting on a good profit on this one and don't want to lose too much of it. At the same time I want to own it when price goes >1.50.

I agree that 1.40 is a bad spot for a exit stop as it's neither tight nor loose. You've probably talked me into using 1.45. 

This is one problem when trading a stock in two time frames (weekly and daily) in different portfolios.


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## kid hustlr

Well you confused the heck out of me by replying in the other thread.

Yes fair point re profit protection, I see in the other portfolio you've been in for a long time.

1.45 looks technically better.

The large sell order at 1.50 got hit and it was 1.51 bid for a while (i literally checked it the other day and saw the price action) - it worries me that it didn't go through with it and its now back in the range. A red flag for me


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## peter2

EOW 134 update: ASX Momentum Portfolio *+67.3%* (44% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.7%* (past 134 wks)

_This weeks sells:_ SSM (-0.1R), ALQ-2 (-0.1R), JIN (-0.5R), ASL-cfd (-0.4R)
_This weeks buys:_ nil

The index closes once more in it's range and our portfolio loses a little again. I'm noticing fewer opportunities and more quick reversals (like ALQ). As the index closed lower this week I've decided to reduce the portfolio heat, purge the losers and be in position to revitalise the portfolio when new opportunities appear. 

SSM: After discussion on the forum and in my head I decided to sell half of my personal position. It's only fair that I close the short term trade and keep the weekly trade open. I've also placed buy orders if 1.50 is traded again. 
ASL-cfd: Trade closed as price drifts lower. I've also placed buy orders if 2.20 trades.
ALQ-2: Trade closed as price closed near our entry price. 
JIN: Trade closed as price closed near our exit trigger on low volume.

Portfolio heat is now only 2.3%. The losers are gone and we hold only winners. 

_Outlook:_ *WD DD*. Remains bearish as the index stays within this range (copied from last weeks' post). There's no point speculating what's going to happen next. We're ready for anything.


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## peter2

Trading update:  New trade

MND: Noticed yesterday's BO-NH. Bid 15.40, iSL 14.70. Bought at open for slightly less, same size iSL.
Strong weekly trend and good recent reports. Price hasn't fallen as much as market showing some relative strength.

MND: Also bought for weekly portfolios with a wider iSL.


edit: Please don't ask me why I haven't bought A2M in 2017.


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## peter2

Trading update:    Trade closed.

APX: Sold at T1 (5.28) using limit sell. I placed this sell order a few days ago when reducing the portfolio heat. Result +1R ($872). The weekly chart looks over extended and due for a pull-back, but the APX trend is one of the strongest atm. 

I've been looking for other opportunities but they seem to be mostly in mineral explorers that I have avoided. I have also been avoiding stocks with low daily traded volume just in case the market falls quickly. One example of this type of stock is SM1. The price consolidation under 4.50 looked very attractive but the past data is a bit spotty. The volume has picked up as the price has gone higher.


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## peter2

I should add that I don't take +1R profits on trades with potential for a lot more. For example our trade in MAH has started to move and we could have grabbed another +1R (0.21) today. MAH is a lower priced stock and the price can potentially move to the post restructure highs near 0.35 (+8R). If price moves quickly to 0.25 and the sellers look likely to slap it lower I may sell then. The trade management is fluid and depends on what the price does.


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## peter2

Trading update:  New trade that I'm a bit wary of posting here, but we're all friends. 

ANN: Bought today's BO-NH at 22.50, iSL at 21.70. 
Not the sort of stock I trade very often, but the target is acceptable. This stock's price does seem to bounce up and down in a large channel and that's what I'm trading on as price comes off support.
Since we had the cash available I've not used cfds. I may convert to cfds later if we need some cash for other opportunities with bigger potential. 
This is the sort of trade and stock that I'd be happy to grab a quick +1R in 5d or +2R in 10d.


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## peter2

Trading update: New trade

MLD: Bought today's BO-NH at 2.12, iSL at 1.97. 
Although we started a weekly trade in MLD a few weeks ago, I've waited for the report to be released before starting this trade. 



We've now run out of cash and will convert the ANN trade to a cfd trade. This change does cost us but the lower margin for the cfd trades free's up some extra capital.


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## peter2

EOW 135 update: ASX Momentum Portfolio *+71.4%* (86% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+9.8%* (past 135 wks)

_This weeks sells:_ APX (+1R)
_This weeks buys:_ MND, ANN-cfd, MLD

Our MAH trade has pushed the portfolio to another equity high, but nothing to get excited about in this market. There were a higher number of bullish weekly bars than usual in this arvo's scans. That's promising. 

I've been avoiding mining stocks as they require a bit more time to monitor. There were recent BO-NHs (KDR, RVR, AGY) that I've chosen to ignore. This may be a significant bias that's crept in as I'm not satisfied with my trade selection over the past few months. I've been thinking about how to improve. This may involve a modification of my pre-trade checklist with more emphasis on stocks showing relative strength (RSC(XAO)) and sector analysis. The ASX doesn't have very good sector indicies and I'm starting to wonder if it might be worth my time creating my own. If anyone has already done this I'd be interested in your opinions (either privately or publicly). 

_Outlook:_ *WD DD*. Remains bearish as the index stays within this range. There's no point speculating what's going to happen next. We're ready for anything. (copied from last weeks' post)


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## peter2

Trading update:  A few TS have been raised, reducing heat and allowing us another trade.

CTD-cfd: Bid 21.90, bought at open 21.85, iSL at 21.20.
I'd have to call this a reversal after the impulsive move down on the annual report (which I thought was good). Price has formed a basing pattern of accumulation (TMF rising) and looks likely to go up from here. We'll take +1R in 5d or more in 10d.

Total capital at risk across 7 trades is 3.8% (that's comfortable). Heat = 6.8%


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## peter2

Trading update:   Trade closed.

In response to the two down days (cf. US two record high days) and the index trading near the low of the range I've increased our emphasis on minimising our downside exposure. We'll grab the few +1R results that we can and make sure we keep the losses smaller than -1R. 

MLD: Sold at T1 (2.29). Result +1R in 4d is a good momentum result from our BO entry. Normally I'd like to get more than this but I'm wary of the bearish sentiment in our market.
I have not closed my weekly trade as it doesn't worry about the daily price action. 
MAH: Remains open at +1.7R with a tighter exit trigger in case of a down day to protect most of this profit as well as allowing it to get bigger.

Our other trades have stalled, but I don't mind seeing that as it shows they're stronger than the market which has gone down for two days. They may recover quickly when the market is bullish.


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## peter2

EOW 136 update: ASX Momentum Portfolio *+76.9%* (101% invested in 6 trades)
_Benchmark index:_ SPAX2F15 (Incl. divs and f credits) *+9.9%* (past 136 wks)

_This weeks sells:_ MLD (+1R) reasons explained previously.
_This weeks buys:_ CTD-cfd

Another weekly "doji" in this unprecedented sideways market. Scrolling through the ASX100 most of the charts are showing a down trend so it's surprising that the index isn't also going down. 

A few stocks in our portfolio (EHL, MAH, CAJ) have started to move higher creating another equity high. Once again, our portfolio is full of winning trades. 

_Outlook:_ *WD DD.* Our market filter remains bearish as the index hasn't moved. In spite of our filter there are plenty of trading opportunities. This contrast highlights the disadvantages of using a broad market index as the basis of our filter and using the filter as an ON/OFF switch for your systems. The small ordinaries index (XSO) has been bullish for the past seven weeks and it's this sector that is currently providing plenty of trading opportunities. 

We haven't been using our marker filter as an on/off switch. Instead we're using it to modulate our portfolio heat. I've always used it like this as I'm aware of the current number of trading opportunities. Had I paid more attention to the bullish XSO index, perhaps we'd have taken more trades in the small cap sector a bit earlier.


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## peter2

Trading update:  Don't chase, don't chase.  New trade.

Today's bullish sentiment and rising prices allows us to raise a few exit stops on our large cap trades. This in turn lowers our capital downside exposure allowing us to start another trade if we have the cash. The low margins that cfds require mean we have plenty of cash. 



My main concern this afternoon is "don't chase".

MMS: Bought near the BO-NH at 14.79, iSL at 14.10. 
The RR is acceptable and I notice prices of other car lease companies (SIQ, ECX) are going up.


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## peter2

A couple of textbook patterns of our fav setup. It's important to know exactly what we're looking for.

*Break-outs of horizontal resistance* *(BO-HR)*
 - there's a higher low (HL) before the BO
 - TMF (OBV) above 0 and rising (indicates accumulation)
 - stock prices stronger than the XAO index (RSC)
 - 10 ema > 30 ema recently indicating new trend
 - both BO prices were above significant numbers (>1.50, >8.00)



ps: BAL was one I didn't want to chase. I didn't place a conditional/pending buy stop order to try to buy it at 8.01, limit 8.05.


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## Rypieee

Hey Peter2, 

Hope you've been well

How's ALL for a trade since you wish to avoid the junior miners/explorers??
Improving USD against weakening AUD could bode well for ALL.

Acceptable R/R and could push through $24 mark as supply has dried up.


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## peter2

Thanks I'm well and feeling frisky (bullish) once more. There's three days remaining in the week and I'm hoping this week can stay up. 

You must have been reading my notes re ALL. I liked yesterday's BO and bought some today (limit 21.50) for one of my portfolios. With an iSL at 20.00 I shouldn't have to worry about this for a long time. There's a small risk setup using an iSL at 20.90 and I did consider placing this one in the momentum portfolio, but I think there's enough going on there atm.


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## peter2

_Between you and me:_ 
When I get the time I update the table showing the results of various exits strategies vs the exits I've actually done. There's a lot more work to do to get it up to date but I came upon this set of results that stunned me. I know I've missed out on a lot of profit on certain trades but I didn't realise I'd missed this one. 

This was a trade in ALL, a larger priced stock that I like to trade in order to grab quick profits to keep the growth ticking upwards. ALL went up with the market and I grabbed the +1.1R when it opened higher than my limit order. This trade is similar to what I'm currently doing with the trades in ANN, MMS, CTD, MND (grabbing a few R's while the market is rallying). 

However, the demand for ALL was a lot stronger than the market and price continued to rise, even when the index dipped. The 2xATR(21) EXIT strategy earned +3.4R and the 3xATR(21) earned a lot more (+7.6R). At the time, an R unit was ~$800. 

I don't worry if the price goes higher after I sell so long as the sell was planned. However, I don't like that I took my eyes off the ALL chart and didn't re-buy any of the subsequent BO-NHs. Clearly ALL was stronger than the index (RSC(XAO) in top pane). 

My TP has a re-entry rule that I overlooked on this occasion and the opportunities were missed. 




Discretionary exits may save $00's but mistakes can cost $000's.


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## Roller_1

Hi Peter,

Great thread btw, what is the TMF indicator?

Cheers


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## peter2

TMF is the Twiggs Money Flow invented by Colin Twiggs from Incredible Charts.

It's an indicator that uses price and volume and I use it along with OBV (On Balance Volume) as an indicator of accumulation or distribution. I like buying BOs when the TMF and OBV are rising.
These next pics are from
https://www.incrediblecharts.com/indicators/twiggs_money_flow.php 
There is a lot more information as well as the calculation on that page.


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## debtfree

peter2 said:


> _Between you and me: _
> The 2xATR(21) EXIT strategy earned +3.4R and the 3xATR(21) earned a lot more (+7.6R). At the time, an R unit was ~$800.




You talking to me? 

Thanks for the chart Peter, it did made me look at it on my charts and I did notice that if we didn't have our SL in the actual market (which you don't normally) the 2 x ATR(21) did not trigger (EOD-Close) on the 12th May or the 15th and we would have survived and been still in. I understand you must have done up the chart with the view the SL would have been placed into the market, is this correct or is my ATR level on my chart a fraction different? I have attached a chart for your viewing.

I also went back and looked at the *EOW Report* *#838* for this trade and noticed you invested 31% of the bank in this trade and by the looks of things it wasn't a CFD trade, was that correct and if it was why so much of the bank?

Cheers ... Debtfree


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## peter2

Looking at the chart and indicator, it looked like price closed below the 2xATR(21). I didn't check. I also looked at the nearby bars and 5 bars back was another large down bar. The index was also down at that time so I'd probably think that close enough is good enough for that exit strategy. The price moves and bearish market sentiment most likely would have scared me out at that time anyway.

If it did there was another BO-NH setup two weeks later that got us into the next move up. Provided we placed the orders and didn't ignore the chart (like I did). My main gripe with myself was that I didn't realise at the time that ALL was one of the strongest charts around and perfect for a re-entry if one setup. This year, A2M is the strongest chart around and has also provided multiple setups for entry and re-entry. 

31%* is a large position size. At the start of the thread I had a 20% max size limit, but since then have relaxed it to 25% provided the liquidity is good. ALL has reasonable market depth. The most important thing is to be able to sell when you want. We must have had plenty of cash at the time or I would have used cfds.

* The % values may not be as accurate as they should be since we transferred 15K to another account.  This position size was probably closer to 25% at the time including all capital and realised profits from both accounts.


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## peter2

Trading update:  Trade closed at profit target.

*ANN*: Sold at 23.95  just below the 24.00 level. Result +1.5R 
I saw the contract note of the sale and thought "huh". Stocks like this old slug don't leap up and tag my levels very often. Naturally I'm pleased as we paid double brokerage/commission on this trade converting it from equity to cfds. The extra cash has been used for other trades that are also producing profit.


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## peter2

This portfolio has cash to burn and very low level of capital at risk (~1%). Total heat is 4.7%.
In my view the daily trend has turned up and I'll wait for a further rise to change the weekly trend. 

Scanning the market this afternoon looking for perfect setups I notice that many charts have had a good run up. We're not going to chase them. Those stocks with prices near a BO level are those that are not in demand atm. We don't want to be the only buyers.  One more day to the trading week and I think we should be patient. 
Possibilities: Reversals: BSL, CGF, HSN, SVW.  IFL remains in a tight consolidation.


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## peter2

Trading update:  Another cfd trade closed for a quick profit. 

*CTD-cfd*: Sold at 23.05. Result +1.7R 
Like ANN price may go a little higher and hit our target levels. I'm happy to bank these profits as they're both above average  (AW is $875. CTD, ANN profits ~$1350 ea) and appeared in a short time (<2wks). 
Banking these quicker profits allow me to let others grow. 
I'm also wary of the unexpected down day that we've experienced during this stagnant period. It doesn't appear to be today (Fri) but next week, who knows.


Can't wait for the EOW update. This portfolio has had another good week.


----------



## peter2

peter2 said:


> I'm happy to bank these profits as they're both above average (AW is $875. CTD, ANN profits ~$1350 ea)




Sorry, just realised I've made a mistake. I shouldn't be looking at the ave win in dollars. The dollar amounts increase with compounding. eg 1% now is $895 and is above the AW. This implies that a +1R win is above average but it's not. I should be looking at the AW in R multiples. An above average win must be greater than 1.4R. 

Thinking in R multiples helps me focus on the trading process not the dollar amounts. If we get the process right the dollars will look great. As you've seen it's easy to slip into bad habits. You "guys"(collective noun for a diverse group of people of every gender) help keep me on the correct path.


----------



## peter2

EOW 137 update: ASX Momentum Portfolio *+85.4%* (85% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+12.4%* (past 137 wks)

_This weeks sells_: ANN-cfd (+1.5R), CTD-cfd (+1.7R) 
_This weeks buys:_ MMS-cfd

That was a surprising bullish close and makes it one of the better weeks we've had for a while. The big four banks are either making new highs or close to it. That augurs well for further rises in the index. I'd expect this BO to be tested next week which will be good for us as it'll form small consolidation patterns. 

The portfolio had another good week as we pounced on this rally. We gained 5R this week. Another equity high thanks to our active trading style. 

_Outlook:_ *WD DU*. I've changed the daily trend to up and I could have changed the weekly as well but I'll wait another week. We can't go from fully bearish to fully bullish in one week. Not that it matters, as we were >100% invested last week as we pounced on the rally. We've stashed some of the profits into our bag and have plenty of cash to start more. Another reminder that we won't be chasing over-extended prices.


----------



## peter2

There's also been significant development between the active daily trader and the weekly warrior. The YTD performance of the active trading style has finally passed the relaxed weekly performance. The active style got into the rally as it happened while the weekly manager added to the portfolio near the EOW. The Jan17 weekly portfolio is now 84% invested (9 positions). 

Hopefully we'll hold on to this lead all the way to the EOY finish line as we attack our own end goal.


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## rb250660

Last 3 days were cracking for me. Hopefully some more follow through.


----------



## peter2

Trading update:   New trade.

NWH: Bought today at 1.255. iSL at 1.12. 
I already hold this one as I participated in the SPP.


----------



## peter2

Update on performance of our actual exits _vs_ 3 exit strategies after 231 trades.

The latest table is at the bottom.

1.  Sell on the next open after a close below 3xATR(21) line.
2.  Sell on the next open after a close below 2xATR(21) line.
3.  Use the 3xATR(21) line until price hits T2 then use 2xATR(21) line.




The 3xATR(21) remains the worst performer and earns the least profit. This strategy allows some price movement but gives back too much open profit on too many occasions, especially in the market conditions we've had over the past 2.5 years.

The 2xATR(21) strategy cuts the losers quickly (lowest AL) and captures profits nicely in low volatile (smooth) trends. Works better on larger priced stocks than smaller price stocks due to the lower volatility of the larger priced stocks.

Strategy 3 remains the best.

Our discretionary approach while better than the first two strategies still lags #3. I have to wonder why I'm not using strategy #3 for my exits. The extra 10K earned would put us above +100%. Who wouldn't like an extra 20% for the same amount of work.

The colloquial definition of insanity comes to mind. Let's improve our performance by applying exit strategy #3 to our trading in this thread or something very similar.


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## peter2

Most of the under-performance of our exits is due to selling at profit targets after price spikes up. On many occasions price continues higher and we miss out on additional profit. I've mentioned before that managing trades to smooth our emotions and our equity curve costs us money. The cost to this portfolio since the start has been $10K or 20% of our starting capital. 

Comparing our exits to Strategy #3 is quite interesting. This table floored me when I created it. It shows the number of times our exits were better and worse than S#3 and the dollar amounts.



I was totally gobsmacked by this data. I knew about the missing 10K, but I had no idea about the size of the other numbers. I knew that our discretionary exits save us money and that it happens a lot more than when they don't. When they don't, we miss out on a lot more than we save. 

Is there something we can do to reduce the amount of these missing profits? 

Yes there is and I'm hoping you've thought of it. When price makes a new high after we've sold, how about we buy it back?  Simple really, we need to apply a re-entry rule. 

Now you're wondering if we applied a re-entry rule how much of the missing profit could we have earned. I went over those 46 charts and found that there was a re-entry triggered in 28 of them. The profits earned from these 28 re-entries totalled . . . . $22,670.  About half of what we missed out on. You have to realise that we are buying at higher prices than we sold. Half is pretty good though. 

Did the penny drop? Did the light globe turn on?  The amount earned by the re-entries was larger than the net amount we thought we missed out on! Whoa. Have we just improved our trading edge by a significant margin? 

_Summary_: Discretionary exits are good if you can show they save you money, BUT they need to be complemented with a re-entry rule when prices go higher. 

I don't think I'm ever going to write a more valuable post than this one. We're going to continue with our current trade management style with fewer exits after spikes up and we're going to implement a re-entry/re-buy strategy when price goes higher than our recent exit or makes a new high soon after our exit.


----------



## peter2

Here's a recent example to show the re-entry mechanism. 

APX: We bought the BO-NH which went sideways for a while then started moving up. We took a quick +1R profit at the time because the market (XAO) was moving lower and looked likely to go below the sideways channel that it's been in for a while. APX also offset the previous four consecutive losing trades (emotional smoothing). 

Four days later APX showed a bullish bar closing at a new high. This is our signal to re-buy APX. We'll probably re-buy the same number of shares and select a tight iSL to reduce any downside exposure. 

In this example price has now gone above T2 and this indicates that we should use the tighter 2xATR(21) line as our exit trigger. 

With hindsight the exit was pre-mature but the re-entry rule helps us lower the cost of that mistake. 

_Note:_ There will be times when the re-entry loses money, but in the long term we know that we're doing the correct thing and improving our trading edge.


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## kid hustlr

Pete, this is awesome.

One thought and I could be off here - but does this factor in the concept that an early exit allows for an entry of another trade? Eg if you've let your trades run your total number of trades would be less, costing you money in that sense?


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## peter2

No I haven't analysed any what-ifs. I've only analysed the situation when price and the trailing stop of strategy #3 went higher than our exit price. I'm sure there were many other occasions when price went higher but the TS of S#3 did not. In other words our exit might have been early but we actually sold near enough to the S#3 exit. 

These results indicate that it's worth while considering re-buying into the price trend on a BO-NH. I'll create a little re-buy checklist to ensure that I only re-buy when there's no overhead resistance and the RSC(XAO) >0. Even if I only get half of what I missed out on with my early exit it'll be profitable. 

I'm saying that there's an edge in buying what I exit early. 

It's not going to be easy buying something we've just sold. The price is going to be over-extended and we're going to pay more for it than our sell price. It will be quicker and easier than scanning through hundreds of charts to find another setup. It's going to be hard to apply in real time so I'll be re-evaluating my use of price targets in strong trends and in charts with no overhead resistance.


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## peter2

Trading update:  Trade closed.

MAH: Sold near close at our TS (0.235). Result +2.4R.
I'd re-buy this if 0.255 trades.

I've removed the limit sells on all our open trades. I'll tighten the TS's when price gets near T2.


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## peter2

I'm hoping that some of you will see the value in keeping good records. Now that I've got a list of instances that I may have exited early I can review the market conditions at the time of the exits. Am I more likely to exit early in bullish or bearish conditions? I've got a record of my mkt filter at the time and I've also got my thoughts recorded in this thread. 

This is work for me to do and I'll keep the results "in house".


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## seans

Thanks Peter, this is great stuff. I'm taking  notes and look forward to future posts


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## kid hustlr

peter2 said:


> A couple of textbook patterns of our fav setup. It's important to know exactly what we're looking for.
> 
> *Break-outs of horizontal resistance* *(BO-HR)*
> - there's a higher low (HL) before the BO
> - TMF (OBV) above 0 and rising (indicates accumulation)
> - stock prices stronger than the XAO index (RSC)
> - 10 ema > 30 ema recently indicating new trend
> - both BO prices were above significant numbers (>1.50, >8.00)
> View attachment 72945
> 
> 
> ps: BAL was one I didn't want to chase. I didn't place a conditional/pending buy stop order to try to buy it at 8.01, limit 8.05.




I passed on BIG due to capital constraints at the time in effect I had to chose 1 set up from 2 options and I went with the other one - stinging now! I really liked the context longer term on it - big push up, bit of a flat pattern and no real climactic action at the high.


----------



## VSntchr

peter2 said:


> *I'm hoping that some of you will see the value in keeping good records.*



A good trade journal is imperative to success IMO. 
Trading record keeping is like analyzing the till at the end of the day for a retail store. 
First you are checking for any errors. Then you go deeper by looking into the details of your transactions and how to gainer deeper insights. 

Upon reviewing sales data someone like Coles might notice that average basket sizes are bigger across all consumers when they place their bakery section near the supermarket entry as compared to the back. 
Similarly, a trader like Peter upon reviewing his trading records might notice when he uses a 3xATR stop for his momentum setups that he gives back more profit than when he uses a 2xATR stop.  

The better data you capture, the more (and more relevant) inferences you can make.


----------



## peter2

Trading update:  New trade

BUB: Bought near close at 0.66, iSL 0.57. 
Hope we're not too late to this party.


----------



## peter2

EOW 138 update: ASX Momentum Portfolio *+85%* (69% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+14%* (past 138 wks)

_This weeks sells:_ MAH (+2.4R)
_This weeks buys:_ NWH, BUB

The market continued higher again this week adding +1.4%. Unfortunately none of the stocks in this portfolio followed suit and we end the week where we started. My portfolio's lost ground as there were a few shocks (LLC, EPD). It's disappointing to see the market charge up and our portfolio "stuck in the mud". 

The end goal is almost within reach. Another 7.5K (8.5R) to go and if we included the profits from the "forgotten" P2 trade book, only 5.4K (6R) to get. Speaking about the P2TB, I'm going to do a few more trades in there to assist the task of getting to the 100K target quicker. I'd like to get there asap now that we can see the finish line. 

_Outlook:_ *WU DU*. Our market filter has turned totally bullish after the past two weeks of gains taking the index near the recent highs. It will be interesting to see if there is further follow through above 6000. I'd prefer to see a pause here to create small consolidation patterns to develop. We can then use these patterns as trend continuation setups for the rest of the year.


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## Shaker

peter2 said:


> Trading update:  New trade
> 
> BUB: Bought near close at 0.66, iSL 0.57.
> Hope we're not too late to this party.
> View attachment 73059



Nice pick Pete. Trading halt with news+ I see and a nice spike this morning


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## tech/a

Ducks happy
Think it will pause a bit at 83c

Sold the lot at 80.5c


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## peter2

@Shaker Thanks for the compliment. Lucky that we bought before today's news.

*BUB*: Raised exit stop to 0.76 (T1) - 0.78. I had similar thoughts to tech/a re selling at 0.81 after price came off the high. If price trades below 0.79 this afternoon I'll get concerned and will probably sell also. Our T2 level is 0.85 which wasn't traded today (so far). I'll give it another day to get there.

*EHL*: Sold today at 0.235 for a near average win (+1.3R). 

It took us 41 days to earn +1.3R on EHL and only 4 days for BUB to earn the same.


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## tech/a

5 min chart tells me its about to come off!

And it did


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## peter2

Trading update:  trade closed

BUB: Sold at 0.79 (+1.4R). It didn't take long to fall below 0.80.
I'm always wary when I sell at this time of day. I'll look at this at 3:30 to gauge if there's any demand late in the day.


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## peter2

It's worth looking at this chart (APX) again. This shows that we never know what's going to happen. I posted this chart as an example of a re-buy entry and selected the 2xATR(21) as the exit trigger. The last two down days have obliterated all the open profits in this re-buy example. 

Don't give yourself a hard time for exiting early unless you're undermining your TP.  

Making decisions about the effectiveness of your exits shouldn't be based on a small number of trades. This is why I track my actual exit performance against some objective measures.


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## tech/a

Went back in at 81.5
30 min chart has shown strength


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## kid hustlr

peter2 said:


> It's worth looking at this chart (APX) again. This shows that we never know what's going to happen. I posted this chart as an example of a re-buy entry and selected the 2xATR(21) as the exit trigger. The last two down days have obliterated all the open profits in this re-buy example.
> 
> Don't give yourself a hard time for exiting early unless you're undermining your TP.
> 
> Making decisions about the effectiveness of your exits shouldn't be based on a small number of trades. This is why I track my actual exit performance against some objective measures.
> 
> View attachment 73100




This is a perfect example of some of my frustrations trading a longer term trend following system. The numbers should support your decisions but these events are really hard to swallow.


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## tech/a

Here is the 30 min you'll see why I went again


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## peter2

tech/a said:


> Went back in at 81.5
> 30 min chart has shown strength




  I have to admit that I re-bought it also when price went back above 0.80 later on. 
This re-buy will not be included in this thread as it's intra-day rather than EOD. I don't wish this thread to do very much intra-day trading. I chuckled seeing that you re-bought it also. 

@kid hustlr  "hard to swallow", that's nothing. When you've got a neck as long as an emu it takes a long time to reach the gizzard. 

I sympathise but that's trading in a market that's dominated by fear and greed.


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## Shaker

tech/a said:


> Here is the 30 min you'll see why I went again
> 
> View attachment 73104



Yeah I can see the higher low. I guess that was the signal.


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## tech/a

It was the small triangle pennant pattern making headway on bugger allvolume
The volume came in at the end of trading 

Seem to think on a similar page Pete
Sorry for the Segway!


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## peter2

Yes we traded it the same way, grabbed the profit in case price fell off the cliff and prepared for a re-buy opportunity, which happened. Most of the time they won't setup again for a few days (although I don't look at the intraday charts very often). 

I don't mind the diversion at all, as it highlights the various trading styles and how they might fit together. The small size intra-day setups can produce great RR results if the demand persists for a few days. 

I think BUB may go for another run tomorrow as the news was so good and demand so strong into the close (plus the sector is hot).


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## tech/a

Maybe a better investment would be a semi load of Baby Formula!!


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## peter2

Trading update:  Trade closed and another started. 

BUB: Sold yesterday's re-buy today for quick profit. This will not be included in this spreadsheet

MND: Sold today at 16.30, result +1.3R. 
Price forming shallow consolidation, which could be a good trend continuation pattern on a BO.
Sold to protect open profit. Re-buy order itm at 13.60-65 (BO-NH).

PGH: Bought today at 5.52, iSL at 5.32 (0.20 trade risk)
Bought this yesterday to start a weekly trade as the chart shows a nice 123 Low reversal pattern off a reasonal support level. Started this daily trade as I'm scratching to find other setups that aren't over-extended already. 



A2M: Another BO-NH that I've passed on. 
NAN: Didn't take 2nd chance to buy this BO-NH. 

Looking for more setups now.


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## peter2

Trading update:  Trade closed

PGH: Sold at open. Result +1.1R
Price hit T1 target in two days like a good turbo trade should. I could have used a 0.15 stop on this lower volatility stock. 


If it seems like I'm pushing it, yes I am. I'll explain why in the EOW update.There's a lot of charts that are over-extended and perfect setups are rare at the moment. There'll be more soon as the market is consolidating at this level. 
We have only three trades open atm (MMS-cfd, CAJ, NWH) with plenty of cash for more.


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## peter2

Trading update: New trades on stocks that I rarely trade. Anything can happen.

BPT: BO-NH. Bought this pm at 0.93, iSL at 0.86.
I rarely trade this as the price follows the price of oil and if oil drops overnight then BPT will open down. The only way to offset unexpected large moves down in the POO is to trade the POO directly. I'll be keeping an eye on it while this trade is open.
The chart shows the correlation to the POO as it shows the oil ETF OOO in gray.



TPM: Reversal. Bought today at 5.20. iSL at 5.00.
Clearly a reversal "gutfeel" trade. You can immediately tell that it's a reversal as the chart background is not green. I'm hoping that the demand shown by huge doji bar resumes and forces the shorters to scramble. My aim is another quick "turbo" trade (target near 5.50).


The gray line in the chart is TLS. TPM has recently turned stronger than TLS (RSC).


----------



## peter2

Trading update: Another new trade. Capital exposure now 4%. Heat 5%

ASL: BO-NH. Bought at 2.20, iSL 2.05.


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## peter2

Trade update: 
MMS trade has continued higher. Today's price action >15.50 is another BO-NH so there's no reason to sell at T1 because it was just above this new BO-NH. We'll raise our TS and let price go higher. Brokerage costs have doubled due to converting this trade from cfd to an equity trade. Another reason to let price go higher
.


----------



## peter2

A made a comment about the use of leverage on another thread. We also use it in this thread so it's time for a review. Ignoring the start when _Pavilion103_ started his thread with a stack of trades, I've limited the use of leverage in this thread to an extra 30%. I've put the chart of how much we've invested below our performance chart. 

You'll notice that we use leverage when things are going well. That is, when all our positions are in profit and our market filter is bullish. We only use it for short periods of 1-3 weeks. IMO we've used leverage very conservatively.


----------



## Kryzz

peter2 said:


> A made a comment about the use of leverage on another thread. We also use it in this thread so it's time for a review. Ignoring the start when _Pavilion103_ started his thread with a stack of trades, I've limited the use of leverage in this thread to an extra 30%. I've put the chart of how much we've invested below our performance chart.
> 
> You'll notice that we use leverage when things are going well. That is, when all our positions are in profit and our market filter is bullish. We only use it for short periods of 1-3 weeks. IMO we've used leverage very conservatively.
> View attachment 73159




Top stuff Peter, not far off the 100% mark now. 

Apologies if this has been posted previously - which software is it that creates your graphs/figures of % of funds invested etc? Thanks


----------



## peter2

It's getting there but there's a road block looming (details EOW). 

The graphs are part of a personal excel spreadsheet where I record all the trading details.


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## Kryzz

peter2 said:


> It's getting there but there's a road block looming (details EOW).
> 
> The graphs are part of a personal excel spreadsheet where I record all the trading details.





peter2 said:


> It's getting there but there's a road block looming (details EOW).
> 
> The graphs are part of a personal excel spreadsheet where I record all the trading details.




Thought that might have been the case - looks good! I'll have to brush up on my excel skills.


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## Rypieee

Ex-Scientist turn technical trader with MADD VBA and Excel macro skillzzz


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## hallph

Impressive stuff Peter. You're using ProTrader for your scan yeah?
I need to find some hours this weekend to re-read all of your posts and review my previous notes. I've said it before, this is an amazing resource. Thanks again, and keep up the good work


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## peter2

EOW 139 update: ASX Momentum Portfolio *+90.7%* (100% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+14.1%* (past 139 wks)

_This weeks sells:_ EHL (+1.3R), BUB (+1.4R), MND (+1.3R), PGH (+1.1R)
_This weeks buys:_ BPT, TPM, ASL

The market paused  this week as we thought it might after such a strong rally. Our portfolio continued to increase in value as we grabbed profits along the way. Another equity high due to the bullish market conditions. 

Our desire to grab profits quickly sometimes seems a waste of effort as a few prices gallop ahead after we sell. We've implemented a re-entry tactic to try to minimise this wastage. Sometimes we get lucky and jump into another winning trade immediately. This is more likely to happen in a bullish market rally like we've just experienced. It's the main reason for our current profitable batch of trades.

We've cashed nine consecutive winning trades. A new thread record and this has propelled our equity curve into space (parabolic trajectory). 

_Outlook:_ *WU DU*. This market pause will create great trend continuation patterns for us to use. We've temporarily run out of cash. We'll close a trade next week so that we can buy another break-out.


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## peter2

I've alluded to a potential road block earlier in the week. It's another example of how life can get in the way of projected time lines. I've been notified that this road block has been postponed for another week. 

The "roadblock" I refer to is Jury Duty. I've a chance of being selected for a case expected to take 3 - 5 weeks. This will mean that I'll be unable to look at the market during the day. It looks like I'll have to finish this thread as a real EOD trader.   I'll have to scan and place all orders in the evening prior to the next open. 

That's been postponed for a week and I've another five trading days of freedom. Enough time to buy that "Guilty as charged" tee shirt.


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## peter2

Trading update:  Trade closed

MMS: Sold just after open at 15.95. Result +1.5R.
Sold to release cash for additional trades. The decision was easy when MMS traded at T1.5 and it was the 2nd largest position. This will provide margin for several new cfd trades. If MMS hadn't traded as high then I would have chosen one of the small losers or CAJ which hasn't moved for ages.


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## SuperGlue

peter2 said:


> The "roadblock" I refer to is Jury Duty. I've a chance of being selected for a case expected to take 3 - 5 weeks.




Are you on the same Jury Duty with Obama? 

http://www.bbc.com/news/world-us-canada-41792432


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## peter2

I can't confirm, deny or even talk about it. 

Interesting coincidence. "O" & "P" are juxtaposed.
Sheriffs all round the world must be getting desperate for jurors.


> Jurors in the county get paid $17.25 (USD) for each day served.




I'll honestly be able to state that I'm be paid more than the ex-US President for performing the same duty.


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## peter2

Trading update:  A bit of activity.

BPT: Sold at 0.975 today as price fell after failing to go higher. Yesterday's doji at 1.00 was a warning. The result is only +0.6R and on this occasion I should have considered a smaller sized iSL. I'm still pleased with the small win. I'll keep an eye on this for any demand into the close. 

MND: Re-entry BO-NH.  Price triggered our buy stop order today (16.60 - 16.65) after a touch yesterday. Bought at 16.65, iSL placed at 16.20. The position size has been restricted to 25K (~25%) to conform to our TP. The trade risk is 0.75%. 

TPM: Price has spiked up and we've quickly moved our TS to BE.


----------



## peter2

I'm definitely playing a strong defense now. There's two main reasons for this. I have to acknowledge that the main one is emotional as we get closer to the end goal. The other is that the market seems a little overextended atm and I always get more defensive after a good run knowing what tends to happen next.


----------



## peter2

Trading update:  Re-entry

MMS-cfd: Re-bought this afternoon at 15.77, iSL at 15.30. 
Position size limited to 25K. I consider there's plenty of upside in this one. 

Lithium and cobalt explorers are bubbling up all over the ASX. They're highly volatile and seem to go up and down quickly. They're for the quick and twit traders.


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## kid hustlr

Liking your reply Pete - I'm trying to 'keep my distance' from my portfolio so to speak however I have concerns a pull back may be on the cards short term - it has been every other time for the last 10 years .


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## peter2

You might find this interesting. Pavillion103 started his thread Feb15 and this shows our results relative to the XAO index.

Our first year was a volatile down market. We've managed to earn a reasonable amount.
Our second year was a volatile up market. We've managed to make a reasonable amount.
This third year (so far) has been a low volatile sideways market. We doing all right so far.


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## kid hustlr

I am staggered by that chart


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## Shaker

I Agree. Now that is a trading method for sure


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## peter2

Information that you can get by keeping good records. 

You're all familiar with my blue/red bar colours. They change when price closes above/below 1.5xATR(21) "supertrend" indicator. I use them as a visual guide to the short term trend. It doesn't always get it right but I apply a little commonsense to make my decisions. 

In this chart I've labelled all the blue/red bar trends. There's 11 of them. 


The table shows the number of trades and the R multiple result for each trend segment.


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## peter2

These results were collated using the closing dates of the trades. 

I hope you can see that we make almost all of the profit when the trend is up (blue bars). There is always an exception. Section 10 is red (down) and a profitable one but is this sideways section really a down trend?


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## peter2

Trading update:  The portfolio is popping. Everything except CAJ is making new highs.

*BPT-2*: Re-bought today at 1.00, iSL is 0.95.
I'm pleased we discussed this re-entry tactic recently. I was a bit defensive when I sold BPT and I monitored it for signs of demand late in the day. The close was off the low which meant buyers. If price traded back at 1.00 that would be the time to re-buy with the iSL back at 0.95. I've found it easier and quicker to just re-buy the same sized parcel. As the new stop size is smaller than the original setup the downside exposure is less than before. Theoretically if the stop size is smaller then we should buy more shares if we want to risk the usual amount. I consider the re-entry as re-establishing the earlier trade that was prematurely exited.

Argh. I didn't realise that BPT released it's quarterly report today. I didn't check for scheduled news (again). That's what pumped the price up. I don't really mind as it's positive price action that gets us into the trade.

I'm getting very jumpy as I write this because today's price action has put the portfolio within 0.7R of the end goal. It's that close. I'd love to get there before the justice system conscripts me.

BPT is trading back at 1.06 and I'm taking it. Sold at 1.06. Result +1R for this intraday trade but its only +$762.

That's how jumpy I'm feeling. If you read that experienced traders don't feel any emotions. Don't believe it. Now I'd better go for a walk to settle down or I'll sabotage the rest of the portfolio.

ps: It's almost time for the pm scans. The walk will have to be later.


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## peter2

Trading update:  Portfolio value at EOD today .... *+100.2%*




_ps_: Exit brokerage is included.


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## hallph

Well done Peter - as a late follower I wish I had found your threads sooner.


----------



## debtfree

Congratulations Peter, absolutely outstanding!!


----------



## Shaker

peter2 said:


> Trading update:  Portfolio value at EOD today .... *+100.2%*
> 
> View attachment 73249
> 
> 
> _ps_: Exit brokerage is included.



Congrats matey hope it doubles again in real life for you


----------



## peter2

Thanks for the compliments. I must admit to being a little stunned that it all happened so quickly. 

@CanOz  once remarked that this style of trading would fly in a bull market. He was right. The market has risen for 5 consecutive weeks and this TP has nailed it. Note the latest batch of results. Nothing outstanding but a near perfect W%. 


The last batch has 25 trades and the performance is outstanding.


We know what that means. Every good batch is followed by an below average batch. Knowing this keeps us humble.


----------



## Rypieee

Well done Peter2, while you have reach your financial goal in your portfolio (and I hope you continue this thread!!!), along the way you have, whether you know it or not, help to develop young and new traders in the market. 

I am proud to say that I am one of those that have followed your thread, gained from your experience and knowledge and successfully applied your teachings in my own strategy.

Please don't go away any time soon


----------



## peter2

I'm going to spend the next few days wrapping it all up and reviewing what I done over the past 140 weeks (33 months). Then I'll think about what to do next for the ASF community.

Here's a look at those last 25 trades and a reminder that I haven't sold my open trades. I hope they continue to go higher. My portfolios have had a huge October.


----------



## kid hustlr

peter2 said:


> Most of the under-performance of our exits is due to selling at profit targets after price spikes up. On many occasions price continues higher and we miss out on additional profit. I've mentioned before that managing trades to smooth our emotions and our equity curve costs us money. The cost to this portfolio since the start has been $10K or 20% of our starting capital.
> 
> Comparing our exits to Strategy #3 is quite interesting. This table floored me when I created it. It shows the number of times our exits were better and worse than S#3 and the dollar amounts.
> 
> View attachment 73025
> 
> I was totally gobsmacked by this data. I knew about the missing 10K, but I had no idea about the size of the other numbers. I knew that our discretionary exits save us money and that it happens a lot more than when they don't. When they don't, we miss out on a lot more than we save.
> 
> Is there something we can do to reduce the amount of these missing profits?
> 
> Yes there is and I'm hoping you've thought of it. When price makes a new high after we've sold, how about we buy it back?  Simple really, we need to apply a re-entry rule.
> 
> Now you're wondering if we applied a re-entry rule how much of the missing profit could we have earned. I went over those 46 charts and found that there was a re-entry triggered in 28 of them. The profits earned from these 28 re-entries totalled . . . . $22,670.  About half of what we missed out on. You have to realise that we are buying at higher prices than we sold. Half is pretty good though.
> 
> Did the penny drop? Did the light globe turn on?  The amount earned by the re-entries was larger than the net amount we thought we missed out on! Whoa. Have we just improved our trading edge by a significant margin?
> 
> _Summary_: Discretionary exits are good if you can show they save you money, BUT they need to be complemented with a re-entry rule when prices go higher.
> 
> I don't think I'm ever going to write a more valuable post than this one. We're going to continue with our current trade management style with fewer exits after spikes up and we're going to implement a re-entry/re-buy strategy when price goes higher than our recent exit or makes a new high soon after our exit.




Incredible Thread Pete and I like that you saved your best post until several weeks ago - this is a ripper


----------



## kid hustlr

peter2 said:


> Update on performance of our actual exits _vs_ 3 exit strategies after 231 trades.
> 
> The latest table is at the bottom.
> 
> 1.  Sell on the next open after a close below 3xATR(21) line.
> 2.  Sell on the next open after a close below 2xATR(21) line.
> 3.  Use the 3xATR(21) line until price hits T2 then use 2xATR(21) line.
> 
> View attachment 73024
> 
> 
> The 3xATR(21) remains the worst performer and earns the least profit. This strategy allows some price movement but gives back too much open profit on too many occasions, especially in the market conditions we've had over the past 2.5 years.
> 
> The 2xATR(21) strategy cuts the losers quickly (lowest AL) and captures profits nicely in low volatile (smooth) trends. Works better on larger priced stocks than smaller price stocks due to the lower volatility of the larger priced stocks.
> 
> Strategy 3 remains the best.
> 
> Our discretionary approach while better than the first two strategies still lags #3. I have to wonder why I'm not using strategy #3 for my exits. The extra 10K earned would put us above +100%. Who wouldn't like an extra 20% for the same amount of work.
> 
> The colloquial definition of insanity comes to mind. Let's improve our performance by applying exit strategy #3 to our trading in this thread or something very similar.




Pete,

Sorry to dig this up but I was re-reading and figured I'd ask the question before the thread died (or hopefully gets made a sticky). 

Before you discovered that re-entry + profit target is actually the best option, does your post above suggest that for all trades (including losers), you would have been better of using the 3x ATR stop rather than say, a discretionary exit where you stop is placed below a recent low?


----------



## leyy

Well done peter2, a terrific result and I am confident that you have inspired many in the ASF community. We thank you for your contribution and I am excited to see your next  trading journey


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## Kryzz

Congratulations Peter, definitely obtained more from this thread than I have after reading multiple trading books. Cheers


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## peter2

@kid hustlr   I can see that you're struggling with exit strategies. Relax, everybody struggles with it. I still wonder if I could do it better. That's why I monitor my performance against a few objective methods.

My current approach, that you watched over the past 33 months is to allow the market to test or retest the BO level when the trade is new. I'll only tighten the exit stops when there's a reasonable amount of profit worth protecting.

The trades that I call "turbo" trades have already started to move and don't get a chance to test anything. They hit their price targets or get closed for a small win, small loss or break-even. This style is very similar to tech/a's style.

Exit strategies are matched to compliment the anticipated price movement I'm trading (trend or swing). I allow more room for a trend trade than a swing trade.

As you know market sentiment can change quickly and the probabilities for further price advancement in every trade will change in response to the changed environment.  In addition to the individual trade management rules I have a set of portfolio management rules (PMRs). PMRs will override individual trade management rules when market conditions change quickly. It's these PMRs that are primarily responsible for reducing my drawdowns to levels that I'm comfortable with.

The results of the stop loss strategy tables show that what I'm doing is much better than the 3xATR and 2xATR methods but not as good as the third method (3xATR until T2 is reached then use 2xATR).

However if I apply a re-entry rule when it's obvious that I've exited too early I'll make more profit and my overall performance will be better than the performance of the third exit strategy alone.

The primary role of our exit strategies is to control the size of our downside exposure. Their secondary role is to protect profits when they're above average.


----------



## peter2

Let me reassure you that although this thread will reach an honorable end soon, the world's financial markets are still operating and we've grown our capital to 100K AUD. 

Don't think that I'm going to put our capital in a term deposit and ride off into the sunset on the QE2.


----------



## Triathlete

peter2 said:


> Trading update:  Portfolio value at EOD today .... *+100.2%*
> 
> View attachment 73249
> 
> 
> _ps_: Exit brokerage is included.



Thanks peter2 for a great thread.....I am sure a lot of followers have learnt a lot from this active trading style and you have shown the benefits of staying the course of your strategy and not deviating. If we take a look at the chart we can see that there were at least 2 x 6 month periods and 2 x 4 month periods were the portfolio went sideways and this can be very disappointing for traders and so most will chop and change there strategies and will not give it time to work.....The last 2 months have been stellar looks like a 30% rise? Keep up the great work.


----------



## debtfree

*Peter: *
Maybe an extreme ask but I thought it would be valuable to go with the thread that will be reviewed and studied by many (me ) for years to come. 
Is there any possibility to have a complete list posted of all trades like in post #1123 with the added columns Buy & Sold Dates? 

Cheers ... Debtfree


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## myrtie100

@peter2 
Thank you for sharing your knowledge consistently and over such a long time.
My trading has improved enormously since following this thread.
You are definitely one of my 'experts'!


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## tech/a

Why did it take you so long??

So which Bar are we joining you for drinks?
Like many here we have enjoyed the show!


----------



## peter2

Trading update:  Whoops I don't have to do these anymore.

EHL: Re-entry triggered today at 0.255. My orders are still working and we're all still trading.


----------



## peter2

"What took me so long?" I know you're pulling my leg but I also understand that it could be of interest to some.

When I took over this thread from Pav there was no planned end. I thought I'd commit to the EOY 2015. By then it was a well honed process and very much part of my trading routine. Even now I'm ready to post another setup and entry (the EHL chart just slipped out). The portfolio trades are continuing higher and I'm going to miss posting the EOW update. The portfolio is another few K higher and it's flying. I've realised that posting regularly is an important part of my trading routine. It keeps me accountable, focussed and I enjoy the interaction. 

Why so long?  It's really important to establish a trading routine. If you want to be successful you must have a routine (or process) and that your progress towards your goals be monitored. It takes time to create a routine that is both efficient and effective. Life gets in the way all the time and people underestimate the importance of establishing a routine. Looking at the charts or analysing company reports whenever you make the time is not good enough. You've got to set aside regular time and ensure no distractions if you're really motivated. 

Over the past 140 weeks you've watched my trading routine; late afternoon scans,  identify best setups, buy, post chart, manage trades, manage portfolio, post EOW update. Repeat next week. You seen me deal with all types of market conditions. There were busy periods and not so busy times. Those times when it seemed that we were not busy, we were. We were busy being patient. 

There's a fine between being patient and losing focus. I have to admit that there were periods where my focus was on other markets and not the daily ASX charts. Triathlete has mentioned a few periods where the equity curve flattened out. I'm proud of those periods because I chose to trade less when the conditions were unfavourable rather that just trade because that's what we do. Why trade when the odds are against us? I'll take a flat curve every time over a downward slope. 

It wasn't until we reached the 2.5 yr mark that I selected the +100% goal and that it had to be done before 3yrs. Stupid thing to do really (trembling hand and skc knew it also). The time line added extra pressure. However it also increased focus and you've seen the results of that when the market turned bullish. Eighteen consecutive winning trades and it was all over. 

Imagine if we accomplished our goal in a much shorter period or imagine if you'd only started reading this thread a few months ago. Would you have learned the importance of adapting to different market conditions? Would you have learned how to adapt? Would you have learned the importance of taking small losses? 

Now you know why active trading and investing is considered a journey. It's a journey of self discovery.


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## IFocus

Hey Peter exceptional effort, there have seen very few threads around on the net like yours. 
Congratulations on the 100% return you worked your way through some really difficult trading conditions that's where 99% lose it but you really excelled.

Well done and all the best


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## Wysiwyg

Yes very rare indeed to see anyone show the nuts n bolts of a trading strategy for an extended and dedicated period. Buy high sell higher works.


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## peter2

EOW 140 update: ASX Momentum Portfolio *+104%* (110% invested in 7 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+15.1%* (past 140 wks)

_This weeks sells:_ MMS (+1.5R), BPT (+0.6R), BPT-re entry (+1.1R)
_This weeks buys:_ MND reentry, MMS reentry, EHL reentry

The market drifted higher again this week (+1%) but our portfolio gained ~7% (~6.6R) putting it above our +100% goal. We've done very well out of this bullish rally and showed the potential that can be acheived from a short term trading system when the market conditions are perfectly suited to our trading style. Our results "flew" over the past five weeks going from 170% to 204% ( +20%).

*Thank you all for your congratulations during the week when we passed the triple digit number.   *



Yes we got lucky, BUT we were prepared and took advantage of the bullish conditions. We were "locked and loaded" when the market was still stuck in the sideways range.


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## peter2

*What's next?*  These thoughts are rattling around my brain atm and I'm feeling like a bug on a windscreen, a little flat. .



Posting these weekly updates is part of my trading routine. I may not be able to just turn it off without some side effects (loss of focus/feel of market sentiment, style drift). I'm a trader and I still need to grow my capital and earn a living. It doesn't bother me that you're watching. 

I would like to make some modifications though. The first one would be to deflate the "hype" by resetting the performance value to 0% (ie start with 100K). 

There's a little "all-up" project I'd like to try (details another time).

I do want to include other major markets as there's potential for additional profits by including them. If we can get 20%pa from the ASX and possibly more from the other markets then our current capital (102K) can potentially create a trading income. I'd like to demonstrate this next stage of trader development and the potential of these other markets but I know it's a lot more work and I've failed to do it before (P2TB thread). 

I think the reason I failed with that thread was that I'd always considered it "extra". I only looked at those markets when there was some free time (consequently missing the setups). I didn't make the effort to include it into my routine. I'd have to describe my own trading in these other markets as sporadic (but profitable). 

It's also very likely that I was trying to add too many markets. There are 30 - 40. It might be better to add them in to my routine a few at a time. eg I rarely trade gold and oil stocks but I like trading the gold and oil markets directly. These two would be obvious early inclusions along with a couple of indices to offset the long only bias of the ASX equity trades. 

It might also be helpful to do all my trading in the one thread and use the one spreadsheet. This will make it easier to keep an eye on everything. I was reluctant to contaminate the ASX Momentum thread with trades from other markets. Now that the ASX thread has hit it's goal we may be able to advance to the next stage in another thread and leave this one "pure". 

ps: I'm also going to ditch the benchmark. It's so far behind us that our dust trail has settled and it wouldn't be appropriate when we include other markets.


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## tech/a

Just a few thoughts on the Trading over the last 30 mths.

The thing I really like is the first year March 15 to June 16
In this time the Ords traded negatively yet the well managed
portfolio of Petes managed a whopping 20%.

Make no mistake these were very tough trading times.

For whatever reason (Trump effect?) from then on markets
became more in favor---there was/is optimism.

So in came the tide and all boats started to float.
In the next 18 mths the Ords is belting along toward 20%

But in the hands of an experienced trader we have seen 20-100%
So while there is a saying of don't confuse brains with a bull market
Out performing a bull market by such a whopping difference is
truly brilliant.



peter2 said:


> If we can get 20%pa from the ASX and possibly more from the other markets then our current capital (102K) can potentially create a trading income.




I like this idea and its come up a number of times in differently
worded questions. *Id like to see the tax implications covered.
The daily gotta pay the bills grind----a wage .

Make it very REAL*

I doubt you could actually do it on 100K as your Businesses
only starting capital and a family to run. Personally think $300K
and $500K + if its really serious particularly when the words in blue are taken
into consideration. EG ( Funds transferred into an offset account (1) Tax (2) Wage for living.) 

This is a particularly popular topic.---well I think it is.

My suggestion Pete!
That will keep you on your toes.
Might be able to help with some charts of interest!
But your thing!


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## peter2

"Trading for a living". I shouldn't have mentioned the term. Comparing what we've accomplished to tertiary education, all we've done is finish a standard degree course. The next step is a Masters degree where we have to enhance our knowledge and skills and do some independant work (1 - 2yrs) In trading this could be learning to trade options, pairs trading or other markets. Trading for a living is the Doctorate level (min 3yrs). 

I agree with tech/a in that 100K is not enough. I don't want to get into a "how much is enough discussion", but rather focus on our next stage. That will include trading other markets that influence some ASX sectors and shorting some indicies so that we're not dependant on bullish markets. 

It just so happens that for the next three weeks I'm restricted to trading the ASX on an EOD basis. I'm taking it as a challenge. Once I've done my market scanning I'll show you what I'm looking at but won't post my actual orders.


----------



## peter2

Trading update:  After only two days this 7-5 grind is cramping my style. I can't look at the ASX while it's open and now I'm too tired to stay awake for the US open (which is now an hour later). 

CAJ: Price closed below our TS and triggered an exit. Sold today at 0.26. Result -0.4R
MND-cfd: Placed a limit sell at T2 and were sold on the open at 17.73. Result +2.2R. 

Tightened TS on TPM, MND, ASL, NWH.


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## xr06t

Thanks for the dedication to the thread Peter. As mentioned earlier, you would be hard pushed to find another thread on the internet showing someone talking through their trading plan for 3 odd years and showing how profitable it can be. Thanks again.


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## peter2

Thank you for posting *xr06t*. I hope you and other readers are focusing on how _*to be*_ profitable rather than how profitable this trading style is. We could make more profit if we took on more risk. This thread has shown how to be profitable with a small downside exposure (max draw-down 7%).

TPM: Sold today with a limit sell at 5.95. Result is a welcome +3.5R. 
Pretty much a perfect reversal setup and follow through. A BO-NH following the 1st HL was accompanied by a rising TMF and strong relative strength RSC(XAO). Obviously the bullish market rally helped a bit. I suspect the high % of short sellers also helped as they had to cover their positions as the price went higher. 

This trade should be used as an example of the criteria required for a good reversal opportunity. 

ps: Longer term investors who recognised the potential in this company and took advantage of the reversal opportunity have no reason to sell here.


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## peter2

*Notice:*  It's important to point out that the results obtained in this thread are indicative for the trading style used. I have not written this thread to show how to get 25%pa. I've written it as an educational thread to show _*how to be profitable*_ trading an active short term system. The profitable edge is created over lots of trades. I've batched them into groups of 20, but even 20 may be too small or not appropriate for other trading styles. 

Another important point to mention is that it would be near impossible to earn the sort of returns we've earned in this thread with a much larger account size. We started with a small account size of 50K. Yes, 50K is small if you're trading equities. It's much easier buying/selling small parcel sizes (<$10K) at the prices we want than trying to do the same with parcels of $50K. 

Larger accounts are restricted to trading stocks with higher daily trading volume if they want to trade short term. 

We've limited our max position size to ~25% in this thread. Would you be comfortable using this limit in a $1M account? I wouldn't. A lower max size limit would also reduce the profits earned by this trading style. You may offset this disadvantage by trading more positions (eg 2 x 12%ea), but this increases the downside exposure (2 x 1%).


----------



## peter2

EOW 141 update: ASX Momentum Portfolio *+108%* (51% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+16.8%* (past 141 wks)

_This weeks sells:_ CAJ (-0.4R), MND-cfd (+2.2R), TPM (+3.5R)
_This weeks buys:_ nil 

The market rally continued higher this week and provided further gains. I've started to take profits and raise a few exit triggers to protect open profits. We've done very well from this rally and don't want to let too many of the open profits disappear. If we're conservative on the downside we're also conservative on the upside once we've got above average profits. 

On a larger account I'd sell half to grab some profit and let the other half run. We can't do that in this smaller portfolio as brokerage costs would increase. 

My current impanelment has restricted the monitoring of other markets and I'll have to wait for that to end. 

_Outlook:_ *WU DU*. Bullish of course, but also cautious as this rally is over extended. We'll see what the week-end scans show. 

_Note:_ I'm recording the re-entry trades with a small "r" so that we can monitor their performance. So far so good. We've earned extra profits as we planned.


----------



## peter2

EOW 142 update: ASX Momentum Portfolio *+108%* (51% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+15.8%* (past 142 wks)

_This weeks sells:_ nil
_This weeks buys:_ nil 

I'm out. The sheriff has let me loose. 
It's going to take me a little while to see what's been happening and notice the hot sectors. I know I'm going to see all the great setups that happened while I was impaneled and there'll be a tendency to chase. I'm experienced enough now to wait for perfect setups. I only mention it as an educational aspect. 

The market dipped a little, probably due to some profit taking after it's recent rally. The US markets are also showing a rise in volatility. Our portfolio maintained it's value, but we only have a little exposure in the market at present. When life gets in the way of your trading, reduce the heat a little to remove the stress. 

_Outlook:_ *WU DU*. Remaining fully bullish, but the daily "line in sand" is at 6000. A fall below this would trigger a down grade of our market filter. 




_ps:_ I can once again appreciate the difficulty of trying to trade while working full time. After jury duty I was too tired to do the daily EOD scans and didn't bother monitoring the major markets. I'd recommend trading weekly charts if you are too busy during the day.


----------



## peter2

To celebrate my "release" I've created a graph to monitor the performance of our exits against the three objective exit strategies that I've described previously. Instead of waiting for a periodic update, I'll have it "real time" from now on. I'm doing this to get immediate feedback on the performance of my exits. I want to see it there is any deterioration quickly so that I can react quicker to fix it. 

The other aim is to see if the re-entry strategy improves our edge. The potential for improvement has been identified (past post) and we instigated a change near the 230 trade mark. The re-entry modification is designed to increase our profits and get us closer to the performance of the best exit strategy. 

The re-entry trades will be marked with an "r" so I can monitor their effect. So far it's been good. The recent re-entry trades in BPT, MND, MMS and EHL have reaped us an extra $3.4K in profits.


----------



## PeterJ

we may have to recapture you Peter !
I have been enjoying your thread immensely 

thx
PS


----------



## peter2

My "release" refers to the jury duty I was impaneled for. The trial lasted two weeks and it felt like a 7 - 5 job. I was too tired to trade the UK session and asleep for the US open. I noticed that there was a lot of activity in the small resource sector over the past two weeks. Right up your alley, Peter.

I'm back (here) and it looks likely that I'll post the other market trades in the P2TB thread to keep this one purely for ASX trades.


----------



## peter2

I've been catching up with what's been happening in the ASX market over the past two weeks. There's been a few good break-outs but the real noticeable aspect is that there are a lot of strong price trends that continue to go higher without any significant pauses. Great if you're already in, but I find it hard to buy without a minor test of demand (small consolidation or pull-back). 

Most of these strong price trends are now over extended and the RR is tilted towards risk rather than reward. However we know that these trends can continue much higher than we think is possible. 

This chart shows most of the gains this FY has been in the small to mid cap stocks.


----------



## peter2

EOW 143 update: ASX Momentum Portfolio *+110.7%* (51% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+16.3%* (past 143 wks)

_This weeks sells:_ nil
_This weeks buys:_ nil 

The market ended up a little this week and our portfolio also thanks to MMS. The strong trends are continuing higher, rewarding those who can stick with their holdings.

_Outlook:_ *WU DU*. Our market filter remains bullish with the line at 6000 (XAO). Although the market is bullish I'm finding it difficult to identify good opportunities with excellent RR characteristics. Many trends are overextended and I don't chase prices as they make new highs. My job is to buy them when the trend starts or soon after (1st pause). I will buy BO-NHs in overextended swings when the market is bullish across the board. This market is not bullish overall as the banks are weighing the index down. 

The few setups I've found have been reversals and daily pull-backs in weekly up trends. These are second class opportunities, but in the absence of better I may start a few.  I'll assess these during the week-end. I posted one example of a reversal setup in the AIA stock thread. 

Even though we have plenty of risk capital available I prefer to wait for perfect setups. These setups have a good RR profile. I dislike having to play defence soon after buying. I prefer to be profitable quickly.


----------



## peter2

A few codes I've included in my daily "BO-soon" watch list. 
3PL, ASL, BKL, CGF, CCP, DTL, EXR, OMH . . . 

There will be others as I go through all the charts that are stronger than the XAO. I sort the interesting ones into BO's, trend continuation and reversal patterns.


----------



## peter2

Trading update:  New trade

AU8: Bought today's BO-NH at 0.405, iSL 0.34.
A more conservative SL would be below the gap at 0.30-31.

Not much chart history to go on, but so far it's definitely bullish.


----------



## Rosscoe62

Hi Peter, great thread. I joined this site only very recently. I follow & use Technical Analysis myself.

I thought I’d throw another stock up with plenty of momentum behind it and one to watch closely ...

I bought into Lynas (LYC) quite a while back who report tomorrow at the AGM. The company has had a stellar run this calendar year. 

Today’s +4.88% move makes me feel confident things are going to be optimistic in their AGM report shortly. I feel LYC has been consolidating in recent times but ready to break out of its most recent trading range.

Following the fundamentals of the company & particularly the Rare Earths price have a major impact on this company moving forward.

It will be interesting to see where this stock heads next!


----------



## peter2

Hey PeterJ, did you like that "boom" in AU8 today.    Straight to our T2 level.


	

		
			
		

		
	
     Looks like I have to watch the open tomorrow.


----------



## kid hustlr

Pete,

What's your thinking in au8 here? Will you monitor action in the morning and make a call or have you already got a plan in place?


----------



## Rypieee

Very bullish characteristics coming from AU8's price action, even intra-day action suggests inflow of demand from investors. Taking profits from this trade tomorrow could be cutting the legs of a runner!!

Likely to see some resistance around 60-70 cents from holders with 30-40 cost base.
Purely speculative in my opinion, difficult to value rationally at this stage and all based on what ifs (except for first movers advantage in that market).

I would probably wait for pull back to determine whether demand for stock is still there and may consider building a position on pullbacks. 

Consolidation phase prior to breakout suggest consolidation so won't be surprise if we see another consolidation around 70 cents before the next run. 

Ultimately, its up to your strategy i suppose 
Disclosure: Held


----------



## peter2

Rypieee said:


> Ultimately, its up to your strategy i suppose




I'm pleased to see someone mention this.  

This trade will be managed in the same way that most of the trades in this thread were managed. Once a trade gets to T2 we're allowed to tighten the trailing stop to protect some of the profit while allowing price to go higher. The 2xATR(21) TS price is currently 0.475. At this price the trade is +1R. I may enter a limit order to sell at T3 tomorrow if there's more bullish exuberance knowing that +3R is twice the average win. 

The primary aim of our trade management is to allow price to get to T2. The fact that price got there in one day doesn't alter anything (other than my emotional state  ).

Trade management of AU8 for my own personal purposes. I know that I should remove the sell function from the trading platform or just go out for the day. My iSL was placed conservatively at 0.31, so the trade hasn't reached T2 yet and therefore there is no reason to tighten the exit trigger.


----------



## peter2

Trading update:  Trade closed

AU8: Sold at T3 (0.61). Result +3R (+$3045) in 2 days.  Next trade.


----------



## tech/a

peter2 said:


> Trade management of AU8 for my own personal purposes. I know that I should remove the sell function from the trading platform or just go out for the day. My iSL was placed conservatively at 0.31, so the trade hasn't reached T2 yet and therefore there is no reason to tighten the exit trigger.




While its the best possible exit today and at your limit order.
Had the trade NOT reached T3 what would have happened ---say 60c--hypothetically.
Just interested with such a large swing.


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## peter2

Yes I agree that today's market action was perfect for the T3 exit strategy. This price level (0.61) was also my personal trades T2 at which I sold 1/2 of my position. I can leave the remainder with a TS at BE (0.41). I'm tempted to buy some back at the lower price. As I write this the price is not so low (ask 0.54).

This has been a huge swing as you mention tech/a. After this mornings exits I went back to bed. I trade the first few hours of the US markets so I don't watch the ASX open.

If price didn't get to my limit sells I would have placed a sell order to protect the 1R open profit. I would not have expected price to fall below 0.50 and if it did sell to protect the 1R open profit. This order would have been triggered as price did fall below 0.50.

Wow, price is now back at 0.565 (vol 21M). The demand is very strong. I'm very tempted to start another trade but don't like buying at this time of day. I'll look at this option later on > 2:30pm.

edit: Checking other charts I notice that the open MMS-cfd trade has turned into a bigger result than AU8.


----------



## peter2

Trading update: Trade closed and a personal reminder that re-entries "rock".

MMS-cfd: Sold today at 17.90,  Result +4R (+$3210)
The sell price in the spreadsheet has been adjusted down (17.81) to account for interest paid over the 29 days this trade was open. This result was also reduced due to the max position size limit of 25K. 


This trade was closed in this thread as I've exited a similar (non-cfd) trade in my own account. 

This thread's portfolio is starting to look a little thin and the market still bullish. 
Time to hit the arvo scans.


----------



## peter2

A couple of my trades have experienced huge intra-day price swings. I've seen it multiple times in SSM and today it happened to ASL. This is why I don't have my exit stops in the market. 

I can't explain these bid clean outs. 
Is someone trying to clumsily trigger sell stop orders? Is there a newbie insto broker? 
Any other ideas?


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## Rypieee

I call them toilet bowl flushes, water level drops, and then water level rises.

No idea what happened with SSM and I doubt it is a newbie insto broker pulling the trigger... Looks like weak retail holders had a part in the frenzy. 

If anything, I reckon there is intent behind the flush, especially on negative publicity (NBN rollout delayed) and capitalizing on the discounted shares. Kind of smart if a broker was orchestrating that to accumulate because they just have to open the flood gates a tiny bit and let retail investors push it down for them... Less capital on the table for the broker.


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## kid hustlr

Pretty scandalous price action really. I always view it as bullish but for the life of me can't understand how it can blip 15% like that. I honestly think it's just a thin market but the skeptic in me thinks it's an an insto buyer who _knows_ it's a thin market and goes hunting.

EDIT: fwiw Commsec doesn't show the same low in SSM that your chart does which tells me the low was on ChiX (I think). Quite the arb opportunity!


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## Country Lad

I don't think it was anything untoward with the ASL trades Peter, the asks far exceeded the bids for most of the day so and the momentum was very much on the sell side. Probably a bit of panic by a couple of the red cordial brigade.  I haven't looked at the trades on the other one.
Here are the trades as they went lower and then recovered.


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## peter2

Trading update: Re-entry into a recent favourite.

*AU8*: Bought at 0.57, iSL at 0.47. 
The entry was a little late as the trigger was >0.55. I selected a conservative SL as this is not one of our normal BO-NH setups. I'm anticipating a medium term trade this time. 

I'm still going through the pm scan results.


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## Rypieee

Did not managed your sell @ 0.61 on my initial position but managed to top up at 49 cents - near lows of 47s. Longer term trade for me as well with AU8 but if trend breaks or momentum fades, it will be a sayonara


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## Porper

We got stopped out of ASL on the intraday raid...if that's what it was...who knows. Like you say this is happening with a few stocks...and not particularly low volume ones either. If it keeps happening then ASX may investigate...not holding my breath though. Some people can't leave their stops out of the market, either psychologically or because of time restraints - so they are at a disadvantage.


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## peter2

EOW 144 update: ASX Momentum Portfolio *+117.0%* (31% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+16.5%* (past 144 wks)

_This weeks sells:_ AU8 (+4R), MMS (+4R)
_This weeks buys:_ AU8 twice

The market ended flat for the week, while the portfolio had a little fun with a newly listed small cap stock (AU8). This week's "fun" lifted the portfolio to another equity high. We've started another trade in the same stock and wait to see what happens next. 
ASL: This weeks volatility has triggered our exit next open. 

_Outlook:_ *WU DU*. Bullish, but we still have to be careful. 
We've heaps of cash and portfolio heat is only 2%. We definitely want more trades, but they must have good RR potential.


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## PeterJ

peter2 said:


> Hey PeterJ, did you like that "boom" in AU8 today.    Straight to our T2 level.
> View attachment 84952
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Looks like I have to watch the open tomorrow.



I actually missed it, 
busy at work
but a very nice trade
and still holding for now


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## peter2

Trading update: 

I'm reluctant to start new trades while the general market goes sideways. I don't trade for the "action" or for something to do. This sideways movement should be good as it'll form shallow consolidations that we can use to buy break-outs in the strongest stocks. If the market falls then we've protected our portfolio. 

There's been lots of sloppy price action in mining service stocks and many of the day trading rallies in the small caps are reversing quickly. 

AU8 trade update: Price continues to go higher as we anticipated (currently 0.75). The T2 for the current trade is 0.78 and we'll place a limit sell above this but below the 0.80 whole number. The aim is to catch a spike higher this afternoon or a gap up open next day. If this doesn't happen then that would indicate the exuberant demand has weakened and we'll remove the sell order, protect our +1R open profit and see what happens next.


----------



## peter2

Trading update:  Trade closed

AU8: Sold at 0.795 for a +2.2R result. 
Price traded at the limit sell before I could remove it. I won't falsely claim that I'm still riding along. 
It's looking likely to continue higher.

Now we definitely need to find a few more opportunities.


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## peter2

Trading update:  New trade

WFD: Bought at 8.50, iSL at 8.20.  Position size limited to 25% (28K).
I must be desperate buying a REIT, but it seems this sector is on fire. This is purely a short term trade.




_Edit_: AU8 was 83-84 when I posted. Soon after it drops to 74-75. 
Did someone on ASF sell a few million of them after I posted?


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## peter2

Trading update:   Another REIT trade (nulla nulla will be pleased)

ABP: Bought at 4.17, iSL at 4.00.
Position size limited to 25% (28K). Another short term BO trade trying to take advantage of the current demand for REITs. 



Others I considered DTL (low volume), SCG (not another REIT !), CGF-cfd, 
TWE (surely over extended). Noticed a bit of a nibble at FBU on my reversal list.


----------



## peter2

Trading update:  That nibble turned into a bite. New trade.

FBU: Bought today at 6.50, iSL at 6.20.
Most definitely an aggressive reversal setup. I set the trigger at 6.45 (limit 6.50) so it's a BO entry tactic. An acceptable RR if other investors think FBU has fixed it's internal problems.



ps: DTL, mentioned yesterday also BO-HR today. The daily traded volume is too low to put it in this thread.


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## peter2

EOW 145 update: ASX Momentum Portfolio *+120%* (100% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+16.6%* (past 145 wks)

_This weeks sells:_ AU8 (+2.2R), ASL (+0.5R)
_This weeks buys:_ WFD, ABP, FBU

The XAO stays within this tight 100pt range and forms another weekly doji price bar. Our portfolio took another quick profit from AU8 which added a bit more to our total. 

We've started two trades on the property sector because it's one of a few sectors that are in demand. Both property (XPJ) and consumer staples (XSJ) are making new highs. 
(XSJ = WOW, WES, TWE, CCL, A2M, BAL, BKL, GNC, MTS)

_Outlook:_ *WU DU*. Bullish, but we understand that the index can't go higher without the banks and rising commodity prices. Buying break-outs will get us into those stocks that are making new highs but the follow through cannot be relied upon when market sentiment is sluggish.


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## Rypieee

While the prices won't agree with me, I suspect most REITs are performing due to upcoming dividends?
FET, GOZ, ARF, CHC - some REITs i know of, are going ex-div in 21 days

Would be wary of Shopping centre REITs and Childcare Centre REITS due to the tough operating environment (Shopping centres) and GE8 recent announcement of low occupancies in their business - potentially leading to higher risk of renewals.


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## peter2

@skyQuake  Thank you for the WFD news!

Serendipity is word that I reserve for occasions like this. Others might call it "dumb" luck. 

I was having difficulty finding BO setups that offered an acceptable RR as most charts are over-extended. Since last week I've been scanning the whole market including ETFs, trusts, REITS etc. in order to find something to put in this thread. That's how I noticed the current demand for the REITs via XPJ. 

@nulla nulla  Thanks for your input in the REIT thread. I see your posts every week and they keep me informed about that sector. I hope you have a bottom draw full of WFD shares. 

I was wondering what to sell this afternoon as this portfolio was fully invested with no available cash. We'll see what the local market offers for our WFD shares when they trade again.


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## peter2

Trading update:   Trades closed.

EHL-r: Sold at 0.24. Result -0.6R (-$600) 
This re-entry didn't go higher. However we'll keep monitoring the chart for another BO setup.

WFD: Sold at 9.70. Result +3.7R ($3888)
This portfolio sold to realise some cash for other opportunities. I'd prefer to wait 5 - 10 days for a better price, closer to 10.00.  Price will fluctuate with the AUDUSD.


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## peter2

EOW 146 update: ASX Momentum Portfolio *+132%* (58% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+16.7%* (past 146 wks)

_This weeks sells:_ EHL (-0.6R), WFD (+3.7R)
_This weeks buys:_ nil

The XAO stays within the current range (consolidation) having failed to go higher.  Meanwhile our portfolio continues to grow and makes another equity high. Even though our equity curve may look like a crypto price chart, it's not a bubble that will eventually burst. 

We sold our WFD trade on the next open after the offer was announced. Another good decision as the AUDUSD has risen a little since lowering the price of WFD shares. NWH and FBU are rising nicely. 

_Outlook:_ *WU DU*. We're still bullish even though the index remains in it's range. The index won't rise without the banks and it take a while longer for the sentiment towards the banks to improve. 

There are other opportunities available but I'm a little cautious at the moment. I'm seeing opportunities in charts showing pull-backs in strong weekly trends.  We'll start a few more trades soon as the portfolio has plenty of cash available. Portfolio heat is low at 3.1%.


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## tech/a

Very impressive Peter 
Near vertical!


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## peter2

Whenever I'm waiting for a scan to finish or have lull in activity I check out Brett Steenbarger's blogspot. http://traderfeed.blogspot.com.au/

I'm looking at his Dec 3rd post where he discusses three ingredients for success. I want to relate his discussion to the trading in this thread. Hopefully you'll then relate it to yours. 

"_The first contributor to success is simply the market environment._" 

It's no coincidence that the portfolio's current remarkable gains have occurred at the same time the market rallied out of it's sideways range. Our long only trading strategy needs the market to be going up to profit from most of our trades. This rally has improved our W%. Since Oct 12th when the XAO closed >5850 this portfolio has had 20 wins and 2 losses. 

The second contributor to success for traders is an overall visionary goal. This larger goal provides the motivational thrust. I have to admit that this thread had no visionary goal other than to create a profit and provide real time educational content. The motivation was/is still present and that comes from my commitment in this thread to you, the readers. 

The third success element for traders is having small goals to accompany their large visionary goal. There's no doubt that I enjoy posting new equity highs in the EOW updates. These are small goals that provide short term boosts of energy and satisfaction. If we're making new equity highs then we're making good progress towards the greater goal. 

On this third topic I should mention another short term goal that probably helped. This goal was to get +100% within three years. No sooner had I posted this goal, the market got stuck in a sideways trading range for six months and this goal wasn't looking very likely. Then the market rallied, BOOM we got there very quickly. The W% >90% certainly helped. 

No doubt the market was the major contributor to this success, but let's not overlook the focus that the shorter term goal provided. We were "locked and loaded" to take full advantage of that rally. 

Brett's ending comments are worth reposting. 

"_When you have an inspiring vision and a robust process for working toward that vision each day, you set yourself up for success when opportunity arises. 

How are you preparing for success in 2018?_"


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## peter2

Trading update:  New trade as we've got almost no risk itm atm.

LLC-cfd: Bought today at 16.47, iSL at 15.80. 
A reversal opportunity as the current daily trend is down. Price has bounced off a weekly support level (zone) and the RR at this price is very promising. 

I've posted the charts in the LLC thread as IMHO this is a good opportunity for medium and longer term traders/investors.


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## peter2

EOW 147 update: ASX Momentum Portfolio *+132%* (85% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+18.1%* (past 147 wks)

_This weeks sells:_ nil
_This weeks buys:_ LLC-cfd

What a week. The market broke out and continued higher without the banks. Our small portfolio stayed the same after it's recent rally. 

I look around at all the stocks that have gone higher without me (and us). I know we've missed a lot of them. Yes I get frustrated that we missed out, but I won't chase price. If I've missed the correct time and price to buy it, then I try to find out if it appeared in my scans and why I passed on it. 

There are many sectors that I'm not interesting in trading, gold, oil drillers, new drug companies and new internet companies. I can't buy these. They boom for a while, then bust very quickly. I hate having to sell when there's no buyers.

I know there'll be great setups soon. No rush. 

_Outlook:_ *WU DU*. Bullish but not completely convinced as the banks aren't moving higher. 

_On a seasonal note_: Enjoy the holiday period and don't forget to let your family and friends know how grateful you are for their support. Spread some of your trading profits around and you'll get their support quick enough. When you get a few spare minutes, think about how you're going to make next year your best ever. 

                                ASF is here if you want help with your trading/investing.


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## debtfree

Thanks Peter, appreciate the assistance, support, inspiration and guidance you offer so freely to everyone throughout the year. We are very lucky to have you at ASF.

Wishing you, your family and everyone else here at ASF (too many to mention) a Merry Christmas and a Happy New Year. Enjoy.

Cheers ... debtfree


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## kid hustlr

Appreciate the thread Pete,

Do you typically stead clear of the entire materials/energy sector or just certain portions of them listed above?


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## peter2

Trading update:   Went shopping, but ignored the drastically discounted ones.

*GXL*: Bought today's second BO-NH at 6.15 using a conditional order at 6.10 limit 6.15.
Initial SL at 5.80, but the exit trigger has already been raised to 5.90.
We're using the shallow consolidation as our setup after the impulsive move from $5 to $6.


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## peter2

Trading update:  We didn't buy only one item.

*AGY*: Bought today's BO-HR at 0.265, iSL at 0.23.
Today's BO of a long consolidation pattern would indicate higher prices. Target 0.35.


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## peter2

Trading update: General comments about our open trades.

*NWH*: Considered adding to this trade after seeing the long wick two bars ago (22/12). 
Missed out this afternoon as price went higher earlier. Our TS is under this long wick (1.48, +1.6R)

*FBU*: Price starting to drift lower due to profit taking. Our TS is 6.83 (+1R). I may exit soon to grab the +1.3R profit on this reversal trade and place a re-entry buy order at 7.05-7.10 in case demand suddenly improves.

*ABP*: Our other REIT that stopped going higher as soon as we bought it. No regrets as we also bought WDC at the same time. Our idea of getting something from this sector worked out well. 
Our exit trigger for ABP is 4.05. Price has traded at this level three time now but always closes much higher. We could exit this trade because there's no upward price momentum. I would use this reason to sell if we needed cash for other opportunities. 

@kid hustlr  I do use a fundamental filter in that I prefer to trade in companies that are producing income with products or services. In these stocks I'm trading the price swings created by insto's and longer term investors. The price movements of mineral explorers, oil/gas drillers, biotech (new drugs) and now internet software companies are driven by dreamers, gamblers and day traders. I apply a tighter exit trigger when trading the boom and bust type stocks.


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## kid hustlr

Thanks p2. As usual I agree.

the last comment about the tighter stops especially. I find the 2x and 3x atr exit not quite as effective in my (limited) sample of boom/bust type stocks given how quickly volatility can change. I think this is where the likes of duckman comes into his own in regards to ability to read the story bar by bar


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## peter2

EOW 148 update: ASX Momentum Portfolio *+132%* (91% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+18.2%* (past 148 wks)

_This weeks sells:_ FBU (+1.3R)
_This weeks buys:_ GXL, AGY

The market and our portfolio ended the week as they started. Materials are doing the heavy lifting but the banks are not helping. 

FBU: Sold today to grab profit and realise some cash. 
ABP: Prepared to give it another day or two next week.

_Outlook:_ *WU DU*. Bullish. Opportunities are out there. We have to find them and trade them.


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## Moose_

Hi Peter, I've been watching this thread closely. It's influenced me to change my strategy from buy and hold to trading breakouts. I changed the strategy around 1 July and the chart below clearly shows that trading breakouts is working better for me. My portfolio includes legacy bank stocks (25%).

My exits are discretionary and are either higher lows, ATR, sometimes parabolic SAR when they run hard, or 50 day XMA. My trading results would greatly improve if I held my winning trades for longer. There are many I sold way to early eg A2M KDM BIG. I also need to improve my risk management, my heat is currently at 16% and I am risking 1% per trade, therefore I can get about 20 open trades. I'm thinking about moving to 1.5% risk.

Anyway I wanted to thank you for your efforts and all the best for 2018.

Moose







R Result


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## maglincer

Hi Peter. I was wondering if you ever trade US stocks or is it just ASX stocks? I use trend following for my trading strategy and I've noticed that when the trends run over there they can run hard and consistent for a long time with some stocks. Also I'm very impressed with your returns, well done.


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## VSntchr

Moose_ said:


> R Result
> View attachment 85420



Great work Moose. 
I think keeping analytics and charting them as you have is one of the most constructive things a trader can do to stay on the 'improvement train'.


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## peter2

@Moose_  Thanks for the compliment. Your first post here is a high quality one and deserves all the "likes". Your equity curve is similar to this thread's in that we profited very well from the recent rally. Prior to that rally, trading break-outs was a frustrating job. This thread has been trading BOs profitably in all market conditions, but only because we are very disciplined with controlling our downside exposure when market conditions are unsuitable. Please ensure you protect your downside within comfortable levels. The market will turn down eventually. 

@maglincer  Thank you also. US stocks . . . I agree that the potential is there and I've been looking at them for many years. A few stocks trend very nicely, but finding them at the right time from all the rest that don't move quickly and smoothly is very difficult. 

_Some observations:_ 
Most stocks move with their index (SPY, QQQ, IMW).
Most stocks move with their industry sector. Within each sector there's stocks showing both relative strength and weakness. (_Note:_ The strongest stocks start moving before their sector. The sector lags these stronger stocks. If we're watching the sectors only then we'll miss the best time to buy the strongest stocks.)
Buying at the best time (stock going up at the same time as the sector and market) is very important.
Shorting is readily accessible and this creates "back filling" which makes break-out trading a little more frustrating. 

IMO the greatest potential for trading US stocks is a combination long/short portfolio. This requires a very disciplined application of both a long and short trading strategy with a clear overall portfolio risk oversight.


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## peter2

I'm writing this note as a lesson to myself.  Since this is an educational thread, you get to read it because it may apply to a few of you.

Two weeks ago I missed a few opportunities that with hindsight were very clear on the charts. I missed them because I didn't do my week-end prep work as diligently as I should. For the past month I've been skimming through the week-end reviews without paying proper attention. This is probably due to the great results we've been getting and that makes me feel that I know what's going on in the market. 

It's normal that our focus wanes a little at times. We're not computer algos. 

Part of my weekend review is the sector indices and I have to admit that I've been skipping them as I thought I knew which ones were hot and which ones were not. What I failed to note at the proper time (a few weeks ago) was the sector that was getting ready to be the next hot one (ie. now). 

The sector that's hot right now is metals and mining (XMM, XMJ). The weekly trend has been up since July17 (black arrow). The swing that I didn't prepare for was the current daily rally (blue arrow) that started 18th Dec. 




You know the two companies that dominate this index (BHP and RIO). There are others as well (OZL, ILU, IGO). All of these stocks are trending higher right now and I'm not in any of them. While none of these formed the perfect BO pattern that I prefer, they all had a first blue bar which I scan for every day. I didn't take notice of them because I wasn't prepared for the "break-out" in this sector. 

_Lesson:_ Pay more attention to the weekly and daily sector charts every weekend, especially the ones that aren't hot now.


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## peter2

Trading update:  Trade closed.



peter2 said:


> *AGY*: Bought today's BO-HR at 0.265, iSL at 0.23.
> Today's BO of a long consolidation pattern would indicate higher prices. Target 0.35.




AGY: Our momentum trade closed at 0.345, a tick under the prior high and our target. 
Result +2.2R (+$2530). One day's delay. then straight to target. Perfect.


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## peter2

Trading update:  New trade.

*DDR*: Bought some at the close (3.06) after seeing today's BO-NH.  iSL at 2.90
We'll need to buy some more next week. This is a thinly traded stock and this makes it liable to sudden price volatility. Therefore it's not ideal for this thread.


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## peter2

EOW 149 update: ASX Momentum Portfolio *+140%* (74% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+19.3%* (past 149 wks)

_This weeks sells:_ ABP (-0.3R), AGY(+2.2R)
_This weeks buys:_ LLC-cfd, DDR

The market gained 1.1% this week while our portfolio gained 3%. Prices are going higher without pausing on many charts.  This means there are few of our perfect setups available and other methods are required to create an acceptable RR opportunity (_a la_ *tech/a* style).

ABP: Sold earlier in the week as price and sector were not going higher. 
AGY: Sold to grab quick, above average profit. 

_Outlook:_ WU DU. Bullish. I see indications of demand in the larger cap financials (PPT, IFL, BEN, BOQ). This has to be bullish for our market. 

Our portfolio heat is a low 3.4% with the capital at risk even lower at 2.3%. In bullish conditions we should have more risk in the market than we have. Monitoring these heat values tells me that I've been a little lax in my prep.




_Note:_ I will only start another five trades in this thread because that will fill this current batch of twenty trades.


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## peter2

Trading update:  New trade triggered using a conditional order.

MND-cfd: Bought today's BO at 18.05,  iSL at 17.30.
I classify this as a pull-back setup in a strong weekly up trend. I've used the ledge as the trigger and iSL placement.


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## peter2

Trading update:  New trades and heaps of opportunities.

*A2M*-cfd: Bought today's BO at 7.67, iSL at 7.35. 
A little late but a tight exit stop will protect us. 



Something different ... 

*CHC*-cfd: Bought today at 6.16, iSL 5.95. 
Noticed a few REITS with bullish bars, so we'll start a trade in this one. 
Strong weekly up-trend, but we're buying a PB hoping that the up-trend is resuming. 
We'll exit if there's no immediate follow through to our 6.50 target.


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## peter2

Notes: 
CHC position size was reduced by our 25% limit. 
AGY: Forgot to place re-entry conditional order on this one and we've missed it. 
The order would have been if 0.36 trades buy with a limit of 0.37. I've looked at the course of sales and a fill would have been determined by how fast the conditional order would have been placed. No guarantee that we would have been filled. Not placing the re-entry order though is a trading mistake. 

Capital at risk is now 5.1%, which is near our limit for an improving bullish market. 
With the leverage of cfds we've invested 141%. 

FBU: Worth another post to discuss this one.


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## Roller_1

Peter, how much commission/interest do you end up paying on a round trip with your CFD trades such as the A2M?


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## peter2

This is from the Saxo Webtrader.


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## Roller_1

Thanks Peter, Cfds are not cheap!


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## peter2

Trading update:  Looks like there's a bit of selling today throughout the market.

NWH: Sold today as price went below our exit trigger. Result +2.4R
Closed off it's low so we'll keep an eye on this for a re-entry >1.70.

LLC-cfd: Sold at 15.90. Result -0.9R. 
Down for 3 days and a bigger drop today. A reversal that didn't have enough demand (or there was too much supply) to continue higher. This one is now worth watching for a Wyckoff spring reversal at 15.50

A2M-cfd: Sold at 7.39. Result -0.9R.
Two down days (BO failure) with today's a little larger. 

CHC-cfd: Sold at 6.02. Result -0.7R
Today's down bar negates the bullish bar that got me interested. 

That seems pretty bad doesn't it. We only started A2M and CHC 2 days ago. We risked a little more at a time when things were looking more bullish. We had a go but it didn't work out for us, so we reduced our exposure quickly. 

Sure, I don't like seeing three losses and perhaps I should have chosen better. I'm pretty pleased with these exits because it was the right thing to do. Doing the right thing makes it easier to forget the losses and we look forward to the next trades that we start.


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## kid hustlr

Great sell in A2M (in fact all 3) Pete.

I always get nervous selling just above my stop as if price turns I have completely blown my R:R out of the water. 

However in this case you've shown what else can happen. If you are trading end of day you actually end up exiting far lower than your ISL (also happens to me a bit!!)


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## tech/a

VSntchr said:


> Great work Moose.
> I think keeping analytics and charting them as you have is one of the most constructive things a trader can do to stay on the 'improvement train'.




Can only Echo V/S on your efforts.

I'm sure Pete would be very satisfied that someone has benefited as you have.
That's what these exercises are all about!

You don't get that on HOT COPPER!


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## peter2

Trading update:  Two new trades

AUZ: Bought today at 0.135, iSL at 0.115

EHL: Bought at 0.275, iSL at 0.24.


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## peter2

EOW 150 update: ASX Momentum Portfolio *+134%* (82% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+18.3%* (past 150 wks)

_This weeks sells:_ NWH (+2.4R), LLC (-0.9R), A2M (-0.9R), CHC (-0.7R)
_This weeks buys:_ AUZ, EHL

Finally we see a little profit taking in our over-extended market. The portfolio lost 2.4% as our newer cfd trades didn't work out as anticipated. I was pleased to see so many "likes" after posting these losers. These posters know the importance of keeping the losses small. Mastering this is important to keep us in the business. Whenever I look at trading another market, instrument or strategy I focus on keeping the losses small while I gain experience. 

_*Notice:* _The current open trades will be the last ones managed in this thread as we're coming to the end of my three year commitment (Feb18). In the remaining six seeks I'll post some thoughts, opinions, observations and what I've learned from this work. When these open trades are completed I'll post all the stats and data we've recorded over the past three years.


----------



## barmix

hi Peter
thanks for your efforts on this subject. I have one question and it may have answered already.
how long do you hold  onto non performers?


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## peter2

@barmix   Great question. I've got a short and long reply for you. 

I'll be more patient with all trades provided the market sentiment remains bullish, and the market and sector are still going up. 
                                                                 ---
Let me define these non-performers into two groups. Group A are slightly positive but their exit triggers may or may not be at break-even but their open profits are not big enough yet to consider grabbing some. Group B is slightly negative but still trading above their exit triggers. I may manage each group slightly differently and this depends on the underlying market conditions at the time. 

If the market conditions turn bearish then I'll exit group B quickly because I know that these are weaker than the market. These will most likely fall faster if the market continues down. I'll raise the exit triggers on many in group A to reduce loss of open profit and to prevent small winners becoming losses. 

If market conditions turn bullish or remain bullish then I'll give group A more time because a price consolidation is a neutral pattern. A BO is bullish and a break-down is bearish and I'll sell asap. I may be patient with group B in bullish conditions but I'll still be aware that I'm in weaker trades. It may be better use of my capital to exit these and buy newer break-outs. 

Before I start any trade I know what type of price movement I'm trading (trend or momentum(swing)). A trend trader must let price go sideways and even let price fall a little to see if a higher low will be formed. A trend trader must be very patient and use wide exit triggers. A swing or momentum trader should exit quickly once price stops moving upwards or the price swing looks likely to reverse. A swing trader is likely to be very active in the market and will cull non-performers of any type quickly. 

Joe Ross defines a price pause of 4 - 10 bars as a ledge and anticipates the trend to continue before the 10th bar. Any longer, the consolidation becomes a trading range or may even weaken to become a non-trending congestion of bars. You may decide to let a ledge develop but exit after the 10th bar if there's no BO. 

As usual it's always up to us to work out the correct decision for our trading strategies. 

ps: Now do you want the long reply?


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## peter2

We've discussed the importance of a market filter before. I've used one in this thread (the XAO) to adjust the amount of portfolio heat according to the current market conditions. We've done this to ensure that the potential equity draw downs are reduced to comfortable levels. Throughout the past three years we've managed to keep the DD <10%. The largest EOW DD in this portfolio has been -7% (benchmark -16%). 

I've also mentioned that the XAO sometimes doesn't represent the market properly. Now is another one of those occasions. The recent rally has been entirely due to rising commodity prices (lower USD) and the rising prices of the materials sector. There have also been a stack of small caps with rising prices but they aren't going to raise the index. 

The other big sectors (banks, industrials, REITs) are not participating at all. If you're not buying small caps or not holding  BHP, RIO then you may have missed out on this latest rally. 

Even though your market filter is bullish we have to buy stocks in sectors that are going up. I haven't bought many industrial companies lately because I've not seen good setups. We got lucky with the WFD takeover offer and nobody wants the banks. 

Looking back at my recent history I've not bought many material stocks for this portfolio and that's why this portfolio is going sideways instead of up. Clearly I've become a bit slack with my weekend reviews.


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## kid hustlr

peter2 said:


> LLC-cfd:
> Down for 3 days and a bigger drop today. A reversal that didn't have enough demand (or there was too much supply) to continue higher. This one is now worth watching for a Wyckoff spring reversal at 15.50




Nudge Nudge tickle tickle


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## peter2

Nudge, nudge, wink, wink say no more... however this is an educational thread so I'd better elaborate.

*Kid hustlr* reminds us that I made a few comments about what I'd need to see before considering another trade in LLC. It's not quite the EOW but the weekly bar looks like a reversal doji that found some support at 15.00. The last three daily bars are up with long tails (+ higher volume) indicating some demand at the lower prices. 

An important aspect to consider with this setup is this; 
Is there enough bullish sentiment (=demand) to offset the six down days? 
Volume was very low on the last two down days and the volume is larger on the three recent up days.
The charts of XPJ and some other REITs show doji's also, so there might be some demand returning to this sector. That would help our trade in LLC. The potential R:R is acceptable. 

I consider this an aggressive reversal setup. A more conservative setup would be to wait for a HL to form. Interesting, thanks *Kid hustlr*.


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## kid hustlr

Thanks for expanding Pete.

You actually read my mind - my playbook doesn't have a reversal set up of this nature in it and says I must wait for a HL. As such I'm on the side lines however I think this trade is justified and I'll
Monitor from the sideline closely.


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## peter2

Not a trading update as there will be no new trades posted in this thread. 
However the A2M chart looks promising for a re-entry. I'd be comfortable with a iSL at 7.40.
It's tight, but price looks likely to go higher quickly. The current bearish market may curb enthusiasm.


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## peter2

This thread is going to end at the end of Feb18. 

Yeah I know you're disappointed, but surely three years of consistent content is long enough. People earn degrees in three years and then they get a real job. Well, we've earned our degree in trading break-outs on the ASX. Now it's time we started a real trading job. 

I'm willing to continue providing content to ASF, but I'm unsure what content you want to read. I would like more interaction with other members but you're reluctant to engage. I understand your reluctance. Trading profitably is hard because we have to do things that go against our ingrained psychological biases. If I suggest you try something different. You'll want to avoid it and you'll disengage. 

Take break-out trading for example. How many people have you read saying that you can't make money buying break-outs. Buying BO's is a suckers play. Buying new highs is very difficult for most people. We're conditioned to buy bargains. Only suckers pay the high prices. Buying new yearly highs is a profitable trading strategy, but most people can't buy those new yearly highs. I hope you realise now that you can trade BO's profitably in most market conditions. 

Another example, using myself as the reluctant one. Eighteen months ago, *skc*, suggested I include shorts. I knew then he was right, but could not bring myself to do it. It was outside my comfortable long only trading skills (even though I short commodities and fx markets regularly). 

Our ASX has to be one of the worst performing markets in the world (maybe Venezuela's is worse). A combined long/short portfolio may have doubled our results. (Note: This thread has never been about results, but it may have been entertaining seeing me in uncomfortable shorts.  )

Whenever you read someone saying you can't be profitable trading FA, Elliot waves, Gann, VSA, MA xors or any other strategy. Translate that to they can't use the strategy to make money. They're spruiking their own lack of trading skills. 

Sorry. back on the topic of what do you want to read from me. I thought about a poll, but designing an effective poll is an art form that I lack.


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## peter2

EOW 151 update: ASX Momentum Portfolio *+132%* (57% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) *+17.0%* (past 151 wks)

_This weeks sells:_ MND-cfd (-0.1R)
_This weeks buys_: nil

The rally in the materials sector seems to have run out causing the index to fall for the second consecutive week. The index has to fall as there's no demand for the other major sectors at the moment. 

_Outlook:_ *WU DD* Our market filter has been downgraded a notch as the daily trend reverses. This is our indicator to tighten our trailing stops and reduce portfolio heat. We closed all our cfd trades and have raised a few exit triggers. 

If all our trades are closed before the end of Feb. We'll start Part 3 (what ever that is) earlier.


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## Joules MM1

Peter, kudos to you

great thread, you are generous

plenty of good nuggets for analogue reference

look forward to your next endeavour


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## Joe Blow

peter2 said:


> This thread is going to end at the end of Feb18.
> 
> I'm willing to continue providing content to ASF, but I'm unsure what content you want to read. I would like more interaction with other members but you're reluctant to engage. I understand your reluctance. Trading profitably is hard because we have to do things that go against our ingrained psychological biases. If I suggest you try something different. You'll want to avoid it and you'll disengage.
> 
> Sorry. back on the topic of what do you want to read from me. I thought about a poll, but designing an effective poll is an art form that I lack.



Peter, this thread has become one of the most valuable trading related resources on ASF and, dare I say it, perhaps any stock forum on the internet. I know I'm not alone in being very appreciative to you for starting it and persisting with it over the last three years. The trading journey you have documented here will be something that people can continue to learn from years from now.

I am sure that many of those who have followed this thread and benefited from it will have suggestions about what you might consider turning your hand to next. While this chapter will soon be at an end, it's great to know that you are interested in starting another.


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## fiftyeight

Massive thanks Pete. Awesome effort!!! Even though my focus has shifted a lot recently some of the gems in here are applicable to all styles of trading and investing.

Thanks again


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## peter2

Thanks for the compliments but it's not over yet. 

One of the aspects that I'd like to demonstrate in my next project is consistent monthly gains. So I thought I'd better chart our monthly results over the last three years first. 

Each R multiple is equivalent to 1% of the capital at the time of the trade. 




Not as bad as I thought. However there are several periods of losses (largest is 6 months).


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## peter2

I know that it's my decision as to what I contribute. Right now I feel as though I'm posting something like the former magazine, "Womens Weekly". You know what I mean. Something that's regular (comes out weekly), has pictures (charts) and is current (live market). While I've no plans to change the content to something like another former popular magazine (Australasian Post) with a double D-cup and handle pattern on the cover.  It's time the trading evolved to include other activities.

Trading ASX stocks will still be important as I've got to manage my own portfolios. However I think it's about time I included other trading activities to boost the performance. This may be important if the ASX continues going sideways. These new activities should not only add to the current positive performance but they should also provide consistent gains. I'd like to see the trading business generate consistent monthly gains. 

The initial idea is to use the major portion of the capital generating gains from trading price swings in ASX stocks in both directions. Going long using our current BO techniques and shorting using cfds. I know what you're thinking "whoa, this is new". This is going to be a challenge for me and will require a change to my procedures (ie. I don't look at charts going down). 

I want to push my own boundaries a little in the next project. Shorting will surely test my brain circuits. If I do this well then I think the losing months will disappear. 

The cfd account we will use to short ASX stocks will also provide access to other markets. When the ASX is stalling and other markets are moving we will trade these other markets. I hope that the inclusion of these other trading activities will eventually eliminate losing months. 

These are my initial thoughts about my future contribution. There are a lot of details that I need to work through as I plan on taking every trade I post.


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## Parse

Just want to say thanks for posts peter2, I enjoy reading them and hope I have learnt something from then. I certainly look forward to Part 3 (maybe even 4, 5 and 6 as well!).
Thanks for all your hard work with this.


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## lindsayf

peter2 said:


> I know that it's my decision as to what I contribute. Right now I feel as though I'm posting something like the former magazine, "Womens Weekly". You know what I mean. Something that's regular (comes out weekly), has pictures (charts) and is current (live market). While I've no plans to change the content to something like another former popular magazine (Australasian Post) with a double D-cup and handle pattern on the cover.  It's time the trading evolved to include other activities.
> 
> Trading ASX stocks will still be important as I've got to manage my own portfolios. However I think it's about time I included other trading activities to boost the performance. This may be important if the ASX continues going sideways. These new activities should not only add to the current positive performance but they should also provide consistent gains. I'd like to see the trading business generate consistent monthly gains.
> 
> The initial idea is to use the major portion of the capital generating gains from trading price swings in ASX stocks in both directions. Going long using our current BO techniques and shorting using cfds. I know what you're thinking "whoa, this is new". This is going to be a challenge for me and will require a change to my procedures (ie. I don't look at charts going down).
> 
> I want to push my own boundaries a little in the next project. Shorting will surely test my brain circuits. If I do this well then I think the losing months will disappear.
> 
> The cfd account we will use to short ASX stocks will also provide access to other markets. When the ASX is stalling and other markets are moving we will trade these other markets. I hope that the inclusion of these other trading activities will eventually eliminate losing months.
> 
> These are my initial thoughts about my future contribution. There are a lot of details that I need to work through as I plan on taking every trade I post.




I look forward to seeing how you diversify into other markets long and short!
Thanks Peter.


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## jjbinks

Hi pete,

Another thanks. I think i've commented occasionally when I have questions but have been following along. Going back through this and your other thread is on my list of things to do.


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## peter2

Reviewing this thread I must apologise for not including any ASX200 index trades after posting I might. 
Post #56: Mentioned that I was going to stick with ASX stocks only. It was easier to apply only one TP rather than several.

I'm pleased that this thread kept it's focus on trading ASX stocks long only. It's probably what most people try to do when they start trading. I hope you've seen that you can be profitable doing just this. I've used a market filter to manage the portfolio heat in order to keep the draw-downs comfortable. 

Without a market filter or a TP to go short, the draw downs for any momentum/trend following strategy will be much larger (-15% - -25%) when the market falls. If you're comfortable with the size of these DDs then you should stick to your TP especially when you're in one of these DD periods. 

Post #51: I posted about the market scans I do. These haven't changed much.
Daily (before close). 
1. Look through watch lists that have been filled on the week-ends. Each list < 20.
(a) BO soon
(b) Reversals
(c) Spec Stks
(d) KeepAnEyeOn

2. PM Scan for Break-Outs: 



This will show ~200 - 300 codes but they're ranked and I only need to look at the top 30 - 40. If the numbers get too high, I increase the daily value traded parameter to 120K.

This scan will show me almost every stock that has started to move up in the last two days. I now apply my daily setup checklist to help me select the best ones to trade. The checklist includes a fundamental filter, is the sector hot or the underlying commodity going up?, a reminder to check to scheduled news events, check market depth, assess R/R of the trade.  I'll end up with only a few and then I'll allocate the trades across my portfolios and if one of the portfolios is this one I'll post the trade here. 

I'd like to point out that this thread doesn't include all the trades I've done over the past three years and in some cases I've not personally traded some that I've posted here. Over the past three years there's been many rallies in various commodities (graphite, Li, gold, Li again, gold again, Li again, cobalt, anode chemicals (scandium, zinc), etc. ) This thread has missed a lot of these mini-rallies and I've done this on purpose. 

The main aim of this thread has been educational. So long as the thread was making progress there was no need to push the pedal to the floor. It wasn't about results. You (the readers) were too polite to point out that I'd totally missed out on many of these hot sectors. I was hoping that a few of you would realise that the potential for this trading style was much greater than what I was presenting.


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## peter2

Review of year one (post #337) and what I posted then.



peter2 said:


> 2015 was a great year to learn how to trade ASX stocks. The markets presented all sorts of conditions. Our trading plans were stress tested and we came out on top. 2016 will be another great year to learn. This year we have the benefit of a stress tested trading plan. We're prepared, so bring it on.







The market drifted down all year with a few mini rallies in gold. We had four losing months and two DD > 5% while the benchmark went down -15% (incl 4% divs).


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## peter2

Review of year two. 
This chart shows a different aspect to that second year as the performance is reset to zero. 



In contrast to 2015 the market rose most of 2016. The portfolio was in a draw-down that started at the end of the previous year.  As the chart shows, the portfolio struggled in the first 5 months of the year. Would it be of any value to know why we struggled at that time? We've got the trade records and the posts during that period, so it's very likely that we would find the reason. That's a benefit of keeping both trade records and a journal of your thoughts at the time. 

Every trader will have periods where life gets in the way. Forgive yourself quickly and get on with the job when you're able.


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## peter2

Woops, realised that I've made a mistake with those pesky percentages. The second year started at +19.5 not 0. This is the adjusted performance which shows that the portfolio matched the benchmark rather than beating it. ROI = +26%



This would be a disappointing result for an active trader. I think it makes it more important to find out what happened in the first five months.


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## peter2

In year one we went from 0 to 119.5 = +19.5%,
in year two we went from 119.5 to 150.6 = +26%
in year three we went from 150.6 to 232 = +54%



Wow, while I was aware of the numbers I didn't think the curve looked like this. We nailed the early part of the rally and I was complaining about not getting the last two weeks of that rally (materials sector).

I mentioned earlier that I hadn't pushed the results, but I did when I thought we weren't going to get to the +100% before the three years ended. I pushed at exactly the same time the market rallied from a six month trading range. 

I suppose now we've got a glimpse of what can happen when everything goes well. I should disclose that my own results were less than half of this over the same period. I don't push my trading as it's more trend trading rather than momentum(swing) trading and I don't use margin (cfds) when fully invested.


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## peter2

More results: The last 40 results were well above average, but this can happen in a bull market. 

It's good to see the edge improving throughout the three year period. The improving market conditions certainly helped. Never overlook the importance of the market for your results. Every edge in the market can disappear very quickly.


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## peter2

Over the past three years we've traded in a falling market, a sideways market and experienced a small rally. That's just about every condition without noting the corresponding volatility. 

The EOW 151 update will be the last one. There's no point going the extra five weeks. 

We've completed 260 trades since *Pavilion103* started his thread and we've discussed two things above all else. *Risk management and trade management.* Everything is important, but it's these two aspects that we have to get right to be profitable. Knowing the correct action to take is one thing. Doing it is another. 

We can sell for the correct reasons or we can sell for the wrong reasons. Every time we sell for the wrong reasons it erodes a little of our edge that we're attempting to earn. 

Risk is a word I've used instead of down-side exposure (thanks *craft*, I miss you). Every trade has a chance of losing and every group of trades has a chance of losing. We must be good at managing the downside exposure. 

You've watched me trade 50K to 116K over the past 3yrs (2yr 11mths). 
Is there really a need for a Part 3?


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## kid hustlr

Seeing the Edge/Expectancy numbers in the above examples is a great thing to see Pete. thanks for this and all your time and effot.

With regards to the need for part 3 - You've given enough and probably not, not sure what else people could ask for.


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## Lone Wolf

peter2 said:


> You've watched me trade 50K to 116K over the past 3yrs (2yr 11mths).
> Is there really a need for a Part 3?




Hi Pete,

I walked away from active trading for six months to remove a mental block I have. I wasn't going to post as my input isn't worth anything until I can demonstrate a commitment to this business. But I wanted to say thank you, and so here I am.

Is part 3 needed? From what you suggested, it would demonstrate an experienced trader stepping outside his comfort zone and dealing with the challenges that come with that. We would see you apply your craft to short selling and markets outside of stocks, these behave differently to stocks (don't they?) and it would be interesting to see what changes need to be made to the trading plan to allow for those differences. Then there's the challenge of eliminating losing months. Maintaining a consistent income when the market it unfavourable for long only portfolios is a valuable skill that may be required more often in future times.

So I do think there is much to be gained from the proposed part 3 that hasn't already been presented. Having said that - You have already given so much, you don't need to do any more than you feel like doing. I can only say thank you, and I'm sorry I wasn't able to engage with you along the way. The archive of this thread will remain and continue to help me as well as the many others who stumble upon it for years to come.


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## debtfree

Congratulations Peter on your results, it was an absolute Masterclass and I appreciated the time, effort and help you gave out so freely to me and everyone else here at ASF during the last 3 years. 
I still can't believe 3 years have passed. As mentioned earlier what a great thread you have left here for all to research, study and learn from for years to come. 

I would also like to thank the many others that have contributed to this thread. Without you all, there would have been many questions that I was not aware of to even ask ... so, without you knowing, you've also helped me in my trading journey.

Once again a tremendous effort Peter,  showing us how to trade profitable and in a safe and controlled manner. You certainly have the knack to convey your message across to others so if you feel you have more to give, I only have one thing to say .... I'm standing in front of my computer clapping and yelling Encore, Encore, Encore (Part 3) 

I know I'll be following the next thread if you choose to do one. A few things have been mentioned already that sounds promising. My god you could even run a thread on excel.

Thanks Peter.

Cheers ... debtfree


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## HelloU

Bugger, I arrived too late to join this party. Cannot (probably will not) look back and work it all out cos feels like looking at old family photos from someone elses family - no skin in that game so no interest. I need to ride along at the time to understand - and feel the market mood and worlds thoughts that somewhat influence the trades. 
Heres hoping for a next something to get a seat on the bus........


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## Parse

I kind of agree with you HelloU. It is difficult reading old posts, or information of any kind which relates to the market feel and direction at that time. Makes it difficult to fully comprehend how things are/were going. The biggest thing is always figuring out which stock to pick from your watchlist and following threads like this one shows how others are choosing in the current climate.


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## Lone Wolf

Parse said:


> I kind of agree with you HelloU. It is difficult reading old posts, or information of any kind which relates to the market feel and direction at that time. Makes it difficult to fully comprehend how things are/were going. The biggest thing is always figuring out which stock to pick from your watchlist and following threads like this one shows how others are choosing in the current climate.




I disagree that the biggest thing is figuring out which stock to pick.

This thread demonstrates how to treat trading like a business rather than simply taking a punt on some stocks. The construction of a trading plan in great detail. Following that trading plan with discipline, identifying when you’ve made mistakes or taken trades outside of that plan. How to managing trade risk and portfolio heat depending on market sentiment to reduce total drawdown. Breaking down results to identify areas for improvement. It was seeing how he approached the business that was more valuable to me, and that’s something that retains its value regardless of when you read it.

Which stock to pick is important and I suspect that if a new trader had followed the exact same trading plan as Pete they’d be less successful. Years of experience help Pete pick the right trade out of the multiple valid candidates. It’s just sad to see this thread value being diminished the moment it ended. If I were Pete I’d find it a bit demoralising.


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## VSntchr

Agree Lone Wolf.
I actually typed up a response last night but decided against posting it...
But essentially, it's not about following the exact stocks.
It's about understanding the process and watching it play out over a variety of market conditions.
I got into trading after discovering the Pair Trading thread, and I spent hours reading through the 40 odd pages that already existed. To look back and realise that a forum thread perhaps spurred the start of a trading career is quite astounding really...
Whilst already a profitable trader by the time these momentum threads were in full gear, I have learnt alot by following along (and partipating when appropriate) and my trading business has certainly taken a few things to bolt on which improve it's resilience through all markets.


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## fiftyeight

Look forward to what ever you do next Pete, but I hope it is something that does challenge you. Will be great to see how you work through the different problems you come across. It is not often you get to see the thought process of an experienced trader tackling new problems


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## mikeroxoz

Don't go Peter!...Perhaps just change to a weekly time frame or I don't know, find another mission... Maybe the Duck v Peter...Thriller in Manila....thunderdome style?...I recall reading that you once wrote that posting assisted your own trading from being disciplined...so please continue to help yourself and benefit the world of Aussie stock forums by continuing....no pressure


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## HelloU

Let me try to restore some respect to the thread following my last post.

Even in places that are full of garbage you can stumble across a diamond.  That is how I see this thread, it is GOLD amongst some non-gold. For anyone interested in swing or general trading you could do a lot worse than read all this thread.

The personal part:
It was never my intention to devalue the massive quantity of work done here. The value I was extracting from this thread was much more tailored. BO NH 385 breaks, 960 breaks, stop levels and even lots of R discussion was looked at but not what I wanted (which may sound strange given that establishing a trading discipline surrounding these was the whole point of the thread).

What I wanted were the table scraps that Peter occasionally left. Eg, the flippant one line comment about why he may see a little upcoming sector sadness even though current was bullish - that was the type of remark that would prompt me to have a real good look at the possibilities and implications for my own buylist. So I have to be in the market at the same time as the post is done for this to work.

Most importantly, the reason that I would seek out Peters scraps (so this thread) was that in my first few forum days I quickly recognized that here was a bloke that I considered to be well worth some of my time.


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## peter2

Did you know that three years ago when I asked for expressions of interest in continuing Pavilion103's work, the first people to respond were experienced traders/investors (*tech/a*, *craft* and *skc*). I'd only posted occasionally before starting this project but they knew it would work out (somehow).



craft said:


> _March 11, 2015_
> I hope Joe sticky’s this thread – it’s bound to become a classic.
> 
> I also hope you have got interest from some of the FA investors. Because if they have never been exposed to a well risk managed trading portfolio, there will be a lot to learn here (with a much faster feedback loop than available through FA investing) that will be useful to their own endeavours – we are all in the business of managing risk and rewards.


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## peter2

The latest concept for the next thread (Part 3) is to expand on what we accomplished in Part 2. Trading ASX long only left us vulnerable to dips in the market and taught us patience when the market conditions were unsuitable. We managed to preserve our capital and keep our draw downs within comfortable levels. 

Do you realise how important that experience is? If you can manage your downside exposure within comfortable levels, you should have the confidence to trade any market. I hope that many of you reading this thread for the past three years have increased confidence to trade the ASX. You must be confident that you'll do the correct thing at the correct time 95% of the time.

I'm planning to include three additional trading activities into our trading business. 

1. Trading short term daily swings in ASX equities both long and short (equities, cfds)
    (i) Current BO TP
    (ii) New ASX equity/cfd Shorting TP and a daily scan to find the opportunities.

2. Trading the 4H trend in forex currencies (fx pairs)
    (iii) New FX 4H Swing TP

3. Trading daily swings in commodities and indices (futs, cfds)
    (iv) New TP

Three new TP's need to be written and printed. Capital and downside exposure needs to be allocated across the three activities. Monitoring of performance and overall risk (heat) needs to be set up. Most importantly a daily procedure needs to be setup to ensure efficient analysis and application of the TPs. This last item is the one providing the greatest challenge for me. 

Well, you wanted me to challenge myself. Further details will be posted in the new thread when it's started. This new thread belongs in the Diaries and Journal section of the forum, however I'd like to post it in the Member's section so that readers can show their respect/courtesy by logging in to read it.


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## Moose_

Cant wait Peter, will be reading every post


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## willy1111

Hi @peter2,

Your consistency to keep posting in your thread over many years is one of the reasons I keep coming back to the forum, to check in on your thread and follow along.

Your weekly updates of cumulative performance shows tremendous transparency and reveals so much info.

I'm curious to know how you live off your trading, if you wouldn't mind sharing?

Clearly you're profitable. But how do you set your income?

Do you anticipate to spend x% of your portfolio each year. Ie expecting long term average above/around 20% per annum, do you say pull out 5% in July each year plus enough to pay your tax. You spend this 5% throughout the year plus say another 5 odd percent to pay tax and leave the rest to compound. 

Or do you take out a certain amount each month to cover your bills.

or do you keep a few months/years worth of cash and top up every so often after a good run.

Just curious to know the mechanics of how you do it if you wouldn't mind sharing?


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## InsvestoBoy

peter2 said:


> Review of year two.
> This chart shows a different aspect to that second year as the performance is reset to zero.
> View attachment 85825
> 
> 
> In contrast to 2015 the market rose most of 2016. The portfolio was in a draw-down that started at the end of the previous year.  As the chart shows, the portfolio struggled in the first 5 months of the year. Would it be of any value to know why we struggled at that time? We've got the trade records and the posts during that period, so it's very likely that we would find the reason. That's a benefit of keeping both trade records and a journal of your thoughts at the time.
> 
> Every trader will have periods where life gets in the way. Forgive yourself quickly and get on with the job when you're able.




Hey peter2,

Can you please elaborate a bit on how you handle tax in the above chart?

For the kind of market activity that I'm reading about in this thread, wouldn't you be classed as a trading business by the ATO and would need to lodge quarterly PAYG style tax and pay a 30% tax on profits each quarter?

Wouldn't the chart you show look quite different if you have to cut 30% of the profits out each quarter? I mean, not just a reduction in returns from that quarter, but also the capital available to compound returns in the next quarter(s)?


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## lindsayf

Brilliant - looking fwd to it.



peter2 said:


> The latest concept for the next thread (Part 3) is to expand on what we accomplished in Part 2. Trading ASX long only left us vulnerable to dips in the market and taught us patience when the market conditions were unsuitable. We managed to preserve our capital and keep our draw downs within comfortable levels.
> 
> Do you realise how important that experience is? If you can manage your downside exposure within comfortable levels, you should have the confidence to trade any market. I hope that many of you reading this thread for the past three years have increased confidence to trade the ASX. You must be confident that you'll do the correct thing at the correct time 95% of the time.
> 
> I'm planning to include three additional trading activities into our trading business.
> 
> 1. Trading short term daily swings in ASX equities both long and short (equities, cfds)
> (i) Current BO TP
> (ii) New ASX equity/cfd Shorting TP and a daily scan to find the opportunities.
> 
> 2. Trading the 4H trend in forex currencies (fx pairs)
> (iii) New FX 4H Swing TP
> 
> 3. Trading daily swings in commodities and indices (futs, cfds)
> (iv) New TP
> 
> Three new TP's need to be written and printed. Capital and downside exposure needs to be allocated across the three activities. Monitoring of performance and overall risk (heat) needs to be set up. Most importantly a daily procedure needs to be setup to ensure efficient analysis and application of the TPs. This last item is the one providing the greatest challenge for me.
> 
> Well, you wanted me to challenge myself. Further details will be posted in the new thread when it's started. This new thread belongs in the Diaries and Journal section of the forum, however I'd like to post it in the Member's section so that readers can show their respect/courtesy by logging in to read it.


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## peter2

TAX: The main aim of this thread was educational and to demonstrate the application of a simple discretionary trading plan. I agree that once a person becomes profitable tax must be paid. The amount of tax owed depends on many factors and there are several ways to minimise the tax due.

As far as I know the ATO doesn't classify individuals as traders. The individual classifies himself/herself as a trader/investor or any other occupation if they're working fulltime. It would be difficult to justify yourself as an investor with the trading record shown in this thread. If one earns more in their FT job, trading profits are added to the income and tax is paid on the total yearly income. The trading profits may increase the amount of tax to be paid if they put the payee into higher tax brackets. If the trading profits exceed other amounts earned then one may classify themselves as a trader and pay what is due.

If this trading was done through a business then the applicable tax rate would be 30% (I think).
If this trading was done through a SF that was paying a pension to it's member(s) then there is no tax payable.
If this trading was done while a resident of Vanuatu (and many other countries) there is no tax paid.
If this trading was done through a trust, then it gets complicated (see trust deed).

Yes the charts would look different if any capital was withdrawn at any time and for any reason (tax included).


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## peter2

I'm thinking about leaving this thread open so that anyone can post a question regarding their plans for trading ASX stocks. 

Myself and many other experienced traders/investors at ASF are willing to provide suggestions to help you create/modify your ASX trading plans. You make the decisions, but sometimes it helps to discuss the options first. 

Trading profitably is a skill that everyone can learn if they're willing to do what it takes.


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## peter2

Update:  Notice to remind all short term traders that the reporting season has started again. 
Here's a current example. CCP chart shows a great looking BO, buy it at 23.5, iSL at 22.5. Easy.




Earnings are scheduled to be announced tomorrow 30/1. Do you want to take on the risk? The earnings might be poor and the price dumps, the earnings may be good but the insto's take the opportunity to sell to the retail buyers (opens high, ends low).  Who knows what will happen.


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## peter2

We avoided that break-out trap.


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## debtfree

*Peter:* I noticed FBU had a large engulfing candle today. 

In post #1190 you noted re-entry @ 7.05-7.10 
You also mentioned in post #1203 FBU: Worth another post to discuss this one.

Was it the support that is now our resistance that you thought to discuss?


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## kid hustlr

peter2 said:


> Trading update:  New trade triggered using a conditional order.
> 
> MND-cfd: Bought today's BO at 18.05,  iSL at 17.30.
> I classify this as a pull-back setup in a strong weekly up trend. I've used the ledge as the trigger and iSL placement.
> View attachment 85556




Pete,

Can I ask how you have managed MND - do you still have it?

Pete,

As an aside - really want to thank you again for your efforts. I can't stress how much your threads have helped me, I could talk for hours about the hidden gems I feel you've given me


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## debtfree

@kid hustlr 
See post #1220 EOW Report - Sold @ 17.98 TS

Cheers ... debtfree


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## peter2

FBU: After the initial aggressive reversal trade ended successfully, I was going to outline what I'd need to see for the next trade in FBU. There were two scenarios, a shallow pull-back or a deeper pull-back and I marked a chart showing both possibilities. I didn't post the chart as the thread was ending. The weekly chart shows a very bullish bar. One of many I've noticed this week.

MND: This trade was closed for small loss when price came back to 18.00. The PB turned into a very deep abc corrective pattern. The PB was too deep for me to consider a re-entry. Price has boomed off support over the past three days making a bullish outside reversal bar on the weekly chart. 

I'm pleased that you've found a few good bits. My trading beliefs and therefore trading plans are created with ideas that I accumulated from a variety of sources. It took time and a lot of ongoing modification to end up with something simple and robust that works for me. 

If your passion is genuine then you'll keep going until you have something that you can use consistently.


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## kid hustlr

It's surreal seeing all these bullish set ups knowing the mini was down 2% yesterday.


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## curiousguy

peter2 said:


> Trading update:  New trade
> 
> APX: Bought today's BO-NH at 4.82, iSL 4.40.
> 
> Lots to choose from today.  Missed A2M and had to choose between ALU and APX.
> I'm going to be using more price targets to increase the frequency of trades.
> 
> View attachment 72589



I know that this is an old post but have you noticed that A2M and ALU have exactly the same graphs?


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## curiousguy

peter2 said:


> FBU: After the initial aggressive reversal trade ended successfully, I was going to outline what I'd need to see for the next trade in FBU. There were two scenarios, a shallow pull-back or a deeper pull-back and I marked a chart showing both possibilities. I didn't post the chart as the thread was ending. The weekly chart shows a very bullish bar. One of many I've noticed this week.
> 
> MND: This trade was closed for small loss when price came back to 18.00. The PB turned into a very deep abc corrective pattern. The PB was too deep for me to consider a re-entry. Price has boomed off support over the past three days making a bullish outside reversal bar on the weekly chart.
> 
> I'm pleased that you've found a few good bits. My trading beliefs and therefore trading plans are created with ideas that I accumulated from a variety of sources. It took time and a lot of ongoing modification to end up with something simple and robust that works for me.
> 
> If your passion is genuine then you'll keep going until you have something that you can use consistently.



I've only just come across this forum thread. It is very interesting. I'm going to go over it as an example of how decision making takes place. I don't understand half the terms used, but am eager to learn. Morgan Stanley recently released a report identifying momentum trading as being more successful than the value, growth, dividend et al approaches. But this seemed to primarily apply to Australia, with Japan being exactly the opposite. I made a lot of money last year adopting the momemtum philosophy, but concentrating on those shares that have a good record of consistency over long periods ALU, A2M, APX, CSL et al. However, the first half of this year has produced only a neutral result. The mentioned shares went up, but i also diverged into more speculative ones that seem to have eroded my profits. This thread seems to concentrate on small clues as to when to buy or sell. I'm interested but not too sure if guesswork on a micro is really successful. However, I'm always willing to investigate new ways. Looking forward to reading any replies to this reply. I really appreciate the efforts Peter made to keep this thread going for such a long time. I am also impressed with the technical talk that went on (rather than the speculative guessing that goes on in some of the other threads). This thread is solid gold. I'm looking forward to trying to understand it.


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## IFocus

curiousguy said:


> I've only just come across this forum thread. It is very interesting. I'm going to go over it as an example of how decision making takes place. I don't understand half the terms used, but am eager to learn. Morgan Stanley recently released a report identifying momentum trading as being more successful than the value, growth, dividend et al approaches. But this seemed to primarily apply to Australia, with Japan being exactly the opposite. I made a lot of money last year adopting the momemtum philosophy, but concentrating on those shares that have a good record of consistency over long periods ALU, A2M, APX, CSL et al. However, the first half of this year has produced only a neutral result. The mentioned shares went up, but i also diverged into more speculative ones that seem to have eroded my profits. This thread seems to concentrate on small clues as to when to buy or sell. I'm interested but not too sure if guesswork on a micro is really successful. However, I'm always willing to investigate new ways. Looking forward to reading any replies to this reply. I really appreciate the efforts Peter made to keep this thread going for such a long time. I am also impressed with the technical talk that went on (rather than the speculative guessing that goes on in some of the other threads). This thread is solid gold. I'm looking forward to trying to understand it.




I haven't traded for about 8 years but hope to re-enter the market later this year time permitting. I started taking positions in 86 remember TechA on trading forums before dinosaurs were born (what was that forum call John?). I took a long time to profits but my methods were really similar to Peters. 

Peter is pretty much in a league of his own as far as posting his progress / integrity  and success over time.

Take time to read through there are a couple of themes that are gold one is trading to the market conditions.


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## debtfree

@curiousguy yes the thread is a beauty. There was one thread before it, if you follow the link it should take you to it.

https://www.aussiestockforums.com/threads/pavilion103s-live-asx-momentum-setup-trading-thread.29536/

There is another one that followed this one called *'P2 Momentum Trade Book - Part 3'* in the Private ASF Members Forum

I'm sure all of it will keep you busy for a while and yes I agree with you, it is solid gold.

All the best ... Debtfree


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