# Pavilion103's LIVE ASX Momentum Setup Trading Thread



## pavilion103

Previous live ASX trading threads seemed to gather some strong interest. If this one also gains strong momentum (pardon the pun) I will keep it running for a while. 

Having not traded a single share in approximately 9 months I am back trading end of day. 

The main consideration is the position of the XAO which appears that it might have some upside potential. This is a basic filter that I use when deciding whether to be active in the market. 

I have also noticed a number of stocks forming setups which are of interest to me. This, combined with the XAO has prompted me to re-enter the market. 

In this thread I will be posting live setups (without the code) and then revealing the code 1 week after the setup is triggered. 

I will be using a hypothetical $50,000 trading account with 1% risk of $500 per trade. 
I will also be assuming that I can leverage at 2:1 under a company name (in order to increase exposure). 

Having not traded stocks for a while I am taking a bit of a punt posting live trades, however as with everything I've posted on ASF, I am to show people the thought process or trading in real time. Whether or not this exercise proves to be successful remains to be seen.  

Wish me luck 

p.s. I will add in a couple of setups I posted in the other thread and have already taken in my live account.


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## pavilion103

The three that I entered live and are in the "Hypothetical..." thread. 

Two have been revealed. One is still trading within the first week of entry.


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## pavilion103

This is the type of summary that I will provide at the end of each week.


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## ThingyMajiggy

I see you've lashed out for TradeGuider  Hopefully you get some good profits to cover the cost  Good luck with the thread


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## pavilion103

More setups


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## pavilion103




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## dutchie

pavilion103 said:


> Wish me luck




Good luck.


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## dutchie

Great thread. Keep those setups coming.

I especially like Setup 4.

It's coming off its all time low (0.07). 

(I think it might revisit 0.17 or so before it breaks 0.245)


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## tech/a

Interested in your trade management


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## Nortorious

Nice work pav, certainly plenty of interest here and I look forward to following your story.

Nice daily movement for SEN today. I didn't have any capital available to get in and my super account isn't able to trade this speccy 

Looking forward to watching the performance of this method.

I've been tracking some of my watchlist and seeing some explosive moves so just a matter of time before some of my portfolio follow suit....


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## tech/a

Observations in the past 
Is that when we see many topping patterns 
It's often before a turn in the market.
The more we see as we did in 2008
The wronged it is.

The same is often true with bottoming and 
Breaking out or continuation moves.
The more you find he more positive the market.

Opportunity may be showing itself.

How are you finding your patterns PAV.?


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## pavilion103

tech/a said:


> Observations in the past
> Is that when we see many topping patterns
> It's often before a turn in the market.
> The more we see as we did in 2008
> The wronged it is.
> 
> The same is often true with bottoming and
> Breaking out or continuation moves.
> The more you find he more positive the market.
> 
> Opportunity may be showing itself.
> 
> How are you finding your patterns PAV.?




Some of the ones I have identified have had what appears to be accumulation bases and consolidated looking ready for an up move. Others are more advanced and are forming consolidations after the initial up move from the base. 

I think we are at a crucial time now. These consolidations are forming as the market is consolidating a little. Whether the XAO needs to push down a bit or not will be interesting. If it is to push up I can see a number of setups really taking off. 

I'm still not 100% confident so risk management will be very important.


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## 5oclock

Good Luck PAV, will be reading with interest, another worthy thread by you!!https://www.aussiestockforums.com/f...tockforums.com/forums/images/icons/icon14.gif


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## Newt

Pav (or others trading similar), I'd be interested if you ever glance at Depth of Market?
Senetas for example is currently showing pretty equal buyer and sellers, with some serious overhead around $0.10

My exploits starting to learn futures showed if nothing else you can get a short term confirmation of large support and resistance during entry/exit windows, so I've been looking up the DOM more frequently for my share trades this year.  Its been interesting that a few that got moving cleared overhead (seller) support which paved the way for some larger percentage jumps over the last week.  You could just as easily say that's indicative of the entire market moving I guess.

Expect much of what your doing is off price action/volume principles though?

Another observation/curiosity - above $0.10 of course the ASX minimum price spacing changes from $0.001 to $0.005 which makes it a little harder to closely trail stops as you cross the transition point.


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## pavilion103

Apologies for the poor quality.


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## pavilion103

Setup 1 SEN - trailing stop 0.075
Setup 2 PAN - trailing stop 0.46
Setup 6 NAN - trailing stop = initial stop
Setup 5 (?) - trailing stop - initial stop


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## pavilion103

Unfortunately Mondays and Tuesday night's for the next 6 weeks are tough for me to even post updates for the next 6 weeks (before DL savings ends) due to my course.

I'll do my best.

NAN really moving today. 
Some others consolidating, maybe ready for the next push up.
Plenty pending too. I will continue to review these.

There seems to be a large number of setups appearing.


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## pavilion103

Best I can do with limited time sorry. Apologies for the small charts, may not be all that clear. 

Some stops moved and minor adjustments to pending setups. Apologies no time to update now. I hope you guys trust my honesty. 

I don't intend to hold all these setups but I'll see what triggers.


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## pavilion103

Setup 14 = half position size

Setup 6 = double position size


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## pavilion103

I haven't run a new scan. We have plenty of prospects on offer. Time does not permit me to look for more tonight. 

Changes:
Setup 5 = MNY


Trailing stops:
SEN - 0.076
PAN - 0.49 (BE)
MNY - 1.67


ENTRY CHANGES:
Setup 6 - 0.39/0.325 (now change to regular position size not double)
Setup 7 - 0.40/0.35
Setup 8 - 2.03/1.91
Setup 11 - 0.56/0.51
Setup 13 - 0.96/0.90


A lot of these patterns are consolidating into a triangle type pattern giving me a tighter (and better) setup. 

Well positioned if the market breaks higher. 

Current account balance - $52,016 (up 4.0%)


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## Mdean

Was thinking to go long off the support of BNO (Blue on chart below) but feel I've missed the ideal entry for least amount of risk.. 10% move today (Red).




Any thoughts on this one Pav?


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## pavilion103

Changes:

Setup 12 triggered. 

Stop on SEN (Setup 1) moved to 0.08

Setup 14 cancelled. 


I will post more charts over the weekend.


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## pavilion103

I like this one because it has setup a bit of an accumulation base and I think, given the position of the chart it's worth the risk.


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## pavilion103

Fxl - 3.53 exit


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## debtfree

G'day Pav,

Didn't see that the S/L on Setup 12 had been moved up to 3.53 or did you take action to lift the S/L during today's trading hours?


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## pavilion103

debtfree said:


> G'day Pav,
> 
> Didn't see that the S/L on Setup 12 had been moved up to 3.53 or did you take action to lift the S/L during today's trading hours?





Initial stop wasn't in the best place.
Once it didn't take off immediately I thought best to exit.
Would have done it all differently if I had my time again. But not to worry.

I moved it intraday today when I posted.


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## debtfree

Thanks Pav


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## pavilion103

No new chart posts because nothing triggered. 

Of the current list:
Cancelled: Setup 6, Setup 7, Setup 10, Setup 13
Moved entry: Setup 4 (0.235)
New initial stop: Setup 8 (1.88)
New trailing stop Setup 9 - AJX - 0.65


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## pavilion103

Actually 1 triggered sorry. 

Stop already moved.


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## pavilion103

The setup I had entry 0.39, 0.325 I took out by accident. 
Can't remember which one it was. I'll put it back in as setup 15.


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## pavilion103

2 new setups


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## debtfree

Hi Pav,

1st Q: Setup 3 NAN - No movement of trailing S/L from Initial S/L yet - happy with that at this stage?

2nd Q: Setup 4 - Initial S/L was .21 - did this need adjusting?

Thanks for the updates and new charts, very interesting to follow.


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## pavilion103

debtfree said:


> Hi Pav,
> 
> 1st Q: Setup 3 NAN - No movement of trailing S/L from Initial S/L yet - happy with that at this stage?
> 
> 2nd Q: Setup 4 - Initial S/L was .21 - did this need adjusting?
> 
> Thanks for the updates and new charts, very interesting to follow.





I thought I'd adjusted NAN to breakeven on here? Did I not do that?

Correct setup 4 was changed to 0.235 stop 0.195 I think. Didn't I post that either?


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## debtfree

Did not see those changes Pav, might have missed them but I had a good look.

Thanks for the reply and changes anyway.


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## pavilion103

debtfree said:


> Did not see those changes Pav, might have missed them but I had a good look.
> 
> Thanks for the reply and changes anyway.




No probs mate. 
Let me know if any more oversights


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## pavilion103

Two more setups. 

A couple of changes to entries/initial stops and I think a cancellation. Not enough time right now, but here are the new ones.


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## Nortorious

Hey Pav,

Check out HFA on the weekly and let me know what you think.

Looks pretty good from a Wyckoff point of view (just waiting for mark up)!

Interested to hear your thoughts and tech/a.


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## pavilion103

One new one


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## pavilion103

Apologies guys that I haven't been as active as I would have liked to. 
It's been a really really busy period. I hadn't anticipated this. Luckily I've at least been able to keep updates coming even if I haven't been able to give it full attention posting charts etc....

Changes

MNY - OUT  -$204
AJX - OUT   -$322
Setup 14 & 15 = canceled

Biggest winning position (live) is NAN - $1,210

Setups 18 & 19 = triggered


I'll check that other one for you too mate later.


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## pavilion103

A couple more setups to post when I get a minute. I'm adding 2 tonight.


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## pavilion103

The new setups


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## pavilion103

Update of portfolio. 

More pending setups than capital available. 

We will see what triggers


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## pavilion103

Will need to keep an eye on these. If the XAO moves then we are well placed. I like the setups forming and there are a lot of them. 

If things turn I will need to go defensive and into capital preservation mode.


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## debtfree

Hi Pav,

Just trying to upload a chart of the Setup 1 Trade SEN, hope you don't mind. I don't know if I have the right size or not to fit, it is a PNG file so here goes. If not I'll have to chase down the easiest way of doing it.

I have taken the liberty of adding the S/L adjustments as the trade has moved along according to your comments or I had a guess to when you would have moved them if not mention on the day. Feel free to correct any wrong days of when you made the decision to adjust S/L's EOD.

No worries if you don't see this for days. 

Here goes


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## tech/a

Unique stop loss placement.


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## debtfree

Was it managed well Tech since buying? 

Always interested in the views you 2 guys have and how you manage your trades.

Plus, I know Pav has been swamped of late.


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## tech/a

debtfree said:


> Was it managed well Tech since buying?
> 
> Always interested in the views you 2 guys have and how you manage your trades.
> 
> Plus, I know Pav has been swamped of late.




How Id play it.


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## pavilion103

I never know how to trade those. As you can see it's different from all my other setups. More speculative.

I'm going to take Tech's thoughts on board and move my stop there.

Happy for input. I admit I'm a bit lacking in understanding with these ones.


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## debtfree

Appreciate your analysis of this trade Tech and your thoughts going forward.

Besides a  few bars it did concern me that most bars have not been finishing near the top of the bars which made me think, are buyers really keen on this one? Or is this not to be really worried about? 

I know you have said before you don't need high volume for a share to go up but I thought it would need for buyers to push the closing price to the top of the bars a bit more often than what is displayed here.


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## pavilion103

Cancel setup 23. 
Trading halt. 
Was NAN. 
We are already in this one.


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## pavilion103

Setup 16 cancelled

Triggered:
Setups 20, 21,22,23,24,25

Just a shortage of time to post lots of charts.

NAN trading halt

setup 22 very interesting


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## pavilion103




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## Nortorious

Hi Pav, 

Nice work keeping this thread active and putting on more and more content etc. Great effort!

I'm interested to know what the stats are for the current portfolio given this has been running for awhile now. Don't need all the metrics, but just overall % increase since it started.

Keep up the excellent posting!


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## pavilion103

New setups


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## pavilion103

Updates. 
Almost 70% of capital in use. 

Light blue = active trades
White = pending
Green/Red = winners/losers

Yellow = any adjustments made since last post.


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## pavilion103

The standout performer to this point


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## pavilion103

One more....
Plenty to keep us going


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## debtfree

Hi Pav,

Setup 1 - SEN ...... didn't you move the S/L to B/E? Looks like it's still active in your spreadsheet. My chart shows the bar went through the B/E line and back up again. Did it not sell enough shares to knock you out?


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## tech/a

*SEN*

Pav suggested he was going to consider my comments.
To clarify my comments on the chart
I would have moved to B/E if the current bar was taken out.
It wasnt so I presume Pavs stop of .8 was!


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## pavilion103

tech/a said:


> *SEN*
> 
> Pav suggested he was going to consider my comments.
> To clarify my comments on the chart
> I would have moved to B/E if the current bar was taken out.
> It wasnt so I presume Pavs stop of .8 was!




Exactly. I said that I lacked experience with these and decided to gladly adopt Tech's trailing stop. 
I thought I made this clear. Maybe I didn't?
Can't remember what I wrote. But I changed it in my spreadsheets.


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## debtfree

tech/a said:


> *SEN*
> 
> Pav suggested he was going to consider my comments.
> To clarify my comments on the chart
> I would have moved to B/E if the current bar was taken out.
> It wasnt so I presume Pavs stop of .8 was!




I read your comments and understood (to my thinking) that if the bottom of the last bar on your chart was taken out you would take your S/L to B/E. 2 days later it did that so I knew if you were in this trade at that point you would out at B/E. Have I read your comments properly?

By the looks of Pav's spreadsheet in his Trailing Stop column he has .072 which is roughly the line you drew with the words 'Pattern failure' 

I'm not sure what has happened.


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## tech/a

debtfree said:


> I read your comments and understood (to my thinking) that if the bottom of the last bar on your chart was taken out you would take your S/L to B/E. 2 days later it did that so I knew if you were in this trade at that point you would out at B/E. Have I read your comments properly?
> 
> By the looks of Pav's spreadsheet in his Trailing Stop column he has .072 which is roughly the line you drew with the words 'Pattern failure'
> 
> I'm not sure what has happened.




No I move stops when new lows or highs are formed (in stock trading)
Taken out has two connotations I guess.
I knew what I meant---why didn't you??

Anyway PAV knew what I meant.
PAVs last comment was stop to .8
I guess that's where it was!


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## Wysiwyg

pavilion103 said:


> One more....
> Plenty to keep us going



That is Drillsearch (DLS).


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## pavilion103

pavilion103 said:


> I never know how to trade those. As you can see it's different from all my other setups. More speculative.
> 
> I'm going to take Tech's thoughts on board and move my stop there.
> 
> Happy for input. I admit I'm a bit lacking in understanding with these ones.





"I'm going to take Tech's thoughts on board and move my stop there"

Not sure if I can get much clearer than that!


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## debtfree

Sorry for more questions Tech but I've just got to learn this stuff, it's important for me.

I have added the graph of SEN you put up earlier. You say this is a pattern failure, is this because the bar on the  4th Feb (black arrow pointing to it) broke out above the horizontal pattern line then came back into the pattern, destroying the pattern thus making this a pattern failure. So at that point you would have then put your S/L at the line you drew with the words Pattern failure. Have I got this right?

Also I have put a red line under the new low (13th Feb) that formed after the share starting moving upwards, a new high was made after this date, is this what you are referring to when you say 'a new low above the buy stop'?

 Taken out has two connotations I guess.
 I knew what I meant---why didn't you??
Can I have another go at this .... you meant, taken out the top of that bar? As I said at the start, sorry Tech.

Thanks in advance for all your help.

Apologies to Pav, this trade threw me a little.


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## tech/a

The line is the point where price would have to trade or lower to call it pattern failure.
The bar I was talking about is the very last bar on the chart.
Following the lows after some correction.


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## debtfree

tech/a said:


> The line is the point where price would have to trade or lower to call it pattern failure.
> The bar I was talking about is the very last bar on the chart.
> Following the lows after some correction.




Ok, many thanks Tech for your input, time and patience with me .. I appreciate it. Also thanks Pav.


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## pavilion103

Latest update going into the weekend


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## Nortorious

Nice work Pav. I'm enjoying following this thread and seeing how the portfolio is performing. I actually had API going back awhile bought in at 0.76 I think and sold when the market was dicey at 0.89. 

Still a nice little earner but the 1.30+ is making my trade look like a buffoon... especially when I ignored my rules and tried to predict the overall market was headed down (before I changed my opinion and caught the rally back up on other stocks.. phew....)


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## pavilion103

Hi everyone following. 
I posted in the futures thread about some minor health issues/stresses I've faced in the past month or so. 
Complete overload, reoccuring virus, bad stress symptoms. My schedule is way over the top. 

I am not sure what to do about this thread as I was really enjoying this and it appears it was beneficial for many. 

I will give my final thoughts on this and let you guys know. Apologies, but I am running myself into the ground at the moment!

My intention is to take a break from the forum for a little while and return fully charged.


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## peter2

I'll volunteer to carry on with Pav's momentum portfolio, provided there is enough interest.
PM me if you want this portfolio to continue. I'll need to see >5 PMs. OK?

I should warn you that I'm daffier than the duck for taking this on and I'm much more conservative (risk adverse = tight arsed) than Pav. 

This is purely an educational exercise to illustrate the ups and downs of a portfolio. When there is risk capital available I'll be hoping to get trading suggestions from the ASF community. I'm not going to do all the work. OK?

As an example of what you might expect this is the portfolio at the EOW 6/3/15. There have been a few down days since then and the current P&L is lower. 

So, PM if you're interested, otherwise this thread waits for Pav's return.


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## peter2

Keep the PMs coming.  Don't you want to know what happened during the week and the effect of a few down days? 

This sort of paper trading exercise is essential for beginners to get a little market experience without losing money. The market will deliver plenty of surprises as we go along, some good and some bad. We have to know what we are going to do at all times. You can create your own trade management what ifs... if you follow this thread. 

If/then examples: 
IF: You are thinking about trading shares
THEN: You will learn heaps following this thread.

IF: You participate by suggesting a trade opportunity.
THEN: You'll learn even more. 

The "Duck" is on board and I'm sure Pav will appreciate the "assist",  but I'm not doing it for them. 

Are there others out there interested enough to PM me to go ahead?


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## peter2

Not enough interest from less experienced members yet, so I'll add a little more information about my trading style. 

Firstly, before I show you the money I have to review the trading facts of life. I cut my losses quickly, use tight trailing sell stops and profit targets to get the numbers I need to be profitable. The numbers are W%, Ave Win (AW) and Ave Loss (AL). 

Win %: I can't do much about this number. Sometimes its easy and other times it's not. My estimate for this number is 50% (random).

AL:  If a breakout trade doesn't go up immediately then I know its in trouble and I'll take an early (smaller) loss than the initial risk (1R). Sometimes I take a slightly larger loss after bad news. That's trading. The estimated AL is ~0.7R.

AW: So what size win do we need to make a profit. Obviously >1R would be enough, but I like to see >1.5R as a minimum. Focusing on >1.5R helps me let the good trades go higher as every successful portfolio needs a few larger than normal winners. My estimate for the AW is ~1.4R. This is twice the AL. 

These numbers create a positive edge and I'll let you calculate how much.  Edge = (W% x AW) - (L% x AL) 


Secondly, my trade management style will be different to Pav, tech/s and others. You should have already noticed in my first portfolio pic that I monitor risk closely. I watch the amount of capital that I'm risking and the total portfolio risk (heat). I have limits on these risk levels and work within them to prevent me from risking too much. These limits are designed to keep me comfortable as I trade better when I'm not concerned about the losses. 

Pav started this 50K portfolio with a trade risk of 1%. I'll continue that but I'll impose a limit of 6% when I'm bullish (XAO going up) and  4% when I'm bearish (XAO going down). This means I'll start more trades (up to 6) when the market is going up than when it's going down. Portfolio heat is the total risk in the portfolio. This includes both open profit and capital risk. I monitor this to ensure it doesn't get too large. I don't want a draw down of 20%, not even 15%. I try to trade without losing more than 10%, so this becomes the portfolio heat limit. 

Look at the risk values on the first pic I posted. Both the capital at risk and portfolio heat are above my comfort levels. Yikes, that is too much at risk for me. I wont be starting any more trades until the risk gets under my limits. 

Pav used leverage and currently the portfolio has ~77K invested. I'll be keeping this to 50K. I won't use leverage until the portfolio has earned that privilege (fully invested in profitable trades and risk capital available).


ps: Interesting, that the first PMs I received were from experienced traders/investors. I love their passion. Are there less experienced members with the same passion for the markets ?  I'm keen. How about you?


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## peter2

Thank you for your expressions of interest. I hope you enjoy the challenge as we proceed. 

Portfolio update:  I will routinely post the current portfolio at the EOW in a similar format to tonights update. Trades closed are listed on top, under the header. (Do you like the header Joe?). I will only show those trades that were closed during the week. The stats will NOT include the open trades. The open trade details should be obvious and they are sorted by risk at their trailing stops (TS). The best trades will be in green once their TS is at BE or better. The portfolio managers role is to be fully invested in profitable trades. 

This is what happened during the week (so far).

Notes: My application of the sell exit stops is different to Pav's. My exits will be triggered by a close below the trigger level. The exit price will be the next day's open price. This allows me to manage every trade at the EOD and place the sell orders before the market opens. I have managed this weeks trades as Pav listed and posted my modified TS (exit) prices. 

I'm not hiding the stock codes. We are all adults and this is NOT a tipping service. I may or may not be trading these opportunities and may manage my real trades differently than what is posted here. 

This weeks sells:
*WHC*: Sold at exit stop 1.57 for a full (1%) loss.
*SAI*: Sold at exit stop (4.13). Trade earned dividend (0.075) which partially offsets the full loss.
*GPT*: Sold as market touched our TS price. This is why I prefer to use a close below exit trigger and keep my sell exit orders out of the market.

Sell exits (TS) updated:
*API*: Great trade, currently >3R. moving TS up to close <1.35 to lock in profit. 
I'm going to place a sell order at 1.54 and grab the +4R result if it trades at/above this level.
*NAN*: Exit trigger moved to close below 1.65, locking in some profit.
*PAN*: We have two open trades (?). Exit both on a close < 0.51.
*SEN*: Raising TS to close <0.082 (Break even). 
*CAJ*: Raised exit stop to close <0.90
*APN*: Exit on close <0.90
*SYR*: Exit on close <4.20
*AGF*: Exit on close <1.11


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## tech/a

*Peter.*

Like your approach!

I don't know if you've ever done this but I note you will move your trade to a sell
earlier if the stock isn't moving in your direction quickly enough (You can see its in trouble).
I do similar.

Another thing I do is move my initial stop to B/E as soon as the initial trade has been tested with a pullback
(Higher Low) and then I start trading with a trailing stop ---which I crank up closer the steeper the rise.

I find it drops back draw down dramatically.(Be as a dot ball is better than a few runs in the oppositions camp!)
Can increase trades as I do get stopped out more often.
Helps maximize profit (More runs for than against!)


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## craft

Solid gold Peter

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

PM Comments:  (PM is Portfolio Manager)

Currently the portfolio has accumulated seven losses (-5.3%). It's normal for a portfolio to accumulate losses before the profits appear. It takes time for the profits to form and we don't let the losses get bigger than planned. I'm sure that this frustrates beginning traders when they start unless they've done some preparation. However I don't like to get too many losses as they add up and I don't want to see them accumulate faster than the open profits. Start slowly.

The portfolio has some cap risk available (6% - 4.6% = 1.4% available = 1 trade). However seeing that the portfolio is -5.3% and there is another -5.3% in open risk I might be patient and see what develops during the week.

I've just noticed that the portfolio is slightly over its 50K limit, so there is no cash available at present. IMO the use of leverage is not justified at this time. 

The best attribute for a portfolio manager is patience. 

New trading opportunites: I routinely scan the market for any one of four price patterns and I'll be on the look out for some potential setups. I'll discuss my setups much later. 

I'd like to invite the members to post any setups that they see in the stock specific threads to allow further discussion. If I like the setup I'll trade it in this thread and give the poster kudos for the find. 


ps: My immediate goals:  Support Pav, support ASF, see this portfolio to a respectable profit, 

OK? Any questions as we continue ? 

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

tech/a: You will notice that we think alike in many trade management aspects. 

eg. The trade in AGF, its a fund and unless it takes off (which it hasn't) I'd rather buy another break out trading opportunity.


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## Nortorious

Trade opportunity with CYC should it close out Friday above 0.633.

Will post in the CYC thread the chart etc for discussion as per Peter's desires.

High risk from a stop placement but good force behind it for further upwards progress.


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## skc

pavilion103 said:


> My intention is to take a break from the forum for a little while and return fully charged.




Pav, a great thread but not nearly as important as your own wellbeing. Enjoy your downtime (it gets rarer as you get older) and we all look forward to you coming back fully recharged.



peter2 said:


> I'll volunteer to carry on with Pav's momentum portfolio, provided there is enough interest.




Thanks Peter2. Heaps of great stuff complementing Pav's methodology, especially in the area of risk management on a trade-by-trade and portfolio basis.


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## peter2

It was brought to my attention that Pav's #28 setup (DLS - post #57) broke out today and closed near its high. 

If I include it, it might seem that I'd put it in because it started well. I won't, but credit to Pav for the setup that has triggered and started well.


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## prawn_86

Great stuff Peter, i am watching with interest


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## debtfree

G'day Peter,

1st of all many thanks for your time and effort in continuing Pav's thread, I'm sure he would be very happy with you picking up the reins and running with it.

I'm so looking forward to your take on this way of trading, the Trade Management from start to finish and also the Portfolio Management. You've covered a bit already so once again, thanks.

Can I get something out of the way early on?
Q: You say "when I'm bullish (XAO going up)" & "when I'm bearish (XAO going down)" What do you look for in the XAO, for you to come to this conclusion, especially when we are trading short term trades?

Cheers ... Debtfree


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## peter2

Debtfree: Good question and each trader will/should have their own definition. I look at the daily chart of the XAO regularly and draw lines that define whether the price is going up/down/unclear. 

I define an up trend as a series of higher highs, and higher lows. A down trend is the reverse. There are times when price is between a higher high and a lower low. This to me is unclear and I might then look at the weekly chart for a bit of clarity. 

I've noticed that my profits accumulate faster than the losses when the market is going up and so I try to start more trades at this time. I've also noticed that buying gold stocks is better when the price of gold is going up. I'll be buying oil stocks when the price of oil starts to rise. I prefer swimming with the tide rather than against it. 

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. 

Currently the trend is UP and if the XAO closes below 5700, I'll show some caution and reduce my open risk.


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## debtfree

That's it Peter, no more questions from me!  You and your x-ray eyes looking through my screen at my spreadsheets and all along, you knew! 

Not anywhere in my spreadsheets have I kept detailed stats of the overall market conditions when I've entered a trade let alone what type of trade setup it was. You're dead right, if I'm serious I should know these details and have them included in my spreadsheet to refer back to for feedback and as you say, to assist me in knowing my overall edge. 

Thanks for the kick in the pants, graph and info ... very good indeed. 

Cheers ... Debtfree


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## peter2

#debtfree: nice one, of all the posters here I think you will get the most from this thread as you're prepared to ask questions and work at it.

Spreadsheet: I've added a target value. This will be a value that indicates a reasonable target for the trade. In most cases this will be a prior high, yearly high or a +2R target. These price targets will be considered in the market and if they get hit we sell. In some cases like API there wasn't any past resistance we may not have a target and take what the market gives us. Although we'll be vigilant near the big number levels (API = 1.50 level)

DE = discretionary exit, in this case to free up some capital and remove second trade in same stock code
PT = Sold at price target
TS = Sold after sell stop triggered
SL = Sold at initial stop loss

Thursday 15:30 update:  No, don't expect these everyday. 

*API*: Sold at our price target and this locks in a very good +4R result. This one win offsets five of our earlier losses. Nice one Pav, youv'e earned a drink on us.
*PAN*: Price is not going up and we don't need to hold two positions. I will sell the smaller trade at today closing price (I'll take the 0.54, now).
*AGF*: Thought about selling this fundie, but the last two days have been up and I'll wait a few more days. I know, we'll raise our sell stop to a close <1.14. That'll put pressure on it.

These sales give us some cash for one new trade (Trade risk = 1% = $500). 

Time to start your scanners and find a few trading opportunities and we'll take the one that triggers first. That means we'll be placing pending orders just as Pav did.


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## peter2

EOD update of sell exit triggers (TS) and target changes.

Remember: My exits are triggered by a close below the price level and we sell on the next day's open. 
NO, we don't watch the open to see if we can get an extra tick or two. Only amateurs do that. 

*SEN*: Raise TS to 0.085. 
*API*: Raise TS to 1.14. 
*CAJ*: Raise TS to 0.95.

These changes reduce our cap risk to 3.9%. We can start two new trades if there is enough cash. 

I'll post the latest xls to show the results of our actions. I hope you'll see/feel that our cap risk is under control and why we are allowed to start two new trades. Grabbing the good profit from API offsets most of our losses from opening too many trades at once (IMHO). We've taken actions to allow our open trades to get better or get lost.

We see that we have to improve our W%, but we've only just started. This will improve as we trade stocks that are in strong demand and move higher for us.

OK - What type of setup do we want to trade?  Obviously Pav's fav is the break-out from small consolidations. I like them also. 

I also see that the index has had a small pullback in a clear up trend, so we can use similar setups in individual stock charts. I call these ambush setups. (A great example of this setup is in the chart of ALQ, but its not a sector I want to buy atm. Boggo - you will recognise this setup.)

Any questions?


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## Gordon7

Peter, this is great stuff you are presenting here. In some ways your approach to the market is similar to mine. What peaked my interest in particular is how similar your chart of the XAO with bullish and bearish ribbons (I have an additional 'neutral') is very very similar to my own. I also place a version of guppy multiple moving averages and a longer term moving average on my chart for a bit more clarity but that's a diversion to this discussion. 

The use of the MACD when it moves into extreme areas and generates a 'sell' signal as it has just recently, is a fairly reliable guide to a market that has to be treated with caution as you note in your chart.

Please continue ...


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## debtfree

Peter, another couple of question if I may:

How much volatility do you allow in your stop loss areas, such as a stop loss of no more than 20% of share price or, does it not matter for you? And at the same time is there a percentage in your stop loss area that is too close and you won't go under, such as 2%?

Also do you have a level in a share's price that you won't go over, such as $20 per share? I understand with a big bank you can get away with a higher level but I still thought $50K you might put restrictions on it, does it? 
Are you chasing cheaper stocks for faster movement?

Cheers ... Debtfree


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## peter2

Gordon7 : Yes I thought of your thread as I posted this. Nice to see you respond to the lure. I like to stalk my trout.

MACD divergence - Ka ching!   Well done. I was aware of this as Pav was starting all these trades. 
My ribbon is based on the GMMA. Well spotted again.

Many of us are doing similar things with only small personal differences. No matter how we do it we all have to get the basic maths right in order to be profitable. If you see a potential TL break let us know and we'll trade it here.


Debtfree: I require more time for your reply. 
Have a look at the volatility in the SEN, HSN charts. I like to apply a commonsense approach based on what I see in the charts.


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## Boggo

peter2 said:


> I also see that the index has had a small pullback in a clear up trend, so we can use similar setups in individual stock charts. I call these ambush setups. (A great example of this setup is in the chart of ALQ, but its not a sector I want to buy atm. Boggo - you will recognise this setup.)
> 
> Any questions?




Well done with this Peter, be careful it doesn't burn you out. It can look relatively straightforward to a casual reader but there is a lot of work behind the scenes.

Regarding the index, I am a bit wary of it at the moment, potential for a further dip to mid 5600's but it is likely to trade sideways erratically for a while before it resumes it's uptrend through 6000.

Based on that you may not see the results for that you would have seen had you been at this point in the process a few months ago and we have had the end of reporting season and associated dividend payments.

ALQ was making the right moves but it has a lot of handicaps associated with that sector which is hindering what you are seeing as well. I was holding NCM warrants (NCMIOZ) but since selling those over a week ago I am out of that area of the market as you can see in the list below.
None of these below have been recent acquisitions and most have paid a nice dividend in the last month or so which together have given me a nice stop buffer.

These market downturns/corrections do provide some nice entries that you seem to be on to but timing and patience is the key at the moment imo.

Cheers


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## Gordon7

peter2 said:


> Gordon7
> If you see a potential TL break let us know and we'll trade it here.



Okay, some of my current potential trades in the near future but for different reasons include CCL (already in at $9.40), CGF, ERA, GNC, HSO, MFG, NHF. Most will fall by the wayside of course.

As Boggo says don't burn yourself out here.


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## Nortorious

peter2 said:


> Gordon7 : Yes I thought of your thread as I posted this. Nice to see you respond to the lure. I like to stalk my trout.
> 
> MACD divergence - Ka ching!   Well done. I was aware of this as Pav was starting all these trades.
> My ribbon is based on the GMMA. Well spotted again.
> 
> Many of us are doing similar things with only small personal differences. No matter how we do it we all have to get the basic maths right in order to be profitable. If you see a potential TL break let us know and we'll trade it here.
> 
> 
> Debtfree: I require more time for your reply.
> Have a look at the volatility in the SEN, HSN charts. I like to apply a commonsense approach based on what I see in the charts.




SEN looking great after today's action. Watch out tomorrow!


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## tech/a

Nortorious said:


> SEN looking great after today's action. Watch out tomorrow!




Don't know about tomorrow but I like the trade.


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## Nortorious

tech/a said:


> Don't know about tomorrow but I like the trade.




Pure optimism tech/a, I'm expecting maybe a +0.11 finish.


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## peter2

Thanks for the burn out warning. I felt that I needed to point out that trading is not all about the entries and the profit. There is a lot to be aware of and manage in between and hopefully I've done that.

I'll admin this EOD and I've allocated one hour each evening to reply and post updates. I'm scanning charts for my own trading requirements as well. This work is not wasted.

debtfree: Volatility is a study in itself. The best low risk entry is when volatility is low and we plan for a price rise with expanding volatility.  A one size fits all % SL doesn't work. Don't ask me for the best trailing stop strategy. I don't know of it. 

I prefer to trade the high priced stocks and I'm happy to get a $3.00 move in a $60 stock with a 0.60 iSL. 

I'm certainly constrained by a 50K account, unless we use leverage. I'll give you an example from today. 

eg I like the AHE chart and like the current sideways range. I thought about buying 4.25 with a iSL 4.10 ( 0.15 risk). The risk:reward is enticing, but should I trade that in this portfolio?  See the pos size calculations.




Am I justified using 28% of the account in one trade? I think not even though the risk is only 1% account. Any company can report bad news and the share price suddenly drop by 15%. In this example the portfolio would lose 4% in one hit. 

Yes, I feel constrained by the starting account size and as a consequence we will probably be trading small/mid price stocks. I understand Pav's use of leverage (even though Aust persons cannot get this leverage from IB atm) and I'd like to include a few trades in the larger priced stocks when they appear. As the portfolio collects winning trades, I would most definitely like to use some leverage and we might use a cfd type arrangement.


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## debtfree

Peter, once again many thanks for another detailed and informative answer to my questions. You have picked up what I was saying and thinking very well, I appreciate the effort and time you have given me in the last few days. 

You are correct in saying "There is a lot to be aware of and manage in between." You have given me a lot to think about and some homework to do, as to catch up to where I should be at this time. I will take a few days/week to digest this and work on it, giving you a bit of time back to yourself. The added load does add up as other people say! 

I have read many of Tech/a and Pav's posts over the time and found many tips and gems among them, even last night I found myself looking back through a lot of your old posts and found and saved many tips and gems as well. So thank you for the old posts to other people, they are still relevant and helpful today. Many other people have great posts as well and are worth going through and reading, my thanks also go to them.

Cheers ... Debtfree


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## peter2

EOW Update: ASF Momentum Portfolio *+2.5%*  ( 87% in 8 stocks )   XAO *-1.9%* (27/2/15)

This is how the EOW update is going to look. If you would like any mods please submit your suggestion in triplicate to Dept of Funny Walks (PM me). 

Note: The lower red line in the graph below shows the value if every trade was closed at their planned exit. The difference between the  current value (blue line) and the red line is our total open risk. You'll notice that the new admin reduced this level significantly. 

Comments:  
Changes to TS triggers highlighted in yellow (SEN, AGF).

NAN, APN, AGF : plodding and if there was something better I jump at the opp. 

Speaking about something better, I think the "team" has missed a typical "Pav" setup. Pav will probably spill his cocoa into his lap-rug and fall of his rocking-chair when he realises what we've missed. 

This stock came up in my pm scans as today's volume put the daily ave vol above my cutoff. Have a look at SRI and tell me that isn't a Pav special. 
C'mon team, we have to do better. Do we have any price/vol spike riders out there?


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## Nortorious

Nice work peter2 and I like the chart which shows the at risk component. Very nice indeed.

I checked out SRI... whilst I am impressed by this week's bar and volume powering it, I don't like all the background noise (aka resistance) on this one. I prefer to trade when it is already in clear skies or when there has been a substantial basing and then moves up from there. 

We are all different and I only know a few recipes for pavlova.

Love your work!


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## peter2

Slight change in account trading conditions. I'm going to include some cfd trades and this will give us access to some leverage. This will allow us to trade larger priced stocks. The trading costs will increase due to commission and interest costs.

I'm leaving the cap risk limit at 6% which allows us to start up to 6 trades risking 1% each. Its not risking 6% in one trade. Whenever we raise a TS on one or more open trades we reduce this cap risk and this reduction may allow us to start another trade. When we move a TS to BE we can definitely start another trade. 

Atm our cap risk is 4.9% and the XAO trend is up, so we can start another trade. 

Pav hid the codes on his charts as he placed them in this thread. This was to avoid any accusations of providing specific financial advice. I'm doing it differently and posting the setups in the individual stock threads. This means you will have to look for them throughout the stock chat threads. 

I will only start trades in companies that are recently indicated by the ASF community. The lazy, of course will look for all my chart posts, but I'm going to use charts posted by others as well. Pixel posts a lot of interesting charts. I like the setups posted by Boggo, and Gordon7. Tech/a occasionally posts a chart analysis. Please continue guys. I will use a few of them to keep the lurkers guessing. 

If that doesn't thwart them this might. On many occasions I've read interesting comments that have led me to a chart with a good low risk setup. These "guys" don't post charts but their comments are always worth considering while looking at the charts. I refer to skc, craft, SilverRanger, VSntchr in the pairs thread. Even the contrarians (notting and So Cynical) occasionally post a valuable hint. 

Sorry, I've left a lot of frequent posters out but these are my fav's that come to mind.  In conclusion, the source of all the trades in this thread will come from the ASF community, both directly and indirectly.  Please keep those posts coming. 

These are the charts I'm monitoring daily for new entry triggers: CNU, TRS,  AIA, CGF,  AHE


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## debtfree

Peter: You and the more experienced traders on this site will most likely know all the following well and truly, but others like myself, probably not. I thought I would send it on to view the results of what we have spoken about in earlier posts. 

You made me do some homework in regards to the distance from the Buy Price to the Initial Stop Loss Price and the different effect it has overall. Below are 12 tables and also another 2 tables over to the right I played around with.

The first 4 tables across the top are a larger priced stock and in this case we will use your $60 stock.  All 4 across are with the $60 Buy Price. Table 1 contains the trade with the high price trade you prefer, the $60 stock with a $0.60 iSL, so a Stop Loss @ $59.60

All  4 tables across the middle contain let's say a medium price stock, the AHE trade with the $4.25 Buy Price. Table 5, contains the AHE trade you spoke about with buying at $4.25 with a $0.15 iSL, so a Stop Loss @ $4.10

All 4 tables across the bottom contain a low price stock with a $1.00 Buy Price.

What I wanted to do was put in your high price trade and the AHE trade and also a cheap stock into the tables along with other various stop loss distances away from those buy prices and see what stood out to me. I also wanted to see what happens if the scenario you spoke about if a stock did plunge 15% and the effects that resulted from this event.

All thing were even: The starting bank was $50K, 1% of the bank was risked for each trade which was $500

I looked at your trade No:1 and seen the stop loss was 1% away from the buy price and the total cost of the trade was $50K which I thought confirmed my thoughts of trading larger price stocks was a no-no with a smaller bank, it took up our whole bank if we traded with our $500 risk amount. (Yes, don't worry  I know you're not trading a $50K bank) but I was surprised when I looked at the cheaper No:2 & No:3 tables with the same 1% stop loss and the total cost was $50K as well. The penny drops when you see it front of you then you say, ahhhh of course it would. The same could be seen with the 4 different stop loss levels, 1%, 3.5%, 10% and 15%, it doesn't matter what price the stock it is, it's how close your stop loss is to your buy price is what chews up more of your bank.

Now to the AHE trade No:5 table and your are right when you said the cost total cost was a little over $14K which was 28% of our bank and if it fell 15% it meant we would lose 4% of our bank in 1 hit. In the No:1/2/3 tables with the 1% stop loss I see that it would lose $7,500 or 15% of our bank, which is 15 trades of risk. So once again it seems that the closer our stop loss is to our buy price it increases our total costs, our amounts we lose if the stock falls, and also it increases the number of trade risk lost. 1% loses 15 lots of trade risks, 3.5% loses 4.25, 10% loses 1.5 and 15% loses 1 trade risk.

In the top right of each table  1 - 12 in the blue cells I've divided our starting bank by the different amount of trades in our portfolio giving an average cost of each trade. No big deal but I just put it in there for my viewing.

The last 2 tables on the right side with the black headers and yellow arrow (Maximum - S/L -  Minimum) I have put in stop loss level s away from the buy prices of 7% & 15%. I see that the 15% will only lose 1 trade risk if the share price drops 15% which makes sense and the 7% will lose a little over 2 lots of trade risk. I also noticed  if your stop loss % was the same for every trade (which is impossible for this type of trading) and you divided your bank by the same number it would equal the total cost of each trade. I think I remember Tech/a saying something about he found between 8%- 12% was the sweet spot and now after this I tend to agree with him. Between 7% - 15% enables you to split your bank up into quite a few stock and at the same time reduces the impact if some stocks drop by 15%.

Like I said before, maybe nothing new for experienced traders but I thought I'd pass it on anyway.


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## debtfree

Sorry but the attached above didn't seem to come our very big or readable so I'll attach Spreadsheet


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## debtfree

I wrote: Table 1 contains the trade with the high price trade you prefer, the $60 stock with a $0.60 iSL, so a Stop Loss @ $59.60 
My apologies to all, the above line should say a Stop Loss @ $59.40. I do have it right in the spreadsheet so no big drama really.


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## craft

Hi Debtfree – I just wanted to give kudos to you for thinking about a risk that the fixed fractional position size does not necessarily address.  

What is risk? 

Is the ‘capital at risk’ and ‘portfolio at risk’ being measured here actually risk? Depends on your answer to what is risk!

My definition of risk is something ‘unexpected’ happening.  Therefore to me the above two categorisations are not ‘risk’ but ‘managed exposure’  Portfolio heat is the downside exposure I except in order to maintain exposure to upside.    Potentially realising the down side is not an unexpected event – it is a part of managing the business for the numbers I require to be profitable and realising that lose will eventuate many times as normal part of a profitable strategy. IMO the risk is the potential to lose more than I expect in managing my downside because of things like price gaps during overnight holds or trading halts.

So how do you manage gap risk?  A % of portfolio limit in any one stock? Maybe but if this position size restriction tends to pushes you towards low cap stocks where there is a larger likelihood that a  50M company will gap more than a 50B company.  All that is really happening is that you are increasing your earning potential by taking on more gap risk – a contradiction of what you are trying to achieve by putting in the portfolio % limit in the first place.

Sorry - no answers here just more questions.

..................................................
Peter

Is there a difference between capital at risk and total portfolio risk?  or is the difference only a mental construct that realised profits are more important than unrealised?

If you were to have a discipline of closing every position once a day and immediately restabilising those that warrant – there would be no difference in the two categories.  With this mental exercise – managing heat becomes paramount – the capital designation becomes a duplication.

Perhaps the capital designation is mentally important to give heat the room it needs to run?


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## peter2

Craft: I agree that the term "managed downside exposure" is a better label than managed risk. Even the term "managed" might imply that there is more control than there actually is. Controlling risk is a commonly used oxymoron. 

If all the managed exposure is downside then what is the importance of using the terms capital at risk and portfolio risk? For me the importance of monitoring the capital at risk happens at the commencement of the construction of the portfolio. Most trend following systems have a draw down of approx 20% (range 17 - 25%). In order to manage a trend following portfolio with the intention of avoiding this normal sized draw down one has to do something different. Placing a limit on the capital exposure limits the number of trades at the commencement of the portfolio. It also forces the portfolio manager to wait until one or more of the initial trades is profitable before starting new trades. Once there are unrealised gains in the portfolio, managing portfolio risk (or exposure) becomes more important wrt avoiding the max draw down. A mature portfolio should have no need to manage the capital exposure as most of the portfolio exposure is unrealised gains. 

Thank you for the opportunity to make me think about what I've been doing for years. 

The capital exposure limit reduces the risk of a disaster (max DD) at the commencement of the portfolio.


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## tech/a

Peter

I don't know if this helps but my discussion with PAV about commencement of a portfolio
I made mention that one trade should be around 10% of a portfolio's initial equity.

I tend to work on 7-14% for best bang for buck and least exposure to a single or couple of stock portfolio risk.
If a trade didn't fit in there then Id cull it from consideration.Risking 1%
the only time I go higher is if I get a second signal in the same stock while trading it. Ill also cut a worst performer to take up a pyramid opportunity.

I also set PAV toward a universe of $5 max again best for bang for buck.

Coupled with aggressive stop and movement of stop to diminish Risk V Reward once the trade got going---in particular to B/E---has served us well.


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## Lone Wolf

Hi Peter,

Firstly, thank you for taking this on. Your input is greatly appreciated. It's interesting to see how you take on Pav's exercise from a different angle.

One thing that sparks my interest so far is your use of a profit target. The more common approach from what I've seen is to let it ride until your trail stop is hit, hoping to catch the big multi R runner. As Tech indicated above, he and Pav use an aggressive stop with an open-ended profit and would even add more if the opportunity presented itself. Whereas you seem to be taking the option of securing the profit and moving on to a new setup.

Could you briefly explain your thoughts here? You mentioned you wanted to ensure you get the numbers you need to be profitable. Is this simply your way of skewing the win/loss rate and amount in your favor? Or is it something else, for example - Your setups identify short term momentum, therefore your targets should also be short term?


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## peter2

Lone Wolf: Thanks for your interest.  

This thread is about capturing short term price movements and doing it again and again consistently. Past traders would probably consider momentum trading as swing trading. IMO there is a difference between trading a trend and a price swing.  A trend trader must let price pull back to make a HL before resuming the trend up.  A trend trader must be prepared to give significant unrealised profits in order to remain in an anticipated larger movement.  A momentum trade is over once price movement pauses and a tight TS prevents losing significant profits. We never know how long these price swings will last but past price swings have shown to pause/end/reverse at prior levels of resistance such as old highs, round numbers and when the overall market pauses/ends/reverses. Taking profits at these targets, provided the R/R is above average helps create the profitable edge. Yes, the average holding time for a momentum trade is much shorter than the average trend trade.  

I took the profit on API at +4R level, knowing that this is twice the average result. I also did it because the portfolio was accumulating more losses than profits as the market paused and turned down. 

Every aspect of the trading system contributes to the edge. 

If this thread was about trend trading or investing then I would get each trade to BE, become fully invested with BE trades and wait for the either the daily or weekly or monthly trend to end. Simple.


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## peter2

Trading update:

*CNU*: Bought break-out of range (2.87). Very concerned by thin market depth, but this is an educational thread. 
*AGF*: Raised TS to 1.17
*WOR*: Raised TS to 9.30. Trade converted to cfd trade to stay under our salary cap.


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## debtfree

Hi Craft, Thank you ... I was not ignoring you, just had a couple of busy days.

Sometimes I'm a visual person, that's why I went for the spreadsheet and I know it doesn't lie to me. Once I see it in that format the penny drops and it sticks with me better, plus I have it forever. Not much more from me at this stage to say in regards to different areas of risk and others have covered it a bit anyway, so I'll leave it there for the time being.

Thanks Tech/a for your thoughts and strategy, always good to hear.

Peter: I'm getting there slowly, I have added 3 columns to my records (Trend of XAO) - (Types of Setups) & (Initial S/L %) so thanks for the push to keep track of these for future reference. Very good.

Also, thanks for the updates of late, I've got a few to catch up on and then a search of all the Stock Threads searching for your hidden trades. 

Cheers ... Debtfree


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## Lone Wolf

Thanks for the detailed response Peter. Much appreciated.

I like the idea of trading momentum in the way you describe. Transaction cost would be higher than for a standard trend trader. But I like that you aren't risking open profit in the hope that a strong trend will develop. It's probably more consistent in flat market conditions, since even if there aren't many big trends occurring there should still be shorter runs to take advantage of.

I haven't tested it, but I wouldn't expect performance to be hurt too bad by missing out on the occasional big move since the money you took out of that stock isn't sitting in cash, it's probably put straight back into another rising candidate.

Opportunity cost might be better this way too, where a trend trader will hold through fairly large periods of flat/corrective movement, a momentum trader would move on to a better looking candidate.

Not having a go at trend traders. And most reading this thread such as Tech don't actually trade like the standard trend traders I'm thinking of either. They say the trend is your friend, and I agree. But it's not a very good friend, it never seems to be around when I need it most.


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## peter2

To Lone Wolf, debtfree and others reading this thread thinking that this is the way to trade. Momentum trading seems to be the new name for swing trading. The trader is attempting to get a major portion of a price swing and is not hanging around for a larger trend. Sounds sexy, great fun and fast profits. Wrong, it's fun but it's also hard work as it's a much move active trading style than trend trading. 

Beginning traders should probably not try this style as it requires almost perfect discipline (>95%). Traders must keep their losses small and there will be a lot of them when the market turns on your open portfolio. Letting a loss get bigger than it should will ruin your results very quickly. If you can't sell exactly when you should every time, don't trade this style. You'll probably also find that we sell too soon too often. If you worry about the profits that got away, then you're not focusing on the next opportunity.  

Buying and selling at the correct times every time is hard and I'm only 95%. When my performance drops to 90% I notice that the profitable edge starts to reduce at at 85% performance the edge is gone. Every mistake costs money and erodes the edge. 

Having said all that, that most difficult thing for new traders to appreciate is the need for patience. Like right now, the portfolio is fully invested and we have to wait for the prices to move before there is something to do. I'm sure there are some readers that think that there hasn't been much trading action so far. Well, we've done all that we can up to this point. We've got nine open trades and now it's time for patience. 

(Posting this reminds me to be patient also. I can't create profits without price movement.)


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## debtfree

Thanks Peter, I'm fully aware and understand the importance of the  points you are making in your post above and it sure is valid to make sure others are aware and understand as well, so once again thanks for thinking to bring it to our attention.

I heard it from somewhere: If you haven't got the discipline to stick to your plan, you're haven't got a plan!

Yes it's nice to have that wind behind your back when trading (short, med or long term) but when it disappears you do need patience as you say.


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## 5oclock

Thanks for your efforts so far PETER, some good insights .....hope the extra posting is not too taxing.Its great to get different views--every one sees things a little differently.I know its off topic--but, do you still trade FX??


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## peter2

Thanks, but it's not too taxing. I love this business. There are so many things to do that I lose focus sometimes on the important things. My Fx trading has waned due to the extra efforts in managing several ASX equity portfolios and my intra-day index trading. Its impossible to be in sync with every market and I haven't yet specialised on one market type (equities, fx, futures) even though I'd probably do better if I did. 

There are times in every market when the prices don't move or there is a contraction in volatility. I don't mind as I can find another market that is moving. If I had my way I'd change this ASX momentum thread into a general momentum thread and be trading the drop in oil, cotton, coffee and buy the rising DAX. Instead I'm managing trades in NAN, SEN, CAJ, AGF, WOR, APN, SYR, PAN, CNU and waiting for them to move. Ha, what did I just say about patience, Peter!


----------



## peter2

While we sit on our hands there is a recent case study that is worth mentioning to show the risks of this trading style. I know, all I hear is "show me the money" but I'm in favour of showing you the realities. 

Had I been managing this portfolio one week earlier it's very likely that I would have started a trade in SRX. Last week there was a great little ascending triangle pattern in a strong trend. The buy price 36.00 with a iSL at 34.00, giving us a 2.00 risk. Price burst higher and we move our TS to 36.00 (BE).  Nice, feeling good, this is easy. Then comes news of the trading halt. Oh. Then the news, wtf?  Then the market opens !!!

At the open (15.00) we are losing 21/2 = -10.5R that's -10% of our account -$5250.  
Even with SRX at $20 we lose 16/2 = -8R  (-$4000).   

That's the business you want to be part of? This is going to happen to every one at some time.


----------



## debtfree

It's good to be aware of what can happen Peter and sure enough there is one trade right before us. 

I put the figures into my Stop Loss spreadsheet to view and I also wanted to see what the results would be if I had a 1% iSL away from the buy price. The bottom table is what you described with the share value dropping 58.33% to reflect that opening price of $15 and as you say, 10.5 units of risk was lost. I then put the same 58.33% drop in the top table but with a iSL of only 1% away from the $36 buy price and we would have lost 58.33 units of risk. 

Yes simple maths I agree, if you use a 1% iSL and it drop 58.33% in price, naturally you lose 58.33 units of risk. If you use a 5.56% iSL just divide 58.33 by 5.56 and that gives you 10.5 units of risk you would lose in this case.

A good exercise for me anyway Peter, viewing it in this way has really opened my eyes to what risks I'm exposed to with my iSL and also if a sudden drop in price arrives at my doorstep. Seeing it in a picture in front of me has really helped my understanding of these 2 risk areas (tight iSL and sudden price drops). Sometimes I'd see a really tight pattern/consolidation and say you beauty but now I say hang and think about this a little.

Anyway that's enough from me .... thanks Peter


----------



## Gordon7

Trading is risky, no doubt...

On the other hand with SRX this stock was fairly stretched already judging by such measures as the break above the trading channel and by even taking a casual look at the MACD. 

My trading style will have me tend to shy away from an extremely overbought stock even with a strong continuation signal.


----------



## skyQuake

peter2 said:


> EOD update of sell exit triggers (TS) and target changes.
> 
> Remember: My exits are triggered by a close below the price level and we sell on the next day's open.
> NO, we don't watch the open to see if we can get an extra tick or two. Only amateurs do that.




Hey pete, some great stuff going on here. Can you elaborate on why you do a 'delayed' stop loss rather than a regular one?


----------



## peter2

I use the delayed sell stop due to the thin market depth on many of the mid-cap stocks I trade. It's too easy for a cashed up insto to push the price below an obvious stop loss level and trigger the conditional sell orders in the market and buy them up. [Good buy signal.]

I can now use round numbers as triggers rather than a tick or two below. 

In the past (pre-GFC) when the market depth was thick I could place my sell stop in the market below a round number level of support and it would be a reasonable place. Not anymore. 

Another benefit is that in a public forum everyone knows the closing price of the trade will be the next open after the exit is triggered. I won't be sneaking out before the close and before posting the exit nor will I select the day's highest price to close the trade. 

I also prefer to see price open below and move through my buy stop. I tend to buy in the last hour of trading and many times in the closing auction.

ps: Massive whinge at the ASX mgt for letting this happen on their watch.

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

debtfree: It would be very risky to use a 1% SL on SRX when the daily ATR(10) was 1.40 (3.9%) at the time. Using a iSL size that is inside the average daily price movement has a high risk of being triggered the next day. 

A safer option is >2ATR(10) away from current price.


----------



## debtfree

Thanks Gordon7, that's a good picture to illustrate your points of view. It made me think about individual shares .... when do most price shocks/drops occur, you know the ones that hurt the most? Is it when traders climb onto a stock after it has been pushed upwards to stretched levels (high volatility) like you have shown on your chart?

I've heard it before but Peter repeated it the other day to me "The best low risk entry is when volatility is low and we plan for a price rise with expanding volatility." By the looks of things that's roughly what you look for and it made me look at the  chart SRX with just Bollinger bands on it to see the last low volatility where the BBands came close together. The charts below shows low volatility areas which is much the same as yours with the GMMAs coming together.



If I had of made a trade in this area (Low Volatility) I probably would have brought at 28.31 with a iSL at 26.06, that's a iSL of 7.98% and if I was still in the trade when this price drop happened I would have lost 47% from my buy price of 28.31. Now this would have still been a loss of nearly 6 units of risk but better than 10.5 units of risk . Yes I know all in hindsight but it's good to give it some thought anyway and I'm fully aware you must put some risk onto the table to give yourself the chance of some profit. Is this another way of reducing our risk and keeping us away from price shocks/drops? Interesting and once again thanks G7 it has given me something to think about for sure and I know it comes back to, what suits you. 

Cheers ... Debtfree


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## debtfree

Peter, I understand what you say and that certainly makes sense to me, so thanks for tip.

I was mainly using the 1% to illustrate the dangers of using a very tight initial stop loss area and the risk side of it such as the price drop of a share. Never thinking of doing it myself, not nowadays. Maybe when I first started out.   just joking! Thanks Peter


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## tech/a

*Don't know what all the fuss is about*.
It happens its an outlier.

Don't care what your method of trading is
-----If you were in SRX when it happened
you'd have suffered the same loss as the guy who was
a Fundamentalist/Gambler/Systems/Discretionary
trader----

Had a few in my time.

*NEXT!*


----------



## Gordon7

debtfree said:


> Thanks Gordon7, that's a good picture to illustrate your points of view. It made me think about individual shares .... when do most price shocks/drops occur, you know the ones that hurt the most? Is it when traders climb onto a stock after it has been pushed upwards to stretched levels (high volatility) like you have shown on your chart?



Bear in mind that this announcement could have come at anytime and the chart is totally irrelevant in that case. 

From my experience most 'hits' to a stock occur whilst they are in a downtrend. Rarer to occur at a top though a stock could be a little more vulnerable when it has built up some 'froth' (high expectations) as SRX has done.


----------



## debtfree

Your right Tech, most of the time it doesn't matter what you do or what you say or put into place, it'll still get you every now and again. Just swallow your pill and move on or as you say, NEXT! But, still glad to have covered it anyway and to have given it some thought.


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## peter2

No fuss here. I just wanted to dim any unrealistic expectations of above average/quick profit. We'll be plodding along.

Trading Update:
*CGF*: Bought the BO-New High (>7.10) at 7.11 (iSL 6.80).  Limited the pos size to 20% account (ie $10K) so the amount risked is <0.9%. 

*APN*: In trading halt as two large sellers negotiate their sales. I've decided to sell this at the next open, whatever the price is. 
*SYR*: Exit triggered, sell next open (Fri open).

NAN: Raise TS to 1.67
AGF: Raise TS to 1.215
WOR: Raise TS to 9.50
PAN: Raise TS to 0.52


----------



## skc

tech/a said:


> *Don't know what all the fuss is about*.
> It happens its an outlier.
> 
> Don't care what your method of trading is
> -----If you were in SRX when it happened
> you'd have suffered the same loss as the guy who was
> a Fundamentalist/Gambler/Systems/Discretionary
> trader----
> 
> Had a few in my time.
> 
> *NEXT!*




True but I believe Peter is just stressing the importance of having a sense-check on the absolute position size... and not just on the 1% or 2% rule. A trader ignorant of this could have used a 2% rule and a 80c stop on a $50k account and ended up with 1250 shares @ $38 (or $47.5k). Then the only *NEXT!* for the poor guy would be a new career.



peter2 said:


> No fuss here. I just wanted to dim any unrealistic expectations of above average/quick profit. We'll be plodding along.
> 
> Trading Update:
> *CGF*: Bought the BO-New High (>7.10) at 7.11 (iSL 6.80).  Limited the pos size to 20% account (ie $10K) so the amount risked is <0.9%.
> 
> *APN*: In trading halt as two large sellers negotiate their sales. I've decided to sell this at the next open, whatever the price is.
> *SYR*: Exit triggered, sell next open (Fri open).




FWIW, I bought some CGF today as well, but I'd only give it to $7. It's the 3rd time testing that level. It's not allowed to come back anymore. 

P.S. APN... a block trade @ 88c with NewsCorp buying in 14.99% stake pending regulatory approval. A potential swing if it opens too low. But I understand your EOD system has its rules so sell on open it is.


----------



## peter2

*EOW portfolio update*: We remain patient waiting for significant price movements. It's too early to discuss stats. 

This weeks sells:
*APN*: Sold open (Fri) as price was going nowhere. Naturally, as soon as I did NWS came in with a big buy and moved the price a bit.  
*SYR*: Sold open (Fri) after exit triggered yesterday.

This weeks buys:
*CNU*: Bought BO-NH, low volume a concern.
*CGF*: Bought BO-NH (>7.10). 

Spend some time over the weekend looking for a few setups. 
We can start three(3) new trades when a posted setup triggers. We have $12,856 cash available. 
(I might have a look over tech/a's shoulder when he looks at the DAX tonight.  )

Minor changes to sell exits (TS) are highlighted in yellow.


----------



## peter2

Hi, I look at a lot of charts and quite often come across something interesting that makes me think how would I handle that situation. I look at my trading rule sets to find the answer. If I haven't got an IF/THEN statement to manage that situation, I know I need to add one. How do I know what is the best thing to do? The only way to find out is to backtest to find the best way to manage the situation. However I'm not a coding expert and most situations are reasonably complex to code, so I end up with something that feels correct rather than knowing it is correct. 

There's a big difference between feeling correct and knowing it's correct. I don't want to start a discussion on this aspect here. This thread is about trading price swings and a break-out is an indication that price might continue to move higher. 

I posted that I'd missed the breakout in the CCL chart. Here is the question. 
Having missed out on buying the BO at the correct time and price (10.71 - 10.75, 20/3/15), would you buy it at that price on the very next day if it trades at that price? 




ps: If this thread is to be an educational one then we have to do some thinking and some work on our trading plans. You do have them don't you?


----------



## peter2

I know that most experienced traders will have a response to my question. I don't want their responses. I received lots of encouraging PMs to continue Pav's thread from people who don't post much. Well?  I'd like to read your responses to the questions I post in this thread. 

It's up to you if this thread continues to be an educational one.


----------



## tech/a

peter2 said:


> I know that most experienced traders will have a response to my question. I don't want their responses. I received lots of encouraging PMs to continue Pav's thread from people who don't post much. Well?  I'd like to read your responses to the questions I post in this thread.
> 
> It's up to you if this thread continues to be an educational one.




I have an opinion in real-time.
Problem is that if I give that opinion later it doesn't have the same impact nor does it point out things I see
in real-time.
Perhaps I can mark them up and send them to you now or tonight
OR 
Ill just do it in hindsight----after others have answered you.(I agree with your post by the way).


----------



## peter2

Tech/a and others, your opinions ARE important, especially when they differ from my own. I appreciate you giving time for others to post. I hope some do.


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## kid hustlr

I'll put my hand up and say If that 2 bar pattern happened and I missed the initial entry I would not buy now. similarly I probably wouldn't have moved my stop to b/e had I entered initially so there's clearly a gap in my thinking.

Interested to hear the result of this because this happens a lot (especially futures).

EDIT: Just on that, I'm not sure I'd necessarily be keen to buy that breakout anyway in the spot marked but that is a different topic of discussion.


----------



## myrtie100

I would buy. 
I see an ascending triangle And have noticed often with these patterns the price will come down and retest the breakout resistance/support area.
Peter, thank you for continuing this thread. It is definitely benefitting me!


----------



## peter2

myrtie100: I'm extremely pleased to see a first time poster responding. Thank -you. 

I'm leaving more time for others to get home from work and settle down. There is no right/wrong answer, so it's either a yes or no, but I'm interested in your reasons for the yes/no reply.


----------



## debtfree

G'day Peter, interesting ... first of all I thought you had a plan on this situation. Say if you did buy the breakout, I thought you mentioned in an earlier post, your exits would be triggered by a close below the trigger level. Well it did today so if you were in, the exit would be tomorrow's open. Why would you be thinking to buy when you have this in your plan. Another thing you have stated if a breakout trade doesn't go up immediately you know it's in trouble.

As for myself NO, if I'm buying breakouts and I've missed the trade, move onto the next breakout. I like the ones  moving in the right direction and this one is not, not today anyway. Looks like it just filling the jap still from back in April last year. 

I'd be interested to hear Tech's thoughts as well, he sees things I don't but I'm still trying. Might need another go at that 10.95 - 11.00 mark. Ahh bugger it, I'll have a crack Tech ... I think there is still enough supply there to stop it from running higher, probably wrong but I had to give it a go.


----------



## tech/a

peter2 said:


> Tech/a and others, your opinions ARE important, *especially when they differ from my own*. I appreciate you giving time for others to post. I hope some do.




This one does Peter.
Ill post it in the morning
Its also different to everyone else so far.


----------



## peter2

I haven't mentioned mine yet, but I had better do it now. My response to missed CCL BO opportunity.

1. As a BO trader, if I didn't place the pending buy stop orders to buy if 10.71 trades (limit buy 10.75) then I've missed this trade. This is a trading mistake if I did see the setup in time to consider the orders. 
2. NO, I will not buy it here as it's not a buy signal. If you think that it's a second chance to buy the BO then you are incorrect. If you do this repeatedly (wait for a second chance) then you will miss all the great BO's that don't come back. 
3. As a BO trader, the next buy signal is when price trades above the highest price of the last two days. If I wanted to get into CCL then I'd place a pending buy stop if 10.95 trades and use a closer iSL than the old one. BUT 10.95 is too close to the 11.00 round number which may provide some resistance. I'd need to place pending orders >11.00 and I might as well wait to see what happens then. Nothing for me to do now. 
4. If I'd bought yesterday's BO, what would I do is another question for a different time. debtfree: Is there really enough room to move a TS up and reduce the risk? I don't think so. 

OK tech/a, post it up (CCL chart opinion) when you have the time.


----------



## peter2

Trading  update:   (While tech/a is perusing his CCL chart.)

*NAN*: Price closes at +4R target. This is an above ave. result and I closed the API trade at this level to grab the profit at that time. Why not do it now? First, price has recently just broken higher from a consolidation, so I am willing to let it get higher. Second, the portfolio risk is under control and there are only a few trades under water. This is very different to the period when the API trade was going well. I hope a few of you budding portfolio managers understand this distinction. 

*NAN*: Move TS up to 1.75.

I assess the RR in every trade and then overlay the RR of the portfolio as a whole. 

*AGF*: Now at +1.3R and we'll leave room for price to put in a smaller higher low. No point tightening the TS here. We want to let the portfolio burst higher.

WOR: Both WOR and MND had a similar setup but WOR gave me the buy signal one day before MND. Damn.

*PAN*: Move TS up to 0.55
*CGF*: Move TS up to 6.90
*CNU*: Come on, get a move on.

*JHX-cfd*: New trade. Bought BO-NH at 15.30. (iSL = 14.70)
*AIA*: New trade. Bought new high at 4.40 (iSL = 4.20)   Limited this cash position (non-cfd) to 10K (20%)

This leaves us $1605 cash and a capital exposure of 4.7% (< 6% limit). We have invested 144% which I think is a sensible use of leverage at this time in the market. 

We can start one more cfd trade like MMS or another if one breaks out soon.


----------



## tech/a

And now-----------for something *completely* different!


----------



## Triathlete

peter2 said:


> I posted that I'd missed the breakout in the CCL chart. Here is the question.
> Having missed out on buying the BO at the correct time and price (10.71 - 10.75, 20/3/15), would you buy it at that price on the very next day if it trades at that price?
> 
> View attachment 62069
> 
> 
> ps: If this thread is to be an educational one then we have to do some thinking and some work on our trading plans. You do have them don't you?




Nice Question...my view is it all depends how much risk I was willing to take. Since the candlestick is a down bar that is retesting the breakout level again but the volume is not supporting this move down I would be still of the opinion the move should still continue higher.

If I did take the trade I would set my stop at the previous low just below the $10.40 level as at this point I would say my analysis would be completely wrong.

Looking at the chart I would now feel more confident if the next bar closed above the  previous up bar around $10.90 on rising volume. This would help support my view that the stock was ready to continue higher.

Of course I would have already worked out also my own price target and where the resistance levels are above as this would also have an impact as to whether I would take the trade or not even on the breakout.


----------



## Nortorious

tech/a said:


> And now-----------for something *completely* different!
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 62080




Late post to the party I know but I agree with tech/a.

I wouldn't trade it until it has moved above that previous high (absolute high), and even then, I would want to know what the background looks like in order to understand risk v reward scenario.


----------



## peter2

Replies to those that contributed.

tech/a: Yes, absolutely, I love your definition of the break-out level.  Supply appeared once at the 10.90 level and now it looks like there is still supply at this level. 

Two people with different definitions of the BO level. Thanks for that tech/a. Love this business. I place more emphasis on the closing price, personally. 


kid  hustlr:  We agree. However while is does happen in other market types I would have a plan specifically for each market type. For example: I would treat this pattern as a great reversal signal if it occured intra-day and it nicked a s/r level (like a prev days high/low). 

myrtie100: I'm still chuffed that a first time poster responded. Yes I agree that price could be testing the BO level. What happens next is of course pretty important if you have bought the BO. 

debtfree: I wouldn't have raised the TS up so soon after buying as price can test the BO level. Yes, I agree the BO is in trouble and what happens tomorrow will determine how I would handle the BO trade. Yes, I agree we've missed the BO by not placing our pending buy orders. 

triathlete: I think we agree also. thanks for contributing.

Nortorius: What background do you want? You have to know exactly what you need and find the information yourself. We have to be independant traders. In replying to your post I looked at the larger daily chart. Wham, it hit me in the face. 

The CCL chart has a huge gap (mentioned by debtfree - kudos to you ). It's very likely that the supply identified by the 18/2 bar and today's bar is from people selling to get out off a trade that has been losing for almost a year. Now with that info. I would say that the BO setup was a poor one to trade knowing this background. Lesson: Look at a chart with more data points, even a short term trader. 

Nortorius: If you had mentioned this background. I would have been impressed. 




We all know that anything can happen when we start a trade. My point is knowing what to do next is very important. 

IF: A BO trade seems to fail on the next bar after entry.     	THEN: Reduce risk, raise TS if possible. 
IF: A BO trade is not profitable after 3 bars			THEN: Reduce risk to half if possible
IF: A BO entry has two consecutive down bars after entry		THEN: Be prepared to lose initial risk.
IF: A BO entry has two consecutive down bars after entry		THEN: Exit next open and find another setup.

Make up your own IF/THEN statements and put them in your trading plans for the next time this happens.


----------



## kid hustlr

thx Peter.

Lets assume you bought the break as described,

where is your stop? What is your thoughts after seeing the big 2 bar reversal? Would you still be in the 'initial trade'

turning into a great thread btw.


----------



## tech/a

This is my view on the CCL pattern.


----------



## VSntchr

Good job with this thread Peter. I'm enjoying reading along with the others.
Here's one I'm watching - NVT. I'm not sure if it fits your requirements exactly, but appears to be breaking above the range of the last two months.


----------



## tech/a

VSntchr said:


> Good job with this thread Peter. I'm enjoying reading along with the others.
> Here's one I'm watching - NVT. I'm not sure if it fits your requirements exactly, but appears to be breaking above the range of the last two months.
> View attachment 62087




To me this is a consolidation in a down move.
PAV's trading was looking for breakouts to the upside in an
up move.
Personally Id not like to see PAV's method become morphed 
into something way off the mark.


----------



## peter2

kid hustlr; you asked the question, "what if I'd bought the CCL BO?". 

My iSL (initial stop loss) would be 10.30 (making a 0.45 risk from the max buy price 10.75).  Seeing the close on the next day is below my buy, you would hear me swear as I don't like to see that. I immediately think about defence and I'd move my sell stop up to 10.50. It doesn't save much, but most break-out failures are quick and merciless. The insto' traders really like to stick it to the retail break-out traders. 

If todays (24/03/15) bar ends up, then I could move my sell stop up again to 10.60. This would reduce the initial risk by half and that's where I'd leave it. 

Thanks to those that made me look at the bigger picture, I now realise that this is an interesting price squeeze area with a battle between supply/demand. I could decide to leave my iSL in place and stay out of the price action battle. 

The choice between these two possible actions would be influenced by the current situation of my open portfolio.


----------



## debtfree

Thanks Peter for the thought provoking Chart & Question yesterday. Bringing up these areas of concern in our trading plans as we go along in Pav's Live Portfolio thread, is an excellent idea. It gives us something to think about and address if it's not in place. It also helps bring those of us, with not as much experience, up to speed to where we should be, once we commit to this type of trading.

Also thanks for the updates and continuing the Portfolio, much appreciated.

Cheers ... Debtfree


----------



## Nortorious

peter2 said:


> Nortorius: What background do you want? You have to know exactly what you need and find the information yourself. We have to be independant traders. In replying to your post I looked at the larger daily chart. Wham, it hit me in the face.
> 
> The CCL chart has a huge gap (mentioned by debtfree - kudos to you ). It's very likely that the supply identified by the 18/2 bar and today's bar is from people selling to get out off a trade that has been losing for almost a year. Now with that info. I would say that the BO setup was a poor one to trade knowing this background. Lesson: Look at a chart with more data points, even a short term trader.
> 
> Nortorius: If you had mentioned this background. I would have been impressed.
> 
> View attachment 62082




Fair call Peter and I take that on the chin as I didn't look at the chart background (time didn't permit). I always check out the background to see where other data points are that might slow any momentum for an up move etc.

Will post some more due diligence next time such a scenario is presented to thread readers, and hopefully time will allow me to post a more detailed response.

Keep up the good work and thought provoking questions etc.


----------



## peter2

Nortorius: Thanks, I didn't notice that CCL gap also and probably wouldn't have if you hadn't mentioned the word "background". Short term traders can't see the "forest for the trees" sometimes. A good reminder for me.

Tech/a: I'm happy to respect your wish that we stick with Pav's initial up trend continuation break-out strategy. 

My apologies for the WOR reversal setup. I'll tighten the sell stop and "force" it up or out. 

Now seems like the appropriate time to discuss a few topics that should be of some interest. The first topic should be how we find our trading candidates from the ~2600 stocks (a real mess) that is the ASX exchange. We should collate a basic set of market scanning parameters that finds the charts we want to look at. Then the second topic should be on creating a set of guidelines (maybe a checklist) of preferred chart attributes to narrow the first set of results into a few break-out trading candidates.

Let's start with a basic set of scanning filters to find the trending price action that is our first requirement. 
Initial concept ideas:
(a) weekly trend is UP
(b) daily trend is UP
(c) market filter ? Hmm..
(d) average daily volume is high enough so we can sell without too much slippage
(e) price filter 
(f) pattern scans
(g) very high volume days 

Obviously this is an important part of creating a trading plan, but I don't wish to clutter this thread with copious opinions on what works for different people. 

If you don't mind, I'll have a chat with tech/a and we'll sort out a basic set of market scans as a starting point for those new to trading. If you have some experience and want to contribute a "must have" scanning parameter then please PM me with your suggestion. 

Ideally we want to end up with a few scans that find about 20-30 charts which we can then appraise with our checklist to identify 2 - 3 break-out setups. We'll trade those setups that trigger in this thread. As you can see, once our portfolio is up and running we don't need to find many trading opportunities each week.


----------



## peter2

Trading updates: 

*CAJ*: Move TS up to 1.00 (BE), looks like demand is greater than supply. I'm tempted to add here (1.08) but the iSL would have to be at the BE of the first trade which doesn't reduce our initial risk amount or lock in any profit for the first trade.
*NAN*: Good move above the high of the high volume bar (20/3). Move TS to 1.82, this protects +3R and gives price a bit of room to move near the 2.00 level. This did trade at +5R (+$2500) today. Very tempting. 

Our downside exposure (risk) is within our comfort limits so we can "let it ride". Only enough margin/cash left to start one cfd trade.


----------



## VSntchr

peter2 said:


> Trading updates:
> 
> *CAJ*: Move TS up to 1.00 (BE), looks like demand is greater than supply. I'm tempted to add here (1.08) but the iSL would have to be at the BE of the first trade which doesn't reduce our initial risk amount or lock in any .




Don't forget it goes ex-div tomorrow. A whopping 0.6c! FULLY FRANKED!


----------



## tech/a

One prospect for consideration.
CZZ is a ripper as well but too expensive!
Im out of time tonight but will post when I can








Also watch list.
CVT
HFR
BAL


----------



## VSntchr

Okay, here's my second attempt


----------



## Nortorious

VSntchr said:


> Okay, here's my second attempt
> 
> View attachment 62101




Nice work VSntchr.

I was just about to say checkout HFA. Has broken above $1.85/1.86 today and intraday high so far of $1.91. I don't have charts so can't talk about projections etc but I got in at $1.78 due to the huge accumulation phase in the background.

Should be in for a nice move...


----------



## Boggo

Nortorious said:


> Nice work VSntchr.
> 
> I was just about to say checkout HFA. Has broken above $1.85/1.86 today and intraday high so far of $1.91. I don't have charts so can't talk about projections etc but I got in at $1.78 due to the huge accumulation phase in the background.
> 
> Should be in for a nice move...




Personally I wouldn't touch it because of item (d) in post 150 above. I would pay around $1.915 to buy 20k worth and if I wanted to sell straight away the best I could do would be getting close to $1.88 and that is on an up day.
You could easily lose 10% if anyone gets nervous and stops might be worthless.

Compare that with SIP as a current breakout example.

HFA depth


----------



## tech/a

Thought HFA OK for volume Boggo.

Here is another I found


----------



## Boggo

tech/a said:


> Thought HFA OK for volume Boggo.
> 
> Here is another I found




I've have seen worse volume, the depth and volume combo though can be iffy. I like to see enough volume support there to be able to escape should a big seller appear. It did get better support late in the day even though there was a few taking profits, problem with that depth in my snapshot is that you could easily lose 5% or more just to get a sell order filled.

ALU, looks good on the weekly too.

Any thoughts on EPD ?

ALU Weekly, click to expand.


----------



## Nortorious

Boggo said:


> I've have seen worse volume, the depth and volume combo though can be iffy. I like to see enough volume support there to be able to escape should a big seller appear. It did get better support late in the day even though there was a few taking profits, problem with that depth in my snapshot is that you could easily lose 5% or more just to get a sell order filled.
> 
> ALU, looks good on the weekly too.
> 
> Any thoughts on EPD ?
> 
> ALU Weekly, click to expand.




EPD looks pretty good, I would want it to close above 0.83 though before considering. Volume today makes me think it will poke its head above 0.83 but does it have the power to start a new move above this key level is the question...


----------



## PeterJ

Peter
some others to consider
TNE is at all-time highs and in a great uptrend 
VTG consolidating at the $ 4.00 level
WBA has filled the gap and there is demand ,
        just broken major resistance and trying to test support,
       a continuation/secondary breakout would be powerful 

regards
Peter


----------



## peter2

Thanks for the suggestions and keep them coming especially when we have capital to start new trades. That might be tomorrow. 

We finally see a market down day (-1%). This will be a momentum killer for most of our trades. This is the time when our trading discipline is tested. Two or three down days will be a bigger test for a portfolio of short term trades like we are doing here. A minor market correction of 3-5% may see us exit every trade. It will happen, several times each year. That's why we limit and manage the portfolio risk (heat). 

A few down days will not dampen the buying demand in the stocks where the demand is strong. Hopefully our portfolio has a couple of these. Many of our trades will lose as prices go down with the market. This is where our placement of the sell exits (TS) is tested. Have we given price enough room to go down with the market and perhaps create another HL in the up trend?  Lastly, there will always be a few stocks in the portfolio that get hit hard by fearful selling. A good example of this is seen in WEB (today). When price triggers our exit then we sell when we should (next open or on the day depending on what method we use). Selling so soon after buying is the test of our discipline. 

In summary, we are going to get hit on a few trades. No probs we sell when we should. We are going to lose profits on a few. No probs all part of trading. A few trades will not fall. Great wish we had more of them. If this dip is minor and the market goes up, then our trade survivors will go up for us and we have the cash to start a few new trades. 

This portfolio is being managed on an EOD time frame. We will see what's to be done on the next open after today's close. 

ps: Jumping into the market now, trying to save a few dollars is a losing game, a waste of time and emotionally draining. We want to be pro's, so go shopping, fishing, play golf etc. See you all after the close.

ps: Sorry almost forgot to point out that it's dips like today's that create the low risk trading opps for us. So down days are great. Sort of.


----------



## Boggo

Off topic a bit but possibly relevant or of interest.

My doodling with arrows a few days ago


----------



## peter2

While I'm waiting to do my pm scans, yes I'm a tragic as I didn't take the day off. (Neither did Boggo, btw)

I looked at this chart which should be famiilar to all following this thread. It's the *API* chart. 




If you think I sold too soon, then IMO those thoughts don't help you become a better trader. I'm happy with my reasons for selling when I did. I sold to reduce the portfolio heat for the benefit of the longer term performance of the portfolio. 

Since then the API price has continued to go higher. Again IMO, the trading mistake is not re-entering this trend. We didn't re-buy API after the minor dip. The PM (portfolio manager) didn't consider the opportunity closely enough, but neither did anyone else (ie. no posts about it) especially after the day of the pin bar (hammer) clearly shows evidence of buyers (closing near top of bar on high volume).


----------



## peter2

EOD Trading update: 

All trades survived. No sells triggered. The portfolio lost ~1%, nothing to be concerned about. 
We have ~$1848 to use as margin in a cfd trade if one triggers. After today's dip there are plenty of potential setups.

Homework: Have a think about today's discussion in relation to your trading plans. Consider adding a re-entry guideline to them. 

Any questions, post them in. IMO after about 3 months* of this thread you should be able to start your own portfolios trading in your own way (short, medium and longer term styles) and be comfortable doing it.


----------



## Nortorious

peter2 said:


> EOD Trading update:
> 
> All trades survived. No sells triggered. The portfolio lost ~1%, nothing to be concerned about.
> We have ~$1848 to use as margin in a cfd trade if one triggers. After today's dip there are plenty of potential setups.
> 
> Homework: Have a think about today's discussion in relation to your trading plans. Consider adding a re-entry guideline to them.
> 
> Any questions, post them in. IMO after about 3 months* of this thread you should be able to start your own portfolios trading in your own way (short, medium and longer term styles) and be comfortable doing it.




Nice posting Peter and yes API is the one that got away for me too. I sold way back when the market was on the cliff edge and could have gone either way. I didn't follow my plan and let price action take me out rather i tried to predict the market direction... And was wrong!

Luckily, I saw many stocks setting up with my entry criterial and was back in the market to enjoy the up-move. API I didn't re-enter but that was due to me maxing my capital out on other opportunities.

My re-entry rule is simple, if it meets my entry criteria it is a new trade regardless of whether I have a past experience with the stock. I hold no grudge if it has burnt me in the past, I just follow my trading plan and enter when it says enter. It's taken time to get to this but removing any emotion is they key. The market nor the stock knows me and neither move exclusively based on my ideas... Don't hold a grudge is probably the best rule to consider for a re-entry... Every trade is different and can have a different outcome even if it is a stock you have gone to dinner with before only to have it run out through the kitchen leaving you with your jaw on the ground..


----------



## tech/a

> I sold to reduce the portfolio heat for the benefit of the longer term performance of the portfolio.




Surely you had something you could cull that wasn't in a full blown up trend?

Right now Id be cranking up the stops and anything that's not at B/E and can be should be---


----------



## get better

I actually also have API and NAN in my portfolio. My system picked these up in scans but I haven't sold out yet. I was surprised when you mentioned that you wanted to exit API at the time and was contemplating exiting NAN to lock in profits. This leads me to asking this question - do you back test your exit criteria with your system? More specifically - the manual exits.

With my trading, I am quite strict when it comes to breaking the rules and going against what my system is telling me. I'm currently learning and trying to apply VSA in case studies and hopefully this will allow me to code this into my system so I can test its performance.

Kind of off topic here but I'm beginning to see the stock market/futures as a game of probability vs manipulation (trading system vs VSA).


----------



## tech/a

get better said:


> I actually also have API and NAN in my portfolio. My system picked these up in scans but I haven't sold out yet. I was surprised when you mentioned that you wanted to exit API at the time and was contemplating exiting NAN to lock in profits. This leads me to asking this question - do you back test your exit criteria with your system? More specifically - the manual exits.
> 
> With my trading, I am quite strict when it comes to breaking the rules and going against what my system is telling me. I'm currently learning and trying to apply VSA in case studies and hopefully this will allow me to code this into my system so I can test its performance.
> 
> Kind of off topic here but I'm beginning to see the stock market/futures as a game of probability vs manipulation (trading system vs VSA).




This is a discretionary trading methodology.
It's edge comes from the ability of the trader to select and manage
His trading of a portfolio to a profit. Distinctly different from a system
Approach.

As for coding a VSA method you'll be sadly disappointed.
VSA is a volume / price indication of likely market behavior which has a 
Technical life of around 5 bars. Where most get the method wrong is that
They see each signal as a buy or sell signal. Simply they aren't---not individually
With time a good exponent can read the whole chart in context with the VSA
Signals generated by price and be in the position to make a higher probability
Trade. They can also take advantage of those 5 bars and subsequent relating bars.
A great tool for the discretionary trader but not for the systems trader.

We have spent 2 mths on VSA systems development and this is the result!


----------



## VSntchr

GUD today.

I got a signal to short it in another system, not going to take it based on the chart though. Breakout on big volume.


----------



## peter2

Thanks for that tech/a. I PM'd get better and said the same things although your reply is a bit more informative. 

Yes, there is no system being trading in this thread. It's purely discretionary. We select charts with good up trends and find a low risk opportunity to buy and let the trend continue. 

Let me try and clarify what I'm looking for in a chart for this thread. 
I'm looking for the first or second small pullback or consolidation in an established up trend. 

(i) A trend starts from a break-out of a horizontal level of resistance. Occasionally it might be acceptable to use a sloping resistance line. (refer to Gordon7 thread for examples) 

(ii) Once that happens we are looking for a small pullback 1-3 down bars or a narrow consolidation with lower volume. 

(iii) Once we find our setup the trigger is a break-out of the pattern and we use a pending buy stop. 

Examples:





My suggestion for an initial scan describes the price action after the initial BO-HR. The 10ema > 30ema.
A scan for Darvas boxes (10d) will find many of the small consolidations.


----------



## peter2

Ha, you'll like this. Even the CCL chart shows what I'm looking for. Our best entry would have been buying the BO of the small pullback that tests the BO-HR (buy 10.00, iSL 9.50, risk 0.50). 

Knowing the background that we've discussed I'd be happy to sell at 10.80 and take the +1.5R result to the bank. 



For me it's all about the Risk:Reward. Can I grab enough +1.5R and +2R results to offset the -1R losses? The larger wins, like +4R and bigger are the "cherry " of top of the cream that sits on the rich Black Forest cake. Yum...


----------



## peter2

EOW Trading update:  All trades survived this week's price action. The portfolio held its value, inspite of the down day. 

I have decided to raise many of the sell exit triggers. This reduces our portfolio heat (difference between blue/red lines in chart) in case the market dumps next week. It may or may not I don't know. I'm prepared if it does. The changes are highlighted in yellow. 

We have $1848 in cash which will fund one cfd position if we see our setup. On that, I see that MMS tickled the BO level (>15.30) today and GUD did have a BO on strong volume. Rather than buy these BO's as I've done on other occasions (CGF, JHX, AIA) I'm going to try to stick with the setup I've described. In the case of MMS and GUD I'll wait for the 1st small pullback or narrow consolidation after these BOs for an entry. 

I'm certain that we'll find heaps of opportunities when we need them. 

It's "Show me the money" time.


----------



## peter2

I'll show another chart that shows the trade results in chronological order. It's early days yet. 




I plan on continuing this thread until the EOFY. Four months of educational content will be enough for me.


----------



## myrtie100

Awesome Peter, thank you I am following closely.


----------



## PeterJ

Appreciate all your effort Peter,
as always !
I have subscribed to the thread, and get an email when there is a reply ,
modern technology is great
PS


----------



## get better

Thanks for the insight tech and Peter, very helpful and learning a lot from this thread. 

I'll probably put more of a focus on learning VSA and shelve the coding idea for a while (maybe for a time killing project if I have too much free time).


----------



## Nortorious

A few new ones that could be considered:

ABX
HIG
RTR

I haven't time to do the analysis but thought I would flag them for those that do. These set ups are higher risk than if we were to go with the continuation breakout entry strategy.


----------



## Boggo

Nortorious said:


> A few new ones that could be considered:
> 
> ABX
> HIG
> RTR
> 
> I haven't time to do the analysis but thought I would flag them for those that do. These set ups are higher risk than if we were to go with the continuation breakout entry strategy.




I don't want to turn this into a stock picking competition but I do have the urge to comment 

No disrespect or criticism of your picks Nortorious as they are breakouts etc but those types of stocks are ones that can make you money quickly but on average over a longer period my experience has been that they can cost you dearly too.
ABX may be worth a look but the other two would be dodgy imo.

Not wanting to enter into a "mine is bigger than yours" discussion especially on this thread, this post is probably borderline anyway but compare these three as an example of what I am going on about.
AIA
SGT
TTS
_(PS - I haven't looked at any of the usual factors associated with these such as ex div, depth etc., I am just picking the pattern only as an initial example)_

My way of looking at those in comparison is that they have a consistent pattern and substance for the want of a better description (and they exist in the fundamental upper end of the market).

My way of thinking is that you need more than just a standalone breakout pattern, you also need a resumption or potential repeat of a previous pattern with steady reasonably predictable movement in both directions where you can be almost certain that your stops will have minimum slippage should you be wrong.

I may be wrong but over the years I have shifted away from the quick hit type breakouts to a more steady style of breakout and the results are enough proof that it works for me.

Sorry to derail the thread slightly, just adding my


----------



## Nortorious

Boggo said:


> I don't want to turn this into a stock picking competition but I do have the urge to comment
> 
> No disrespect or criticism of your picks Nortorious as they are breakouts etc but those types of stocks are ones that can make you money quickly but on average over a longer period my experience has been that they can cost you dearly too.
> ABX may be worth a look but the other two would be dodgy imo.
> 
> Not wanting to enter into a "mine is bigger than yours" discussion especially on this thread, this post is probably borderline anyway but compare these three as an example of what I am going on about.
> AIA
> SGT
> TTS
> _(PS - I haven't looked at any of the usual factors associated with these such as ex div, depth etc., I am just picking the pattern only as an initial example)_
> 
> My way of looking at those in comparison is that they have a consistent pattern and substance for the want of a better description (and they exist in the fundamental upper end of the market).
> 
> My way of thinking is that you need more than just a standalone breakout pattern, you also need a resumption or potential repeat of a previous pattern with steady reasonably predictable movement in both directions where you can be almost certain that your stops will have minimum slippage should you be wrong.
> 
> I may be wrong but over the years I have shifted away from the quick hit type breakouts to a more steady style of breakout and the results are enough proof that it works for me.
> 
> Sorry to derail the thread slightly, just adding my




Well said, and the breakout you speak of is my continuation breakout setup I use. Low risk and high probability (probably 75% likelihood that a trend will continue - no research to back that...)

Any of my live trades are never putting more than 2 to 3% of my total portfolio at risk but certainly important to highlight risk management and money management for newbies. Especially with these identified stocks as they are quite volatile... 

I can refrain from posting these setups and focus on continuation breakouts if that's what we are looking at. Or not at all, doesn't phase me the slightest either way...


----------



## peter2

Continuation break-outs are what we want to trade. I'll be keeping a watch list of 60d BO and check for our setups over the following weeks. 

Trading Update:  Exits triggered on *CAJ, PAN, WOR*. 

The exit price for this portfolio will be the next open. This avoids any concerns about the portfolio exit price. Conditional sell orders can be used where there is enough depth eg. PAN, WOR. 

*CAJ*: Pending re-buy order at 1.10.    [I'm a fan of the re-entry order if you are using tight exit stops.]

We will have some more cash after the open. I'll look at the suggestions and have a quick scan through the watch lists tonight.


----------



## Nortorious

No problems at all lads, I will stick to posting continuation breakouts on this thread. Usually scan the market on a Saturday morning to find these setups so if I see anything worthwhile I'll let you all know.


----------



## Boggo

peter2 said:


> Trading Update:  Exits triggered on *CAJ, PAN, WOR*.
> 
> The exit price for this portfolio will be the next open. This avoids any concerns about the portfolio exit price. Conditional sell orders can be used where there is enough depth eg. PAN, WOR.




That is a pretty tight stop on CAJ imo.
I haven't looked at the other two but I am holding CAJ for at least another day.

(As an aside, any views on the way ILU may be shaping up)

(CAJ - click to expand)


----------



## peter2

*CAJ*: Too tight, probably. We got into the trade at 1.01 and price hasn't moved enough to raise exit stop, but I did and now don't want to change my mind (second guess).  Must be decisive on a public forum, but we know what really happens.

I've posted my chart so you may compare the bar colours. I'm using supertrend (2atr(10),midpoint).



*ILU*: One of my fav trading stocks. My reversal trade (123L) is done and I'm waiting for a low risk (~0.50) buy signal. A 1.00 risk is too big for me. Price has only recently moved above sloping R line. I'm anticipating setup >8.50 as there could be plenty more potential profit (to 10.00 then 12.00). Glancing at this chart daily.


----------



## tech/a

tech/a said:


> Thought HFA OK for volume Boggo.
> 
> Here is another I found
> 
> View attachment 62111




Smacking along! Both this and CAJ look good setups.


----------



## VSntchr

tech/a said:


> Smacking along! Both this and CAJ look good setups.




Yes, HFA announced today that they have divested the loss making Aus division. A nice setup where breakout and good news collide.


----------



## Boggo

tech/a said:


> Smacking along! Both this and CAJ look good setups.




HFA certainly travelling nicely tech/a.

Nortorious's pickup on ABX going well too (weekly chart is a better picture of it).

Some good setups still appearing and some such as CAJ seem to be fairly predictable in their behaviour.


----------



## tech/a

VSntchr said:


> Yes, HFA announced today that they have divested the loss making Aus division. A nice setup where breakout and good news collide.






Boggo said:


> HFA certainly travelling nicely tech/a.
> 
> Nortorious's pickup on ABX going well too (weekly chart is a better picture of it).
> 
> Some good setups still appearing and some such as CAJ seem to be fairly predictable in their behaviour.




Don't you love it when it all comes together.
Any minute now that Murphy blokes gonna pop up!


----------



## Boggo

I'll post a bit on HFA on its thread to avoid derailing this.


----------



## peter2

We have some cash available (~11400) as we sold a few this morning. 

Candidates: (suggested by) - My comments

CAL: (tech/a).  Still moving up, although cautiously.  Buy BO to new high (>1.10, iSL - 1.00)

ALU: (tech/a).  UP trend looks strong, buy BO to new high >4.50 (iSL - 4.25).

EPD: (Nortorius), Has difficulty closing above 0.80 (weekly).  Buy if it trades back at 0.83 (iSL - 0.75)

TNE: (PeterJ)  Nice narrow range. Buy new high at 4.05 (iSL - 3.90)

WBA: (PeterJ). Broke above yearly highs (1.40) with good volume. Supply above 1.60 stopped price, which has been trading sideways on low volume. Buy at 1.55 (iSL - 1.45)  


BAL: (P2). Clearly in a strong trend. Price in narrow range. Buy BO >2.90 (iSL - 2.75).   Looks like this one has been busted. 
HFA: (VSntchr). This one went up too soon for us. I was concerned by low volume, but good pick.
IRI: (P2). Noticed this one yesterday, but no cash.

Maybe I should apply the Commsec trading conditions. Buy if we have the cash or not and settle in 3 days time. Heh.

I thought Murphy popped in on that down day last week.


----------



## tech/a

> I was concerned by low volume




*Just a comment on this comment.*

Its been my experience that trading to new highs on volume is at least an initial sign of weakness.
Nearly always will a new high on volume turn back lower before moving on if it does!

Lower volume breakouts are more likely to be continuing breakouts as supply is not evident at that level.
People are holding so higher volumes are not forthcoming as supply has retreated.

Really its a matter of determining how price reacts to volume and or range.
It really is an intriguing subject!


----------



## Boggo

tech/a said:


> *Just a comment on this comment.*...
> 
> Really its a matter of determining how price reacts to volume and or range.
> It really is an intriguing subject!




And one that I will get my head around one of these years hopefully


----------



## peter2

Intriguing, absolutely. Does a break-out on very high volume have a higher or lower probability of success than a break-out on average volume or below average volume?  You would think that all the back-testers would have a quantifiable reply by now. I think other factors such as the daily market sentiment have a significant effect on those probabilities. Take a day like today (big UP day) and most stocks are up. Sellers generally have backed off, but they'll be back when they get spooked again. It won't take much volume to create a BO on a day like today. 

IMO it's a daily mix of supply/demand and sentiment. All three components change each day and even during the day.


----------



## tech/a

peter2 said:


> Intriguing, absolutely. Does a break-out on very high volume have a higher or lower probability of success than a break-out on average volume or below average volume?




Breakouts on volume are clear indications of effort in a direction--long or short. High volume only comes about when there is supply that wants to get out at prices traded.---I'm convinced that price movement is driven buy supply and *NOT* demand.---that's a topic!



> You would think that all the back-testers would have a quantifiable reply by now. I think other factors such as the daily market sentiment have a significant effect on those probabilities. Take a day like today (big UP day) and most stocks are up. Sellers generally have backed off, but they'll be back when they get spooked again. It won't take much volume to create a BO on a day like today.





Ive spent a lot on looking for that definitive answer. I'm also convinced there isn't one where all variables are considered in the question you pose above. In RAW terms---does an increase in volume mean price will move in that direction the RAW answer is ---short term no--long term likely if---(add ifs). Your brain can quantify theses ifs if trained instantly and there is the face in the crowd. To turn volume questions into Yes and no answers gives you a lot of nos and then lots of yes's when your trading! You have added an if---strong bullish day---not that I use it myself!



> IMO it's a daily mix of supply/demand and sentiment. All three components change each day and even during the day.




Weekly and Monthly as well.
Buying/Selling/Balancing.


----------



## peter2

Back to the business of trading and a few thoughts that come to mind. We are not going to get into every opportunity that turns out to be good. Interestingly we forget the ones that didn't work out and focus on the ones that started well that we didn't buy. I'm talking about possible trades in XTV, HFA and IRI. 

There's a huge difference between paper trading equities and real trading. Most people immediately mention the difference in our emotional states. No fear, no greed and no concerns about where we place our exits when there's none of our money involved. Yes, that is huge. However there are other less discussed differences. Consider order placement, if they're not in the market then they can't be executed. How many of you actually take the time and effort to write your orders in an order book when you paper trade? It takes time and effort to log in to your broker's platform and place every order. If you want to paper trade properly, then log all your orders. I'm posting the orders in this thread and won't start a trade without them (*). It's too easy to pretend that we got into a great trade without placing any orders. 

Another subtle difference when paper trading equities is the money. This is a finite resource and once it's used it can't be transferred to another trade until it's made available by selling something. Keep track of the money. Know how much is invested and how much is available for the next trade. When you get your portfolio established you'll notice that there is very little cash available most of the time. The great trades start when you have none. I don't know how many trades I've started with partial positions because I've run out of cash and these turn out to be great trades. Argh. 

I'm mentioning this to the few of you who are creating and managing your own portfolio of trades with the goal of starting for real in the new FY.

Paper trade these next three months with absolute integrity. 

(*) I may post an occasional trade before the close after doing my pm scans. These will be rare.


----------



## myrtie100

I have a suggestion - DMP.


----------



## peter2

You had me thinking; *DMP*?
Debt Management Program
Dual Media Player (nah)
Decision Management Process - for our exits - yeah.

Then it hit me Domino's pizza. Strong trend UP, good trend continuation setup for a BO trader. 
My buy would be 37.50 (traded today) with a iSL at 35.00 for short term traders, at 34.00 if I wanted to give price more room. 

I can't fault the selection, however I can fault myself for not buying any of the dozens of BO opportunities over the past five years. Seeing that I'm irrationally biased against this stock, I'll let you place the buy order.

I definitely want to include DMP in the portfolio as it's a good pick and it's posted by a member with very few posts. I would like the portfolio to be constructed with picks from lots of ASF members.

What are your instructions Myrtie100? Are we going to place an order in the market tomorrow? What type a limit buy or a pending buy order to buy if a higher price is traded? I'm in your hands.


----------



## myrtie100

Oh dear! now the pressure is on 

I would put a buy order in at $36.73 and watch the open to make sure it didn't gap down passed this price.

If we miss out at that price - nevermind there are plenty more to choose from!

My initial stop would be $35.12.


----------



## Boggo

I think that anyone posting up a stock should also explain their entry and stop etc ?

Not trying to inhibit yours or anyone's posts myrtie100, it's too easy though to just pop up a stock symbol without some additional info.

I think that Joe addressed a similiar issue on another thread a while ago.

Just my


----------



## peter2

Yes, that's what I want, to make you feel a tiny bit of responsibility. There's no pressure because nobody knows what is going to happen next. 

I'll give posters with <10 posts a lot more freedom in order to get their suggestions and I'll help them frame their trade. This is primarily an educational thread. Those with hundreds of posts should know how to frame a trade.

A quick reply to myrtie100 before I get out of the office for some exercise. 

You've selected a stock where the price has started to move higher and you anticipate that it may go higher sooner rather than later. You don't want to miss this opportunity by placing a bid that is too low. DMP could open at $37 and go higher immediately. Your bid (36.73) won't be executed and you miss this opportunity to get into this trade. 

I think you should place a higher bid (~37.50) to try to ensure you get it tomorrow. If it opens higher than 37.50, you will miss it also. If it opens lower than 37.50 you will get the open price.


----------



## myrtie100

Oh ok.....
I like to buy close to the broken resistance line on minor weakness rather than chase the price up.
The stop is placed just under the ccongested area. In fact the stop could be tighter, if price goes that far the trade is not travelling as expected.  
Is that what you mean bongo?


----------



## myrtie100

Boggo - sorry


----------



## myrtie100

Thanks peter.

Yes we could play it that way.

I like to try and be patient and stifle those feelings of missing out.
I'm happy to wait for my price for days - as long as the pattern is still intact.
You're right tho - no one knows what it's going to do.

I wonder if tech/a has any insight on the volume?
Higher than average volume for 2 days - lots of supply??
The sellers managed to get the price down a little from the high today.


----------



## Boggo

myrtie100 said:


> Boggo - sorry




No problem.
My suggestion wasn't directly at you myrtie100, I would just hate to see this thread turn into a stock tipping thread.
If people had to add a bit (as you have) it may tend to reduce simply symbols posts.
There have been a few threads in the past that have been derailed or Joe has had to intervene.

I should probably keep quiet though as it is Pav and peter's project 

Cheers.


----------



## tech/a

I'm afraid Volume indicates supply and resistance once more to prevail.

I think there is some supply to be exhausted.
If it cant go on with it it will be clear distribution into buyers.
Today's bar sees a retreat from the highs.
The gaps up could be exhaustion gaps.
I'm not bullish---yet.
Need to see clear break of resistance.


----------



## peter2

Another important topic has come up. Thanks craft. 
I love it when the market provides opportunities to learn and we grab the opportunity to get ourselves a little better prepared for the future.

Trading around dividends. This is important if the size of the div is a significant part of your open trade risk (downside exposure). It won't be an issue for the medium to longer term traders (they love the divs). 

The current chart of *MMS* and craft provided the case study. Would you start a trade with a risk of 0.60 just before the stock went XD worth 0.25?  IMO this an indiviual decision as we all have different risk tolerances. Personally I avoid them and won't start short term trades before XD dates. In my medium term portfolio I swallow the div and make the tax man spit up the franking credits. In raging bull markets it doesn't matter as much as the divs are quickly swallowed by the eager buyers. Currently we are not in a raging bull market. 

The text books state that we should adjust our sell exits by the amount of the div and carry on. I'm not so sure about this advice. Chart levels of support and resistance should still be respected and I don't like to see XD prices go through these levels. 

In summary: If you plan to be a short term trader and use tight exit stops then you should be aware of XD dates and scheduled news events related to your stock (company) and to scheduled news related to the underlying commodity that your company uses/produces. This is essential due diligence in the business of trading.


----------



## peter2

Trading update: We did a few things today. 

*DMP*: Placed our buy order at 37.50 and we were executed at the open price (37.40). Our iSL is 35.00. 

Yes myrtie100 you could have bought at your lower price, but over many trades would your strategy be helpful or hurtful. You would get into all the failed BOs and miss the good ones. Ouch. In a wishy-washy market like now, you may not notice, but in a raging bull market you would. 
Anyhow, we're risking 1% on this trade and we don't know what is going to happen tomorrow. 

*TNE*: Bought at 4.05 (iSL - 3.85)  I don't like to see price closing below the BO level. That's trading. Tomorrow's another day. 

*NAN*: Exit triggered in this trade. 

*AGF*: Sell stop (TS) raised to 1.30


----------



## Gordon7

For Peter's eyes only 

I don't know how much juice is left in this market but some trades you might consider in the near future are *EHE*, *MFG *and *MNF* should they break out of their highs of recent days. I may or may not take some of these trades.


----------



## peter2

Thanks Gordon7. 
EHE: I picked that one up already from your post in the stock chat section. Nice trend continuation setup. I hadn't seen that chart because it's a newish listing.
MFG: I see a symmetrical triangle pattern. 
MNY: Weekly pullback or daily reversal setup. That's a scary chart for a trader, because of all the big red down bars and repeating pullbacks. I'll leave this one for you and the ambush traders.

If people post their charts in the stock specific threads, I'll see them and they'll probably get more in-depth comments from other members. eg. EHE is in a hot sector atm and other companies in the same sector get a mention. (except JHC).


----------



## Newt

peter2 said:


> Another important topic has come up. Thanks craft.
> I love it when the market provides opportunities to learn and we grab the opportunity to get ourselves a little better prepared for the future.
> 
> Trading around dividends. This is important if the size of the div is a significant part of your open trade risk (downside exposure). It won't be an issue for the medium to longer term traders (they love the divs).
> 
> The current chart of *MMS* and craft provided the case study. Would you start a trade with a risk of 0.60 just before the stock went XD worth 0.25?  IMO this an indiviual decision as we all have different risk tolerances. Personally I avoid them and won't start short term trades before XD dates. In my medium term portfolio I swallow the div and make the tax man spit up the franking credits. In raging bull markets it doesn't matter as much as the divs are quickly swallowed by the eager buyers. Currently we are not in a raging bull market.
> 
> The text books state that we should adjust our sell exits by the amount of the div and carry on. I'm not so sure about this advice. Chart levels of support and resistance should still be respected and I don't like to see XD prices go through these levels.
> 
> In summary: If you plan to be a short term trader and use tight exit stops then you should be aware of XD dates and scheduled news events related to your stock (company) and to scheduled news related to the underlying commodity that your company uses/produces. This is essential due diligence in the business of trading.





Important topic.  In the interests of learning tips for efficiency, it would be good to hear how people do their XD date research?

For example, do you keep a list of all dividend dates sorted by date for reference when considering candidates, or perhaps you make it part of your fundamental data checks before entering a technical BO trade?

Would be curious to hear/learn.  


Many thanks too Peter for investing so much of your time teaching good habits here.  I've personally found your portfolio heat and risk metrics music to the ears, at a time of becoming much more "risk aware/adverse" in my personal trading development.


----------



## peter2

EOW Trading Update: Then it's a few days away from the markets. The portfolio held on to most of its open profit as the high market volatility continued. Think I'm suffering some whiplash. The market is poised to move and I don't know which direction.

This weeks sells:
*PAN, WOR, NAN*: Closed as their exits were triggered.
*CAJ*: Also sold as the exit was triggered. Mea culpa. I raised the TS too hastily in response to a few down days. Locking in $224 of profit is not significant. Keeping the TS at BE would see us still in the trade. Both Boggo and I knew that it was a bit hasty, but I don't want to change my mind on the day and between posts. We'll re-buy when it trades at 1.105 or above. 

Hasty decisions happen all the time and discretionary traders will do it more than most. I'm currently managing six portfolios (four real and two educational) with open trades in many of the same stock codes.  That's why I love the re-buy order. If price takes off again, we'll buy it. 

This weeks buys:
*DMP* and *TNE*. Bought BOs. 

I was keeping an eye on *WBA* as a spike then pullback setup. Price triggered the buy at 1.55 today and I was all set to place it in the portfolio. When I looked at the market depth for a purchase, it was crap. A few bid at 1.52 then a gap to 1.60 which someone paid. I'm not going to trade this myself, so I shouldn't put it in the portfolio. The price for WBA could go from 1.52 to 1.70 quickly and It would be a good quick +1.5R win. I prefer to trade stocks with higher daily volume. There's plenty out there (like IWG). 

What's new: Well, the completed trades are showing a profit. Got to love that. This means we start compounding and the new 1% is now $508.
Max position size is being kept to 20%. 

What's old: Trades in AIA, SEN, CNU. Yawn. We have cash and cap risk available to use. No point closing them yet.


----------



## mikeroxoz

Newt said:


> Important topic.  In the interests of learning tips for efficiency, it would be good to hear how people do their XD date research?
> 
> For example, do you keep a list of all dividend dates sorted by date for reference when considering candidates, or perhaps you make it part of your fundamental data checks before entering a technical BO trade?




Hi Newt,

Here is one resource I use for Dividends:

http://www.sharedividends.com.au/viewStory/Upcoming+Dividends

Peter2

I have been really enjoying reading your strategy. One I have been keeping my eye on is ALU

I have a buy stop in for *ALU* at 4.50 and sell stop at 4.20

I will keep reading as long as you keep posting

Mike


----------



## peter2

Trading update:  A few executive decisions made today. 

*EPD*: Bought on open with 0.83 bid, paid 0.82 (iSL = 0.77) 
After today's close, I'm raising TS to close < 0.81.

*CAJ*: Traded >1.10, Bought 1.10  (iSL = 1.00 )
*ALU*: Traded > 4.50, Bought 4.51 (iSL = 4.30) 

Sell triggers raised (highlighted in yellow); to reduce open risk 
AGF - 1.40
JHX - 15.10
EPD - 0.81
TNE - 4.00
DMP - 35.50

Our trades in *AIA*, *CNU* were sold at today's close due to low market depth and no upward momentum. We've no time for snails. I'm doing this to make cash available so that we can get into some faster/higher volume moves (hopefully). Why didn't we see ERJ.


----------



## skc

peter2 said:


> *ALU*: Traded > 4.50, Bought 4.51 (iSL = 4.30)




ALU should be reporting Q3 sales and revenue before the end of the week. They reported last year on 10 April. It's often quite a moving event.


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## peter2

Trading update:  It doesn't matter how you trade, there are times when you must be patient. Currently the market is gyrating between a high and a low and we must wait to see what happens next. While we wait for an exit trigger to sell, we scan the charts for perfect setups. There are quite a few charts ready to break-out to new yearly highs. Most of these are larger price stocks and seem to be great opportunities to add to our medium term portfolios. I'd like to get into a few lower priced stocks and see if we can get a few easy wins.

Today was actually a good day for this portfolio. Most prices went up and only a few went down. Nice.

Thought for today is all about patience. Trading setups that aren't perfect is over-trading. This may be a short term portfolio but we don't have to start a trade unless it's perfect and we are going with the market. As the market is going sideways, we wait. 

Of course, both AIA and CNU (closed yesterday) went up today. Tough. I'm not concerned. I only peeked as I knew YOU would. I could place a pending buy stop for CNU at 2.90 (iSL 2.75) but the market depth must look better than it has. 


ps: Thanks for the ALU info skc. Our exit trigger is out of the market and based on the closing price.


----------



## VSntchr

This is something that I have had my eye on for my fundamental portfolio given the board changes and accounting changes that the company has undergone, however it appears to me that it is consolidating a breakout of the long term HR at $5.30. 



Weekly for relevance.



As per the new guidelines, personally I would go for a buy order at a close above 553 with a stop on a close below 497. I am not a breakout trader and hence these levels are just a stab at what I think looks appropriate - happy to be corrected if for instance a stop below 520 is the better choice.


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## tech/a

Like it


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## peter2

Trading update:  Up one day, down the next. 

EXITS triggered in *SEN, CAJ*. 

*TNE*: TS raised to BE (4.05)

Comment: SEN, our momentum trade is over, but I like the orderly 3-wave (abc) retracement seen on this chart following the impulsive move to the last high. Fib ambush traders take note.


----------



## peter2

EOW Update: The last two weeks went by very quickly. 

This weeks sells: 
SEN, CAJ : Due to the exits being triggered.
AIA, CNU: Due low market depth and no price movement. Of course things are looking a little better now. That's trading.

This weeks buys:
EPD, ALU: 

*Note about our exits*: Sell at our TS (trigger) when there is enough market depth, rather than wait for next open. There was enough depth on both SEN and CAJ to sell at our stop levels. This is purely an educational exercise. The overnight slippage in those two stocks concerns me. 

Modifications to our exits are highlighted in yellow.

Our portfolio is moving along nicely and you can see we have 6/7 profitable open trades. That's what we do. We collect winning trades. We have lots of cash available (~29K) and if the market breaks-out to new highs next week we should start a few more trades.


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## mikeroxoz

Portfolio is tracking nicely Peter2

Personally I have moved my *ALU* sell stop to break even at 4.50

This is a strategy that I have picked up from Tech A who I have been following for many a year.

The trade has moved to 1xR for me and this strategy takes risk of the table. 

I notice you have moved yours to $4.40 rather than break even. Care to discuss?

As a student I welcome any discussion as to whether this is the right move or not?


----------



## peter2

I'm happy to share my opinions but there is no right answer. If you keep good records then you can look back at your completed trades and determine which is the best strategy for you.

I have a belief that the market tests obvious break-out levels about half the time (less in bull markets, more in other conditions) and that 50% pullbacks are very common (again less in bull markets). If your trade has moved +1R then either a test of the BO level or a 50% pullback will hit your BE stop. I prefer to allow the market to test a BO level and to pullback 50% of the current swing so I don't raise my exit stops too fast at this early stage of a trade. My stops get tighter once I see the first HL after my entry and/or at +1.5 to +2R. In fact I usually exit at these price targets if they coincide with a S/R level.

Another consideration for me is that raising the exits stops quickly would create much more admin work in the portfolio. There would be a lot more selling at the BE exits (for no profit) and I'd have to find more setups. I have no doubt that managing trades like you (and tech/a) will improve your edge provided you do the extra work. Is the extra work worth it or could that extra work be used more productively? 

(Hint: Do I look through a lot of charts for an educational thread or spend the time grabbing some of the +130pts move in the DAX tonight? Hm...)


----------



## tech/a

It's all portfolio management with the goal 
To giving us a better Reward to Risk.
A few ticks here and there isn't going to 
Skew figures massively. Sometimes it could
Keep you in a longer term successful trade
Others it could take you out with no loss.

With an abundance of prospects and a solid
Re entry strategy aggressive management should
Give high R/R provided we let good trades run.


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## tech/a

tech/a said:


> Thought HFA OK for volume Boggo.
> 
> Here is another I found
> 
> View attachment 62111




Nice +6% today.

2 years bank interest in 1 day!


----------



## peter2

Yep, very nice.  I love those little asc triangle patterns. 

*ALU*: Hit 5.15 today.  Raising sell stop to 5.00, locking in +2.2R (+$1083).


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## tech/a

peter2 said:


> Yep, very nice.  I love those little asc triangle patterns.
> 
> *ALU*: Hit 5.15 today.  Raising sell stop to 5.00, locking in +2.2R (+$1083).




Why so tight?

Its got to have some wriggle.
There has been no testing of the breakout which I would expect.
Id also expect the $5 to be taken before a higher low is made.

Do as you wish but you'll *never* make a big profit taking small ones!
I cant see a technical reason to do this.


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## peter2

Sell exits should be either tight to grab most of quick profits (as with ALU) or loose to allow price to test previous levels. The exit strategy should match the trading style. As this is primarily a momentum trading thread once price passes +2R IMO it's important to protect major part of profits. 

A loose stop that would allow a small consolidation or pullback (test of prior level) would be suitable for a trend following style as the tight stop may exit prematurely. 

As you know, momentum traders can re-buy quickly after one or two down bars if demand is strong (and supply disappears of course).

If the test of a prior level starts quickly then I'll let it unfold as the profits aren't big enough to grab. If price moves up quickly (past +2R) then I'm inclined to grab most of it and place a re-buy order in case the exit is early. 

Most definitely my choice to manage this way as we can't manage these trades by consensus. As this is an educational experience I hope people are keeping their own records and tracking different trailing stop strategies. Making all decisions live and keeping records is the only way to learn.


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## tech/a

Ok out at $5 and looking for a re entry opportunity then.
How will you handle this now?
Back on the watch list?
What will you be looking for?


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## peter2

The ALU exit was an intra-day decision, which my records tell me is generally not good as they're too emotional. Sorry my bad but I'll not retract any trading order that is actioned by the market.

I'll wait until the EOD and see what the close and daily volume looks like. Right now I'm scanning the charts for other opportunities. LNG looks interesting.


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## peter2

This diagram may help people write their trade management plans (if... then .... statements).

The diagram is a bit corny, I know. I didn't take the time to copy/cut real charts showing the common types of corrections. If you're serious then perhaps you should. Having a chart of every contingency next to you as you look at the EOD charts might help you to apply your trade management consistently. 

I look at price patterns more than indicators. Indicators like an MA or an ATR trailing stop can look great until they don't. The market is too dynamic for a formula. 



ps: If you can apply your trade management rules consistently >90% of the time. You will be better than 90% of the traders out there.


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## tech/a

Like these

Even Spotless that has broken out can still
be traded profitably.

I really like tight micro patterns


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## peter2

Trading update:  Modifications to sell stops. Slowly reducing risk and locking in profit. 



Must find a few more setups as we have plenty of cash now. I need to feed the beast. edit: Thanks tech/a.

Stocks on the watch list:
ALU:  Re-buy  >5.15
IWG: BO >0.40
AMA: BO >0.55
HSN: BO > 2.45
IMD: Buy at 0.38  Not in weekly UP trend, so might keep this one for myself.
SAR: BO > 0.45
SIQ: See stock chat.
LNG: WEB: SPO: I'm tempted to buy soon.

EHE: Interesting bar today, but price has fallen from the small range. Very similar to BAL.
PRY: SEN: Interesting 3-wave (abc) corrective patterns, but not for this thread until price gets back to highs.
WBA: Volume improving everyday after I couldn't even buy 10K shares at my price.


----------



## skc

peter2 said:


> Must find a few more setups as we have plenty of cash now. I need to feed the beast.




Plenty charts threatening to breakout.

AAC, IRI, PME, AHE, LOV, SPO, DTL, RHP, AJX, DLX


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## peter2

Trading update: I know it's morning, but I've got to post these entries.

LNG: Bid 3.83 (iSL = 3.55)
SPO: Bid 2.42 (iSL = 2.25)
SAR: Buy if trades at 0.455 (limit 0.46), iSL = 0.415


----------



## peter2

Trading update:  Trades started in *LNG*, *SPO* and *SAR*. 

No mods to existing sell exits.  *AGF* may be the next to exit if it trades at 1.42. 

Open trades look promising and it's just like watching the grass grow. 
Although it's NOT my main focus, I'm pleased to see the W% improving.


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## tech/a

Pity QAN isn't in the mix


----------



## padman

May I suggest QBE?

Buy above $13.90, iSL $13

Target $15.44 (low before the gap down), giving R/R of 1.7

Daily




Weekly


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## peter2

Padman: Nicely thought out setup. I would reduce the trade risk to 0.50 - 0.60. Anticipating that the BO will either work straight away (with the market BO) or fail quickly.  The RR would be better with a lower risk amount. 

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

Trading update: As expected on a down day like today a few trade sells will be triggered. One down day may be the start of many down days or prices may go up tomorrow, who knows. Taking small losses and break-even results help us create the overall profits.

*AGF, DMP, TNE* - Trades closed as price hit the sell exits.  AGF (+2R), DMP(-0.6R), TNE(BE)

*LNG*: Sell exit raised to 4.40 (+2R) after todays above average spike. 
*SPO*: Sell exit raised to 2.35.

Compounding continues as the profits are banked. The portfolio has realised +5% (1% = $525, Max pos size 20% = $10503)


----------



## tech/a

*



			Taking small losses and break-even results help us create the overall profits
		
Click to expand...


.*

To further increase R/R you need to get some really high R multiples.
If your taking at targets how will you do this?

I'm a little confused a I agree with cutting losses but cant see where the *momentum* strategy allows for
profits to run?


----------



## peter2

I understand your question and I hope your confusion is not due to any inconsistency in my management of these trades. I admit that I have made a few mistakes that might cause some confusion. Thinking about this reply is constructive (thank-you). 

For this thread, my trade management includes techniques from both momentum and trend trading styles. I consider these styles as very different. Raising sell stops and reducing risk after entry is a momentum technique designed to lower AL. We agree that this is important. I won't be as aggressive as you to get to BE. 

My first target is the +2R price level, along with prior S/R levels. Once price gets past this level I'll use a tight exit stop (momentum technique) and try to lock in +1.5R to +2R. This may allow a shallow consolidation to unfold but not a deeper pullback. A trend trader would allow the HL to form which would be after either a shallow consolidation or a deeper pullback giving back open profit. 

Until price gets past the +2R level I'll manage the trades as a trend trader might. That will keep the turnover at a manageable level instead of grabbing lots of quick +1R results. In order for me to get a larger (>+3R) result, the price movement must not have a deep (>25%) correction. 

The choice of the trade management style creates slightly different result distributions.

A purely momentum style: W%~60%, AW +1R, AL -0.7R  Expectancy = 0.32  
Highest # of trades, but too much work for me unless I trade them myself. 

Current management style: W%~50%, AW +1.5R, AL -0.7R  Expectancy = 0.40  
Reasonable # of trades and the cumulative results should engage followers. 

A trend trading style with raising stops quickly initally : W%~40%, AW +2.1R, AL -0.7R  Expectancy = 0.42  
Lowest # of trades and could get boring when the market goes sideways (like now). :frown:


----------



## tech/a

Thanks for your reply Pete.

I agree that its not a one size fits all.
Much is similar to what I do and did with PAV.

The point I'm making is that if momentum is still evident then allow 
for a pullback---its going to happen.

One method is for every 4 up bars allow one back 8 --2 etc.
OR
Place a Parabolic SAR on the chart
OR 
Bollinger bands and allow a pull back to the median.
OR
Divergence in Stochastic
OR
What your doing.

Profit is profit and skewing your way is sound trading.
Massive skewing removes all doubt!


----------



## Newt

Kudos to Tech and Peter for discussing pros and cons of momentum/hold in public for the attention of all.  Second guessing your TP and SL goals by flicking back and forth between "swing/momentum" style vs "longer trend holds" has got to be one of the hardest things to decide for learning trend traders, particular in tough markets.  Backtesting on my preferred strategies shows the last 18 months have been particularly challenging if looking to buy breakouts and then hold more than a few weeks through multiple higher lows/highs (e.g. Bollinger breakout entry).


Could I suggest VTG as a future candidate?  Long term weekly trend promising (as below)
Would be nice to see daily volume above the 20 day average on one or two nice bull bars before I would buy in current environment.


----------



## peter2

Trading update: (with an early bonus!)

*LNG*: Sold at sell stop 4.40 (+2R). price went through the next target level (4.64 = +3R) but I wasn't watching it at the time. You had to be quick.

*IMD*: Bought BO-NH (0.385) iSL 0.34.  Testing the water in this sector. 
*SIQ*: Bought BO-NH (1.62) iSL 1.55. Liked the small risk setup and the volume indicators OBV, TMF are showing strong demand.

There will be no EOW update as I'm out of town this week-end  so I'm going to post an early update now.  
We've had a good week bagging three +2R wins and two small losses. 

Over the past six weeks the index (XAO) has hardly moved (+0.3%) yet we've managed to do a little better (+9.8%). I hope you are starting to see the benefits of keeping those losses small and grabbing a few quick profits when they appear. Another important contributor to our edge is that we are buying break-outs in strong trends. In other words we are trading stocks that are clearly in demand, not bargains (reversals). 

Note: The stats are slowing getting to where I expect them to be (see post #73).

Enjoy your week-end.


----------



## tech/a

Excellent result Pete


----------



## peter2

Trading update: I'm back and I see we've had two down days. This knocks a book of short term trades around a bit. 

*CGF*: Trade closed at TS.  (-0.4R)
*EPD*: Trade closed at TS. (BE)

*CVO*: Bought BO (>2.15)  iSL = 2.02
*AGF*: Didn't place buy stop order on this one, but have now, so if AGF trades at 1.505 we buy it. 

Comment: As the index is falling, I'm reluctant to buy many more. The trades started last week have not gone far enough to reduce risk. (SPO, SAR, IMD, SIQ, CVO). Our patience will be rewarded.


----------



## Boggo

peter2 said:


> Comment: As the index is falling, I'm reluctant to buy many more. The trades started last week have not gone far enough to reduce risk. (SPO, SAR, IMD, SIQ, CVO). Our patience will be rewarded.




A fun market at the moment. I have a couple of potentials popping their heads up but am reluctant to go long on any new trades.

Am currently down to holding just six stocks from thirteen with exits from the likes of TLS, CAJ, JHC etc etc. after collecting some good dividends along the way.
Good timing now for a correction.

Would be happy to just be in cash for the rest of this FY, I've got tight stops on the current holdings.
I would like to see a nice big correction followed by a repeat of another run up, only need one of those a year but another would be nice


----------



## tech/a

Pete

You watching ALU?


----------



## peter2

Trading update:  The market seems soggy atm, just like Sydney. 

*JHX*: Closed at TS (+0.2R)
*CVO*: TS exit raised to 2.10
*ALU*: Re-bought at 5.02 (>5.00) , iSL far away at 4.70. [Ha, just saw your post as I was about to post this.]

*MTU*: liked the setup, but the trade book (portfolio) is near its capital risk limit. This restricts the number of trades even though there is capital available. This downside exposure limit comes into play when starting a portfolio (book of trades) and reduces the chance of having a poor start if your market timing is unlucky. This limit also restricts the number of trades when the open trades as a group are not progressing as anticipated. This happens when the market goes down like this week. 

Another thought: 
An active trader shouldn't be restricted by any market condition nor limited to one market (ASX stocks). Think of the benefits of being short the ASX200 index right now. The open profits from a index short would be offsetting some of the open losses. If the market continues down the profits would be greater than the equity losses as we would have closed most of the stock trades.


----------



## VSntchr

peter2 said:


> Trading update:  The market seems soggy atm, just like Sydney.
> Another thought:
> An active trader shouldn't be restricted by any market condition nor limited to one market (ASX stocks). Think of the benefits of being short the ASX200 index right now. The open profits from a index short would be offsetting some of the open losses. If the market continues down the profits would be greater than the equity losses as we would have closed most of the stock trades.



Good point and one that I roll around in my head quite often.

The tricky part is - when do you determine is a good time to open? - A MA cross? lower low? VSA? Not to sure on this one....

How big a position do you take, how do you arrive at this position? - I guess the position sizing would be relevant to the long exposure in the momentum (and perhaps others) portfolio. X would give complete hedge while 1.X or 0.X could be justified depending on strategy.

What instrument is used? - For me the best choice would be an index CFD.


----------



## tech/a

Get it wrong and you'll chew up any profit in no time!


----------



## skc

VSntchr said:


> Good point and one that I roll around in my head quite often.
> 
> The tricky part is - when do you determine is a good time to open? - A MA cross? lower low? VSA? Not to sure on this one....
> 
> How big a position do you take, how do you arrive at this position? - I guess the position sizing would be relevant to the long exposure in the momentum (and perhaps others) portfolio. X would give complete hedge while 1.X or 0.X could be justified depending on strategy.
> 
> What instrument is used? - For me the best choice would be an index CFD.




IMHO... unless you really really really know what you are doing with hedging, you should treat each trade individually. By all means have a more delta neutral portfolio, but don't keep your longs open just because your shorts are in profits. 

Chances are, the stops on your longs will get executed the very moment that your index short reverses. -R each way thank you very much.


----------



## peter2

This chart of *SBM* shows exactly what we are looking to trade in this thread. If you know what to look for then you can scan many charts quite quickly. 

If this is a chart pattern that you want to trade, print this chart and keep it on your table, close by. If you trade other patterns then find perfect charts and print them also. This is how you create your chart pattern play book. Pav often mentions his play-book of setups. 

*Trend Continuation setup after BO-HR*. 
Price broke through a horizontal resistance level (BO-HR) that had lasted for several months. (Note: This is one of my favourite buy signals but we are not trading these in this thread). The price break-out restarts the daily trend up. After a short sharp price rise, profit taking pauses the upward price movement. The subsequent price pattern that forms during this supply/demand exchange is a narrow ledge instead of a deeper pullback. These shallow ledges are good high probability trend continuation setups. 

Pending buy stops must be placed in the market to catch these trades.  
These ledges are good places to add to your initial position if you started cautiously at the BO-HR. 




Comment: If this is such a good example, why didn't I trade it in this thread. Knew you'd wonder about that. The quick answer is I'm bearish gold and having one open trade in gold (SAR) I didn't wish to start another in this current bearish market.


----------



## peter2

Trading update:  A bit of good luck and a bit of bad luck. That's normal. 

*SIQ*: Price spiked above our +2R level on good news, sell stop moved to +2R and sold at 1.78 (+2R) for a serendipitous result in a bearish market.
*SPO*: Price slammed through our TS(2.35) after today's news. Trade closed at 2.34 with a bit of slippage (-0.7R). 

*AGF*: Price traded >1.50 and triggered our re-buy order, iSL = 1.40.


----------



## peter2

EOW Trading update:  The market giveth and taketh away.  Pav portfolio +8.3%, XAO +0.1% (start)

The portfolio lost 3% earlier in the week, but we grabbed the surprise +2% from SIQ. This kept the portfolio about level for the week. 

This weeks sells: JHX SIQ SPO IMD 
IMD: Closed today after ordinary news dropped price through our sell stop.

New trades:
*EPW*:  Bought as price traded >1.50 (1.51) and above trend continuation pattern (ledge), iSL = 2.36
*EWC*:  Bought BO as price traded >0.40 (0.405), iSL = 0.38  Sell stop raised to 0.39 after today's up bar.
I don't allow very much room for trades in these types of stocks. Price continues higher or we are out. T2 sell order in market.

MTU: Thought about buying 11.50 BO, but was tempted by the lower priced stocks. 

Outlook: I am slightly more bullish after seeing the US near new highs and today's ASX bouncing off 5800 and the high close. The market will not BO to new high without the banks. Interesting, as usual. 

??? - This is an educational thread. Where are all the questions from those setting up their trading businesses?


----------



## kid hustlr

Loving this. Is initial capital 50k? We are using cfd's aren't we? What's max risk per trade? Apologies if answered I'm on my phone if you've already answered I'll find them later.


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## peter2

Starting Balance = $50,000 AUD  Restricted to trend continuation setups on ASX stocks.

Pav used 50% margin provided by IB even though they have stopped providing that to AUS persons. Not a problem as this was more an educational thread and the more trades the better. 

Since taking over I've switched to a mixture of cash and cfds (on the larger position sizes). The leverage provided by cfds (5% - 20% margin)  allows us to start a few more trades and include a few larger priced stocks along with the small/midcaps.

The individual trade risk is 1% of the starting $50K + realised profits with the max pos size of 20%. Currently the 1%TR has grown to $537 without the brokerage/commission.

The use of leverage means that our results shouldn't be measured against a start balance of $50K (even though they are) as we have occasionally used more than this.  The pos sizes used (%) are shown in the EOW snapshots. The max amount used so far has been ~80K (160%) and only briefly. 

Thanks for the feedback. It gets a bit quiet in here.


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## kid hustlr

tx peter.

I think performance should be measured against 50k that's the starting balance and your effective ROE. (Less maybe interest costs or something?)

Important that followers understand the leverage is used for MORE POSITIONS NOT BIGGER POSITIONS.


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## peter2

EOD Trading update:  Could this be a break-out week?

*QBE*-cfd: Bought BO (13.95) iSL 13.40  Limited to max size 20%.  

Sell stops raised: EWC (0.415, 0.460), CVO (2.12), EPW (2.40)

There were a few good looking BOs today that I couldn't use as they didn't conform to our pattern. (EHE, IVC, MOC)
I hope a few of you grabbed them today as the market nears recent highs. 

DMP: Thought about buying these again on the open after seeing the chart of the US DPZ (Domino's Pizza Inc) on the week end. (see DMP thread).


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## tech/a

kid hustlr said:


> tx peter.
> 
> I think performance should be measured against 50k that's the starting balance and your effective ROE. (Less maybe interest costs or something?)
> 
> Important that followers understand the leverage is used for MORE POSITIONS NOT BIGGER POSITIONS.




Well if that's the case it's not being used correctly!


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## kid hustlr

Go into detail tech? Radge talks a lot about the benefit of leverage but not necessarily for bigger positions but to take advantage when a mkt heats up and more trades get triggered beyond our available capital?


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## padman

Another setup to consider TAH

Buy above today's high of 4.96.



Btw can someone tell me why the chart in IB looks different from Comsec (above). If the IB chart is correct, may have to adjust the entry or even the setup.


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## skc

padman said:


> Another setup to consider TAH
> 
> Buy above today's high of 4.96.
> 
> Btw can someone tell me why the chart in IB looks different from Comsec (above). If the IB chart is correct, may have to adjust the entry or even the setup.




TAH paid a 30c special dividend (Ex-div 5 March) so the "raw" share price fell accordingly, but Comsec chart uses "adjusted" prices to reflect these kind of one-off changes. In IB you might be able to change the setting whether you wish to show "adjusted" price.

As to which one you should use if you are trading from a chart... I'd stick to "adjusted" (i.e. Comsec version).


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## padman

skc said:


> TAH paid a 30c special dividend (Ex-div 5 March) so the "raw" share price fell accordingly, but Comsec chart uses "adjusted" prices to reflect these kind of one-off changes. In IB you might be able to change the setting whether you wish to show "adjusted" price.
> 
> As to which one you should use if you are trading from a chart... I'd stick to "adjusted" (i.e. Comsec version).




Thanks skc. Can't find the right setting at the moment, but will have a fiddle around to get it correct.


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## bonkerrs

Been following this thread, trying to keep up with it all.


peter2 said:


> iSL = 0.38



What is "iSL"?


peter2 said:


> T2 sell order in market.



What is "T2"?

edit: Sell stops raised: EWC (0.415, 0.460). What do the prices 0.415 & 0.460 represent?


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## peter2

I do use a few acronyms as it saves typing. 

*BO* is break-out
*BO-NH* is break-out to a new high
*BO-HR* is break-out of horizontal resistance

*iSL* is the initial stop loss and there is always one when I start a trade. 
*TS* is the trailing sell exit trigger. This is used to reduce the trade risk initially, then when it's above break-even (*BE*) it protects some profit.
*PT* is a profit target and is usually an old high. When there isn't an old high to reference then the targets are based on multiples of the starting risk. *T1* is the price level of the +1R result, *T2* is the price level of the +2R result, *T3* = +3R  etc. . . 

*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. This 1% gets bigger as we bank profits.

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

*EWC*: This stock (I'm trying to be diplomatic) experiences many sharp price spikes, both up and down. I'm happy to go with it as it rises and I'm looking to sell as soon as it starts down. The first price is the TS exit which is now above our entry. The second price is a limit sell order to sell if it trades at 0.46 (which is the +2R price level). I note this price in the blog in case price does spike up, hits 0.465 and closes lower. I can then say that I've sold at 0.46 as I have placed the order in the market. I want to be as realistic as possible. You might be familiar with the term "bracket" orders and when one is executed the other is deleted. 

I hope you are enjoying the thread. I could modify the trade management to slow it down, but it might get a bit boring and I want to complete as many trades as possible before the EOFY.


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## peter2

EOD trading update:  Patience

*JHC*: Bought BO today after price traded above BO level yesterday.  Bid before open 2.73 (iSL 2.56).  

No other modifications. 

We have now hit our capital risk limit (6%) and have 8 open trades. It's tempting to reduce some risk by raising the sell stops, but at the moment they are safely away from current prices. It seems wise to give them some room while the market goes sideways.


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## ukulele

Hi Peter, great thread. I have been trying to follow your thought process; still wrapping my head around it. 

Wondering what you think of DTL? It is approaching 12month high and could be worth a trade if it goes above 90cents on volume. 

I bought some before the dividend, and recently sold for 86cents as I thought it had run out of puff. Made a little bit on the trade and some extra for the dividend as well.


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## peter2

Thanks for dropping in. I am doing so many things that I can get a little confused. Which thought process can I try to make clearer?  

*DTL*: I'd prefer to not comment on any specific chart because the market doesn't care what I think and neither should you. I can comment on a chart if we discuss something that helps you understand what I'm doing in this thread. 

I love charts near yearly highs. However I need a low risk setup for a buy signal. The setups we look for in this thread are small sideways consolidations after price moves up. The *DTL* chart has two nice ones, at 0.80, then again at 0.84. I would now wait to see what happens at the yearly high (0.90). If price forms a small rectangle (box) pattern, then that would provide a low size risk setup. ( Has this helped? )


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## Triathlete

peter2 said:


> Thanks for dropping in. I am doing so many things that I can get a little confused. Which thought process can I try to make clearer?
> 
> *DTL*: I'd prefer to not comment on any specific chart because the market doesn't care what I think and neither should you. I can comment on a chart if we discuss something that helps you understand what I'm doing in this thread.
> 
> I love charts near yearly highs. However I need a low risk setup for a buy signal. The setups we look for in this thread are small sideways consolidations after price moves up. The *DTL* chart has two nice ones, at 0.80, then again at 0.84. I would now wait to see what happens at the yearly high (0.90). If price forms a small rectangle (box) pattern, then that would provide a low size risk setup. ( Has this helped? )
> 
> View attachment 62414




Hi Peter2,
               I have been enjoying your work on this thread...I just have a question regarding your thought process in regards to your trades.

I see that you are taking trades on the break out after the continuation pattern.

What I would like to know is that when you take these trades have you worked out a price target as to where you believe the price should go to prior to taking the trades?

In other words is there 5%,10% or greater price movement required to take the trade?


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## peter2

No, but I look for any prior highs that might provide some resistance (supply). There must be at least +1.5R possible or I will not take the trade. The spreadsheet calculates the +1R and +2R price levels after the entry is known and I'll wait and see what we can get from the market at that time. I've been grabbing a few +2R wins as they appear because the market has been going sideways for quite a while. Once the market breaks out we'll get fully invested and let them go. 

I should mention that I am restricted by the conditions of this thread. I have modified my normal management style, slightly, in order to complete a reasonable number of trades and ensure a reasonable overall profit in the 17 weeks I've allocated for this thread. 

Once this is over I could start another thread or blog and trade anything, anyway I like. Then you'll see me fly. That's unlikely to happen unless I see more passion/commitment from the contributors to this thread. There's only 8.5 weeks left.


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## Triathlete

peter2 said:


> No, but I look for any prior highs that might provide some resistance (supply). There must be at least +1.5R possible or I will not take the trade. The spreadsheet calculates the +1R and +2R price levels after the entry is known and I'll wait and see what we can get from the market at that time. I've been grabbing a few +2R wins as they appear because the market has been going sideways for quite a while. Once the market breaks out we'll get fully invested and let them go.
> 
> I should mention that I am restricted by the conditions of this thread. I have modified my normal management style, slightly, in order to complete a reasonable number of trades and ensure a reasonable overall profit in the 17 weeks I've allocated for this thread.
> 
> Once this is over I could start another thread or blog and trade anything, anyway I like. Then you'll see me fly. That's unlikely to happen unless I see more passion/commitment from the contributors to this thread. There's only 8.5 weeks left.




Thanks Peter2,
                     Thanks for your reply.

 I am sure that if you start your own thread with your own style and trading whatever you like there would be an interest also for that even if it is for a couple of months to show others how it is done.
Cheers.


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## ukulele

Thanks for the Reply Pete. I do have DTL on my watch list. You are quite clear in your reasoning, but I am still very much a trading noob. 

Another one that might be of interest to people is Sundance Energy. Broke out on Friday with nice volume and the past few days may be the rectangle box (or consolidation) pattern you were talking about. 

SEA is obviously in the oil game and in addition to SEA chart the West Texas Cash seems to also be in a consolidation phase after some moves up past some resistance. The Brent chart also seems to be exhibiting this behavior.


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## VSntchr

ukulele said:


> Another one that might be of interest to people is Sundance Energy. Broke out on Friday with nice volume and the past few days may be the rectangle box (or consolidation) pattern you were talking about.
> 
> SEA is obviously in the oil game and in addition to SEA chart the West Texas Cash seems to also be in a consolidation phase after some moves up past some resistance. The Brent chart also seems to be exhibiting this behavior.



Perhaps a buy stop at 68, with an iSL at 61.5c?
Gap to be filled at 80c could be the first logical target, which gives >1.5R.


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## peter2

EOD Trading update:  This portfolio held up better than my own portfolios which all lost 2% today. 

*CVO*: Price spiked down and touched our sell exit. So sad, sold. I hate those spikes.
*SAR*: TS raised to 0.42. 

No other mods. I hope our remaining sell exits are far enough away. 
If the XAO closes below 5800 tomorrow, I'll close the weakest of our trades to reduce risk and protect the profits that we've earned over the past eight weeks. This is a discretionary exit strategy based on a market filter. 

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

Thanks for your ideas. Even though I'm a chartist I do try to apply some commonsense. [Note: I don't know if this adds to my edge or not, but it makes me feel better). Commodities are getting cheaper and cheaper. This is making it very tough for producers (including miners, oilers). There will be occasional rallies in all commodities and I'll be happy to trade them from support but not break-outs. 

Yes I'll buy a BO in a commodity stock occasionally (we've traded LNG, IMD, SAR, EWC recently) but only when the market(XAO) is rallying. 

To VSntchr: That's exactly how I'd frame the SEA trade, but only if I'm bullish oil. 
Iran is about to add another 10% to the worlds daily output. (Oh no, is this a fundamental filter?)


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## VSntchr

peter2 said:


> EOD Trading update:
> 
> To VSntchr: That's exactly how I'd frame the SEA trade, but only if I'm bullish oil.
> Iran is about to add another 10% to the worlds daily output. (Oh no, is this a fundamental filter?)




I'm certainly happy to avoid it also, I am very conservative with my breakout trading (it's non-core for me and I am still learning the ropes). I tend to stick to the stocks which I have a fundamental understanding of so I can give it a double thumbs up, i.e. tech and fund align. Oil, or any commodity stock for that matter, is certainly not within my realm. On the other hand, the BO-NH for HFA a few weeks back was a good example of something that I was happy to take based on this double criteria. 

BTW, nice work on the trading. It's amazing to see how quickly this educational portfolio has taken shape. It's evident to me that there is a methodical process going on here involving an edge/expectancy rather than just a bunch of trades benefiting from a rising market. One thing that has stuck with me is something you said "we are in the business of collecting winning trades". This is key for me as it is a concept that is a bit different to a few other strategies I trade and helps to differentiate this strategy when managing the portfolio. 
I for one have benefited greatly from this thread and it has given me another tool to add to the belt, and like all my other tools - its a process of constant refinement.


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## peter2

I got the term, "collecting winning trades" from Nick Radge. The term described exactly what I was doing in my SF portfolio. I love the feeling of being fully invested and all trades are green. This portfolio isn't managed in quite the same way but it could be. 

btw: The ASX200 short idea we mentioned last week was restarted and although not managed in this thread is going along very nicely. It is offsetting some of the rapidly disappearing ASX stock profits. If the SPI doesn't turn up later tonight, then I might close a few open trades first thing tomorrow.


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## peter2

EOD trading update: Nothing to post, other than "phew". 

I thought this portfolio might get thumped today, but it was mainly the banks. 
Open trades: EWC EPW SAR ALU AGF QBE JHC   Portfolio Heat = 6.7%


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## peter2

EOW9 Portfolio update:  Pav's Portfolio  *+8.5%*  (113% invested in 7 trades)   XAO* -1.7%* (9 weeks)

Our portfolio held its value this week as the market (XAO) dropped 1.8%. Pleasing, but not significant in the longer term. It's been nine weeks now, half way through the term of my administration. 

The graph shows that we are beating the index comfortably, but looks can be deceptive. We must not become complacent and assume that it will continue as smoothly as it has. On paper we are +8.5% with total open risk of 6.9%, so actually one may say we are only +1.6% after these nine weeks. As Kenny Rogers sings," You never count your money, when you're sitting at the table. There'll be time enough for counting when the dealin's done."

This weeks sells:   CVO: Price touched our sell stop. 

This weeks buys: Break-outs in QBE, JHC

No mods to the exit stops. Yes, I could lower the open risk a little and save a few hundred, but with the volatility in the market I wish to avoid our exit stops being hit with another spike down (like CVO). If there is a significant reversal bar on a chart then we can exit at the next open. 

Well it's that time again to show you the money:  Cash $11,702.


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## peter2

EOD trading update:  No buying or selling for three days. I feel like a longer term investor. 

*EWC*: Modified higher sell order (price target) as price looks like going higher (0.415, 0.475)
*ALU*: Raised sell exit to 4.80. 

The only reason for doing this is to reduce risk to be able to start another trade if we see a great setup. 
Currently 6/7 open trades are in profit. That's what I like to see.


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## VSntchr

peter2 said:


> *ALU*: Raised sell exit to 4.80.



Would this level be chosen based on a 1.5ATR level from the bottom of the 5.00 consolidation level?


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## peter2

VSntchr: You think there might be some real science going on backstage? 




I moved the stop up because it felt right for this trade and I wanted to reduce the cap risk enough to be able to start another trade.


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## Nortorious

A couple of prospects for consideration, AHD hitting all time highs and had some volume come in today (albeit mild) to push it above its trading range. 

SEN, I thought this was still live on this thread but must have been exited whilst I've been away. Hit 0.12 today and had some decent volume on the breakout as well. Good for another 58% me thinks...


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## Nortorious

peter2 said:


> Trading update:  Up one day, down the next.
> 
> EXITS triggered in *SEN, CAJ*.
> 
> *TNE*: TS raised to BE (4.05)
> 
> Comment: SEN, our momentum trade is over, but I like the orderly 3-wave (abc) retracement seen on this chart following the impulsive move to the last high. Fib ambush traders take note.




I found the sell post on SEN. I have been holding in my actual portfolio and averaged up today when I saw the early move this morning.

Re-entry opportunity for this portfolio however risk may be too high now?


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## bonkerrs

Hello Peter. Thanks for your posts. I enjoy reading your updates and thoughts whenever you post.

I'm sure it was mentioned earlier in this thread but can you please remind us again.... What are your entry rules and how do you go about stock selection? Has it changed from way back when Pav started this thread?

Is the trailing stop a parameter you enter into a charting software and it automatically follows a chart?

What does "1.5ATR level..." mean?

Cheers for the postings!


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## peter2

Pav started this thread posting charts with small consolidation patterns in daily UP trends. I've continued doing that. 
These two posts explain the setup (#170, #250) and show examples. (I'm not adept at linking and it seems the browser isn't either)

ATR(period) is an indicator that measured the average true range over the "period". When used on daily charts it shows the average daily range. It's best to keep the sell exits outside the daily range, so people use a multiple of ATR like 1.5. 

I've used 3 x ATR(21day) in the chart to keep VS amused. Yes, the charting software plots this automatically.


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## peter2

Trading update: Another large down day and the portfolio loses some open profit. It happens. Often.

*EWC*: Sold as it hit our exit. The opening gap down didn't help us. 

The market (XAO) closed below my 5700 "line in the sand" and indicates that the daily trend is now down. As we are trading short term price movements (long only) in this thread then it's time for another chat. In my experience it's easier and more profitable to trade with the trend of the market and as we are only going long this means trading when the daily trend is up. 

Now that the trend is down there will be fewer setups available and we'll be looking to trade perfect setups only. The other important aspect to consider is the amount of open risk (portfolio heat) that the portfolio is exposed to. How much are we willing to risk now that the market condition is unsuitable for our trading plan? It's another individual decision. 

This portfolio is +8% with total open risk of 6%. If the market goes down further and it can. We may end up +2% quite quickly. I trade for profit so I will review all our open trades with the intent to reduce the open risk. To be clear, it's the change in the market trend that has prompted the review and indicated that it's time to reduce the portfolio risk. This is clearly stated in my trade plans.

Trades in stocks that are weaker or as weak as the market will have been closed as they hit their exit triggers. You may notice that all our open trades are acting stronger than the market. That's the benefit of trading break-outs. Think about that. 

We are active traders. This means that we sell quickly to save our capital and re-buy just as quickly if the market goes up. Some of these decisions will work out well and some may not. That's trading. My aim here is to reduce portfolio heat as the market looks like going down. 

*EPW*: Sell next open (limit 2.50 = BE). Re-buy 2.60.  
*SAR*: Acting stronger than index, raise TS to 0.45. 
*QBE*: Acting stronger atm, but will fall with market. I'm unsure as price is between entry and iSL but must make decision. 
Sell next open (limit 13.70)  we can re-buy on a close >14.00.
*ALU*: Acting stronger. Willing to wait until I see a down day. Leave TS at 4.80. 
*AGF*: Gap down but closed off low on large volume. Raise TS cautiously to 1.44.
*JHC*: Recent BO being tested. Thin market depth, so I have to be cautious. raise TS to 2.60

These modifications reduce the portfolio heat to 4%, risking half the profits earned so far. 



------------------------------------
ps: Additional disclosure: I'm trading a few of these in a medium term portfolio. As the weekly trend remains UP I don't have to review them and can leave the sell exits where they are, which are mostly below last HLs. 

If you are trading some of these (don't tell me) follow your own trade management guidelines.


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## peter2

My reply to a PM asking about starting short term trades now that the market is down. 

There will always be a few stocks going up based on company specific fundamentals/sentiment. Trade them, but make sure the setups are perfect and the risk/reward is comfortable. Business as usual but I'll reduce the portfolio heat. Over trading in adverse market conditions will erode your capital very quickly and make it hard to get back in profit when the good times return. 

Reducing total risk is a survival technique to ensure I'm still trading when the market rallies. 

It's worth mentioning again about the benefits of using multiple trading systems or strategies. There will fewer break-out opportunities now that the market is going down. On the other hand there will be more opportunities to buy pull-backs in weekly up trends. Prices may find support at prior highs or prior break-out levels. Pullbacks are great trading opportunities if you are ready for them (have a plan). 

I've mentioned the benefits of shorting the index. At times like these there are plenty of other markets to trade if shorting isn't your thing. 

In this thread we'll stick to trend continuation setups, but personally I love buying pull-backs in weekly up trends. 

ps: Love the passion that notting showed in the CBA thread.


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## peter2

Trading update: Portfolio heat (total open risk) reduced as XAO closes below 5700 (yesterday).

*EPW*: Sold open.
*QBE*: Sold at limit price
*AGF*: Sold at our exit price (near open).

I'll post a list of the re-buys and other charts I'm looking at later on. 

Shooting the breeze: There are times when we are in sync with the market and then there are times when we aren't. Two of my portfolios have lost value due to the selloff in the banks. I hate seeing hard earned profits disappear. This has put me off balance and its effecting my overall focus. It's tempting to jump in and re-buy stocks you've just sold telling yourself they've hit support levels and will go up (wrong).

We all feel this way at some time. Right now that's me. I'm itching to buy something but I know I'm reacting to the 4% falls in my portfolios. Trading with this mindset would see me acting like a losing trader. Buying high, selling low, buying low, selling lower. I don't know why the banks have sold off as much as they have. It doesn't matter. The fact is they did. 

I go back to basics. I review my tradings plans and remind myself of the importance of waiting for my best buy signals (break-outs and 1st HLs off support).


----------



## peter2

These are the codes of the charts where I've framed a setup for this thread. They are all BO-NH as we want to buy stocks in demand. 

EPW HFA QBE SIQ TFC WBA LOV SEA IFM  

I'll take the next two or three that trigger then review the market at that time.


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## VSntchr

peter2 said:


> These are the codes of the charts where I've framed a setup for this thread. They are all BO-NH as we want to buy stocks in demand.
> 
> EPW HFA QBE SIQ TFC WBA LOV SEA IFM
> 
> I'll take the next two or three that trigger then review the market at that time.




Nice list Peter, I have been watching LOV for a little while from a fundamental interest. It's pretty thin to trade but chart looks nice. Another similar chart is UBN, also illiquid. High at 1.33 with a tight consolidation while the market has capitulated.


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## VSntchr

VSntchr said:


> Another similar chart is UBN.




Perhaps the above post can lend me some credibility to avoid the hindsight predictions....but here is my play on this one as marked out from last night.
Position size small given the liquidity.


----------



## peter2

EOW10 Trading update:   Pav Portfolio *+7.0%*  ( 60% invested in 4 trades )  XAO *-4.5%* (since start)

Another down week for the market as the XAO ended -2.8%. The portfolio lost 1.5% this week including a 3% drop from its intra-week daily high. 

This weeks sells: EWC EPW AGF QBE

This weeks buys: SIQ as it traded >1.94(5) today.

The portfolio has plenty of cash available for the listed setups. ($29,389)

In the graph, the gap between the blue and red lines is the amount of portfolio heat. You can notice the effect of reducing the portfolio heat in the graph as the red line turns up narrowing the distance to the blue line.


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## grah33

peter2 said:


> EOW10 Trading update:   Pav Portfolio *+7.0%*  ( 60% invested in 4 trades )  XAO *-4.5%* (since start)




after 10 weeks +7 % return (after a year about 5 times that! ). that's fantastic.  then it really is possible, for someone who knows how to do it.  all the hard work in learning it is paying off (literally)


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## Wysiwyg

Up trending stocks spend variable time in a sideways trend. To avoid having capital at risk in the market and going nowhere for an unknown period, this strategy works well.


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## peter2

grah33: Thanks for that post.

*NO*, you can't and shouldn't infer future performance using past results especially results from a discretionary approach. This is an important point. We don't know what is going to happen in the future. It's possible that the market goes down for another 8 weeks. The portfolio is unlikely to earn more profit if this happens. 

Never infer future performance of a trading system using past performance. This applies to all (>95%) the back testers out there as well. You (the >95% of back testers) are kidding yourselves about your future performance. 

Once we create expectations about potential performance then we are most likely to be disappointed. Disappointment leads to poor discipline, poor discipline to poor results, poor results increases stress, etc. There is a classic example of this in this forum and is found in the most popular derivatives thread. 

Re: Comment that this strategy works well in a sideways market. 

This type of trading is exacting work. In a sideways market there is more work as the exits occur more frequently. In a volatile market you have to be watching the buy and sell stops closely to minimise the slippage. I would describe the market conditions over the past 10 weeks as both sideways and volatile. 

I posted this earlier (#111)

*Beginning traders should probably not try this style* as it requires almost perfect discipline (>95%). Traders must keep their losses small and there will be a lot of them when the market turns on your open portfolio. Letting a loss get bigger than it should will ruin your results very quickly. If you can't sell exactly when you should every time, don't trade this style. You'll probably also find that we sell too soon too often. If you worry about the profits that got away, then you're not focusing on the next opportunity. 

I'm pleased to be showing a profit, satisfied with the fund manager's performance and hope the market rallies soon.


----------



## bonkerrs

peter2 said:


> It's worth mentioning again about the benefits of using multiple trading systems or strategies. There will fewer break-out opportunities now that the market is going down. On the other hand there will be more opportunities to buy pull-backs in weekly up trends. Prices may find support at prior highs or prior break-out levels. Pullbacks are great trading opportunities if you are ready for them (have a plan).



Thanks for your regular contribution to this thread. I don't "actual" trade them, however I enjoy the learning process from following it... well appreciated. And great results!



peter2 said:


> In this thread we'll stick to trend continuation setups, but personally I love buying pull-backs in weekly up trends.



If you don't mind me asking, I guess you simply won't answer if you do :
How are your results with buying pull backs? Thinking about starting another thread with trade setups?


----------



## peter2

Thanks Bonkerrs. I don't want people to trade them. The value is purely educational and I hope a few people are evaluating the ideas that pop up in this thread for use in their own trading plans. 

The two strategies (break-outs and pull-backs) complement each other as the market rallies and then pulls back before rallying again. My results buying pull-backs in up trends are profitable.   Let's leave it at that. 

I'm thinking about doing something extra, but I need the right reasons and the right format for it. It might be a "look over my shoulder" blog. I don't know yet.


----------



## VSntchr

peter2 said:


> I'm thinking about doing something extra, but I need the right reasons and the right format for it. It might be a "look over my shoulder" blog. I don't know yet.




Having learnt plenty from this thread, I give my support to this idea. Happy to help/contribute in any way I can


----------



## PeterJ

VSntchr said:


> Having learnt plenty from this thread, I give my support to this idea. Happy to help/contribute in any way I can





Peter,

ditto
i am also very happy to contribute in any way
this is a great learning tool

regards
Peter


----------



## peter2

Thanks for the support guys, it's always appreciated. 

EOD Trading update:

*ALU*: Sold on the open after huge down day yesterday. A large down bar is definitely an upward momentum killer. Realised small loss (-0.3R).  Today's dragonfly doji could be considered a buy signal, but not in this thread.

*QBE*: Bought limit 14.05 and got lucky as price traded down to our order. (iSL 13.40)  Used max 20% for this position. 

I'm comfortable with our four open trades in this market. If the market has found support then it should go up from here and trigger a few more of our setups. I'll believe it when I see it.


----------



## VSntchr

peter2 said:


> *ALU*: Sold on the open after huge down day yesterday. A large down bar is definitely an upward momentum killer. Realised small loss (-0.3R).  Today's dragonfly doji could be considered a buy signal, but not in this thread.



Yesterday Bell Potter downgraded to hold with a $5.50 target, looks like their troops left and triggered alot of the stricter momentum traders stops...certainly had a large two-day impact.


----------



## skyQuake

VSntchr said:


> Yesterday Bell Potter downgraded to hold with a $5.50 target, looks like their troops left and triggered alot of the stricter momentum traders stops...certainly had a large two-day impact.




Bought some today, expecting a decent rally tomorrow on potential index related flows


----------



## peter2

re: ALU: 

Short term momentum trader = yikes
Medium term trader = no worries
Longer term trader = yawn


----------



## peter2

EOD trading update:  Open trades: SAR JHC SIQ QBE SEA

*SEA*: Bought as price triggered the buy stop (0.685 - 0.69)  iSL is 0.59. 
This trade will need the price of oil to keeping going higher.

Comment: Large price spikes like that in ALU (and AGF BAL CVO HSN) are the bane of traders that use tight stops and short term momentum traders. They will continue to happen so traders will need to adapt their trade management rules to cope. It's no use grumbling or whinging. Trades in this thread have been and will be hit by a spike and closed, only to see price bounce back immediately. 

The day we don't sell after a large down day, there will be a second large down day. Ouch. 

I've already mentioned that I love my re-entry rules. I don't use them as much as I should and it's one thing I must improve. 

If you don't like getting kicked out of your trades by a large down bar and you don't want to be as active as these exits are making you then you must allow more room for price to move against you. You may be a much better medium term trader than a short term one. Adapt your trading style to suit yourself and your lifestyle. It's easy.


----------



## peter2

EOD trading update: 

*TFC*: Price traded at my 1.85 trigger, but I have not started the trade (in case you noticed). 

The current capital risk is 3.9% and the bear market limit is 4% (bull market limit is 6%). These guidelines prevent me starting too many trades when overall market conditions are unsuitable for the strategy. 

In order to start another trade I must wait for the market to return to a bullish state, or wait for a 1% reduction in the capital risk. Capital risk can be reduced by raising the existing sell stops or by closing a trade at it's iSL (-1%).


----------



## myrtie100

Peter, what do you use to measure whether the market is Bullish or Bearish for this strategy?


----------



## fiftyeight

Great thread Pete.

The additional comments on why you are making certain decisions has been very insightful


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## peter2

fiftyeight: Thanks for the compliment. I like to think that I have a rule or guideline for every trading decision so I'm happy to explain each decision. I'll describe my occupation as a rules based discretionary trader. My explanations can seem repetitious at times, but repeating the rules (and reading my plans regularly) gets them into my subconscious. 

Hello Mytrie100: I mentioned earlier (post#83) that I place lines on my XAO chart to use as indicators. My current XAO chart looks like this.


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## myrtie100

Thanks Peter..It's showing lower lows = bearish.


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## 5oclock

PETER you have put a lot of time and effort into a REALLY good thread, well done and thank you. This is a stand out thread on a great forum !! I know i have not contributed , but have read every post and got a lot out of it--and will keep reading -- appreciate all your work.


----------



## Newt

People can and should get even more value from Peter's posts in the current sideways/down market conditions.  That's where sticking to good trading rules and maintaining a calm approach can really protect valuable capital.


----------



## Gordon7

Offering a consideration here if I may. 

I like to go beyond the major market index (XAO/XJO) and look at our other major indicies. 

From time to time different market groups will have their own sell offs or rallies in excess of the movement in the broad market. In the past month we have had the banks sell off hard and because they constitute a large component of the XAO or XJO, _on the face of it_ it seems as if we should be concerned about the market as a whole. This is clearly indicated in Peter's chart of the XAO.  

However, when we look at the chart of the XNJ - the 200 major industrial companies ie. excluding the financial and material stocks, we can see a different picture. Really, just a consolidation correcting an overbought condition. 




Let's also take a look at the XSO - smaller companies outside the top 100.




The above charts alone tell me that there are still major pockets in the market which have been holding up quite well during what we are given to believe has been a tumultuous time in the market.


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## tech/a

Gordon 
I agree.


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## VSntchr

peter2 said:


> These are the codes of the charts where I've framed a setup for this thread. They are all BO-NH as we want to buy stocks in demand.
> 
> EPW HFA QBE SIQ TFC WBA *LOV* SEA IFM
> 
> I'll take the next two or three that trigger then review the market at that time.






VSntchr said:


> I have been watching LOV for a little while from a fundamental interest. It's pretty thin to trade but chart looks nice.



LOV breaking out today, as mentioned liquidity makes it tricky.


----------



## peter2

EOW11 Trading update:   Pav Portfolio *+7.0%*  ( 70% invested in 5 trades )   XAO *-2.8%* (11 weeks)

This weeks sells: ALU
This weeks buys: QBE, SEA

The portfolio held its value this week as the index improved a little. Trailing stops on QBE and JHC were raised and this reduces the capital risk to 3.1%. Raising these TSs allows us to start another trade and respect our bearish market limit (<4%). 

Gordon7 makes a valid point that the drop in the index is primarily due to the financial sector and other sectors are still tracking sideways (XSO slightly up). Therefore describing the market as bearish based on just the XAO can be misleading. You'll notice that I haven't "shut up shop" due to the change in the XAO daily trend. All I did was reduce the open risk a little and didn't start new trades this week. 

Knowing that the open risk is within comfortable levels we can review the market over the week-end and be better informed about the hot/cold sectors. 

The great advantage that discretionary traders have is that they can apply some commonsense in every situation. The portfolio can start another trade so it would be logical to find setups in the stronger sectors of the market and be prepared to act on them.

#VSntchr LOV it


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## peter2

EOD trading update:  Spent time on the weekend looking at the sectors and the charts. It's always time well spent. 

*SAR*: Sold open after Fridays large down bar (momentum killer). 
*SEA*: Sold open after two down bars. 

Note: These exits are for the purposes of this thread. For a gold stock SAR hasn't really responded to the price rise in gold (like SBM). It's been slow and steady and is not turning out to be an ideal trade for a momentum trade book. I'm not happy with the TS at 0.45 which is near the mid point of the recent swing. This is NOT a good place for a TS. Whenever I become confused about how to manage a trade I've found it best to exit. This cleans the slate and I can reassess.

SEA: is responding to the price of oil which has been quite volatile. I don't have a problem with that but this thread bought the BO anticipating a fast move up. It hasn't happened. It was sold after two down days. There is no point holding the trade hoping for a turnaround.

Personally I've not closed my trades in these stocks (SEA, SAR) as they are managed differently and their exit stops are lower. I can cope with the oil and gold price volatility by trading these markets intraday and overnight. 

New trade:  *VTG*: Bought the BO-HR (1.80) iSL = 1.60 

Note: My personal iSL is 1.50 as I'm managing this trade with a medium term outlook. 

Outlook: Not a good day for the XAO (-70pt, -1.2%) considering the SP500 nears it's all time high. Caution is warranted.


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## tech/a

Momentum hard to find anywhere.
You've done well Peter to maintain the portfolio.


----------



## Nortorious

EGH a contender for this thread?


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## peter2

EGH: The trend is clear and strong, but I'm concerned by the number of low volume days. When I notice the zero volume days (trading halt), I must look at the company announcements. I read that there is a current SPP (at 0.45) to raise capital. 

Corporate undertakings like this SPP and other actions like mergers and takeovers move the share price based on fundamental information or buyers/sellers perception of those fundamentals. I prefer to trade in markets without this interference. Others in this forum love these opportunities. I'll leave it for them and I'll look for their spoor later on. 

I avoid markets with known corporate activity. Take S32 for example I won't be able to trade this for weeks as there is not enough price data available. The demerger of S32 from BHP will ruin the price patterns in the BHP chart (unless the data is adjusted).


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## debtfree

*Peter:* Good decisions on SAR & SEA, also helps skew the AL towards your projected figure of (0.7R) stated in your 3rd post after taking over. I also remember you saying then "If a breakout trade doesn't go up immediately then I know it's in trouble and I'll take an earlier (smaller) loss than the initial risk (1R)" You followed these words exactly, very good.

Just catching up with everything and since it's a little quite, did we end up with a scanning process to find these potential trades Peter?

Impossible to look at every chart each day and I understand the scanning process is set up in a way to eliminate all the crappy stocks that would have no interest for us. I also guess that it wouldn't matter how we set this up it still would filter out some good setups but overall it would get us quite a few potential trades. I remember at times people would suggest a stock to Pav & Tech/a which they had missed so I thought then, it must not matter which way you set up a scan, sometimes you will miss some and not get every good setup/trade in your scan. Is this true or is it sloppy scanning process?

At the moment I'm only using Incredible Charts scanner and it does a fairly good job overall.

Cheers .... Debtfree


----------



## peter2

Trading update:  Patience. Nothing to do with our open trades in JHC, QBE, SIQ, VTG.

I could point out that there is no upward momentum in these trades (except JHC) and we should close them to reduce risk. That would effectively take us out of the market and I'd have nothing to post about eek. We have to be in the market to earn further profits. I'm comfortable with the amount of our open risk in these trades (3.3%) and they seem to be holding up better than the index. There is no point raising their TSs as that would most likely see them closed. Let's keep them going on the understanding that they are being managed as a trend trade rather than a momentum trade until the market rallies once again. 

Temptations are everywhere. The banks are much cheaper. Do we buy some? Several BO's that we elected to pass on are now back at their BO level. Do we buy them here? There are nice setups in 8IH BKW EHE SIV SUL. Do we place orders?

I don't know about you but I find it hard to sit on my hands and not buy something that is much cheaper now than a month ago. The thing that stops me is the problem of placing the iSL. Where to put it when the price is going down? I prefer to place them under a HL. I have to remind myself that I'm not a value investor and I wouldn't recognise value even if it slapped me. I must wait for BOs and HLs. 

Debtfree:  Unfortunately there is no easy scan to find them all. I use two scans. 
A Darvas box scan (10d, 15% max size, +50% volume increase)
General scan for up trends (Close > 20ema, 10ema > 20ema >50ema, Value traded >120K/day)

These scans show me about 180 charts and I skip thorough them quickly. Occasionally I find a chart that I want to keep for my own trading so the time spent is not wasted. 

Setups for this thread are selected subjectively so we will always miss some. Of course we'll remember those that work out well while conveniently ignoring those that failed. We just need enough to put the odds in our favour. 

Important point: Debtfree was able to review and evaluate my trading decisions because there was a written record. How valuable is that? Would your trading decisions be better and more consistent if you had written guidelines to follow that covered every situation?


----------



## bonkerrs

peter2 said:


> Trading update:  Important point: Debtfree was able to review and evaluate my trading decisions because there was a written record. How valuable is that? Would your trading decisions be better and more consistent if you had written guidelines to follow that covered every situation?




Excellent idea. One I have been meaning to do but unfortunately a busy life keeps getting in the way. I guess that is why I'm reading this with such interest... building my momentum (pun intended) :


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## VSntchr

CMP. The close at 25.5 looks like a BO-NH. Risk is a bit wide with a stop at 20c.

Interesting one that would almost be better in tech/'s micro thread given it's size.
Liquidity is poor but has improved somewhat with the recent run up. 

Disclosure: my tip in the COMP


----------



## peter2

EOD trading update:    *API*: Bought on the close (story below).

*CMP*: Hmm, yes I like it. Maybe a buy next time it trades at 0.25.


Once upon a time *API* was in a strong up trend and everyone wanted a piece of the action. A country squire from Adelaide, named Prince Pav identified the 1st consolidation after the big break-out and decided to buy it for his momentum thread. History records the event as a great success and the people rejoiced. 

A month or two has passed and in a weak marketplace the price of *API* has traveled sideways indicating some underlying demand, possibly accumulation. Price has since popped up and filled the gap left in April. Seeing that the price has not dropped after the gap fill, the ruling Baron has bought on today's market close.


----------



## get better

peter2 said:


> Important point: Debtfree was able to review and evaluate my trading decisions because there was a written record. How valuable is that? Would your trading decisions be better and more consistent if you had written guidelines to follow that covered every situation?




Funny that, I've been following this thread for a while with interest and was actually thinking exactly this the other day!

In fact, I was kind of hoping you'd release a book on all of this identifying examples etc - perhaps something like a trading handbook. I would buy it in an instant .

Keep up the good work though Pete, trying to absorb as much as I can from a distance.


----------



## peter2

I just wanted to note this pattern in this thread for future reference. I love these little ascending triangles.


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## peter2

Another good chart example to keep. Even bad things can happen to ascending triangle patterns. 

*IF*: The market closes below our iSL any day after buying.
*THEN*: Sell next open




Imagine if we had a trade management guideline (if.. then ...) statement for every situation the market can throw at us. 

I'll post a few examples in this thread so that if I happen to assemble a list of them, these examples will remind me.


----------



## VSntchr

peter2 said:


> EOD trading update:    *API*: Bought on the close (story below).
> View attachment 62661




They also got an upgrade from Bell Potter yesterday. 
I actually had it short in a pairs trade. But all signs pointed to close this one early...and now that our resident breakout trader has pinned it - I am glad I did 
API's sector peer does not have a chart that resembles the accumulation of API, which is surprising to me given they are probably very similarly affected by the recent budget.


----------



## tech/a

VSntchr said:


> They also got an upgrade from Bell Potter yesterday.
> I actually had it short in a pairs trade. But all signs pointed to close this one early...and now that our resident breakout trader has pinned it - I am glad I did
> API's sector peer does not have a chart that resembles the accumulation of API, which is surprising to me given they are probably very similarly affected by the recent budget.




This is a critical pattern.
Its at resistance and bunching up below it.
Volume is low which is a good sign.
The best result is volume punching through.


----------



## debtfree

Peter: Did you keep OZL on your watchlist?


----------



## peter2

tech/a: Your mention of the nearby resistance (API chart) is spot on. I didn't give it due consideration. I bought this for a medium term portfolio rather than a short term opportunity. A consequence of doing too many things sometimes. 

[It's also due to not having a checklist for the setups in this educational thread. Consistency is so important.]

It was a choice between this and SUL. SUL doesn't have the nearby resistance and is the better trading opportunity. 

In order to manage API in accordance with this thread I'll use a tight stop. Price either goes up or we're out at 1.70. We can always re-buy.

*OZL*: Yes, we bought this today at 4.88 (iSL 4.60). I really like the bear trap (fake-out) pattern that is in the OZL chart. This consolidation is the 1st since the BO > 4.20 and is a new yearly high. 

*CMP*: Bought on open (0.25 limit 0.255) after yesterday's BO close above 0.25 (iSL 0.215). 

I think we have maxed out our number of trades and we need some price movement.  I'll post all the details this evening after the close.


----------



## peter2

Ok I made a trading mistake. The API setup wasn't perfect. We should be trading only perfect setups. As this is an educational thread I have to do something to fix this source of inconsistency. 

I printed a small card with a checklist for the setups in Pav's Momentum thread. This is now on my desk and I'll have it when I go through the charts from the scans.




ps: If you think this is corny and it won't help. You're right it won't help you.


----------



## peter2

EOW12 Update:  Pav Portfolio *+6.9%* ( 94% invested in 7 trades )   XAO *-3.9%* (12wk)

This weeks sells:  SEA, SAR
This week buys:VTG, API, CPM, OZL

The portfolio held its value again this week as the index fell. We have started a few more trades to try and catch some price movement. I'm reluctant to be fully invested (max # of trades) when the index is down, but it seems the stocks we're in are holding up OK. If this changes (large down bar or two average down bars) then we'll exit them quickly and minimise the losses.


----------



## tech/a

A little API analysis.


----------



## debtfree

Thanks Tech, love your charts and analysis. A story in a chart of what is happening, very good and I'll be watching.

Cheers ... Debtfree


----------



## tech/a

*API*

*BOOM*

Testing latest high but doing it as expected.


----------



## peter2

Trading update:  

API: Nice to get the timing correct (buying before the BO).
CMP: Sell exit raised to 0.23. 

I won't be raising other TSs due to thin market depth in many of them and the current market volatility. We can always exit after a large down bar or two down days. Portfolio rising slowly with the index. Even though the XAO has closed >5750, I'm waiting for another day (and overnight US) before changing my daily XAO trend to up.


----------



## debtfree

Tech/a: Nice work and nice call.

Peter: Thanks for your updates and your explanation regarding the TSs. 

I seen the XAO took out the previous high (15th May) and thought yes it's back to Trend UP and also 6% Capital at Risk. I hope I have that right  and fair enough waiting another day to be sure. 

I remember the earlier comments regarding the use of GMMA's to help in identifying the Trend or a bullish situation, it might not have triggered a bullish move as of yet, is this right? (the crossing of fast MAs through or above the slow MAs). If this has not gone above or through yet, has this been another reason you are waiting for another day?

Cheers ... Debtfree


----------



## peter2

I'd like to see some bullish confirmation in the US markets after their Memorial Day holiday. The capital risk is currently 5% so even if we change to the bullish limit we can only start one more trade. We reduced risk when the daily trend changed to down, but quite correctly, it was pointed out that other sectors less influenced by the banks remained strong. With this understanding we started additional trades when prices broke-out rather than wait for the trend to change to up. We've had no reason to regret that decision and there has been no need to tighten those TSs. 

If all sectors were selling off like the banks, then I'd not hesitate to tighten every TS and reduce the open risk significantly. This might have closed every trade. We''ll never know.

I mentioned that leaving the TSs where they were (and letting the portfolio heat increase) is a trend trading management style not a momentum management style. We have this option as discretionary traders to modify our trade management style when the market conditions change. 

That freedom of expression is why I'll always be a rule based discretionary trader. Of course this can make things seem more complex, but not if the guidelines are written down and the main aim is to do what is best for the portfolio.


----------



## debtfree

Thanks for the detailed reply Peter. 

I've grabbed a couple of good points out of your comments to add to my notes/playbook so many thanks again, appreciate it.


----------



## peter2

One trade left and I see these two charts. Arrgh.


----------



## VSntchr

Another one for the mix 


I bought this under another portfolio prior to the break, but trading the break I would say buy limit at 414 with a stopt at 404. Tight stop and might be a bit aggressive - but given the trading update released today I think it's worth a shot.


----------



## peter2

Trading update: 

XAO closed below the May15th high negating any thoughts about changing the trend to up and we remain cautious. No new trades started even though there are many good setups. I'm respecting our market filter and we currently have enough at risk. If the XAO falls I'll start raising the sell exits to reduce risk and protect the portfolio value. 

OZL: Gold took a hit last night with the strengthening USD. If the XAUUSD closes <1190 tonight then I'm selling OZL on the next open. As I type this the price is 1190. 

QBE: Bracket sell orders OCO (13.70, 14.94). This is just in case QBE spikes up to that level. 

API: Will add to our position if it trades back at 1.88. The iSL for the combined position remains at 1.70.

In case you were wondering I prefer IT to shoes (HSN > RCG).


----------



## Woosha

peter2 said:


> Ok I made a trading mistake. The API setup wasn't perfect. We should be trading only perfect setups. As this is an educational thread I have to do something to fix this source of inconsistency.
> 
> I printed a small card with a checklist for the setups in Pav's Momentum thread. This is now on my desk and I'll have it when I go through the charts from the scans.
> 
> View attachment 62669
> 
> 
> ps: If you think this is corny and it won't help. You're right it won't help you.




newbie question - great thread.

On your scorecard post:

What is AT scan?
You look for stocks trading $120K/day - is this just on the day prior to buy day or over a period of time (week, month, 3 months)?


----------



## peter2

Woosha: Thanks for the compliment. 

AT = Ascending triangle ( I love these. )  Check out: AHG CAJ and the micro ATs in CNU JBH JHC

I use a 15 day exponential moving average of value > 120K. 
This doesn't get some small cap stocks that have just started to move on increased volume after long basing periods, but I don't want them personally.


----------



## peter2

Trading update:  

OZL: Gold drifted lower last night but ended back near where it started. However it did close <1190 and we sold  on the open as instructed. This discretionary exit was due to the failed BO (3 days ago) and loss of upward momentum. It would have been on plan to treat this as another trend trade and either leave the iSL or raise it a little (2.70) to reduce risk. 

Do we really need another trend trade? Collecting trend trades inflates the portfolio risk. This is not the best time to be increasing the portfolio risk. 

QBE: Bracket sell orders OCO. TS raised to 14.10. This removes the cap risk (now at BE). Limit sell raised to the old gap fill 15.44) 

CMP, SIQ, VTG, API: All low volume pullbacks to test the last BO level. We must allow these tests as price didn't charge higher immediately. 

We can start one or two trades if they are perfect setups. I considered the recent BOs in AMA and CAJ but stuck them in my own portfolio. :

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

Time for another chat:  Lately the results have been mixed and our portfolio has been stuck in a rut. Over the last 11 trades we have realised losses totaling $1650 (3%). Small losses are great, but too many small losses add up.




IMO a discretionary trader should be quick to review their performance when results aren't as expected. I know most of you will say the market conditions have been crap. Yes maybe, but don't be too quick to blame the market. Review your own performance first. Have you been overtrading? Have you been taking less than perfect setups? Have you made a few too many mistakes?

Reviewing our portfolio manager's (PM) performance. Overtrading is not an issue and there have been only a few mistakes. None of the mistakes have caused a loss larger than planned. The ave loss over those last 11 trades is only $150 (-0.33R). I would have to give the PM a pass mark (Don't take that sentence out of context please). 

Now, I think we are justified in saying that our trading plan is not suited to the current market conditions. We have to remain patient and maintain our open risk within a limit that is appropriate for the current conditions. We've got a few open trades that have started well. Things will get better, but I don't know when. 

Important point: Don't be too quick to blame the market conditions. Review your performance first.


----------



## Woosha

peter2 said:


> Woosha: Thanks for the compliment.
> 
> AT = Ascending triangle ( I love these. )  Check out: AHG CAJ and the micro ATs in CNU JBH JHC
> 
> I use a 15 day exponential moving average of value > 120K.
> This doesn't get some small cap stocks that have just started to move on increased volume after long basing periods, but I don't want them personally.




It is really is a fantastic thread - fantastic learning and would love more of these perhaps with non discretionary set up like tech trader from past.

Checking charts


----------



## sinner

peter2 said:


> Trading update:
> 
> OZL: Gold drifted lower last night but ended back near where it started. However it did close <1190 and we sold  on the open as instructed.




Out of curiosity, how come you are watching Gold priced in USD rather than Gold and Copper priced in AUD?


----------



## tech/a

Pete
Just a few observations.

Good minimization of losses 
Your not getting any luck with trades continuing into profit.

While I understand your reason for minimizing exposure 
It is minimizing your opportunities.
Personally that's fine but sitting in trades doing bugger all like 
One of mine in the other thread----and some here---limit opportunities
In others like those you included in your personal portfolio.

You are certainly doing a great job making it clear that
Trade and portfolio management play a big part in discretionary
Trading


----------



## peter2

sinner: An astute observation and a thought provoking question for me. I keep on eye on a dozen futures contracts including GC, HG, CL and don't look at their prices in AUD. This is probably why I'm confused by some moves in gold stocks. Some go up and some go down on a day where the GC(USD) hasn't moved but the AUSUSD has. Obviously I don't trade gold stocks very often. If I did perhaps then I'd take the time to find out how each individual gold producer prices their mining costs and P&L. I'd then find out who is hedged, how much and at what price. I'm not interested in the corporate fundamentals. I concede that it should be an advantage using the correct currency based commodity market when trading commodity stocks. It's a good point and worthy of further discussion.

tech/a: Maximising opportunities is a delicate balancing act between too many and too few. While I'm trying to trade the optimum number of opportunites the market conditions are constantly changing. I prefer to start several trades and cull the losers before adding more. I've had sixteen short term trades open at once when the market sold down suddenly. It's not a nice feeling scrambling for the exits in ten trades as fast as you can. It's much easier collecting winning trades using a trend trading management style than a tight momentum mgt style. 

I could lower the average loss even more by exiting quicker and could start more trades but that would mean more work. During the day I'm looking for setups in other markets that might trigger in the UK and US sessions. I look at the ASX after 2.30pm or 3.30pm.


----------



## sinner

peter2 said:


> sinner: An astute observation and a thought provoking question for me. I keep on eye on a dozen futures contracts including GC, HG, CL and don't look at their prices in AUD. This is probably why I'm confused by some moves in gold stocks. Some go up and some go down on a day where the GC(USD) hasn't moved but the AUSUSD has. Obviously I don't trade gold stocks very often. If I did perhaps then I'd take the time to find out how each individual gold producer prices their mining costs and P&L. I'd then find out who is hedged, how much and at what price. I'm not interested in the corporate fundamentals. I concede that it should be an advantage using the correct currency based commodity market when trading commodity stocks. It's a good point and worthy of further discussion.




Worth keeping in mind that OZL isn't really a gold stock. But in general my guess is that the explanatory power (r^2) of cash or front month gold on individual gold miner returns would be relatively low, and the relationship is probably slightly more complicated than you might think (doubly, or triply so for nonproducers, hedged/unhedged, etc).

See for example

https://marketsci.wordpress.com/2008/12/29/trading-strategy-oil-stocks-vs-oil/

which outperforms the benchmark (XOI) by only being long XOI when the ratio between cash WTI and XOI is falling (i.e. betting on mean reversion in the ratio). Keep in mind that in this case XOI is priced in USD so no FX considerations needed to be taken into account. If you wanted to try this with Woodside, you might need to look at the Singapore Tapis price.


----------



## sinner

Although, admittedly, as it turns out, replicating that strategy using OZL and gold ratio does pretty good (all things considered):

Since 2003-03-27:

OZL


		Code:
	

Annualized Return                0.0178
Annualized Std Dev               0.4943
Annualized Sharpe (Rf=0%)        0.0361


Gold (using ASX GOLD ETF as proxy)


		Code:
	

Annualized Return                0.0828
Annualized Std Dev               0.3620
Annualized Sharpe (Rf=0%)        0.2288


Long OZL when RSI(9) of OZL/GOLD ratio < 50


		Code:
	

Annualized Return                0.1745
Annualized Std Dev               0.3523
Annualized Sharpe (Rf=0%)        0.4953


----------



## sinner

oops sorry, late night posting, the returns for above are actually for RSI(9) of the ratio *>* 50. ignore me!


----------



## peter2

Thanks. I've been thinking OZL was gold, but it's definitely copper. The OZL price rally from 4.00 to 4.80 coincides with the rally in copper. I've put a note on my chart. 

I'm reminded of a time long ago when starting out trading break-outs and my scans repeatedly brought up a stock with a name of a young girls fashion brand (PMM - Portman). I refused to buy the break-outs in a clothing company and a year later learned that it was a WA miner which was in much demand and eventually bought by the Chinese.


----------



## peter2

EOW13 Update:  Pav Portfolio *+7.6%* ( 77% invested in 6 trades )     XAO -*2.1%* (13wk)

This weeks sells: OZL
This weeks buys:  none

Our portfolio retains it value again this week as the index finds some support. The XAO has closed once again above the May 15th high, so we can change the daily trend to up. This means we can start a few more trades and try to earn some profit if the market rallies next week. If the market rallies, setups become plentiful and our trades start well we can replace our non moving trades. 

Our first task is to get into a few trades that might move immediately. I'll look for a few setups over the weekend and post them here before Monday. 

Obviously I'm cautiously bullish, but if the market falls next week, we'll protect the portfolio quickly. 

Only four more weeks for me and this thread. I'm considering another thread "Collecting Winning Trades" where I'll accumulate a portfolio of medium term trades based on chart patterns with the aim of thumping the index.


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## debtfree

Thanks for the updates Peter. 

I've got a couple of good scans going now and they seem to picking up quite a few of the potential candidates. I'm also picking up quite a few of Tech/a's selections as well, so it looks like I'm on the right track with them in regards to Momentum trades. 

I for one will be following your new thread "Collecting Winning Trades" and I know there would be plenty of others very interested as well. So I'm keeping my fingers crossed. You've given a lot over the last few months besides your time, tips, clues, advice and a bit of homework, all in a calm respectful manner at the same time, unbelievable. A lot of other people have chipped in as well with their valuable input and questions which has made it a great thread for anyone to look back on and study for a long time into the future. I can't see your new thread being any different. 

Cheers ... Debtfree


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## Porper

peter2 said:


> EOW13 Update:  Pav Portfolio *+7.6%* ( 77% invested in 6 trades )     XAO -*2.1%* (13wk)
> 
> This weeks sells: OZL
> This weeks buys:  none
> 
> Our portfolio retains it value again this week as the index finds some support. The XAO has closed once again above the May 15th high, so we can change the daily trend to up. This means we can start a few more trades and try to earn some profit if the market rallies next week. If the market rallies, setups become plentiful and our trades start well we can replace our non moving trades.
> 
> Our first task is to get into a few trades that might move immediately. I'll look for a few setups over the weekend and post them here before Monday.
> 
> Obviously I'm cautiously bullish, but if the market falls next week, we'll protect the portfolio quickly.
> 
> Only four more weeks for me and this thread. I'm considering another thread "Collecting Winning Trades" where I'll accumulate a portfolio of medium term trades based on chart patterns with the aim of thumping the index.
> 
> View attachment 62757




This is the best thread I have seen on here...full stop, and I have been on here for Donkey's years. All beginners...and for that matter unsuccessful traders (90%) should read all of the posts over and over. With the correct attitude you will be on your way to joining the 10%. Good stuff Peter and I hope all appreciate the time and knowledge you are giving for free.


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## PeterJ

peter2 said:


> Thanks. I've been thinking OZL was gold, but it's definitely copper. The OZL price rally from 4.00 to 4.80 coincides with the rally in copper. I've put a note on my chart.
> 
> I'm reminded of a time long ago when starting out trading break-outs and my scans repeatedly brought up a stock with a name of a young girls fashion brand (PMM - Portman). I refused to buy the break-outs in a clothing company and a year later learned that it was a WA miner which was in much demand and eventually bought by the Chinese.




Gold !
When i first put my toes into the waters of trading, there were so many breakouts i could not believe it:dance:
It was difficult to decide which stocks to buy.
I culled many by name , WORLEYPARSONS, i did not like that name,
however i was constantly reminded in many future scans of my stupidity.
I learnt pyramiding and re entry rules much later.
This stock peaked at just over $ 54 , within a four year period.
Peter you are not alone.


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## debtfree

*Peter2:*
Scanning, I'm just using Incredible Charts at the moment. A quick scan I set up to try to catch potential candidates.

Price: Percentage of Price Movement: 1 month (21 day) (min 15%)
Price: Closing price today is >= .03 dollars.
Value: Filter where 20 day moving average of value is not less than 200,000 dollars

Thoughts behind this scan:
The 15% movement is the minimum amount I want to prove there is momentum upwards in the last 21 days.
Closing price has to be 3 cents or over and I wanted it to be this low to have a chance of catching some of Tech/a's
shares to view as well.
I put in an average traded amount of $200K over 20 days as I didn't have much option to the selection area of 10 or 15 days so I thought the amount should see me ok to get in and out of a trade without too much slippage as I'm only trading small amounts.

This scan has brought up 58 candidates to view which is a big reduction from over 2,200 stocks without the added scan of mine.

Peter2: Post 325, you were talking about assembling a list of IF/THEN scenarios if you had time, have you any to throw in at this point. I have now pulled all the info out of this thread and compiled it into a word document and now doing a very shortened version (IF/THEN) to come up with my plan and to see if it suits me which I'm sure it will and this is why I asked about your IF/THEN scenarios.

Cheers ... Debtfree


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## peter2

Yes, I was thinking about posting a list, but wouldn't it be better if you created your own?  My role here is to suggest a course of action and a reason why it should be considered.

It's taken me years to assemble a list of trade management guidelines. Now I'm noticing that the list that I use to manage all my medium term trades is not exactly right. There are times when I'm confused and unsure what my correct course of action is. This could be due to a sudden change in market conditions, an increase in volatility, unclear guidelines, even a news announcement. 

hence . . .  IF I'm confused about what to do THEN sell and work it out later. 

I've found out that I need slightly different guidelines for each of my three basic entry strategies (BO, PB, Rev). For example buying a daily reversal setup in a weekly down trend is a low probability trade, but if I can hold on to the trade (with appropriate guidelines) until the weekly trend changes to up then the rewards are much bigger than my average. 

Obviously, the most important aspect of trade management is to create a profit over a number of trades. We are not going to earn this profit without applying our trading plans consistently. Our emotions influence our decisions and are the main reason for our lack of consistency. A written set of management guidelines should minimise this emotional interference. 

Can you imagine the emotional turmoil experienced by the SRX traders over the past three months? They've been tested.


----------



## debtfree

peter2 said:


> Yes, I was thinking about posting a list, but wouldn't it be better if you created your own?




Hell no Peter, I'm here to help you in your confusion and unsureness and this homework would be good for me, I mean you.  

Ohhhhh Ok then ...... I think your probably right and having to do a bit of work myself over the duration of this thread has been good for me and my understanding, so .... so be it. 

Thanks Peter


----------



## peter2

Trading update: Today was a strong selling day and the daily trend is definitely down. 

QBE JHC API are close to their exit stops. We can sell on the next open or hope for an overnight change in the bearish sentiment. I'd rather be proactive and save money (sell on the open) than rely on hope and if we're wrong take a slightly larger loss.

I used to think that I could watch the market and see what happens after the open. If prices go up, don't sell and if they go down sell. It didn't take long for my stats to show me that I was crap at doing that and it was better to sell on the open. If they have a huge up day, we can buy them the following day. 

Note: My personal exit stops on API and JHC are further away than this portfolio, so I won't be selling tomorrow. 

#debtfree: I'll admit that I don't have them written down for this thread and it would be better if I did. However as there are only four weeks left I think I'll manage OK without them. The falling market has stymied this thread and someone "put the mockers" on us with their extrapolation of our past results (see quote).



> NO, you can't and shouldn't infer future performance using past results especially results from a discretionary approach. This is an important point. We don't know what is going to happen in the future. *It's possible that the market goes down for another 8 weeks*. The portfolio is unlikely to earn more profit if this happens.




Arrgh, did I post that. There are plenty of trading opportunities out there but not for this thread's strategy of trading trend continuation break-outs in ASX equities.


----------



## peter2

Trading update:   Trades closed at open:  QBE, JHC, API 

Yes, API had a nice up day. This indication of demand means that API goes onto a watchlist for a BO >1.90. Along with a few others.

The portfolio has now closed 14 trades since our equity high. The current draw down is now $2051 (4%). This is an opportune time to show you another chart that I use to monitor my portfolios. 

The chart shows all the draw downs that the portfolio has experienced. I've shown the %DD as the balance compounds. My aim stated in one of my earlier posts is to try an avoid a 10% DD. 




Note: If the portfolio heat limit was higher eg. 15% then we would have been able to start more trades and run with more open risk. Don't assume then that the portfolio would be experiencing a bigger DD. Yes, its possible, but its also possible that by starting more trades we might have grabbed more profits and been in different trades. We would have had a different equity curve and DD profile. 

Important: Start with a risk profile that you are very comfortable with. Start low. You may decide to increase your risk limits as you gain experience (at least a year or two IMO). You need to experience both good and bad periods and watch the numbers (total open risk, draw down%) before you decide what are your limits. 

OK so we have a DD of 4%, that's comfortable, right? We expect to have these DDs all the time. Portfolios spend most of their time in a draw down. If the DD% is comfortable then you won't go chasing stupid trades (overtrade) or panic and decide to ignore perfect setups when you see them. Of course if you stop looking for them because of recent losses then you must acknowledge that you are emotionally compromised and your trading business is stuffed until you get over it.


----------



## tech/a

I'm confused
Why would portfolios spend most of their time 
In drawdown if they are profitable


----------



## debtfree

Hi Tech/a,

I think Peter is referring to a decline in account equity from peak to a trough. It spends most of the time away from the equity peaks even though the account equity is rising over time. Hope this makes sense and along the line of what Peter meant.

Cheers ... Debtfree


----------



## tech/a

debtfree said:


> Hi Tech/a,
> 
> I think Peter is referring to a decline in account equity from peak to a trough. It spends most of the time away from the equity peaks even though the account equity is rising over time. Hope this makes sense and along the line of what Peter meant.
> 
> Cheers ... Debtfree




Ok
My apologies


----------



## peter2

New Trade:  I know it's a bit cheeky in this market, but I like this chart.

FLN: Bought at AT resistance level (1.20, iSL 1.10)


----------



## peter2

EOW14 update:  Pav Momentum Portfolio *+4.7%* ( 43% invested in 4 trades )    XAO *-6.6%* (14wks)

What a week!  Five down days in a row. All my medium term ASX portfolios lost 3-5% this week. The Pav Portfolio also lost 3% as the selling flowed through the market.

This weeks sells: QBE  JHC  API
This weeks buys: FLN

Price did hit our exit triggers on CMP and SIQ during the day, but when I looked at them later in the day the prices were above the exit triggers so I'm holding on. Thin market depth makes it hard to exit at the prices we want. 

SIQ: Sell (limit 1.85) on next open (Tues) to close position. I still like this chart, but the market depth is getting very thin and exiting now might prevent some costly slippage if price goes lower. 

Comment: I've talked about handling the draw down last week and I'm informed that Brett Steenbarger has similar thoughts about draw downs on his blog. It's definitely worth a look and a bookmark.

I'm going to take time over the long weekend to review my performance and make any modifications to my trading plans if they are required. I think I suffered a few "rabbit in the spotlight" moments and it cost me.


----------



## tech/a

Peter

If a stops hit it should be exited.
That's what it's for. You place it in the market and if
It triggers then it's sold out at the price you can get.

If your going to have a stop where price needs to close
Below the level chosen then that should be a rule.

You've been rigid on rules yet on stops --- not?


----------



## peter2

Fair comment, tech/a.
I started this thread stating that when a price trades at our exit stop we would exit at the next open. This was an attempt to avoid price spikes we see when the market depth gets thin and there would be no disagreements on the exit price as the open is known.

I wasn't consistent with this and started selected exit stop levels at round numbers where there would be sufficient volume to exit during the day. A few trades were closed using this method as the daily volumes were sufficient. I wasn't happy with this either as these levels were being spiked through (closing higher) on the stocks with thin MD. Stocks with good depth one day showed thin depth the next. Arrgh. 

Currently, I am using the exit stop as a guideline and when I see a large down bar or two down bars or price trades at/near the exit trigger, I'll post an exit for the next open. This makes the exit price known in advance and avoids the spikes. This makes all the exits seem discretionary and some are, but most will be after price trades at the exit trigger. 

Yes I must be consistent and it's extremely important to be consistent. I'll continue using the third method of announcing the trade exit on the next open after I've seen price action that concerns me. Price may or may not trade at the exit. I also prefer to use an EOD exit trigger (sell next open) as most people reading this thread won't be able to look at the market during the day. It also avoids using contingent orders (which cost too much). My exits won't be the best, but they'll be known before the next day opens. 

It would be more educational if people use their own exit strategies if they are following the charts we trade. 

Thanks, tech/a for asking me to clarify this important aspect. 

*ps*: This is another example of how a respectful forum community can assist people to think about aspects of their trading. If tech/a hadn't asked the question, then he and many others would be wondering about my application of the exits. If sinner hadn't asked about OZL I would have continued to treat it as a gold stock (it's copper). craft had me thinking about my categorisation of risk. debtfree has been actively engaged and I hope his trading plans are becoming awesome.

Knowledgeable and experienced people like these can't help if you don't post.


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## debtfree

Peter: Just a very quick one, I noticed that AMA has been strong of late while the market has been bearish. I thought a breakout of the highs of the last few day of .595 cent would be ok for a .60 cent entry with a iSL at .56 cents would be an ideal trade. Just had a look and it hit .60 and is still there at the moment. 
I don't know if we have spare money there or not for a trade.
Catch up soon ...Debtfree


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## peter2

I agree with you that AMA has been stronger than the market for a while now. We can buy some at 0.60 and place our iSL at 0.55. We need to buy 10421 shares for our position. There is enough on offer for us. Thanks for the idea.


----------



## debtfree

Thanks Peter and I can see why you put the iSL at .55 so thanks for the Market Depth. 

Big volume today like a few months ago, would be interesting to see what Tech/a thinks about this large volume on the breakout.


----------



## peter2

The AMA chart shows the recent BO-HR (at 0.55), the trend is up and price has consolidated for a few days (TC pattern) just under 0.60. The price of AMA has been going up while the XAO has been falling. It's a perfect setup for our trading plan and that's why we bought. The iSL could have been closer (0.56,0.57) but I placed it under the large buy order in the MD. In the old days that order would probably stay there. These days it might be gone at any moment. Coincidentally the selected iSL matches the 3xATR(14) trailing stop on the chart.


----------



## debtfree

Thanks Peter, very good indeed and makes perfect sense.

VSntchr will be happy to see you still using that 3xATR(14)


----------



## VSntchr

debtfree said:


> Thanks Peter, very good indeed and makes perfect sense.
> 
> VSntchr will be happy to see you still using that 3xATR(14)




LOL! I don't actually use the ATR myself, but my previous questioning was moreso to figure out how it was implemented 

Friday's profit upgrade by BAL allowed it to break out, todays action confirmed it for me with the high being taken out. Personally, I'd say buy at $3.80 with a stop at $3.55 (used the 1 hour chart to find the most recent low after profit upgrade).
Chart shows some nice consolidation/churn since late April.


----------



## peter2

Tech/a: I thought your post was a beauty and worth reposting here. 



> My opinion is that all books and opinions are worth investigating.
> While I'm reading/watching or listening, I ask myself.
> 
> 
> (1) Is this for me?
> (Does this fit in with my personality/timeframe
> comprehension)
> 
> (2) What do I need to know?
> (What is the crux of that being presented)
> 
> (3) How do I apply it?
> (Everything appears to have merit in theory but can I apply it?)
> 
> (4) How do I evaluate?
> (How can I quantify the results--much presented just cant be
> coded and tested---)




People reading threads like this one and others like it should most definitely be asking these questions.


----------



## peter2

Trading update:  

We sold SIQ on Tuesday's open as posted. Prices in our four open trades are trying to be positive, but remain safely above our exit triggers. 

VLA is a chart worth using as an educational one to test your trade management guidelines. It's got gap opens and large bars going up and down. Your rules won't get the most out of every chart but they should ensure you earn a reasonable profit after many trades.


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## debtfree

VSntchr: BAL Nice choice mate.

Peter: VLA I remember a chart posted by Tech/a a few years ago which would help big time in this area. I thought it was a ripper bit of info and saved it only the other day, then what do you know, the question comes. I know you would have to be at the screen and ready to act. Anyway I'm sure Tech/a wouldn't mind me putting it back up for our viewing.


----------



## grah33

peter , debtfree: not sure if ama was a great pick (i went in too   ).  don't like the fact that there were a few little peak breakouts b4 this "new high" (aka breakout trade i think). may be a little overbought cause of that, would have been nicer if it was the first "new high" after the main peak b4 (16th march), as in bal.   but it did have extra volume on the trade day (9 june).  i take it you are trading even though market was trending down then. for long trades when is that advisable? i take it that the initial stop loss strategy is to go a little under the breakout trendline (about 7% all up)


value snatcher: wish i took that trade   just wondering, what is your exit strategy. it rose up really high quickly, and i'm thinking is it good for you to get out EOD (11 june ), since it may be overbought and may go back down alot (then to reenter soon enough). or is it better to stay in (let it run rather than take profit) in case it is going to keep going up aggressively? if i went in when you did, i may have taken profit since i think it will come down significantly (went up too fast).


----------



## peter2

grah33: It was a perfect pick for this thread. Just because price hasn't gone higher immediately after you/we bought it doesn't matter. Price is now testing the BO at 0.60. We must wait to see what happens next. I would only be concerned if price goes back below that little ledge (0.57). 

Yes I know the index is down, but we had some risk capital available and the AMA setup looked good. You may decide to avoid trading when the index is down. You would have noticed that there was no follow through in many of Daffy's trades.  In our case we reduced risk and kept the number of trades small while the index dropped. If the market rallies then we will trade more perfect setups.

The BO on BAL has gone straight up. We won't win them all. 

If I may make a suggestion, would you please try to ignore those thoughts that a price is "overbought". You mentioned this word twice. If you look at the chart of BAL you may notice that it was "overbought" for months on end when price went from 1.80 to 2.80.  Do you want to get three up days or 60 up days? The BAL price may pullback and test the BO level. I don't know. 

Don't worry about VSntchr's exit strategy. He's waiting for every Chinese baby to be fed Bellamy's and the stock price to hit $100. That doesn't help you. 

I can sense your confusion, we all feel it sometimes when things happen that surprise us. You should have created a set of trade management guidelines and these will tell you what to do in every situation. When you see price doing something unexpected learn from it and make a rule for the next time it happens.

Remind yourself why you started the trade. Was it to get a few % or to get more. If your target has been hit, then exit and look for the next opportunity.


----------



## debtfree

Yes as I see it, we are looking for that 1st consolidation after we have broken a resistance level. 
AMA as Peter said fitted that bill whereas BAL has just broken through the resistance level and now it's on my Watch list, waiting for that 1st consolidation above that level. Yep it was a great jump out of the gate if you were looking for just for a breakout trade.

I'm working overtime on writing my plans for the defence of my iSL and TS's at the moment and I have found there is a fair bit to think about in regards to all the different outcomes a trade will find itself in once activated.

Now, I don't know if VSntchr took that trade on BAL or not and it doesn't matter but it's great to have a written plan on what to do if I did. Let's say he did!

VSntchr had a buy at 3.80 and a iSL at 3.55, so a risk of .25
The trade jumped out of the blocks and hit 4.55 (intraday) .75 above his buy in price or 3 times his initial risk.
Has he plans to do anything with his iSL? Does he reduce his iSL risk a little or does he move his iSL to BE or higher. Did he have targets of 3x Risk (Peter2) to sell? 

Does he have a plan for this in writing and if he has and it's just to wait for $100  fantastic, that's what Peter is on about, get it into a written plan for yourself and when it happens it's no guessing or stress. It makes it a lot clearer for me now so once again Peter thanks for the push, it's been a pain in the butt for sure. I now realise if I need a different style of trading I have a written plan already that only needs a few changes to suit the new system.

That's enough from me and it's breakfast time.


----------



## VSntchr

peter2 said:


> grah33: It was a perfect pick for this thread. Just because price hasn't gone higher immediately after you/we bought it doesn't matter. Price is now testing the BO at 0.60. We must wait to see what happens next. I would only be concerned if price goes back below that little ledge (0.57).



I agree, I really liked this set-up when I had a look after seeing it here. Was too slow and missed it, but might be able to take a BO-PB trade if it churns through enough to hit me at 60.
The prolonged downstretch has been (was?) good for me in terms of trade management. I was able to clearly see what was weak in my portfolio, and also found a few good setups ready to go when we bounced.

One that I missed yesterday was RIC, it has been continually breaking out since September last year. A trade now looks good to me if it can pull back to 120. A stop at 113 and an initial target of 134 looks like a decent setup. However, not sure sure it will pull back.


----------



## peter2

Trading update: New Trade - SEN

Liked the small consolidation in SEN. Bought 26053 at  0.13 (iSL 0.11)




I also liked ELD and ISD.


----------



## peter2

The chart as I last saw it.


----------



## PeterJ

nice pick up Peter,
it has held very well over the last couple of weeks 


Peter


----------



## peter2

EOW15 update:  Pav Momentum Portfolio *+6.4%* ( 45% invested in 5 trades )    XAO *-5.9%* (15wks)

This weeks sells:  SIQ
This weeks buys:  AMA, SEN

CMP: TS raised to 0.25 (BE)

Another week has passed and there is not much for me to comment on. Our trade in CMP has picked up this week which is nice to see. The others are still hanging in there. If the market continues to rally, I'll start a few more trades and ditch VTG when we need the money for something else.

I'm considering my reasons for posting a trade book using leveraged products (cfds, fx, futures) as well as continuing this thread. To be decided.


----------



## grah33

peter2 said:


> The AMA chart shows the recent BO-HR (at 0.55), the trend is up and price has consolidated for a few days (TC pattern) just under 0.60. The price of AMA has been going up while the XAO has been falling. It's a perfect setup for our trading plan and that's why we bought. The iSL could have been closer (0.56,0.57) but I placed it under the large buy order in the MD. In the old days that order would probably stay there. These days it might be gone at any moment. Coincidentally the selected iSL matches the 3xATR(14) trailing stop on the chart.
> 
> View attachment 62955






peter: thanks for the advice, it makes sense.  i initially had a similar stop loss as you specified above at about .57 ( a little under the break line). my thinking was that if the price doesn't break out at that time than i never wanted to be in the trade so i should get out.  but why did you lower  the stop so much?  also, what's your take on volume at that breakout point? mine is that there was a surge in volume meaning that many sellers came in but were overpowered (since the price rose some), so many sellers aren't around anymore freeing up the price to move up (complicated stuff !!)




why aren't u people shorting now while the market is going down?


valuesnatcher : you mentioned coming in on RIC on a pullback to 1.20. just wondering what you are looking for specifically? my take is to see if the price can get close to 1.2 (not on high volume), or maybe even cross it but finish above it at the end of day, or maybe some narrow range bars around that area on low volume.   or even a candlestick reversal pattern (dojis or whatever, gotta learn that stuff)


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## peter2

grah33: Too much analysis, I was caught doing that when I learned a little VSA. It's a waste of energy and doesn't help. The main reason is that we can make a case for buying and for selling in almost every situation. Naturally we agree with the case that we want to see. 

I try to keep it simple. I like seeing break-outs of round numbers with good volume. We saw that with AMA (>0.60 high volume). Price can now do one of three things, fail, retest the BO level or go up.  If price drops to 0.57 on above average volume then I'll consider the BO as a failure and close the trade. (The BO was a failure NOT the trade.) If price hangs around the BO level, I've got to be patient. There is no use trying to analyse what's happening on every bar. If price goes up, smile.


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## VSntchr

grah33 said:


> why aren't u people shorting now while the market is going down?




This is a breakout momentum thread, Peter is journalling these trades. Doesn't mean he isn't shorting elsewhere.



grah33 said:


> valuesnatcher : you mentioned coming in on RIC on a pullback to 1.20. just wondering what you are looking for specifically? my take is to see if the price can get close to 1.2 (not on high volume), or maybe even cross it but finish above it at the end of day, or maybe some narrow range bars around that area on low volume.   or even a candlestick reversal pattern (dojis or whatever, gotta learn that stuff)



I am just looking for an entry point that gives me a good R:R based on the identified stop level.


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## debtfree

grah33 said:


> also, what's your take on volume at that breakout point? mine is that there was a surge in volume meaning that many sellers came in but were overpowered (since the price rose some), so many sellers aren't around anymore freeing up the price to move up (complicated stuff !!)




Hi grah33,

I looked on the day at the market sales and from memory I seen two big orders go through each with 2 million shares and once again from memory I think it was marked on the order XD or something like that. I just gathered it was a couple special orders from a broker going through. So above all that, there was only 400,000 shares traded on the day but anyway, it triggered our buy and now we deal with it.

Cheers ... Debtfree


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## peter2

Trading update:

CMP: Price spike. Would have liked to sell at 0.35 for a +2.5R result but we didn't have any sell orders in the market. You may have noticed that I occasionally place a few limit sell orders in case of spikes but didn't in the case of CMP. Now we watch what happens after today's news and low close. It looks like a few large holders took the opportunity to sell into today's good news release. No point placing a sell order at 0.35 now. If price goes back up to 0.35 quickly, it might go higher.


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## grah33

thx for advice everyone. it helps.


peter: you said you will close the trade if price on AMA goes below .57   but your initial stop loss is significantly lower.  why didn't you put it up there or thereabouts?  also, i notice you all take breakouts b4 the end of the day.  isn't it better to wait for the final closing price at end of day, as price could breakout but then go down by the end of the day (false breakout).  that's what i got from the books and how i do it.

debtfree: xd as in x dividend ?.  the x div date is far away...confused.  i assume you looked at the MD (market depth) and saw 2 big buy orders go through. still, they went through and bumped up the price and took out many would-be  sellers in the process. perhaps that is "smart money " (the 2 orders).


i was spending alot of time changing my mind but i thought i would try RIC out. i went in on the candlestick doji (the current pullback) - looks similar to one of the reversal candlestick doji patterns.  but my main reason was that there was heavy volume in the recent breakout and low volume in the current pullback. also, i put my stop just under the bottom trendline , so that if the BO fails i can still win as the trade might bounce off the lower trendline.  turns out that the stop loss is still a small percentage loss (about 7%) so may as well keep it a little under the trendline. see what happens.


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## debtfree

grah33 said:


> debtfree: xd as in x dividend ?.  the x div date is far away...confused.  i assume you looked at the MD (market depth) and saw 2 big buy orders go through. still, they went through and bumped up the price and took out many would-be  sellers in the process. perhaps that is "smart money " (the 2 orders).




grah33: Sorry to confuse you in saying "XD or something like that." No it was nothing to do with dividends. I had a look at the Course of Sales near the end of day and seen what I seen and it was more than likely XT but don't hold me to that either.


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## peter2

grah33: You're asking the right questions which indicates that your thinking about it. I'm pleased to help people that are prepared to help themselves.

My iSLs are placed below support or a recent higher low (HL). If price went back there then my analysis is invalidated. Once the anticipated support does not hold I have no reason to hold the trade. It's a compelling sell. If I use a wishy-washy SL then my mind goes to mush when I should be selling. 

My iSs are also what I describe as disaster SLs. I don't want to see them hit but they need to be there just in case. In most trades that don't go my way I can exit the trade earlier than the iSL. There is no need to take a full loss, especially when trading break-outs. Remember, that reducing my average loss is a part of my edge. 

*AMA*: Placing the iSL at 0.57 would be too close to the entry as the daily price movement is 1.8c. I don't want to be taken out of the trade due to random price movement. I prefer to close the trade when my trade idea is proven incorrect. 

*RIC*: Just to be clear, you're buying the retest of the BO level. The BO opportunity has gone and this is not a second chance at the BO. Price does move around a bit (ATR(14) = 3.2c) and there are a few HLs that you may use as a iSL. The sloping TL is also OK. 

BREAK-OUTS: The best time to buy them is when they BO and you'll need pending stop orders or conditional orders to buy them. I prefer to set an alarm and then look at the MD and volume just after the price breaks-out. It gives me the illusion of control but really the market just yanks my chain. I buy before the close one or more ticks above the BO level. I have this belief that the close is more important than the open and I don't like to chase price the next day if it gaps up. The best trades gap up and take off. 

Trading BOs is a bit trickier (frustrating) when it's not a bull market (like now). There are many more false BOs (bull traps, fake-outs) and it's imperative that you can sell immediately and reduce those losses. One good trade should make up for 2 - 3 small losses. Edit: Very few new traders can do this and that's one reason why BO trading gets a bad rap. 

You mentioned a 7% loss number. I recommend that you use fixed fractional position sizing that is used in this and tech/a's smallcap thread.


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## debtfree

Peter2: Once the trade has triggered and Price has moved above the Buy Level I've look at lifting my iSL towards or to the Breakeven (*BE*) level. I used your demo chart with the iSL, Entry, +1R and +2R levels for a few ideas of what to do with the iSL when Price hits these levels. 

I was going not too bad until it hit me that if a trade had a iSL that was say 5% away, it only had to go up 5% from the buy level to hit the +1R level and a chance of moving my iSl to BE. But, if my iSL was say 15% naturally it would have to go up 15% to get to the +1R level. 

I suppose a stock that has a iSL of 15% would have to be a lot more volatile and has the ability to move that 15% just as easy as the other stock that only has an iSL of 5% that has lower volatility. 

Some thoughts I had was maybe, if my thoughts were that it would be harder for the 15% iSL to get to the +1R level than the 5% iSL in the same time frame would I be better to say if the 15% iSL gets to +.7R move iSL to BE and at the same time if the 5% iSL had to get to +1.5R before moving it to BE. Would that balance things better and give both trades a level playing field of getting to BE or towards it and is this the right way of thinking about it? 

So many things going through my head to iron out iSL and Trailing Stops, I didn't think there would be so many combinations form start to finish. Hope this makes sense and you understand where I'm coming from.

Cheers ... Debtfree


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## debtfree

Peter2: I haven't forgotten your advice on entries about "A safer option is >2ATR(10) away from current price." If this fits into a low risk entry, we're away and running and maybe not getting out as far as a15% iSL.


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## debtfree

Peter2: Well there you go, I think I have this sorted out a little now. Amazing, putting this out for all to see my silly thinking  has made me think even faster for an answer. I have gone over so many notes, books and web pages to find a better way of handling my iSL after entry when all along it was my buying setups and not the handling of my iSl  to overcome differences of different %iSLs.

Most of the answer is in the post above (your original advice). If your iSL is around about the 2ATR range all things are equal. So if a 5% iSL = 2ATR and if it moves at that rate in 2 days it will be at the +1R level. Now if a 15% iSL = 2ATR and it moves at that rate in 2 days it will be at the +1R level as well. 

But, if the 15% iSL is equal to say 4ATR yes we have a problem, it does not look like a low risk trade. It's going to take twice as long as our 2ATR to hit the +1ATR level (4Days) so, find a better entry trade. Just make sure you have more consistency in your trade selection.

I think I'll sleep better tonight having that sorted, that's if I do have it sorted. 

Thanks all for letting me use this space to sort this.

Cheers .... Debtfree


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## peter2

New Trade:   *ISD* Bought 2084 shares at 3.81  Trade Risk = 1%   (iSL = 3.55) 

Price did BO of consolidation earlier today.


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## peter2

Trading update:

*CMP*: Momentum trade is over and will be closed next open. Personally I still like this chart and will be looking for a pull-back entry for a medium term trend trade.

FLN: Raise exit trigger to 1.20
SEN: Raise exit trigger to 0.12
AMA: Raise exit trigger to 0.57

These exits are not in the market and I'll be looking at each day's bar in relation to these triggers for a signal to exit.


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## debtfree

Thanks Peter


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## grah33

still absorbing the info in these posts.  a lot to take in...


thus far i've been doing at-market entry orders and at night time. never thought of the possibility that price could gap up and i'd get a very different entry price.  so what is the point of entering in the market early morning rather than making the order night before outside market hours? one could put their order in at say midnight, rather than going in next morning.  also,some  go at about 3:30pm and that is because they are thinking the price is going to be roughly that b4 the market ends, and they get a head start b4 everyone else gets involved later in the evening(my take on it anyway).


don't know if i should get IB so i can short stocks. got a cmc account but i have to get another cmc CFD account if i want to do shorting. don't know if that is a good idea (use cfds or go IB which allows for shorting of shares)


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## skyQuake

imo doing a market order for the next open is a bad way to trade. Liquidity is the main concern.
Unless you're doing big caps, ie asx50; vol at close is about 10x vol at open, and less prone to getting orders pulled

As for shorting, the CFD providers have a much larger range than IB for AU. Much smaller range than IB for US


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## peter2

Trading Update:

*CMP*: Sold at open price (0.285) for this portfolio. If this was a real trade we would have had great difficulty selling our small parcel (13,267). If we were desperate to sell then we would have had to be quick and sell lower (0.28). There is no depth in the bids and offers and price can easily go back to the recent highs if there is any demand. Not placing a sell order at one of our price targets has cost us the opportunity to exit at a much better price. This is something that is worth including in your trading plans when you notice that the market depth getting a bit thin. 

PS: If this was a real trade I would not have sold this morning as there wasn't enough volume. I would have reinstated the BE exit (0.25) and wait to see what happens to the price over the next few days. I'm willing to risk the open profit to see if we can get more. I don't want to do something like this in this portfolio as I'll be tempted to always sell at the highest price .

This shows how important it is to trade stocks with more than enough volume so that we can sell at the price we want to protect our capital. 

skyQuake's comment about liquidity are spot on and timely. 

grah33: It would be worth your time reading how your broker handles your orders. 

If you can't make money trading long then you won't make money going short. Yes, I think it a good idea to be able to do both, but master one way first.


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## grah33

2 new trades today :
1)NHF: stock is close to the bottom trendline so went in (there are 2 bottom trendlines), a few nice trendline touches, with little volume in the big pullback from  around april onwards. hope for the best.
entry: $3.44
initial stop loss: 3.25 (at market)

2)mny : another bounce off the trendline, little volume as price hovers a little above the trendline.  see what happens.
entry: 1.29
initial stop loss: 1.204

my positions are small enough since i'm learning  (about 1k each) so the market could handle my position sizes even in the morning.  i got in the first few hours of the morning to make my trades . if i had finished analyses last night i would have maybe done it last night and put conditional orders so that i don't get an unexpected entry price e.g. gapped up price or something.  

peter: thanks for the informative and practical stuff i need to know.  i picked up a few things.
i've been looking at the market depth a little . it can change quite quickly, and if a breakout occurs, it  can really change, so that's interesting. i tried a profit target too on one of today's shares since the depth was thin (in case it explodes  .

i've noticed some shares don't necessarily follow the market direction much and i went into 2 new uptrends .  i might see if i can do the same thing but with shorting shares since market is down.
i got a total of 4 uptrends going but it's been a down turn in the market , so i don't know if that is good .  i'll study risk soon but first i need more practice at the basics.  at a basic level, when you go for uptrends in a downtrend market, what differences in risk or position size or number of open positions do you implement/do differently? 

thanks heeps everyone


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## peter2

EOW16 update:  Pav Momentum Portfolio *+8.5%* ( 53% invested in 5 trades )    XAO *-5.2%* (16wks)

This weeks sells: CMP. Price action forced closure for this thread but I did notice the very low volume pullback in price. 
This weeks buys: ISD

The portfolio is starting to improve as the market stabilises even though the daily volatility remains huge. The portfolio has held it value quite well over the past few months. If all our open trades were forced to close the realised profits would have disappeared. A little bit of luck and a bit of good management I think. I'll be looking to start more BO trades next week. 

I'm happy to keep the TSs away from the current prices. This means the portfolio looks like it carries a bit more heat (downside exposure), but selling quickly after a big down day or several down days, before the TSs are triggered will protect our capital.

Only 11 more days until the EOFY and the end for this administrator. I'm still considering another thread with no restrictions. Any market, any pattern, any time frame and every which way but loose. [Joe, I hope the sponsors are outbidding each other for the naming rights.]




ps: Joe, just kidding about the sponsors, but it's something to think about.


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## peter2

grah33: Your trading strategy seems to be buying at support. This requires a different outlook to trading break-outs. There's nothing wrong with that. The trading basics apply to every strategy. 

There are always a few up trends even when the market is falling. In fact it's probabaly easier to find them. Whether they continue up after we buy them remains to be seen. 

Trading long in a down market is always done cautiously. I reduce portfolio heat by selling the worst trades and keep a close watch on the open trades for any signs of weakness. I start fewer trades and those I start must have perfect setups (like AMA). One last thing, I'm very patient.


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## tech/a

> If you can't make money trading long then you won't make money going short. Yes, I think it a good idea to be able to do both, but master one way first.




You sure about that.
It's a pretty broad brush.( The first sentence )


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## VSntchr

I know we are looking predominantly for daily patterns.
But checkout CCP on the weekly and monthly


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## peter2

CCP: It's on my BO-soon watch list. Not for this thread though. 
CVO: Has a similar pattern also.
ELD: Still looking good.

VSntchr: Maybe you should lower your risk during this period of higher volatility. 
I see that you've lost your vowels.  I hope you hold on to your remaining consonants or you won't be recognisable.


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## VSntchr

peter2 said:


> VSntchr: Maybe you should lower your risk during this period of higher volatility.
> I see that you've lost your vowels.  I hope you hold on to your remaining consonants or you won't be recognisable.




I have tightened the open risk a little, Friday was a good day for that for me.
And yes, the vowels are gone - but the consonants will remain


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## grah33

another thread for all kinds of  trades sounds good. why is the focus just on breakout trades here?  


peter : u mention exiting trades b4 a stop loss occurs, if it isn't looking good. i never thought of doing that. what sort of behavior would you be looking for in the share when you exit earlier than the isl (initial stop loss)?

value snatcher: i had a quick look. nice uptrend with recent consolidation (horizontal movement). there was volume recently but it didn't break through the top limit, so if it were me i would wait for another breakout to occur , that breaks above the top , ideally with high volume.   but nice find . might charge ahead soon.

NEA: was gonna go in but didn't have the money in my account. rocketed up today after a low volume pullback (with narrow spreads too) close to a trendline. bomber, i would have won big...

MVF: considering jumping in. it's close to a bottom trendline. it's trading more horizontal so i don't kow where it will go, but it might go up at least to some height. had lots of volume b4 at the trendline but couldn't break further down. i think this is a good sign as the sellers couldn't get it to fall more and they are no longer there to pull it down, so if it does go up it will encounter less resistance .my thoughts anyway.


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## peter2

grah33: Pavilion103 started this thread with the singular purpose of demonstrating that small trend continuation patterns could be used in a profitable system. I have continued this thread and hopefully helped show that indeed one can use these patterns to earn a profit in the longer term. This portfolio has endured unsuitable market conditions due in part to the relative strength (re XAO) of these break-outs and good risk management. 

The ISL is placed at a level that would invalidate the trade setup and this makes selling easier when that happens. We've been trading BOs in this thread, so if price closes below the BO level after we buy, that would be my first indication that the BO setup has failed. However I'll let one down day go, but if there is another then this is a second indication that the BO has failed. I may decide that this is enough for me and close the trade. Sometimes one huge down bar is enough for me to exit, especially as I'm anticipating a huge up bar once price breaks-out. 

Price must show that your entry is OK. I'd recommend you find and read a thought provoking account by "Phantom of the Pits" (ebook available).


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## VSntchr

AMA - into a trading halt pending a material capital raising.


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## grah33

VSntchr said:


> AMA - into a trading halt pending a material capital raising.



what does that mean?


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## peter2

Trading update:

AMA: In a trading halt pending an announcement about a capital raising. This means AMA is raising capital by creating and then selling more shares. Generally this means short term traders like us will take a haircut (loss), but this will depend on the details of the capital raising and how popular it may be. We have to wait for the details. Unless they are very favourable I'll exit when they start trading. 

FLN: TS remains at BE. We've lost open profits and can only wait until this correction completes. There is no point exiting with a small profit. 
ISD: Two down bars makes me nervous about a failed BO. If price closes below 3.70 I'll exit next open. 
VTG: Price is testing range low. No room to raise TS further. 
SEN:


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## grah33

just took rhp.  it looks like it's going to go somewhere soon. hugging the trend line, and low volume in that zone, so i don't think it will smash further down. details below:

RHP 
isl 1.51
1.59 BUY

will get back to the other stuff people wrote (when i get a chance)...


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## peter2

Trading update: 

VTG: Yikes.  Actually today's bar is quite bullish, but one can't be sure with the low volume. We'll exit on tomorrow's opening price. I'll keep an eye on this chart in case today's price action is some insto's attempt at scaring the weak holders (yes that's us). Any subsequent BO >1.85 would interest me, especially if it happens in the next 5 days. 

Nothing else to comment on. I've been taking a break from the ASX markets as the FY ends. That's why I haven't started any new trades for this portfolio. 

I've been thinking about what to do next and why. It seems logical to expand on what Pavilion103 started with this thread and I've been thinking about how to do that and what to include. Currently I'm thinking about expanding our BO setups, adding another strategy and including something that will allow us profit when the market goes down. All in a new thread. If you have ideas then please PM me. Let's not pollute this thread with off topic comments.


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## grah33

regards AMA, how does one act for this situation?  if the price of the share changes suddenly (because they create more shares), says goes lower, upon resumption it might trigger a stop loss... do we get the news first and they tell us what will be the new price and the exact time trading will reopen? just wondering how one acts in this situation on a practical level to avoid a sudden e.g. stop loss exit. i'll check for news in the morning b4 market open.


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## debtfree

ASX report on AMA, well part of it anyway.


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## xr06t

Hi Pav, Peter, debtfree, tech/a and all others who have contributed to this thread.

Just wanted to say thanks for a great thread. It has provided much insight into trade management, record keeping and risk control amongst other things and i have found it a great benefit. Wanted to get my thanks in before the thread ends at 30 June!

One query i have off the top of my head is how you scan for opportunities? I have looked into a few free web based scanning tools with limited success and note that Pav used an expensive one at the start of the thread, but am after something a little more basic perhaps?

Again, many thanks to those for the insightful discussion in this thread.

Much appreciated.


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## tech/a

xr06t said:


> Hi Pav, Peter, debtfree, tech/a and all others who have contributed to this thread.
> 
> Just wanted to say thanks for a great thread. It has provided much insight into trade management, record keeping and risk control amongst other things and i have found it a great benefit. Wanted to get my thanks in before the thread ends at 30 June!
> 
> One query i have off the top of my head is how you scan for opportunities? I have looked into a few free web based scanning tools with limited success and note that Pav used an expensive one at the start of the thread, but am after something a little more basic perhaps?
> 
> Again, many thanks to those for the insightful discussion in this thread.
> 
> Much appreciated.




You need something with programing capability to set up searches.
I don't use the free stuff but Ninja maybe a go.
You then need to be able to save them as watch lists.
I keep 3
(1) Signal for a trade about to happen.
(2) Trades that have failed
(3) Trades that have been missed.

I look for new setups in 2 and 3
But am constantly culling all 3
If the pattern breaks down and its clear the trade is 
no longer in a set up or has changed sentiment then
out it goes.
It will come back up in the searches (I have 6) if something
interesting happens.

*One of the best hints* I can give with searches is to search for past setups in Metastock that is the Alert function
I have over the past 5 and 10 days.
What that shows is the set up we want 10 days ago and what its now doing.
Some great continuation micro patterns appear.

Once in the trade constantly monitor sentiment.

Pete's done a great job and I suspect deep down he's enjoyed the experience.
Its a challenging market and he's accepted that challenge.

Stocks are a great challenge but I'm not rushing to revisit them!---although I'm having a play in my thread.
Its great to keep your hand in.


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## peter2

grah33:  re capital raisings (share purchase plans): In the trading halt I remove any sell orders that are in the market, read the notice and do a back of envelope calculation as to the theoretical share price after the dilution at the new price. If this new price is below my TS then I get out asap. If this price is above my TS then I wait until the end of the notice day. The unknown is the reaction to the news by the large investors. If they love it and think management will do something positive with the money they'll hold on and buy more. If they don't like it  they'll sell. So far today the price remains above our TS and the selling has been soaked up by buyers. 

AMA: We bought this at 0.60. TS raised to 0.59 and is in the market. If it trades at 0.59, we will sell for a small loss. 

xr06t:  Welcome, thanks for the compliment in your first ASF post. This thread may end but I think there's going to be a sequel.   Hope you post again soon. tech/a has done a good job of replying to your question. If you really want to get into trading then you need the tools. Amibroker is the most economical scanning software that I know. The data is an additional monthly cost. There may be some free online ASX scanners around. I can't help you there. If you find one then a quick way to find charts worth looking at and keeping an eye on are those charts with huge increases in daily volume. They are the stocks in play and worth looking at.


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## debtfree

Thanks Peter for the update and your thoughts on AMA, appreciate it.


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## debtfree

Hi xr06t,

Welcome, good to see you in here and picking up tips. I don't know if Peter was a teacher in his previous life or in this one but he has done a great job as Tech/a has stated earlier. There is always something to learn and digest from these two guys so hang in there and keep your mind open. I'll see you in the new thread 

Free ASX scanner: I have been using Incredible Charts Charting Program and it has a scanner, although limited and I'm pretty sure the free version updates end of day data at 7pm. So run your scanner after then and it also has a scan volume that Peter speaks about as well. 

Cheers ... Debtfree


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## peter2

EOW17 final update:    Pav's Momemtum Portfolio *+6.7%* ( 44% invested in 4 trades )      XAO *-6.1%* (17 wks)

The portfolio lost a little of its open profit as the market fell late this week. It's hard to believe that 17 weeks has passed since I started managing this portfolio. As you are aware I'll be continuing in another thread and we'll be adding a bit of extra flexibility so that we don't have large periods of inactivity. 

Let's look at what we accomplished using Pav setups. The market conditions started favourably for us, stalled and then went into a severe dip. Initially the dip was contained to the banks but this soon spread throughout the market. 

W% = 38%.  Down from my anticipated 45%. This is due to unfavourable market conditions, but you have to be prepared for this to happen at any time. It might have been good to suffer through a down market as we learn more about the effectiveness of our risk management procedures when the going gets tough. We didn't have a big bad loss. Sure, we had plenty of losses, but nothing big enough to cripple our progress. That's surviving. 

AW = $607  (~1.2%) This is below our goal, but again due to unfavourable market conditions. 
AL = $284 ( ~0.6%)  This is slightly better than expected, due to our reduction of open risk as the market dropped. 

These stats confirm that we have managed the earn a profit with a small edge. If all our open trades were to close at/near their exits then the remaining profit would be ~+3.7%. If we can earn a profit and hang on to it during the unfavourable conditions then think what we can do when the markets become favourable.


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## peter2

I've been pleasantly surprised by the positive support for my contributions in this thread and that's the main reason for me continuing. 

There have been a few people keen enough to ask questions and post their thoughts. I thank them, because I don't wish to talk to myself.

I'd hoped to see a few more posts from people who don't post. I assume there's a whole lot of you out there, reading but dare not post. Come on, have a go. 

:thankyou:    :bekloppt:


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## ah13

Hi Peter

You're quite right and I'm one of those following you daily but "dare not post"! Would just like to thank you - you've given so generously of your time and knowledge and I've learned so much.  Am looking forward to the new thread and learning a great deal more - very much appreciated.


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## The Beagle

Hi Peter
Like ah13, I to have enjoyed this thread, and will be following your new threads. Many thanks to you for your time and effort and experience that your've shared with us. I have learnt a lot from your posts, along with TechA and Debtfree's contributions as well.  Thank you.


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## debtfree

pavilion103 said:


> Having not traded stocks for a while I am taking a bit of a punt posting live trades, however as with everything I've posted on ASF, I am to show people the thought process or trading in real time. Whether or not this exercise proves to be successful remains to be seen.
> 
> Wish me luck




*PAV:* I know you will read this one day, in your own time and when you are good and ready. The above quote is from your 1st post in this thread.

Well as time has gone by, all can see what you started off here has been very successful, so Congratulations and Thank You for all your time and effort, ideas and replies. 

Every week I find myself chasing up previous posts of yours for ideas, answers and clues for getting myself more organized. So before moving onto the new thread I just wanted to say once again, Thanks Pav, I've appreciated your help so much. We'll catch up soon, wishing you good health and happiness.

Cheers ... Debtfree


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## Trav.

This is probably the 3rd time that I have gone through this thread and each time picked up something that is relevant to my stage of trading. This time trade management was the subject that I needed some direction on and the information is contained in this thread, you just need to be ready to take it in. I suppose that is part of the journey.

Thanks to all that have contributed especially @peter2


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