ASX Momentum Trade Book - Part 2

[grah33]

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

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

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

 

[peter2]

Trading update: Intraday transactions.

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

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

 

[tech/a]

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

Often not driven by the same factors.

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

 

[peter2]

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

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

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

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

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

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

 

[peter2]

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

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

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

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

 

[tech/a]

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

 

[peter2]

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

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

 

[grah33]

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

 

[maglincer]

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

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

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

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

View attachment 64742

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

 

[peter2]

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

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

 

[grah33]

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

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

 

[VSntchr]

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

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

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

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

 

[peter2]

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

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

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

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

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

 

[Nortorious]

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

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

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

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


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

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

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

 

[Nortorious]

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

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

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

 

[tech/a]

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

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

The luck of a Duck I reckon.

 

[peter2]

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

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

 

[VSntchr]

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

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

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

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

 

[peter2]

Trading update: New trade

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

 

[Nortorious]

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

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

Well played sir.