ASX Momentum Trade Book - Part 2

[peter2]

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

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

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

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

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

 

[grah33]

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

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

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

 

[peter2]

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

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

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

 

[Trembling Hand]

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

And neither will these,

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

 

[grah33]

And neither will these,

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

 

[VSntchr]

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

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

 

[VSntchr]

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

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




Also, UGL BO today looks very good to me.

 

[Nortorious]

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

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

View attachment 64877


Also, UGL BO today looks very good to me.

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

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

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

 

[peter2]

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

 

[Nortorious]

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

View attachment 64902

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

 

[peter2]

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



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

 

[Trembling Hand]

Pete what is that trailing squiggly line on your chart?

 

[CanOz]

Pete what is that trailing squiggly line on your chart?

Looks like the index...

 

[peter2]

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

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

 

[peter2]

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

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

 

[peter2]

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

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

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

 

[peter2]

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

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

This weeks sells: nil
This weeks buys: ISD

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

 

[Nortorious]

That's a might fine looking chart Peter2!

Well done

 

[grah33]

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

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

 

[peter2]

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

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