ASX Momentum Trade Book - Part 2

[Wysiwyg]

Thank you for showing me you can beat the market by trading up trending stocks in a down trending market. The kicker for me was the after trade entry management and to a lesser degree the stock selection from various candidates. A skill that you have obviously developed.

Short selling with the market trend would have seen astronomical returns.

Thanks for taking the time to expand on this thread.

 

[kid hustlr]

Great thread Pete.

Your points about lack of interest I agree with. I think most are generally lazy and underestimate what it takes.

For me personally given how time poor I am mon-fri the idea of learning anibroker, running scans, checking charts, building an outlook etc for me right now is a little much. I've instead opted for nick's signals for the near future to take any decision making completely away with the goal to move more towards what you are doing when my life opens up a fraction. Threads like this are a good reminder of the fact the more time you have to put in the more return you should be achieving.

Perhaps I'm lazy? Not sure. Regardless congrats on the thread.

 

[Newt]

Great thread Pete.

Your points about lack of interest I agree with. I think most are generally lazy and underestimate what it takes.

For me personally given how time poor I am mon-fri the idea of learning anibroker, running scans, checking charts, building an outlook etc for me right now is a little much. I've instead opted for nick's signals for the near future to take any decision making completely away with the goal to move more towards what you are doing when my life opens up a fraction. Threads like this are a good reminder of the fact the more time you have to put in the more return you should be achieving.

Perhaps I'm lazy? Not sure. Regardless congrats on the thread.

It will be interesting to see if Momentum trading "ala Peter" is by nature a longer term beast with less day to day maintenance. I'm prepared to give up some performance to be more realistic with my weekday (night) time. Switching my primary focus from daily to weekly has been a valuable learning experience, so keen to see how the future thread pans out. ASF readers have no right to expect Peter to front up for another round of detailed diarising - but we'll be pretty stoked if it happens!

 

[debtfree]

Peter

What a fantastic thread ..... +19.5% and I still can't believe it when looking at the XAO chart, it's basically all downhill since you took over. I have certainly benefitted immensely Peter by your input and I appreciate it very much, so many areas of my trading was so out of order with how I really wanted to go about my trading. A Trading Plan operated in a business manner is a must as you say, clear instructions from the boss to the worker (trader) on how to perform each task and also clear instructions on what to do if things go wrong. Perfect, just what I was after! I have now taken the apron strings off and no longer need to use trading websites for trading tips and trade management.

Thank you .. Thank you .. Thank you .. I love it!!

Watching you control your 2 money management boxes was a joy, it was like driving a car to a destination safely. (Capital at Risk = When driving, you stayed in your lane) and (Total Portfolio Heat = Controlling the accelerator and brake to get us home safely without a bad crash. 7% Drawdown (approximately) was outstanding!

I give you a 10/10 and I echo the nice comments others have stated in their posts above. As Craft mentioned, many people will be helped for years from your contribution. In regards to people getting involved, I've noticed forums get very quite when the market is heading down and I suppose that reflects also in the market with Peter mentioning lower volume in the market depth of late. But, at the same time there has being a strong following of this thread with lots of people viewing it.

I look forward to your "Peter's Momentum Portfolio" thread in March. I gather that will be using a CFD supplier?
Once again thanks Peter and enjoy your week away.

Cheers ... debtfree

 

[VSntchr]

Overall I was going to give myself 8/10 for the work, but missing the gold rally, I'll reduce it to 7/10. That's the lot of a discretionary trader. Sometimes we're in sync with the market and other times we're not. The missed opportunity reminds me that the scans do their job and I should take the hint when so many charts in the same sector start appearing.

Personally I give you 9 out of 10 for the significant alpha you've generated... and an extra point for demonstrating to the followers what is the right attitude for trading. Treating it like a business, admitting to mistakes rather than looking for something else to blame (did anyone see a single mention of bots, shorters, manipulators, CFD stop hunters, company management etc etc?), and continuously seeking improvement.

Agree on the 9/10 SKC. I was going to say 10...but then there would be no room for improvement...and what good is a trader if he is not constantly seeking self-improvement? :

All publicly documented and open to discussion / criticism, and communicated with a passionate, all-inclusive, friendly and hands-on attitude.

It's one thing being a good trader, another thing to be a good teacher. I think it's pretty clear that the attributes you describe above are well covered in this thread.

View attachment 65861

This chart says it all...great management of losing trades.

I'd hoped to cultivate a vibrant group of people that traded or wanted to trade in a similar manner. Unfortunately this hasn't happened. Even attempts by others to stimulate interest in break-out opportunities hasn't kicked on. I don't know the reasons for this but whatever they are they're just excuses. I can only assume that most people aren't really motivated enough or become disheartened when they realise how much work/effort is involved. If it was easy .....

I am certainly a beneficiary of the thread and have tried to participate where appropriate. If I may, perhaps one of the issues holding back wider participation is a clear indication of how to participate. At times I have been reluctant to post in order to avoid hijacking the thread. You've done a great job at keeping the trades documented and updated in the journal weekly, that it almost seems like a distraction for me to come and post my own trades or thoughts on a potential.

We've got 60K now and I'm thinking that we will take advantage of our leverage account that will allow us to trade other markets.
I'll be back in March to start Peter's Momentum Portfolio.

I think if I had have been you, I would have found it too difficult to stick to another trader's style within the journal for so long. Maybe that has been another good learning tool as it stimulates thought and demands mechanical-like action to avoid discretionary style trading mistakes. In any case, I am super excited to watch the move into new markets, very relevant for me and will no-doubt put the learning curve into hyper drive once more. :bier:

 

[peter2]

If I may, perhaps one of the issues holding back wider participation is a clear indication of how to participate. At times I have been reluctant to post in order to avoid hijacking the thread. You've done a great job at keeping the trades documented and updated in the journal weekly, that it almost seems like a distraction for me to come and post my own trades or thoughts on a potential.

You've made an excellent point. I don't know how others could participate other than by contributing their trading ideas/comments to the general ASF stock threads or the break-out threads. I read all the trading related threads and occasionally construct a trading opportunity from them. What we trade and how we do it is not a group decision.

The community at ASF is what it is and will only get better with more thoughtful contributions.

 

[Nortorious]

Hi peter2,

Great thread and well done on the performance of the portfolio. Exceptional result given the prevailing market.

I'm one of the guilty members for not keeping certain threads going. When the interest isn't there though, it's a reward for effort scenario for me. Luckily for all of us, you persisted and kept this thread going.

All the newbies and experienced members have all gained something and I am also another one of the members looking forward to the encore.

Let's hope for better conditions, plan for the worst and see where we come out.

Top effort and thanks for the time you have invested in keeping the thread alive and vibrant with useful content.

 

[Huskar]

I am not a momentum trader but I still find your thread (a) fascinating and (b) very instructive, particularly for your disciplined after trade management and measured self-reviews (both things that I need to work on). I am guilty of being not involved enough in the conversation but that is mainly because everyone else has already said it much better than me ! Enjoy the break.

 

[peter2]

Comment: We're out of the market as all our open trades hit their exit triggers and the sentiment so bad that it was not worth starting any more. I'm also planning a week away, so it was an opportune time to have a break. Personally I'm 90% cash also and my only position is a trade in an ASX index ETF.

Well it's amazing how ones outlook changes when there's no emotional ties. The market drops 200pts, who cares I'm out. The market rallies 100pts, who cares, I do, I want to get back in, the market is going up. . The bullish bias or the fomo psychological bias doesn't disappear. I'm starting to see bullish setups all over the market even though my daily market filter is still bearish.

I'm going to sit on my hands until I get back, but I can tell you that I'm champing at the bit to start earning more profit for the/my portfolio. I'm so keen that I might even buy break-outs of sloping resistance lines instead of waiting for horizontal resistance.

---

If one hasn't got a mentor then the self review process is so important. It's not easy and I only do it long after (weeks/months) the trade is done. I wait until the emotions have died down and I've forgotten the market sentiment that existed at the time of the trade. It's easier then to see if the setup wasn't perfect or the exit was too early or late. Counting our mistakes isn't fun, but it's very instructive.

When I start the non-ASX trading thread there won't be a suitable benchmark to use as the trades will be in a variety of markets and timeframes (incl intraday). How will I know if I'm doing a good job? I'll only know if I monitor my trading mistakes against a standard mark (<5%). I'm thinking of including a performance review figure after each trade. We'll see.

 

[Modest]

When I start the non-ASX trading thread there won't be a suitable benchmark to use as the trades will be in a variety of markets and timeframes (incl intraday). How will I know if I'm doing a good job? I'll only know if I monitor my trading mistakes against a standard mark (<5%). I'm thinking of including a performance review figure after each trade. We'll see.

Ooo...Can't wait peter! Enjoy your break.

 

[PeterJ]

Peter enjoy a well deserved break
and i look forward to an interesting 2016

Peter

 

[xr06t]

I would like to echo Debtfree's comments. This thread has been great for me, and have found this type of momentum trading seems to sit well with me.

For Peter and any others worried about their threads not being followed, please please take notice of the increasing thread views, as i think this is a much greater indicator of how a thread is going. I for one never felt i had anything meaningful to add but very much enjoyed the constant posting and analysis, and was able to reflect on my own trading with the rhetorical questions posed.

10/10 for the thread from me. I think the results speak for themselves as to the score /10 for the plan.

Many many thanks.

 

[5oclock]

PETER , you have done a fantastic job of this thread, with an equally fantastic bottom line !! I will be waiting along with many others for your return ! Like other people i have not contributed,but I have read all your posts and enjoyed and learnt a great deal from your work----its really amazing to have an inside look at how others trade let alone an inside look at someone who can get an healthy return while the index goes through the floor. I for one have learnt more from your thread than a number of trading books. Thanks again for your efforts,have a nice little rest, and hurry back !!!

 

[peter2]

Thank you for the compliments.

A brief preview before my short holiday.

This thread will continue as an ASX, long only, short term price momentum trading, educational journal. The individual trade risk for every trade in this thread will continue to be 1% of total capital. The minimum price target will be >+1R and if market conditions are suitable we'll let a few get bigger (>+3R) using trailing exit stops.

Our preferred trading setups/entries are break-outs of horizontal resistance (BO-HR) and break-outs to new highs (BO-NH) in a trending market. Currently the weekly trend is down and this reduces the number of BO opportunities for us, so we may look for other setups that I categorise as pull-backs and reversals. The inclusion of these extra setups will provide plenty of opportunities.

We'll continue to manage our portfolio heat using our market risk filter based on the weekly and daily trend of the XAO index. The XAO index is also our benchmark that helps us monitor our performance.

As this is an educational thread, perhaps I should describe the perfect (imo) pull back and reversal setups, but right now I won't (tease . I've mentioned previously that trading reversals when the general market is going up is a waste of time and money. However if the market is down and turning up then it's a perfect time as the probability of earning an acceptable reward/risk is much better. The oil price will turn up, some time in the future and the oil stocks will follow. Demand for our banks will resume one day. We'll keep an eye on them. Until then, we'll trade the stocks most in demand now using price break-outs.

The spreadsheet and graphs of our performance will continue rather than restart. This will remind us that trading is a long term commitment and that we can expect to have losing periods, frustrating periods and rewarding periods. We can't have the good times without weathering some bad.

 

[debtfree]

Sounds fantastic Peter. Will you using all the funds you accumulated, roughly $60K or are you keeping the other $10K dry for something else on the side ...... or maybe your holiday

Enjoy your break Peter.

Thanks ... debtfree

 

[peter2]

The current trading capital (60K) will be allocated across two trading threads. The current ASX Momentum Portfolio will have 50K and the new business/new thread will start with 10K. Trades in the new thread use leverage and won't require as much upfront margin. If one thread needs to borrow cash from the other thread, that'll be done if there's cash available.

Trades in either thread will be sized according to the total capital of both threads (50K + 10K = 60K). Accumulated profits in either thread will help increase the trade risk in both threads (faster compounding).

This thread will continue trading ASX stocks (long only) and will be the main educational thread. The new thread will mainly be a trading journal. Educational comments will only be provided if people ask.

No more comments about the new thread. It won't commence until the first trade is opened.

 

[Nortorious]

The current trading capital (60K) will be allocated across two trading threads. The current ASX Momentum Portfolio will have 50K and the new business/new thread will start with 10K. Trades in the new thread use leverage and won't require as much upfront margin. If one thread needs to borrow cash from the other thread, that'll be done if there's cash available.

Trades in either thread will be sized according to the total capital of both threads (50K + 10K = 60K). Accumulated profits in either thread will help increase the trade risk in both threads (faster compounding).

This thread will continue trading ASX stocks (long only) and will be the main educational thread. The new thread will mainly be a trading journal. Educational comments will only be provided if people ask.

No more comments about the new thread. It won't commence until the first trade is opened.

Looking forward to seeing how you manage risk when using leverage. It's an area I haven't ventured into too much other than feeling like a superhero with a massively leverage trade that went well.... to then only give back those profits plus some on a couple of trades that went wrong following the initial home run.

 

[peter2]

There's nothing tricky about it. I'll be risking 0.5% - 1% of the trading capital in each trade. That's $300 - $600 as the current capital is $60K.

If it's an intraday forex trade with a risk of 32pips. I'll adjust the lot size of the trade so that 32pips = $300AUD. If it's a trade in the SPI with a risk of 40pts, I'll adjust the lot size so that 40pts = $600AUD. Obviously I can't do this with the futures contract but I can use a cfd contract to do it. CFD providers have mini-sized contracts in many futures markets (mini- Copper, mini-Crude Oil etc..).

It's the same fixed fractional position sizing model that we use when trading ASX shares. Unlike shares which require 100% of the trade value to be paid up front, leveraged markets require only a small amount to be deposited as margin for the trade. We will be able to trade a 60K account with only 10K quite easily.

 

[Nortorious]

There's nothing tricky about it. I'll be risking 0.5% - 1% of the trading capital in each trade. That's $300 - $600 as the current capital is $60K.

If it's an intraday forex trade with a risk of 32pips. I'll adjust the lot size of the trade so that 32pips = $300AUD. If it's a trade in the SPI with a risk of 40pts, I'll adjust the lot size so that 40pts = $600AUD. Obviously I can't do this with the futures contract but I can use a cfd contract to do it. CFD providers have mini-sized contracts in many futures markets (mini- Copper, mini-Crude Oil etc..).

It's the same fixed fractional position sizing model that we use when trading ASX shares. Unlike shares which require 100% of the trade value to be paid up front, leveraged markets require only a small amount to be deposited as margin for the trade. We will be able to trade a 60K account with only 10K quite easily.

Ok so you focus on the total value of the trade and the risk related to that rather than looking at the margin put up.

Makes sense

 

[VSntchr]

UGL was a great trade for anyone who took managements hint just prior to results.
Recent consolidation gave opportunity for the BO-NH (albeit at a much higher price) around $2.90.
One of the things I am working on at the moment is knowing when to add to positions that are deeply in profit. My urges are to take profit but clearly this chart was screaming to be added too in the last few days.
Some of the guys in the futures threads have mentioned struggles like this and "making the tough trades".



One that I saw, but missed :


Now that reporting season is out of the way there should be some new trends forming. Some sectors might go out of favour and may be replaced by new ones. I haven't been taking many BO trades over the last few weeks due to both market conditions as well as my focus being on trading the reports. Looking forward to finding some good trades over the coming weeks.