ASX Momentum Trade Book - Part 2

[peter2]

is the reason for using CFD's to increase returns?

No, definitely not. Cfds allow us to use 10-20% of the value of the parcel instead of 100%. This is helpful when the parcel sizes are larger than usual.

If we have cash available we can start more trades if the existing trades prove themselves profitable.

Currently the portfolio is 113% invested and we still have 14K left to use.

 

[peter2]

On the eve of a change in forum software and the impending holidays it's an opportune time for me to thank you all for your support in this thread. This thread started with Pavilion103 (all my best to you Pav.) a long time ago and it's progressing comfortably.

I hope that I've helped a few of you only the way. I'd like to help more, but you're too shy to ask. Use these holidays to decide if you really want to actively manage your capital in the world markets. Every one of us can learn the skills to be profitable over time. I'm willing to help and I know there are others in this community who are willing to help you also.

I'm hoping that the new forum software will allow us to create members only threads, maybe even invite only threads. I don't know.

I'm willing to start another portfolio using weekly charts with a larger account size. I know many of you can't actively manage your trading account during the week. Perhaps we could get together for a few hours every weekend via this forum and plan our trading activities for the next week. It's just an idea to inspire further suggestions.

We can't tell you what to buy and when to sell, but we can provide suggestions to help you organise your trading process. We can help you get a trading plan together. You know you can't win without one. I'm not interested in reading about your should haves, would haves and could haves. I'll ask you why didn't you follow your plan or do your preparation. The forum can provide additional accountability if that's any help. You're not alone while this forum exists.

Finally. My results are all due to my work. Your results are all due to yours. If your results are not good enough, then what are you going to do differently? If you don't know, then ask.

 

[Newt]

Hope you have a great Chrissy Peter. On behalf of all the lurkers here, that probably don't interact enough, I'd just like to add my thanks again for all the blood sweat and tears you've invested for learning traders here (and realistically do we ever stop learning?).

Your posts are always one of the first things I look over on ASF, and I hope there will continue to be a chance to do that in the New Year.

:xmastree

 

[lindsayf]

Thanks for your work on this thread and your generosity with your time.
I am interested in the weekly time frame as I can access the asx300 within my super account.
I just need to get myself organised with some scanning software and a few other things.
Currently do some daily/weekly forex trading with a fast take profit methodology.
It would be good to expand and develop my trading over the next few years.
I will keep an eye out for developments here and think about drafting a trading plan with reference
To some of your work here.
Have peaceful xmas/new yr break.

 

[Lone Wolf]

Thank you for your continued efforts Peter.

I hope I can contribute more in 2017. I've allowed trading to take a second seat to other things. It's time to stop spinning the wheels and put trading first, 2017 is do or die. First is a written trading plan and a process of discovering appropriate candidates. I'll see how much progress I make over the Christmas break, otherwise I'll need to look at taking my 10 weeks long service.

As for the weekly chart idea, I think everyone would be able to learn something from the exercise. But it's not for me. One of my biggest issues is having confidence in a system with low trade frequency. How do you know it's not just a lucky run when you only have a small sample size? I also have no confidence that the global economy will produce long bull runs in the future. I'd rather develop the ability to react quickly to changing market conditions, including profiting from bear markets. Weekly trading would react slower, which for many is a good thing, but with lower trade frequency and greater exposure to market pullbacks I'm not sure I could personally trade weekly.

Whatever you do, don't burden yourself. I liked the direction the P2 Trade Book thread was heading in. But I get the feeling it interfered with your actual trading. We aren't paying you for your contributions, so contribute in a way you enjoy and can comfortably sustain.

 

[peter2]

EOW 95 update: ASX Momentum Portfolio +46.5% ( 86% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +4.0% (past 95wk)

This weeks sells: BSE(+0.8R), GXY(+0.8R), AMP(+1.5R), MYR(1.6R)
This weeks buys: REA, BLD, JBH

Our portfolio gained a little this week as we cashed in on a two larger cap trades. Another portfolio equity high. It's very satisfying seeing our trading actions slowly accumulating profit. Sure we've made a few mistakes, missed a lot of good opportunities and have felt frustrated. However on the other hand we haven't been hit by a shocker and we've been profitable in every batch of 20 trades. That's very consistent.

The latest batch of 20 trades has been our best yet (55% (11/20) winners and a massive $7200 profit). See table.


Outlook: Our market filter remains bullish and we've got plenty of cash to take advantage of opportunities as they appear next week or more likely in the new year. At this time of the year the market depth is thinner and trading volumes very low. Stops that are in the market can be triggered more easily. Don't leave them in the market at this time.

I'd like to remind you of what happened last year. The XAO dropped 500pts during January 2016. I don't anticipate this happening in Jan 2017 (Trump inauguration Jan 20th 2017) but don't get complacent.

 

[peter2]

I've expanded the Batch of 20 performance table. The effect of compounding will distort the $ values but the true performance is shown by the R multiples. The edge per trade for each batch is Total R /20 trades.

After a slow start the overall edge is improving (0.17 -> 0.259). I'm hoping we can get this to >0.30 before we hit the end goal.

I monitor my performance to see if I'm improving or trading well. Are you monitoring yours?

 

[debtfree]

Hi Peter,

I must say a big thank you for your amazing thread which certainly displays the tenacity of sticking to your plan through tough and tougher times over the duration of this educational exercise. I appreciate the time and effort you have given to us to better our trading habits.

Wishing you and everyone else following Peter2's thread a Merry Christmas and Happy New Year.

Cheers ... Debtfree

 

[Boggo]

Hi Peter,

I must say a big thank you for your amazing thread which certainly displays the tenacity of sticking to your plan through tough and tougher times over the duration of this educational exercise. I appreciate the time and effort you have given to us to better our trading habits.

Wishing you and everyone else following Peter2's thread a Merry Christmas and Happy New Year.

Cheers ... Debtfree

x 2

 

[ianna]

Hello Peter
Just wanted to add my thanks for your great work on this thread. I've been following it for a while now and learning as I go.
Thanks again.

 

[Lone Wolf]

Trading update: New trade

BLD: Bought at 5.43, iSL at 5.10. Initial target near 6.00.
Another reversal using the BO-NH after the first HL setup.

View attachment 69158

Peter,

Looking at the recent BLD reversal trade. BLD had been in a significant downtrend since late August, with a substantial gap down on 24-Nov on news. What in your eyes made this a better candidate than other options at the time? You don't seem put off at all by that recent large gap down. Any comments on what, if anything that large gap down means to you?

Did you hold an opinion on whether the gap down was overdone, or was the decision purely technical in reasoning?

 

[peter2]

1. At the time there wasn't any promising break-outs and my next preference is to look for pull-backs or reversals in ASX300 stocks. This bias to look for reversals (buying bargains) in a bullish market is a weakness and is something I'm trying to minimise.

2. I'm anticipating that the bullish sentiment for the banks will flow to others within the ASX300 soon. The best RR setups in the ASX300 currently are the pull-backs/reversals off support. I started five (AMP, MYR, REA, BLD, JBH) at the same time trusting that a few will work out. AMP and MYR have created +3R for us so far. If the market goes down then we'll exit the others quickly to minimise any losses. If the market remains strong then we'll start more ASX300 trades hoping to profit from the current bullish sentiment in the larger cap stocks.

3. BLD setup. Perfect setup in a bullish market. Except for the gap. [I'm a chartist primarily, but I do use commonsense as well.] It's was commonsense to look at the reasons for the gap. This gap was created by a corporate restructure. BLD sold its 40% stake in Boral:CSR and raised additional capital (creating shares at a lower price) at the same time.

The gap down was due to a corporate restructure rather than any deterioration of their business. I was comfortable ignoring this gap.

 

[Wyatt]

Hi Peter,
As an avid follower of this thread, I would love to see your trading style from a weekly perspective. I like many, as you suggested, find it nigh on impossible to follow the market intraday, so your weekly perspective would be very interesting.
In particular, the discipline in your trade exits, which are my / everyones? weakness, are a revelation and your ability to eke out returns in a market that has had a few of the regulars grumbling, displays adaptability to market changes. We have much to learn from you.

[/QUOTE]Finally. My results are all due to my work. Your results are all due to yours. If your results are not good enough, then what are you going to do differently? If you don't know, then ask.[/QUOTE]

I guess waiting for a systematic backtested approach to get back to sync with the market is not gunna cut it?

Cheers Wyatt

 

[peter2]

The significant disadvantage of demonstrating a weekly system is the much lower number of completed trades. In any year a portfolio might only do about 30 trades based on weekly charts. Any profit earned over 30 trades, even if it beats a benchmark could still be considered lucky. It's even easier to be unlucky and not beat the benchmark even though we followed the TP perfectly. There's not much entertainment value in seeing a portfolio earn 5% even if the index lost 10% over the same period.

People are only getting interested in this thread as the gain nears +50%. They overlook the 95 weeks it's taken to get here.

My SF portfolio comprises trades from both weekly and daily time frames. It's a difficult juggling act when one's personality (risk tolerance) favours one trading time frame over the other. The difficulty is maintaining consistency in both systems.

When we trade the weekly charts we need our trades to last months instead of weeks needed for our daily system. If the market doesn't trend for months then every weekly system will struggle for gains. Our ASX has gone up one month and down the next. Weekly systems struggle in these market conditions. Over the past six months I've earned more from the shorter term trades than the weekly trades.

I love the weekly time frame and it was all I needed while working during the week. (The 2007 bull market also helped.) I am still considering a forum portfolio thread using weekly charts as I'm managing a few portfolios in the same manner. The extra work would be in the composition of the explanatory posts. I'm having difficulty seeing if there's any extra educational value in a weekly portfolio thread compared to this short term trading thread. The setups are slightly different, but the risk and trade management are very similar. The basic aim is the same, make more profit than losses, while managing the risk.

ps: One main point of difference for the weekly portfolio would be the stock universe. A much larger account size would exclude trading in lower volume stock codes. Earning 20%pa, while trading only ASX300 stocks would be a challenge in a sideways or down year.

 

[Lone Wolf]

The gap down was due to a corporate restructure rather than any deterioration of their business. I was comfortable ignoring this gap.

Thanks for the reply. My mistake was in only skim reading the news. The article I saw made it sound like the price crashed 17% on fears that the company paid too high a price for the acquisition. I missed the capital raising part so it makes sense now.

 

[Lone Wolf]

People are only getting interested in this thread as the gain nears +50%. They overlook the 95 weeks it's taken to get here.

How are you tracking this out of interest? Do you check the thread views?

The 50% gain looks pretty and will be a nice milestone, but if that's what people are excited about then they are missing the point. The portfolio has always been running at around 25% pa and still is. The more exciting figure to me is the single digit system draw down. As you say, the real value here isn't the end figure but in how you managed the portfolio in order to achieve it.

 

[peter2]

I'm pleased you understand the importance of the consistent management of the individual trades and also the management of the portfolio has a whole.

I'm not tracking interest at all and maybe you caught me exaggerating a little.

 

[peter2]

Trading update: Whoops, trade closed.

BKY: Sold at 0.88 this morning (+2.3R, $1640).
I meant to raise this sell order yesterday but obviously forgot and it was pinged today. If price trades almost to a target but backs off a little and it requires another BO to hit the order I should raise the order to the next target.

 

[peter2]

Trading update: New trade

FBU: Bought today (10.33) after yesterday's BO-HR, iSL is 9.80.
A couple of higher lows makes the ascending triangle pattern with the target ~11.30. Price must make a new yearly high to get there. Break-outs during low volume periods are like BO's at any time. They work out or they don't.

 

[peter2]

EOW 96 update: ASX Momentum Portfolio +49.6% ( 84% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +5.2% (past 96wk)

This weeks sells: MYR (+1.6R), BKY(+2.3R)
This weeks buys: FBU

The market continues to drift higher over the holiday period. Our portfolio gained a little this week as we bagged profits in MYR and BKY. Another equity high.
We've raised a few TS to reduce risk. These trades will work out or we'll close them.

Outlook: Our market filter remains bullish and we'll start more trades next week to fill our quota for risk.