ASX Momentum Trade Book - Part 2

[peter2]

Trading update: First "turbo" trade.

AMP-cfd: Bought BO-NH (after news) at open 5.15, iSL at 5.00.

 

[peter2]

Trading update: Another turbo trade.

MYX: Reversal setup. Yesterday's 10d BO on above average volume showed up in the scans.
Bought 1.35, iSL placed at 1.25. The tight iSL and our planned aggressive trade management, makes this another turbo trade.

 

[peter2]

EOW 102 update: ASX Momentum Portfolio +51.1% ( 103% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +6.2% (past 102 wks)

This weeks sells: PRG(-0.9R)
This weeks buys: AMP-cfd, MYX-cfd

Our portfolio gained a little as the market rose. Reporting season seems like we're walking in a minefield once more. We have to be cautious about starting a trade a few days before a scheduled report. I considered buying the BO in CNU but declined as it reports in a week and it's not likely to rise enough in a few days.

Outlook: Mildly and cautiously bullish. I've decided to try to increase the frequency of trades. These trades will be started with a smaller iSL size and managed with a quicker exit strategy.

 

[Kryzz]

Outlook: Mildly and cautiously bullish. I've decided to try to increase the frequency of trades. These trades will be started with a smaller iSL size and managed with a quicker exit strategy.

View attachment 69914

Hi Peter

Can you shed any light on how your exit strategy will change if moving to one that will be quicker in nature?

Will you still favour the discretionary exit?

 

[peter2]

The end goal is to double our starting capital. I'm going to make a greater effort to reach this goal before the end of Feb 2018. We need to earn +33% of our current capital to get there. That's 33% in 12 months.

It's dangerous placing a time limit on a trading goal because we're at the mercy of the market and it could go down for 12 months. However, doing the same things will probably not get us there in time either. Our options are to increase frequency (by being more aggressive), include shorts (which is against my natural bias) and/or trade other markets.

This thread is primarily an educational thread, not a recommendation to actively trade stocks or to buy/sell any specific stock.

The first thing I'll do is the addition of a more aggressive TP to increase trade frequency. There's no way I'll be able to manage lots of these trades simultaneously so most of the account capital will be employed by our current momentum TP and a smaller amount used for turbo trading.

This means we'll have to outline a Turbo TP.

 

[peter2]

Turbo Trading Plan

Strategy: Pure swing (momentum) trading with smaller iSL sizes and faster exits than our current momentum TP. We're going to anticipate an immediate continuation of the price swing and exit quickly if we don't see it.

Setup: Undeniable bullish price bar with above average volume. These bars may or may not be BO bars.

Entries: in the last hour of the trading day. Higher priced stocks may be traded using cfds (less capital required).

Position sizing: (Fixed Fractional) Trade risk starts at 1% of realised capital PLUS 10% of cumulative profits from turbo trades only. This compounding stops after losing >-2R and resets, resumes after the first winning trade.

This modification is used to compound profits quicker in winning sequences and prevents losing sequences from destroying most of the profit.

Exits:
1. Initial Stop Loss below signal bar or prior low or below prior gap.
(Note: Much smaller than our current TP which is below a recent higher swing low.)
2. Trailing exit trigger for longs will be two down bars with lower lows or one large down bar.
3. Profit targets at prior swing highs or placed at +1R to +2R wrt price levels.
4. Open turbo trades can be closed in batches when the open profit of the batch >0.5R/T.

Note: This plan's trade management won't wait through small pull-backs and retests of BO levels like we currently can.

Precautions:
Avoid entries just prior to scheduled news events (earnings reports).
Avoid thin market depths.
Avoid trading through XD days.

ps: This is a strategy that one might use when trading after gaps or after missing huge break-outs that increase original trade risks to unacceptable sizes.

ps2: We could use this TP (with appropriate modifications) to short stock-cfds after clearly bearish bars.

ps3: This is much closer to tech/a's small cap trading style. We may even use a few of his chart suggestions.

 

[peter2]

Trading update: Trade closed.

MGX: We were in the queue at 0.42, but decided to take 0.415 (Don't have centre-point orders ie 0.417.)
This trade closed at +1.1R after almost being stopped out. Price surges for 4 days then pulls -back over the next three weeks before surging again. Frustrating price action for a BO trader.



GRR would have been a better iron ore trade. grrr

 

[peter2]

Trading update: New trade.

WBA: Bought this BO-HR, although a little late we were still able to buy at 1.40 today, iSL 1.35.


MGX: Too impatient to grab reasonable profit after almost exiting for full loss. Missed out on bonus R's.

 

[peter2]

Trading update: New trade

ASL: Bought today's BO at 1.51, iSL at 1.40. [Reports 23/2 next week.]



NWH: Our limit sell order at 0.845, touched but didn't fill. Damn.
Don't you just love it when your broker posts that the report is due tomorrow instead of today!

Our turbo trades (AMP, MYX) have paused. We can allow them to go sideways, but we'll exit on a significant down day.

FPH: Price is not going up and we'll exit tomorrow at 8.35 - 8.40 if we can.

 

[peter2]

EOW 103 update: ASX Momentum Portfolio +52.6% ( 94% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +7.9% (past 103 wks)

This weeks sells: MGX (+1.1R), FPH-cfd (-0.6R), NWH (+1.2R)
This weeks buys: WBA, ASL

Our portfolio gained a little as the market rose earlier in the week and gave some back today.

Our turbo trades (AMP, MYX) have stalled and we'll exit them on the next open at near break-even prices. They were started in an attempt to profit from the bullish sentiment that caused our market to rise. In hindsight it would have been better to buy the index rather than try to select stocks that would rise with the market. Trading futures markets is the role of the P2 Trade book that I haven't followed up on. Sorry about that. It may even be the right time to consider an index short as the market is near a possible resistance level.

MGX: Sold at T1 as price rose. Our mistake was not letting price go higher before considering selling. Another 2R missed by this costly mistake. The market reminds me, again, that I don't know what will happen next. Don't pre-empt market action.

NWH: Closed on the open after failing to trade at our T2 target and falling down to our T1 level yesterday. This is in accordance with our management guidelines to let the profits get bigger and selling when price falls.

Outlook: Reasonably bullish but cautious as the index is near a new high. Reporting season is causing the usual price spikes in both directions. Even good reports are attracting sellers that take advantage of the increased volume to realise some profit.

 

[peter2]

Trading update: New trades

GNG: Bought the BO-NH at 1.71, iSL at 1.55. Target is the recent yearly highs at 2.00.
Our iSL allows a little room, but we anticipate that price will slowly continue higher.

KDR: Bought BO-NH at 0.54, iSL placed at 0.49. Target is the recent high at 0.65.
We'll be managing this one like turbo trade with this tight stop.

 

[peter2]

Note: You may or may not have noticed that we're going to compound the trade risk a little more aggressively with the "turbo" trades. Our normal amount put at risk in every trade is 1%. The turbo trades will also risk 1% plus 10% of all profits earned from these turbo trades.

Currently 1% = $759. The profit earned by the turbo trades so far is +$286 (AMP, MYX turbo trades were closed for small profits on Mon.) The current turbo trade is KDR and we've risked approx $787 (759 + 28).

I'm demonstrating this strategy because we have a proven track record of good risk management. If you can't exit when you should then please don't increase the amount you put at risk. I'm restricting this to only a few trades at a time as I'm unable to monitor too many at once.

This strategy works well when your trading strategy produces sequences of consecutive winning trades. It's also important to stop the aggressive compounding in losing sequences. I mentioned we'd stop at -3R, but I might change that to -2R as we'll be exiting quickly and usually before our iSL level with these trades.

This position sizing method is a good fit with the short term active trading style that tech/a demonstrates provided you can keep your losses very small.

 

[peter2]

Thoughts: Really liked this BO-NH setup in MYX, but declined, due to scheduled report in two days.
The BO is above a strong R level of 1.40.



Edit:
WBA: Decided to sell this after closing below 1.40. Initial SL was too close for this thinly traded stock. Reports Mon.

KDR: Not liking down day, another down day will trigger an exit in this trade.

 

[peter2]

EOW 104 update: ASX Momentum Portfolio +50.6% ( 34% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +7.1% (past 104 wks)

This weeks sells: AMP-cfd (+0.2R), MYX (+0.2R), WBA (-0.8R), KDR (-0.6R)
This weeks buys: GNG

Our portfolio lost a little this week as the market drifted down. Our turbo trades didn't get the immediate follow through that was anticipated. There were plenty of other charts with acceptable momentum but we didn't get into them. That's a matter of luck in a sideways market.

Our defensive trade management has us only 34% invested at the moment. We'll find some bullish momentum to trade next week.

Outlook: Cautiously bullish as the reporting season ends. It's been one of the most dangerous reporting seasons for a short term trader that I've seen for a while. Prices in many stocks went a little too high too fast and many have been corrected.

 

[peter2]

Happy second year anniversary!

This portfolio has now been active for two years (104 weeks). IMO the performance has been average. We could have done better or we could have done worse. A few mistakes were costly, but that's what really happens. This is probably the right result for an educational thread. Profit has been earned by applying a consistent approach and the potential for more has been presented.

This table shows the results during each six month period.

 

[tech/a]

Happy second year anniversary!

This portfolio has now been active for two years (104 weeks). IMO the performance has been average. We could have done better or we could have done worse. A few mistakes were costly, but that's what really happens. This is probably the right result for an educational thread. Profit has been earned by applying a consistent approach and the potential for more has been presented.

This table shows the results during each six month period.

View attachment 70096

Great effort
Peter.

Wouldn't mind 50% on my Super over 2 years!
Very low risk shown in the equity curve.
I wonder what the result would be if given to 50 different practitioners to trade over the next two years! How varied the results would be.

In particular your dedication in time and patience is most impressive.
So from the Duck a big THANKS.

 

[peter2]

Thanks tech/a and the others who liked the effort.
Different people, absolutely, different results. I think the spread of results could be +5% to +100% over the same period. I would hope that all would be profitable as this thread has emphasised a conservative attitude for risk.

People following this thread and managing some or all of their own money, please do NOT compare your performance to this thread's performance. You should be comparing your performance against your own benchmark. Our aim in this thread is to better the benchmark index. We've done that. In fact, we've thrashed it and done it with less draw down. The maxDD of the benchmark has been -17%, this portfolio -7%.

To anyone who has beaten their benchmark on both the up and down sides. Well done.

Do we bask in our own radiance? No way. We look back at our mistakes. Have we been reducing them or are we getting sloppier? I see indications in my trading that I'm getting sloppy. I've made some basic mistakes by forgetting/overlooking/ignoring my trading process. My trading business will suffer if this continues.

The market is relentless. Scratch that. The market doesn't have any attributes it just exists and we've decided to interact with it to grow our capital. We have to be relentless plus a lot of other adjectives. Our profitable edge is such a small thing that can never be taken for granted. We have to earn it one trade at a time.

 

[5oclock]

Happy second year anniversary!

This portfolio has now been active for two years (104 weeks). IMO the performance has been average. We could have done better or we could have done worse. A few mistakes were costly, but that's what really happens. This is probably the right result for an educational thread. Profit has been earned by applying a consistent approach and the potential for more has been presented.

This table shows the results during each six month period.

View attachment 70096

The Duck is 100% right Peter, a great effort on your behalf and much appreciated ! There are plenty of fund managers that would be happy with 50% return.Looking forward to the portfolio continuing ! A great insight to how a successful trader trades! The honesty and transparent posting is a great stand out. HAPPY SECOND ANNIVERSARY !!!!!!!!!

 

[peter2]

Trading update: Volatile price movements as CDD and GNG reported today. + New trade.

CDD: Closed with a little slippage as price traded at our exit trigger. Small loss on trade (-0.2R).
We'll keep an eye on this chart for a another setup.

GNG: Huge price range today. Close is above our exit trigger, so we'll hold on. Price weakness tomorrow will see us exit.

CDA: Bought as price looks like closing above our R level. Bought at 2.21, iSL at 2.00.

 

[debtfree]

XAO Chart: Price movements of (Mostly 2014) section looks and feels a little like (Mostly 2016) section. Hope 2017 doesn't follow suit with (Mostly 2015) section.
It caught my eye and I kept going back and looking at it.
To have a plan and follow it is a must as you say and it will take the worry out 2017 if it does go down.