ASX Momentum Trade Book - Part 2

[Rypieee]

Lessons for those of you who are having difficulty making profits, keeping profits or just generally not doing it correctly.

1. We're all going to have rough patches. Get ready for them and don't let them take you out of the game, financially and psychologically (emotionally). Plan to trade less, risk less on each trade, but keep trading your plan.

2. Don't give up or start trading another strategy. Our strategy is to buy break-outs. We're not going to start trading reversals or use the "top secret skc" prop trading plan. We know that break-outs get us into those charts that are moving up. Just because our favourite sector (mid-caps) has stopped moving higher we don't abandon the strategy. If the break-outs are happening in the small caps or the large caps then we should be trading where the action is while the market is rising.

3. This portfolio is still in a draw-down. We're not out of our rough patch yet. Once we do get out (new equity high) we'll accept the high fives, but more importantly we'll enhance our experience and strengthen our confidence in ourselves and the TP.

If you abandon your TP in the rough patches then you won't experience the joy when you trade through them.

btw: The Top Secret SKC TP is available. For details click on @skc 's signature link.

I am a culprit of tip no. 2 in the past, just made my P/L worst and my emotions out of whack And when your emotions aren't in the right state and you're aimlessly wandering around wondering what to do with your portfolio, there was where I did the most damage to my portfolio.

Thanks for your advice and lessons through your own journey Peter2, I have most definitely become a better trader since following your journey and from what I have learnt off ASF, you have been the biggest contributor to my progress.

Thank you kindly for sharing this

 

[peter2]

Thanks for your advice and lessons through your own journey Peter2, I have most definitely become a better trader since following your journey and from what I have learnt off ASF, you have been the biggest contributor to my progress.

I'm pleased to read that and I think the ASF community shares that pleasure also. We've a good community here, with potential for so much more.

 

[Kryzz]

I am a culprit of tip no. 2 in the past, just made my P/L worst and my emotions out of whack And when your emotions aren't in the right state and you're aimlessly wandering around wondering what to do with your portfolio, there was where I did the most damage to my portfolio.

Thanks for your advice and lessons through your own journey Peter2, I have most definitely become a better trader since following your journey and from what I have learnt off ASF, you have been the biggest contributor to my progress.

Thank you kindly for sharing this

Echo your sentiment here Rypieee.

Peter's posts throughout this thread and others have been extremely useful!

 

[peter2]

Trading update: New trade

ORE: Bought break-out at 3.07, iSL 2.65.
This is a "cute" setup in the weekly chart. I'll post that chart later in the ORE thread.
All the EW aficionados help me out there.

 

[peter2]

One of the attributes (skills) of a profitable short term trader is flexibility. Day traders must be able to trade both long and short and they must be able to do this quickly in response to price action.

Although this thread isn't about intra-day trading the attribute to be flexible is an essential skill to learn. The flexibility I'm thinking about isn't about going long/short, but exiting and re-entering quickly. If you want to be an active trader and use tight exit stops then it's essential to aquire the skill to re-enter quickly in response to price action. The ability to re-buy one or two days after selling is a skill worth acquiring.

I'm sure I've mentioned this aspect before when we had consecutive trades in a GXY price rally. The opportunity to show this flexibility occured in the current price rally in ALL. We sold at our price target (T1) when price gaped above our sell order. We were comfortable with that exit as previously explained.

A gap up on opening is a bullish indicator and in a strong swing up it can be a one bar bullish setup worth considering. Tech/a gets a lot of his setups using this technique.

ALL is in a strong bullish rally atm and the gap up and subsequent price action provided a great opportunity to place a re-entry buy stop order. I wasn't able to post this trade last night so I won't be including it in this portfolio. However the educational content and the real-time example may be of some value.

 

[peter2]

I've mentioned how to handle this scenario before and I've suggested you include it in your trade management rules/guidelines. Here is another example and it's happening in our open ILU trade now.

Our T1 price target is at 7.70. Price has traded close to it but has now paused just under our level. We need another break-out to get to T1. Another BO-NH would be a bullish indicator, so why would we leave our order there? We've raised our order nearer to the 8.00 level.

Our T2 target is just above the old high. There is no point placing a sell order here as the old high and round number (8.00) may provide resistance.

We have two reasons to place our sell order below the old high.



Medium and longer term traders don't have to consider these suggestions. You're riding the prices higher and the dips don't matter.

 

[Cam019]

Thanks for your advice and lessons through your own journey Peter2, I have most definitely become a better trader since following your journey and from what I have learnt off ASF, you have been the biggest contributor to my progress.

Thank you kindly for sharing this

I'd also like to say thank you for your insights and lessons throughout this thread and Pav's momentum thread @peter2. There are many outstanding pieces of information throughout these two threads (among many others) that I am adapting to fit my own preferred trading style (as I'm sure many others are doing too). I appreciate the time taken to manage this portfolio and share your trading thoughts and processes.

I have noticed that the iSL, B/E SL and TS sell orders are only triggered by you manually on the next trading days open, after the current price closes below the sell order trigger price. I prefer EOD portfolio management because I don't have to be concerned about getting stopped out if the smart money drive prices down to shake out trailing stop orders. On the other hand though, if I didn't have a trailing stop order in place and the price didn't close back near the open, I would loose the profits that have not been locked in by a trailing stop order. In your opinion, is this just part and parcel of EOD portfolio management and do YOU just manage this potential risk by keeping the portfolio heat percentage under 10%?

 

[peter2]

The current market depth determines the ease of selling at our exit price. We can use in market stops when the MD is thick, but not when it's thin. Yes, we'll have slippage in thin markets and I'll remind myself again to try to avoid them.

I prefer to maintain the portfolio heat to 10% as I don't wish have a DD >10%. This is a personal risk tolerance and something I've continued to manage in this portfolio. There's a pic of the portfolio DDs so far in this EOW update.

 

[peter2]

EOW 110 update: ASX Momentum Portfolio +50.3% ( 53% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +10.2% (past 110 wks)

This weeks sells: DCC (-1R), ALL (+1.1R), CDD (+2.1R)
This weeks buys: ORE

Our portfolio has finally earned a bit of profit from this current rally. This good fortune was probably due to culling our losers and starting trades in a different sector of the market. We're not out of this current DD yet.

Outlook: We remain bullish along with our market filter. We'll look to start new trades this week to invest more into this market that is near new yearly highs.

 

[peter2]

Trading update: New trade

API: Bought the BO at 2.11, iSL at 2.00.
This is a tricky stock to trade as the price swings up/down frequently. Hoping that this BO will be followed up by further increases.

 

[peter2]

Trading update: A couple of exits for this portfolio.

AMP: Sold today at our target (T1.5) price 5.32.

GXY: Sold today as today was the second consecutive down day after the BO. This BO has failed to follow through with higher prices. The immediate reversal after the BO indicates that supply remains and it's not ready to go higher now. A re-buy order is in the market at 3.10 until the EOW (3 days) in case of another quick reversal.

This portfolio is still in a DD so cutting the losers quickly is prudent.
(Medium term, I'm holding on to both of these with a wider TS. )

Outlook: We need a few more trades as the market is making new highs. Reviewing the indices...
XEC - Emerging markets Mkt Cap (350 - 600) are being hammered.
XMD - Mid caps are making new highs. Just have to find them.
Energy, financials, materials (esp gold) are all going up.

 

[peter2]

Trading update: New trades

CSR: Bought today's BO-NH at 4.61, iSL at 4.40

BOQ-cfd: Bought today at 12.28, iSL at 11.90
Be aware of impending XD date.

I also liked CIM and QBE for opportunities, but I'd better not get carried away.

 

[peter2]

EOW 111 update: ASX Momentum Portfolio +48.9% ( 69% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +10.7% (past 111 wks)

This weeks sells: AMP (+1.5R), ORE (-0.4R), ILU (+0.6R)
This weeks buys: API, CSR, BOQ-cfd

Our portfolio fell a little as the market sold off on Thurs. Our trade in ILU was also closed as it fell to it's exit trigger (7.50). The market gave us a glimpse of a new equity high but it was only a mirage. We've still got more work to do yet.

Outlook: We remain cautiously bullish with our market filter. If the market falls continue next week we'll close our open trades as they'll follow the market down.

 

[Triathlete]

Hi Peter, I enjoy your thread.

I just have a question regards your BOQ-cfd trade as I trade cfds myself so it caught my interest....just taking a look at my own chart I can see that there is resistance just above at $12.50...I would have thought it would have been better to wait for a break and close above this level for the next run up????

Being so close to the entry price and a dividend on the way I would expect price to move towards this resistance and then pull back , a bit risky for me at this time but is on my alert now above $12.50...just my own opinion of course...

Keep up the great work Peter..

 

[peter2]

I agree with you on both points. I occasionally trade the micro pattern without looking at the larger time frame chart. 12.50 could present resistance as it's also a new yearly high if hit. I'm more concerned about the pending div which seemed a long way in the future. Public holidays can sure shorten the weeks.

I started a weekly trade in BOQ at the same time after noticing the weekly ORB. The iSL is much further away and takes into account the div.

The banks appear to be the main sector responsible for the slowly rising index and if you don't have any banks (like me) then it's been almost impossible to beat the index over the past six months (Trump rally).



@Triathlete , keep posting your charts to the stock threads. I enjoy seeing them (along with Boggo's, pixel's and tech/a's)

 

[peter2]

Short term traders like us must be aware of scheduled news so that we can avoid unfavourable price spikes. I have been caught out not knowing again today (due to not investigating) with API and ILU.

Our open trade in API has not been adversely affected although price has traded at our exit trigger (2.00). Price has closed above it once and may do so again today. We'll exit if price trades down there again.

ILU was the other stock with news today. Our trade ended a few days ago and I was waiting for an opportunity to re-enter not knowing that there was a qrtly production report today. This report was good news and the price opened much higher, leaping over my re-entry order.


BOQ, our trade was closed yesterday before the XD today. I don't like paying the div and in skittish markets the price falls further than the XD amount. We'll take the small loss.

Our open trades are API and CSR. We're looking for more as our market filter is cautiously bullish. The daily trend is down but the weekly trend is still up.

 

[peter2]

Trading update: New trade

BLD: Bought today at 5.91 (pre-empting the BO), iSL at 5.70.
Turbo trade, price continues higher or we're out.


ORI: Seriously considering this one also.

 

[peter2]

Trading update: New trade

ORI-cfd: Bought today at 18.06 (pre-empting BO), iSL at 17.50


Note: Pre-empting the BO is not a good habit as the BO to a new high hasn't happened yet. The BO and close above the BO level confirms the demand and creates the BO entry opportunity. Until then, pre-empting the BO is wishful thinking.

 

[peter2]

EOW 112 update: ASX Momentum Portfolio +48.7% ( 96% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +10.0% (past 112 wks)

This weeks sells: BOQ-cfd (-0.3R) sold before going XD
This weeks buys: pre-empting BOs in BLD and ORI

Our portfolio value remains the same and we've added new trades, anticipating further demand next week. I've intentionally targeted the larger cap stocks atm as the demand seems to be with them and they have enough liquidity so that I don't have to watch them during the day. My stop orders get filled with minimal slippage.

Have a look at the recent chart of ILU. The short term traders (us) get kicked out for a small profit while the medium term traders scoop a lot more thanks to the good news. That's the difference between the trading styles.

Outlook: Cautiously bullish. The daily trend is down, but may have found some support while the weekly trend remains up.

 

[peter2]

Trading update: New trade

BAL: Bought today's BO at 4.80, iSL 4.40.
A nice little ascending triangle pattern and the BO, a sign of strength (SOS). The 5.00 level may provide some overhead resistance, however the initial target provides a good RR for this setup. The iSL is placed conservatively in order to give this trade some room top move around. Price will need lots of time to get to the initial target. I'm hoping that the good results of A2M apply to BAL. I think A2M is in the same position BAL was two years ago, great sales, great profits and ramping up production into China. BAL couldn't handle it, can A2M?

Even though we're using a BO technique, but this trade is very much a reversal opportunity.



Good to see BLD and ORI BO today. Pre-empting the BO can lead to disappointment. On another note, I can't get over that I pre-empted the EOM in the yearly comp. D-oh!