ASX Momentum Trade Book - Part 2

[peter2]

Trading update: EOD

One down day (-1.5%) doesn't change the daily trend, which is up. Selling the short term large cap trades provides cash for others.

JHX and CTX: These didn't bounce on the close at all. They were thumped.

AGI: Sell on the next open. This one is not going up just yet. Keep on eye on it though. I'll re-buy >2.80 if price doesn't close below 2.60.

Comment: As I've mentioned (as has tech/a and Pavilion103) getting out quickly is a requirement for a portfolio like this (*). The entries on both JHX and CTX were perfect. Prices went higher immediately and they added almost 2% to the open profits. Another up day and they might have hit their profit targets. JHX was very close. Not to be.

As we've seen today, a down day in the US markets and a down day in the ASX sees their prices drop quickly. We exit these trades as quickly as we start them. I don't see any reason to wait another day (and hope they go up tomorrow).

Those trades didn't provide anything, but this market dip creates other opportunities. There's a small price consolidation out there waiting for us to find it and trade it.

* If you can't sell or buy quickly then this style of trading is not for you. There's nothing wrong with using a more relaxed style. In fact if it feels better for you then you should do it.

 

[VSntchr]

What was the exit signal on SEN?

VTG breaking 200 today looks good against a profit taking market! In fact, most of my BO trades went up today..

 

[tech/a]

SEN

Yes I remember now.
Both you and I made a glaring error in our stop
Placement at 13 c

That's AT Support where we would expect it to hold
It did--- twice.
Stop should have been at 12.5 or 12 c when the stop
Is triggered.

Cost me a lot more.

 

[peter2]

Comment: I love it when people ask questions. Why aren't there more from less experienced traders?

My discretionary SEN exit was based on the high volume (12M*) on the good profit news. Generally good news is sold into by the larger holders. I was surprised to see price hold up as well as it did near the close. This indicates that there may be more demand and higher prices. Since I had sold my parcel I thought I should close this public trade as well. I mentioned that it was a DE (discretionary exit).

tech/a: re SEN exit trigger. Yes, I agree with you completely. 0.13 was a DH decision for the reasons you mentioned. Sometimes thinking about BE and preventing losses makes us overlook the chart obvious.

The SEN chart is good example. Every now and then a price movement will end up in an either/or situation for discretionary traders. The price of SEN drifted lower, on low volume, in a neat 3-wave abc correction to its 61.8% fib level, that coincided with the prior BO level. (This can be considered a pullback buy setup, not a sell.)

Do we exit at BE or allow the corrective move to complete (which may mean a small loss)? Most corrective pullbacks that go back 61.8% give up a significant amount of profit. and a quicker exit will prevent giving too much back. The pullback in SEN took back all our open profit but this pullback was only 4-5 price increments (ticks). This thread exited at BE, but got something from the re-entry trade.

It was that neat abc pullback that made me place the re-entry stop at 0.155 and was fortunate to be able to buy at 0.15 for the re-entry trade.



* Just noticed that the daily volume figure in my chart shows only 7.4M. I was watching ETrade and it was showing 11.5M before the close and there was ~300K at the close. That's interesting.

Is the CXA volume included in the ASX EOD data? I would like to know.

 

[VSntchr]

IT companies seem to be the sector of the moment. Good news from ASZ, DTL have produced huge gaps up in their prices. MLB has been on fire.

TNE is currently in a corrective pullback and I'm watching the chart closely for a buy signal.

I want to mention SMX as another contender for consideration. Price seems to have started to climb off it's two year lows (support?).

Been holding SMX on a support reversal play trade which has transformed into somewhat of a BO.
Agree that this sector looks like it is awakening from hibernation/leaving the dog house/insert your favourite euphemism.
I like TNE and also have it on watch.
RXP is another sector contender, the daily (and weekly) chart shows a series of higher lows since March. Although the background context may prevent some from entering. With results out shortly perhaps it would be better to wait for some fundamental confirmation before considering this one.

That brings me to another question. With reporting season kicking off imminently, do you have any rules around holding through results?

 

[peter2]

Trading update: EOD

AGI: Sold on open (2.65) for a loss $354 (-0.7R)

New trade: TNE: Bought BO-HR at 3.77 (iSL 3.55)
The larger price pattern is a pullback and I used the BO-HR as the entry trigger to see if price resumes the weekly up trend.

TS raised on BAL to 4.60, API to 1.55.

Holding through results: Makes me feel like a "long-tailed cat in a room full of rocking chairs". Does that answer your question?
I won't knowingly start a short term trade with a low size risk a few days before scheduled news. Trades that have been going for while (this means they are profitable) I'll let them go and wait for the surprises.

 

[peter2]

Does anyone know if the Chi-X (CXA) volume traded is included in the ASX EOD data?

OR is there something about the ETrade volume figure that I don't know?

 

[craft]

Does anyone know if the Chi-X (CXA) volume traded is included in the ASX EOD data?

ASX data doesn't include Chi-X. Looks like your E-trade includes both. Comsec only displays ASX data although trades may be executed through Chi-x. Not sure what the standard policy (if there is one) is for EOD data suppliers, or what the likes of yahoo finance include in their free data. Probably a pretty important question if you use volume in your TA.

Makes me feel like a "long-tailed cat in a room full of rocking chairs".

Classic!

ps
SRX chart.... Ugly.... how rude!!!

Great thread

 

[skc]

Does anyone know if the Chi-X (CXA) volume traded is included in the ASX EOD data?

OR is there something about the ETrade volume figure that I don't know?

View attachment 63559
View attachment 63561

It would appear that the ASX data contains only volumes traded on the ASX...

 

[bonkerrs]

Comment:

View attachment 63540

Can't work out why my chart has red candles where yours is blue, can see it after the consolidation period, during the breakout portion of the attached photo and I've noticed it in other charts.

Tech/a talked about placing the stop at 0.125 or 0.12 instead of 0.13. Could you please expand on this? Sorry I don't know how to make multi quotes but it was just before your above post.

 

[bonkerrs]

Not related to momentum trading but be good to get an understanding on this. How do you read this?

 

[CanOz]

Bonkers, I believe that Peter has a trend filter that is painting his bars in certain predefined conditions, could simply be a moving average or volatility. Where as you bars are only being painted based on close up, or close down.

 

[debtfree]

Bonkers, I believe that Peter has a trend filter that is painting his bars in certain predefined conditions, could simply be a moving average or volatility. Where as you bars are only being painted based on close up, or close down.

Bonkerrs: 1st July Post #18 - Peter covered this for you in saying "you'll notice that the bars turn blue when price moves >2ATR(10) [It's actually the SuperTrend (10,2) indicator]." A little different in I/Charts as CanOz stated.

If you want too see when Peter2's bars/candle would change colour add indicator 'Average True Range Trailing Stop,Daily10 / 2ATR Close
Cheers ... Debtfree

 

[craft]

View attachment 63563
Not related to momentum trading but be good to get an understanding on this. How do you read this?

Before you even try to read it, a few considerations.

In relation to what Peter was talking about in his previous post. Does what you are looking at include the Chi-x order book?

It definitely doesn’t include ASX Centre Point orders and that's where the big block orders tend to hang out looking for a cross match with anonymity.

There’s also the algo’s where you might only see the tip of a potential iceburg.

Then of course there is all the liquidity that is just hanging in the background that could hit the market at any second. You don't show your hand early when playing cards for money.

 

[tech/a]

Tech/a talked about placing the stop at 0.125 or 0.12 instead of 0.13. Could you please expand on this?

 

[peter2]

The market is providing another situation that we must be prepared for, "disappearing buyers, very thin bids". This is happening right now in two of our trades (FLN and CAT) and it is occurring at/near our exit triggers.

CAT: The big down bar two days ago alerted me that something had changed (our open profits disappeared). That means it's time to look for the exit, but the buyers' bids have thinned out. The portfolio needs to sell 5132 shares and our exit trigger is 1.25. We could have placed our sell order in the market today and we might have sold, but unless we really did this we don't know for certain. I took a snapshot of the MD just before the close today. The pic shows that there wasn't enough bid to sell our order at one price level and selling at market would have produced an average sell price of 1.222. It's a loss on the trade after being nicely in profit. This happens.


FLN: No big down day, but looking at the bids thin out is a concern, especially as it's also near our exit trigger (1.20). We need to sell 5296 shares and again (like CAT) must go through several price levels to get our market order filled. Our average sell price is 1.22.


This is another situation where I think selling is the right thing to do even though price hasn't closed (FLN) below our exit trigger. I would label this type of exit as discretionary (DE) also.

Sometimes, getting out when you can anywhere near your exits is a good exit. Don't be a dick for a tick in this situation.

Personal note: My personal trades in these stocks have not been sold as the parcels are larger. I can be a bit more patient and it might take me a few days to sell. I may get a better or worse sell price. I know where my must sell price is and I'll be keeping a close eye on the MD.

 

[peter2]

EOW Trading update: ASX Momentum Portfolio +10.0% ( 46% invested in 4 trades ) XAO -5.8% ( 21 weeks)

This weeks sells: SEN, JHX, CTX, AGI, FLN, CAT
This weeks buys: API, TNE

TS adjustments (in yellow in xls): API, BAL

This portfolio ended the week a little higher even after losing approx 2.5% of open profits as the market dropped. Closing trades reduces our downside exposure and this can be seen in the rise of the red line in the chart. We are poised to start more trades next week if the market rallies. If it continues lower we'll protect our capital.

 

[grah33]

Peter: thanks for the detailed response, including pictures, it was quite helpful. never thought of shutting positions off if the market is no longer uptrending. do u think that for daily short term trading, if the market changes from being in an uptrend to going horizontal like now (or even downward), one should just shut off all their open positions, or wait and see what happens to them?



ATR stop loss question: I've been reading about this in my books but they are unclear in terms of applying it. if u use e.g. 2 ATR for your stop loss, is that isl set at 2 ATR, and from then onwards as well 2 ATR - as price increases so does the stoploss ( a trailing 2ATR stop loss) .

and by the way, FP markets have been chasing me hard and they offered to give me a share-cfd trading account with .09% brokerage. that's like $1.8 brokerage for every 2000$ worth of shares. i'm thinking of taking it up , and they are dma as well. seems to good to be true. if anyone knows of any significant drawbacks to using cfds for short term trading let me know. i may save quite a lot of money, which is good for a newb.

 

[peter2]

grah33: I think you may have misunderstood. I closed the positions because the market was disappearing. I don't want to be left holding something that no-one wants to buy. I expect the buyers will return but I don't know at what price they will be willing to buy. Short term traders should avoid these situations.

I am concerned that the thin MD is here to stay and would advise you to stay with the higher volume stocks.

How you manage your portfolio in response to the market conditions is up to you. I've explained my guidelines several times already.

Trailing stop sizes: You have to find what works for you. You will have a different tolerance for risk than others.

Be sure to match the style of your trailing stop to the style of trading you intend doing. IMO there are only two types of effective TSs, either tight or loose. If you think back to the TS discussion on SEN. A TS at 0.12 would have been loose and a TS at 0.14 would have been tight. My selection of 0.13 was in the middle and a stupid place to put it.

 

[peter2]

Trading update:

BAL: Seems to have been sold off today and price is near our exit trigger. Sell next open (Wed 29/07) for this portfolio. (I'll give my trade another day or two to see if any demand appears at the 5.00 level.)

Outlook: Precarious, tricky. I want to see the market bounce from this level before starting more trades. Things could get ugly if it goes down to test the lows. On the bullish side there are a few nice looking large cap charts (JHX, CSL, WBC, BOQ, BEN, QBE).



SEN: BO-NH today after 4 inside bars with low volume.