ASX Momentum Trade Book - Part 2

[grah33]

thanks for the diagram peter. i don't know if they are percentages taken from winning trades or what but it is interesting to note that the pullback trade is your main shot (i assume you mean a pullback from a breakout). would like to ask you something, again if you don't mind: i've been paying attention to market depth as you do and i'm wondering if there is a setup that looks good (chart wise) that we would like to take but the depth is badly against us then should we take it? or perhaps the depth can change very quickly so we shouldn't worry too much about it and if the setup looks good go for it?



the market has been horrible hasn't it, terrible for a newby trader

 

[VSntchr]

the market has been horrible hasn't it, terrible for a newby trader

The market in general hasn't been ascending upward. But that doesn't mean that there hasn't been a wide array of opportunities for breakouts. In saying this though, it has been tough and if gains haven't been taken at key levels/desired targets then profits have often been washed into BE or even losses. I've had this happen with more than a few trades and it can be disheartening, but it's all part of the trading business.

In my opinion, the market is always providing extremely valuable lessons to traders - especially those who are experiencing certain conditions for the first time. So instead of calling the market terrible, I like to view it in a way that it is terribly constructive - I like to focus on what these market conditions provide in terms of opportunities, how I feel when I am forced to trade in them, how my trading stats look and what I could have done to better mitigate risk. By capturing all of this data I am able to be better equipped for the next time that we enter market conditions that are similar to this.

If the market was just going up through the period that Peter had been running this journal then all we would have learnt would be how to count money and while I love the thought of that as much as the next guy...I think that these sort of conditions have allowed Peter to display risk management in a strict and mechanical fashion that will provide the core skills for traders to ensure that they can stay in the game and grind out singles and doubles day after day. I try hard to focus on process over outcome and trust that overtime the results will correlate with progress on process improvement.

 

[VSntchr]

While I am here, thought I'd offer a candidate - not a BO yet...but worth the watchlist.
REG.
EHE has already broken out, and I noticed the recent trade in JHC - so the sector is hot.

I was considering a pre-emptive trade here..but with the result coming out shortly I decided to wait. If it does BO, then that tight consolidation offers a pretty good low risk setup IMO.

 

[peter2]

Vsntchr: Thanks for dropping by (RFN looking good btw). My focus has been on other markets (indicies) while the ASX has been falling. Have we made another low here? It's only one up day, but, about time.

REG: I like it a lot and will wait for scheduled report(28/8) and close >6.00
UXC: Liked today's BO of small TC pattern, but again, must wait for scheduled report (21/8).
JHC: Watching it. (>2.80)
SRX: Yes, even this BU chart BO (>31.00) Very crafty.
MEB: VTX: I like both of these recent BOs, but will leave them for Daffy.
SEN: Price going sideways, not far for another BO.
BKL: Great TC pattern, but price not for this thread.

I mention "must wait" as my trading plans state to not knowingly buy before major scheduled reports.

Grah33: MD does vary and it can do it very quickly. I'll overlook thin MD if the daily volume is adequate (10x my parcel size.). I've used this guide for quite a while now and maybe I should increase it to 20x my parcel size.

 

[peter2]

Trading update: Looks like the XAO is going down to 5100. Plenty of large caps with 6% yields available. We should be close to a low.

TNE: Sold at 3.75. Thought this one might hang in for us. A small loss (-0.1%).

AAD: Bought again as price traded at 2.45. I place the re-buy stop orders for only three days and then remove them as price drops lower. Yesterday's large up bar alerted me to replace the order. The difficulty here was selecting a reasonable SL price. I chose 2.20 as this is about an 80% retracement of the range from the low to the entry price. I prefer to place my exit stops below the 50 - 61.8% retracement level and create a HL without triggering my exit stops.

A conservative SL for a longer term trader would be 2.10, but this increases the size of the "risk" to 0.35 and would mean a lower parcel size and price must move at least 0.35 to create a +1R win.

 

[peter2]

EOW25 update: ASF Momentum Portfolio +7.8% ( 37% invested in 3 trades ) XAO -11.4% (25wk)

Our portfolio ended the week lower by 0.2% while the XAO dropped 2.3%. I hope you see the advantage of sticking with stock in strong up trends. They sell off with the market but not as much and they recover quicker. If you stay with the weaker stocks, you get hammered.

This weeks sells: TNE
This weeks buys: AAD

 

[skc]

EOW25 update: ASF Momentum Portfolio +7.8% ( 37% invested in 3 trades ) XAO -11.4% (25wk)

Our portfolio ended the week lower by 0.2% while the XAO dropped 2.3%. I hope you see the advantage of sticking with stock in strong up trends. They sell off with the market but not as much and they recover quicker. If you stay with the weaker stocks, you get hammered.

Plus the fact that you are only in 3 positions so >60% in cash. The ability to quickly go to a high % of cash will protect you from the worst falls. It would also cost the trader some missed profits if and when the market turns.

But, managing risk is more important and there is no such thing as a free lunch!

 

[IFocus]

Plus the fact that you are only in 3 positions so >60% in cash. The ability to quickly go to a high % of cash will protect you from the worst falls. It would also cost the trader some missed profits if and when the market turns.

But, managing risk is more important and there is no such thing as a free lunch!

Apologies haven't followed the thread if my comments are out of contex

Being long in a down trend is a flogging to no where particularly if it follows through , Peter has done well to hold the losses to where they are.

 

[peter2]

Trading update: Well, we don't see a -4% day very often.

ELD: Sell if 3.70 trades again (in market).
NXT: Sell if 2.45 trades again (in market).

AAD: nothing to do.

 

[VSntchr]

While I am here, thought I'd offer a candidate - not a BO yet...but worth the watchlist.
REG.
EHE has already broken out, and I noticed the recent trade in JHC - so the sector is hot.
I was considering a pre-emptive trade here..but with the result coming out shortly I decided to wait. If it does BO, then that tight consolidation offers a pretty good low risk setup IMO.

REG: I like it a lot and will wait for scheduled report(28/8) and close >6.00

Well for anyone with big balls, today the price initiated the BO. Report coming in a few days, so I am still waiting...given that JHC didn't take off on their report despite a prospectus beating result - I think waiting will be prudent. Perhaps this will turn into a nice BO-PB pattern by the time it is suitable to enter.

UXC: Liked today's BO of small TC pattern, but again, must wait for scheduled report (21/8).

Report out of the way (good result IMO) and I still like this chart. Holding up against the market despite some wild volatility.

 

[peter2]

EOW 26 update: ASF Momentum Portfolio +5.5% ( 13% invested in 1 trade ) XAO -10.6% (26wk)

Almost overlooked posting the weekly update. That's the result of one very interesting week. Who would have thought that this week would have ended higher.

This weeks sells: ELD, NXT sold during volatile movements.
This weeks buys: nil

Comment: There are not many BO opportunities in the market for this portfolio due to the big dip. As a result I will be selecting a few pull back setups. The basic scan finds charts where price has moved >2 ATR(10) higher than a swing low point. The setup checklist has additional filters that narrow down the trading candidates. I want the recent swing low to be a HL on the weekly chart. I want the weekly RSC(XAO) > 0 (stronger than the index), plenty of daily volume, swing low (HL) should be at the end of a corrective move that is appropriate (size) for the prior impulsive move (think EW abc correction or equal time correction), price at 50% - 61.8% level of prior impulsive move.

That's a little bit subjective, but I've got to leave a little mystery as we're discretionary traders after all. As a matter of record we're going to forward test this strategy. Therefore we're going to start more trades than normal (in a bear market) and probably be fully invested a little more often.

 

[peter2]

Trading candidates for this week are;
Break-outs: REG, RCG, TGR
Pullbacks: CSL, HSN

 

[VSntchr]

FPH seems to fit the bill for a breakout. A close above 695 looks like a good entry to me.
Weekly trend up, daily chart shows a higher low. I'd opt for 630 stop.


On a side-note, REG is a good example of how a report can ruin a perfect setup!

 

[peter2]

I've been focused on other markets while conditions were unfavourable for this thread's system (*). Two up days doesn't change the daily trend but the bounce makes a higher low which is good to see. Of course we must be mindful that this bounce may be only a short lived rally.

(* Kudos to tech/a for continuing Daffy's thread in a strong down swing.)

VSntchr: Thanks for the notice on FPH. I like it a lot.
REG: Our caution in waiting for the news saved us from a loss. That's why we have that rule.

Trading update: AAD remains open.
BSL: Bought BO of the small trend continuation pattern (after the BO-HR at 3.80). SL = 4.00
TPM: Bought the BO-HR, SL 9.00

Watching the BO levels in NUF, TGR and multiple pullback setups (123Low).. I remain cautious in this rally.
I anticipate some resistance at 5400 (XAO) and I'd like to see a HL above 5400 (XAO). That would induce me to risk more.

 

[VSntchr]

I've been focused on other markets while conditions were unfavourable for this thread's system (*). Two up days doesn't change the daily trend but the bounce makes a higher low which is good to see. Of course we must be mindful that this bounce may be only a short lived rally.

Watching the BO levels in NUF, TGR and multiple pullback setups (123Low).. I remain cautious in this rally.
I anticipate some resistance at 5400 (XAO) and I'd like to see a HL above 5400 (XAO). That would induce me to risk more.

Agree with all your points. I'm cautious as well. Have traded various strategies throughout the last two weeks, although all of them have been at reduced size so that I can maintain some sanity!

Another one I found this afternoon: HFA. Have traded this one successfully before and like the look of the consolidation at the HR (its a pretty wide resistance range due to illiquidity). I like the fundamental backdrop of this one as it is a 'fund of hedge funds' manager - so it should be performing well for clients against traditional FUM plays in the current environment.
It is a bit tricky to decide on where to enter this one as an aggressive trader may take an entry now in anticipation, but I guess the clear entry is a close above 250. I'd really like to buy only on a close above the break as it can wick around a bit. For the same reason I'd have a stop at a close below 226. Some real nice and sexy lower highs on a few charts now!

 

[peter2]

EOW 28 update: ASF Momentum Portfolio +5.3% ( 51% invested 3 trades ) XAO -13.5% ( 28wk)

This weeks buys: BSL, TPM, JHC (break-outs)

Outlook: I'm getting a little bullish here as the market goes sideways. I'll remain bullish even if the market makes a new low but doesn't stay there (bear trap). I'm personally using weekly lows to ensure my exits aren't triggered by the daily volatility. Although I'm bullish I must restrict my bargain buying and stay within my risk limits for a market that is trending down.

Charts that I'm watching for BO opportunities:
AHY APE CIM DTL EHE FLT FPH GNE HUB NTC PBG PRG PRO RCR SGF SIQ TGR TRS
Lots of them are slowly appearing.

 

[peter2]

Trading update:

RCR: Bought the BO (2.10) SL 1.90
I like that the small consolidation is above the 2.00 level and the old highs.

 

[peter2]

Trading update: New trade (BO-HR, also an ascending triangle pattern)

GNE: Bought at the BO level 1.70 over several days (thin depth). SL 1.58
Stock is CD (0.09NZD) soon. We may have to reduce the SL by the div amount after it goes XD (30/9). This will depend on the price movements at that time.



Raised several exit triggers to reduce portfolio heat and keep it within our bear market limits (<5%).
JHC: Raised to 2.65
TPM: Raised to 9.20
AAD: Raised to 2.30

Outlook : I remain cautious anticipating a retest of low. Upcoming FED news might be the catalyst.

 

[peter2]

Trading update:

BSL: Today's large down bar triggers our exit on tomorrow's open. We earn the 0.03 div, but that's a pittance as the price dropped >0.30. Looking at the chart our exit is late. My mistake. Each mistake erodes our edge.

 

[tech/a]

Trading update:

BSL: Today's large down bar triggers our exit on tomorrow's open. We earn the 0.03 div, but that's a pittance as the price dropped >0.30. Looking at the chart our exit is late. My mistake. Each mistake erodes our edge.

Brutal

Least it wasn't like TNG!!!