Contrarian Investment Journal

[Cam019]

I was thinking today about whether I should continue posting in this thread, but looking at the number of views and a few previous comments from people there must be some people watching, so I will continue for those people who have commented and everybody else lurking in the shadows.

I guess I should just elaborate on my trading style a little:

- I am trading using VSA on quite a small capital base.
- I will be deploying anywhere between 45-50% of my capital on any one trade and only holding a maximum of 2 trades in the portfolio at any one time.
- Trade risk on any given trade could be, and has been, up to and including 5% of my total capital base. I do try and make an effort to not let it get above that.
- I also prefer to trade shares with relatively high volatility with a price less than $2 per share, but definitely would definitely consider something in the $2.01 - $5 if the right set up presented itself.

Due to brokerage, and my small capital base, I have decided that this is the most effective way to deploy my capital to trading, and one that I am comfortable doing.

 

[peter2]

Thanks peter2, will definitely keep it coming.

You have to keep it going because you said you would.

I would like you to consider altering the thread title (ask Joe) as your style is no longer a "deep value" one and the current title is misleading.

You're trying to learn a hard to master skill. It's going to take time. Use this thread to record your thoughts and help organise them into a clear trading plan. As you gain experience you'll have a record of your accomplishments and this should give you some confidence that you're learning.

Knowing that people are watching should help you "do the right thing". Perhaps you could setup a chart to show the progress of your portfolio.
eg ABC +12%, XYZ -6%, DEF +13%, MNO -10% Progressive total = +7% / 3 mths.

The forum has discussed the pros and cons of a 1 or 2 stock portfolio. Consider doing some paper trades on the side to help you gain more experience.

 

[Cam019]

You have to keep it going because you said you would.

Yes I did, and I will continue.

I would like you to consider altering the thread title (ask Joe) as your style is no longer a "deep value" one and the current title is misleading.

I had considered this, but point taken. Thread name and location changed.

You're trying to learn a hard to master skill. It's going to take time. Use this thread to record your thoughts and help organise them into a clear trading plan. As you gain experience you'll have a record of your accomplishments and this should give you some confidence that you're learning.

Knowing that people are watching should help you "do the right thing". Perhaps you could setup a chart to show the progress of your portfolio.
eg ABC +12%, XYZ -6%, DEF +13%, MNO -10% Progressive total = +7% / 3 mths.

I will try and modify my current trading spread sheet and consider posting more regular portfolio progress updates than once each month.

 

[Cam019]

Trading update: New trade

Bought PAA @ 0.066 (green line) on Mondays open, iSL is a close <=0.059 (red line). Note the bullish pennant forming with the last 7 days of price action.

 

[peter2]

Good, now you're starting to get serious.

My next suggestion is to develop a playbook. A playbook is a collection of your favourite setups. Each setup is clearly defined by a set of variables. This may include how your going to find them and how you're going to trade them. [ref. Mike Bellafiore's book: The PlayBook. There is also plenty of free material on the SMB Capital website.]

As you learn more about VSA you'll be attracted to a few ideas that seem easy to understand and you can see how to trade them. Review how tech/a trades his charts, he's done a lot in many threads, not just his current one. Develop your own rules, see how they work out using the training mode available in many charting packages.

I'm steering you into a discretionary style because that's my own. If, after plenty of work you realise that your ideas have potential but you're not working it properly, consider if there are benefits to automating your strategies. That's a whole different journey and fortunately we have an expert in that field that has plenty of reference material.

If you put in the work and ask the right questions, you'll get plenty of help.

 

[tech/a]

I agree with Pete.
It's rare to see anyone put up Thier trades and thoughts
Those that do should be encouraged
It's a long road.It takes time to find, mark up and follow
Charts.

I like your thinking Cam and I think Pete has nailed it by
Pointing out your trade planning.
It's critical to success. By choosing VSA or in my case my
Own slant on my findings in it, your clearly not one to buy
Hold and hope.

I've said many times practical application of analysis and
Trade management are often the keys that are missing or
Full of holes.

Lastly you'll know when you've got it.
10 wins, 10 Losses in a row won't matter you'll know exactly
How to minimise loss and maximise profit in any situation.

If you need a hand just holla!

 

[tech/a]

PAA

My first observation is what appears to me to be a random entry
Into this trade and a random ISL.

Can you explain your thinking here and how you intend to manage the trade.

I'm also interested in how you intend to manage risk and maximise profit.
As a VSA chartist you'll begin to notice a few things
What have you found?
One thing I will say is that PATIENCE pays
Take A2M and MSB as recite to examples.

 

[Cam019]

Good, now you're starting to get serious.

My next suggestion is to develop a playbook. A playbook is a collection of your favourite setups. Each setup is clearly defined by a set of variables. This may include how your going to find them and how you're going to trade them. [ref. Mike Bellafiore's book: The PlayBook. There is also plenty of free material on the SMB Capital website.]

As you learn more about VSA you'll be attracted to a few ideas that seem easy to understand and you can see how to trade them. Review how tech/a trades his charts, he's done a lot in many threads, not just his current one. Develop your own rules, see how they work out using the training mode available in many charting packages.

I'm steering you into a discretionary style because that's my own. If, after plenty of work you realise that your ideas have potential but you're not working it properly, consider if there are benefits to automating your strategies. That's a whole different journey and fortunately we have an expert in that field that has plenty of reference material.

If you put in the work and ask the right questions, you'll get plenty of help.

Thanks for the invaluable suggestions and advice Peter. I shall get a start on them.

I agree with Pete.
It's rare to see anyone put up Thier trades and thoughts
Those that do should be encouraged
It's a long road.It takes time to find, mark up and follow
Charts.

I like your thinking Cam and I think Pete has nailed it by
Pointing out your trade planning.
It's critical to success. By choosing VSA or in my case my
Own slant on my findings in it, your clearly not one to buy
Hold and hope.

I've said many times practical application of analysis and
Trade management are often the keys that are missing or
Full of holes.

Lastly you'll know when you've got it.
10 wins, 10 Losses in a row won't matter you'll know exactly
How to minimise loss and maximise profit in any situation.

If you need a hand just holla!

Thanks tech/a, will do.

PAA

My first observation is what appears to me to be a random entry
Into this trade and a random ISL.

Can you explain your thinking here and how you intend to manage the trade.

The entry was made after noticing the second decreasing low volume down bar after the 3 bar up move (what I consider a sign of strength). I use EOD data so I was unable to enter Fridays close @ 0.064 which then lead to my entry on Monday morning @ 0.066.

The iSL was placed at a closing price of <=0.059 to give it some room to move before a break through of 0.072. I have given it the range of Wednesdays extreme volume up bar to move around in and taking into account Wednesdays low not trading lower than Tuesdays close of 0.06, I chose a close of 0.059 or lower as the iSL. The trades will be managed EOD and sold at the next mornings open if we have a close below the iSL level.

I'm also interested in how you intend to manage risk and maximise profit.

This is where is gets interesting. The iSL stop is not in the market. It is a mental stop that I will trigger when and if the price closes below my iSL. Once we have a breakout I monitor the price action and will move my stop loss up to an appropriate price once a new support level have been defined and price is tracking away from it. If I see some wide range up bars on extreme volume or supply entering at the top end I will consider entering a trailing sell order in the market to maximise profits but I am cautious about this because price could bounce back and close above the trailing sell trigger price.

As a VSA chartist you'll begin to notice a few things
What have you found?

Not everything is as it seems!

 

[tech/a]

Not everything is as it seems

Ha yes
But there is much more there than most who look at a chart see.
Ill expand with an example later---maybe the weekend as I'm flat out
building things!

 

[Rypieee]

Hey Cam019, great work on starting your own thread, it is no easy task!
You make me want to start one up as well so the peeps at ASF can keep me and my trading in check, might consider opening up a thread soon.

My trading style is based on fundamental & technical analysis and I am a trend follower that take my positions on breakouts (new highs or horizontal resistance - very similar to Pete's method).

Would love to learn about VSA in the future

I am just intrigued by your decision to allocate up to 50% of your capital to a single trade - reasons?
I allow myself 8-12 positions within my portfolio and each position size is based on max risk/loss on the single trade.

Good luck with your thread!!
Ryan

 

[tech/a]

Perhaps a follow my trade section---how about it JOE?

 

[Joe Blow]

Perhaps a follow my trade section---how about it JOE?

Am happy to create a Follow My Trade subforum for Trading Strategies/Systems if people would like to see it. Those who would, please 'like' this post to register your vote.

 

[Cam019]

I am just intrigued by your decision to allocate up to 50% of your capital to a single trade - reasons?
I allow myself 8-12 positions within my portfolio and each position size is based on max risk/loss on the single trade.

Ryan, the reasons are due to a small capital amount and brokerage costs. I trade using CommSec and brokerage costs are $19.95 each time you buy and each time you sell a position, this means brokerage on one trade (in and out) is $39.90. If I were buying position sizes of $500 this means that in order for me to break even on a trade the price would have to move up 7.98% and as you can see, this is quite significant and difficult to regularly achieve. In order to combat this, I increase my position sizes (and therefore risk) so when I buy a position it need only increase by 2% (as capital increases I hope to lower this further, aiming for 1% or less) in order for me to hit break even, and then onward to profit.

 

[Rypieee]

Ryan, the reasons are due to a small capital amount and brokerage costs. I trade using CommSec and brokerage costs are $19.95 each time you buy and each time you sell a position, this means brokerage on one trade (in and out) is $39.90. If I were buying position sizes of $500 this means that in order for me to break even on a trade the price would have to move up 7.98% and as you can see, this is quite significant and difficult to regularly achieve. In order to combat this, I increase my position sizes (and therefore risk) so when I buy a position it need only increase by 2% (as capital increases I hope to lower this further, aiming for 1% or less) in order for me to hit break even, and then onward to profit.

I see, did not take in account capital constraints when I was drafting the question

Nevertheless, good luck on your journey and maybe you might see my thread on ASF soon enough

 

[Cam019]

Nevertheless, good luck on your journey and maybe you might see my thread on ASF soon enough

I look forward to it. Good luck!

 

[tech/a]

Cam here is my take on PAA as of NOW

Note
Low volume in itself for bars after a high volume wide range bar
are not an indication that supply will stay contained and demand will follow.
It is possible that price may continue to fall on low volume if there is no demand.

What we want to see is how NEW higher volume is handled---is it supply or demand
absorbing supply or something else. It will come but not on this chart YET.
.

 

[tech/a]

Cam Perhaps an exercise. I have left out a lot

 

[Cam019]

Thanks for your thoughts on PAA @tech/a. I always enjoy seeing how other people read unfolding stories. Uni and work are taking up a lot of time currently, I will give BIG a crack later on and post up what I can see.

 

[tech/a]

As the market hasn't opened and it is easier to read after the fact
here is how I see things at the Right side of the page.

BIG has risen on moderate volume with a test to the up side the day
after the breakout. I think the gap 2 days ago could signal support.

Ooops I didn't hit the send button!

 

[Cam019]

Alright @tech/a, here it is.