My open book trading plan - Two month test

nomore4s · 10 July 2007

nomore4s said:
Porper did you get an entry on this today?

I missed the opportunity for my final pyramid position with a type of swing trade set up that I've been looking at, but I've only just started looking at this type of set up and didn't have enough faith in it, showing my inexperience, will post up the info sometime tomorrow.

Be good to get some feed back on it from some more experienced people as well.

Here's a chart with some of the swing trade set ups.
The swing trade idea/system was in Smart Investor Magazine this month and has got me interested. I will mainly look at using it with stocks I'm already holding a position in and am in profit with already, will use it as a type of pyramid and/or a short term trade (tight trailing stop) to scalp some more off the trend.

Will be looking for consecutive down days after a high.

The rules I will be using are:
1) The stock must be in a strong uptrend - Higher lows. (The orange line on the chart)
2) Entry will be a break of the previous days high (the day before the low).
3) Stop loss will be at the last low (or the next price under to allow for price movement) - Tighter the stop the better.

I realise this is nothing new but it is a new strategy for me.
Any comments and/or ideas & hints will be gladly taken on board.
I haven't taken a trade with this set up yet.

Does anyone else use this method?

vert · 10 July 2007

ok guys a few questions on this trade im in, MGX
first i high lighted my target 1.57 which is 3:1 given my entry was 1.27 and stop 1.17.
i havent used fib projections yet but have seen a few thrown up and thought i would have a go and the 261.8 has landed next mine (looks good to me)
my trailing stop started as a close below channel
now since it hasnt traded sideways a bit longer towards the channel as i thought it would i am thinking of moving my stop a bit closer as i dont want to miss out on some of the profits i have gained
my thoughts would be to place my stop at 1.35 now just under todays low and under 2 weeks ago high that was broken yesterday
this would be 5% to stop and would it be logical to trail the sp by this from now on.

nizar · 10 July 2007

Nomore4s.
Im liking ROC.
I think $3.45 would be a good stop (about 10c from entry).

Any pullback shouldnt close below $3.45 for the breakout to be valid.
Im my opinion.

It's Snake Pliskin · 10 July 2007

nizar said:
Snake are you still holding ROC?
Fair recovery from that long tail.

Can, take a look at MPO. Seems to be strong support (previous resistance) at 28.5c. Whats your projected R/R on this one?

No I'm not. Hows this? I held even after my mental stop had been hit and held for a while then it went back up and looked weak. I sold it.

CanOz · 11 July 2007

nizar said:
Nomore4s.
Im liking ROC.
I think $3.45 would be a good stop (about 10c from entry).

Any pullback shouldnt close below $3.45 for the breakout to be valid.
Im my opinion.

OK guys, any break above 3.55 and we're in at market with a stop below 3.07....i really think we need it wide Nizar....I've been taken out of so many longs lately with stops too close....TAP comes to mind.

I have the first profit target at 5.08, so this gives me 3.1:1 which is acceptable...just.

The question is, will the oil bulls win over the market bears today to get us above the 3.55 mark?

Cheers,

CanOz · 11 July 2007

FYI, portfolio looking a bit sick at the moment....

motorway · 12 July 2007

CanOz said:
FYI, portfolio looking a bit sick at the moment....

Some points I emphasized in earlier posts..

How are you factoring the trend in the mkt
and position and timing

What is you time frame
what magnitude of moves
are you drawing trend lines from
what moves are you trying to catch

Unless You have a clear view
Unless You then act in harmony with that view.

You will be out of step on a number of fronts
Your actions will not have harmony...

My view ( what has yours been ? )
Is that the mkt has been in a range..

Hence everything else then has context
I made the point of How much better our longs would be
If the mkt was in a defined uptrend..

Buy SUPPORT
Sell Resistance

At the top of the rally
a natural reaction at least is to be expected..............................
...................Buy support WITH strength
Sell resistance WITH Weakness

MRE is a good example

Entry matters

whether to make an entry in the first place is a decision
what sort of mkt is it How are You going to play it ?

Sit it out ?

R0nin ?

I think MRE is giving a good example
Of WHY it is better to buy off support
That is where the selling subsides
and demand is seen to start to overcome the supply.

Again

You asked

just look at the resistance line

I made the point again

I would look to buy of clear support
Where ever price and volume
reveals that to be

At junctures that reveal
NO supply

Can

It has been a range bound mkt
How many buying at the tops and selling at the bottoms ?

Easy to be out of step

Keep the bigger picture in view

Nomre4s..

In the article on the rule of three

look at the entry points
and then look at Your swing chart..

SEK
There is a difference between a move outside of a marked trading range
and a clear Jump over and supply

Upthrusts don't look like very good jumps to Me

look at the "ease of movement"

A series of bars with closes at the High which do not overlap
would be maximum "ease of movement"

How much ease of movement in SEK ?

A move out of a trading range is a test BUT ...

A successful "JUMP" is where the VOLUME shows it to be..

Just some observations

motorway

nomore4s · 12 July 2007

motorway said:
Nomre4s..

In the article on the rule of three

look at the entry points
and then look at Your swing chart..

motorway

Motorway, haven't had time for a close inspection, but after looking at the article again it looks like only entry 2 & 5 on the swing charts would have been close to buy signals? ie after higher highs & higher lows had been made?

Again not sure if I'm on the right track, pretty busy atm, will study further tonight (hopefully).

Have some other thoughts about what you said about the market & entries etc that I might post tonight as well.

motorway · 12 July 2007

Here is the original study of which that rule of "3" paper
Used as the example...

So here is a link to it for completion...

The Wyckoff Method is a school of thought in technical market
analysis that necessitates judgment. The analyst- trader acquires judgment
through experience and through well-guided illustrations of
basic principles. Although the Wyckoff Method is not a mechanical
system per se, nevertheless high reward/low risk entry points can be
routinely and systematically judged with the aid of a checklist of “Nine
Tests.” Each test in the list of “Nine Tests” represents a Wyckoff Principle.
One purpose of this article is to demonstrate the “Nine Classic
Buying Tests” of the Wyckoff Method at work via a case study of the
stock of the San Francisco Company. Although the case name is disguised
as the San Francisco Company (SF), it does represent an actual
company in the energy sector. For the sake of economy, the
illustrations in this article feature the bull side of the market, they
can be inverted to illustrate the bear-side of the market.
The classic set of “Nine Classic Buying Tests” (and “Nine Selling
Tests”) was designed to diagnose significant reversal formations

http://www.hankpruden.com/nineclassic.pdf

A speculator must concern himself with making
money out of the market and not with insisting that the tape
must agree with him.
“Therefore, the thing to determine is the speculative line of least
resistance at the moment of trading; and what he should wait
for is the moment when that line defines itself, because that is
his signal to get busy.”

Reminiscences of a Stock Operator

Can I hope it is not off topic

But The quote out of reminiscence Should be right on topic

The nine tests are part of a larger whole...
An important part being the trend and position in the trend of the "Market".
Then there are other considerations once a trend is underway..

On the P&F
It measures a trading range in a different way to just time

The MKT has been in a trading range
so many days so many bars

all stocks in a range have the same number of days
same number of bars

But in terms of swings and relative strength ?
All ranges are different

Some of these ranges will have less swings than the mkt
some many more

P&F is one way of observing this difference

Some stocks P&F charts stopped moving
some are racing across the chart
Hence a different measure of time

What Wyckoff calls the building of a cause..

It is the principles that matter
Here is a good principle

look at the swings in the ranges
( and on a particular time frame every chart is in a range )

motorway

R0n1n · 12 July 2007

Motorway I am starting to see what you ment by Buying at support with ref to MRE. It is really close to my stop loss line though.

nomore4s · 12 July 2007

Motorway do you have any good links for learning to use & read p&F charts?

As I slowly (very slowly) begin to understand some of what you're saying it's slowly changing the way I look at the market and the way I trade. I definately need more patience waiting for the tade to come to me.

Thanks

Zero Sum · 12 July 2007

HVN: Harvey Norman chart looks interesting, an all time high close after a two month consolidation, my type of trade. If JBH is anything to go by this has plenty of upside left. Does this fit in with your methodology Canaussieuck?

CanOz · 12 July 2007

Yes Zero Sum i like it! What could we use as a profit target?

I wonder if this will affect this and similar stocks?

COMMONWEALTH Bank chief Ralph Norris says Australia's debt-laden household sector had reached its capacity for debt and a slowdown in borrowing is expected.

Mr Norris said hopes his business banking division will counter an expected slowdown in personal lending over the next year.

Speaking at a business lunch in Melbourne yesterday, Mr Norris said Australia's debt-laden household sector had reached its capacity for personal loans.

"If you look at the capacity for people to borrow, it's obviously getting to very high levels of capacity and I think there will be a tempering of demand in regard to personal lending," he said.
"We have reached capacity for people to borrow which would see them start to reduce their appetite for additional borrowing.

"So we'll see a slowing in growth for personal lending and an increase in growth for business lending."

Since Mr Norris took over the reins of the bank in September 2005, one of his priorities has been to improve CBA's share of the business-lending market.

Rival major banks and niche lenders have eroded CBA's business customer market share from 22 per cent to 13 per cent in the last decade.

One of the big changes Mr Norris has made has put business bankers back into branches.

Despite the bearish outlook , the Australian Bureau of Statistics yesterday released data showing that personal finance commitments rose by 2.2 per cent in May.

On a seasonally adjusted basis, the value of personal lending reached $6.7 billion -- slightly above the trend figure of $6.6 billion.

The ABS said the rise was driven by a 5.6 per cent increase in revolving credit, which included credit cards and overdrafts, offsetting a 1.4 per cent decline in fixed-term loans.

CommSec equities economist Martin Arnold said the rise in personal finance indicated that consumers still had confidence in their financial position.

He noted monthly changes in lending finance figures were often volatile and best viewed over a longer period.

He said the rise in personal finance in May consolidated falls in the previous months.

Personal finance commitments dropped by about 0.5 per cent in April and 0.6 per cent in March.

Mr Arnold said commercial finance picked up during May as the robust business environment encouraged companies to invest in construction projects and the property market.

"Business lending makes up over 60 per cent of total lending, so it is an encouraging sign for future growth that businesses continue to expand their working capacity," he said.

with AAP

Cheers,

Zero Sum · 12 July 2007

CanOz said:
Yes Zero Sum i like it! What could we use as a profit target?

I wonder if this will affect this and similar stocks?

Cheers,

I can't help you with price targets I've never used them in my trading, I'm not smart enough to know when a stock will stop going up, thats why I use trailing stops. I can see where price targets can be useful but my poor win strikerate means that I need to make the most out the winners that I do find. I would need a win strikerate of at least 60% to even consider short term target trading. As far as the article is concerned, as a technical trader you can't let news articles influence your decisions unless it directly relates to that particular stock and even then you should consult the chart first.

Porper · 12 July 2007

Zero Sum said:
I can't help you with price targets I've never used them in my trading, I'm not smart enough to know when a stock will stop going up, thats why I use trailing stops. I can see where price targets can be useful but my poor win strikerate means that I need to make the most out the winners that I do find. I would need a win strikerate of at least 60% to even consider short term target trading. As far as the article is concerned, as a technical trader you can't let news articles influence your decisions unless it directly relates to that particular stock and even then you should consult the chart first.

Very difficult to put a price target for a short term move.Not many pullbacks to speak of...................just up, up, and up some more.

Having said that, the breakout isn't emphatic.Had a test a few days ago, but rejected on V.high volume.

Todays breakout on very low volume.That can all change of course,if the XJO breaks out, blue sky stocks like this will do well,but indicators looking more towards overbought for this stock i.m.o.

A couple of nice swing lows to put a stop under though.

R0n1n · 12 July 2007

What Motorway has been trying to show us ..

Buy SUPPORT
Sell Resistance

I have been having a look and TAH came on my scan. It bounced off its support line with nice volume. It has been struggling to break out and but kept falling back to its support line. It hit the upper resistance line and if the positive volume keeps coming it will likely rise, otherwise it will fall back to its support line, which is where an entry should be. There is also ease of movement visible in the last bar.

Comments please.....

CanOz · 12 July 2007

Zero Sum said:
I can't help you with price targets I've never used them in my trading, I'm not smart enough to know when a stock will stop going up, thats why I use trailing stops. I can see where price targets can be useful but my poor win strikerate means that I need to make the most out the winners that I do find. I would need a win strikerate of at least 60% to even consider short term target trading. As far as the article is concerned, as a technical trader you can't let news articles influence your decisions unless it directly relates to that particular stock and even then you should consult the chart first.

Well i like to use targets now to help determine the R/R of the trade...to each is own. This system will use trailing stops as specified a dozen or so pages earlier.

I'm not real keen on this sector to be honest, perhaps it will improve. I like the all time highs but i'm not particularly impressed with the volume....could regret it.

Ron1n, this ones been on my watchlist, probably from the same scan for about two weeks now, as it built that triangle. The thing that annoys me is that the triangle is not on or at highs, its below...so to me caution is warrented. The close on the high is good, but are there still some sellers about, do we need more confirmation?

My thoughts anyway Ron1n, good spot...was that the triangle scan?

Cheers,

R0n1n · 12 July 2007

Hey Can, yes it came up on the same scan. The reason I brought it up is cos Motorway talked about buying at support and I wanted to explore this option as it will be a good line under which I can set a stop loss and get a good R/R ratio.

nizar · 12 July 2007

Hi Can,

What do you (and others) think of EXM?
Range trading within a narrow range the last 3-4 days, general uptrend.
A bit like CUO before it broke out??
(PPP also consolidated within narrow range for 3-4 days before todays candle)

Thoughts??

nomore4s · 12 July 2007

Here's one (MXI) that broke out today on very low vol though.

My open book trading plan - Two month test

nomore4s

Commonsense isn't that common

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vert

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