My open book trading plan - Two month test

[motorway]

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.

Their Primary purpose is another reason to take one trade over another
We hopefully have more trades to take than funds to take them with
and If We over diversify We maybe lose focus and retreat to a mkt average
return...

As the move unfolds they are ( How ever determined ) a way of judging
the relative strength of one trade Vs another and provide stop look and listen points ..
eg In the BPT chart I posted when price reached the vicinity of the downside target. would You automatically close the short ? No.
But when the climatic stopping action appeared as well ? Yes..

An active exit frees up funds for another entry with better R/R at that time

The R/R of an existing position deteriorates as the move progresses

R/R means defining risk and having some conception of reward

What is important is time frame and opportunity cost..
rather than eking out a few last points of profit..

...........

TAH

Some positive signs to that chart

On the last BAR.... Even individual BARS represent waves of Buying and selling
that attract and gather followings

Demand was the winner and Volume shows a larger following

What does that tell Us about the following on the supply side ?

From the top supply has been overcomimg demand
But the price action found support ( some good indicative BARS show demand ,Vol off the bottom ) and demand and supply have come into equilibrium as the bars have moved across the trend channel
forming your triangle

What does the last BAR say about the the balance between demand and supply NOW ?

But Do We need more evidence , After every thrust there is the reaction
Have We had any higher lows ?

too early ?
.........................

MXI... low volume but ...

The last BAR has very good range and close
in this case with demand reaching so Far what does it suggest the low volume
is caused by ?

The last 6 BARS tell a nice story.. They took out some suggested resistance

Do We wait for a backup ? Should We wait for the a selling wave to see
If there is no longer any following at these prices ?

..........................

HVN there was nice volume in the rally then volume did fall in the reaction
but just Now... Does it look a little tired ?

............................


The trend of the market is so important
What sectors are building strength and weakness ?

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.

There will always be opportunity... The key is Not losing money while the standout opportunities arrive...

If the mkt breaks out with vigor into a new leg of the bull mkt
How easy then ? Even second rate plays will make money ..

But If price reacts back down to the bottom of the current trend channel
Well taking longs is like pushing string...
it can be done, But.............

P&F is worth looking into
it aggregates all the waves of action
and does not have a fixed time scale

Bar/candle charts cut the swings of the (market )pendulum into discrete periods of time
P&F charts cut time into discrete swings of the (market) pendulum.

One column may be 3 bars because they are really one bar
the next column in the other direction may be 6 bars because they are really one bar.
Then because of the filter the next 10 bars are ignored because they are really nothing...

Now You could make a bar chart that changed it's time frame as the trends and speed of the trends changed (very hard ).Or You could have a chart that automatically adapted to the action because it was price and not time driven ..

On the bar chart you would have 19 bars across
On the P&F chart You would have three columns

sometimes it could be the other way around ( That is only with a pure P&F ).


The main difficulty has been the trend and position in that trend of the Market... It is the great tide that all the individual opportunities are treading water in...

As I wright this the DOW is up over 100 points
One thing the range is building is a cause
We get a breakout
It should propel many longs into good trades..

Do We see any change of behavior with the last two bars ?

motorway

 

[CanOz]

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??

EXM looks darn close to a cup and handle...

I think we need first class trades in this market, as MW says, we need the best trades in the best sectors...you know i'm so excited to be in these conditions....and i'm becoming more patient, more content to wait for the trades to come to us.

Thanks guys.

PS. Great insight M.Way.

Cheers,

 

[CanOz]

Someone remind me again why we didn't take this trade

Anyway..i'll post a few or at least one potential up tonite.

You know i came home tonite thinking there might be quite a few buys signals on my scans with stocks breaking out...not the case...the market still looks really weak to me...excepting a couple of sectors, maybe i'll post them up to and we could work from there.

Cheers,

 

[CanOz]

The best looking index award for the last 2 days goes too.....the XIJ, information technology sector.

Then its the XMJ. thanks to a couple of well priced miners...

 

[vert]

Someone remind me again why we didn't take this trade

well i did and now im out. why? it has hit the top of the channel and almost my target.
momentum has turned down, rsi is in overbought teritory, slow stochs have closed and turning down and sp has breached top bollinger sugesting this trend is over. also ther was a gap up today and it was friday a good day to take profits.
looks like SEK has gone alright for you though, cant be on everything

 

[CanOz]

OST...looking good from the price action side of things i reckon...

Good on ya Vert for having a go at that one!

Cheers,

 

[CanOz]

Heres another one...EWC, tracing out a good triangle not far off all time highs...

Cheers,

 

[R0n1n]

Here is another one. SSX.

It gapped up today so it will likely come down to fill it. The concern is volume. Although its higher and positive but its not above average. Put it this way, people are not stampeding to buy this stock. Something to note on the chart is that a support line will likely become a resistance line.

 

[nomore4s]

Here is another one. SSX.

It gapped up today so it will likely come down to fill it. The concern is volume. Although its higher and positive but its not above average. Put it this way, people are not stampeding to buy this stock. Something to note on the chart is that a support line will likely become a resistance line.

Ron1n, you'll probably find this is linked to OST because of the merger, when OST goes up so does SSX (check both charts back to March/April). With the merger you get 9 OST shares for every 22 SSX shares and a 6c D/E as well, so the higher the OST sp the more SSX shares are worth.

I hold SSX shares since Jan, so go you good things.

 

[nizar]

Can,

EXM is looking very good now.
Not much on the depth after 3c the sell side is thin.

I mite pick some up on mondays open, initial stop at 2.6c.
Should be able to get them at 3c.

I suspect if i wait EOD for confirmation I may have to pay 4c+ as she may run hard once 3/3.1 is smashed.

Any thoughts??

 

[Porper]

Can,

EXM is looking very good now.
Not much on the depth after 3c the sell side is thin.

I mite pick some up on mondays open, initial stop at 2.6c.
Should be able to get them at 3c.

I suspect if i wait EOD for confirmation I may have to pay 4c+ as she may run hard once 3/3.1 is smashed.

Any thoughts??

Well you certainly wouldn't find a stock like this on any CFD providors universe.

Volume has picked up recently but still only $178000 worth traded on Friday.

I just think that eventually trading stocks like this, you will get caught out, any bad news and how will you get out................you won't, a double or nothing gamble i.m.o.

Also very difficult to put a count on a thinly traded stock as everything looks corrective with overlapping price action.

Could argue that this is the start of wave 5, but stretching the rules a bit and maybe trying to make a count fit for emotional reasons.

 

[CanOz]

Well you certainly wouldn't find a stock like this on any CFD providors universe.

Volume has picked up recently but still only $178000 worth traded on Friday.

I just think that eventually trading stocks like this, you will get caught out, any bad news and how will you get out................you won't, a double or nothing gamble i.m.o.

Also very difficult to put a count on a thinly traded stock as everything looks corrective with overlapping price action.

Could argue that this is the start of wave 5, but stretching the rules a bit and maybe trying to make a count fit for emotional reasons.

Excellent points on liquidity Porper.

Its not in my Universe Nizar.

Incidentally though, i have had thoughts on a penny stock system...i had been thinking of it after i read something about a mechanical system that traded penny stocks.

I think it would make for some interesting discussion.

Nizar, have you thought about a mech system for them?

Cheers,

 

[nizar]

Oh yeh sorry i forgot about your CFD universe, Can.

A mechanical system for penny stocks Iv thought about it myself and I ruled it out because i think it can only be achieved successfully by trading intraday, which is not my cup of tea.

I cant see why you cant include penny stocks in your universe when testing an EOD system though. WMT and BLR are examples of champion penny stocks, that have now become dogs. I guess we can always put a liquidity filter on your universe and see if the results are better with or without it. Another thing to try is a dollar value filter. Maybe.

 

[nizar]

What is everyones thoughts on SWK?

A goer with stop at $1.35 ?

 

[CanOz]

Sorry Nizar

Not in my universe....I know i might be missing out on allot of opportunities but i selected the CFD list for a reason.

Cheers,

 

[IFocus]

Hi Can

Understand you want to stick with CFD’s but for the future consider not only the leading sector but also where the momentum is within that sector.

Tech often talks about it but this is where you get your bang for buck and when the bottom end of the market is running that’s the area to be trading. It’s just sticking to where the highest area of probability exists, no need to be clever.

One other thing, this is a bull market be risk seeking long………


Motorway’s commentary is some of the best I have seen but I though this is particularly very good, to many traders anguish over exits that they consider to be to early or to late……..

Their Primary purpose is another reason to take one trade over another
We hopefully have more trades to take than funds to take them with
and If We over diversify We maybe lose focus and retreat to a mkt average
return...

As the move unfolds they are ( How ever determined ) a way of judging
the relative strength of one trade Vs another and provide stop look and listen points ..
eg In the BPT chart I posted when price reached the vicinity of the downside target. would You automatically close the short ? No.
But when the climatic stopping action appeared as well ? Yes..

An active exit frees up funds for another entry with better R/R at that time

The R/R of an existing position deteriorates as the move progresses

R/R means defining risk and having some conception of reward

What is important is time frame and opportunity cost..
rather than eking out a few last points of profit..

Focus

 

[IFocus]

What is everyones thoughts on SWK?

A goer with stop at $1.35 ?

Hi Nizar

Where would your entry be for SWK?

Where would the ideal entry be for defining support / resistance supply / demand, R/R etc?

Regards
Focus

 

[R0n1n]

ok guys PMP came up on my scan. I have put comments on the chart. I have copied over text from my blog instead of typing it over.

There was a massive injection of volume and its above its second support line. My concern is that its below its 200 day MA and its still inside its downward channel. Further past volume injection could not get it to break out.

 

[IFocus]

Hi Ron1n

Like your analysis on the chart

A few questions

Are there other examples in the current market (same price structure as PMP) that show good moves?
Can you find 10 that have just happen or about to happen? Think probability

The small flag you high lighted, always important to use patterns in context. Try reading up on flag patterns and where they have the highest probability of success.

There are plenty of examples in the current market see if you can find them.

Look at the bigger picture is that a head and shoulders forming?

Which way do H&S break to confirm pattern?
What would have to happen for pattern to fail?

Again are there H&S patterns through out the current market firing?

Is PMP the best opportunity that exists currently in the market for an entry?

Hope this helps

Focus

 

[R0n1n]

IFocus, thanx a ton for taking the time in pointing me towards the right direction.

I am attaching two more examples of Head and shoulder (I hope they are) KIM in March and GWT in march May June and July.

Entry wise this is definitely not the best opportunity out there...

You will have to enlighten me on the below questions.

Which way do H&S break to confirm pattern?
What would have to happen for pattern to fail?

Regarding Flags Paterns, I googled up and found this link and a qwick look at stocks, I found UXC which had shown the flag patern in the past. Looking back at PMP it sorts looks like a small flag patern at the end and the bigger patern is head and shoulder. Am I right ?

http://stockcharts.com/school/doku...._analysis:chart_patterns:flag_pennant_continu

now the million dollar question.. will I o\put my money on it ??? HMM .... NO. I would wait for it to show the sign of break which according to the site is :

For a bullish flag or pennant, a break above resistance signals that the previous advance has resumed. Volume should be heavy during the advance or decline that forms the flagpole. Heavy volume provides legitimacy for the sudden and sharp move that creates the flagpole. An expansion of volume on the resistance (support) break lends credence to the validity of the formation and the likelihood of continuation.

Thanx again for showing the way to look at paterns and feel free to correct me where ever I am wrong...