Pavilion103's LIVE ASX Momentum Setup Trading Thread

[peter2]

Trading update: (with an early bonus!)

LNG: Sold at sell stop 4.40 (+2R). price went through the next target level (4.64 = +3R) but I wasn't watching it at the time. You had to be quick.

IMD: Bought BO-NH (0.385) iSL 0.34. Testing the water in this sector.
SIQ: Bought BO-NH (1.62) iSL 1.55. Liked the small risk setup and the volume indicators OBV, TMF are showing strong demand.

There will be no EOW update as I'm out of town this week-end so I'm going to post an early update now.
We've had a good week bagging three +2R wins and two small losses.

Over the past six weeks the index (XAO) has hardly moved (+0.3%) yet we've managed to do a little better (+9.8%). I hope you are starting to see the benefits of keeping those losses small and grabbing a few quick profits when they appear. Another important contributor to our edge is that we are buying break-outs in strong trends. In other words we are trading stocks that are clearly in demand, not bargains (reversals).

Note: The stats are slowing getting to where I expect them to be (see post #73).

Enjoy your week-end.

 

[tech/a]

Excellent result Pete

 

[peter2]

Trading update: I'm back and I see we've had two down days. This knocks a book of short term trades around a bit.

CGF: Trade closed at TS. (-0.4R)
EPD: Trade closed at TS. (BE)

CVO: Bought BO (>2.15) iSL = 2.02
AGF: Didn't place buy stop order on this one, but have now, so if AGF trades at 1.505 we buy it.

Comment: As the index is falling, I'm reluctant to buy many more. The trades started last week have not gone far enough to reduce risk. (SPO, SAR, IMD, SIQ, CVO). Our patience will be rewarded.

 

[Boggo]

Comment: As the index is falling, I'm reluctant to buy many more. The trades started last week have not gone far enough to reduce risk. (SPO, SAR, IMD, SIQ, CVO). Our patience will be rewarded.

A fun market at the moment. I have a couple of potentials popping their heads up but am reluctant to go long on any new trades.

Am currently down to holding just six stocks from thirteen with exits from the likes of TLS, CAJ, JHC etc etc. after collecting some good dividends along the way.
Good timing now for a correction.

Would be happy to just be in cash for the rest of this FY, I've got tight stops on the current holdings.
I would like to see a nice big correction followed by a repeat of another run up, only need one of those a year but another would be nice

 

[tech/a]

Pete

You watching ALU?

 

[peter2]

Trading update: The market seems soggy atm, just like Sydney.

JHX: Closed at TS (+0.2R)
CVO: TS exit raised to 2.10
ALU: Re-bought at 5.02 (>5.00) , iSL far away at 4.70. [Ha, just saw your post as I was about to post this.]

MTU: liked the setup, but the trade book (portfolio) is near its capital risk limit. This restricts the number of trades even though there is capital available. This downside exposure limit comes into play when starting a portfolio (book of trades) and reduces the chance of having a poor start if your market timing is unlucky. This limit also restricts the number of trades when the open trades as a group are not progressing as anticipated. This happens when the market goes down like this week.

Another thought:
An active trader shouldn't be restricted by any market condition nor limited to one market (ASX stocks). Think of the benefits of being short the ASX200 index right now. The open profits from a index short would be offsetting some of the open losses. If the market continues down the profits would be greater than the equity losses as we would have closed most of the stock trades.

 

[VSntchr]

Trading update: The market seems soggy atm, just like Sydney.
Another thought:
An active trader shouldn't be restricted by any market condition nor limited to one market (ASX stocks). Think of the benefits of being short the ASX200 index right now. The open profits from a index short would be offsetting some of the open losses. If the market continues down the profits would be greater than the equity losses as we would have closed most of the stock trades.

Good point and one that I roll around in my head quite often.

The tricky part is - when do you determine is a good time to open? - A MA cross? lower low? VSA? Not to sure on this one....

How big a position do you take, how do you arrive at this position? - I guess the position sizing would be relevant to the long exposure in the momentum (and perhaps others) portfolio. X would give complete hedge while 1.X or 0.X could be justified depending on strategy.

What instrument is used? - For me the best choice would be an index CFD.

 

[tech/a]

Get it wrong and you'll chew up any profit in no time!

 

[skc]

Good point and one that I roll around in my head quite often.

The tricky part is - when do you determine is a good time to open? - A MA cross? lower low? VSA? Not to sure on this one....

How big a position do you take, how do you arrive at this position? - I guess the position sizing would be relevant to the long exposure in the momentum (and perhaps others) portfolio. X would give complete hedge while 1.X or 0.X could be justified depending on strategy.

What instrument is used? - For me the best choice would be an index CFD.

IMHO... unless you really really really know what you are doing with hedging, you should treat each trade individually. By all means have a more delta neutral portfolio, but don't keep your longs open just because your shorts are in profits.

Chances are, the stops on your longs will get executed the very moment that your index short reverses. -R each way thank you very much.

 

[peter2]

This chart of SBM shows exactly what we are looking to trade in this thread. If you know what to look for then you can scan many charts quite quickly.

If this is a chart pattern that you want to trade, print this chart and keep it on your table, close by. If you trade other patterns then find perfect charts and print them also. This is how you create your chart pattern play book. Pav often mentions his play-book of setups.

Trend Continuation setup after BO-HR.
Price broke through a horizontal resistance level (BO-HR) that had lasted for several months. (Note: This is one of my favourite buy signals but we are not trading these in this thread). The price break-out restarts the daily trend up. After a short sharp price rise, profit taking pauses the upward price movement. The subsequent price pattern that forms during this supply/demand exchange is a narrow ledge instead of a deeper pullback. These shallow ledges are good high probability trend continuation setups.

Pending buy stops must be placed in the market to catch these trades.
These ledges are good places to add to your initial position if you started cautiously at the BO-HR.



Comment: If this is such a good example, why didn't I trade it in this thread. Knew you'd wonder about that. The quick answer is I'm bearish gold and having one open trade in gold (SAR) I didn't wish to start another in this current bearish market.

 

[peter2]

Trading update: A bit of good luck and a bit of bad luck. That's normal.

SIQ: Price spiked above our +2R level on good news, sell stop moved to +2R and sold at 1.78 (+2R) for a serendipitous result in a bearish market.
SPO: Price slammed through our TS(2.35) after today's news. Trade closed at 2.34 with a bit of slippage (-0.7R).

AGF: Price traded >1.50 and triggered our re-buy order, iSL = 1.40.

 

[peter2]

EOW Trading update: The market giveth and taketh away. Pav portfolio +8.3%, XAO +0.1% (start)

The portfolio lost 3% earlier in the week, but we grabbed the surprise +2% from SIQ. This kept the portfolio about level for the week.

This weeks sells: JHX SIQ SPO IMD
IMD: Closed today after ordinary news dropped price through our sell stop.

New trades:
EPW: Bought as price traded >1.50 (1.51) and above trend continuation pattern (ledge), iSL = 2.36
EWC: Bought BO as price traded >0.40 (0.405), iSL = 0.38 Sell stop raised to 0.39 after today's up bar.
I don't allow very much room for trades in these types of stocks. Price continues higher or we are out. T2 sell order in market.

MTU: Thought about buying 11.50 BO, but was tempted by the lower priced stocks.

Outlook: I am slightly more bullish after seeing the US near new highs and today's ASX bouncing off 5800 and the high close. The market will not BO to new high without the banks. Interesting, as usual.

??? - This is an educational thread. Where are all the questions from those setting up their trading businesses?

 

[kid hustlr]

Loving this. Is initial capital 50k? We are using cfd's aren't we? What's max risk per trade? Apologies if answered I'm on my phone if you've already answered I'll find them later.

 

[peter2]

Starting Balance = $50,000 AUD Restricted to trend continuation setups on ASX stocks.

Pav used 50% margin provided by IB even though they have stopped providing that to AUS persons. Not a problem as this was more an educational thread and the more trades the better.

Since taking over I've switched to a mixture of cash and cfds (on the larger position sizes). The leverage provided by cfds (5% - 20% margin) allows us to start a few more trades and include a few larger priced stocks along with the small/midcaps.

The individual trade risk is 1% of the starting $50K + realised profits with the max pos size of 20%. Currently the 1%TR has grown to $537 without the brokerage/commission.

The use of leverage means that our results shouldn't be measured against a start balance of $50K (even though they are) as we have occasionally used more than this. The pos sizes used (%) are shown in the EOW snapshots. The max amount used so far has been ~80K (160%) and only briefly.

Thanks for the feedback. It gets a bit quiet in here.

 

[kid hustlr]

tx peter.

I think performance should be measured against 50k that's the starting balance and your effective ROE. (Less maybe interest costs or something?)

Important that followers understand the leverage is used for MORE POSITIONS NOT BIGGER POSITIONS.

 

[peter2]

EOD Trading update: Could this be a break-out week?

QBE-cfd: Bought BO (13.95) iSL 13.40 Limited to max size 20%.

Sell stops raised: EWC (0.415, 0.460), CVO (2.12), EPW (2.40)

There were a few good looking BOs today that I couldn't use as they didn't conform to our pattern. (EHE, IVC, MOC)
I hope a few of you grabbed them today as the market nears recent highs.

DMP: Thought about buying these again on the open after seeing the chart of the US DPZ (Domino's Pizza Inc) on the week end. (see DMP thread).

 

[tech/a]

tx peter.

I think performance should be measured against 50k that's the starting balance and your effective ROE. (Less maybe interest costs or something?)

Important that followers understand the leverage is used for MORE POSITIONS NOT BIGGER POSITIONS.

Well if that's the case it's not being used correctly!

 

[kid hustlr]

Go into detail tech? Radge talks a lot about the benefit of leverage but not necessarily for bigger positions but to take advantage when a mkt heats up and more trades get triggered beyond our available capital?

 

[padman]

Another setup to consider TAH

Buy above today's high of 4.96.


Btw can someone tell me why the chart in IB looks different from Comsec (above). If the IB chart is correct, may have to adjust the entry or even the setup.

 

[skc]

Another setup to consider TAH

Buy above today's high of 4.96.

Btw can someone tell me why the chart in IB looks different from Comsec (above). If the IB chart is correct, may have to adjust the entry or even the setup.

TAH paid a 30c special dividend (Ex-div 5 March) so the "raw" share price fell accordingly, but Comsec chart uses "adjusted" prices to reflect these kind of one-off changes. In IB you might be able to change the setting whether you wish to show "adjusted" price.

As to which one you should use if you are trading from a chart... I'd stick to "adjusted" (i.e. Comsec version).