Pavilion103's LIVE ASX Momentum Setup Trading Thread

[Nortorious]

Trading update: Up one day, down the next.

EXITS triggered in SEN, CAJ.

TNE: TS raised to BE (4.05)

Comment: SEN, our momentum trade is over, but I like the orderly 3-wave (abc) retracement seen on this chart following the impulsive move to the last high. Fib ambush traders take note.

I found the sell post on SEN. I have been holding in my actual portfolio and averaged up today when I saw the early move this morning.

Re-entry opportunity for this portfolio however risk may be too high now?

 

[bonkerrs]

Hello Peter. Thanks for your posts. I enjoy reading your updates and thoughts whenever you post.

I'm sure it was mentioned earlier in this thread but can you please remind us again.... What are your entry rules and how do you go about stock selection? Has it changed from way back when Pav started this thread?

Is the trailing stop a parameter you enter into a charting software and it automatically follows a chart?

What does "1.5ATR level..." mean?

Cheers for the postings!

 

[peter2]

Pav started this thread posting charts with small consolidation patterns in daily UP trends. I've continued doing that.
These two posts explain the setup (#170, #250) and show examples. (I'm not adept at linking and it seems the browser isn't either)

ATR(period) is an indicator that measured the average true range over the "period". When used on daily charts it shows the average daily range. It's best to keep the sell exits outside the daily range, so people use a multiple of ATR like 1.5.

I've used 3 x ATR(21day) in the chart to keep VS amused. Yes, the charting software plots this automatically.

 

[peter2]

Trading update: Another large down day and the portfolio loses some open profit. It happens. Often.

EWC: Sold as it hit our exit. The opening gap down didn't help us.

The market (XAO) closed below my 5700 "line in the sand" and indicates that the daily trend is now down. As we are trading short term price movements (long only) in this thread then it's time for another chat. In my experience it's easier and more profitable to trade with the trend of the market and as we are only going long this means trading when the daily trend is up.

Now that the trend is down there will be fewer setups available and we'll be looking to trade perfect setups only. The other important aspect to consider is the amount of open risk (portfolio heat) that the portfolio is exposed to. How much are we willing to risk now that the market condition is unsuitable for our trading plan? It's another individual decision.

This portfolio is +8% with total open risk of 6%. If the market goes down further and it can. We may end up +2% quite quickly. I trade for profit so I will review all our open trades with the intent to reduce the open risk. To be clear, it's the change in the market trend that has prompted the review and indicated that it's time to reduce the portfolio risk. This is clearly stated in my trade plans.

Trades in stocks that are weaker or as weak as the market will have been closed as they hit their exit triggers. You may notice that all our open trades are acting stronger than the market. That's the benefit of trading break-outs. Think about that.

We are active traders. This means that we sell quickly to save our capital and re-buy just as quickly if the market goes up. Some of these decisions will work out well and some may not. That's trading. My aim here is to reduce portfolio heat as the market looks like going down.

EPW: Sell next open (limit 2.50 = BE). Re-buy 2.60.
SAR: Acting stronger than index, raise TS to 0.45.
QBE: Acting stronger atm, but will fall with market. I'm unsure as price is between entry and iSL but must make decision.
Sell next open (limit 13.70) we can re-buy on a close >14.00.
ALU: Acting stronger. Willing to wait until I see a down day. Leave TS at 4.80.
AGF: Gap down but closed off low on large volume. Raise TS cautiously to 1.44.
JHC: Recent BO being tested. Thin market depth, so I have to be cautious. raise TS to 2.60

These modifications reduce the portfolio heat to 4%, risking half the profits earned so far.


------------------------------------
ps: Additional disclosure: I'm trading a few of these in a medium term portfolio. As the weekly trend remains UP I don't have to review them and can leave the sell exits where they are, which are mostly below last HLs.

If you are trading some of these (don't tell me) follow your own trade management guidelines.

 

[peter2]

My reply to a PM asking about starting short term trades now that the market is down.

There will always be a few stocks going up based on company specific fundamentals/sentiment. Trade them, but make sure the setups are perfect and the risk/reward is comfortable. Business as usual but I'll reduce the portfolio heat. Over trading in adverse market conditions will erode your capital very quickly and make it hard to get back in profit when the good times return.

Reducing total risk is a survival technique to ensure I'm still trading when the market rallies.

It's worth mentioning again about the benefits of using multiple trading systems or strategies. There will fewer break-out opportunities now that the market is going down. On the other hand there will be more opportunities to buy pull-backs in weekly up trends. Prices may find support at prior highs or prior break-out levels. Pullbacks are great trading opportunities if you are ready for them (have a plan).

I've mentioned the benefits of shorting the index. At times like these there are plenty of other markets to trade if shorting isn't your thing.

In this thread we'll stick to trend continuation setups, but personally I love buying pull-backs in weekly up trends.

ps: Love the passion that notting showed in the CBA thread.

 

[peter2]

Trading update: Portfolio heat (total open risk) reduced as XAO closes below 5700 (yesterday).

EPW: Sold open.
QBE: Sold at limit price
AGF: Sold at our exit price (near open).

I'll post a list of the re-buys and other charts I'm looking at later on.

Shooting the breeze: There are times when we are in sync with the market and then there are times when we aren't. Two of my portfolios have lost value due to the selloff in the banks. I hate seeing hard earned profits disappear. This has put me off balance and its effecting my overall focus. It's tempting to jump in and re-buy stocks you've just sold telling yourself they've hit support levels and will go up (wrong).

We all feel this way at some time. Right now that's me. I'm itching to buy something but I know I'm reacting to the 4% falls in my portfolios. Trading with this mindset would see me acting like a losing trader. Buying high, selling low, buying low, selling lower. I don't know why the banks have sold off as much as they have. It doesn't matter. The fact is they did.

I go back to basics. I review my tradings plans and remind myself of the importance of waiting for my best buy signals (break-outs and 1st HLs off support).

 

[peter2]

These are the codes of the charts where I've framed a setup for this thread. They are all BO-NH as we want to buy stocks in demand.

EPW HFA QBE SIQ TFC WBA LOV SEA IFM

I'll take the next two or three that trigger then review the market at that time.

 

[VSntchr]

These are the codes of the charts where I've framed a setup for this thread. They are all BO-NH as we want to buy stocks in demand.

EPW HFA QBE SIQ TFC WBA LOV SEA IFM

I'll take the next two or three that trigger then review the market at that time.

Nice list Peter, I have been watching LOV for a little while from a fundamental interest. It's pretty thin to trade but chart looks nice. Another similar chart is UBN, also illiquid. High at 1.33 with a tight consolidation while the market has capitulated.

 

[VSntchr]

Another similar chart is UBN.

Perhaps the above post can lend me some credibility to avoid the hindsight predictions....but here is my play on this one as marked out from last night.
Position size small given the liquidity.

 

[peter2]

EOW10 Trading update: Pav Portfolio +7.0% ( 60% invested in 4 trades ) XAO -4.5% (since start)

Another down week for the market as the XAO ended -2.8%. The portfolio lost 1.5% this week including a 3% drop from its intra-week daily high.

This weeks sells: EWC EPW AGF QBE

This weeks buys: SIQ as it traded >1.94(5) today.

The portfolio has plenty of cash available for the listed setups. ($29,389)

In the graph, the gap between the blue and red lines is the amount of portfolio heat. You can notice the effect of reducing the portfolio heat in the graph as the red line turns up narrowing the distance to the blue line.

 

[grah33]

EOW10 Trading update: Pav Portfolio +7.0% ( 60% invested in 4 trades ) XAO -4.5% (since start)

after 10 weeks +7 % return (after a year about 5 times that! ). that's fantastic. then it really is possible, for someone who knows how to do it. all the hard work in learning it is paying off (literally)

 

[Wysiwyg]

Up trending stocks spend variable time in a sideways trend. To avoid having capital at risk in the market and going nowhere for an unknown period, this strategy works well.

 

[peter2]

grah33: Thanks for that post.

NO, you can't and shouldn't infer future performance using past results especially results from a discretionary approach. This is an important point. We don't know what is going to happen in the future. It's possible that the market goes down for another 8 weeks. The portfolio is unlikely to earn more profit if this happens.

Never infer future performance of a trading system using past performance. This applies to all (>95%) the back testers out there as well. You (the >95% of back testers) are kidding yourselves about your future performance.

Once we create expectations about potential performance then we are most likely to be disappointed. Disappointment leads to poor discipline, poor discipline to poor results, poor results increases stress, etc. There is a classic example of this in this forum and is found in the most popular derivatives thread.

Re: Comment that this strategy works well in a sideways market.

This type of trading is exacting work. In a sideways market there is more work as the exits occur more frequently. In a volatile market you have to be watching the buy and sell stops closely to minimise the slippage. I would describe the market conditions over the past 10 weeks as both sideways and volatile.

I posted this earlier (#111)

Beginning traders should probably not try this style as it requires almost perfect discipline (>95%). Traders must keep their losses small and there will be a lot of them when the market turns on your open portfolio. Letting a loss get bigger than it should will ruin your results very quickly. If you can't sell exactly when you should every time, don't trade this style. You'll probably also find that we sell too soon too often. If you worry about the profits that got away, then you're not focusing on the next opportunity.

I'm pleased to be showing a profit, satisfied with the fund manager's performance and hope the market rallies soon.

 

[bonkerrs]

It's worth mentioning again about the benefits of using multiple trading systems or strategies. There will fewer break-out opportunities now that the market is going down. On the other hand there will be more opportunities to buy pull-backs in weekly up trends. Prices may find support at prior highs or prior break-out levels. Pullbacks are great trading opportunities if you are ready for them (have a plan).

Thanks for your regular contribution to this thread. I don't "actual" trade them, however I enjoy the learning process from following it... well appreciated. And great results!

In this thread we'll stick to trend continuation setups, but personally I love buying pull-backs in weekly up trends.

If you don't mind me asking, I guess you simply won't answer if you do :
How are your results with buying pull backs? Thinking about starting another thread with trade setups?

 

[peter2]

Thanks Bonkerrs. I don't want people to trade them. The value is purely educational and I hope a few people are evaluating the ideas that pop up in this thread for use in their own trading plans.

The two strategies (break-outs and pull-backs) complement each other as the market rallies and then pulls back before rallying again. My results buying pull-backs in up trends are profitable. Let's leave it at that.

I'm thinking about doing something extra, but I need the right reasons and the right format for it. It might be a "look over my shoulder" blog. I don't know yet.

 

[VSntchr]

I'm thinking about doing something extra, but I need the right reasons and the right format for it. It might be a "look over my shoulder" blog. I don't know yet.

Having learnt plenty from this thread, I give my support to this idea. Happy to help/contribute in any way I can

 

[PeterJ]

Having learnt plenty from this thread, I give my support to this idea. Happy to help/contribute in any way I can

Peter,

ditto
i am also very happy to contribute in any way
this is a great learning tool

regards
Peter

 

[peter2]

Thanks for the support guys, it's always appreciated.

EOD Trading update:

ALU: Sold on the open after huge down day yesterday. A large down bar is definitely an upward momentum killer. Realised small loss (-0.3R). Today's dragonfly doji could be considered a buy signal, but not in this thread.

QBE: Bought limit 14.05 and got lucky as price traded down to our order. (iSL 13.40) Used max 20% for this position.

I'm comfortable with our four open trades in this market. If the market has found support then it should go up from here and trigger a few more of our setups. I'll believe it when I see it.

 

[VSntchr]

ALU: Sold on the open after huge down day yesterday. A large down bar is definitely an upward momentum killer. Realised small loss (-0.3R). Today's dragonfly doji could be considered a buy signal, but not in this thread.

Yesterday Bell Potter downgraded to hold with a $5.50 target, looks like their troops left and triggered alot of the stricter momentum traders stops...certainly had a large two-day impact.

 

[skyQuake]

Yesterday Bell Potter downgraded to hold with a $5.50 target, looks like their troops left and triggered alot of the stricter momentum traders stops...certainly had a large two-day impact.

Bought some today, expecting a decent rally tomorrow on potential index related flows