Pavilion103's LIVE ASX Momentum Setup Trading Thread

[peter2]

Thanks for the suggestions and keep them coming especially when we have capital to start new trades. That might be tomorrow.

We finally see a market down day (-1%). This will be a momentum killer for most of our trades. This is the time when our trading discipline is tested. Two or three down days will be a bigger test for a portfolio of short term trades like we are doing here. A minor market correction of 3-5% may see us exit every trade. It will happen, several times each year. That's why we limit and manage the portfolio risk (heat).

A few down days will not dampen the buying demand in the stocks where the demand is strong. Hopefully our portfolio has a couple of these. Many of our trades will lose as prices go down with the market. This is where our placement of the sell exits (TS) is tested. Have we given price enough room to go down with the market and perhaps create another HL in the up trend? Lastly, there will always be a few stocks in the portfolio that get hit hard by fearful selling. A good example of this is seen in WEB (today). When price triggers our exit then we sell when we should (next open or on the day depending on what method we use). Selling so soon after buying is the test of our discipline.

In summary, we are going to get hit on a few trades. No probs we sell when we should. We are going to lose profits on a few. No probs all part of trading. A few trades will not fall. Great wish we had more of them. If this dip is minor and the market goes up, then our trade survivors will go up for us and we have the cash to start a few new trades.

This portfolio is being managed on an EOD time frame. We will see what's to be done on the next open after today's close.

ps: Jumping into the market now, trying to save a few dollars is a losing game, a waste of time and emotionally draining. We want to be pro's, so go shopping, fishing, play golf etc. See you all after the close.

ps: Sorry almost forgot to point out that it's dips like today's that create the low risk trading opps for us. So down days are great. Sort of.

 

[Boggo]

Off topic a bit but possibly relevant or of interest.

My doodling with arrows a few days ago

 

[peter2]

While I'm waiting to do my pm scans, yes I'm a tragic as I didn't take the day off. (Neither did Boggo, btw)

I looked at this chart which should be famiilar to all following this thread. It's the API chart.



If you think I sold too soon, then IMO those thoughts don't help you become a better trader. I'm happy with my reasons for selling when I did. I sold to reduce the portfolio heat for the benefit of the longer term performance of the portfolio.

Since then the API price has continued to go higher. Again IMO, the trading mistake is not re-entering this trend. We didn't re-buy API after the minor dip. The PM (portfolio manager) didn't consider the opportunity closely enough, but neither did anyone else (ie. no posts about it) especially after the day of the pin bar (hammer) clearly shows evidence of buyers (closing near top of bar on high volume).

 

[peter2]

EOD Trading update:

All trades survived. No sells triggered. The portfolio lost ~1%, nothing to be concerned about.
We have ~$1848 to use as margin in a cfd trade if one triggers. After today's dip there are plenty of potential setups.

Homework: Have a think about today's discussion in relation to your trading plans. Consider adding a re-entry guideline to them.

Any questions, post them in. IMO after about 3 months* of this thread you should be able to start your own portfolios trading in your own way (short, medium and longer term styles) and be comfortable doing it.

 

[Nortorious]

EOD Trading update:

All trades survived. No sells triggered. The portfolio lost ~1%, nothing to be concerned about.
We have ~$1848 to use as margin in a cfd trade if one triggers. After today's dip there are plenty of potential setups.

Homework: Have a think about today's discussion in relation to your trading plans. Consider adding a re-entry guideline to them.

Any questions, post them in. IMO after about 3 months* of this thread you should be able to start your own portfolios trading in your own way (short, medium and longer term styles) and be comfortable doing it.

Nice posting Peter and yes API is the one that got away for me too. I sold way back when the market was on the cliff edge and could have gone either way. I didn't follow my plan and let price action take me out rather i tried to predict the market direction... And was wrong!

Luckily, I saw many stocks setting up with my entry criterial and was back in the market to enjoy the up-move. API I didn't re-enter but that was due to me maxing my capital out on other opportunities.

My re-entry rule is simple, if it meets my entry criteria it is a new trade regardless of whether I have a past experience with the stock. I hold no grudge if it has burnt me in the past, I just follow my trading plan and enter when it says enter. It's taken time to get to this but removing any emotion is they key. The market nor the stock knows me and neither move exclusively based on my ideas... Don't hold a grudge is probably the best rule to consider for a re-entry... Every trade is different and can have a different outcome even if it is a stock you have gone to dinner with before only to have it run out through the kitchen leaving you with your jaw on the ground..

 

[tech/a]

I sold to reduce the portfolio heat for the benefit of the longer term performance of the portfolio.

Surely you had something you could cull that wasn't in a full blown up trend?

Right now Id be cranking up the stops and anything that's not at B/E and can be should be---

 

[get better]

I actually also have API and NAN in my portfolio. My system picked these up in scans but I haven't sold out yet. I was surprised when you mentioned that you wanted to exit API at the time and was contemplating exiting NAN to lock in profits. This leads me to asking this question - do you back test your exit criteria with your system? More specifically - the manual exits.

With my trading, I am quite strict when it comes to breaking the rules and going against what my system is telling me. I'm currently learning and trying to apply VSA in case studies and hopefully this will allow me to code this into my system so I can test its performance.

Kind of off topic here but I'm beginning to see the stock market/futures as a game of probability vs manipulation (trading system vs VSA).

 

[tech/a]

I actually also have API and NAN in my portfolio. My system picked these up in scans but I haven't sold out yet. I was surprised when you mentioned that you wanted to exit API at the time and was contemplating exiting NAN to lock in profits. This leads me to asking this question - do you back test your exit criteria with your system? More specifically - the manual exits.

With my trading, I am quite strict when it comes to breaking the rules and going against what my system is telling me. I'm currently learning and trying to apply VSA in case studies and hopefully this will allow me to code this into my system so I can test its performance.

Kind of off topic here but I'm beginning to see the stock market/futures as a game of probability vs manipulation (trading system vs VSA).

This is a discretionary trading methodology.
It's edge comes from the ability of the trader to select and manage
His trading of a portfolio to a profit. Distinctly different from a system
Approach.

As for coding a VSA method you'll be sadly disappointed.
VSA is a volume / price indication of likely market behavior which has a
Technical life of around 5 bars. Where most get the method wrong is that
They see each signal as a buy or sell signal. Simply they aren't---not individually
With time a good exponent can read the whole chart in context with the VSA
Signals generated by price and be in the position to make a higher probability
Trade. They can also take advantage of those 5 bars and subsequent relating bars.
A great tool for the discretionary trader but not for the systems trader.

We have spent 2 mths on VSA systems development and this is the result!

 

[VSntchr]

GUD today.

I got a signal to short it in another system, not going to take it based on the chart though. Breakout on big volume.

 

[peter2]

Thanks for that tech/a. I PM'd get better and said the same things although your reply is a bit more informative.

Yes, there is no system being trading in this thread. It's purely discretionary. We select charts with good up trends and find a low risk opportunity to buy and let the trend continue.

Let me try and clarify what I'm looking for in a chart for this thread.
I'm looking for the first or second small pullback or consolidation in an established up trend.

(i) A trend starts from a break-out of a horizontal level of resistance. Occasionally it might be acceptable to use a sloping resistance line. (refer to Gordon7 thread for examples)

(ii) Once that happens we are looking for a small pullback 1-3 down bars or a narrow consolidation with lower volume.

(iii) Once we find our setup the trigger is a break-out of the pattern and we use a pending buy stop.

Examples:



My suggestion for an initial scan describes the price action after the initial BO-HR. The 10ema > 30ema.
A scan for Darvas boxes (10d) will find many of the small consolidations.

 

[peter2]

Ha, you'll like this. Even the CCL chart shows what I'm looking for. Our best entry would have been buying the BO of the small pullback that tests the BO-HR (buy 10.00, iSL 9.50, risk 0.50).

Knowing the background that we've discussed I'd be happy to sell at 10.80 and take the +1.5R result to the bank.


For me it's all about the Risk:Reward. Can I grab enough +1.5R and +2R results to offset the -1R losses? The larger wins, like +4R and bigger are the "cherry " of top of the cream that sits on the rich Black Forest cake. Yum...

 

[peter2]

EOW Trading update: All trades survived this week's price action. The portfolio held its value, inspite of the down day.

I have decided to raise many of the sell exit triggers. This reduces our portfolio heat (difference between blue/red lines in chart) in case the market dumps next week. It may or may not I don't know. I'm prepared if it does. The changes are highlighted in yellow.

We have $1848 in cash which will fund one cfd position if we see our setup. On that, I see that MMS tickled the BO level (>15.30) today and GUD did have a BO on strong volume. Rather than buy these BO's as I've done on other occasions (CGF, JHX, AIA) I'm going to try to stick with the setup I've described. In the case of MMS and GUD I'll wait for the 1st small pullback or narrow consolidation after these BOs for an entry.

I'm certain that we'll find heaps of opportunities when we need them.

It's "Show me the money" time.

 

[peter2]

I'll show another chart that shows the trade results in chronological order. It's early days yet.



I plan on continuing this thread until the EOFY. Four months of educational content will be enough for me.

 

[myrtie100]

Awesome Peter, thank you I am following closely.

 

[PeterJ]

Appreciate all your effort Peter,
as always !
I have subscribed to the thread, and get an email when there is a reply ,
modern technology is great
PS

 

[get better]

Thanks for the insight tech and Peter, very helpful and learning a lot from this thread.

I'll probably put more of a focus on learning VSA and shelve the coding idea for a while (maybe for a time killing project if I have too much free time).

 

[Nortorious]

A few new ones that could be considered:

ABX
HIG
RTR

I haven't time to do the analysis but thought I would flag them for those that do. These set ups are higher risk than if we were to go with the continuation breakout entry strategy.

 

[Boggo]

A few new ones that could be considered:

ABX
HIG
RTR

I haven't time to do the analysis but thought I would flag them for those that do. These set ups are higher risk than if we were to go with the continuation breakout entry strategy.

I don't want to turn this into a stock picking competition but I do have the urge to comment

No disrespect or criticism of your picks Nortorious as they are breakouts etc but those types of stocks are ones that can make you money quickly but on average over a longer period my experience has been that they can cost you dearly too.
ABX may be worth a look but the other two would be dodgy imo.

Not wanting to enter into a "mine is bigger than yours" discussion especially on this thread, this post is probably borderline anyway but compare these three as an example of what I am going on about.
AIA
SGT
TTS
(PS - I haven't looked at any of the usual factors associated with these such as ex div, depth etc., I am just picking the pattern only as an initial example)

My way of looking at those in comparison is that they have a consistent pattern and substance for the want of a better description (and they exist in the fundamental upper end of the market).

My way of thinking is that you need more than just a standalone breakout pattern, you also need a resumption or potential repeat of a previous pattern with steady reasonably predictable movement in both directions where you can be almost certain that your stops will have minimum slippage should you be wrong.

I may be wrong but over the years I have shifted away from the quick hit type breakouts to a more steady style of breakout and the results are enough proof that it works for me.

Sorry to derail the thread slightly, just adding my

 

[Nortorious]

I don't want to turn this into a stock picking competition but I do have the urge to comment

No disrespect or criticism of your picks Nortorious as they are breakouts etc but those types of stocks are ones that can make you money quickly but on average over a longer period my experience has been that they can cost you dearly too.
ABX may be worth a look but the other two would be dodgy imo.

Not wanting to enter into a "mine is bigger than yours" discussion especially on this thread, this post is probably borderline anyway but compare these three as an example of what I am going on about.
AIA
SGT
TTS
(PS - I haven't looked at any of the usual factors associated with these such as ex div, depth etc., I am just picking the pattern only as an initial example)

My way of looking at those in comparison is that they have a consistent pattern and substance for the want of a better description (and they exist in the fundamental upper end of the market).

My way of thinking is that you need more than just a standalone breakout pattern, you also need a resumption or potential repeat of a previous pattern with steady reasonably predictable movement in both directions where you can be almost certain that your stops will have minimum slippage should you be wrong.

I may be wrong but over the years I have shifted away from the quick hit type breakouts to a more steady style of breakout and the results are enough proof that it works for me.

Sorry to derail the thread slightly, just adding my

Well said, and the breakout you speak of is my continuation breakout setup I use. Low risk and high probability (probably 75% likelihood that a trend will continue - no research to back that...)

Any of my live trades are never putting more than 2 to 3% of my total portfolio at risk but certainly important to highlight risk management and money management for newbies. Especially with these identified stocks as they are quite volatile...

I can refrain from posting these setups and focus on continuation breakouts if that's what we are looking at. Or not at all, doesn't phase me the slightest either way...

 

[peter2]

Continuation break-outs are what we want to trade. I'll be keeping a watch list of 60d BO and check for our setups over the following weeks.

Trading Update: Exits triggered on CAJ, PAN, WOR.

The exit price for this portfolio will be the next open. This avoids any concerns about the portfolio exit price. Conditional sell orders can be used where there is enough depth eg. PAN, WOR.

CAJ: Pending re-buy order at 1.10. [I'm a fan of the re-entry order if you are using tight exit stops.]

We will have some more cash after the open. I'll look at the suggestions and have a quick scan through the watch lists tonight.