Ryan's Trading Journal (F/A+T/A Strategy)

[Rypieee]

Why didn't you re enter
You had plenty of opportunities
Being stopped to minimise potential losses shouldn't mean the stock should be forgotten

Often my best trades are 2/3/4 th attempts

No point beating yourself up

I don't have a re-enter strategy and I am a culprit of not watching a stock even after I'm out of it. Thanks for pointing out to me, it never occurred to me to keep watching for 2nd, 3rd and 4th opportunity.. I will need to draft up a watch list of my old stocks going forward.

Not sure what that chart is but I don't think its A2M , have you considered using a binary algo stop although that will present problems applying it . Skillset , software and applications needed . But the harder , smarter you work the easier it will become . helps if you quantify your stops and do a statistical analysis to determine how tight/loose to obtain the optimum outcome . If you measure it , it becomes easier to improve it . Systematic approaches take a lot of the emotion out of it with defined probabilities ...


View attachment 71092

I thought about algo/system trading before but I have no idea where to start. I do want to look into it eventually after I get my basics down.

 

[Quant]

I thought about algo/system trading before but I have no idea where to start. I do want to look into it eventually after I get my basics down.

FWIW this is a very simple atr based stoploss code and is full adjustable the 5 is the period of Average and the '3' represents multiple of ATR to determine stop , once you have the basic code its easily adjusted to the various periods & multiples required . If you are interested in the code PM me

PS as much as its a stop loss it can be just as easily used for entry as well so its a versatile tool , In fact on clean trending instruments I'm sure a complete trading algo could be possible using just this singular tool .

5 period , 3 multiple atr trailer on daily A2M chart

 

[peter2]

I use a dual stop loss technique. You may have noticed it in the momentum thread but I haven't called it as such. It starts wide to allow a retest of the BO level, stays wide if I'm trading a trend to allow those pesky pull-backs, then tightens up when price goes on a tear higher and the profits are above average.

When the wide TS triggers an exit the trend is over. Time to exit.
When the tight TS triggers an exit, I place a re-entry order to buy if price makes a new high (BO-NH).
After the re-entry, the SL is wide and the cycle resumes just like any new trade.

If you decide to research a dual technique then you need to be very clear about the purpose of each stop method. I think the idea is worth observing by placing a wide TS line (5,6*ATR) and a tighter TS line(2*ATR) on your charts.

ps: The only purpose of the trailing exit triggers is to reduce draw-downs to a manageable level. You got to know what your level is.

 

[Triathlete]

Tying in with the previous discussion, I'm assuming you are going to treat your capital position as mark to market.

If so and you happen to have a runaway winner in your portfolio – that will skew your position risk calculations as heat and volatility on that large position impacts all the other decisions.

Try your numbers with a stock you brought at 13% of your portfolio and has become a ten bagger whilst the rest have in aggregate basically marked time. funding new positions at the calculated size may not be possible if you don't sell down the large position, so your intended diversification can be compromised as will the risk you apply to the new positions because relatively small swing in the oversized positions have disproportionate swings in the new position risk calculation.

If he is using 13% to start with for position sizing then his portfolio size is 8 stocks to start with.

I can understand what you are saying about heat and volatility, but if you are on a multi bagger there is no need to sell it down until his stops have taken him out IMO......

He has already used his total capital for the 8 stocks based on the original position size and selection process.
The only reason I can see for selling out a good position is if he wants to increase the amount of stocks in his portfolio.

 

[Rypieee]

After much thought from @tech/a , I have decided to review my past trades as well as my new scans to see if there is opportunity to re-enter a trade, CGC and A2M were good examples of trades that I completely missed.

I have also reviewed my setting of my stop losses according to my strategy, though the problem isn't from my initial stop loss, rather, it is from my adjusted stop loss levels after the trade has begun.

@Quant I like that idea of having a stop loss "automatically" generated and the graph that you provided with the trailing stop loss! I do intend to start automating some of my trades eventually, any idea on where I can start?

@peter2 I have always taken a liking to your stop loss strategy, giving the space to b/o first and then tightening the SL to accommodate the trend or covering your profit/losses based on your market filter. My iSL strategy is to find a level 2 points of support below current SP and within a x2-x4 ATR. My "new" SL strategy once the SP confirms a trend to is set the SL with x1-x3 ATR and behind one point of support. As you can tell, I adopted your strategy of "Dual Stop Loss Technique"

Need to develop a technical analysis market filter as well.

I have a few trades that I plan to open up tomorrow and a few on my watchlist as it is nearing B/O. Shall post the trades after I complete them!

 

[Rypieee]

Another down day today with the portfolio, have yet to open new trades yet as they have yet to meet my criteria, I have 7 that I am closely watching for an entry. Our portfolio has about 16% in cash which allows us to start another trade when the opportunity presents itself. None of our stocks have reach their stop losses yet so no action required.

On the weekend when I completed my scan, I found two stocks that I was happy to enter but upon further analysis, those stocks have passed their optimum entry price and therefore I have refrained from entering them and shall wait for a better entry. I have learnt that while picking the stocks that are liking to run is important, execution of the entry and exit means a lot as well and greatly affects your P&L so I will be patient and execute the trades at the right time and place. Patient is a virtue that I have to learn.

I was thinking about the overall strategy of my portfolio and I made it into one of my important guidelines. It goes "Fundamentals support medium to long term SP Appreciation/Depreciation, Technicals support short to medium term SP Appreciation/Depreciation, a combination of the two allows you to support short to long term SP Appreciation/Depreciation."

It is tough when you see down days in the portfolio but you gotta remind yourself that it is normal to see controlled down days in the portfolio. My strategy's underlying principle understands that down days are part and parcel of success.

 

[tech/a]

Sorry Ryan but I see these as insipid.

"Fundamentals support medium to long term SP Appreciation/Depreciation, Technicals support short to medium term SP Appreciation/Depreciation, a combination of the two allows you to support short to long term SP Appreciation/Depreciation."

This is like saying
I'm going to the Stock shop with a generalized idea of long and shorter term
price movement both positive and negative.

AND----------------

Crank it down
Be specific. What are you going to do when your at the shop.
What if you make a right decision
What if you make a wrong decision
How will you know if your wrong or right decision is altering
How long will you stay wrong OR right?

Finally
HOW DO YOU KNOW THAT THE ABOVE WILL BE LONG TERM PROFITABLE?

 

[Rypieee]

Sorry Ryan but I see these as insipid.



This is like saying
I'm going to the Stock shop with a generalized idea of long and shorter term
price movement both positive and negative.

AND----------------

Crank it down
Be specific. What are you going to do when your at the shop.
What if you make a right decision
What if you make a wrong decision
How will you know if your wrong or right decision is altering
How long will you stay wrong OR right?

Finally
HOW DO YOU KNOW THAT THE ABOVE WILL BE LONG TERM PROFITABLE?

I made that quote up in my head to try to explain the way I trade/invest which is while fundamentals are important in the medium to long term, the technical side(emotions) are important in a short-medium term

Essentially, I choose stocks that have a fundamental growth quality that I seek (med to long term) and then apply my technicals on them (short to medium term) for managing the trade.

A wrong decision will be action upon immediately through various means - I could be thinking that I am right about the fundamentals backing the stock but if a stock hits a criteria that calls for an exit, I exit knowing that either my analysis was incorrect or my timing was off and I move onto the next opportunity.

I don't know if my strategy will be profitable tbh but I'm okay with that. I run the portfolio with proper stock selection, diversification and risk management and I shall see how it travels over time.

 

[tech/a]

Ryan Trying to help you here.

You need to specifically define in words in a trading plan those things marked on BOLD.

That in BLUE needs to be in a play book.

Essentially, I choose stocks that have a fundamental growth quality that I seek (med to long term) and then apply my technicals on them (short to medium term) for managing the trade.

A wrong decision will be action upon immediately through various means - I could be thinking that I am right about the fundamentals backing the stock but if a stock hits a criteria that calls for an exit, I exit knowing that either my analysis was incorrect or my timing was off and I move onto the next opportunity--and keep an eye on the stocks in my watchlist which I add to and cull if the following happens..

I don't know if my strategy will be profitable tbh but I'm okay with that. I run the portfolio with proper stock selection, diversification and risk management and I shall see how it travels over time.

You really need to be very specific and decisions need to be black and white and instant---no hesitation/indecision or procrastination.
I see Procrastination/indecision as one of your (and other Newbs ) stumbling blocks at both ends of a trade.

 

[Rypieee]

Ryan Trying to help you here.

You need to specifically define in words in a trading plan those things marked on BOLD.

That in BLUE needs to be in a play book.



You really need to be very specific and decisions need to be black and white and instant---no hesitation/indecision or procrastination.
I see Procrastination/indecision as one of your (and other Newbs ) stumbling blocks at both ends of a trade.

Hate to admit it but you're right on procrastination, I shall work on defining my TP down to the tee so as to avoid stumbling on either end of the trade.

The part where you marked off as blue, could you elaborate on what a playbook is?

 

[tech/a]

A Play book is a written account of your trades

Why you take it
How you position size it
How you trade manage it
Why and how you exited it.
Why you completely discarded it OR
Why you re entered it.

You can then look for and identify patterns in your trading
that need to be re evaluated OR ADOPTED.

 

[Rypieee]

Hey readers, wondering if I could get your guidance on APX?

I am a bit unsure on how to handle a stock that has a massive gap up in price after an earnings upgrade. From what I can tell the price action prior to the gap was trading in a minor tight consolidation pattern for about a month. And prior to the tight consolidation pattern, it was in a range between $2.40 to $3.

On a gap play like this, I would enter the stock on the day that it gapped(yesterday), set my iSL under the low of the day (i.e under $3.00 so I would set it at $2.90). Gap supported with strong volume (yesterday and today) + brokers raising their price targets.

The only issue I have with APX is that the previous resistance range of $3.40-60 would attract supply(sellers) into the market to B/E.

What would you guys do in this instance? Wait for the gap to fill (possibility of that not happening due to strong volume/interest), wait for the B/O above prev high or move on from the stock?

The stock fits my criteria on the macro front and fundamental side of things, just unsure on how to handle it on the technical side of things. May seem to be deviating from my strategy of B/O transforming into trend at this stage but I believe there is more upside for the stock and a upward trend to begin.

Thanks!

 

[tech/a]

Brief look.
Considering the negativity in the last 2 days its done well to hold up there.
Id like to see a clear break of todays high
OR a pullback to the centre of the gap.

To be honest if this is set to go then resistance should be negligible.

 

[craft]

If he is using 13% to start with for position sizing then his portfolio size is 8 stocks to start with.

I can understand what you are saying about heat and volatility, but if you are on a multi bagger there is no need to sell it down until his stops have taken him out IMO......

He has already used his total capital for the 8 stocks based on the original position size and selection process.
The only reason I can see for selling out a good position is if he wants to increase the amount of stocks in his portfolio.

To answer your question Triathlete – and some waffle to boot.


Modelling around having a runaway winner and the question of what is the right capital figure to use in the calculations suggested in this thread.


Positon size 7 -13%

Initial risk 1%


Assumptions:

Initial account 50K

Trailing stop to ride medium term trends 20%


First question to answer: what do you regard as your capital?


1)Mark to market.

2)Initial Capital + closed trades

3)Mark to market less heat


Scenario: you brought an initial 8 positions for $6,250 each with an ISL at $5750.

3 stopped out at ISL so you have $17,250 back in the bank.

4 have moved up a bit to $7,500 each and you have moved your trailing stop to -20% = $6000

1 has blown the lights out and is a 10 bagger @ $62,500 trailing stop -20% at $50,000


So with 1) mark to market your capital is $109,750

Your position sizing calc is between $7,680 and 14,265. Even at 7% you cannot bring your portfolio back up to 8 positions with the capital you have available, unless you buy below your minimum parcel rule.

Your 1% risk is $1,097.


With 2) Initial Capital + closed trades, your capital is $48,500 and your calcs effected accordingly.
This definition of capital is good for a short-term trader but it can be slow to respond for a trend trader.


With 3) Mark to market less heat, your capital would be $91,250 and your calcs effected accordingly.


Whilst 3) overcomes the slowness of 2) it suffers the same problem as mark to market for basing the calculations.


Imagine your $62,500 position is SRX on the 13 March 2015. Your first chance to exit on breaching your stop, your 1) mark to market capital would be $71,288, 3) M2M – heat would be $65,288 and 2) Initial + closed capital would be $66,288


All your calculations on new position size/risk are being massively influenced by what happens to the one oversized position – is that logical?

While I'm waffling is risking 1% on 7% of your portfolio equivalent to risking 1% on 13% if not why have the same initial risk calc for both sizes. If you can't guarantee your stops against gap how much faith in the precision of the calculation should you have.

Maybe a standard position size (ratcheted over time) is worth considering.

 

[Rypieee]

Brief look.
Considering the negativity in the last 2 days its done well to hold up there.
Id like to see a clear break of todays high
OR a pullback to the centre of the gap.

To be honest if this is set to go then resistance should be negligible.

Hey @tech/a ,

Appreciate the post, initially I was going to post directly on your charts of interest but decided to do it on my thread hoping you and others would answer

 

[Cam019]

Hey readers, wondering if I could get your guidance on APX?

I am a bit unsure on how to handle a stock that has a massive gap up in price after an earnings upgrade. From what I can tell the price action prior to the gap was trading in a minor tight consolidation pattern for about a month. And prior to the tight consolidation pattern, it was in a range between $2.40 to $3.

On a gap play like this, I would enter the stock on the day that it gapped(yesterday), set my iSL under the low of the day (i.e under $3.00 so I would set it at $2.90). Gap supported with strong volume (yesterday and today) + brokers raising their price targets.

The only issue I have with APX is that the previous resistance range of $3.40-60 would attract supply(sellers) into the market to B/E.

What would you guys do in this instance? Wait for the gap to fill (possibility of that not happening due to strong volume/interest), wait for the B/O above prev high or move on from the stock?

The stock fits my criteria on the macro front and fundamental side of things, just unsure on how to handle it on the technical side of things. May seem to be deviating from my strategy of B/O transforming into trend at this stage but I believe there is more upside for the stock and a upward trend to begin.

Thanks!

Ryan, if I were trading your strategy I would be waiting for a breakout and close => $3.64. Todays trading has displayed the supply between $3.40 - $3.60 that you mentioned. As you have stated, your strategy is based on a breakout transforming into a trend, and my confirmation of supply withdrawing or being absorbed by demand, would be a close => $3.64. Just my opinion.

 

[Triathlete]

To answer your question Triathlete – and some waffle to boot.


Modelling around having a runaway winner and the question of what is the right capital figure to use in the calculations suggested in this thread.


Positon size 7 -13%

Initial risk 1%


Assumptions:

Initial account 50K

Trailing stop to ride medium term trends 20%


First question to answer: what do you regard as your capital?


1)Mark to market.

2)Initial Capital + closed trades

3)Mark to market less heat


Scenario: you brought an initial 8 positions for $6,250 each with an ISL at $5750.

3 stopped out at ISL so you have $17,250 back in the bank.

4 have moved up a bit to $7,500 each and you have moved your trailing stop to -20% = $6000

1 has blown the lights out and is a 10 bagger @ $62,500 trailing stop -20% at $50,000


So with 1) mark to market your capital is $109,750

Your position sizing calc is between $7,680 and 14,265. Even at 7% you cannot bring your portfolio back up to 8 positions with the capital you have available, unless you buy below your minimum parcel rule.

Your 1% risk is $1,097.


With 2) Initial Capital + closed trades, your capital is $48,500 and your calcs effected accordingly.
This definition of capital is good for a short-term trader but it can be slow to respond for a trend trader.


With 3) Mark to market less heat, your capital would be $91,250 and your calcs effected accordingly.


Whilst 3) overcomes the slowness of 2) it suffers the same problem as mark to market for basing the calculations.


Imagine your $62,500 position is SRX on the 13 March 2015. Your first chance to exit on breaching your stop, your 1) mark to market capital would be $71,288, 3) M2M – heat would be $65,288 and 2) Initial + closed capital would be $66,288


All your calculations on new position size/risk are being massively influenced by what happens to the one oversized position – is that logical?

While I'm waffling is risking 1% on 7% of your portfolio equivalent to risking 1% on 13% if not why have the same initial risk calc for both sizes. If you can't guarantee your stops against gap how much faith in the precision of the calculation should you have.

Maybe a standard position size (ratcheted over time) is worth considering.

I see what you mean.
I am sure we all have different ways of managing our portfolios.

Maybe I need to clarify the point when I said we should let the winners keep running, I will only let that stock occupy 20% maximum of the portfolio after that % is reached I would either add more funds into the portfolio or start to reduce the position.

 

[Rypieee]

Hey readers!

EOW 02
Portfolio performance up to date (Starting 1st of March 2017) = 2.31%
Market performance (ASX200) up to date from 1st March 2017 = 0.40%

Have been a busy week with work and studies so I haven't done a proper update - I will at least do a weekly update on the portfolio

This week I sold CGF on the 18/05/2017 during the market down day after it hit the stop loss, we managed to sell the stock at $12.43, incurring a loss of -0.52R. Our stop loss level was marked off as $12.45 so we have suffered a minor slippage of $0.02.

This week I bought into IRI @ 3.00 with a iSL of 2.60. The recent B/O above that $3.00 range isn't as "strong" but I do like the fact that it has made a higher low of $2.85 compared to its previous low of $2.60, which indicates to me that people are buying up the stock when it pulls back. I expect the trend of IRI to continue.



We are sitting in 18% cash at the moment and I am starting to become more cautious of the market due to political risk by the Don and technical chart of the ASX200 is closing in on it's previous low. I will be more cautious with opening up positions this week and will be tightening my stop losses on trades that have already run, especially the ones that I opened up recently.

I have yet to run my scans for the week yet but on first glance of my watchlist, it does not look like there is an opportunity right now + as my market risk turns cautious, I become more hesitant to open up positions. We may wait for the ASX200 trend to find support before using our excess cash!

 

[ducati916]

Here is where a little diversity in trading methodology is important.

You have capital available, but your single strategy, viz trend following, is marginal currently as there is possibly some uncertainty around the strength of the overall market trend.

Market neutral strategies are one way of diversifying the portfolio.

Long term holds and working the position are a third way. There are of course a number of other strategies, all have their own risk/reward profiles and do not depend on a unilateral trend direction.

Don't think 'stock diversification' is the only type of diversification that you ought to think about.

jog on
duc

 

[Rypieee]

Here is where a little diversity in trading methodology is important.

You have capital available, but your single strategy, viz trend following, is marginal currently as there is possibly some uncertainty around the strength of the overall market trend.

Market neutral strategies are one way of diversifying the portfolio.

Long term holds and working the position are a third way. There are of course a number of other strategies, all have their own risk/reward profiles and do not depend on a unilateral trend direction.

Don't think 'stock diversification' is the only type of diversification that you ought to think about.

jog on
duc

I do have plans to set up a long/short portfolio in the next 12 months! I need to get the basics down first before venturing off into the unknown - not really, I'm just going to flip my strategy around and do a short version But I need to get my trading plan properly defined.

What is an example of a long term hold strategy and "working the positions"?

Are you talking about buying the dips on fundamentally strong companies?