Starting small CFD account

[Triple B]

Week 4 , 17-11-2017
Month 1

Closed 5 trades this week

Tuesday and Wednesday saw a sell off across the market .
CWY was Stopped out after a 3% drop in price for $66 Profit or 4.1% profit on position size. -$23 costs
MGR stopped out after a 3% price drop for B/E on trade but a loss after $22.60 costs

Wed ALL Stopped out after stop was moved up tight as trade was looking weak. gapped down a bit on open to give $10 loss after costs.

On Monday opened DXS and It dropped on open first day and then gapped down on open on Tuesday ; this was a Full stop out and a bit plus costs for a $130 loss!

So this little love tap from the bear gave my little account a good smackdown.
Down to just below B/E at $995.

Had one position open IAG on Thursday and put a sell limit order on For $7.20 which it just triggered today for $120 profit - costs.

Account now at $1030 And no positions open .
Cant keep trading when costs are 15% of account.
Here are the stats for the month

Full turn trades 7
Trades exclude costs
4 Wins $318
2 Loss $130
1 B/E
P/L 2.45:1

Costs $158 [rounded]
P/L After costs
$318 / [$130+ $158 =$288]
P/L =1.1:1

So we can see profit before costs was[$318-$130] =$188 or 18.8% for the month
Costs were $158 or 15.8%!!! of Acc
Leaving a profit of 3% .Account is $1030.12
So as was suggested to me earlier , this account is simply too small to trade profitably.
Perhaps if the market stayed bullish throughout this last week I would have been looking at 30-40% [acc was at $1400 GLV at one stage]
profit before costs for the month. even then costs would kill me and Those numbers are not sustainable.
I was running numbers in my head today while working .
$3000 is probably the bare minimum as Peter suggested earlier.
With $150 costs per month [aprox 6-7 trades inc finance]which is 5% of acc ,. B/E on trades would mean 5% draw down or the cost of trades $150.
So to make any profit after costs would be looking to achieve over 5% profit on account
So I will give this another crack when the account is at $3000+
Getting smashed with bills at the moment so may be a few months till I return.

Bye
Brendan

 

[peter2]

I liked the post because I love it. Trading is a business and like all businesses you've got to include all the costs before posting the profits.

You gotta love these "bear taps". Open profits can disappear quickly. As you've seen most stocks fall when the index falls.

You'll also start to appreciate why I monitor the total downside exposure (heat) as this can change quickly with lots of open trades.

You're always going to be worrying about those open profits. Tighter TS's get triggered too often and looser TS's allow open profits to disappear. This is the balance that you must manage and you've got to do it in a consistent manner. A discretionary approach will be sabotaged by your psychological biases (recency and confirmation biases).

My suggestion is to decide what type of price movement you're trying to get and use the appropriate exit strategy to manage that in a consistent manner.

Good to see you're starting to really learn the "business".

ps: Get a spreadsheet organised so that all your details are updated easily and can be conveniently monitored.

 

[Triple B]

As you've seen most stocks fall when the index falls.

Yes . I checked on Wednesday night , and the number of stocks showing profit over the 2 day sell off was aprox 36 /199 [ASX 200] so only about 18% showing profit over the 2 days.
So If you have say 5 open positions, chances are you will be taking losses on most positions during a bear attack!!

You'll also start to appreciate why I monitor the total downside exposure (heat) as this can change quickly with lots of open trades

Absolutely. If you are not aware of your total downside exposure , you cant be serious about your trading IMO. Its simple maths and there is no excuse for not knowing your "heat".
I would calculate "heat ' every night. This allows you to take more trades,manage your profits too, and is the reason I did not blow up my account during the bear attack.
I even allowed a little for gap downs , which as it turns out , was needed! This is why the account only went $5 below $1000 for a day. Even if all stops were hit, 3/4 were . My account would be at or near B/E at all times. A more conservative approach could have locked in profits at various amounts too.

As far as Trailing stops, I was pretty happy with the way I managed them .
I use current support /mini support levels when in a trading range, and when trending I use the low of a previous bullish days candle . I also use ATR 2.5 on my charts to help as I found these levels match reasonably with my TS strategy.

My suggestion is to decide what type of price movement you're trying to get and use the appropriate exit strategy to manage that in a consistent manner.

Yes will work more on this while saving more $$
Am going to work on buying off support in trading ranges, this should give roughly 5 -15% profits on reward side in the trading range, and reduced Risk on the down side , especially when we have longer term investor buying pressure [up trend]
This can also be extra profitable if price pushes up through resistance or " jumps the creek"
and turns into a "breakout"

I believe buying above a well tested support give you an edge .

My Idea is this:
A trade can move 3 Ways , Up , Down , sideways.
We don't know which way it will go.
So we have a 33% chance of a trade going in any direction over a given time period.
If we can reduce the probability of a trade going in a particular direction [ie down when going long]
by using a sound entry strategy then we increase the probability of the trade going in the other two more desireable directions.

ie if buying slightly above a well tested support in a longer term up-trend reduces the chance of price dropping, by say 3% [ I don't yet know how to measure this] then we have a 30% chance of price dropping and a 35% chance of going sideways , 35% chance of going up.
So in effect a 70% chance of a trade going break even or in profit .
Of course there are many other factors to consider , News events , market pressure etc that can blow these odds out of the water ,and we need to constantly monitor for them.


As far as spread sheets go I will need to either learn, [ have never really had the need to use them]
or purchase something similar to the one I posted a link to earlier.
Cant hurt to learn something new first and then decide if I want the slicker version.

Thanks for the feedback Peter

 

[Triple B]

OK . Figure I might as well continue this thread.
I have been trying to trade FX and Gold over the last few months.
While I lost $ over this period , I feel I gained a lot in experience . I am continuing to trade fx /Gold with a very small amount ,just a couple hundred bucks. Developing a strategy that works, forwrd testing etc.
In the meantime its back to the ASX. Im kicking myself for going to FX and not continuing with Equities. I have paper trade success and a month in the market with equities all showing profit. Why stop!!! WTF was I thinking.
So I opened an acc with Trade direct 365. I have been trading since 18thSept. ASX only
$5 per trade + funding .
$658 deposited so far acc is at $670. inc p/L
will be depositing more this week and $100 per week there after.
TD365 is a market maker! However market makers have the option of hedging risk. Not that they will with an account the size of mine. They also have guaranteed stops. good for a small account as insurance from the dreaded gap.I use the GS on all trades as you only pay if hit. so far none hit .
Also have not seen any shinanigans from the broker.
Still have FP Markets leveraged CFD acc, and also a non leveraged CFD acc which I will add to , to use for trade on equities that TD365 dont include.

Top Down approach .
US Market , Charts, Commodities charts .DXY , AUS 200 charts including futures. Sectors then individual stocks in the strongest sectors,
Joining uptrend in a breakout . or on support. [opposite for short]
Risk is $100 max per trade inc costs .
Similar to my previous trading ,however costs are now halved.
I have High risk tolerance , as this is money i can afford to lose.
I know I can blow up quickly risking this % of account .
The GS will be usually about $100 to $150 away from entry as there is a minimum distance of between 5% and 15 %. So Sell orders[stop loss no guarantee] are made after buy orders are filled . These will be at no larger than $90 loss to allow for the $10 in trading cost . to = $100 Risk.
I think I will post weekly brokers statement to save typing out the gory details.
Will still post charts and trade thoughts with those.
Look forward to sharing my Trading and continuing with the journey .
One reason for this thread is that its hard to find someone to share the journey with.
th Mrs show fake interest. One bloke at golf loves talking about it as he has some interest and has recently opened an acc with self wealth. he is also a programmer and has agrred to help me with python.
So feedback is welcome.
Brendan.

 

[Triple B]

OK
Lets look at the US


As we can see Uptrends!! all is good with the US markets

The top 5 exports from Australia are 1. Iron Ore 2. Coal 3. Gold 4. Petrolium Gas 5.Aluminium Oxide
So It makes sense to me to keep an eye on these Commodities. Keeping an eye on these can also alert us to trades in the materials and resources sectors.

https://au.investing.com/commodities/coal-cme-futures

Coal is going well!

Gas is flat after some big recent action. day Trading aussie gas companies may have been interesting then.

Gold [my favourite]. The AUD /USD FX market seems to follow gold prices fairly well .

Also worth looking at oil prices as our energy sector follow that.
Remembering that all commodities are priced against the USD, It is worth looking at the USD index aka the DXY. The DXY compares the USD against a basket of Currencies .

So If the USD is strong and a commodity is strong against the USD I would infer that the commodity is showing signs of Strength. eg oil.

OK What about The ASX

Looks to me like a recovery after a sell off. From memory the sell off was around the Recent PM Knifing. [ As a point of interest , did you know Malcolm Turnbull was head of Goldman Sachs Australia]
No wonder he was initially reluctant for a banking royal commision, on his mates!! Cant believe labour didnt smash him with that !

The finance sector is by far the biggest sector on the ASX . So always worth taking that into consideration. The sector seems to be dragging the rest down , probably due to the Royal commission!
No wonder Malcolm was reluctant to have it. He of all people would know what it would do to the sector and the Market.Maximum uploads reached for this post. continued next post

 

[Triple B]

OK .
Finance sector looks like this

So On to the other Sectors. I dont look at commodities charts every day , except maybe gold or if there is news of a large commodity price change.
I do Look at the ASX Sector charts a few times a week.
This week I have found 4 of interest.
IT Sector , Energy , Materials , AREIT

We can see IT and energy look the strongest
Materials look to be recovering[looks a lot like the gold chrart] and AREIT has hit resistance.
Other sectors are starting recoveries too . I assess these after every days trading . does not take long.
Then I simply screen stocks in the sectors. using 3% positive price move over last 3 days [for strong sectors ]
opposite for weak. I would watch AREIT for a bounce off R then a reversal to break R before long positions are Taken.
This Is a basic summary of what I call a top down fundamental analysis.Does not take long and gives me ideas of where the money might be on The ASX.
Next Some StockCharts

 

[Triple B]

So
Trades this week are :
Beach Energy BPT. alredy in at 500 @ 2.005 stop at 2.03 now B/E inc costs GS @ 2.00 for -$15.73inc costs
sell order for 200 @ 2.21 for $40 [should have had this on earlier in the week doh]
The other 300 when the market says get out

MYOB. bought 1000@ 3.05 now 3.02 -$30 GS @ 2.89 for $160loss Stop loss at 2.96 for $100 loss inc costs.
Stop is tight . Probably went too big with this one, got exited
Sell order for 500 @ 3.15for $100win- Costs
another sell order right up at $3.80 for 500 for $425. longer term hold Must be dreaming

LNG bought 1000@0.69 GS @ 0.617 for $73 loss + $10costs currently @ 0.685 -$5
sell order for 500 @ 0.80 for =$110 - $10 costs then hold and see as there is no previous Resistance above 0.82

Have a Buy Stop order for
BVS 300@4.42 GS @ 3.97 for -$135 + costs of $10 + GS cost of $13.19
if filled a sell order for 300 will be set at 4.12 for -$90 loss +costs
Take profit sell order will be set once I see the movement perhaps $5.00 target as no previou sResistance


So as you can see if GS orders are hit it will hurt but I will still have my small account.
If normal stops are hit $ 100 Gaawn. though I do move them up asap
If you are wondering how i can afford all these trades with such a small account I will explain.
When you put a trade on with this broker and you put a normal or GS stop loss order on, the margin required is the amount that will be lost if hit. So you only need to fork out that amount . if the trade moves against you the loss comes out of the initial margin. its a good idea to have a couple hundred bucks extra to cover commissions and GS charges if hit.
Current margin used is BPT $84.05 LNG $73 MYOB $135 BVS will be $135 until I put a sell order in ,then $90 leaving about $250 for commissions and GS charges if hit
So there you go. trading a small high risk cfd acc.SCARY huh?

 

[Triple B]

I should add that non GS stop loss orders require 20% extra margin . this is to add a buffer for slippage.
Lets say your notional position is $5000 the initial Margin required is 10% so $500 [no stop placed]
however place your stop [not guaranteed ] is placed $100 away add 20% = $120 this is the required initial margin.
Not $500 as with other brokers.
I hope its ok to paste this:
Orders Aware Margin Attaching a Stop Loss Order to an Open Position can result in a reduction to the IMR. When a Stop Loss Order is placed, the system calculates Margin as 100% of the Stop Loss Order plus 20% of the IMR. The system will use this figure as the Margin if it is lower than the IMR. In other words, the most the system will take as Margin is the IMR but will use a lesser amount subject to proximity of an associated Stop Loss Order. It is important to note that a Stop Loss Order set by you is not guaranteed, it is subject to Gapping, an occurrence whereby the Quote moves from one price to the next price, through an Order level. In such circumstances your Stop Loss Order will be executed at the Quote based upon the first price that we are reasonably able to obtain in that Underlying instrument. This is the reason why 20% of the IMR is added to 100% of the Stop Loss Order to calculate Margin, to act as a buffer in the event of Gapping. If a Guaranteed Stop (GS) Order is placed as opposed to a Stop Loss Order, the system simply calculates the Margin as 100% of the GS Order. This is because there is no Gapping risk if you decide to use a GS Order. The system will still use the IMR if it is a lesser amount than 100% of the GS Order. Please refer to section 12.3 for more detail on GS Orders. The following three scenarios are used to illustrate how Margin is calculated:

 

[Triple B]

MYO hit full stop -$90+ $12costs howver received divs of $57.50 so - $44.50
BPT hit TP sell 200 at 2.21= +$41 - $11 costs + $30profit then BE inc costs at $2.03
LNG and BVS were both stopped out for small losses after I moved stops to BE not inc costs .
Also OM holdings was stopped out. for a loss.
anyway Total deposits are $1000. - $27.50 for asx data . account is now at $901.
This weeks focus on IT sector Materials and energy.
Scan is in these sectors as follows. 6month % move min 10% 21 day move min5% 5 day move min -3%. looking for stocks in uptrend and incuding ones that may have pulled back in the last week.

 

[Triple B]

Ended up with 34 charts in the 3 sectors
18 possible trades,all now in watchlist. about 2 hrs work Sunday night.
another hour to place orders.

Buy limit orders with SL orders to hopefully catch the pullback before continuation of trend.
All trades if filled MINIMUM 2:1 p/L ratio to previous high or next significant round no. if above all time highs.
take profit is usually by trailing stop below support or hitting target if at previous high.
Here is the list: 5 more possibilities not provided by my broker
Materials;

DNK
PAN
NST
IPL
OMH
SAR


IT

APT
CPU
PPS
BVS
XRO
ENERGY
BPT
COE
STO
SXY
WPL
SOL
WHC

Here is an example green line is buy limit order . Red is SL. previous high back in sept 2014 at 43.50 can be seen on weekly chart. Many orders wont be filled and the things will take off without me .
The orders that are filled will be buys on support on a pullback in an uptrend in the strongest sectors.
This method keeps my grubby finger out of the action.I still get to pick the stocks , but the price determines the entry, not me.
Will post charts as orders get filled

 

[Triple B]

MYOB. bought 1000@ 3.05 now 3.02 -$30 GS @ 2.89 for $160loss Stop loss at 2.96 for $100 loss inc costs.
Stop is tight . Probably went too big with this one, got exited
Sell order for 500 @ 3.15for $100win- Costs
another sell order right up at $3.80 for 500 for $425. longer term hold Must be dreaming

MYO hit full stop -$90+ $12costs howver received divs of $57.50 so - $44.50

NO I Didnt get back in on Friday!

 

[Triple B]

so.. 5 Buy limits filled
BPT @ 2.05
OMH @ 1.60
SXY @0.50
WHC @ 5.55
APT@ 17.5 now closed @ 15.65 for -$64 -$10costs
As you can see heavy on the energy sector. which may be a good thing as oil looks to be moving up again as I type . [ have a small cfd long on brent.]
The above are all trend following trades.
will take a position in Origin energy at market tomorrow. and that more than enough energy stocks.
Notices AREIT sector had a few positive movers today against overall market direction.
Will be looking more closely at some Ihave shortlisted in a minute.
Account is now at $806 . Really hurting on the missed MYOB trade.
Gold bottom bouncing in Trading range wont be helping gold miners tomorrow,

 

[Triple B]

AREIT
DXS looks ready too take a running jump up over Resistance at 10.90
SCP stronger vol and positive closes right near support. looks ready to try to cross resistance again at 2.48. then 2.56 for all time highs. slow mover stop 10c away but may see some action when into new highs.
I suspect AREIT and Energy sectors may be the Go To sectors if fear kicks in after the bearish market conditions of the last few days. With an eye on materials sector.
Cant take any more trades as fully invested ,although another $100 goes into the kitty on pay day, whenever that is!!

 

[Triple B]

Took a hit on thursday . was fully booked and got smashed down to $501.
closed all trades except OMH. which is $24 in profit
Then thursday arfternoon took BPT short 1000 @1.84 now $1.79 + $50
Then Bought Saracen Minerals(gold miner) SAR 750@2.1 now 2.11 +$7.50
Account now at $548
Then remembered my rule about only having 3 positions open at max Risk. ie $300 "heat " at any time.
I can move stops to take another position .
Also instead of adding another $100 I decided to purchase Trading Journal Spreadsheet. all markets version.
A very detailed trading spreadsheet that looks like the developer put a lot of work into.
Cost was $179USD but also had to buy EXCEL. at $49 . I did try to use it with open office but as the developer writes , it only works with excel.
My spreadsheet was very ordinary and having 0 experience with spreadsheets before trading ,decided that the money spent would be worth it.
Raining hard here so no golf this morning . going to spend some time with the new software .
going to be a grind to get back to BE. just need that one good trade

 

[Triple B]

This one might do the trick.
Going to scale in $50 at a time.I like scaling in when previous entry is at BE. this is what wyckoff suggested. If you get onto a good thing load up.follow it for weeks to months.
if scaling in at say 2% R per entry you canl be 6% R on one good trade but only 2% R at any one time. slightly less profit due to average entry price but the risk is minimised. eg 6R% x 3=18% of account size.

This is how I write up my charts when I not being lazy . This one uses less abbreviations than normal but Is to show What I look for . The rest of October will be focusing on finding good candidates for a "campaign"Need to pick trades like a sniper. and when Im right load up!(incrementally)

 

[Triple B]

Should add that nxt is about 11% short sold as of thursday . I look at this as ; short selling to help boost start of mark up as shorts are covered and also to help suppress prices as more supply is absorbed .
Also one of the directors bought on market.$44000@$6.29 on 6th Sept. on the 3rd day of break of support.ie Director catching the falling knife!
She also made an off market transfer of $200000 worth at $6.23 same day cant say whether that was a buy or sell??

 

[peter2]

I'm no Wyckoff fan but his structure for accumulation is sound and shouldn't be abbreviated.

NXT shows the SC, AR and perhaps an initial ST?. There's bound to be another ST incorporating a spring near the level of the SC or after the next ST. Then we'd expect to see a HL. That's the time to buy an initial parcel, then add once price breaks the sloping trend line or breaks-out above the AR line.

There's also his nine tests for buying accumulation. I don't see that many of them have been met in this chart.

It's worth looking back in the NXT chart to see what happened to get the price going up.
Mar16: Price formed a base over 12months, then good news created the "jump over the creek" and price took off.
Feb17: Another good news gap after the first ST and price took off again once it got above the AR level.

There will be no doubt when the accumulation structure is formed and the nine buying tests are confirmed.

 

[peter2]

Last week market antics created lots of selling climax's (SC). We anticipate that there'll be an automatic reaction (AR) next week. It'll be a while before we see the first STs and SOS's and the HLs that we both like.

All ARs are tricky to trade because they're based on emotion. If you're a true Wyckoff trader and short term cfd'er then you should be looking at the hourly charts for intra-day setups to get into these ARs that will start soon.

 

[peter2]

Here's an intra day (1Hr) chart of SBM that had a selling climax earlier (Sep 25,26). You'll recognise the Wyckoff accumulation structure in this chart but it's impossible to see it in the daily chart.

This structure will be there in a lot of charts in the next few weeks. They won't form in a week. If you're a keen W student you'll be itching to find them to give your cfd trading a great boost at the correct time.

 

[Triple B]

Gday Peter .
Thanks for that .
Im looking at longer timeframe . holding for a few weeks -a few months although you would not know it the way I have been in and out recently.not good.
i see this as a re accumulation over the last 10 months . although I can see how you can see accumulation in the last month and would apply accumulation rules to that .
I marked a chart a bit differently to show more clearly my view.
Do you see what Im seeing ??? i like the way this is setting up and the candle on thursday was one of the few blue ones outside gold stocks.
Also like the Idea of trading ARs over a shorter time period .not sure if thats practical at sounds like intra day trades would be most appropriate. Im working during the day.
appreciate the input