XJO - Does anyone trade it?

[bonkers]

Hi to Rembrandt--I had some contact with you if you remember at Hotcopper in 2002--I note you were long on BHP--back when it was half the price it is today. Sadly for me I bought some at around the 10 dollar level (overleveraged)--went down to around I think 8.30---from that point though--it's never looked back!.
Anyway regards to you and other forum members.
BK.

 

[rembrandt]

Finger on the trigger for several days waiting for the stop and SHORT entry to be triggered.

Seems old habits die hard ... amid a sea of red this morning as the Market has climbed the 'wall of worry' and currently in a quandary ... so why not follow the DOW ... dah !!!

Bonkers ... from $10 to $8.30 is nearly 20% !!! You must use a stop-loss. 95% of investors lose because human beings shun rational behaviour when faced with the prospect of risk. They avoid risk when offered the chance of a sure gain: even if the risky move has a higher payoff than the sure one. On the other hand, when faced with a sure loss, they will do the exact opposite: they will court more risk, even if it is likely to leave them worse off than the sure move.

When your BHP pozzie dropped to $9.50 (you should have exited with say a 5% stop) you were faced with a sure loss and chose to hold effectively courting more risk which caused a 20% loss.

Traders understand our tendency to be irrational at times and create mechanical safe-guards such as stop-losses and with discipline can balance our risk by letting our profits run and cutting our losses.

Cheers ... tight stops.

 

[bonkers]

Re: XJO - Does anyone trade it?Rembrandt

Hi Rembrandt--yes I sure learn't my lesson!--I had quite irrational trading behaviour at the time--chopping and changing all over the place--I had a debt gearing problem also and an opportunity cost of capital problem--today I'm back in the workforce and have money going into my account each week--so I'm starting afresh--as you know a good trader forgets about past losses and moves on--that I've done.
All the best--nice conversing.
BK.

 

[DTM]

OK, XJO on long term support of 4464 or there abouts. It did bounce off it this morning and looks like support is holding. Yesterday was also a major gann date and this week leads into the Yom Kippur festival which I think goes like 70% of times it is a down week. Don't ask me how I just read it somewhere. The gann date was drawn in a few weeks ago and I had forgotten about it until now when I checked on one of the XJO charts.

A lot of volatility ahead with the trading range between the top and todays bottom I think. It might be a good time to get out of equities when the market starts nearing the top again or protect them with options.

Apologies for the delay in my charts, it doesn't get updated until mid-day so I only have yesterday's up.

 

[DTM]

And my elliot wave count.

 

[rembrandt]

Still slavishly in sympathy with the DOW despite our strong fundamentals.

Mid morning support at important 4500 level has since failed ... adding to SHORT profits. Trailing stop at 4490.

Cheers ...

 

[rembrandt]

Next test support at 4400 ... although late rally at close today.

Cheers ... tight stops.

 

[RichKid]

Next test support at 4400 ... although late rally at close today.

Cheers ... tight stops.

Great charts as usual Rembrandt.

Yep, and hope you get filled at the stop level without too much slippage. I'm looking at going long once good support is established but this high volatility means that eto's will be expensive- does that sound right to the experts? What do you folk do in that case, do you just start writing lots of options?

 

[rembrandt]

Taking SHORT profits.

RichKid ... this is a big subject in it's own right and a lot depends on individual trading style. As I trade larger parcels LIQUIDITY is important to me and I try to EXIT as close to the money as possible.

Cheers ...

 

[RichKid]

Taking SHORT profits.

RichKid ... this is a big subject in it's own right and a lot depends on individual trading style. As I trade larger parcels LIQUIDITY is important to me and I try to EXIT as close to the money as possible.

Cheers ...

Thanks Rembrandt, will do more research and reread the options threads in the Derivative forum, my concern is that the market may go higher or lower but when volatility drops (as it should after last week's fall, unless we have an even bigger hike in volatility) I may get a very small or no profit.

It looks like a minor support level there around 4415 so far with some rejection of lower prices, still to early to see where it'll head, especially with that big round figure of 4400 just below todays low you'd think it'll at least retest 4400.

BTW, what do you mean by 'exit close to the money'?

 

[rembrandt]

Sometimes this Market just gives me the sh*tes ... grrr

Tested 4400 today and is just as liable to bounce again tomorrow.

RichKid ... yes, the best ETO profit scenario is 1-2 clicks OTM and exit ATM where liquidity is highest.

Cheers ... tight stops.

 

[wayneL]

Sometimes this Market just gives me the sh*tes ... grrr

What really gets to me is how I can pick the exact swing point so often...I mean the exact swing high or low....AND PUT MY BLOODY STOP THERE!

When I am blessed by this amazing forsight, the trade of course goes on to be a fantastic trade...sans my capital.

You just gotta laugh!!! ....thats trading

 

[RichKid]

Still in some sort of st channel downtrend, borders are flaring outwards. Will it be down again tomorrow? Price action is all over the place. Near some crucial support levels now. Oil and gold prices both down so the big resources co's are not really getting much help from those charts.

 

[mit]

What really gets to me is how I can pick the exact swing point so often...I mean the exact swing high or low....AND PUT MY BLOODY STOP THERE!

When I am blessed by this amazing forsight, the trade of course goes on to be a fantastic trade...sans my capital.

You just gotta laugh!!! ....thats trading

Wayne,

Maybe you can start a new thread called WayneL's stops and we can trade accordingly

MIT

 

[rembrandt]

The XJO index is off nearly 8% and is an excellent portfolio hedging tool.

Cheers ...

 

[RichKid]

The XJO index is off nearly 8% and is an excellent portfolio hedging tool.

Cheers ...

Excellent point, certainly it is a good tool, but how many people would study derivatives and how they work (delta, volatility etc) to protect themselves? Very few, and periodically monitoring it to make sure you're hedged correctly is beyong the reach of quite a few. I prefer stop losses and individual stock options but then my ac is tiny compared to most and not all my stocks are in the ASX200.

Looking at your chart the 50% retracement level is taking on added significance as it's near the previous highs, falls in gold and oil simultaneously has weakend our big resources stocks imo- they'd usually hold up the market. Still, sell volume seems to decrease so maybe some sideways movement soon, but stll a bit of room for a smaller move lower to support circa 4300.

 

[rembrandt]

Expecting continuing volatility in the 4400/4500 range ... LONG pozzie doing nicely ... trailing stop 4400.

RichKid: Yes ... trading(speculating) is very different to hedging and worthy of a thread of it's own. Those whose portfolio's have seen big increases since Mar03 will be sitting on a mountain of unrealised gains and any reversal includes tax issues aside from losses that are stopped.

Cheers ...

 

[RichKid]

Anyone expecting a pullback before the the jo hits the former high? I was until I saw the recent increase in the index with increasing volume, vol on up days was low until this week. Does anyone have an index chart with volume to compare the year's progress (my charts don't have xjo volume, alas!). I'm thinking of comparing the first correction this year with the current one.

 

[sails]

Hi RichKid, here is an XJO Iress chart with volume, but predicting when a move might end is not one of my strengths so will leave that for more expert technicians!

 

[DTM]

XJO looks like its building to go up again. At the moment, its starting to move into overbought area and could be a weak movement up.

Next few days will tell whether its a weak movement up but up it is in my opinion.