Archive for the ‘discretionary’ Category
today – pna close – book review
PNA: closed my long PNA position today for a 1% gain. I entered this position nicely on 28/4/09 bouncing from a support line. I then pyramided in at a high price, only to see the position deteriorate. My exit was triggered last friday on a close below a support line, however my exit position was not filled – my fault really as I tried to be clever and tune the exit, when I was not in a position to actually do that – leaving me to sit through the weekend with a half open position.
When a stop is hit – EXIT!
As I look at the US market starting today, the S&P500 is down more than 2% and can’t help but be reminded of the recent losses – and yet I know from my records there’s been some good gains over the last couple of months. This article is a reminder – Its ok to lose money! I know I lost money when I started when around me others were making it. Over the last year I’ve lost money – but not as much as some others have. Come July I review the annual stats – then I’ll have to go read that article again!
Following is the next installment in my reviews of trading books from my library.
“Getting Started in Chart Patterns“ by Thomas Bulkowski.
The title suggests ‘Getting started’… this book can be picked up by a beginner who has an interest in the art of reading charts. Don’t confuse this comment as one that suggests the book is for a beginner – many beginner books talk about how to place trades, differences between types of instruments and so on – this book assumes you know that.
The book specifically talks about chart trading of equities, however the concepts are obviously portable to other markets – with some care, due to his use of probabilities as they relate to his research against equity charts. Thomas’ books are valuable to me because he has done A LOT of work analysing charts and quantifying what he sees. When he talks about (for example) a Head and Shoulders pattern, he talks about the expected profit, as well as the percentage chance of getting that profit in bull and bear markets – great information! Further to that, he gives a point form list of ‘requirements’ that a chart pattern must exhibit to be classifed correctly in a particular manner.
The author remains focused throughout the text on his trading via the use of charts. A couple of times he may mention an MACD divergence or other indicator related metric – but then suggest the reader refer to other books to follow that idea through – the book remains firmly focussed on charts.
The book is written a bit conversationally in places, as the author uses simulated discussions between two traders as a tool to convey points regarding trades. Looking at the price, I must say its one of the less expensive books of its type. Whilst not to the detail of his other texts (which I’ll review at some later date) this is an excellent beginner to intermediate text.
The best thing I learnt from this text? I’ve got to say looking at ‘busted patterns’. Whilst I have been aware of them for some time, looks at the statistics – I’ll be looking for ‘busted head and shoulders’ more often!
friday – aqp – chc – fmg – pna
Filed under: discretionary, System A | Tags: aqp, chc, fmg, pna
Leave a comment Friday was a busy day for me at work, and as I got home friday night, I found my portfolio had changed shape due to some of the trades I placed earlier.
AQP exit - UGLY!
I closed my position in AQP for a 20% loss – OUCH! And the graph is ugly. When I look at it now, after the pain of the loss has past, the price was clearly ranging. When the share went through my stop loss at ‘1’ I should have exited immediately – instead I held thinking it might recover… big mistake… Never second guess the plan when its in place, take the exit signal when it comes, and re-enter if conditions suit. Now to go write that out 5 times! Anyway, learn from it – and move on.
CHC entry
Entered a long CHC position today, and as entries go, I am happy so far. Pushed through what looks to me like the upper line of a flag on Thursday close, and rose all day friday – and look at the volume.
Having done this for a while, I came to my own personal view some time ago that I can pretty much buy anything – as long as I manage my exit well. I can get out with a small loss if I enter badly – but keep it to a small loss. That said, I’m always happy with an entry like the one in the picture… I’ll see how this plays out.
Entered a long FMG position. On close the days trade looks like a spinning top which is disheartening, but does not trigger an immediate exit. Will keep a close eye.
Exited a long PNA position, but I’ll write this up when I fully exit, as I didn’t fill the order.
System A: Ran my scan – which is designed to run on weekends – still comes up blank! It still doesn’t like this market.
Final thought for the week – this was an active week, more transacions than I usually like to make in a week, which is making the management of the positions more time consuming. And it appears that even the professionals struggled with making anything of this week – read what The Kirk report had to say – he’s expecting a bit more to work with next week.
today – aqa
opened AQA long today on fallback to a trendline.
A few down days in a row now – lets see how we finish up for friday. I have a couple of long positions to open in the market for tomorrow, a bit off market, based on support lines. If support fails under the friday weight on these I can see me closing a number of positions come Monday.
My Plan A and B systems are based on end of day data and are supposed to be traded that way. Something I am noticing at the moment is that in my ‘discretionary trades’, which are largely pattern and or breakout related, I am getting stopped out during the day. I am then finding the prices are recovering by day end – meaning I would not have closed that position. Looks like I have some pattern testing to do to see the impact of that process on my results. My ‘real’ job has me very busy at the moment, including after hours… still, I have to find the time.
today – roc – mcc
Another down day, and my longs are getting picked off one by one.
roc
ROC signaled an exit on yesterdays close of day price, so closed long position that I pyramided into just the other day, for a 4% loss. (Actually not really true, loss is greater as I don’t take into account transaction costs for the purposes of the blog, and this had high costs due to the multiple entries). As I look at the graph (see to the right), it has fallen to the next support region…
mcc trade
MCC also signaled exit on yesterdays close, so exited on a tidy 23% gain. Again closed near support today. OK trade though this one. I am a bit disappointed in the entry, as I bought in ‘hoping’ to push through the resistance, rather than waiting for confirmation.
This could be short term weakness (likely to be?) but to trade well, cut the losses – go by the chart – and re-enter short or long when the next opportunity arises.
today – ewc – cfe
what a lot of red in the heat map on market opening today!
With the general market drop, I had an entry point hit on EWC at 0.575, a share I have traded a number of times. Purchase is based on trendline starting early March this year through another touchpoint mid May. Given the market drop, I always get a feeling in the bottom of the stomach… I have purchased on a retracement – but by definition I am therefore not buying on immediate strength. Its counter-intuitive for me – when I want to buy something making higher highs. I’ve got my plan in place for this share, so will follow.
CFE closed at 0.335 (4% loss) to protect my overall portfolio, and avoid a margin call. This was above my stop loss for the individual share, but given the general weakness today I closed this out.
The ongoing question in the press and even at lunch with the guys I work with – are we in a bear market, or are the bulls breaking into a run? Whilst I am interested in views, I just try to trade the same way I would otherwise. I saw this article, couldn’t help notice the Aussie reference. I do wonder myself when looking at all this cash being pumped out by the various world governments whether I am watching a bubble being born.
today – kzl – roc
well, as documented yesterday I had to make a decision about KZL. I exited part way through the day at a 19% loss, based on the great fall yesterday. 19% loss hurts when I’m working my current plan. Some of this may be recovered if I take up the offer for the share placement..whatever happens, this has brought out a flaw in my trading plan… my plan says exit when I fall through a stop loss, however my stop loss does not have a rule to move it based on a fall based on what amounts to a ‘return of capital’ which this share placement appears to reflect in essence. I’ll think about this some more over time, but don’t want to make a rash decision.. some study is in order.
The other action today was a pyramiding entry into ROC. ROC passed through resistance two days ago and is travelling on strong volume over the last month, and next resistance level is at ~$1.10.
Gold – I commented yesterday on a potential h&s formation on the hourly chart. Further analysis looks positive today, but then flicking to a daily chart, it is not obvious that there is a ‘defined’ right shoulder – as one would want for a positive trade.
today – tap – aqa
closed TAP today, fell through stop loss, giving me a 7.5% loss. Entry seemed promising, but fell back from resistance on day I entered (2/June/09).
aqa measured move
closed AQA today. Closed on a profit target, on a 27% gain – didn’t expect it this soon. See the inserted pic. As always when a profit target is met, I am unsure if I should trade that way, as my ‘normal’ approach is to let them run till they fall back through a stop loss. Back to the drawing board to see if I re-enter.
Points of interest – downward channel looked to be busted to the downside, so was looking to enter to the upside on the day is came out the top. I picked the exit as just below $6 as I expected that to be a point of resistance.
My other point of pain and pondering – KZL. It came back on the market today to a 20% drop which went straight through my stop loss (not CFD so not automatic). So now I have to evaluate if I am in a reasonable position to maintain the trade. Will go and think about this some more….
Both trades discretionary. Market looks very bullish.
today – mnd – cfe
opened MND – broke through resistance on open, so trigger fired. Originally found a month ago on heat map. EOD closed down, so technically should not have entered – I pulled the trigger too early as I normally engage on end of day prices.
opened CFE – huge volume on open, highest high in ~6months, and appeared to close the gap that was opened in October last year. Looking for the gap window to switch from resistance band to support band. Similar to MND above – close is low. I traded CFE poorly last time (a reason for setting up this blog) so will stick to exit plans this time.
Both trades discretionary. Market generally bullish.
Systems
I run a couple of systems, noted here so my other posts make some sort of sense.
System A: A long term trading system that looks for long term trends in the ASX200. Currently reviews 200 trading days for constant(ish) growth, and looks to take a position from a week to a number of months looking for share price increase. As you may guess, given the ASX over the last year, its a long time since this system signalled an entry.
System B: Not finalised. Essentially a shorter term trend following system based on ‘System A’. As ‘System A’ is written in C++, I am updating the code to remove a number of assumptions that I use in the share selection component to look for 3 month trends with other criteria similar, possibly extending outside of the ASX200. Some more coding to do – then testing. By the time I get there ‘System A’ may be running again… who knows.
So – System B has been redefined in March 2012 – see here
discretionary: ok – not really system based. Born out of the current world financial situation… what can I say. When my systems generate nothing, I revert to bits that interest me – in this case, shorts and pattern recognition. Almost all of my trades for the last 5 months have been discretionary – I get tips from a ‘heat map’ provided in real time by my broker, weekly volume increases, large candles and other signs I look for that tell me ‘there’s activity here’. Chart patterns are a favorite. Is it a cup n saucer I see formed in Fairfax today?
All systems have a money management component regarding stop setting and weighting by sector and as a whole of the portfolio. These are not detailed as I do not want to be seen to be offering any financial advice.
I am not a financial adviser, and I am not offering advice – just a guy with an interest
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