long term position trading -primarily etf's-

[Swift5]

Thank you for putting volume in the chart. Your analysis of MCD is very interesting. If you also put volume in any chart of your purchased ETFs will give some of your readers more incentive to look at it and study with you.
Could you also mark "springs" and "associated stops" on the MCD chart or whatever your next chart to illustrate? Your effort will be very much appreciated.

 

[sowterdad]

Thank you for putting volume in the chart. Your analysis of MCD is very interesting. If you also put volume in any chart of your purchased ETFs will give some of your readers more incentive to look at it and study with you.
Could you also mark "springs" and "associated stops" on the MCD chart or whatever your next chart to illustrate? Your effort will be very much appreciated.

I will include volume on some charts- as a potential element to consider if it is beneficial -
some market GURUs qualify their trade suggestions to "BUY" if the stock moves higher on large volume- I essentially have an issue with waiting to buy and see a confirmation that the initial move is accompanied by high volume .
I think if a potential upcoming large breakout move could be read by the subleties indicated by understanding volume and price action prior to the move - that would truly improve one's trading results-
One could choose to then take an entry ahead of the breakout- where they were positioned for a small loss as the Point of Failure (Alan Farley) was close by.
Using MCD as the present chart- and perhaps an exaggerated example to illustrate my point-

I find that the fast 15 minute chart seems to indicate high volume buying just at the close-
When I drop down to a faster 5 minute chart- All the buying occurs in the last 5 minutes of the market close- Including the past 2 declining days- Particularly high volume at the close today. What I think I understand is that high volume itself is not a positive- unless the price action/response shows an appropriately sized gain- Big volume without a decent move in the price bar indicates large supply selling into the buy orders- Thus the big volume doesn't see a larger up move- This could perhaps suggest liquidation supplying almost equally into the demand.
Since i'm totally winging it concerning volume- I would recommend not trusting my interpretation- but review Wycoff.

The other side of the volume story- MCD again- Guru says to Buy on good volume-
MCD moves up 8% on good volume and closes at 110.90. OK- that's a confirmed breakout on good volume- Now, To follow the Guru's recommendation- you buy if it moves higher- The entry would be about 111.00- and price moves higher for a day - or two- but it is now an extended upside move in a soft market-- with a wide range of profits to be locked in back within the gap area.
The 15 min chart looks negative- but that's a visual perception when seeing the minor upside moves and declines that is actually an exaggerated perception of normal daily minor retracements and back filling- It can be difficult to view faster charts and not be able to readjust to what the daily chart is suggesting. A fast chart may look like the SKY is Falling- but it is not necessarily the case if one views a daily chart. I need to remind myself that the longer time frame chart generally defines the trend - and what is my goal?
I want to capture as much of a trend as i can be patient for, without jeapordizing my hopefully larger profits by allowing too extreme a pullback.

A good example of my confusion about GURU's Rules about buying on Volume has confirmed the price move is well illustrated in the MCD daily chart-

I tend to rely on price channels- looking for a breakout move to occur higher-
i would typically set a buy-stop entry above the high of the sideways channel- and only after the trade occurred would i ever see what the volume was that day.

The MCD chart I am attaching illustrates a nice breakout move out of consolidation on very mediocre volume- and it would easily have become a net win-win trade- The breakout order would have been set just above the top of the consolidation, the stop just below the low of the consolidation- defined loss- Potentially the fill would have occurred at $99.50.
Since it occurred on low volume- GURU would not have placed an entry until the next trade- and would likely have passed on it entirely. The following day the order would fill at $100.50. - Trade moves up over the next few days pre-earnings report to swing backs low of 101.50- and then the earnings report sees a hige gap higher.

What is the better trade? Taking a chart formation buy-stop with a 3% risk- or waiting for a breakout on large volume some 10% higher ? with a much wider stop-loss?
As this daily chart illustrates- a very nice upside move can occur without a confirming large volume on the breakout- In actuality- the volume gradually increased from the initial entry breakout day.
Perhaps this would explain why i do not believe in waiting on volume to confirm- By then, The HERD is all in the trade- Hear that Mooing sound? It makes the herd feel good to know they are surrounded with others doing exactly the same thing.

Compare the two charts- where would you have preferred to have taken an entry?
which entry would allow you to be a holder of the position for a longer term targeted gain?

 

[sowterdad]

Nice- PJP hit my target in spite of a weak market- sold $69.60- which was just below the recent range highs. On a promissing note- price closed above this level challenging the prior highs with a close at $69.90.

 

[sowterdad]

Nice- PJP hit my target in spite of a weak market- sold $69.60- which was just below the recent range highs. On a promissing note- price closed above this level challenging the prior highs with a close at $69.90.

10.28.15 comment- failed to ' post reply.'PJP actually moved higher today and broke through the perceived resistance - and i sold yesterday- and no free cash to repurchase- HMMM- I thought the pharma/biotech was going to continue to struggle in this preelection season - Fed signaled Dovish again today? Market rallies. I missed the opportunity to employ in the PJP trade to keep a portion of the trade alive witha wider stop-loss-
I thought i had a chance in EEM and CU- but both stopped out today for losses- Conversely, Q's moved higher, spxh higher, and HACK popped up 4%.

My losses negate my gains - but there is satisfaction in following a logical course of trade action- with stops- and recognizing that those are the cost of doing business trying to implement a consistent approach in evaluating stops.

So much of trading success is linked with riding With the tide- instead of fighting it.
I guess one could liken this to the surfer that looks out to sea to judge the tide coming at him, and tries to select a winning wave. Being in touch with the direction of the tide largely dictates how that ride will perform.
My positions presently are an effort to try to add a diversified approach- much like one would have if managing a diversified portfolio.
I like the concept of taking an entry closer to the Point of Failure- and HACK perhaps best illustrates that concept - As price was declining intraday, I took an entry knowing where the point of failure was. The advantage is that the entry had a low % risk- Coincidentally-
the q's were moving higher while Hack was lagging-so that suggested the tide was favoring an upside direction. but it also seemed Alan Farley timely.
I doubt that anyone today recalls Alan Farley- Hard right edge? i should revisit his video -

Essentially, Farley would have not waited to see a high volume move on a stock to take a position- because he knew the HERD would all follow into that trade- His approach was to take the earlier entry- smaller loss- and sell to the Herd`.
10.29.15 follow up-HACK

Does this concept make sense? I think it does- when applied with some discretion- You do not want to front run a stock in a hard decline- You have to have a valid reason to consider an entry in any type of pullback-
Extend this concept to determining the bottom of a trend line- or a channel line- and the Point of Failure lies just slightly below the possible entry.
In setting stops- I think each trade writes it's own level of support-
One has to allow for some volatility in most cases- so one has to determine a support as a break back and penetration into a lower level- or range.Support can best be defined by working from the longer time frame charts. At some point- the intraday charts don't even consider the longer term time frames as they are too wide to be relevant in a very fast time frame. The fast intraday chart may respond to price action within the wider charts parameters. The point i am trying to consider is that as one drills down into faster time frames for a more insightful view of the price action- there is a distortion in what is really relevant perhaps on the daily chart-
insight into the intraday price action needs to be also viewed as to how it is playing out on the Daily- and perhaps the Weekly- time frames

 

[sowterdad]

10.28.15 comment- failed to ' post reply.'PJP actually moved higher today and broke through the perceived resistance - and i sold yesterday- and no free cash to repurchase- HMMM- I thought the pharma/biotech was going to continue to struggle in this preelection season - Fed signaled Dovish again today? Market rallies. I missed the opportunity to employ in the PJP trade to keep a portion of the trade alive witha wider stop-loss-
I thought i had a chance in EEM and CU- but both stopped out today for losses- Conversely, Q's moved higher, spxh higher, and HACK popped up 4%.

My losses negate my gains - but there is satisfaction in following a logical course of trade action- with stops- and recognizing that those are the cost of doing business trying to implement a consistent approach in evaluating stops.

So much of trading success is linked with riding With the tide- instead of fighting it.
I guess one could liken this to the surfer that looks out to sea to judge the tide coming at him, and tries to select a winning wave. Being in touch with the direction of the tide largely dictates how that ride will perform.
My positions presently are an effort to try to add a diversified approach- much like one would have if managing a diversified portfolio.
I like the concept of taking an entry closer to the Point of Failure- and HACK perhaps best illustrates that concept - As price was declining intraday, I took an entry knowing where the point of failure was. The advantage is that the entry had a low % risk- Coincidentally-
the q's were moving higher while Hack was lagging-so that suggested the tide was favoring an upside direction. but it also seemed Alan Farley timely.
I doubt that anyone today recalls Alan Farley- Hard right edge? i should revisit his video -

Essentially, Farley would have not waited to see a high volume move on a stock to take a position- because he knew the HERD would all follow into that trade- His approach was to take the earlier entry- smaller loss- and sell to the Herd`.
10.29.15 follow up-HACK View attachment 158717

Does this concept make sense? I think it does- when applied with some discretion- You do not want to front run a stock in a hard decline- You have to have a valid reason to consider an entry in any type of pullback-
Extend this concept to determining the bottom of a trend line- or a channel line- and the Point of Failure lies just slightly below the possible entry.
In setting stops- I think each trade writes it's own level of support-
One has to allow for some volatility in most cases- so one has to determine a support as a break back and penetration into a lower level- or range.Support can best be defined by working from the longer time frame charts. At some point- the intraday charts don't even consider the longer term time frames as they are too wide to be relevant in a very fast time frame. The fast intraday chart may respond to price action within the wider charts parameters. The point i am trying to consider is that as one drills down into faster time frames for a more insightful view of the price action- there is a distortion in what is really relevant perhaps on the daily chart-
insight into the intraday price action needs to be also viewed as to how it is playing out on the Daily- and perhaps the Weekly- time frames

I added to the position at the close- Friday 10.30.15 as i got home with an hour pre close. Hack was up some today, while the markets were soft. This increases my position to 80 shares. Average cost $26.32- I was tempted to raise my stop to break-even- but i paused in doing that- just raising it up to $25.80 - thinking the prior dbl bottom lows should provide nominal support. Hack is a sub segment - Cyber security ETF with a narrow focus- IF Tech (qqq's) hold - I'm expecting Hack to do the same- It was actually up today slightly as the q's closed down slightly.

 

[sowterdad]

Nice- PJP hit my target in spite of a weak market- sold $69.60- which was just below the recent range highs. On a promissing note- price closed above this level challenging the prior highs with a close at $69.90.

Following up PJP- reentry 10.30.15
PJP did hit my "Target " price and paused for the day at that level- I expected that would be perhaps the top of a channel, and that price would pull back from that top level. That was not the case as price promply moved higher the next several days, and went above $72 before retracing. I reentered on todays pullback- while price was closing at the low of the day.
I had a large enough position in PJP that i could have sold 1/2 and perhaps allowed the remaining 1/2 to stay in play- could have gotten another $1 out of that move and the pullback- Now that price pulled back for 2 consecutive days, I chose to take an early reentry- thinking that price is approaching the prior resistance- now 'support' just below.
Since my perception of these possible levels is based only on the past few weeks of price action- these levels do not represent extended periods of buyer/seller exchange-
It is -perhaps- simply my desire to try to define price action into zones and lines that 'should ' be respected - but in the grand scheme of things, even the perception on the daily is at best a minor support level compared to something established over weekly or monthly time frames- None-the-less, I attempt to attach meaning on these faster time frames - and perhaps the success or failure is totally not related to what is occurring in this specific ETF- but more a response from the input of the larger market forces at work? The lesser volumes
of participation in select focused stocks and ETF's needs to be a consideration. And- knowing that low volume participation does not favor any stock or ETF- all are to be considered. If that particular stock or ETF comes into favor- it could potentially outperform the underlying- major index. But the converse is also true- Price action in low volume offerings can result in wide bid-ask spreads and also could be difficult to get a fill on a stop order any wheres near the desired price if there is another flash crash- Not If- just when?
In this chart- I show taking an entry when the daily bar is quite bearish and closing at the lows- On the faster chart- I see the decline and a possible bottom attempting to get a footing- This appears to be a nominal retest of the breakout of the lower "support/resistance' level- So i see this entry as perhaps 'early' - which often is synonymous with wrong. My thinking is that retracements are normal- and some penetration into the lower support area is also normal- so a stop should lie below that range-Will determine that exact stop over the weekend- but $68.50 would be about as tight a stoip as I would want to have for a position trade. I could make the case for a wider level- all the way lower to $66.50 - but the tighter stop is preferable .

 

[sowterdad]

Following up PJP- reentry 10.30.15
PJP did hit my "Target " price and paused for the day at that level- I expected that would be perhaps the top of a channel, and that price would pull back from that top level. That was not the case as price promply moved higher the next several days, and went above $72 before retracing. I reentered on todays pullback- while price was closing at the low of the day.
I had a large enough position in PJP that i could have sold 1/2 and perhaps allowed the remaining 1/2 to stay in play- could have gotten another $1 out of that move and the pullback- Now that price pulled back for 2 consecutive days, I chose to take an early reentry- thinking that price is approaching the prior resistance- now 'support' just below.
Since my perception of these possible levels is based only on the past few weeks of price action- these levels do not represent extended periods of buyer/seller exchange-
It is -perhaps- simply my desire to try to define price action into zones and lines that 'should ' be respected - but in the grand scheme of things, even the perception on the daily is at best a minor support level compared to something established over weekly or monthly time frames- None-the-less, I attempt to attach meaning on these faster time frames - and perhaps the success or failure is totally not related to what is occurring in this specific ETF- but more a response from the input of the larger market forces at work? The lesser volumes
of participation in select focused stocks and ETF's needs to be a consideration. And- knowing that low volume participation does not favor any stock or ETF- all are to be considered. If that particular stock or ETF comes into favor- it could potentially outperform the underlying- major index. But the converse is also true- Price action in low volume offerings can result in wide bid-ask spreads and also could be difficult to get a fill on a stop order any wheres near the desired price if there is another flash crash- Not If- just when?
In this chart- I show taking an entry when the daily bar is quite bearish and closing at the lows- On the faster chart- I see the decline and a possible bottom attempting to get a footing- This appears to be a nominal retest of the breakout of the lower "support/resistance' level- So i see this entry as perhaps 'early' - which often is synonymous with wrong. My thinking is that retracements are normal- and some penetration into the lower support area is also normal- so a stop should lie below that range-Will determine that exact stop over the weekend- but $68.50 would be about as tight a stoip as I would want to have for a position trade. I could make the case for a wider level- all the way lower to $66.50 - but the tighter stop is preferable .
View attachment 158751

Sunday 11.1.15 On the home front- got the concrete roof of the storm room poured this am- and just ahead of the rain- which gave me an excuse to browse ET and to browse one of the closed historical threads for a few dozen pages-concerning volume - http://www.elitetrader.com/et/index...eople-use-volume-range-and-tic-charts.80582/- The thread caught my interest in further exploring Volume - and I will have to continue reading through the thread- Note that I went to the end of the book (thread) to read the last page or two and found that there was a lot of acrimony with accusations concerning one of the thread's contributors as actually selling his services off-line - and detractors were coming out against him.
that acrimony being noted- If i read more possibly I will learn something of value in
ways to consider whether i want to include volume .as a component in my trading-
I expect- as most things in chart reading- interpreting volume in context of Price Action
is something that takes a great deal of experience with thousands of charts and hundreds of trades.
What i already 'know' about volume is commonplace- Climax volume often accompanies the top of a momentum move- typically seen as big volume but little follow through response in price .
Small volume, tight bars during periods of quiet consolidation may result in strong moves.
What i have noticed is that Volume often occurs in spurts during the course of a day-
While the daily bar may show as big volume- Often that may not occur in every period -
For example- Daily chart will show volume, Drilling down into a 2 hour chart will yield 4 time periods with different volume, 1 hour will give 7 periods and so on progressively as one drills down into faster time frames. This was noticed a few days earlier when i posted a fast chart of MCD and only the last bar of the chart- at the market close -included high buy volume virtually most days- pre earnings.
One of the chart choices available to me using stockcharts is the Arms Candle volume-Which changes the size of the candles relative to the amount of volume that occurs in that candle's period. i will post a few charts in that format. i will also look to drill down into faster time frames to see where that larger volume actually occurs- Does it coincide with a preexisting area of support or resistance? Or - Does it occur on NEWS? Earnings?
How I assess this information likely determines my novice expectation of what the trade should do-

 

[sowterdad]

Sunday 11.1.15 On the home front- got the concrete roof of the storm room poured this am- and just ahead of the rain- which gave me an excuse to browse ET and to browse one of the closed historical threads for a few dozen pages-concerning volume - http://www.elitetrader.com/et/index...eople-use-volume-range-and-tic-charts.80582/- The thread caught my interest in further exploring Volume - and I will have to continue reading through the thread- Note that I went to the end of the book (thread) to read the last page or two and found that there was a lot of acrimony with accusations concerning one of the thread's contributors as actually selling his services off-line - and detractors were coming out against him.
that acrimony being noted- If i read more possibly I will learn something of value in
ways to consider whether i want to include volume .as a component in my trading-
I expect- as most things in chart reading- interpreting volume in context of Price Action
is something that takes a great deal of experience with thousands of charts and hundreds of trades.
What i already 'know' about volume is commonplace- Climax volume often accompanies the top of a momentum move- typically seen as big volume but little follow through response in price .
Small volume, tight bars during periods of quiet consolidation may result in strong moves.
What i have noticed is that Volume often occurs in spurts during the course of a day-
While the daily bar may show as big volume- Often that may not occur in every period -
For example- Daily chart will show volume, Drilling down into a 2 hour chart will yield 4 time periods with different volume, 1 hour will give 7 periods and so on progressively as one drills down into faster time frames. This was noticed a few days earlier when i posted a fast chart of MCD and only the last bar of the chart- at the market close -included high buy volume virtually most days- pre earnings.
One of the chart choices available to me using stockcharts is the Arms Candle volume-Which changes the size of the candles relative to the amount of volume that occurs in that candle's period. i will post a few charts in that format. i will also look to drill down into faster time frames to see where that larger volume actually occurs- Does it coincide with a preexisting area of support or resistance? Or - Does it occur on NEWS? Earnings?
How I assess this information likely determines my novice expectation of what the trade should do-
View attachment 158778 View attachment 158780

a CLOSER LOOK - 15 MIN CHART OVER FEWER DAYS
Looking at the 15 minute chart - I can see Volume in greater detail-
Note that price did Hold at perceived resistance for a day- where I initially sold.
I cannot say that I have a "Eureka" moment here viewing Volume- The demand in the market ebbs and flows with the day- Notice on 10.27, Price made a decent continued up move and closed just under the perceived resistance level on moderate bullish volume-
It opened the next day -tried to open higher- but failed in the 1st 15 minutes, and went below the prior day's close. It then moved up and went through the resistance level on the next 3 small vol bullish bars, with a mid morning bullish gap move higher. It closed the day on solid bullish volume- Opened 10.29 with a gap move higher on bullish volume, but was unable to gain any further momentum.It declined through the day, filling and closing below the gap on consistent but modest selling volume- Buyers tried to come in at the close.
10.30. price was initially weak and continued lower. I bought the close for a new trade on the "bearish" decline. I think it was $70.60 fill +/-

In the context of swing trading- for those of us that hold positions overnight- A retest of a breakout- or a gap move higher is not uncommon. I'm looking to that perceived lower resistance- now broken to become the "support" range.
I highlighted the tenative support zone- starting at $70 and going lower-
If I was to choose buyer enthusiasm to determine support- i would have to look back to 10.26 and set a stop below- $67.25.
Since I am an EOD swing trader- Is this a fruitless endeavor- and should i simply be employing the Daily and weekly charts ? As a swing trader- i need to allow price some room for volatility- and reluctantly be aware that wider support is found at the wider swings that price has made. The goal of a stop is to prevent an estimated loss from becoming an outsized loss. One way to moderate the potential for loss is by reducing the position size via different levels for stops- One for the initial entry, one to take a position for a longer swing trade. I think this is worth considering -but for this trade- as I want to allow some possible penetration into the prior channel- $68.50 looks to be enough leeway -with several days of prior trading at this level.

 

[sowterdad]

HACK was a Ballsy entry for me as an intraday entry- I purchased as price was in decline for the day- but felt that the larger sector tide would come in to play- Which was up on the day.
I then later added in on a higher move that increased my cost of entry- $26.32-

I liked the hack entry as it was close to the point of failure of the recent swing low- and i liked that I was correct in thinking it would trade Along with the bigger tide eventually.
So, a relatively low controlled entry , and i then added to the position size as momentum has moved it higher-
Now, I am not trying to lock in pennies of profit- I want to capture a larger net gain- but I have moved my stop-loss to Break Even as I have 2 intraday pullbacks over this price level.

 

[sowterdad]

11.02.15 Nice when the market lets you feel that your calculated Risk is going to be rewarded.
Markets are higher and each of my positions gained in value today-and all are in positive territory-
I've got some free cash- thanks to losing in EEM and CU last week- and although both appear to be wanting to move higher now- i thought I'd look around at some different sectors-diversifying my positions a bit- (QQQ, HACK, PJP, SPXH )
I'd like to give myself an "ATTABOY!" for that timely re-entry into PJP as it pulled back,
as well as adding to the HACK position- but the Market deserves the credit for co-operating & allowing other "investors" to have the confidence to move the prices higher- I'll take the credit for taking the trade as it was in decline as it was based on my view that it was likely a normal pullback or retest- and that I had a defined lower level of support beneath the trade.
It makes more sense to add into a winning trade than it does into a losing trade-
Dollar cost averaging UP vs dollar cost averaging Down.

Focus tonight is XLE- Energy sector - weekly chart- It had declined 40% in just the last 15 months- with a couple of attempted rallies higher along the way. These rallies could have made excellent trades if taken on a faster time frame- some moved up 15% before the decline continued.Allowing the adept and fleet of foot trader to try to profit in both directions- Unfortunately, I am not adept and likely club footed- and late to the party.
XLE has caught my attention as it appears to have made a substantial attempt to put in a possible upside reversal over the past 4 weeks.
As i look at this on a Daily chart- i think I see the 'Spring" occurring -
Price breaking 'support' -dropping lower and promply reversing to move higher.
,pushing through the top of the prior range. Remind me to continue reading Wycoff! and define this further- but I have seen this occur - often leading into large upside moves.
I'll be Buying XLE @ $70.00 with $66.00 as the entry stop-loss.- That's a pretty wide range - and could perhaps be reduced with a higher buy-stop entry price.
I'll start with a buy-stop 30 shares- ($2100.00 ) Risking 4 x 30 = 120.00 = 120/13253 = .9% Risk- Under a 1% Risk on the trade - for the account value.
Chart wise- this trade is realistic- Instead of trying to fit a fixed stop amount on each individual trade- This fits the trade to the amount of portfolio Risk it represents.
No time for a chart - Early to bed- Early to Rise.