long term position trading -primarily etf's-

[sowterdad]

FOLLOWING UP ON LOOKING AT CURE:
TAKING A VIEW OF THE WEEKLY CHARTS-
w2 chart illustrates the various periods of price reversal to trend- and following pullback
w3 illustrates just the turning points - where trend ended and declined and then resumed the uptrend-
consider- that in the sum- all that occurred inbetween could have been ignored as just "noise" and relatively inconsequential.
What is it i am trying to learn? As a trend trader- perhaps it is staying with the trend and allowing it to tell me when it is over- and not react to the noise that is between the turning points.
View attachment 146718 View attachment 146721

FOLLOWING UP -question on the specific averages ......
What one chooses is up to the individual as to periods applied-pluses and minuses for fast compared to slower will change in different conditions as well. Also would vary depending on the time frame- or the particular instrument- stock, etf etc past history - One size does not fit all......
CURE FRAME 3
In this period 3 chart- starting off with a couple of wider moving averages-as an example........
it just so happens that price pullbacks never make a closing weekly bar under the ema- The initial study 'guideline' is that one reacts to a completed bar closing- below an ema to raise the stop. One does not react intrabar- but only to the completed bar- thus- an intraweek penetration of a bar could open below the ema, could close below the ema for 4 days- but close above the ema on day 5- and not be reacted to as it had not completed.
This example shows some significant penetrations-
it also illustrates how price had raised well above the emas and then has since come back closer- A nice momentum up move occurred there- but this particular "slower" approach does not try to take advantage of that upswing- indeed, by using the wider emas- on a weekly time frame- one is trying to stay outside of the price volatility- One could go further- use a 50 ema with a 100- a lot of width and potential gains missed out on though as the price to stay in a trend- and a lot of give back when the trend breaks.

 

[sowterdad]

A friend asked Why would I not do better to widen the stop to have abetter chance of the trade working out in my favor:
My response was:
Since you are willing to risk 4.1%, why not risk a little more to avoid the nearby gap to avoid being shook out?

Since i am just entering the trade on a fast chart- I know this is a speculative entry off a very minor price pause-
This level just happens to coincide with a minor consolidation on the move up- but I do not see support until one gets down to the lower consolidation of 98-100 made in late October- and below that a more extended area 86-90. If this entry level fails - there is considerable more downside - If I get stopped out here, I will look to make a reentry.
While this is a real trade, it is also something of an experiment in the process of trying to apply a faster time frame to get tradable signals that can be acted on -even by an EOD trader-
I do not want to widen my stop to be made correct in the trade-That would be a defeating behavior- My initial stop was set below the prior lows- When you have a technical reason to set a stop-loss- stay with that reason- don't make the stop wider than necessary -
Yes- I think I would like to own some BABA - but the premise for my trade is that price will proceed in my direction. It looks weak though- and I expected I would get more of a momentum follow through to the upside-
I dropped down and viewed price action through a faster Renko chart - it tells me I had a price reversal with a new high, apullback with a higher low, followed by price making another high, ending with a pullback- but at a higher low- In the micro picture- this is an uptrend-
Higher highs- higher lows- If it fails, and wants to put in a low lower than the initial swing low (110) , the momentum is not in my favor-
Another factor in taking a 1st reversal attempt- They likely have a higher failure rate- but perhaps not always- so, that weakness
is a warning- and raising a stop to lessen the loss is good money managment IMO for a spec momentum trade-
If stopped out, I'll look for another up turn back higher- expecting it will range sideways and consolidate- and not close below the prior lows. I could split the stops on the position- leave 1/3 at the entry and move the remaining 2/3 $109 and see how that fares. Good 'test' split stops-
(have done this in the past- is a good way to manage a longer term position).

Again, - this journal is about the learning process- or mine anyways- trying to modify , discover what works- and when- and i will be proven wrong many times I expect. Past history tells me so!

a 30 minute candlestick chart

 

[sowterdad]

FOLLOWING UP -question on the specific averages ......
What one chooses is up to the individual as to periods applied-pluses and minuses for fast compared to slower will change in different conditions as well. Also would vary depending on the time frame- or the particular instrument- stock, etf etc past history - One size does not fit all......
CURE FRAME 3
In this period 3 chart- starting off with a couple of wider moving averages-as an example........
it just so happens that price pullbacks never make a closing weekly bar under the ema- The initial study 'guideline' is that one reacts to a completed bar closing- below an ema to raise the stop. One does not react intrabar- but only to the completed bar- thus- an intraweek penetration of a bar could open below the ema, could close below the ema for 4 days- but close above the ema on day 5- and not be reacted to as it had not completed.
This example shows some significant penetrations-
it also illustrates how price had raised well above the emas and then has since come back closer- A nice momentum up move occurred there- but this particular "slower" approach does not try to take advantage of that upswing- indeed, by using the wider emas- on a weekly time frame- one is trying to stay outside of the price volatility- One could go further- use a 50 ema with a 100- a lot of width and potential gains missed out on though as the price to stay in a trend- and a lot of give back when the trend breaks.
View attachment 146892

As a follow up to using the 30 ema- which netted 27% in this uptrend period-
trying a very fast 4 ema to see what occurs- The end result is the 4 ema approach had 2 winning trades- 1 losing trade and gained a much lower net 11% or so. The take-a-way in this period is that as long as the price remains in an uptrend, trying to employ the faster ema on this same weekly chart , provides substantially lower results- Note the results would have been substantially different had price declined by 2-3 bars below the 30 ema- The profit would have virtually been given back -if this had occurred-
perhaps finding a happy medium between the 4 & 30 would perform better, while providing protection in a downside move.

 

[sowterdad]

I THINK having stops in place is important in every trade- it takes the human element out of it if the stop is attached when the trade is entered- eliminates Hope as a co-pilot. Hope happens to be deaf , blind, and dumb, but is pretty optimistic regardless. I can't tell Hope to think any differently- won't listen because Hope is Deaf.
So, it is what i choose- to apply-
let's take a review of the present Cure position- As I look at charts and make final adjustments for tomorow- something that is coming to light from these recent charts is that keeping a tight stop is rewarded when the market is volatile and in decline- Keeping a tight stop as a matter of course may be inviting volatility to take one out- if one is too anxious and too close.
The Cure daily chart illustrates a very orderly sideways consolidation that has developed over 3 weeks-
This developing price has established a "support" level in the sideways action.
recognizing this- I have chosen to 'split' the stops- 1/3 at my new averaged entry cost- and 2/3 under the low of the 3 week consolidation-
Something I have noticed- is that the top of the consolidation is often penetrated into the consolidation mid range intra bar.- Yet the higher move continues.

 

[sowterdad]

When the market is in Bull mode- and you are long- After all ....."The rising tide floats all boats". It makes you think "I've got this" handled-
When the Risky trade you take outperforms the other less Risky- You wonder what is holding you back..... Why take modest gains- when the Apple is ripe. There is something to be said for taking additional Risk when it seems warranted-when everything seems to favor that higher risk for the higher reward.
However, one needs to not put everything in a "Risk" mode chasing the potentially higher gains-
There has to be some balance- .So, adding some "Riskier" plays to an investment portfolio can be beneficial- But with greater Reward usually comes greater Risk- and a plan needs to be in place to protect one's gains-
As i checked the net port value, it has benefitted by being long this market trend- Making Several good early entries on the sell-off- entering early on the bounce has also made a good benefit -
Taking a "riskier" trade- Cure in this example- has happened to be the outperformer in asset appreciation per individual position gain- Although presently everything purchased recently has managed to gain- Tide flow at work- and going with the Tide.

This is usually the time the market will deliver a wake up -shake up to those of us thinking that complacency is the new normal- Where will this Wake up come from? And When? Check out the VXX-
making a 3x bottom here- Is this the moment when complacency gets a slap in the face???

The answer is- it remains to be seen- We know this cannot last indefinitely- but does it hold us back from being long because we are in an overbought market? My view- don't allow it to hold you back - but don't be complacent- Keep stop losses in place- or ready to be acted on- My personal issue has been to be too tight with a trailing stop- and getting taken out on a minor price retracement- Also- I tended to want to trade my negative Bias- and go in large on counter trend moves - andI was inclined to hold onto those trades longer, as that usually didn't work out -
So, In this edition- I have worked on my personal impulse to take a small profit- to allow a bit of breathing room for price to expand and contract- and to think I want to allow price to run until it rolls over and belly turns up- I just don't want to give it too much space during the roll-over. In the past- complacency has not rewarded me.

'Fear and Greed" Fear holds us back, Greed is like my dog- He protects the bowl of food in front of him- but doesn't even conceive that the larger bag of dog food is waiting..when that bowl is empty.......

My gut (fear) tells me that it is prudent to consider that this is also a seasonal trend move- and that it will not last much into December-since it started earlier- Perhaps the majority of the upside has peaked- as in recent years. This would suggest to me taking a more tactical approach- and to be ready to tighten stops on initial weakness- instead of expecting this nice trending condition to continue. But that's all "Feelings" and tends to make me read some slight weakness as the rationale to take action.
There is a solid rationale - if one is trading- to cut losses short and take new entry opportunities-
I think I believe this statement as true. It "Fits" my belief of how i am inclined to trade.
However, one has to recognize when reacting is not a strategy- and Intuition is perhaps Fear disguised as something that one thinks is a strategy....when it is just an extension built on a need to satisfy an emotional need or response .
If one steps outside of short term trading- Can one be an Investor and be comfortable wearing a different hat altogether? As i try to 'merge ' a systematic approach- I want it to both satisfy my trader side and my Investor side- And the two may not be compatible. Go Figure!
But, I think there are indeed things that one can realize that are true for both approaches-

Getting in early after a bottom is in place - makes a lower Risk Entry
Getting out Early in a decline is more profitable than holding on.

That is common ground that a strategy (ies) can be built on.

 

[sowterdad]

fOLLOWING UP ON BABA.
It was gratifying to see Baba start off in my direction for a few days- I was thinking this was a good example of taking a more rapid tactical signal to enter a trade early off a price swing low- and see that trade capture a series of higher highs and higher lows and go back up to test the recent highs-
AHHH- Unfortunately BABA has struggled- but it went higher for a few days- but not with conviction-
Today, Baba broke under the moving average (2 hr chart) and that is indeed a warning - there is a lack of Buyer's support- Consider that the larger markets were also flat-despite good GDP #'s.
Here's the deal- I jumped in this trade based on a faster time frame chart- i have given it some room to "prove" it's intentions- It appears that it does not have the firm support to do as I hoped it would.
1 day of weakness does not a trend make however-.
from a chart standpoint- there is a lower level of minor consolidation - that supports a stop below $111.50 - which would exit the trade near the entry $111.58.
I was prepared to protect my entry and go with that stop level- The "Realist' tells me to go with that stop- The optimist says give it a chance - so $110.50 is the new stop-

Here is the approach based on tactical trading- Take no prisoners- take a position- take a small loss. Reenter.give it another try if justified.

I'll use this developing trade as an example of that mindset-
Consider- If one is not locked into what one does when one enters a position-
If one can get out of a losing trade early- even at one's entry cost! What a positive for the cash flow!
The greater Risk should only be on the entry day. Ideally - as the trade heads in one's direction, the distance to getting to Break even diminishes- the potential loss should as well.



BABA - as a Spec trade that looks to be failing is instructive - IMO.
Allow me to put Hope aside- I have already initially raised the stops as the trade proceeded as i had hoped-
This process reduces my % loss progressively.
Today, price did not simply close lower Intraday, it closed below the prior day and below the ema on the fast time frame I entered on. This is not the price action behavior I expected- There is a lot of upside to the prior high /resistance.
Now i see a price breaking lower- EMA violated- ( 2 hr chart)

At this point- that is enough for me- Weakness is a warning. Particularly on a brand new position- No need for emotional attachment.
Instead of simply putting in a low below today's low- I'll now raise the stop to $110.50 and take a loss-
This is a smaller loss than if I simply sat at $107.00 and hoped to be right all along.
Yes, Price could hit my stop with a low of $110. 49- but I have seen weakness- and that is the warning-
For the purpose of this trade as instructive- 2/3 of the position is at $110.50,
the 1/3 is held at $107.00-

 

[Jakobsberg]

Been interesting reading through this journal. Many things remind me of things I did or stuff I tried.
In the end, for me and my situation, im coming to the conclusion that individual stock trading is just not worth the extra reward given the extra psychological (more volatile, more random shit) and time cost compared to trading indexes. More fun sure and maybe it will work for you. Good luck.

 

[sowterdad]

For tracking & contrarian purposes- i just purchased 3 shares of UVXY $19.75 as it pushes to an all-time low. Yes- All of $60.00 -expended- I won't mind if it happens to go to $0.00 Be great for the investment side.
This is a leveraged short of the Vix- The Vix is also at an all-time low today- Investors are "calm."
Note- uvxy does not track the vix well- due to the way it rebalances daily- and it's purchase is not an 'investment' - but I do intend to follow it with a fast time frame chart- With commission -average cost is $20.08

 

[sowterdad]

Been interesting reading through this journal. Many things remind me of things I did or stuff I tried.
In the end, for me and my situation, im coming to the conclusion that individual stock trading is just not worth the extra reward given the extra psychological (more volatile, more random shit) and time cost compared to trading indexes. More fun sure and maybe it will work for you. Good luck.

I would also agree with you- I think index investing/trading in the long term is also the best way for me as well for the very reasons you mention. Investing account is a company 401k with access limited to mutual funds - In the IB account- due to the low commissions- it is my more "active" trading account- I added a couple of stocks - for Fun- if you will- just to mix it up a bit- The stocks are a minor distraction, and less than 10% of my ETF focus-
ETF's -very overweight DTN, VIG, ; TDIV, SPLV - and some CURE- A bit of a spice -it up- with a small amount in Cure...


Do you have a specific method where you narrow the field in selecting the ETF's you trade? I ended up rolling a basket of other ETF's into just DTN -at the time - time was indeed an issue- and it served the purpose-in managing the position.

Thanks for your input and posting!

 

[Jakobsberg]

How do I narrow the field in ETFs?

Been trading mainly euro stocks the last few years (see journal thread). Mainly Euro 50 / SX5E, DAX and OMXS30 due to a combination of reasons:
- Europe looks cheap compared to the US and has done the last few years.
- Im based in Sweden and so its easier to get leveraged products on those indexes. I always want the option to buy/sell more if necessary without taking up lots of cash. I can easily buy options on the OMXS30 since im in sweden but the correlation with US and Euro50 is large anyway. I often try to spot the S&P bottom and then buy the Euro index.

Apart from CURE they will be highly correlated to the SP500 so why not just trade and concentrate on the SP500? Its keeps things simple and focused. You then concentrate on risk management rather than distractions of ETF selection etc. If you get the direction of the SP500 right it will likely dominate any gain coming from ETF selection formed from combinations of SP500 stock.