long term position trading -primarily etf's-
- Thread starter sowterdad
- Start date
Had some on-line access time - Markets flat- waiting on Fed Minutes-
I read an interview on ETFDB- concerning several "new" -more narrowed focused ETF's in the biotech space. Posting the link here- not a recommendation per se-
http://etfdb.com/news/2015/02/18/interview-with-bioshares-bbc-bbp/
The dangers of being so focused in a narrow market segment could be complemented by the reward- if a number of the companies within are successful.. the reward would be potentially high- If the companies selected within the group fail to perform........could be ugly.....
I don't know any of the particulars - Expense ratio etc- certainly low volumes- But, as opposed to betting on a couple of spec names in the industry, the ETF would seem to offer a better opportunity on an odds basis. If one was inclined to speculate on smaller innovative companies.
For myself, having exposure to the larger sectors- PJP, IBB or XBI I assumed I was getting the right type of broad exposure- but I've got a lot to learn in looking under the hood in ETF's in general.
Meanwhile- It points out that it is worth noting the distinction of what the ETF one buys is actually comprised of. Some are cap weighted, while others may be equal weight. Also, expense ratios can vary widely. ETF's are becoming more focused and slicing the investment landscape into narrower segments- John Bogle- of Vanguard Funds doesn't think well of the narrowed -more focused ETF's as being good for the average investor-
But, ETF's are here to stay- One needs to take some time to understand the variations.
Interestingly- I read that the S&P low volatily etf outperformed the SPY in this last year with a 24% return- 2015 calendar year appears to have been 18%- still beating the SPY -
Interesting that a lower volatility fund produced the excess return
I read an interview on ETFDB- concerning several "new" -more narrowed focused ETF's in the biotech space. Posting the link here- not a recommendation per se-
http://etfdb.com/news/2015/02/18/interview-with-bioshares-bbc-bbp/
The dangers of being so focused in a narrow market segment could be complemented by the reward- if a number of the companies within are successful.. the reward would be potentially high- If the companies selected within the group fail to perform........could be ugly.....
I don't know any of the particulars - Expense ratio etc- certainly low volumes- But, as opposed to betting on a couple of spec names in the industry, the ETF would seem to offer a better opportunity on an odds basis. If one was inclined to speculate on smaller innovative companies.
For myself, having exposure to the larger sectors- PJP, IBB or XBI I assumed I was getting the right type of broad exposure- but I've got a lot to learn in looking under the hood in ETF's in general.
Meanwhile- It points out that it is worth noting the distinction of what the ETF one buys is actually comprised of. Some are cap weighted, while others may be equal weight. Also, expense ratios can vary widely. ETF's are becoming more focused and slicing the investment landscape into narrower segments- John Bogle- of Vanguard Funds doesn't think well of the narrowed -more focused ETF's as being good for the average investor-
But, ETF's are here to stay- One needs to take some time to understand the variations.
Interestingly- I read that the S&P low volatily etf outperformed the SPY in this last year with a 24% return- 2015 calendar year appears to have been 18%- still beating the SPY -
Interesting that a lower volatility fund produced the excess return
Astute professional traders can separate themselves and their ego's from the trade- or so I read. For the rest of us "normal" human beings, we struggle with the desire or affirmation - to find that we make the 'right' choices- or 'smart' choices. There is a certain level of emotion when we go through the decision process to Buy- or to NOT BUY- whether we acknowledge that emotional influence or not- Usually follows our underlying Bias or perception of the market, and some probability that makes us think our trade is favorable.
We usually take the information given to us, process it, and then make a decision that it
is likely a favorable trade at that moment in time. SUCH is my DIG trade-
From a chart standpoint- i liked the recent break higher above the prior reversal attempt, and the bottom that was being made. It was a reversal of trend trade that has been underway for weeks - but had dropped considerably from the prior highs-
To a certain extent, Buying the energy trade- when everyone is talking that OIL still goes lower is either contrarian or prescient. Since the trade has already tried to make a significant move off the lows- perhaps the warnings are correct- and my entry is indeed late- and should have been made weeks ago when the 1st lower reversal failed to hold and tested the prior low. This would have provided the astute trader a relatively low Risk entry- and I was not watching, or stalking the trade-
Instead, I find that i Buy the breakout above the prior swing low-
This is not a bad trade- since it is still oversold- but the fundamentals suggest OIL goes lower!
Viewing this trade on 3 time frames- the breakout i entered on is valid- both on a trend line and a horizontal support from the initial 1st reveersal swing high.
The crux of the issue now is- how much do I allow to the stop-loss?
How 'solid' was the recent level that we gapped above? Retesting of a gap is common, with some volatility, price could penetrate back below the level-
Below this level, is a next support level- also worked off a lower gap - where price gapped higher- moved up, had a swing low back that did not challenge the gap- This is a more solid 'support' IMO- but it is too far away from my entry.
I'm resolving the 'where' to place the stop at a $54 level under the recent gap- This Risks 6% which is very wide-
I consider the FCG trade- I got caught by a few pennies on the tight stop- and price has rebounded back into what would have been pforitable territory- Making allowances for wider volatility means perhaps-smaller positions.At least for me.
As much as I would like to be "right' on a trade- that should not come with an extra wide Risk. Perhaps my comfortable Risk level- based on momentum movements- is too narrow for this choppy market? I want to be able to relax my stops from being too rigid and getting whipsawed intraday, to where the stop does not get caught by a small downward spike-
Sharing 3 chart views of this particular trade. I tried to highlight the potential levels one would consider technically from a swing trade perspective- I didn't go all the way down to the prior ultimate low-.
We usually take the information given to us, process it, and then make a decision that it
is likely a favorable trade at that moment in time. SUCH is my DIG trade-
From a chart standpoint- i liked the recent break higher above the prior reversal attempt, and the bottom that was being made. It was a reversal of trend trade that has been underway for weeks - but had dropped considerably from the prior highs-
To a certain extent, Buying the energy trade- when everyone is talking that OIL still goes lower is either contrarian or prescient. Since the trade has already tried to make a significant move off the lows- perhaps the warnings are correct- and my entry is indeed late- and should have been made weeks ago when the 1st lower reversal failed to hold and tested the prior low. This would have provided the astute trader a relatively low Risk entry- and I was not watching, or stalking the trade-
Instead, I find that i Buy the breakout above the prior swing low-
This is not a bad trade- since it is still oversold- but the fundamentals suggest OIL goes lower!
Viewing this trade on 3 time frames- the breakout i entered on is valid- both on a trend line and a horizontal support from the initial 1st reveersal swing high.
The crux of the issue now is- how much do I allow to the stop-loss?
How 'solid' was the recent level that we gapped above? Retesting of a gap is common, with some volatility, price could penetrate back below the level-
Below this level, is a next support level- also worked off a lower gap - where price gapped higher- moved up, had a swing low back that did not challenge the gap- This is a more solid 'support' IMO- but it is too far away from my entry.
I'm resolving the 'where' to place the stop at a $54 level under the recent gap- This Risks 6% which is very wide-
I consider the FCG trade- I got caught by a few pennies on the tight stop- and price has rebounded back into what would have been pforitable territory- Making allowances for wider volatility means perhaps-smaller positions.At least for me.
As much as I would like to be "right' on a trade- that should not come with an extra wide Risk. Perhaps my comfortable Risk level- based on momentum movements- is too narrow for this choppy market? I want to be able to relax my stops from being too rigid and getting whipsawed intraday, to where the stop does not get caught by a small downward spike-
Sharing 3 chart views of this particular trade. I tried to highlight the potential levels one would consider technically from a swing trade perspective- I didn't go all the way down to the prior ultimate low-.
I have only time for a chart-with volume- I'll expand on this later-subject for discussion as I think volume significance can be interpreted as one chooses- When it works in your favor- one gives it credit- High volumes can often indicate a climax move- If one waits for a high volume move to occur before entering a trade- then all the other buyers are already in that trade- in that bar-.
Thanks for posting-
STOP LEVEL IN DIG WAS REACHED TODAY.
The question was asked if i was chasing the stock- would it not have been better to Buy at the lower level- and closer to my "I want to be right" stop posted on the prior chart-
Anytime you can purchase close to the point where you want to exit the trade as being wrong- P.O.F. you have reduced your losses on that specific trade and get additional times at bat- possibly pursuing another trade in the same stock -or etf.
In this particular trade, I felt the prior day's move broke above a prior high- now resistance level- and that higher high in the trend justified taking an entry- thinking that the space is still oversold- and plenty of upside exists- eventually.
The next issue was choosing where to set a stop-loss- In the end, I felt i was not willing to Risk the logical chart stop below the $52 level. Also, the potential new trend line would allow price to drop back there as well- So, it was a choice to reduce RISK- but in essence it was a choice saying i did not have any 'belief' in the trade- because, as can be seen in the chart I will post here- just when you think you have a bottom reached, the bottom can open up and drop you lower-
Reversal of trend trades - perhaps feed the ego a bit- It is comparable on a small scale
to be stepping up as a buyer when the majority are scared and fleeing. That is fine if you have deep pockets to grin and bear it. That is where large fortunes get larger. In my case, I don't have any conviction to hold the trade if it doesn't go in my direction. It easily gapped lower- and took out my stop- and then rallied to close higher.
Analyzing the attached chart- this type of price action could only be successfully traded by a trader in real time making the very early reversal entry, and raising the stop-loss daily.
Note that a tight stop placed under the low of any bar that closes under the ema would have captured some gains in most of these higher moves.
Something worth mentioning- While reversal of trend trades may trigger the value buyer instincts, buying WITH the higher trend has the market with you- Easier to Row with the tide! These trades may seem to be extended- but if they continue to deliver higher results-
Ultimately, the question becomes how much volatility can a trade withstand and still be held? In the prior low volatility year, I benefitted from taking quick small losses, and allowed winning trades some room to prove me right- That 'strategy' worked in that environment-at that time- This is a new time,perhaps a new-wider- volatility- a different environment- This is trading- testing the waters.......
One can get the trade principle correct, but be marginally off by a few days, and find that they are hit by volatility not anticipated- Or- be like Tiger Woods- and find that your game is not effective and step aside for a while.....
I'm not all that intimidated by having some losing trades- it's
a cost of this business- Just so long as i see some counter-winning trades- Eventually, I expect my winning trades to outperform the losses-
But- Am I willing to Risk $1 to make $2? is that a good Risk to Reward? how about 1:3 or 1:5?
Had I bought SPY 6 years ago, and simply held- would I be pleased with the result?
5 years ago?
4 years ago?
3 years ago?
2 years ago?
1 year ago?
Did my fear of loss keep me out of this type of long term trade/
Will my fear of loss keep me out of long term winning trades going forward?
Good study for another post!
let's get a chart of DIG:
You are welcome- Different traders have different ways they approach the market-That shared input challenges or causes one to think outside of what is normally a well defined channel we simply get accustomed to- because it is what we have always done and we are comfortable with it.
This clicks something- so i want to expand the line of thinking.....
If something is beneficial in your trading-volume, indicators, fib levels, trend lines, MACD ,Rsi, etc -
By all means make use of them- If they work to your benefit in your approach. It does not matter what I use- or do not use or believe to be useful- Like many things in TA- one will see and focus and give meaning to what one wants to find- If it works- Use it.
I think anything we Rely on in our trading, we should try to back test the application to see if it really provides the resulting positive benefit in the majority of occurrences- or are you 'cherry-picking' and focusing on those times it was a positive, and not giving equal consideration when it was not. This means putting some type of scientific rigor or scrutiny to our assumptions . I made a stab at that in the earlier backtest charts in this thread and learned that my assumptions about what would work as a trading method to buy and enter a specific stock- i THINK IT WAS CURE - did not deliver improved results.Indeed- underperformed as I recall- Was not the result I had anticipated at all, and caused me to question the validity of my assumption-
Personally, I am in the camp that believes the fewer inputs one responds to- KISS -
is the way to go. Some time back, I felt if i could just get the right mix of multiple indicators & oscillators to align, my trading would go to a higher level- I was one of those guys that thought if a little TA is good, More would be better- And would have 4 or 5 different TA indicators trying to get cross confirmation to ensure a trade would work out-That usually caused a delay in taking a buy or sell action- or prompt an action way ahead of when price actually finally made the move-
I will occaisionally have an indicator- a fast Macd or an RSI on my chart- I have played around with these considerably-and find that using the a faster setting often gives more relevant -responsive- signals-but i don't rely on either of these-because price will do what it wants- Price can stay overbought- or 'oversold' and keep on trucking higher for an extended period of time- Indicators are useful for gauging levels or divergences-but that tells you nothing about what tomorrow's price will do. It may follow suit with what preceded, (often does) , or it may take a new turn-
I think in it's simplist form- a chart, some fast & slower moving averages- some trend lines- and do that on several time frames- is where to look first- and look deepest to really get an understanding of trend/ support . It is likely there is really no need to complicate things more than the very basics- but we seek an 'easier' way to define the random moves that the market seems to make. Human beings want to understand that x + y= Z and that offers predictibility- after all, that's how we send a rocket to Mars and actually make a landing- We have a definite set of rules and understanding of how the universe works-and moves- and we can make a transaction (rocket launch) (trade purchase) and end up at our perceived destination (Mars,) (Profit target) - We can only do this rocket launch when we have a defined universe and set of universal laws - IN our trading, we try to do the same thing- To establish a set of 'rules' that will favor our outcome (successful landing at target) Since the trading Universe is not bounded by the constant rules of our physical universe, all of the rigid rules we learned that were necessary to get the rocket from Earth to find and land on the planet Mars- all of that rigor that causes us to excell in our sciences-
may be a detriment in trading in an universe that may not respect and abide by such absolute rules. In fact, that perhaps guarantees underperformance.
By Thinking rigidly- If I can only get the right combination: volume, the macd cross, the oversold on the RSI, the FIB retracement to 67.728, the solar alignment-lunar eclipse- All the things the navigator on the early crossings of the Atlantic 400 years earlier would have considered..to get to the New World- ..But failed to account for the winds of momentum- Change- throwing us off course.
After all that :
Thank you for the input- /request. I appreciate you taking the time to post your request- and giving me pause and make me consider as to WHY I choose to not make something relevant in my trading that other traders may find value in. Also allows me to expand my thoughts and go off on tangent
SD
Last edited:
2.20.2015
With a market rally today, i find i am positioned to go with the flow-
Easy to jump on board something flowing with the tide! Nice to find you are already in the boat when the tide finally turns in your direction.
All green in the IB account- except TBT flat.
PJP- gapped up to a new high - (overweight)
xbi- biotech- new high-
SSO- New High-
DDM- New High
XLF- coming off a swing low- FLAT- I will set a stop to the low of the swing low.
HACK - another 2% higher
Those are winning trades-All in profitable territory.
XLE declining this week I will have to raise the stop to $78.00
As i find the majority of my positions are gaining in value all in the same stride-
Is this spot target shooting? Tactical trading?
No, this is going With the Tide- and just casting a net wide and far., and getting some upside movement.
With a market rally today, i find i am positioned to go with the flow-
Easy to jump on board something flowing with the tide! Nice to find you are already in the boat when the tide finally turns in your direction.
All green in the IB account- except TBT flat.
PJP- gapped up to a new high - (overweight)
xbi- biotech- new high-
SSO- New High-
DDM- New High
XLF- coming off a swing low- FLAT- I will set a stop to the low of the swing low.
HACK - another 2% higher
Those are winning trades-All in profitable territory.
XLE declining this week I will have to raise the stop to $78.00
As i find the majority of my positions are gaining in value all in the same stride-
Is this spot target shooting? Tactical trading?
No, this is going With the Tide- and just casting a net wide and far., and getting some upside movement.