long term position trading -primarily etf's-

[sowterdad]

Final Thoughts- Sunday 2015.3.8
Proportionately, I hold a large % in cash presently in the trading account (sold off this week) and also in the investment account-sold off gradually this past 2 weeks- I don't think the market is set to drop significantly here- It's just my psychology at work- But I'm hoping that my cash position gets to become an active position following a pullback rather than a breakout.
Presently I'm reading Douglas- again- In chapter 3- Taking Responsibility- He writes
" You are responsible for what you have learned, as well as for Everything you have not learned yet that's waiting to be discovered by you."
Wow- That sounds very Zen- Buddist- philosophic- and perhaps even factual.
As traders, we step in , not even knowing what it is we still do not know .
It is by experience and evaluation and modification in the processes we attempt to employ, that we learn. Some will find success in their experimentation- Some will not-
Wasn't it Edison - that tried 10,000 times reportedly- before he finally succeeded/

I received an e-mail today suggesting some flexibility in a trading approach is beneficial. After reading Douglas some- I don't think so....
I'm not so sure that I agree what that "flexibility" may imply. I know when i go with my
gut - I'm being flexible- but is it the right thing to do? Probably Not.
Having a set of rules and a systematic approach allows one to evaluate the end results, make minor modifications, and then eventually determine if the approach is worth modifying further, or does not serve one's purpose.

In the trading account, I presently fall into the general "Flexibility category- " or wide-ranging 'discretionary' trader.
Finding- and implementing a more systematic approach would likely be beneficial in the trading and Investing aspects.
Presently, The Renko approach looks like it may still hold some merits, and so there is a lot of 'back testing' homework to be done.

 

[sowterdad]

sOME 2 hOUR SPY CHARTS:
The 1st 2 are RENKO- one with fast indicator values, and the other with standard -out of the box- values-. compare the timeliness between the fast and slower indicator values-
This would be something one should consider over multiple periods of time and compare.
The final chart should be a 2 hr candlestick chart- with standard indicator values.

like Renko charts- Indicators follow and average the price action. Indicators averaging an averaging mechanism- like Renko- seems redundant. but that may be precisely the type of check that proves to be an asset in making a trading decision. Possibly beneficial as it offers a bit of 'restraint' in reacting to a single or smaller price movement. Requires further confirmation- The goal would be to exclude minor smaller moves-whipsaws- but get on board for a larger up move....
Notice the difference in employing fast and slower indicators- Whatever combination one chooses, one needs to do the statistical back checking to feel that the signals give validity over a larger # of trades.
The 3rd chart is a 2 hr candle chart with fast indicators-
i haven't done any type of analysis as to these particular indicators possible effectiveness
with candle charts. I posted it just so a price action trader had something to also compare to : A crosscheck perhaps that would confirm their price action decision.

It's difficult to feel unbiased and objective when one reviews one's own trades and puts them under scrutiny- particularly present or recent trade decisions- I think it takes real talent to have the capacity to remove one's self from the personal equation- and analyze other-perhaps conflicting- information objectively.

 

[sowterdad]

3.10.15 mid afternoon moment- Dental appointment
Don't know the catalyst- for the market selling off- presently indexes all down -1.5% +/-
Today is a good day to not be overly exposed on the long side for active traders- and one of those tough ones for investors who hold long positions and just have to bear a multi day decline. I'm glad i recently lightened up some on investment exposure, and didn't jump back in full throttle in the trading account after stopping out previously. In the trading account I had a partial energy position on- hadn't looked at it to see if it's intact- and partial PJP & XBI with 4% trailing stops- Some biotech is rallying today after an earlier decline.
Will check those positions later.

Had i been using the 2 hr Spy Renko , it would have stopped out the other day at the 1 ATR value under the 5 ema- approx 209 +/-- With the histogram still declining, and the adx +DI line declining, under the red -D! line- no entry is the guidance would be the guidance this chart would be giving.
Today's chart is a hi-lo- setting- Essentially shows more in terms of price movement intraday- it is still bearish in focus-
The 'sentiment' if one views the MACD histogram finds that today's active bar is increasingly below the 0 line and well below the prior bars. It is actually at a lower negative level than any prior histogram in this chart's 2 months- and 2 prior multi-day declines.
The ADX/DMI confirms the bearish momentum with the Green +DI line below the red and pointing down.
If I was an intraday trader- or an eod trader, I would likely use a faster RENKO to get more timely signals, and I would have to see how that compared with using the 2 hr as the
overall directional focus. If I was an active trader- perhaps i would consider taking a partial short position entry when a stop-out occurred- Perhaps SDS- But not today- not now...

 

[sowterdad]

3.10.15 mid afternoon moment- Dental appointment
Don't know the catalyst- for the market selling off- presently indexes all down -1.5% +/-
Today is a good day to not be overly exposed on the long side for active traders- and one of those tough ones for investors who hold long positions and just have to bear a multi day decline. I'm glad i recently lightened up some on investment exposure, and didn't jump back in full throttle in the trading account after stopping out previously. In the trading account I had a partial energy position on- hadn't looked at it to see if it's intact- and partial PJP & XBI with 4% trailing stops- Some biotech is rallying today after an earlier decline.
Will check those positions later.

Had i been using the 2 hr Spy Renko , it would have stopped out the other day at the 1 ATR value under the 5 ema- approx 209 +/-- With the histogram still declining, and the adx +DI line declining, under the red -D! line- no entry is the guidance would be the guidance this chart would be giving.
Today's chart is a hi-lo- setting- Essentially shows more in terms of price movement intraday- it is still bearish in focus-
The 'sentiment' if one views the MACD histogram finds that today's active bar is increasingly below the 0 line and well below the prior bars. It is actually at a lower negative level than any prior histogram in this chart's 2 months- and 2 prior multi-day declines.
The ADX/DMI confirms the bearish momentum with the Green +DI line below the red and pointing down.
If I was an intraday trader- or an eod trader, I would likely use a faster RENKO to get more timely signals, and I would have to see how that compared with using the 2 hr as the
overall directional focus. If I was an active trader- perhaps i would consider taking a partial short position entry when a stop-out occurred- Perhaps SDS- But not today- not now...
View attachment 150237

 

[sowterdad]

With the market selling off today, it is reportedly on concerns of the strong dollar and it's impact- And perhaps concerns that The Easing in Europe will not be as "successful"
as the US Fed policy has been. That the strong dollar will reduce the net profits of the US Industrial companies that depend on a lot of international trade for their profits-
That us stocks are at a 'lofty' valuation- and that awareness of US companies already being highly valued is an investment community's concern.
Perhaps that is why BRKB- has been in a gradual decline since the beginning of 2015-

Let's face it, the stock market works best when most everything is doing well.
When 'everything' fails to do well, and it drops into a few narrow market segments- as money chases where it thinks the grass may grow greener, and that gets to be a rotation into and then out of- In recent years past, the majority of these fluctuations have been short lived and minor- and this one may not be the exception-
This pullback is relatively minor - off the 212 or so highs for the SPY, presently 205- this is a minor decline so far- less than 4%. I don't know why price would not find prior support at the 198-200 level - that served on the past 3 pullbacks. That could occur in 1 or 2 more sell-off days, and for "nimble" traders - that might be the long awaited ' buying' opportunity.
Chart wise- following big sell-off days, one would look for a climax-exhaustion- and then expect an upside move as Buyers declare this to be the bottom- Isn't that what works?
Sometimes there is a V move reversal if the market feels the selling is overdone- Those that jump back in 1st - get the lion's share-
If one relies on technicals-Or Price Action- keep in mind that the 1st reversal following a large decline May not be the bottom- One needs to have an entry plan- and an exit/stop plan - if one is ready to jump on board but find out that this time there is another leg down. There is always that possibility.
I think I heard that the average decline in recent years is 5% - but that means there were some larger declines and lesser declines to achieve that moderate average.
If one looks back past the recent few years- jump to 2011- or 2008- and that would raise the eyebrows. We have had an exceptionally complacent run in the markets for the last few years- The market is not the Fed, and eventually it will exert itself and impart a lesson - No idea when that may actually occur.
This type of mindset brings up 'fear' and how do i plan for this?
Quite simply- we cannot plan for the black swan event - or the out of the expected range of decline- just bfore it occurs. The trading approach should have built in the concept or knowledge that events that exceed the norm will occur - and to have a plan for that-
If you went back to October 2007- and then had a 5 % decline- you would not be alarmed-
But as that declined became 10,20,30,50% . you felt differently- you felt helpless if you sat through it-

For those traders reading this thread that are perhaps more recent market participants, the market environment has been exceptionally benign - One's approach into the market should also have some qualifiers as to when to stay out of the market- or to take the short trade. Knowing where the market direction is generally supports taking trades With the market direction......

I know the past few days were not positives to be long most positions-
The market environment is perhaps changing- There are a lot of dynamics at work with Europe and the $$$$. Volatility swings are increasing-
Most of us are not rigid structured traders with a single one or two method defined approach- Our methods are often referred to as 'discretionary" - because it absolves us of taking full responsibility for the success or failurs of our trades. We want the 'freedom '
to make the choices we do - and the flexibility to allow as much range as we think is necessary for the trade to succeed- as opposed to holding a more structured view using TA as a guideline-
Does TA work? Darvas and HFT would suggest it does- as long as you can eliminate the human element of discretion.
What is required to implement a structured entry/exit plan? For all trades?
Certainly, one could define different targets and flexibility for position trades vs short term trades- or "Investments"
Sadly, I have not taken the steps to do exactly that- But I hope to improve on that goal in the duration of this thread .

The chart is of the $USD. It's a daily chart - $USD prints at the close- much like a mutual fund- Closing price is at the end of the day-

 

[sowterdad]

3.11.15
tHE MARKETS HAVE eased up- with only a small decline at the close.
Today's open was slightly above yesterday's close, but price moved lower during the day-
It's difficult to tell at the EOD when one just views the daily chart how that price action proceeded - You see the open, the high, the low, the close.
Viewing the chart in a faster time frame- it is no longer a single bar, but multiple bars better tell the intra day price story.
Chart is just the daily view.
It now has occurred to me that on 3.9. it looked like the bulls were going to make a stand- Price opened above the prior close, and moved higher- and even closed higher- If I was an intraday trader, i might have jumped onto that positive price action- Why would i not? What would hold me back from getting in on the early reversal higher? Had i taken an entry there, and held through the close, hopefully I had a stop-loss under the low of the prior day's sell-off.
Price would have opened on a lower gap, but I would have been out $206.60.
That would have been a well executed losing trade IMO- Had i not had the discipline to se t a stop- I'm now holding at $204.50 - another 1% lower than necessary.

Today's easing of the downward momentum is a positive note for those desiring to be long- Perhaps the bank stress tests will give the market a footing- I think it is prudent to recognize that this may not be the market of the prior 18 months. It is a dynamic and changing market- and perhaps some of the rules of the prior uptrend are not quite the same-
Previously, a 4-6% pullback was a BUY,BUY,Buy! (Cramer sound effects please) .
The markets have reportedly given back all of the gains initially made in 2015.
consider the idea that perhaps this will not be the market that gives a 30%, 20%,12% even the average 7% gain we have become accustomed to- What's the plan in a choppier market environment? These are actually the questions/concerns i have in my investments- more so than in my trading account-
Jumping in a move early and catching price near a low and riding a successful move higher is sweet....
Jumping in a move early without a stop-loss-point of exit where the trade is considered no longer valid- is irresponsible trading- Taking the loss at the defined stop- is responsible
trading- It's not about whether the trade at the moment wins or loses- it is how was it executed- according to your plan- or random emotion?

Spy chart

 

[sowterdad]

I added to the DUG position today. I purchased an additional 20 shares for a total of 37.
While i think this is also supported by the chart, This is also my sense of where prices in this industry may go in the nearer future- That gives me a long Bias-
I worked through where i should set a stop-loss if this will be a possible longer term position- I used the ATR values and the 1 atr below the 5 ema- and checked this against the variation in price swings- using the Renko values- and the stop-loss becomes 4.7% on this position. Quite frankly, I don't care for this wide of a stop-loss. But in trying to develop a longer term position- the stop-loss is ideally outside of minor and normal volatility. I need to explore this more- and possibly add some qualifiers- such as price has moved higher and is now considered to be uptrending ......... Since the 1st partial entry is now net profitable,
the stop-loss - if hit would not be a full 4.7% loss-
I think this is a good initial start- but a stop-loss under an ema (price smoothing mechanism) will fail to capture momentum moves well away from the ema. A more active position would tie the trailing stop to the actual price itself- so a momentum high that falls back lower would pull the stop up much closer to the ema-
I was stopped out on my remaining PJP yesterday, and today find price has closed higher.
I think the way to approach this initial higher move is with a higher buy-stop entry .
If the rest of the market- is down for the year to date- the XBI is up 18% -
YES, that is correct- so consider some biotech/pharma- small allocation -might continue the trend of the past years- Use ETF's though- don't make the single biotech bet.......
I've entered buy-stops for both XBI and PJP - if they move higher-

 

[sowterdad]

Market rallied hard today- + 1% PJP position filled - on a buy-stop $76.50-
DUG jumped a bit higher.
Today's SPY price action started off with a strong upside move- The 2 hr chart demonstrates that. Keep in mind the 2 prior times in this decline that price attempted to move higher-
This looks stronger- This time, the price moves managed to generate an upturn in the 10 ema. (2 hr chart).
In the 2 hr candle chart, the first 2 hr candle also was accompanied by a positive and strong MACD bullish move above the 0 line- and a +DI cross - all the components to confirm an early entry. Note that in the prior 2 bullish moves, both indicators did not confirm- and so no entry would have been "allowed' -
However, back on Mar 2- indicators confirmed- price closed higher- but declined the next day and the downtrend started. Indicators don't guarantee what happens tomorrow- just tell you if what occurred looks bullish. That's why you employ appropriate stop-losses on each and every trade-
Something I have failed to point out, perhaps more important - is that in viewing this chart, price is declining under a downtrending daily 5 ema- On the daily chart, price just barely closed above the declining ema- While i am illustrating some charts here, it is important to not forget TREND- on each time frame- One can get whipsawed repeatedly .
Consider the basics- Know where price is directionally by employing a ema- your choice-
Price under a declining ema is definitely bearish- and possible long entries should ask for better criteria to take a long position- For example- If you view a daily Spy chart, today's price move is a very bullish engulfing candle- but indicators on the daily haven't caught up to agree. Indicators lag..... but possibly that lag may prove to slow an early entry- and yet capture a larger trending move -albeit missing the initial move higher. Capturing the meat of the trend- not the extremes.......

An EOD trader has to try to capture a longer trend move- in order to be profitable-
After all- the smart day traders bought earlier today and sold near the close. EOD traders may be delayed in getting in, and in getting out- but they strive to capture the largest part of the move.
Studying the faster chart approach;
What is worth noticing- is that the 2 hr candle chart gave a fast response with the indicators- A 2 hr Renko- does not react as quickly- The confirmation of today's bullish price move was not confirmed . As I dropped down to a faster RENKO chart, the 30 minute Renko
gave an early confirmation. This is due to the ATR value getting larger in each slower time frame.
Only when one gets down to a very fast 30 minute RENKO does the entry correspond to the price candle chart -in today's action-

While posting the faster candle, and renko charts, it is easy to lose sight of the larger perspective- How does one integrate and process this different information into a systematic approach? I think it takes a lot of time and homework, and multiple trades to make a determination- that a certain approach can and will sustain over the longer term.

 

[sowterdad]

buy-stop orders for 3.13
Tan 43.30; pjp add mkt,hack 28.15, xbi 228.20

 

[sowterdad]

Market rallied hard today- + 1% PJP position filled - on a buy-stop $76.50-
DUG jumped a bit higher.
Today's SPY price action started off with a strong upside move- The 2 hr chart demonstrates that. Keep in mind the 2 prior times in this decline that price attempted to move higher-
This looks stronger- This time, the price moves managed to generate an upturn in the 10 ema. (2 hr chart).
In the 2 hr candle chart, the first 2 hr candle also was accompanied by a positive and strong MACD bullish move above the 0 line- and a +DI cross - all the components to confirm an early entry. Note that in the prior 2 bullish moves, both indicators did not confirm- and so no entry would have been "allowed' -
However, back on Mar 2- indicators confirmed- price closed higher- but declined the next day and the downtrend started. Indicators don't guarantee what happens tomorrow- just tell you if what occurred looks bullish. That's why you employ appropriate stop-losses on each and every trade-
Something I have failed to point out, perhaps more important - is that in viewing this chart, price is declining under a downtrending daily 5 ema- On the daily chart, price just barely closed above the declining ema- While i am illustrating some charts here, it is important to not forget TREND- on each time frame- One can get whipsawed repeatedly .
Consider the basics- Know where price is directionally by employing a ema- your choice-
Price under a declining ema is definitely bearish- and possible long entries should ask for better criteria to take a long position- For example- If you view a daily Spy chart, today's price move is a very bullish engulfing candle- but indicators on the daily haven't caught up to agree. Indicators lag..... but possibly that lag may prove to slow an early entry- and yet capture a larger trending move -albeit missing the initial move higher. Capturing the meat of the trend- not the extremes.......

An EOD trader has to try to capture a longer trend move- in order to be profitable-
After all- the smart day traders bought earlier today and sold near the close. EOD traders may be delayed in getting in, and in getting out- but they strive to capture the largest part of the move.
Studying the faster chart approach;

What is worth noticing- is that the 2 hr candle chart gave a fast response with the indicators- A 2 hr Renko- does not react as quickly- The confirmation of today's bullish price move was not confirmed . As I dropped down to a faster RENKO chart, the 30 minute Renko
gave an early confirmation. This is due to the ATR value getting larger in each slower time frame.
Only when one gets down to a very fast 30 minute RENKO does the entry correspond to the price candle chart -in today's action-

While posting the faster candle, and renko charts, it is easy to lose sight of the larger perspective- How does one integrate and process this different information into a systematic approach? I think it takes a lot of time and homework, and multiple trades to make a determination- that a certain approach can and will sustain over the longer term.
View attachment 150314
View attachment 150315 View attachment 150316

In the earlier post Thursday, I was looking at how the faster 30 minute RENKO had an entry confirmation with confirming indicator crossings. , while the slower 2 hr Renko had failed to confirm . Everyone understands that the faster the time frame, the more responsive price is as smaller increment price movements become more relevant.
Certainly a daily Renko would have not come close to being confirmed.
While each of us wants to get in a winning trade early, getting in early on what looks to be a strong move higher- is understandable. The price action yesterday looked solid- nice up move- and if I had been sitting behind a computer during market hours- i would likely have jumped in as some did. Jumping in early - on possible trend reversals- requires
an appropriate stop-loss- often determined to be the prior day's low.
If one gets in a trade on a faster chart, the distance to the stop-loss is less than on a slower chart- but one gets more signals, and naturally more whipsaws.
Following up with the 2 hr Spy chart following today's price action.
I was filled on several trades today- will try to get those noted- Account ended up a bit higher today thanks to the DUG position/trades.