long term position trading -primarily etf's-

[sowterdad]

Futures up @ 6 am- Jobs report pre market will get interpreted- but which way? GAp higher or gap down lower?
I'm not putting on any additional trades- stops are in.....Might reassess this afternoon if I get out early.

I did get out early enough to get online this 3 pm- with an hour to make some trading decisions-hedj, dxj, xhb,TAN-
Market gapped higher- choosing to like the jobs report. Nice to see my remaining positions- including USO moving higher-
With this recent market decline- That effectively becomes a line in the sand- as far as stops go- sEE HOW THINGS HOLD AT THE CLOSE....

 

[sowterdad]

I said -the other day
"
An account decline of 4-5% should be considered potentially "normal' As we extend past that level- Let's regroup- I'm at that point in the trading account - Time to be less aggressive- more defensive"

And today I went all long late in the day- long after the initial gap higher occurred- I had some freed cash in the account- and chose to also go long in a separate account that was in cash. Not to get confusing here- but because i was limited in waiting for cash to clear for 3 positions- I added those positions outside of the IB account-- ADDED PJP, FXI-LLSP (1.25% light leverage on SPY.)
I was not prepared to take an unknown gamble and add to positions that declined ahead of the Jobs report-I did not know what the report would say- nor the market's reaction.
One could take a guess-and if they guessed correctly and went long yesterday, they are feeling pretty good today- congratulations on being on the right side of the trade.

Because we have had a bit of persistant decline- and one that took it's toll on my account, I look at the swing lows that we had this week as the proverbial Line in the Sand that should not be breached .Even perhaps in the context of the Weekly chart?

I split the positions - with a tight stop and a wider stop - On PJP, XBI- and was taken out on weakness on part of the positions this week. On other positions- I was stopped out quickly-
XLB- the materials ETF had looked defensive- but caught my stop by about $.20 -
And when that occurs- and it makes a solid move higher after taking out the stop- You are inclined to try to Ask yourself - "Should i have had the stop a bit wider?" The next thought is : " IF I had, I would have seen my trade go higher-" and it would be in the green now- All I needed to do would be to have widened the stop by a 'smidge'.

I think anyone that trades will experience this stop execution only to define the bottom of the decline- and worse yet- the vigorous rally that follows while you're now out of the position, and by golly- you don't want to chase it.

So, after being skinned up, seeing a longer period of losing trades- I belatedly- near the end of the day- jumped back fully into the market.
Some will feel that this is chasing- you are entitled to your opinion. For myself-
This market move suggests the market will want to go higher- perhaps rally for 2-3-4 days - and perhaps not-
The recent swing lows that have been made represent a level that price should not be allowed to break through lower- That's a grossly general statement-and not accurate- for everything out there- But- for myself- I will look at the recent swing lows as something I do not want to be holding below-

Following that general statement- is where does that put me regarding the amount of RISK that today's late day adds would be exposing me to-
With most everything gapping higher today- one likely should expect some volatility & a possible test of the gap level- This means that my 2 hour chart and ema - while instructive- may simply be too restrictive if volatility is in the market this coming week-

Within the trading account, I am starting to look outside the box a bit-
I took hedged positions for Europe & Japan- HEDJ, DXJ-both moved higher with the US mkts.
With Oil going higher- - solar -alternative energy costs - TAN- had a massive vertical run since Feb- and the recent decline-was also sharp- but not that significantly lower compared to where it had come from. I think I'm trying to hedge any optimism- but it is a minor position size- due to limited freed cash....a final trade- and OIL may not have much upside left, but I'm grateful to be able to tighten the stop a bit higher.
At 1 minute before the close- I decided i would try to leverage up just a bit - on the SPY-
and LLSP - a recent offering - is a 1.25% leverage- But it has no liquidity- lots of gaps-
I did not do any homework on this Direxion offering- They have a few others providing "light" leverage. Might be the right approach to leverage.....
Financials would potentially benefit when the Fed raises rates- XLF closed at the high side of the trading range- potentially trying to set up for a higher move- but the prior range provides a set level to set the stop-
Caution perhaps would be prudent- because this rally could dissolve on any kind of negative Fed comments- but I think you have to try to take advantage when the entire markets respond in this fashion.
Even the venerable BRKB jumped smartly higher- So, if it didn't move higher today- it was in the minority.
Will see how the weekend works out to try to get some charts up and a working plan for Monday-

 

[sowterdad]

This Saturday am I am going to review a few charts on HEDJ- which I took a position in on Friday.
Starting with the weekly chart-to get the wider perspective- defining where possible support & resistance may be- we see that price broke the recent uptrend- This week's close occurred as a possible bullish hammer- with price having dropped intra week much lower, but closed higher on Friday- For a PA trader, the hammer can be viewed as a potential reversal.
since i took the entry (3:27 pm )near the high of the bar $65.68, I have several areas based on this weekly chart to consider a stop-loss. I have the low of the hammer, and I have the prior week's low to consider as areas that might provide some logical stop-levels - To not see a continuation of the decline .
I will check this out further on the daily chart.

 

[sowterdad]

This Saturday am I am going to review a few charts on HEDJ- which I took a position in on Friday.
Starting with the weekly chart-to get the wider perspective- defining where possible support & resistance may be- we see that price broke the recent uptrend- This week's close occurred as a possible bullish hammer- with price having dropped intra week much lower, but closed higher on Friday- For a PA trader, the hammer can be viewed as a potential reversal.
since i took the entry (3:27 pm )near the high of the bar $65.68, I have several areas based on this weekly chart to consider a stop-loss. I have the low of the hammer, and I have the prior week's low to consider as areas that might provide some logical stop-levels - To not see a continuation of the decline .
I will check this out further on the daily chart.
View attachment 152483

Looking at the shorter term Daily chart- allows a closer look at what occurred with the actual price movements- The markets were weak, waiting on the jobs report on Friday.
HEDJ has rolled over and was declining after making a recent high- Worth noticing was the daily price action- a higher breakout - a decline back into the support range- and a breakdown of that range with price dropping solidly lower and declining-
An aggressive trader - "believing" that HEDJ would have seen a bottom based on Wednesday's low- saw price stabilize Thursday- but that price action was weak and did not look to be indicating a move higher at all-
While I am illustrating HEDJ here- many stocks and the ETF's I viewed/ purchased will show similarities-Price in decline-or weak - for prior days- Markets were looking poised to sell-off further. Based on the jobs report- price gapped higher- a gap was to be expected - but the direction was unknown. I made the decision Friday pm that the move looked to be holding well- and based on that added to my positions.
My trading approach in this weak market has not seen much success, with a net decline in my execution . My decision to go long at this price action is based on my assumption that the price action will have some further days of upside- and is not just a bull trap -dead cat bounce- That remains to be seen as the day's ahead unfold.
One thing i mention in this daily chart is calculating the position size of any trade one takes- On Friday-pm I made a number of adds towards the market close, all had similar moves higher- with my purchases going into the last 30 minutes of the trading day.
The entries will all find themselves extended above the recent lows-
So, understanding the initial RISK to the portfolio value of each trade is worth paying attention to. Essentially, I will be on the high side of too much Entry RISK compared to the disaster-failure stop- level- but I was willing to take this on because it was a market wide momentum move that carried Most everything higher-Perhaps it is just a relief rally
and not a pullback bottom for the market- But I felt is was a risk worth taking-
For newer traders- and perhaps some experienced as well-Who have seen some losing trades like me- Let me share this again for those that might find it a calculation worth doing- It might surprise you- because if you trade different amounts, a different dollar loss might seem to be less - but % wise- could be more % Risk based on the trade value.

Anyways- Point I want to share is that understanding what % Risk the trade represents
is a useful- necessary consideration in evaluating the trade entry as well as perhaps determining how the trade is followed with stop adjustments higher for some or all of the position to reduce that RISK.
Calculation is simple- Take your entry cost , subtract the stop loss - multiply by the number of shares to be purchased- divide by the total portfolio account value.
Move the decimal 2 places right.
If the account value is $5,000.00- You want to allocate to 5 different trades-$1,000.00 ea. You Buy 50 shares of stock XYZ @ $20.00. Your stop-loss is $19.00
You risk $1 x 50 shares = $50.00 at risk $50.00/5000 =0.01 =decimal 2 places right=1%

1-2% OF THE PORTFOLIO VALUE FOR ANY POSITION IS A MODERATE RISK . Good starting point - Seems too small and is difficult for those of us with smaller accounts.
I've knowingly exceeded that conservative Risk level, Friday and in the past month- with
a deeper loss than needed.
If a stop-loss on a trade risks too much of your total net portfolio value- that might need to be looked at . Also- If all trades get entered essentially at the same time - on a market momentum move- the exposure will be across all the positions similarly high. (Friday's entries)

I've exceeded that smaller Risk amount with these entries- as well as in some of my prior trades the last month- and - that added exposure amount of Risk - in losing trades causes increased damage- In winning trades- added position size where something is working can capture the momentum of the trend- But the RISK is always there.and perhaps increased -
When one favors one segment too strongly- Biotech, Pharma- that's setting up for some pain if that segment loses the market's favor.

The opportunity over the weekend is for me to review my positions, my Risk,
and where my stops will be placed.
Got a trailer full of mulch to spread This Saturday.

 

[sowterdad]

Looking at the shorter term Daily chart- allows a closer look at what occurred with the actual price movements- The markets were weak, waiting on the jobs report on Friday.
HEDJ has rolled over and was declining after making a recent high- Worth noticing was the daily price action- a higher breakout - a decline back into the support range- and a breakdown of that range with price dropping solidly lower and declining-
An aggressive trader - "believing" that HEDJ would have seen a bottom based on Wednesday's low- saw price stabilize Thursday- but that price action was weak and did not look to be indicating a move higher at all-
While I am illustrating HEDJ here- many stocks and the ETF's I viewed/ purchased will show similarities-Price in decline-or weak - for prior days- Markets were looking poised to sell-off further. Based on the jobs report- price gapped higher- a gap was to be expected - but the direction was unknown. I made the decision Friday pm that the move looked to be holding well- and based on that added to my positions.
My trading approach in this weak market has not seen much success, with a net decline in my execution . My decision to go long at this price action is based on my assumption that the price action will have some further days of upside- and is not just a bull trap -dead cat bounce- That remains to be seen as the day's ahead unfold.
One thing i mention in this daily chart is calculating the position size of any trade one takes- On Friday-pm I made a number of adds towards the market close, all had similar moves higher- with my purchases going into the last 30 minutes of the trading day.
The entries will all find themselves extended above the recent lows-
So, understanding the initial RISK to the portfolio value of each trade is worth paying attention to. Essentially, I will be on the high side of too much Entry RISK compared to the disaster-failure stop- level- but I was willing to take this on because it was a market wide momentum move that carried Most everything higher-Perhaps it is just a relief rally
and not a pullback bottom for the market- But I felt is was a risk worth taking-
For newer traders- and perhaps some experienced as well-Who have seen some losing trades like me- Let me share this again for those that might find it a calculation worth doing- It might surprise you- because if you trade different amounts, a different dollar loss might seem to be less - but % wise- could be more % Risk based on the trade value.

Anyways- Point I want to share is that understanding what % Risk the trade represents
is a useful- necessary consideration in evaluating the trade entry as well as perhaps determining how the trade is followed with stop adjustments higher for some or all of the position to reduce that RISK.
Calculation is simple- Take your entry cost , subtract the stop loss - multiply by the number of shares to be purchased- divide by the total portfolio account value.
Move the decimal 2 places right.
If the account value is $5,000.00- You want to allocate to 5 different trades-$1,000.00 ea. You Buy 50 shares of stock XYZ @ $20.00. Your stop-loss is $19.00
You risk $1 x 50 shares = $50.00 at risk $50.00/5000 =0.01 =decimal 2 places right=1%

1-2% OF THE PORTFOLIO VALUE FOR ANY POSITION IS A MODERATE RISK . Good starting point - Seems too small and is difficult for those of us with smaller accounts.
I've knowingly exceeded that conservative Risk level, Friday and in the past month- with
a deeper loss than needed.
If a stop-loss on a trade risks too much of your total net portfolio value- that might need to be looked at . Also- If all trades get entered essentially at the same time - on a market momentum move- the exposure will be across all the positions similarly high. (Friday's entries)

I've exceeded that smaller Risk amount with these entries- as well as in some of my prior trades the last month- and - that added exposure amount of Risk - in losing trades causes increased damage- In winning trades- added position size where something is working can capture the momentum of the trend- But the RISK is always there.and perhaps increased -
When one favors one segment too strongly- Biotech, Pharma- that's setting up for some pain if that segment loses the market's favor.

The opportunity over the weekend is for me to review my positions, my Risk,
and where my stops will be placed.
Got a trailer full of mulch to spread This Saturday.

View attachment 152491

Here i go with a 2 hour chart of the HEDJ trade-
There are some PA nuances here that cannot be seen if one only trades on the Daily chart.
However, the 2 hr chart gives early indications that perhaps do not evolve on the slower Daily time frame.......UNLESS one chooses to be more PA aggressive-.and not be slower and confusing safety with delaying an entry or exit.
What is interesting in this chart- is the similarities of the 2 up moves that looked promising- One prior that failed- and the one I entered on Friday. They are very similar-
However, they are different-
The 1st pullback could be considered a 'normal ' decline in trend- But it had 2 attempted moves higher which led to a lower low- Now, we have an attempted move again higher- and it is critical that this move holds - or we print a new lower low- and the predominant trend may now be in decline if that occurs. What's an allowable pullback on any time frame % wise?

 

[sowterdad]

Here i go with a 2 hour chart of the HEDJ trade-
There are some PA nuances here that cannot be seen if one only trades on the Daily chart.
However, the 2 hr chart gives early indications that perhaps do not evolve on the slower Daily time frame.......UNLESS one chooses to be more PA aggressive-.and not be slower and confusing safety with delaying an entry or exit.
What is interesting in this chart- is the similarities of the 2 up moves that looked promising- One prior that failed- and the one I entered on Friday. They are very similar-
However, they are different-
The 1st pullback could be considered a 'normal ' decline in trend- But it had 2 attempted moves higher which led to a lower low- Now, we have an attempted move again higher- and it is critical that this move holds - or we print a new lower low- and the predominant trend may now be in decline if that occurs. What's an allowable pullback on any time frame % wise?
View attachment 152511

Frustrating to get stopped out by a small amount on a trade, and then see it move higher- It happens to everyone that actually trades-
Stops are essential- but what does one use to guide their placement?
Price volatility can extend beyond where one expects- only to find the price closes back within the expected range.
I am going to experiment some with RENKO in my actual positions for this month-and see how this experiment - works out.
For starters- i will use the Daily Renko hi-lo with a 100 ATR look back to determine the average ATR value-
I don't want to overcomplicate things- but I think including an RSI 3 with a 50 line cross
Up or Down- might be useful - open to interpretation as to divergence-
I'm inclined to try the faster time frame RENKO as well- but for starters -I'll use the Daily.
The goal is to not sit still and allow the stop to be hit- but to have the stop initially set to be outside of average volatility-
With HEDJ, the 3x ATR value of $.75 brings the stop back to $63.00 from the closing value of the bullish present brick. This is 1 atr value below the red brick- hopefully the recent swing low.

 

[sowterdad]

I like the overall concept of a less discretionary and more systematic approach-
So, this is an experiment- but these are actual trades- and actual dollars-
I know- every approach deserves backtesting- but when everything went higher- discretion
suggested to jump on board-

Working out the different particulars in comparing Renko for stops this pm-
I have 3 of my positions that I entered in violation of the bullish RSI +50- 1 borderline- and that's an interesting momentum divergence with what I thought price was indicating at the time of entry- The indicator simply did not respond to the upside with Friday 's higher price move on the Daily Renko on PJP, HACK, TAN- HMMMM.
So, The Daily is less responsive than the 2 hr- Perhaps I can find a rationale for taking the positions i took if i look far enough into a faster chart?
When i view the 2 hr Renko - I see the positive price action is reflected on Friday's move higher- for most positions.
Since this is a faster time frame and the ATR increments are smaller- I will compare the 2 hr with a 5 ATR for the stop .
This faster time frame view with a tighter ATR value comes in with suggesting tighter stops-losses- The question becomes- does one react with the tighter stops on the faster chart only to get whipsawed - where employing the stops based on the daily chart would survive nominal volatility?
For monday, I'll allow the daily ATR values to serve.
PJP- $73.70 (bearish RSI) 2 hr suggests $74.80

XBI- $203.00 Bullish 2 hr suggests stop @ $208.00
Hack -$28.00 (bearish RSI) 2 hr suggests $29.00
USO $19.50 Neutral RSI 2 hr suggests $19.80
Tan $44.00 (Bearish RSI) 2 hr suggests $45.00
HEDJ $63 Bullish 2 hr suggests $63.70
DXJ $55.90 Bullish 2 hr suggests $56.50
LLSP $25.70 Bullish 2 hr suggests $26.30 bearish
XLB $49.64 Bullish 2 hr $50.50

As i reviewed the different stops and RSI values- I feel much more confident when I see a positive improving RSI on the faster time frame - as this will occur 1st-

 

[sowterdad]

I like the overall concept of a less discretionary and more systematic approach-
So, this is an experiment- but these are actual trades- and actual dollars-
I know- every approach deserves backtesting- but when everything went higher- discretion
suggested to jump on board-

Working out the different particulars in comparing Renko for stops this pm-
I have 3 of my positions that I entered in violation of the bullish RSI +50- 1 borderline- and that's an interesting momentum divergence with what I thought price was indicating at the time of entry- The indicator simply did not respond to the upside with Friday 's higher price move on the Daily Renko on PJP, HACK, TAN- HMMMM.
So, The Daily is less responsive than the 2 hr- Perhaps I can find a rationale for taking the positions i took if i look far enough into a faster chart?
When i view the 2 hr Renko - I see the positive price action is reflected on Friday's move higher- for most positions.
Since this is a faster time frame and the ATR increments are smaller- I will compare the 2 hr with a 5 ATR for the stop .
This faster time frame view with a tighter ATR value comes in with suggesting tighter stops-losses- The question becomes- does one react with the tighter stops on the faster chart only to get whipsawed - where employing the stops based on the daily chart would survive nominal volatility?
For monday, I'll allow the daily ATR values to serve.
PJP- $73.70 (bearish RSI) 2 hr suggests $74.80

XBI- $203.00 Bullish 2 hr suggests stop @ $208.00
Hack -$28.00 (bearish RSI) 2 hr suggests $29.00
USO $19.50 Neutral RSI 2 hr suggests $19.80
Tan $44.00 (Bearish RSI) 2 hr suggests $45.00
HEDJ $63 Bullish 2 hr suggests $63.70
DXJ $55.90 Bullish 2 hr suggests $56.50
LLSP $25.70 Bullish 2 hr suggests $26.30 bearish
XLB $49.64 Bullish 2 hr $50.50

As i reviewed the different stops and RSI values- I feel much more confident when I see a positive improving RSI on the faster time frame - as this will occur 1st-

TBT had a substantial gain today-+4.8 % (not a position) I have a position in XLF-
Expected higher rates seem to be in the market's focus-.
Saw a bit of increase in PJP, XBI. A bit of decline - net little change.
Very unimpressed with the low volume LLSP- It seemed like a good / conservative idea, at the time - but it obviously has little interest- low volume- SSO - ultra has 2.6M volume.
Some of my positions are presently in the blue- others slightly in the red.
The wider stop-loss required by the Daily chart may be the wrong approach at this point in time- Seeking higher gains - with holding a larger stop-

 

[sowterdad]

I did not get much free time as I expected over the weekend-
A quick summary of my present positions is that i have stops set on the wider side- and should the market sell-off in a reaction, I will lose much more than the recommended 2% exposure per position unless the trades are adjustedhigher- Presently, I am holding with the wider stops- and not reacting on the 2 hr chart.
I should mention -again- that I chose to make my buys at the EOD market close Friday-all mostly near the highs of the day- a market wide bounce that lifted most positions that had been in decline the prior week.
My expectation was that the market had been in a holding pattern- and that the jobs report reaction would lead to further upside momentum. That does not appear to be the case, as the market failed to find reason to extend that Friday's enthusiasm.
Quite honestly, We are simply in a sideways consolidation here- Haven't broken down substantially- can't break higher- and the market (SPY) is up for the year-
Look at the SPY weekly chart dating back to 2014- The market started off the year with some selling, but by May was higher- and then went into rally higher mode - contrary to the stereo-typical saying - seasonality factor- of go away in MAY..
Presently, this does not appear to be the market that repeats last year's performance-
I found that so far i am not succeeding in 2015 applying a tighter approach in this market in sectors that are not in demand! Go figure!
As I am trying to adapt, I am taking a wider approach, Looking to different market areas - and I am willing to use a simple concept of a stop-loss under the prior swing low- to allow the trend to move higher-
A lot of the success -or failure- of this modification will be in the narrowed selection of what is in favor-what is not- With the initial trades i entered into - I am dependant on the recent lows holding- . A break below recent major swings suggests a market shift lower-

With my goal to be in a longer term position, for a larger gain, I am Risking more- than usual on a 2 hr chart which would have stopped out on today's pullbacks on most positions-
This may be uncomfortable- and financially painful- if the trades do not make a higher turn soon. If they break below the swing low made- I'm on the side lines-and stopped out-

 

[sowterdad]

I did not get much free time as I expected over the weekend-
A quick summary of my present positions is that i have stops set on the wider side- and should the market sell-off in a reaction, I will lose much more than the recommended 2% exposure per position unless the trades are adjustedhigher- Presently, I am holding with the wider stops- and not reacting on the 2 hr chart.
I should mention -again- that I chose to make my buys at the EOD market close Friday-all mostly near the highs of the day- a market wide bounce that lifted most positions that had been in decline the prior week.
My expectation was that the market had been in a holding pattern- and that the jobs report reaction would lead to further upside momentum. That does not appear to be the case, as the market failed to find reason to extend that Friday's enthusiasm.
Quite honestly, We are simply in a sideways consolidation here- Haven't broken down substantially- can't break higher- and the market (SPY) is up for the year-
Look at the SPY weekly chart dating back to 2014- The market started off the year with some selling, but by May was higher- and then went into rally higher mode - contrary to the stereo-typical saying - seasonality factor- of go away in MAY..
Presently, this does not appear to be the market that repeats last year's performance-
I found that so far i am not succeeding in 2015 applying a tighter approach in this market in sectors that are not in demand! Go figure!
As I am trying to adapt, I am taking a wider approach, Looking to different market areas - and I am willing to use a simple concept of a stop-loss under the prior swing low- to allow the trend to move higher-
A lot of the success -or failure- of this modification will be in the narrowed selection of what is in favor-what is not- With the initial trades i entered into - I am dependant on the recent lows holding- . A break below recent major swings suggests a market shift lower-

With my goal to be in a longer term position, for a larger gain, I am Risking more- than usual on a 2 hr chart which would have stopped out on today's pullbacks on most positions-
This may be uncomfortable- and financially painful- if the trades do not make a higher turn soon. If they break below the swing low made- I'm on the side lines-and stopped out-

Had to work almost a double shift-Getting in at 11:30 pm- Account is relatively flat/weak-
HEDJ looks to go lower- PJP is down & weak, XBI is holding it's recent move higher-
Hack moved up from the low.......USO holding
Asia is weak this pm because of concerns about the US- go figure-at least that was 1 rationale in the headline I read tonight-retail was weak, and we're now waiting on another report Thursday- IWM closing lower- Value canary- BRKB also pulling back lower- offering a potential entry with a swing low just 1.5% lower- if one is so inclined-

I had hoped to be able to do more with getting some charts posted-but time has been an issue- I thought the materials sectors was looking strong - xlb- and it's pulling back now to the recent lower trend line-I spent some time on XLB multi-time frames-trend line extensions-- but it is still trending.
XLF- financials are trying to stair step a bit higher- Theoretically, a Fed raising rates is a positive for the financials- What happens if the GDP outlook looks weak, and a rate hike is determined unlikely in the next quarter or two? What moves financials higher?

It looks like a teeter-totter presently-