Out of the closet

[dimsdaletraders]

update:

CW. stopped out: 0.2% gain
DGE stopped out: 1.1% loss
IMT stopped out: 0.2% gain
SHP stopped out: 1.2% gain
AV. stopped out: 0.9% loss

EXPN, day 2, no changes needed; currently around 7 points down
REL, day 2, no changes needed; currently around 7 points down
GSK, day 1, no changes needed; currently around 7 points down

T31-39
w/l 55.5
p/l -0.8

T1-39
w/l 48.7
p/l -7.9

*****************
A bad day today, that has underlined that counter-intuitive relationship between win:loss and risk:reward, that I understood intellectually before but can now see in actual figures too, which has made for an interesting day. We're letting the three still-open trades run their course, and spending the next couple of days refining the risk:reward side of our four strategies to try to improve the bottom line for our next T10 group. I think it will help remove another layer of uncertainty on exits, and also help the bottom line, but I guess we'll see.

More later...

 

[dimsdaletraders]

GSK stopped out: 1.2% loss
EXPN stopped out: 1.1% loss
ANTO daytrade (today; short): 1.5% gain

REL, day 5, no changes needed; currently back at BE

So once again, the only real winner, in the sense that it made the target, since Tuesday has been my daytrade strat. The EOD stuff all got clobbered on Tuesday when everything fell through the floor. Ok, it could have been worse, because three of them had either profits or BE already locked in, at least, but the others just fell like rocks down a mineshaft. And although some of them immediately turned around on Wednesday, I didn't do re-entries, because we decided to spend some time reassessing, so didn't trade again until my ANTO trade today.

It's way too soon, though, to make any definite judgements about the strategies, so I'm just going to stick to the plan, and keep trading all five set-ups until March. Then I'll have five months of data, at least, and perhaps then it will be time to look at some results. Though I'm finding I'm already reluctant to take strat 4 trades, they just don't seem to work often enough. Maybe I'll look at those again this weekend...

 

[tomorton]

Hi Tess - Thorough testing of a strategy is a good thing before you seriously modify - the more trades you complete, the more guidance you will have.

But, developing something said earlier in the thread by Mr. Charts I think, don't let your account bleed dry while you're running this pilot.

e.g. Looking at GSK - long opened 12/01, stopped out (I assume) 15/01. Intra-day on 12/01, GSK looked like it was going to make a recovery. Yet it closed below its range's mid-point and only 2p up. In any case, the reversal would have been trying to base on a low that is below the previous swing low, 1287.5 on 21/12, and would therefore have a low probability of succeeding. The candlestick resembles an inverted hammer, that could suggest a reversal into uptrend, but this is such a weak candlestick signal that verification in the following session is essential, and this never showed up. Similarly, 11/01 printed an ID/NR4, which tentatively suggests the possibility of trading a break-out 12/01, in the direction of the break-out: but entry is confirmed only at the close of the break-out day, if it locates beyond the ID range, and this did not happen: this is not a great pattern anyway - in my trading notes for this pattern I also for some reason have noted to exit at second close after entry at the latest.

I am currently using two TA patterns to review markets for swing trades. Conventional swing trading pattern suggested on 08/01 that GSK came off the trading list as the previous swing low had been breached. It returns as a potential long if the swing high of 1347 29/12, is breached, and as a potential short if another swing high prints below 1347. My other pattern is more aggressive and suggested GSK as a positive shorting target at the close 1295.5 06/01.

 

[dimsdaletraders]

hi again Tom

okay, I've sat with my GSK chart and worked through all your points one at a time, and thankyou for taking the trouble.

Yes, I entered on 12/01 (stopped out 14/01, tho). I see now that the main mistake I made, as is clear from your analysis, was to assume that although the low was lower, and so the swing pattern that had been evident since around Nov 6th-7th was ended, the 50eMA would provide pivotal support for the longer-term swing. And now I'm looking at it again in light of your analysis, and can see that I had no real grounds for thinking it would. Plus, I incorrectly assumed that 11/01 was a one-bar reversal after a three-bar pullback, when in fact it was an inside day.

Quote: "Similarly, 11/01 printed an ID/NR4, which tentatively suggests the possibility of trading a break-out 12/01, in the direction of the break-out: but entry is confirmed only at the close of the break-out day, if it locates beyond the ID range, and this did not happen".

I'm not sure if I understand what this means, because I don't know what an ID/NR4 is. Is it the same thing as an "inside day", plz? If so, then I understand what you are saying, and will try to make sure I don't make THAT mistake again. I wasn't careful enough, hey. I think I was afraid of entering too late and missing the first part of the move, and it made me careless.

Thanks again for this analysis, Tom. I feel better now for knowing that it was just my mistakes that had me in the wrong trade, and that in fact my strategy should have kept me out of it in the first place if I had applied it properly, rather than feeling as though my strategy failed!

regards
Tess

 

[tomorton]

I'm not sure if I understand what this means, because I don't know what an ID/NR4 is. Is it the same thing as an "inside day", plz? If so, then I understand what you are saying, and will try to make sure I don't make THAT mistake again. I wasn't careful enough, hey. I think I was afraid of entering too late and missing the first part of the move, and it made me careless.


Hi Tess - Sorry, ID/NR4 means an inside day, with narrowest range of the last 4 sessions. I learned about this from Street Smarts by Connors & Raschke. Its a very short-term (2 days?) pattern for good (not high) probability of a modest (very) gain. Other sources use NR7 in the same way, though maybe only as a confirmation pattern of another, stronger signal.

The key is to await verification on the day after the ID/NR4 if you're using it, because this is really not a high probability signal. This comes from the close being outside the NR: take a position in that direction at this close. I have a note to get out at the second close after entry if I use this. But all in all, I'd suggest its a pattern not worth the trouble on its own. I would not even exit a position on confirmation of this pattern alone.

On the whole, I prefer to maker entries on the close, rather than intra-day, and never at the open. 4:29pm entry sometimes means missing a chunk of price movement, but eliminates signals that fail in the pm: also helps with discipline - no point looking at charts throughout day so less chance of tinkering: also means I have to be ready to go when I do see the chart, so the plan needs to be finished before I even log on.

 

[tomorton]

Hi Tess - After our exchange last night I thought I should start testing 14MA breach strategy on large caps.

Paper trading -
Taking the 20 largest cap shares from the FTSE100, and starting 100% cash on 01/01. So far I have closed 3 trades (2/3 winners) for +6.9% net and have 6 running, all shorts. Of the 6, 4 are in the money, net +7.3%. I am surprised these results are this good, though its early days.

 

[dimsdaletraders]

hi Tom

I'm interested to hear you say this. I haven't looked at all at MA breach strategies, I have only used MAs as directional confirmation of trend and as potential areas to examine for support/resistance. (*grins* and occasionally as red herrings to completely mislead myself, as in the GSK trade as described above!)

Are you planning to carry on testing?

 

[tomorton]

Yes, more testing to follow. Currently backtesting FTSE big 20 through 2009, will post in next few days.

 

[ceydababy]

Just an alternate view on GSK. Apologies for the less than brilliant chart I don't have a UK stock feed so used ETX capital. It does the job.

Instead of using MA's. I've used Fibs. Basically looking for confluence and then reactions at those confluence points.

The long trade you executed (in my opinion) was slightly off for a number of reasons.

Firstly it had broken the previous swing low.

Secondly shorter term symmetry had broken in my opinion this tells me that the trend is "dirty" at least in the short term.

Thirdly you were trading against a much bigger swing's Down Fib with confluence from the current time frame in the form of a projected fib.

If we look GSK pulls back to my next confluence zone consisting of Up Swing Fib, Projected Fib and Symmetry Level. So at this point is where we're going to be looking for a bounce.

All in my opinion and of course.

 

[dimsdaletraders]

thankyou, ceydababy...that was really kind of you to take the trouble.

I'll save that chart down now and then sit and work through your analysis tomorrow. I might need to ask you about some of the terminology first, tho, if that's ok?

regards
Tess

 

[dimsdaletraders]

well that was quite a week.

Once it was clear that the indexes really were turning rather than just showing a one-day blip, it's been pretty easy to daytrade the mining stocks, which is in any case where I've ben focusing most of my attention since I took that step back on Jan 14th. The success with those has at least repaired the damage to my a/c, so I'm almost back now to the 1K I started with back in October when I was completely clueless.

As far as my EOD strats are concerned, I've only run two short trades (WOS and SAB), plus the REL that was already open long, since the FTSE turned, and I closed REL as soon as it hit my target yesterday. Closed WOS and SAB today, but have re-entries analysed if I decide to use them.

Plans for this weekend include revisiting the six papertrades I set up at the beginning of the week but then found myself too busy trading to be able to annotate.

Strange reaction today, after it was finally over for the w/e. Until 4.15pm, if asked, I would have stated that there was no emotion involved. I felt completely calm and confident, entered on signal, exited pretty much as intended, didn't stress the missed opportunities, made points, took them, re-entered on the next signal, etc etc. At 4.15 I closed my trading platform, and a few seconds later got flattened by the "emotion truck". I mean, WTF was that all about? Hey ho. At least it waited until I was done! *G*

*******************************
T31-40
w/l 50
p/l -2.0

T41-50
w/l 90
p/l 6.0

T51
w/l n/a
p/l 1.7

T1-51
w/l 56.8
p/l -1.0

 

[timsk]

Just an alternate view on GSK. Apologies for the less than brilliant chart I don't have a UK stock feed so used ETX capital. It does the job.

Hi ceydababy,
The chart itself is okay, but I can't read your notation. If possible, bigger and bolder type in future please!
Cheers,
Tim.

 

[Mr. Charts]

Good morning, Tim,
Open the image, click on magnifying glass, go to Page (top right of Windows browser) and choose
Zoom and then the %age you want; 150% works fine. That makes the notation legible allthough the font and resolution don't make for easy reading.
Happy weekend,
Richard

 

[timsk]

Hi Richard,
Yeah, did all the above - up to 200% and still struggled! Perhaps it's just my PC!
Tim.

 

[Mr. Charts]

No, Tim, it's not your PC, it's lost clarity, probably due to the font used.
Richard

 

[ceydababy]

Hi ceydababy,
The chart itself is okay, but I can't read your notation. If possible, bigger and bolder type in future please!
Cheers,
Tim.

Thats Microsoft Paint for you and a crappy spread bet chart. I have the original if anyone wants it. Just PM me. Maybe thats clearer

 

[dimsdaletraders]

uh huh, it is, especially if you make sure the magnification is exactly 100%. And thanks again for the help, by the way...

Tess

 

[D70]

uh huh, it is, especially if you make sure the magnification is exactly 100%. And thanks again for the help, by the way...

Tess

Hi Tess,
How is it going?
Been a while since you updated.



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