Trades 29 and 30

Here are two trades I closed recently.

trade 29: long copper +1.6R

This is the longest I've ever held a trade and I wonder perhaps if I should have held longer. The full holding time of this trade was 13 months, so more an investment. I bought on a huge MN domino candle that coincided with my thoughts that commodities would boom in late 2016.

• Entry: Copper was in MOTR L1 (strong buying) price had declined heavily, based then printed a MN bullish domino candle that closed above the prior highs and 200 and 20SMA. I bought at the close of this bar.
• Stops: my initial stop was at the lows of the domino bar. I then move my stop to 70% at the close of the first bar. I use a 3 bar time stop, closing the position if it is not in profit after 3 bars. When the position reaches +0.7R paper profit I move my stop to 30%. I didn't use a TSL, although I'm looking at using domino candle lows.
• Exit: The trade hit my PT of 1.6R.
• Notes: I am happy with this trade. throughout the 13 month hold I had plenty of opportunities that encouraged me to sell. MOTR changed a few times and price stalled at certain levels. However, I learnt here that the trade isn't invalidated simply because the vehicle is no longer in a buying environment. If you think about it, it makes sense that as it moves favourably it will leave the ideal buying environment; it would be more worrying if your system was telling you to buy at prices that offered diminishing returns. You have to expect and accept this will happen when you are in a trade you expect to hold. Having "faith" in the underlying trade idea is very helpful (that commodities were in a bull) but crucial is in trade risk management. If you manage a trade correctly there should really always be more upside than downside that you're exposed to.

trade 30: long USDCAD -0.3R

I bought the USDCAD against MOTR because the entry was on the MN chart. I have noticed that good MN candles often overpower the current MOTR and so in this scenario I was trading with my rules which are to always trade in the clearest strongest direction. I bought a decent MN pin bar that coincided with my thoughts at the time that the USD was undervalued.

• Entry: MOTR S1 (strong selling) but bought as MN candles are often stronger than current MOTR. Bought MN pin @ MN Demand and 50SMA.
• Stops: my initial stop was at the lows of the pin bar. I then move my stop to 70% at the close of the first bar. I use a 3 bar time stop, closing the position if it is not in profit after 3 bars. When the position reaches +0.7R paper profit I moved my stop to 30%. 
• Exit: After reaching +0.8R in paper profits price reversed and hit my 30% stop for a -0.3R loss.
• Notes: Despite a small loss I am very happy with this trade and I would have no qualms about taking it again. This shows that if you manage your risk effectively you can expose your capital to slightly riskier opportunities without really taking on any more actual risk than you would ordinarily.

Start of Year Update... 2017: Be The Gatherer

Apologies for my prolonged silence, since starting the day job I have had to adapt the ways and times I go about trading.

I am now starting to view my trading almost as "short-term investing". Often when seeing an entry I think "would I hold this for the next 3-6 months?

charts

I now use W1 and MN charts for building my primary positions. I want MN stochastic to have crossed in the direction that I am trading and for price to be at a MN/W1 area of supply/demand, with a nice candle pattern. I feel I am then trading with long-term momentum, at good supply/demand imbalances with a stronger signal. During the week I try to monitor the daily charts of pairs I am already in to see if I can add or build to them but this isn't always possible.

prep

My technical prep is done over the weekend (MOTR etc) but I now spend a lot more time throughout the week reading and pondering on geo-political and macro events, which are now the basis of almost all my trade ideas. My main sources are MoneyWeek, Pippa Malmgren and ZeroHedge.

setups

I am currently not finding perfectly matched MOTR (momentum and trend) pairs useful. The reason being is that I am often ready to trade a pair before MOTR is completely lined up. Having said this I always try to match an idea to the strength/weakness matrix.

Due to not knowing if I'm going to be in a good state to trade each evening, my mindset is, "get in tentatively when you can and start building" rather than, "wait for perfection" because "I could well miss the move".

The day job and the exhaustion it can create means that I'm sure if I'm going to feel good enough to trade each evening. So I would rather save my major entries for the weekend. I guess this is the price I have to pay. My hope is, with experience and practice that I  might be able to average down in the future.

metaphor

I'm seeing trading and investing as a metaphor of the Hunter/Gatherers of past.

The Trader is the Hunter: spending huge amounts of time and energy stalking prey, setting traps and failing often.
The Investor (long-term trader) is a Gatherer: She simply walks through the fields each day and notices what is beginning to germinate, flower, bloom or wither. She knows what is going to feed her today and has a good idea of what is going to feed her in the coming months.

summary

I feel I am relating strongly to the gatherer. I want to get in slowly when a market is germinating (turning), I want to add to my position as it begins to flower (trends) and take profit once it's bloomed (begins to turn again),  I use momentum to help me predict the seasons, the timings aren't precise but that's quite nice as it takes much of the pressure off "being perfect" which was something that flagged up strongly in my Tharp Report. 

Missed a Crude Long Opportunity Due to Size

I originally posted this in a private group last week. However as it is part my trading strategy and it will also relate to a post I am putting up shortly it felt important to reblog it here...

ORIGINAL POST 080816

initial idea

I've been watching crude for the past month or so "collapse" and twitter bang on about what a turd it is. This reminded me of something Paul Wallace (my coach) says: when everyone is certain, this is often the time to look the other way.

prep

Because this was a counter trend trade, technically it wasn't STAM (STAM is a method my coach has taught me and so am unable to go into details), but it fits all the parameters I like to see. This coupled with better than expected NFPs, an increased rig count and potential demand from India made a bullish engulfing pattern (at lots of support) on the daily chart very appealing.

issue

The size, even at 0.10 in a micro account meant a £300+ stop which didn't remotely fit my risk requirements. In the end I just took a screen shot and put a tweet out for my records.

I don't particularly want to go down a timeframe, for this kind of trade I want to stay long term. I was wondering if anyone knew if there is an alternative instrument I can trade which might let me trade smaller?


Tweet screenshot (D1 and W1)

Crude as of 1917 this evening (080816) (D1)

MOTR Trade 10 R+0.2

So I got long the NZDUSD...

prep

Technically this pair met all my criteria, momentum and trend both up and price experiencing a deep pullback.

On the macro point of view there was an issue, Fed policy was due in 2 days however my trade plan allows me to trade this, provided I close a few hours before the data is due, which is what I did.

thought

Price initially went my way by R+1 or more, then fluctuated before the fed announcement (I exited just prior to the durable goods report). I do wonder if price initially goes in my favour by quite some way, whether I might be able to hold on to this kind of trade in the future (as you can see the MFE on this trade was R+4.4).

This thought alone shows a hole in my trading plan/strategy; I don't know at what point (before hitting my target) a trade is a success. Definitely something for me to mull over and research! Ultimately my numbers are going to have to dictate my action here.

NZDUSD Long

MOTR Trades 8 (R-1) & 9 (R-0.6)

Bit of ring rust after a month off but hands up, I screwed up my prep.

prep

This weekend after completing my homework I noticed the NZD had been gaining strength. Actually by my reckoning it had been the strongest currency for two weeks running (although that might have changed now)!

So I went through my NZD pairs and found a long on the NZDUSD and a short on the AUDNZD, net long the NZD. I did my technical prep then looked at the economic calendar, I never trade in front major data. I noted the RBNZ had it's economy report out on the 21/07 so I thought I'd have 48 hours to hit targets and would close out before the announcement, regardless of P/L.

the mistake

The data was on the 20/07 not the 21/07 so I just traded right into and through the announcement  and it wasn't pretty for the NZD.

MOTR 8

Long NZDUSD (pin at W1 demand) I got a 100% stop on this.

MOTR 9 

Short AUDNZD (BearEP at W1 supply) I saw my mistake and managed to exit before a full stop for R-0.6.

summary

Not much to say. Seeing that I've has a month off I'm pretty pleased with my prep and management on the whole, with obvious the exception of that one mistake. Guess all I can do is double check in the future and move on.  Fact is if the data had been when I thought it was these trades were completely "trade plan valid" positions, so I'd take them again. 

MOTR Trades 5&6 DHM R-1.4

intro

So last Friday I got long the AUD by shorting the GBPAUD and buying the AUDUSD. Now the entries were fine but the management could have been better, hence DHM "dickhead management".

trades

One went my way while the other hovered around breakeven. I trailed my stop to 70% on both of them as my plan dictates, but I failed to note on Monday evening that there was an RBA governor speech due overnight... This would have been the perfect time to kill the trades for more or less breakeven, instead both hit their 70% stops for a total loss of R-1.4.

lesson

My strategy is based on getting a "technical edge", this is fine but the issue is, one cannot predict the outcome of data or speeches. And so when such an event approaches my edge losses it potency until it comes to a point where it has no predictive power at all. At this point my trade turns from a calculated risk to a gamble and is where it should be closed. It could be argued that if I keep taking bets with great returns I should win, that's what most punters do. And guess what, it's the bookies making a business out of it. It is often thought that casinos also play the long game, and they do, but remember they have the odds, even if small on there side in every game. Here I started off as a trader then turned into a punter.

MOTR trade 5 

GBPAUD was in MOTR S (strong selling) and I took a bearish pin at W1 supply as an entry. 

MOTR trade 6 

AUDUSD was in MOTR B (strong buying), I took a bullish pin at W1 demand as an entry.