• Australian (ASX) Stock Market Forum

P2 Trade Book

Discussion in 'Derivatives' started by peter2, Sep 21, 2016.

  1. peter2

    peter2 Well-Known Member

    Posts:
    1,206
    Likes Received:
    69
    Joined:
    Jan 12, 2008
    P2 Trade Book (futures, forex, cfds)

    It's time to diversify our trading business that started in Pavilion103's LIVE ASX Momentum Setup Trading thread and continued in the ASX Momentum Trade Book - Part 2 thread. Diversification will provide more trading opportunities and reduce our dependance on a bullish ASX market.

    Our starting capital ($50K) has grown to approx $65K (not including open profits). We are going to transfer $15K to an account that has access to leveraged financial products (futures, forex, cfds).

    This thread will be different in that there will be less educational info presented. I apologise for this, but there is too much educational material related to these financial products for me to repeat it here. If you want further explanation about anything, then the onus is on you to ask specific questions. I encourage you to ask and participate. I don't wish to tell anyone how to trade these markets or endorse trading in leveraged financial products.

    Aim: To earn a few % each month in addition to what we earn from the ASX trading activity.

    Trading Strategy: Short term swing (momentum) trading using daily and intra-day charts.

    It's illegal for me to post specific buy/sell recommendations. I'll post details soon after the entry and before the trade is closed like I have in the ASX thread. Every trade has an iSL and they will be in the market at all times. I will also state the initial risk of the trade (points, ticks, pips and the $AUD risked) and post a chart after the trade is closed to show the complete trade.

    I'll continue the use of the fixed fractional position sizing model in this thread. The individual trade risk will be based on the combined realised equity of both accounts (ASX + P2). Currently the realised equity of both accounts is 50K + 15K = 65K. Open profits are not included. A new trade risking 1% will therefore be risking $650AUD. All wins and losses will be converted and displayed in AUD as other markets around the world operate in different currencies. Trades based on the daily charts will risk 1% and the intraday setups will start at 0.5%.

    All of the trades posted in this thread will be based on live trades done in one of my accounts. The results (R multiples) I get in my own account will be used as the results in this thread. For example if we risk $300 on a trade in this thread and I realise a +1.6R result in my account (incl all costs and currency conversions). The result in this thread will be $300 x 1.6 = +$480.
     
  2. peter2

    peter2 Well-Known Member

    Posts:
    1,206
    Likes Received:
    69
    Joined:
    Jan 12, 2008
    My trading is a rules based discretionary style derived from my beliefs of market behaviour. I must mention that the methodology to be used in this thread has NOT been proven or validated to be profitable in the long term (years). Trading in this thread will stop if the draw down exceeds 10% combined equity of both accounts (currently -$6500).

    Most of my trades are trend trades. I do trade counter trend when there is an acceptable RR.
    I do not scalp these markets. I want to get at least twice what I've risked in every trade, however with counter trend trades there are many times when I'll take +1R.

    DAILY PROCESS (brief outline): Find a market that has started to move and join in.

    1. Review daily currency strength. I want to buy a strong currency and sell a weak one (forex).

    2. Review a list of daily charts looking for short term trends that have started recently. Those are indicated by specific price bar patterns (candlestick patterns) that indicate probable future movement. I also use a pair of short term ema's on the daily and 4H charts to indicate trend direction.

    3. Look for setups in the trading time frame (1H) in the direction of the trend indicated by the daily charts. There are two common setups that are defined by the depth of the corrective pullback;
    shallow (<40%) => break-out entry into the trend
    deep (50-61.8%) => ambush or reversal setup for entry into the trend

    Once that work is done and the orders placed. I monitor a few markets during the day for one of two intraday patterns (15M charts).

    Most trades last for 0 - 2 days. I will be trying to hold some trades for longer.
     
  3. peter2

    peter2 Well-Known Member

    Posts:
    1,206
    Likes Received:
    69
    Joined:
    Jan 12, 2008
    "Why do this ?"
    I've been considering this question for many months.

    The main reason is selfish and I've had to decide whether it's "ego" or self improvement. My trading has improved and become much more consistent since I started blogging my ASX portfolio years ago (elsewhere). I hope this journal will help me improve many aspects related to trading in these markets. Of course, it could be my ego telling me it's for self improvement. :confused:

    Without going into detail, these aspects are;
    1. Trade frequency (I should trade these markets more often than I do)
    2. Trade in a smaller universe of markets (improve focus, specialise)
    3. Research optimum hold times.
    4. Increase overall productivity.

    I'll be monitoring my progress in all these aspects as well as the usual stats, looking for signs of improvement.

    "Why do this on this forum?"

    Overall our community here is supportive and I think I can help others improve aspects of their trading by showing some of mine.

    I hope you'll enjoy it as much as the ASX momentum portfolio thread but remember this is more of a journal rather than an educational thread.
     
  4. peter2

    peter2 Well-Known Member

    Posts:
    1,206
    Likes Received:
    69
    Joined:
    Jan 12, 2008
    This is how I think it's going to work. After I've got set in the market I'll post something like this.

    New Trade: T00 EURUSD long
    T00e.PNG

    and when it's finished I'll post the chart showing the complete trade along with my results.
    eg. Closed T00 at T2 target. Results +2R, +$650AUD

    T00.PNG

    Edit: I'm going to start this slowly as I don't know how much extra work this will require.
    I'm anticipating 1 or 2 trades per week from the daily charts and I'll try not to post too many intraday trades.
     
  5. cynic

    cynic Well-Known Member

    Posts:
    2,122
    Likes Received:
    1
    Joined:
    Feb 25, 2011
    Great stuff peter.

    It will be interesting to observe the differences and similarities (in trading highly leveraged instruments in both directions as opposed to relatively unleveraged, long only, securities) as this thread progresses.
     
  6. tech/a

    tech/a No Ordinary Duck!

    Posts:
    16,251
    Likes Received:
    38
    Joined:
    Oct 14, 2004
    I understand the time and effort this takes.
    If you can show me how you make the time
    I'd be forever grateful!

    A very generous and selfless task.
    Hopefully the endless posts on how can I
    make a profit
    Will have a permanent reference.

    Thanks Peter.
     
  7. captain black

    captain black Well-Known Member

    Posts:
    997
    Likes Received:
    55
    Joined:
    Oct 24, 2005
    Watching along with great interest Peter. Back in 2011 I had a reasonable slice of my capital tied up in the MF Global bankruptcy and faced the choice of going back to doing a real job (gack!) or finding a way to make an income from a lower capital base. Thankfully I'd been doing some research and testing on day trading index futures and found a way to make it profitable so I'm always interested in seeing how others approach trading with a small capital base ($15K in your case).

    Apologies if you've answered this before; what charting software are you using?

    Lol, same here! :)

    Great to see you posting again tech, I picked up some great tips from the futures trading thread(s) you and Pav had a few years ago.

    I have thought about a similar type of educational "follow my trades" thread but know I'd have trouble keeping it going so find it much easier to hijack other people's :D
     
  8. tech/a

    tech/a No Ordinary Duck!

    Posts:
    16,251
    Likes Received:
    38
    Joined:
    Oct 14, 2004
    Disappointing.

    I thought there would be a lot more interest
    and encouragement.

    At least 3 of us will be watching on!

    Rare indeed to see the combination
    of the two---derivatives and equities
    being traded at the one time.
     
  9. cynic

    cynic Well-Known Member

    Posts:
    2,122
    Likes Received:
    1
    Joined:
    Feb 25, 2011
    Fret not!

    The day is young! Near 200 views portend a vaster audience than thee and thine!
     
  10. Porper

    Porper Ralph Nelson Elliott

    Posts:
    1,253
    Likes Received:
    0
    Joined:
    Aug 11, 2004
    Hopefully there will be a lot of people silently watching this thread and learning.

    You don't often get somebody with the time and inclination to teach you how to trade profitably - the opportunity should be grabbed with both hands.

    If you are a newbie and scared to post - don't be. I am sure Peter will be glad of your participation.
     
  11. debtfree

    debtfree Well-Known Member

    Posts:
    172
    Likes Received:
    1
    Joined:
    Aug 21, 2008
    I've left a post on ASX Momentum Trade Book - Part 2 to Peter that I would be following his thread here so add another person that appreciates his time and efforts. Absolutely fantastic, thanks once again Peter.

    Cheers ... debtfree
     
  12. VSntchr

    VSntchr Well-Known Member

    Posts:
    1,665
    Likes Received:
    1
    Joined:
    Dec 27, 2010
    Lol the thread was started at 230am, less than 12 hours ago - give it a chance!
    I'll be here :xyxthumbs
     
  13. tech/a

    tech/a No Ordinary Duck!

    Posts:
    16,251
    Likes Received:
    38
    Joined:
    Oct 14, 2004
    Ahhh
    The secret to his endless time allotment.
    The man doesn't sleep!
     
  14. barney

    barney Well-Known Member

    Posts:
    1,762
    Likes Received:
    12
    Joined:
    Aug 17, 2006

    Echo the above 100% ..... There will be a squillion watchers in no time flat:)

    Well done Peter. You have given me excellent advice on many occasions which has always been appreciated. Hope it goes well.
     
  15. Roller_1

    Roller_1 Well-Known Member

    Posts:
    163
    Likes Received:
    1
    Joined:
    Sep 13, 2013
    Watching with interest too... Looks good!
     
  16. peter2

    peter2 Well-Known Member

    Posts:
    1,206
    Likes Received:
    69
    Joined:
    Jan 12, 2008
    tech/a et al. Thanks for your support. I don't mind a low key start.

    captain black: The capital base is currently 65K with 15K being used for margin purposes.

    Most of the charts will be from an MT4 account. I've got the charts looking nice for my purposes. I should mention that even though the charts are from an MT4 account I may take the trade in a futures account as my trade sizes are different to those in this thread.

    ----

    The first important difference between trading equities and leveraged products is the handling of the iSL. The initial SL is always placed in the market whereas my exit triggers in the ASX trades are not in the market. The main purpose of the iSL's are to act as disaster exits. They're there to protect capital. If a trade doesn't work out quickly, I'll exit it at break-even much more than I have in the equity thread.

    I also use profit targets (T1, T2 etc ) a lot more in these markets. That means I exit early many times, but the profit is in my account and I'll be compounding the trade risk a little more aggressively in this thread. I'll discuss the methods and reasons at a later date.

    You'll notice that I use similar methods for setups and entry. That's not a coincidence as my trading strategies are all based on my beliefs about market behaviour.

    Another important difference about trading world markets is the impact major news has on certain markets. While I can ignore most FA info from the ASX companies, regular scheduled news is very important for a short term trader in these markets. There are scheduled news events almost everyday. There is no excuse for being unprepared for the impact of these on our trades. [Note: BOJ news right now, check out the price spikes.]
     
  17. Modest

    Modest Well-Known Member

    Posts:
    1,582
    Likes Received:
    16
    Joined:
    Sep 7, 2012
    I'm all over this like a rash! :xyxthumbs
     
  18. captain black

    captain black Well-Known Member

    Posts:
    997
    Likes Received:
    55
    Joined:
    Oct 24, 2005
    Thanks Peter, is that darvas boxes in the chart above?


    You can get some cream that'll take care of that :p:
     
  19. tech/a

    tech/a No Ordinary Duck!

    Posts:
    16,251
    Likes Received:
    38
    Joined:
    Oct 14, 2004
    ** I'll exit it at break-even much more than I have in the equity thread.

    ** That means I exit early many times, but the profit is in my account and I'll be compounding the trade risk a little more aggressively in this thread.

    ** regular scheduled news is very important for a short term trader in these markets. There are scheduled news events almost everyday. There is no excuse for being unprepared for the impact of these on our trades.


    GEMS
     
  20. captain black

    captain black Well-Known Member

    Posts:
    997
    Likes Received:
    55
    Joined:
    Oct 24, 2005
    +1

    I posted a couple of scatter charts of trades in Modest's futures thread and they were good examples of keeping tight initial stops and getting stops to breakeven as soon as practicable. I mentioned earlier about having to become profitable trading futures after the MF Global collapse and this was one of the key things to achieving that.

    A trade setup should have an entry where you know very quickly whether it's going to move your way or not. Being able to take entries inside accumulation and distribution patterns gives high R multiples when done well. The trade I took on the FESX last night I posted in CanOz's DAX thread ended up as a 7R trade. Don't need to make many of those a day to be profitable. :2twocents
     
Loading...

Share This Page