Chart study is interesting- Actual account- I had added to Cure position by 50% this week as it moved higher in the consolidation- I thought it looked promising- but now it looks weak- I'll review my stop-for Monday- Perhaps split the stops- PBE stopped out on weakness this week for a minor loss - have to update the actual trade- TDIV moved higher- on momentum after a lackluster week earlier- Nearing prior high, DTN moved up to a new high- Had a small momentum gamble on Baba-stopped out-no pain- but no gain- AAPL moving up nicely this week- Minor position- Luster may be coming off the healthcare/biotechs- will see where it goes-
I believe my math was correct- but in error on calculating a 300% gain-Still -better than the prior method. The account value is simply 3x the starting value (1,000.00) - a 100% gain = +1,000.00 a 200% account gain = net $3,000.00 acct value of $3,000.00
This following chart adds a moving average - I personally find moving averages useful as a graphic -something that helps me visualize what price is doing in terms of trend direction. A moving average lags the price action- it is constructed bar by bar when that bar closes- moving averages are not leading indicators- A rule based approach can be constructed employing a moving average to give a sense of direction. downtrend, sideways trend , uptrend- if one is a long only trend trader- one wants to stay out of entering in a downtrend. wants to recognize a consolidation occurring, and wants to be long in an uptrend. This chart is illustrated with a moving average- a set of "rules" based on closing price bars relative to the direction of the moving average- (cannot react intrabar -volatility swings-can only react when the bar CLOSES- ) in this case of the monthly chart- one has to wait for the month to end -evaluate the bar and make an evaluation then. Many of us cannot be that hands off in our investing-much less our trading-That may be a negative for the one, and a positive for the other- I tend to want to react to price volatility swings- and have to personally discipline myself and remind myself that as a swing trader I'm looking for an ongoing trend to continue-and restrain myself from reacting too emotionally- and in too fast a time frame at investments, and perhaps not fast enough in my trading account. My opinion is that one perhaps should not have a "one size fits all" approach -investments (longer term) and trading are similar- but done with different glasses. One can see if an approach on the one could be successfully extended to the other - At this thread gets more focused- I will try to do that comparisom for myself- Back to the Chart at hand - Yes, This is a Monthly Chart- and a simple one at that- But, a Chart is a Chart, is a Chart-meaning that what occurs on one time frame- also occurs on every other time frame . and if a moving average included in one time frame with some "rules" appears to work, it could be considered worth exploring on different time frames- over wider periods-to see if it also could be applied with some success. One could change the particular moving average time frames- or from a simple to an ema- and compare whether it would have benefitted one's trading - While this chart is 3.5 years old- it only has some 40 bars of price action- so this is a very narrow and coincidentally trend "cherry picked' chart to start with. Looks promising initially through rose colored glasses. Best to start off Simple though- and ease into more complexity gradually.
FOLLOWING THE SEQUENCE OF A SINGLE MOVING AVERAGE, INTRODUCING ADDING AN ADDITIONAL MOVING AVERAGE- tHE ADVANTAGE OF MORE THAN A SINGLE MOVING AVERAGE IS THAT IT GIVES A SENSE OF PRESENT TREND- WIDER TREND- AND ONE CAN HAVE AN EVEN LONGER MA REPRESENTING THE RELEVANT WIDER TREND. sOME PEOPLE CAN EMPLOY A MOVING AVERAGE CROSSOVER APPROACH FOR ENTRY & EXIT SIGNALS- sINCE MOVING AVERAGES TYPICALLY ARE LAGGING- USING MOVING AVERAGES IN THE SAME TIME FRAME MAY WORK- BUT ONE COULD TRY TO EMPLOY THE NEXT LOWER TIME FRAME MOVING AVERAGES TO GET MORE TIMELY SIGNALS AND REDUCE THE AMOUNT LEFT ON THE TABLE- cOMES AT A COST OF MORE POTENTIAL WHIPSAWED SIGNALS. tHE PLUS TO HAVING A SET OF RULES CONSTRUCTED WITH 2 MA'S HELPS DEFINE DIRECTION, ENTRY AND EXIT SIGNALS, AND COULD BE THE BASIS FOR AN APPROACH THAT KEEPS ONE OUT OF A DECLINING MARKET AND IN A TRENDING MARKET.. Sorry if the caps offend- not intended. The monthly chart with 2 moving averages looks pretty smooth -uptrending- following that monthly chart, is a weekly chart- with the same moving averages- Different picture and then price is ignored in 3rd chart- just ma's
iN THE DTN POSITION- price is slowing and consolidating- a $75 stop will lock in some gains and give some room for volatility compared to the close.
FOLLOWING UP ON LOOKING AT CURE: TAKING A VIEW OF THE WEEKLY CHARTS- w2 chart illustrates the various periods of price reversal to trend- and following pullback w3 illustrates just the turning points - where trend ended and declined and then resumed the uptrend- consider- that in the sum- all that occurred inbetween could have been ignored as just "noise" and relatively inconsequential. What is it i am trying to learn? As a trend trader- perhaps it is staying with the trend and allowing it to tell me when it is over- and not react to the noise that is between the turning points.
CHART OF CURE -FRAME 1- DOWNTREND TRANSITION INTO UPTREND- What I think can be learned from this Frame view- is that when price is strongly downtrending- it may take a considerable effort to get a trend reversal going- In this example- the 1st reversal try fails- but the initial criteria to enter the trade long was met- have an upturned ema and higher closing bar- In this example- it illustrates that there is a difference between a decline in a downtrend- and a minor decline in a predominant uptrend- Both need to be treated with suspicion- but less investment perhaps in a downtrend reversal than in entering an uptrend pullback= this is a money management consideration to reduce the Risk of a more speculative trade.
Just a footnote on adding to Cure LAST WEEK while in the sideways channel- It did not move directly higher as i was hoping- It took a week or so- By adding to the position while it was closer to my stop below the consolidation channel, I narrowed my RISK - I was comfortable in doing this because i have had a nice move higher from my original entry. Today's action moved in my direction- higher. To me, this reinforces the recent multi-week consolidation range as having become a more substantial support level now that price appears to have "broken out" higher.
Following up on a chart study of CURE- Cure went into a multi-week decline soon after starting off it's IPO and attempt to move higher- focusing more on the multi-bar decline had been using the weekly chart BY looking at a Daily chart of Cure following it's downtrend, and applying my typical entry approach, I have losing trade after losing trade and would have sustained very large losses, as well as damaged my resolve to apply that approach going forward. Why does this approach fail so consistently in this particular chart? PREDOMINANT TREND- I was going long based on a reversal of the predominant trend- the 1st reversal attempt following a sharp decline often tests the resolve of new buyers-with pullbacks- or the reversal could simply fail and the downtrend lower resume. The ensuing trades caught a period of choppiness where buyers and sellers simply battled for the low volume # of shares- also - leveraged ETFs are dangerous- in the way they are rebalanced daily- they may not accurately reflect- over time the actual moves of the underlying- index- as well as exaggerating those moves- My 'preferred' method sees a pullback (normally in a predominant uptrend). This chart example is on a Downtrend- and illustrates one reason to trade With the Trend- at least for myself. Additionally, following a reversal bar or two, my confirmation bar closes above the upturning ema- and the entry is on the following bar- Then I get nailed by the wide volatility of a gap down stop executing well below my entry on many of the trades- (assume I would raise the initial stop up to the low of my entry bar after the trade starts in my direction) , eventually up to B.E. Break Even. Since the trades are taken within what is a sideways chop zone- I get chopped. There was no way to Know that it would be a chop zone until after the fact- but one would get suspicious after a losing trade or two. Also- MHO- if one takes a counter trend trade- the Risk is higher- of the trade failing- Money management might consider using a lower entry amount initially. Note that my "safer" entry signals were anything but safe in this condition- They got me into the trade somewhat late, and just prior to the topping of the momentum . I repeat something I saw on a video with Alan Farley- (hard Right Edge) - The best Entry is one that is closest to the point of Failure- It reduces the amount one has to Risk before being proved wrong and out of the trade. I like the concept- something I'm moving towards -slowly. Going forward, I'll look at using a faster chart -2 hour- and see if it improves the results compared to the daily chart- making for more responsive tactical trading- (my belief) .
Usually an EOD trader- caught this drop intraday weakness - raising the stop here on 1/2 the position- with a limit to repurchase same at $117.