Temuco's TA Trades

Discussion in 'Journals' started by temuco, Jun 20, 2013.

  1. temuco


    I've been reading a few journals here at ET with interest. Inspired by the technical analysis debate in a couple of them, and even more so by Rearden Metal's actual trading journal, I've decided to start one of my own.

    I am starting with a $40K IB account, and my goal is simply to trade based upon my understanding of technical analysis. I will post the trades here, with a chart showing my TA basis for the trade, and I will include a screenshot of both the opening and closing transactions. I will make every effort to post in real time, but circumstances may at times dictate that I am unable to post until after the close.

    My goal for the journal is simple: A gain of 20% gain within a year without a drawdown of more than 20% below the starting equity.
  2. temuco


    First trade: Long SDS at $40.80 based on the SPX breaking its November 2012 - May 2013 trendline.
  3. dbphoenix


    How are you defining "technical analysis"?
  4. temuco


    Thank you for the question, dbphoenix.

    By "technical analysis," I, myself, am referring to the analysis of price as recorded on charts or "graphs." My trading decisions are based primarily on support and resistance levels determined from prior highs, lows, and areas of price congestion or consolidation; and I augment that analysis by the use of trendlines, certain chart patterns (e.g. flags, pennants), and to a lesser extent, volume.

    Thank you again - and I have a good thick skin and an "always eager to learn more attitude" - so if you feel you can be of any assistance to me going forward, I welcome your comments and criticisms.
  5. dbphoenix


    Well, if you're going to pursue patterns, you may be much less successful that you might be otherwise. Here, for example, you've entered a trade because, I assume, price has broken the trendline you've drawn. But the key here is "you've drawn". The trendline is in your head, not in the market. Therefore it cannot act as support or as resistance; it can only do what it is intended to do, illustrate trend, or the lack thereof.

    What is in the market is/are the last two swing lows. These are not drawn by the trader; they exist independently of the trader. And price is far more likely to find support at those swing lows than it is off a trendline of some sort.

    Currently, price is at these lows after having dropped to 93, which is coincident with the swing highs in April, again points which are in the market, not in the trader's head or a result of a trader's calculation. This may be of no consequence at all, but it is at the very least cause for vigilance with regard to the progress of this trade. You may find that your trade ought to be in the opposite direction.

    The best support and resistance exist independently of the trader and independently of any sort of calculation the trader might make.
  6. temuco


    Thank you, dbphoenix. I am aware of the two swing lows to which you refer. I do have a limit order to take half of this position off at 41.63, a few cents above the June 6 high for this instrument; and a close at or above that level will be required for me to hold the position overnight. Your point concerning the subjectivity of the trendline is well-taken, and I thank you for offering your guidance.
  7. temuco


    Price has had two tries at the support level shown. Closed the long SDS at $44.14 for a $330 profit. Today's high and the June 6 low are the levels I am watching to determine possible future opportunities.
  8. dbphoenix


    I assume you mean 41.14. Nonetheless, why did you pre-empt your plan and exit early?
  9. temuco


    When SPX didn't break on the second try at 1599, I thought my money would be put to better use elsewhere, specifically, an opportunity to short crude. To place the order, I needed margin, so I closed the trade. Crude came within three ticks of my sell limit to go short.

    I spent the rest of the afternoon waiting for the SPX to retrace back to the crime scene at 1598 for a chance to short.

    In hindsight, had I traded ES instead of the etf, I'd have had the margin for both positions. I could have done better.

    Thank you for your comments today, dbphoenix.
  10. dbphoenix


    That's why I asked how you were defining "TA". Price paused at support (actually just above), but there were never any indications of a reversal. In fact, the intraday downtrendline (an appropriate use for it in this case) was never broken, hence no reason to exit (incidentally, if you plot a trend channel beginning with 5/21, price bounced exactly off its lower limit; whether or not it continues to decline remains to be seen).

    Hope you can make use of this.
    #10     Jun 20, 2013