On Friday afternoon, I was getting in to some fine tuning on the Xjo 60 minute chart, anticipating a little more short term weakness but that theory proved to be bunk. Instead, my main scenario, based on the daily chart, was closer to the mark. That idea was that last week's resilience would be enough to help the index pop up to new highs - it's not there yet - and squeeze out any shorts. Obviously, it could happily keep charging upward too.
Pleasingly, I haven't come to any great harm profit wise as my short positions have rallied against me but nothing has gone ballistic. Unfortunately though, I haven't got much more time to see if I can turn a profit on these trades. I'm going away on Wednesday for a short holiday and with that in mind I'm just unwinding my positions as best I can.
It's 11.25 am and on the day I'm looking for the market to retrace slowly so I'm not buying it all back straight away. I have bought back a small balance of Tse at 364 and most of the Awe short at 160. I shorted Awe at 161, kind of hoping I could get short at more like 166. It fell as far as 157.5 but is really going nowhere.
I've also bought back a couple more Djs at 500 and on the long side, I got out of Paladin at 374. I never bought the extra stock there, I found the price action unconvincing.
11.37 The market is pushing back up for another go at the highs. I still anticipate a gap filling sell off but it would be easier if the index had pushed up above 4670 first. It's at 4668.
11.39 There we go....4670.2 vs 4670.1 on September 15th.
11.41 As promised on Friday, a discussion about Joe Ross's trading bible which has been revised and retitled as "Day Trading".
This is a terrific book and well worth the expensive cover price of US $150. Actually, I'll add a caveat here. I've lent the original version, "Trading by the Minute", to friends who were getting into trading and I could see that they were pretty unimpressed. I've got the book back a few weeks later and I'm confident that all they did was skim it, put off by the amateurish text and layout. I'm pretty sure it started out as a sort of self published/small publisher thing because it's not what you'd call smooth.
So, to be more precise, someone who has been trading for some time and is realising the need to be more disciplined and systematic in their approach will love this book and read it again and again.
Joe Ross must be past retirement age and he's a second or third generation trader. Perhaps that's why he's refreshingly free of theories, doesn't make heavy use of indicators and has a method which is just as applicable to long term trading as it is to very short term trading.
He uses a few entry signals, he's incredibly disciplined with his exits, he runs positions really well and he gives you a very clear understanding of how to follow his approach.
When you first start reading trading books, you follow the examples and everything happens in retrospect. So the author will say, obviously you would have got long here and this is the point where you would have got out (for a tidy profit). It's only when you try it for yourself that you realise the examples were unusually clean charts and you're not sure exactly where you should get in and out, and why this point x, say, rather than that point y.
Joe Ross is as precise as those jokers are vague. He also makes valiant attempts to deal with trading psychology - much better dealt with by Douglas or Van Tharp - and has lots of (outdated) info on dealing with brokers and the mechanics of dealing. Actually, I can see that the original needed revision and I imagine he's edited out the stuff dealing with market access, brokerage costs and dealing delays.
I found that I could go back to this book after a few years and see useful things that I hadn't taken in earlier.
I don't trade exactly like Joe Ross, I can't do the strict discipline and I tend to be more intuitive. It's still a fantastic learning resource for traders and you'd probably find that you would use and adapt some of his methods to suit your own trading style.
12.31 By the way, I wish I could do the strict discipline, I'm certainly a lot better than I was. My way of dealing with having to cut is to enter trades at points where a cut will be low cost. It means I've cut down greatly on the number of breakouts which I take. They're great trades but I struggle when they make quick reversal failures so I'm very careful with them now.
I have to go to the dentist now, which is grim, but I'm out of Awe at 160 average, I've bought some Ozl at 145 (bought some back at 141 on Friday) and have cut half the short in Ipl at 354. Ipl has gone through my stop but I'm still hoping for a better fill on an afternoon retracement. Bought a few Fmg at 512 too as I extricate myself from another failed short.
The market got to 4674 and it's still up at 4670.
2.57 Well, I've been back from the dentist for a little while now and the market is showing no signs of the pullback I was hoping for. The balance of my short positions is much reduced though so I'm fairly relaxed to wait overnight and I'm just winding everything up for my holiday.
Murchison has had a rollercoaster ride today and is still down 10%. The stock price had fallen from an overnight price of 181 to as low as 151. After being suspended from trading briefly, the stock has resumed trading with an announcement that rumours of their JV partner, Mitsubishi, watering down its involvement are unfounded.
I think the chart looks potentially bullish with the sell off touching support and the stock recovering. I don't really fancy buying to hold overnight though as it's one I'd want to monitor. It occurs to me that lots of rumour traders will be short so it's a big chance of taking off if the rally hits a critical mass. I'm long a few as an intraday punt.
3.41 Out of Mmx again, small loss. It could still rally into the close but it's also shaping up like a pennant before further weakness. That's on the 5 minute chart. I'm clearly having trouble disengaging ahead of my mini break and I'm just trying to make something happen, which is generally unwise.
4.16 The index finished up near the highs at 4675. I cleared the decks buying back Djs at 500, Ozl at 144 and the rest of the Ipl at 354 along with a couple more Fmg at 513. I'm just short a few Fmg and long a handful of Lnc.
I've been fighting the market for the last couple of weeks after a strong first half of the month, it's probably a good time for a holiday.
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