Trading Journal 20160203
1. Trading Journal
2. Tip of the day
As explained in a previous post, Shorts entered after a squeeze offer better visibility and have higher probability of success. So, the alert pad came back quite full. Most of the signals are frequent flyers on the short side.
Shorts are like a glasses of wine, they tend to be depleted, so they require regular top-ups. Let:s not complicate things here.
Here is how to read the above table
- Stop Loss: it has a dual function, one obviously to put a quick end to a bad trade for now. The second function of a stop loss is to calculate a position size. Those are isometric staircase stop loss using a multiple of ATR 2.5 or 2.6
- Limit: Entry is a choice, exit is a necessity. This has been severely back-tested and reinforced in real life trading: this strategy works best over time if we do not chase stocks. Stop Loss and Limit are used to calculate position size
- ATR: Average True Range 20 days, simple average.
- Weight: suggested position size. This is a Fixed Fractional Position Sizing method or equity at risk that assumes -0.10% risk per trade. This is a clean simple multiplier
- Risk Adjustment: this is the -0.10% factor
- Equity at risk: position sizies are rounded to the nearest lot and this gives residual equity at risk
- Ranking order: the bigger the better. For a same risk budget, the trade suggesting the largest size comes first. There is no “qualitative/fundamental” assessment here. Size is a primarily a reflection of the volatility signature
For the record, I have placed orders on some of those ETFs. I am not suggesting You should buy/sell/short sell or buy to cover any of those signals.
As You can see, the numbers at the right side of the charts are the same as the ones on the table. In fact, I go through every chart and write those numbers.
SJNK is another junk bond ETF. It has low volatility and clean trend. Those are rare and nice shorts: bearish calm
On the Long side, the information is below the swing point. Interestingly enough, the algorithm flagged a partial exit shortly before this re-entry. Re-entries are possible only after a partial exit has been performed.You
The logic is simple: take risk off the table before adding some. Adding to a position with open risk compounds risk. It works until it does not
Tip of the day
Whatever asset class and time frame, we all trade the same thing: risk. So, the first order of business after entry is to reduce risk.