Trading Journal Week 21/3/2016

This is the first entry of a trading journal that I intend to do every week. It’s main purpose is to keep me honest about my trading. Lately I’ve been trading alone without the scrutiny of another set of eyes and my discipline and performance had lapsed.

It will begin with a set of Levels and ranges I’ll be watching and trading for the week. Then as I open and close a trade I will tweet it and embed the relevant tweet here. It may or may not get views but it needs to be done.

Also it’s a 4 day week (pre-Easter).

Trade #1 – USDCAD I’m quite sure it failed as my entry wasn’t timed well enough for the size of my stop/risk.

Trade#2 –  EURJPY Looking at the chart below I see no valid reason to have even opened a trade. None whatsoever.

Trade #3 – AUDJPY was 3rd consecutive fail. I traded off the 8470 line which in hindsight was too minor a level. The next line below near 8430 provided support and bounces all week.

Trade #4 – GBPUSD I got every level spot on here but was content with this one trade.

Trade #5 – AUDUSD I added a new line based on current Weekly low to enter if new low was made. That’s not how I do things.

Trade #6 – USDJPY I traded correctly here. My stop got spiked during Brussels bombing events.

Trade #7 – NZDUSD Entry was correct. Target was based on AWR which wasn’t achieved even after 4 trading days. So I took the money and said goodbye.

Trade #8 – USDCAD same setup and idea as before. Moved quite well during Brussels hours where I moved stop to entry point and it got hit in the volatility. Not a mistake.

Trade #9 – EURGBP This level was too vague to have succeeded. Had I won it would have been luck. While no great harm in trying, my mistake here was not to reduce size to accommodate a bigger stop for the vagueness. Ended up a -2R lose

Trade #10 – EURUSD Forgot to tweet exit but went out for -0.5R. Wasn’t smart entry, similar to AUDUSD earlier relying on momentum and not waiting nearer to the level.

Trade #11 – AUDUSD This was another entry but much higher up nearer to tough resistance. Didn’t get the chart posted. But once it failed to break again I started adding to trade.

Trade #12 – USDJPY just like CAD above the idea and level was there. Out for zero after adding and adjusting risk, ie. tinkering with stop levels.

Trade #13 – USDCAD 3rd time lucky. Set and forget. No tinkering or adding.

Trade #14 – EURUSD level was definitely broken here. Got to +40 and just struggled to get on with it. Moved stop to zero and that’s what I got.

End of week report

 

Trade #15 – GBPJPY Wasn’t going to open another trade but this level looked too juicy.

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NASDAQ – Monthly Weekly Daily Hourly

The Nasdaq has been on fire lately so let’s see where it’s at. I just want to point out some features – make up your own minds.

On the monthly chart the obvious stand out is the perfect double top exactly at the 50% level. That’s big.

The double top on the weekly chart looks terribly like a mirror image of the double bottom of 2009.

Take your pick of the indicators on the daily chart. All giving the same message. The 200day SMA coincides with the uptrend line as first major test of defence.

And finally the hourly chart is hanging on for dear life at 2750 to remain in or above the bullish colour zone.

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Average Ranges

A conversation on twitter the other day made me realise that the concept of Average Ranges isn’t widely followed. Not to be confused with repeating ranges (measured moves) or ATR (Average True Range), Average Range is simply the value of an instrument’s high minus its low (H-L) for any given period (Day, Week, Month) and then averaged by a chosen number of periods.

Below is a daily chart of AUD/USD with the (custom) indicators I use for Average Range.

[click on chart to open in new tab]

The black indicator at the bottom shows the average range for the past 20 periods. We see that the current average daily range (ADR) for AUD/USD is 93. What does that mean? It means that on average, in any daily period, the difference between the high and the low will be 93 pips. It means that on average, in any daily period, there will be a 93 pip move from low to high or from high to low. But that is only an average: sometimes it moves more, sometimes it moves less, so lets look further. The red indicator shows the single period % of average range. This tells us what percentage of the average range the instrument has moved in the past. A quick glance at the chart above shows us that AUD/USD completes at least 50% of its average daily range nearly every day, often more. This is powerful stuff. We can be almost certain that price will move at least 46 pips nearly every day. (A notable exception is the period between Xmas and New Year). For those statistically minded, very useful information can be extrapolated from this simple data: eg, 70% of average range gets completed 4 out of 5 days; 100% completions occur half the time, etc. The blue indicator simply shows the actual range of any one period. The whole concept is based on nothing but price and the movement of price. No other TA required – no momentum, no relative strength, no trend, no divergence, no moving average. Nothing but price and the knowledge that it will move.

The idea is the same for weekly, monthly, quarterly, yearly or whatever period you wish (AWR, AMR, AQR, AYR). In any give period price can be expected to move a certain amount with a good degree of certainty. There are a number of ways an actual trading plan can be based around average ranges but that will have to be in another post.

(I couldn’t publish this without acknowledging the role of Rob @RobTTTrade in introducing the concept of average ranges to me. Videos of how Rob applies average ranges to trading can be found here here here & here.)

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Santos Can Surprise

I rarely read the financial press but today I made an exception because my wife needed a stack of newspapers to cut up. So I bought the all biggest ones and browsed through them over breakfast. In The Weekend Australian an article titled Brokers put Santos through the wringer about Santos (ASX:STO) caught my attention. I love a good broker recommendation for a laugh. Usually means they’re off-loading excess stock to the retail public. So you can imagine how I nearly spit my coffee all over the table when I read this:

Merrill Lynch analyst James Bulleen….. cut his target price to $17.47 from $17.89.

“In your dreams pal,” I thought. The weekly closing price was $10.65 and the company was having well documented problems with a major project. And how does he get to a figure ending with .47 and .89? Why not 17.50 or 18.00? And what about a timeframe? How long would it take to reach that price (assuming it even would)? That would be a 70% rise. Who are you guys trying to kid?

Curiosity got the better of me and I just had to look at the chart. I was quietly surprised. The weekly candle chart below show Santos sitting on a major support area from where it has rallied four times. In 2007 and late 2008 it rallied over $7 in the space of about six months! In early 2008 it went from $12 to $22 in 14 weeks! Yes, over 100% in 14 weeks. So yes it can be done. And yes, the analyst isn’t fooling anyone. It could happen by Christmas. So if I was a stock buyer I’d buy this chart. I’d even tolerate a run on stops below support (that happens these days). And of course, I’d have a price point where I’d admit I was wrong somewhere near $8. So that’s 20% risk v 70% reward.

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SPX, DAX at KEY Levels

Arguably the two most important stock indices, DAX and SPX are now at very key horizontal levels.

SPX 1hr – Can momentum keep carrying it?

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SPX Daily

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DAX Daily

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And here’s another chart worth posting that I’ve stolen from the blog of @gj0201 who I’m pretty sure won’t mind. 🙂 http://gjcharts.blogspot.com.au/2012/03/have-we-seen-top.html. A reflection of the rising price of crude or the leader?

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Watching Yen Pairs

Most JPY pairs have had a good run the past couple of weeks and are starting to look a little stretched.  Daily charts are looking very interesting where most charts are approaching longer term resistance. History tells us that spikes have been quickly sold into and that new lows follow. It’s probably Yen repatriation while prices are high. Actually I have no idea because all I’m really interested in is the chart.

But first, I’ll be looking for some daily ranges to the downside as price looks overheated in the short term. The following yen pairs are the clearest to me.

USD/JPY Daily – If this is the leader of the yen pairs then a breakout is clear

USD/JPY 1hr – showing great symmetry.

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NZDJPY Daily

NZD/JPY 1hr

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EUR/JPY Daily

EUR/JPY 1hr

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AUD/JPY Daily

AUD/JPY 1hr

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GBP/JPY Daily – Was this really at 250!

GBP/JPY 1hr – 300 pips in 2 days

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EDIT

Yen pairs opened the week with large gaps up then extended the gaps early in the Asian session. By European open those gaps have almost closed and daily candles are looking very bearish so far. Will add more charts when daily candles are complete.