[lesson] 2017 w9: Updated trading strategy- entry and exits details

Foreword

I sold off quite a number of positions on friday as they were proven wrong( will post a bit later as a summary). it is definitely better to lose a bit than to lose everything...

After reading way of the turtle (find it here), it showed that a number of trend trading backtested-strategies are profitable (ranging from 40-60% returns per annum). but it seems that a good fund manager only seems to be able get 20-30% max? One of the reasons is because of the inability to execute a trade as per plan, So in my earlier post (here) i sort of outlined my objectives and rough  trading strategy. so today's post will be about the DETAILS. I've been talking to a few of my trading friends, and it seems that i am still affected pretty much by emotions.

Strategy

My aim is to enter counters for: 

• short term : up to 50days; ( pure technicals)
• long-term:  more than 200days. ( need to do some fundamentals)

Trading methods (which i am still learning), has to be simple and clear, so here it goes.....

SLTRW's current strategy (revised)

Identify the potential play for the selected counter....

• Reversal
• uptrend
• breakout

Plan. based on the trade play, and expected time frame (short term 50MA; long term 200MA)

• Reversal:

changes in trend, higher lows.

Enter when the price is about to break the trend.
e.g. when price is above 20MA and just below 50MA

exit
when price fails to remain above the MA you entered for
e.g enter based on 50MA, but price cut below 50MA. (trade invalidated)

• Uptrend

identify the dynamic resistance that the trend is respecting

if the counter trend respects 20MA, 50MA need to be uptrending

if the counter trend respects 50MA, 200MA need to be uptrending

Entry: Enter only when price enters an area of value, aka close to the MA it is respecting.

Exit: price goes below price and stays for 3 days....

if price stops respecting the MA and cuts 1/2 way to the next timeframe.
e.g. respect 20MA, but price cut down 20MA by 5 bids.

• Breakout

Entry: Need to have consolidation (3 months or so), price is above 50MA/200MA.

buying needs to be accompanied by volume.

Exit: if you entered based on 50MA, price cutting down 20MA

if you entered based on 200MA, price cutting down 50MA

Conclusion

Subsequently, i hope to share investment/trading strategy. 

which revolves around having a core position and trading the in betweens.