Chart Watch 2007-01-11

Riversdale Mining Limited (RIV) closed below our set stop loss today. As part of our trading rules we should look to exit tomorrow.

Reconfirmation of the trend if the 3, 5, 8 EMA start to turn upwards over the next coulple of days. If you look close to the end of November this was the case.

Traders with positions should close as per our trading rules. Reconfirmation of trend can signal a new oppotunity of entry and RIV will stay on our watch list.

Eastern Star (ESG) again closed on our stop loss.

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Joining Trend

I’ve been reading a candlestick trading book and when I reached the end I was extremely disappointed. The book discussed the full range of candlestick formations, and the psychology behind them but it didn’t discuss how to trade the setups. No entry, exit or failure rules were defined.

After coming to this conclusion about the book, I realized this blog has missed an important step on how I trade. I blogged about an entry in ESG that was possible when it bounced above the count back line, but that isn’t a situation I have ever traded or will. The count back line isn’t intended to be traded this way. Trend trading isn’t about picking bottoms. It’s about joining an established trend, or joining an established trend after it has re-confirmed continuation.

Joining an established trend is an easy scan using MarketNinja or most scanning programs. I look for consistent separation of the short and long term Guppy MMA. I then look for an entry with minimal risk, which is close to our count back stop loss and provides me with minimal risk.

Joining an established trend after it has re-confirmed continuation (pullbacks) is about waiting till after the short term group has contracted, and indicators show the 3, 5 and 8 EMA’s are again separating. This provides more confidence that the trend is intact an entry is available at less risk than guessing the trend will continue.

Trend trading is about using our defined indicators to determine entry and exit of all trades. Using each indicator as its intended will provide the most profitable results. I hope to has some examples of each of these setups in coming blogs.

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Eastern Star, ESG

Late seller closes ESG on our stop loss (0.275), but not below. We also had a intra-day low of 0.27.

Short term trend was broken today, long term still looks intact. If it looks bad tomorrow I'll be looking for an exit.

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Eastern Star, ESG

Entry opportunity provided today for aggressive traders with ESG falling below our stop loss and rebounding above. 0.285 available at of time of posting. This provides an opportunity with a close below 0.275 as our stop loss.

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Market Ninja

First screenshot of the work in progress Market Ninja.
The scanner, Market Ninja, is designed for me to easily download EOD data for the ASX and create scans to filter this data. There is still a lot of work to be done before it is ready to be released (freeware), but is currently in a usable state for my purpose.

The idea of the scanner is to load data into columns. This is currently configurable through editing a text file but will be added as a dialog. The current columns supported are only the basics (open, high, low, close, MA, EMA, Volume, Average Volume) with more functions will be added as required. You have an unlimited amount of columns you can create.

Once the columns are defined and loaded, a complex filtering system is available. Greater than, less than, equal to, between, in, not in and many more conditions are available to be applied to a column. This allows you to reduce the data returned by a set criteria without requiring the data to be re-loaded and scanned. This improves speed of changing filter settings over scanning solutions. The filter setup for scan is automatically saved with the scan so it can be re-used next time the application is run.

My aim is to also have available a chart below to the scan results to quickly display the current chart with a few indicators applied. This will speed up my scanning process before investigating the stock further in a more advanced charting application.

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