SD-2020 TRADING WITH THE TIDE

[dg]

making this the active 2020 thread- EDIT NOTE : I had logged in this time as ADMIN and so I see these initial thread entries show as being made by DG'- Hope it wall carry some of his influence....

THINKING ABOUT 2020-
Another Year, Another Thread- Is there anything different? Hmmm- When i 1st started writing in a thread on this board years ago. I figured it would only be a short time - a few years..... until I achieved the trading/investing "Mastery" that Ira thought members here might offer. Still struggling with that desire today...
Before this board, a small group had formed at ClearStation- At that early time, DG and Bankedout offered some very solid advice to newbie traders-and introduced me to the concept of position sizing- Which ultimately allowed me to survive many trading mistakes while trying to adapt to the learning curve every trader likely undergoes.And not totally blow out my small trading account- As i had, and still have, a Full time job, the trading account was not a major focus and concern- Fun Hobby, with periodic successes and larger losses - lack of focus, lack of a defined trading approach, impulse buying , and particularly thinking the "Sky is Falling" due to the news events of the day.... taking short trades with some leveraged ETFs.... most ended poorly for second guessing the temporary volatility over a few days ...thinking it was a repeat of early November 2007- start of a -50% decline for the markets.
A few years ago, seeking the relative security of a passive approach and reducing the costs of managed mutual funds, I rolled over a portion of my company IRA (as the Investment company managing the company account could not comply with the newly enacted fiduciary standard and the curtain of the high fees they charged was evident) and a Roth IRA spread across several other brokerage accounts- and simplified my life by rolling it into Vanguard brokerage accounts. I also brought my wife's Roth accounts into Vanguard,. Realizing I could be significantly impacting our financial future by trying to self manage our future retirement assets, I divided approx 1/2 to be managed by a local fiduciary professional investment firm that I felt would be my "benchmark" for my self executed performance. This firm has models that adjust for Age, and get progressively more conservative as one approaches retirement age- As i am already past retirement age, but still employed full time, I initially eased into putting larger positions into play. Realizing the concept of market rotation is a valid and well defined concept , and that it is likely futile to try to second guess when the small volatility events will turn into that major pullback that wipes out all of the year's gains, I gradually adapted a more rules based approach- essentially outlined in the backtesting done in the December 2019 strategies thread with several initial examples- And I find I have outperformed the professional manager for 2 years in a row.
The approach is essentially a simple trend trading approach-with a focus on increased asset allocation in those market segments that have strong market momentum. and a stop-loss approach.
I will primarily start off by overweighting ETFs but have decided to include more stocks with momentum this year- and , I will likely allow myself more leeway to consider taking partial profits on higher raised stops, goal to protect capitol and the initial entry- Repeat entries will be part of the approach.
Last year's historical exceptional market strong performance -up 29% for the year, had only a few shallow net pullbacks of 4-6%- My net overall performance was only 50% of what the Buy and Hold investor would have gained this year- but I had less than a -3% drawdown on the active tight trailing stops- I also held a larger amount of cash for longer periods.
While the Bull market is very long in the tooth- since March 2009- There have been some periods of sharp declines- of -10% or more- see 2018 when the markets declined -20%- My approach preserved capitol gains and had a decent cash position to be buying Dec 24, Dec 25-
Books on momentum -like Brian Livingston presented- and Trend following advocates- Landry, Weinstein- make capitol preservation goal #1 and profits the net gravy.
I will be adding a larger % of stocks into the mix- speculative and higher Risk- but also with a tighter trailing stop.
Primarily I will refer to the % net allocations/ gains/losses in the combined Vanguard IRa, Roth and Interactive Brokers accounts-
Outside of those accounts, I hold a fair allocation to the emerging markets and global funds.
The Wife's account is similarly executed- and she wanted to diversify with some stocks, and to embrace a bit more Risk-

Since we know that the present market trajectory is unsustainable, is not in itself a reason to not be on for the ride- Just to be prepared to get off before it returns to the station. It could stall or reverse with little signal, or continue to push on.... The further it goes, the more parabolic it seems- Scaling out with tighter trailing stops make sense- but keeping a bit of a wider position as well. Remember the big 8% run up of Jan 2018?

Final Note- Over these many writings- They serve a 2 fold purpose.... Writing allows me to consolidate the fragments that are my thoughts- sometimes cohesively- and often Not so much. And, I felt it could perhaps occasionally assist another Newbie just like myself to perhaps read and take away something they find productive . I think we perhaps get too entrenched in our own thinking, and being challenged with a different perspective is healthy if we are open to it. And i don't mind being Wrong.
I think journaling and marking up charts becomes insightful- and I have found it insightful in reviewing past trades- usually for the opportunities missed .

Future Posts here will document some of my trades, some of my thoughts- additional backtests If I get the free time- and thoughts on identifying sector rotation.
Any questions or comments will be respected.
SD

[dg]

Quick note- this Am took a couple of trades based on overnight "News" events- An Iraq General was assassinated by a US Drone on the orders of our President.
Iraq- seen as a middle east player in the oil supplies- and the possible wider disruption within the region .... made me think Pre-market that there would be a large spike in the energy sector on fear of an oil disruption in the region- Oil- as an energy resource is the lowest sector in 2019- but has recently tried to make a turn higher-
I entered VDE a few weeks ago on favorable TA and exited last week - only to reenter today, but finding I entered at the highs during today's open- Similarly with RSX- a global play that is strongly tied to energy that has been a market leader in the Global markets-

I also saw my IBB position stop out on weakness today- TSLA stock higher-CMG higher , Indexes lower on the day-
As i develop time to chronicle this 2020 thread, i will add some more pertinent information as my primary focus is investing with a larger asset allocation in those sectors that appear to be experiencing stronger momentum- That has been typically Tech in 2019-
The focus in this thread is about asset allocation- and not as much about individual stocks- I Firmly believe that trying to pick an individual stock within a sector is largely a crap shoot - over a year's time - My opinion is to find the best sectors to overweight- underweight sectors out of favor- Become aware of sector rotation, and then shift allocations as momentum appears to shift- That actually requires a fluid approach to following the various market cycles- and it's virtually impossible to get in at the bottom of an impending uptrend and exit at the top of a significant downtrend- but the concept is to capture the majority of the middle ground between the trend cycles.
This works best when there is a larger swing in market volatility- and essentially delivers whipsaws in the small and more frequent 3-5% pullbacks.
As i have started tom do some backtesting in the latter 2019 strategies thread, the reality of the underperformance for gains within a strong trending market is evident with the studied trading approach- However, that was simply a good starting point for further analysis to modify the system- not optimize- to consider ways to make improvements/tweaks that would-over multiple trades- improve the reward and still reduce the net Risk- My Risk ratio was very small vs the market in 20i8-2019 , but that also delivered a less than equal profit- gain- With less Risk comes less Reward- the Goal is to find the happy medium that one's personal psychology can tolerate. Deceptive for those that have been focused on the strong gains in 2019 and forgot the -20% decline in 2018.
Would you rather Risk a 100% gain for a possible 50% loss, or a 50% gain for a 20% loss?

At this point in my life- i would choose the more conservative loss . If i was Younger, I might select the greater opportunity for the larger gain-
In essence, because i am trying to make asset allocation shifts with sector rotation as a focus- I try to capture the potential for a larger momentum gain in choosing a sector with momentum- the Tide in it's favor- and overweight that sector seeking a larger net gain- By employing trailing stop-losses, I hope to limit the inevitable periodic declines and am willing willing to reenter once stopped out. I hope to expand on this approach in this thread - the 2019 thread capturs some of what has evolved .

For the one or 2 people that I have conversed with over these years- Simplify your trading- Don't try to capture the downtrending pullbacks -
It makes such a greater degree of success to not try to second guess where the market momentum may turn in your favor- If it's trending- EMA;s in alignment and sloping up and to the right- it's worth jumping on board- Find the leading market sectors/ indexes and focus Trading With the Tide - and the market's Momentum- vs trying to outsmart the market- or to be buying at a better value as it is in a downtrend-
Sorry jim Cramer-Buy and then Add Lower as it declines to an individual stock is the Ultimate total Crap shoot- Buy 1/4 and then add on pullbacks? Get real JIM!
Suppose you select one of the 10 dogs of the Dow as your Go-To-? What if you selected GE in 2018? The Index ETF is the way to invest With Momentum- Call it SPY, QQQ, DIA- and only then should one put a small % into an individual stock -

i have been overweight Technology this past year, but also hold sectors and Spy-healthcafre- Biotech (sold today) Sold genomics- etc. Which leads me into the charting/TA approach to Momentum . next time...

[sd]

TREND TRADING- Simple concept , but not as easily implemented-due to sector rotation, and periodic market pullbacks-
While capturing a trade after a large decline and see it take a sharp turn higher as it was "Oversold" - or value investing and seeing a stock bottom and then make the market cycle upturn- Can be one's approach- and eventually rewarding- I think the more prudent approach is to Trade With The predominant trend- and to recognize when that trend is losing momentun or market favor- and seek to find that which is coming into favor-
As markets experience the business cycle- various sectors go from in favor to overbought-and over rated and expensive .... and shift into declines as value sectors then become the market's focus as being worth the PE ratio ... This type of cycle has seen entire sectors come into and out of favor- and the prudent investor would be wise to
understand this market cycle- See Ray Dalio- Market cycle: www.youtube.com/watch?v=PHe0bXAIuk0

A graphic way to understand if a sector is in favor or not, is simply viewing if the sector is in an uptrend, downtrend, or sideways range-
Trading when the sectors are trending higher and being Long is simply Trading with the market flow- momentum- the "Tide" is rising -floating most boats.
Trading against the prevailing tide is usually a short term fluctuation. Overall- with brief periods of selling, the market has primarily maintained an uptrend since March 2009- There have been some pullbacks over the short term- including a -19% decline in 2018- but the momentum has continued to Trend higher again in 2019-Indeed, 2019 has tied for a record year gain, but the pundits fail to mention the Loss that was sustained in 2018- The real average over the 2 year period is not as large as the bulls like to talk about.
For those of us that have been trading/investing for more than a decade, we remember the period from Oct 2007 to March 2009 where the markets primarily declined and lost 50% of their value-
Those that can recall the bust of the Tech bubble in 2001- have deeper scars. Those larger market declines in the same decade shook the investor psyche and paved the way for TA to offer a possible way to not simply Buy and Hold and see mammoth declines of value in one's portfolio- I'm also an advocate of staying on the correct side of the Trend- and stepping aside when the trend is in decline-
Attached is a weekly chart of the SPY during the 2007-09 period without any confusing price bars- Simply some moving averages - which when they are in proper alignment and moving from the lower left towards a higher upper right are the essence of an UPtrend- Conversely, when the emas cross and turn downwards (Bowtie) it then becomes a downtrend- One can argue over how many ema's constitute a fair assessment of what the Trend is - some will use the 50 & 200 - but for practical people- anything longer than the 50 ema is seeing a major shift overall.
Attached chart is the weekly- At what point would one have preferred to take profits on one's long term positions?

i.imgur.com/YyC8xJ8.png

With this outstanding year of gains across many market segments- Note the 1st chart illustrates the SPY, QQQ's, and the sub index -SEMI's-
i.imgur.com/rIIaW60.png

A 2 year look back shows the Semis to be the bigger underperformer in 2018- as well as the major indexes ended up losing money in 2018
i.imgur.com/p48eqLW.png

[sd]

1-5-2020 Notes-RE: Your STop-losses - The assassination by US Drones of the Iranian General Soleimani could be a major catalyst for the middle east- and the possible retaliation attempts by IRAN. Including Cyber attacks- Large institutions and algorithmic trade programs in the past were credited with the large price drops under some equities that resulted in huge drops in price that executed at a wide percentage lower than where stop-losses become market orders.
Combining a stop-loss with a wider limit attached is worth consideration-to protect your position from executing at an extremely low price. Flash crashes- although rare- can still occur, and typically are over in just a few minutes- but one's position with just a conventional stop-loss could execute at a huge % loss.
The attached limit order to the stop-loss would ensure that the stop-loss- when activated asa market order- would not execute at a huge low, but would execute only at the limit -or higher. I will be adding limits to my stops today-likely about -5% wider than the stop.


www.ig.com/us/trading-strategies/flash-crashes-explained-190503

While I realize that a Flash crash affecting the broad US mkts is an unlikely event, I'm considering placing a low limit order - -15% below present mkt prices for the VGT, VOOG. with some available cash on hand .

Goog SA article by David Lerner regarding the present market uncertainty: seekingalpha.com/article/4315134-dont-panic-sell-buy-instead-time-to-deploy-of-cash-how-and-why?isDirectRoadblock=false&utm_medium=email&utm_source=seeking_alpha

[sd]

LINKS
Places I may want to refer back to:
Portfolio Backtester - versatile portfolio performance backtester : www.portfoliovisualizer.com/backtest-portfolio#analysisResults

[sd]

Put some of the recent cash position back to work today-
I'm truly confounded by Biotech- I had added to the broad healthcare- VHT, but biotech offered a pullback reentry that gets me back in below my exit - for a net small gain should it go higher from this reentry. - My mindset is that while there is a large potential political overhang regarding the 2020 election, Healthcare has been moving higher recently- I also had been fortunate to have a biotech position - divided between ARKG and IBB - that delivered some earlier upside gains , then stopped out-but I think this industry will only gain as medical advances will hugely impact our society/longevity- The political overhang of free healthcare and endless regulation is an overhang on the sector- but it holds remarkable promise- Can't try to second guess the individual companies though!
Took another position back into some of the ARK funds as well- ARKQ- Automation and Robotics-; ARKF on Financial technology, and ARKK -
Playing around with a small % in individual stocks- and the Wife is also getting engaged ! I had purchased a small amount of SNAP, $15.11, based on an analyst enthusiastic upgrade with a $20. target, , AAPL doing well, TSLA moving up- but these and the few other individual stocks we hold or enter into will require stops to be raised on weakness or as the price advances, cover the entry 1st, then trail for a profit.

Breaking news- 7 pm Iran launches missles- at US air bases? in IRAQ!!! 1-7-20 all bets are off ! This type of NEWS event will cause a hyped reaction - but I am not going to react- It would be futile to do so as the Wednesday open will be exaggerated if this is still in the news forefront. -See how this shakes out over the next days- One never knows what will evolve- the News is often distorted and designed to make one react. Will this be the catalyst to make the market reset lower?

In terms of using TA to guide a trade- Exiting on a 1st red Elder Impulse bar- or a higher stop placed at the bar's low - was timely - the rentry after a 1st closing blue bar with a higher price-followed by a next higher- Will this capture the upturn?
i.imgur.com/nU7sXUs.png

[ira85]

This is really good, i.e. your posts since January 3. You've obviously given a lot of thought as to what your weaknesses / vulnerabilities were and how you could strengthen your skills with those vulnerable issues.

I hope some of the visitors to this board will give your post some thought. You may be paying it forward and some visitor may greatly benefit by becoming a regular here. I expect SD to write many more and many with gems of actionable market knowledge, like the January 3 posts up to today.

So to any visitors today, I hope you find this useful and hope you stop by again. -ira

Very kind IRA, Ideally I will have something now and then that might prompt a newer investor/trader to consider something they had not previously- and it may prove beneficial in their trading. It keeps me on track to write-things out- Working with a larger asset base than just the smaller trading account also brings some different challenges as I now have to take larger positions-with retirement assets at work. The Goal of investing those assets focused on market momentum, but protecting the downside Risk with stops is this year's challenge. I hope it will be net profitable and perhaps instructive-

[sd]

I added to some positions yesterday, putting some freed cash back into the markets- Ignored the noise about IRAN -
I added back into the IBB, ARKG as they had declined for a few consecutive days, and then made a tenative up (blue) reversal bar higher- That prompted the buy-stop reentry
above the swing low. Also added a few stock positions- looking for a continuation of the uptrend in 2020-

With the news all about IRAN and the missle attack they launched last night in the direction of the air bases our troops are stationed at in Iraq, it would be easy to assume the worst and react in that direction- Like similar events in the past, it is easy to want to react to that information - indeed I bought Energy-again-m VDE, and RSX on that basis- but both were already trending- What is interesting at this noon hour, is that RSX has broken out to a new high while the VDE is showing a big red bar and went down to $80.84 . I will take this pullback bar and see how it closes- If it pushes lower at the close and I can view, I may exit- otherwise, I will set a stop-loss tighter -at the low of the bar, and see how it performs tomorrow. I had recently made a small gain in VDE, and should still be in the green even with a loss on this reentry. With RSX breaking higher, and it already be a leading ETF in the Global market- I feel optimistic that that momentum will continue to the upside.
Over time - when I reacted to similar events in the news- the majority cost me money- Take the VIXY- it would be easy to think this situation was about to spiral out of control and the VIXY would be up huge- it only had a small 2 day pop, and today we are at a new low- Similarly, I would be cautious about the up momentum in the defense sector stocks- and trail a tight stop at the 5 ema. (I don't own any).

I also added back into the other ARK funds as they had declined, but are also moving back higher. One thing to mention is the lower volume of the ARK funds- tends to cause them to have less liquidity and perhaps wider price swings . For example- The ARKG had a rather significant gap down compared to the IBB- ARKG also had a 24% rise from late Oct to the Recent high in Dec., and the IBB also made about 24%, but kept more. ARKG will hold more speculative and smaller names in the biotech sector.

[sd]

Why do we React to News Events? The News is always on- and we turn to it to be informed- Yesterdays news could have become today's threat of Middle East war and destruction- a definite reason to raise a large cash position- and yet this "potential" threat fizzled out- but undoubtedly some of us reacted to this event- possibly even took a short position after selling some long positions.
I've done exactly the same thing numerous times in the past- something that seemed to be a dire event would prompt me to take a short position- as it seemed very probable - and yet, the prevailing trend would often pick back up - and my trade would be whipsawed- and I would eventually have to buy back in at a much higher price than I exited and took the reverse trade- Quick way to lose because your Fear gets triggered. That's not to say that one doesn't need to be prepared to exit a position on actual weakness- but don't sell into strength just to lock in the gain- Trail that stop-loss at a reasonable level- perhaps raise only on price weakness that drops below the fast ema- with a lower Close- Don't react intraday- Wait for the Close to determine if the reaction was actually a minor retracement- All Things i try to remind myself to do.....
I'll copy my post in the Horse Race 1-8-20 Perhaps it seems a bit chiding, but it's really a relief that today indeed turned out to fav or my approach- One of these times, it will not be so favorable.

Who SOLD everything they owned when they heard that missles were flying in the Middle East and just Knew the Sky Was Falling and the end was nigh? Or took short positions???
And Yet, we Closed today at all-time Highs on the indexes! Looked Grim overnight EHH?

If you held off putting money to work in 2020- or sold before because the market was too high and over valued and ripe for a correction, and yet it keeps pushing new highs, take comfort in knowing that Yes- eventually, you will be right. In the meantime, those that continue to hold long, keep sliding up those stops!- not too tight! As long as price continues to Close above an uptrending 5 ema, stay with the TIDE- trail a wider stop-loss- If January earnings come in meeting or exceeding expectations, this bull likely has another leg up during the month. Trend is your Friend!
JMHO.

Let me add- had their been casualties and US retaliation, that actual conflict would be a valid reason to raise cash- At least this moment in time turned out to be a false alarm- as have many that have occurred in the past. That which we fear is often worse than the future we are actually given.

[sd]

tIGHTENED A FEW STOPS-
I also tightened TSLA close- Nice gain in a short period- i split VGT- with 33 shares tight and 67 wider- the price bars appear extended above the fast ema-

[sd]

Friday , 1-10-2020
Got out early today- will make it up by working Sat- Such is the balance- It gave me time to view the market's weak performance today after hitting highs this week. Such is to be expected as it's been a pretty nervous week early on- Job growth slowed based on the jobs report- but some benefit to higher payrolls for the hourly workers-
I locked in 2 losing trades this week-m VDE and LITE- VDE was a jump back into Energy after I had sold it the prior week (gain there) because of the unrest in the middle east- That is the danger of reacting to a news event- often short lived momentum if things don't evolve in the direction that was anticipated. The pair to that trade was RSX which has moved up this week and I added more to the position today. also Added to the to ARKF-- Ark Financial innovation fund.
LITE was a chip maker that I had heard a bullish analyst report for last week- but it never got out of the base. Today it got downgraded and it dropped below the base. It had pushed down- almost hit MY stop-loss intraday, went back higher but still down -2% , so I elected to sell it before the close $79.68.
I had a small cap position that hit my raised stop-loss this week as well. Earnings will be important - and there is some talk that due to the big run this year,

The decision to ADD to the RSX position was based on it's positive existing momentum, and foreign exposure- I had decided I will add a larger % exposure to stocks this year- but the majority of my positions will still be in ETFs. In an IRA account I have the focus primarily on Intl and foreign markets and emerging markets-All through American Funds-Which also had a decent 18% return on the year (2019) - but those markets are definitely more volatile and also are "cheaper" PE wise- If the world economies can continue to improve, having some wider exposure than just in the US provides some diversification- and possibly more upside potential- but also more volatility to be expected. I have to take the long view as those holdings are in mutual funds I cannot actively place stops in -

With that noted- I decided i would take some cash from the positions that stopped out (still considered as "Unsettled" cash; so I have to hold these buys for 3 days min to avoid a trading restriction))
I bought some BABA, BIDU, KWEB to give specific China exposure....
Overall, it's been a good week- at least with gains on paper.

[sd]

A friend suggested i take some profits in TSLA- a recent momentum acquisition: and he permits our occasional exchange of ideas to be included here:
" I do find our exchange of ideas generally stimulating- It keeps me on my toes on occasion-
For example- I do not know how this will work out, but your prior comment in the other e-mail
"A quick TSLA went down today. You made some money. If I were you, I would sell it now and pick them back later, since the valuation is very high. (Read the article.) You are a disciplined trader, but don't forget we are here to make money. JMHO"

I totally agree that the valuation is very high - and that there was a small pullback Thursday, as well as no net gain today- I was able to view the market this pm, considered your suggestion to take some profit off the table, but instead chose to not react to a very minor pullback and blue bar as it is still holding above the fast 4 ema- This is not yet an indication of a price reversal- simply a potential pause at this point.... While momentum can often find a strong run of green bars, a periodic shallow pause , blue slower momentum is also common and - until the trend is violated by a lower bar closing below the fast ema- I want to have the discipline to allow this the opportunity to trend higher- View the chart of the past few months -Oct 28 - where price started trending higher- and then transitioned into a tight consolidation, and then broke out higher - Consider if you -or I - had bought TSLA the day after the original breakout on 10-24- a big gap move up- When would you have made your initial sell? On the 1st pullback blue bar?
My simplistic observation is that as long as price can close above the 5 ema and is in an uptrend- stay the course-
A Close below the 5 ema is a reason to consider to raise the stop - ARE the emas still trending or are they sideways? If sideways, and compressed, that is a different analysis-
The same signals . Please take time to review the recent chart and trending periods- The Daily signals are not all successive higher green bars- reacting to a small pullback bar as your primary signal to sell is just a reaction to the daily volatility- because price pulls back from a large green momentum bar is not necessarily a sign of impending failure and price reversal/downtrend- - Using the emas as a average to refer to the price smooths out the daily volatility, and can potentially encourage you to stay longer in a winning uptrend.
Ultimately, a trend may last much longer than you expect- Those minor pullbacks- if limited to stay within keeping the uptrend viable- have to be allowed- Eventually , over different multiple trades,, price that trends and continues to Close above an uptrending fast 5 ema is the focus- When that trend is violated by a Close b elow the 5 ema, Consider the Trend to be in jeopardy . TEST this out by backtesting other positions you own- or are considering. View where you would have preferred to be trailing a stop-loss- I normally would trail between the 10 & 20 ema- and only tighten on a trend violation Close under the fast ema.

Since TSLA pulled back yesterday and again today, it is still well above the fast ema...and not violating the present uptrend- YET- although it likely will, to cut it off short will not give it the opportunity to become the even greater momentum trade ...... If i were a Florist, i would use the analogy of cutting off the bud before it reached it's full potential bloom. When we garden at home, we dead head the obviously spent bloom.
SD

i.imgur.com/lG4oAUQ.png

[sd]

Overnight reflection brought some added considerations:


The suggestion to consider taking some partial profits on a trade has  merit- The question is When, where, and how much of the position?  Individual price bars can often indicate a topping in the trend before price actually shows any decline-  A shooting star-tall tail Doji  for example may signify a top in price.A gap away move higher and wider from the  fast ema- that does not get any follow through on  the next few days may  signal a short term top.A high momentum move- generally referred to as  'parabolic'  is recognized as not sustainable-  We just don't know when it will run out of momentum. It could be trailed with a tight stop at the low of each closing bar- or a stop-loss  moved up daily at the fast ema ,  or a very high % limit sell could be set to capture another up move. 
These and other price action signals can help the active trader make timely decisions which capture gains  before a more substantial decline occurs -That has not been my methodology.     My present approach is based on waiting for that   more substantial decline- CLOSE below the ema - to occur .   The goal is to stay longer in a trade for a potentially larger longer term gain.   i  still  think this is my best method  for being in a sector or index  type ETF-  Along with an eye on the status of the "market" indexes-  If they're trending  decently,  then many of the market segments will be trending -or potentially leading.  That said, there is a sentiment  that you continue to hear in the CNBC shows that  believe the market is somewhat highly  valued and growth is expected to be slower this year-  so earnings and companies expectations are critical to be positive in order for this bull to continue.
As I've increased my exposure to individual stocks this year,  I think that warrants a more active approach- particularly if trending into earnings- As i've mentioned before,  Individual stocks can potentially be  a much higher Risk investment than some index that holds 30 to -500 companies  or more.  Also can potentially be a higher reward.  I'm specifically experimenting with that theme by purchasing BIDU, BABA, and KWEB- Friday.  Both BIDU and BABA are large  leading components of KWEB-  Their momentum up is also seeing the KWEB trending higher but at a slower rate, held back by some of the companies in the index that are not doing as well.  I expect these will trade in tandem- and when the momentum stalls for one, it will also stall for the others.  If They will gain enough that I can raise a stop-loss to Break Even,  That works.  If the momentum stalls, i don't want to give them too much leeway - to decline very much-  Will  see how this evolves.
     Individual stocks- I tend to position size  more volatile or speculative stocks with smaller positions- I'm willing to chase some momentum already in play- TSLA was a good example-TSLA can also be very volatile- and have a large gap  up or down that  AAPL  likely would not-  A lot of short covering in TSLA I suspect-  so as I try to balance  my standard methods with something that can potentially be much more volatile,  a tighter stop-loss for part of the position  would be prudent .  And as I  consider my position size- I also need to consider the potential for volatility-  TSLA  is overweight as a position  simply   based on it's greater Risk potential compared to my larger position in AAPL. 
So,  I will see how things evolve, and perhaps adapt a slightly different approach to "stocks"-  but I'm still seeking to hold a position for the longer term as long as price behaves.For example, I entered SNAP $15.11  3 weeks prior with a modest position.  In that period of time, it has only had 1 bar Close below the fast ema- That  would prompt raising the stop- but as long as it's trending well, no reason to trail a stop too closely-  While it is now up 15% above my entry,  my present STOP would only capture 10% approx unless I tightened it on a future weak price bar.

i.imgur.com/KiNzCLG.png

 I'll put this in the strategies threadThanks for the suggestion.  SD 

[sd]

aDJUSTING WITH A TIGHTER STOP ON A PARTIAL POSITION- TSLA -

i.imgur.com/aPZBBN3.png

2:30 pm 1-13 Best current Example favoring the possible benefit of trailing a stop-loss-
In this example, my close stop would have been hit on a minor dip penetrating the fast ema- I normally would trail @ the wider stop until a Close under the fast ema.
Trying to be patient and capture a possible larger gain vs capturing a smaller initial profit- With todays strong move higher, I will leave the stops as shown and see how Tuesday works ....

i.imgur.com/DvgdVwH.png

Strong into the Close- will there be more upside tomorrow? Worth taking some off the table if it pushes higher again by 10%- Limit sell $575.00 for another big momentum move. stop being raised...
i.imgur.com/WRX6m15.png




1-14-20 2/3 sold on a higher limit-
2/3 (8 shares) sold today in the opening few minutes- i had considered a very high limit sell - blow off high up move- but common sense prevailed and i reduced the limit to $544.00 - which activated soon after the higher gap open- Price went a bit higher, but closed lower on the day- I have moved the remaining stop-loss (4 shares) to $520.00.
Tech has been a big market leader, and today stalled- Is this a warning sign that the Jan up move is losing steam? Perhaps-
On the other hand, is this some sector rotation underway? My positions in healthcare and biotech all were higher today - IBB + 1.64, ARKG 1.08, VHT +.67.
i.imgur.com/g5zxTyQ.png

[sd]

IRA POSTED IN THE WEEK 2 HORSE RACE THREAD-- A situation many find themselves in- I respond with my perspective in this post later-

After I finished the post above I remembered SD made some very thoughtful observations about AAPL in his December 24 post. He noted AAPL had a two year average annual gain of 33.6% for 2018 and 2019. But that same two year period had a gut wrenching drawn down that turned a 36% annual gain to early October into a 7% loss by late December 2018. It was the over 100% gain in 2019 that saved the two year out performance results. Strong performance and momentum didn't save AAPL from that correction. I'm over simplfying to think it can weather another risky situation without another draw down.

What would I have done if I had been holding AAPL and saw it dropping and a substantial gain was disappearing. My history has been to buy and hold. I've tried to learn a thing or two about more active trading, but I have only done it occasionally and with speculative stocks. So if I had been holding AAPL in all likelihood I would have held it and would still be holding it today. I'm doing that with MO right now. Great long term performer currently going through a difficult time. How will it work out? It might be like AAPL and come back. Or it might be more like GE. We'll see. I've certainly had buy and hold decisions blow up on me. I've under-performed by being too conservative, e.g. holding a good bit of cash and holding some poor performers for too long. Frequent trading and buy and hold both have risks. SD did some back testing to see how some different strategies impacted his results. I love that. Empirical results, not just opinion. Keep up the good work SD! -ira Oh, yes I want ViXY short as my default. But AAPL long this week.

Response: SD: I think it is best to choose what suits your comfort level, personality, Risk Tolerance, and Time Horizon-
With that being acknowledged, I also think that being willing to question the status quo approach one has been accustomed to believe is the "best" way for financial security is worth a periodic review-
Picking the best stocks to hold for a very long time- years- is indeed a roulette wheel -crap shoot- The market dynamic is constantly changing- As you noted - GE...It was the final original DOW component- finally ousted from that status - Nothing wrong with selecting strong dividend stocks- but when they fail to continue to perform, and they roll over and decline - not only are they losing $$$value, but consider the net loss of holding a declining asset for a number of years- As Inflation tends to average 2.5% / annum +/- - a stock that has declined from $100.00- over a 3 year period would need to get back up to $ $107.50 to get to "Breakeven"- and -if other stocks had appreciated at the average 7.5% in that 3 year period - The catch-up price would actually be +22% more -
The example in MO is that it Hit it's High in 2017 $67.50 and had lost a substantial % in the decline since then- down about -40% at the lows- in asset value- I don't think the dividend payments can justify the asset loss of value- And a similar case can be made of GE-
These are both once great companies with strong businesses, but the market now tells you that they are no longer in favor- Also, the price action clearly tells you that these companies are likely not safe harbors for your assets going forward- Other than periodic pops higher - what will ever turn these companies around to be favored by the market?
In Fact, The buy and Hold market investor outperforms the average market trader and market timer by a significant margin- likely by 50-66% over time as the market timer jumps out early on small gains, reacts to minor news events, gets whipsawed with stops, and gets back in late after an upmove surpasses the price from which they exited.
For a stock such as AAPL - It has made a huge recovery from where it had recently declined- I think a good rule of thumb is to exit a stock once it breaks down- and my simple belief is that once prices and emas are inverted- 10-50 declining- it's past time to be out and on the sidelines. When the momentum is to the downside, it often is stronger than on the way up- Exiting from a position you own on a decline simply may free you up to be more opportunistic to repurchase more of the shares at a lower price- The issue with individual stock ownership is that you usually do not get enough diversity in the sector selections, and if you hold- say 10 stocks as your primary portfolio- What are the odds that your 10 stocks -or more- are all sector leaders?
Why not simply BUY the sector index- with an ETF - and dilute the Risk, but get the market performance? SPY gives about a 2% dividend, and gained 28% +/- this past year.
What did MO do ? Over the past 3 years? With any individual stock holding, you carry a greater % for larger Risk- Not the "Safety" you think holding "Blue Chips stocks" that can fall out of favor-

I'm not a good example of being a prudent investor- as I'm at an age- where I am supposed to be protecting I disagreeets vs trying to grow them further with a momentum approach- But- I employ relatively tight stop-losses and will end up holding a larger cash position when the market tells me that my momentum approach is not working-

I would encourage a diversified ETF portfolio- worth serious consideration- or even broad fund indexes -for the majority of one's assets - and perhaps 10-20% of those assets applied to one's individual stock trading- and perhaps a look at some of the dividend aristocrat funds that give one ownership of the best of the best in one simple wrapper vs trying to select from a lesser amounts of individual stocks .

I think that believing you are consefrvative by simply being willing to stay the course and HOLD a losing investment does not consider the "Opportunity factor- You could liquidate the losing position and apply those assets towards something that had winning momentum-
The AAPL example is an opportunity to have exited, and reentered later following the decline- owning more shares, and getting a higher gain with a reduced Risk-
Granted- a stop-loss approach gets chewed up with a minor -5% decline and that moves higher- a decline of -10% is marginal- but the decline from $220 to $140 - with no guarantee that it would ever turn back higher- is indeed an act of faith to continue to have held - Consider that other investors may have felt that their investments were worth holding as they declined- The names are legendary- but almost forgotten in the annals of stocks that eventually went bankrupt and were delisted- and only the investors holding the proverbial bag recall that lesson. Or those names.
Did i mention that I hold some AAPL- and it has had a great momentum run- time to be sure the stop-loss is adjusted a notch closer-