Highlighted Trades - 04/18/2024
We saw 6 trades - all long - across 2 tickers today. Let’s check them out.
Let’s start with the simpler of two tickers. We made a long on FITB in the morning, with no re-entries. We made 0.20% here. I think our entry here is just okay. The main concern I have is that the Kijun-Sen like is pretty flat, which is a warning sign for a lack of directional momentum. But if momentum in one direction is strong enough, there’s cause to ignore this. In this instance, I think our momentum was too weak to make that claim - because we entered on a solidly red candle. If we’d entered on a green candle, or even just a smaller red one, I’d be more inclined to ignore the flat Kijun-Sen line. But the red candle suggests visually that momentum is turning around, or at least weakening - and we can see immediately afterwards that’s exactly what happens. I wouldn’t say that makes the trade necessarily undesirable, but together, these 2 red flags make it pretty questionable.
I would have taken this trade in spite of these warning signs, but I likely would have under-allocated it.
Now for a chart that’s a bit more complicated: the 5 long positions we took on ES throughout the day. Overall, we lost 0.33% here - and that bothers me because, if we’d just held our position until the end of the day, we would have made a solid profit instead.
I think there are 2 ways this could have been avoided easily. First off, I don’t think any of our re-entries are particularly appealing. Shortly after our first stop-out, MACD goes totally flat, and then negative. This is a red flag, but if MACD returns strongly, it can be mitigated. Unfortunately, that doesn’t happen. All 4 of our re-entries have a MACD that’s slightly positive, but significantly weaker than the MACD during our initial entry. If you took that first stop-out, and didn’t re-enter, you successfully cut your losses to just 0.19% - more than a 40% reduction!
The alternative way to improve this trade - and I think it’s less likely I would have done this - is to ignore the stop outs, and hold until EOD. If you did that, you made a 0.60% profit. The algorithm’s main method for stop losses is to use the Tenkan-Sen line as a dynamic stop loss level. However, there is a more high-risk, high-reward strategy of instead using the Kijun-Sen as a stop loss. Again, we don’t normally use that strategy with this system, but if it’s the one you prefer, you probably made some solid profit here.
Overall, despite these trades ultimately being poor, I think most traders would have mitigated the losses pretty effectively. In this most likely scenario, I would have taken the initial entry, but refused all subsequent ones, taking a smaller loss on these.
That’s all I have for you tonight. Thank you for reading, and happy trading!
