Slow Trader Diary – Week 26

One step forward, followed by one step back. Or was it the other way round?

When trading (or managing) a leveraged fund there is no hiding. Unlike ‘normal’ funds where poor investments can be ignored under the (incorrect) pretence that the share price will eventually return.

Often it doesn’t. And the loss is rarely admitted to – how many pension funds still hold Lloyds Bank since before 2008? The theory being that the offending share investment is not a loss until it is sold at a loss.

Peter Lynch – arguably the most successful fund manager – in his books, tells us of investments he still holds today – from decades ago – that will never recover to previous values.

A leveraged fund on the other hand, is brutal. If you go down a fraction you sell. You take your losses early is the mantra. Your failure is known right away. And you will have failures. Its part and parcel of the game.

Here are my failures (and win) this week: failure plural, win singular.

Firstly, we paid £24.79 this week in long interest. This is a charge IG make for carrying DFB (Daily Fund Bets) over one day. Day traders – those that don’t carry trades past one day – would have nothing to pay.

FX AUD/USD – £480 loss. Not my finest hour.

Halliburton – £558 loss.

Snip20150627_10

We bought at the green arrow. Perfect, a 50% retrace and good price action. However, I (foolishly and unknowingly at the time) broke my rule of going against the trend. It was only clear to me after the share price went lower and stopped out that we were, indeed, trading against the recent trend. We had a lower high. Okay, it could be argued that the lower high was slightly hidden until the next move…? But still not a good trade.

Under Armour Inc. + £667.

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This had everything we required. Trend, retrace and price action. The target price was set at purchase. This was a 3 to 1 trade. Meaning that we made 3 times more than our potential loss.

Should I have set a higher target? Maybe. Only time will tell. The target was my call at the time. And I still stand by it. We are short term traders after all. If a new high is made another buy opportunity will always present itself.

Trades we are currently in:

CLS Holdings. – 51.7 points down. We had sold this share at break even and bought again at a lower price. Not a great strategy to chase a share price down looking for a buy point. However, the chart and the fundamentals are good.

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ITV PLC. + 12.3 points up.

Snip20150627_13Our target is a new high with ITV. Fundamentals are good too.

Moneysupermarket.com + 15.9 points up.

Snip20150627_14Our target is to simply match the previous high with this one. The big drop down, shown on the chart, leaves me a little nervous to take this share to a new high. Also, we have moved our (non guarantee) stop up. For a share such as this – one that has large moves – a guaranteed stop would (in hindsight) have been a good option.

Monster Beverage Corp. + 1137 points up. Don’t be confused by the amount of points. As US stocks are often much more expensive than UK shares we have large points movements in our US trades. However, in the tradition of good money management, we have a trade amount that matches the risk. For Monster that, in this case, is 0.7 pence per point. (In the case of Moneysupermarket, for example, it is £20 per point).

Snip20150627_15

Pace. – 9.1 points down. This is a funny share chart and one that I will look to exit.

WPP. + 2 points. WPP is now trending down, so I will watch very carefully when the market opens on Monday to sell this share.

That is it for this week. As usual, I will post the fund position overall (which is done monthly) in the new month, probably next week. Have a great weekend.

B

 

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