Slow Trader Diary – week 32

No trades cashed-in this week.

We also had no costs against us.

This week we entered Pace PLC and DTE Energy Co, both on a December quarterly trade.

We are mostly short-term swing traders: so are our trades taken as DFB (Daily Fund Bets) or quarterly futures trades?

The DFB gives us a tight spread (the difference between the buy and the selling price) but has a daily interest cost. A quarterly futures bet (near, mid or far quarter) has a more substantial spread the more distant the quarter but carries no interest charge. So which one to take – a DFB or a future quarterly – depends on time. In other words, it depends on the duration we think we will hold the trade.

DFB is a suitable means to trade currency pairs (FX). With shares and stocks, however, we have the option of a DFB or a quarterly futures trade; I will look to take a mid-quarterly trade where possible.

Here is our trade with DTE Energy Co:

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DTE Energy is conventional electricity. Our conditional is ten years of positive earnings per share (EPS) percentage growth. As for recent trend, the stock is trending up which we can see from higher highs and higher lows. The 21-day moving average supports this. Our price, for us in this example, as there are many personal ways of determining price, is the confluence of a support line (a 61.8% Fibonacci retracement line to be exact) and the pin bar the day before. We took the trade on-limit, which meant the price did come down to a more favourable rate before we bought automatically. We have set a target limit of 90.67. That gives us a risk reward of nearly four times.

Here is our trade with Pace PLC:

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Pace PLC is telecommunications equipment. This trade has gone against us slightly, and I’m not happy with my decision to take this trade. Our conditional, again, is ten years of positive EPS percentage growth. However, it is the trend that is our weak link. Over the last 18 months, except for a large gap up, the trend is down; this is made more so with the drop in price yesterday. A closer look at the recent trend confirms this. Our price, a confluence of a support level and price action is okay but is secondary to the trend. Also, our price action, being the pin, in hindsight, is black where a white pin would have been preferable. I will tighten our stop to minimise any loss and if we get a rebound, I will sell early at, or close to, break-even price.

No buy or short signals in FX this week. FX requires a regular watch so as not to miss the opportunities. By regular I mean a once daily detailed review of daily bars. Because of the timing of the FX New York close daily bars, at  9pm or 10 pm, depending on UK/US time difference; or, as is my preference, early, before 7 am, UK time. Then a look every 4 hours where possible, to match the 4-hour bar close times. However, I find that as we get closer to a buy or short opportunity the best way is to set an automatic (ambitious) entry.

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 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 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 losses. 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. 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.

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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, 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. Target price set at purchase providing a 3 to 1 trade.

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.

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 sound.

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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.

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The significant 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 stock such as this – one that has significant moves – a guaranteed stop would (in hindsight) have been a good option.

Monster Beverage Corp. + 1137 points up. Don’t be confused by the number of points. As US stocks are often much more expensive than UK shares, we have ample points movements in our US trades. However, in the tradition of proper 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).

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Pace. – 9.1 points down. An odd share chart and one that I will look to exit.

WPP. + 2 points. WPP is now trending down, so I will observe 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 (Done monthly) in the new month, probably next week. Have a great weekend.