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.

How goes it? Week 25

For simplification, I’ve combined Slow Trader and Ferrari into one fund which we will refer to as Slow Trader Fund.

Our strategy in Slow Trader is to short-term trade (using, primarily, daily close bars rather than intraday bars) shares in the FTSE 350, stocks in the S&P 500 and major foreign exchange (FX) currency pairings.

Arm Holdings. We came out at a little over break even. I moved our stop as I was not happy with the possible trend change of this share price. The share price did run below our buy point but has subsequently moved up again. We are out for the time being.

Halliburton Co. We set this share stop also to a little over break even; this took us out without losing, and the share price has continued to drop. A good move on our part.

BT Group. Moving the stop too early is usually not a good thing. I feel that the stop should move if something happens to make you change your mind about the share or the share price has climbed sufficiently to put you into a different price bracket. I got this wrong with BT. I moved the stop and got stopped out for £17 profit, but the share turned and continued up!

Ashtead Group. – £311 lose. On reflection, not a good share to take. A ranging share price, rather than my strategy of making trending prices, this share dropped well below my entry price – but has subsequently turned up again.

CLS Holdings.  – £325 lose. I made fundamental mistakes with this one. Incorrect retracement level without price action. If I had waited (patience is the virtue of a good trader) and measured the retrace correctly, this could have been a winner.

Snip20150620_7I bought at the red arrow; the green arrow was, of course, the correct buy point.

Card Factory. – £311 lose. A relatively new share. Only five years of fundamental information, I prefer ten years.

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We were in credit – having bought at the lower green arrow – but a sharp drop took us out. You will notice that I sell a share for a loss.

FX AUD/USD. + £394. An intraday 4-hour chart so you can see the move.

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We bought at the red arrow, we sold at the green arrow, and we bought again (and we are still in) at the blue arrow. Easy! Okay, sometimes it goes ideally like this.

We also had interest charges (mostly for carrying shares over the weekend) of – £32.

We are currently in:

CLS Holdings. We bought again at the green arrow on the CLS chart above. Although the price has moved up, we are still -3.7 points as this is the spread. The spread is how the broker (in our case IG) make their money. It is the same as when you go on holiday and change your sterling for euros; you have a buy and a sell rate.

ITV PLC. + 2.6 points.

Money Supermarket. + 12.1 points.

Monster Beverage. + 568 points.

Underarmour. + 464 points.

WPP PLC. – 9 points.

FX AUS/USD. – 20.9 points.

Finally, anyone wishing to short-term trade for themselves I am trialling a notification system to help you. You will get my information directly to your smartphone.