Slow Trader

Tag: Pace PLC

  • Slow Trader Diary – week 34

    Here are the ups and downs of this week:

    Pace PLC lose £294. AUD/JPY lose £770. Silver gain £363. USD/JPY gain £115. EUR/GBP gain £523. Broker cost was a gain of £18 (the gain was interest earned as we were up with USD/JPY for several days).

    Net for the week was a lose of £45.

    The (unexpected) last minute strength of JPY took away a potential two grand gain for this week. That is how it stood financially. In ‘how well we traded’ terms I was pleased with this week. We called the market correctly in everything but a late dip against JPY. That is the nature of the business.

    The main area for improvement is the risk/reward amounts. We didn’t manage better than 1 to 1. To make money consistently, this needs to improve to an average of 1 to 3. Or, as we term it, 3R. That is: wins need to be, on average, three times bigger than the losses.

    Take AUD/JPY above for example. Our stop was 110 points (often called pips) away. That means I felt that the trade had the possibility of going up at least 330 pips. Three times the risk. Or, 3R. If I didn’t, I more than likely would not have taken the trade. Its a necessary filter to keep the risk reward balanced in our favour.

    The important reason for this is simple. At 3R we can lose some 60% of the time and still take a profit. Okay, it will make it hard work, but a profit non the less. We aim to have the statistic the other way round and win 60% of the time. Importantly, however, if we are not achieving an average win of 3R – we lose longer term.

    So keep an eye out in future for the ‘R’ which I will post after each actual win/loss. If you see 1R consistently on the wins you will know (nice as it is to have a win) that we are not cracking it. However, an average of 3R is plain sailing.

    From this weeks charts:

    Snip20150822_26

    We know from the COT (commitment of traders) report that gold and silver were ready to buy. We had to be careful however of the long term trend against both of these commodities. Therefore we waited until, in this instance, silver went up and retraced to provide a buy opportunity in the direction of the COT, but also with a recent Up (a recent trend up).

    Very nicely done. I came out – correctly – at only 1R because the overall trend was still too strong on Silver. We may get another buy opportunity this coming week.

    Gold, on the other hand, did not retrace and I was left watching it go up – even though I knew it was going up. There are strategies to jump onto the train and, influenced possibly by Silvers retracement and thinking gold will do the same, I missed one. Still watching.

    Snip20150822_28

    There are clear buy signals above. And signals to jump on board. Hindsight remains wonderful!

    Snip20150822_30

    Sometimes we can just plainly do better. I’m pleased with that EURGBP buy above. It was an excellent call, if I say so myself, however, I came out way too early. At only 1R. You get the picture. Why did I come out at 1R when the market for EURGBP was going so strong? that, as we have already mentioned, is the area for improvement.

    I had a buy order in place with EURUSD and missed a great buy by only a few pips, the chart then zoomed up. But I’m happy with that as the trade (although missed marginally) was correct.

    Snip20150822_32

    USDJPY above, was this sell instinct? I bought USDJPY on a retrace, from a recent Up, on the one hour chart (chart above is the daily chart to show the week). I was looking for a 3R with this one and we sat at 1R all week. I noticed the move down (unexpected strengthening of JPY) and sold with a small profit of £115 (all week the profit had been £600).

    The interesting thing about trading is the necessity to detach yourself from profit. Personally (although I’m background aware, of course, of the profit) I never look at ‘up or down’ in terms of money (I don’t even have the money amount showing on my broker page) but only in terms of ‘pips’. If we’re emotionally attached to money amounts – up and down – we cannot trade emotionally detached or to the best of our abilities, consistently, over the longer period.

    Worth a mention about S&P below and FTSE.

    Snip20150822_34

    For those in traditional funds they would have taken a battering this week. The FTSE is a similar picture. I realise that those in managed funds, for the long term, then this is only a 20% blip downwards. However, I would like to take the 20% back up, without having suffered the down bit.

  • 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 sell price) but has a daily interest cost. A quarterly futures bet (near, mid or far quarter) has a larger 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.

    Currency pairs (FX) can only be traded through a DFB. 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:

    Snip20150808_13

     

    DTE Energy is conventional electricity. Our conditional is simply a consistent 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 price before we bought automatically. We have set a target limit at 90.67. That gives us a risk reward of nearly 4 times.

    Here is our trade with Pace PLC:

    Snip20150808_14

    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 support level and price action is fine 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. This can be done, because of the timing of the FX New York close daily bars, at 9pm or 10pm, depending on UK/US time difference; or, as is my preference, early, before 7am, 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 close to a buy or short opportunity the best way is to set an automatic (ambitious) entry.

    Particularly looking this coming week for a buy opportunity in GBP/USD.

  • Slow Trader Diary – week 27

    Our fund, in total, is down 17%. Or £4,842.67 out of the investment of £30,000.

    Those used to a ‘normal’ fund will consider this drastic as it takes an age in a ‘normal’ fund to come back 17%. However, I’m pleased with our recent come back to this level – always more difficult to bring a fund back up – but once we’re over the hump…

    With good money management (not risking too much too quickly) we can bring this back in a few weeks with good trading.

    However, remember that original invested amounts are guaranteed and can be taken back at any time, in any amount, without influence to the fund or fellow investors.

    At some point soon I know, based on our lessons learnt, that we will soar.

    Here are our trade results this week:

    Long interest paid was £10.87 – a reflection of our limited trades due to the Greek issues and subsequent volatility in the markets (shares, stocks and FX). Bonds, and commodities were not adversely affected but I have not had a buy signal for those this week.

    WPP PLC, – £194 loss.

    CLS Holdings PLC, – £471 loss.

    Pace PLC, – £145 loss.

    FX GBP/JPY, + £384 gain.

    Moneysupermarket.com, + £108 gain.

    ITV PLC, + £93 gain.

    Monster Beverage Corp, +£691 gain.

    Elementis PLC, + £160 gain.

    Total losses this week including long interest: £821

    Total gains this week: £1,436

    Not exciting. But considering many (probably all of you) with ‘normal’ long term managed funds would have had a loss this week.

    The Greek issue continues this weekend with the referendum.

    We are out of the market this weekend. We are holding no trades. This is because the markets can ‘gap’ – either up or down – depending on the Greek outcome. A gap is a jump from close of market before the weekend to open of market after the weekend. Those without a guaranteed stop risk a significant hit to their funds.

    Next weeks subsequent volatility could suit us. Looking forward to it!

    B