Fish and chips or a’ la carte?

If our restaurant served fish and chips one week and a’ la carte the next, both sets of customers are going to be disappointed at some point.

As with what we serve at the restaurant (within reason) we have to be clear in what we represent in trading.

Most of our Slow Trader contributors are slightly north of 60. Okay, all except you SA. But you’re close enough for it not to matter.

Therefore, you’re looking for the fund to do something interesting within the 3 to 7 year period. The younger readers, those under 45, can opt for our share ISA idea, a 20 to 30-year investment.

These are the two options. (1) a dynamic fund that uses lower time frame charts; and (2) a long-term ISA investment based mostly on fundamentals.

We like the short-term and the very long-term. We don’t want what 99% of the investment market is using, the medium term investment idea. For the long-term investors, they expect to go through a few market crashes. It’s part of the game. The long-term investors look at this as an opportunity to buy more at lower prices. The Slow Trader is a type of hedge fund that trades both long and short. The fund rides the wave whether it’s going up or down. Everything else in a market crash, the 99% of the investment market, gets stuck in no man’s land with a significantly reduced portfolio.

For the Slow Trader fund, we’ve had some glaring blunders and some moments of brilliance. We’ve benefitted from taking the time to trade the 5-minute charts over the last year, as the lessons from this were vital. However, we’re delighted with the early results from trading 4-hour charts.

We’ve traded shares from the daily charts but were significantly more successful coming back to the 4-hour charts. Therefore, we now trade a selected mix of currency pairings (FX), commodities and FTSE shares using 4-hour charts.

We have three trading opportunities a day 8 am, 12 pm and 4 pm. (8 pm is a consideration for the FX and commodities-the share market is closed at this time-but as the market goes into the night it has little movement). With the 4-hour charts, we can trade many more markets than is possible with a lower timeframe chart, and we are more likely to benefit from an extended trend.

Slow Trader Fund Update

Slow Trader closed to any new funds until next year. Here are the amounts:


For the sake of simplicity, percentage gain or loss refers to original funded amounts.

We are now ready for 2016. Our attention this year is on gold, silver, copper and crude oil. We will also trade from time-to-time the SPDR S&P 500 ETF fund (all sessions) and currency: namely the Euro against the US dollar. We may trade the occasional stock.

We have an excellent short signal developing for silver. That is, we consider silver will drop again in price. Signals for each of our commodities happen no more than a couple of times a year. Therefore, when we get them, we need to take full advantage.

The S&P and EUR/USD are not cyclical like the commodities – therefore we will trade these via lower time frame charts (one or four-hour chart and, occasionally, as low as the 15-minute chart).

Commodities are traded through daily charts and in conjunction with the COT report.

For those building funds for grandkids, or looking to buy the Aston Martin DB11 – then here we go!

A brief overview of how we did last year.

We finished the year with only an 8% gain, but that does not tell the whole story. You will recall that 12 months ago I was using a daily trading system that relied heavily on several indicators. I won’t go into detail as to which indicators because it is now irrelevant.

I also employed a mix of fundamentals, that is finding great stocks that are undervalued and trading them long by my indicators; this worked very well over several previous years, primarily because the market was raising steadily.

Around about this time last year I got it wrong. The market had a relatively sharp 15% fall closely followed soon after by a similar rise. The fund at the time was heavily committed, and my indicators lagged the fall and rise by just the right amount providing the wrong direction on both occasions. The fund was nearly halved.

It may be odd to learn that I now consider this to be a blessing! This loss forced me to make the jump from the indicator and fundamental mix reliance on a system I had been noticing for some time. Price action trading. Indicators are all well and good in a trending market, but they provide conflicting messages when the market transitions.

On the other hand, Price action, or bar by bar trading, is immediate. Of course, the downside is that price action takes a lot of work to master. We moved over to price action trading and tentatively built the fund back up by the end of the year to a small profit. In other words, if we accept the loss, and the new fund value at the time of the damage, we doubled the fund. I know as a fund contributor that does not sit well, but it was a goal and a task that I had to face over the last nine months.

Trading with the fund remains light. The fund amount remains unchanged at 8% up. This has given me the time for several weeks of backtesting, which I hope I have kept you informed about, and the introduction of a new charting system. New software and charts always take some time to master but the change we have made, as the charts are now linked directly to our broker, is a significant improvement.

Finally, this is not a fund that you will find easily elsewhere. It is an aggressive fund but, importantly, where all trades are reasonable trades. That is, all trades have a fair measure of risk, reward and probability. I could trade the fund tomorrow against a 60% probability trade to double the entire fund. That, however, would be a long way short of reasonable.

The goal of the fund is to make money and make money at a rate that I’m able to do, progressively, and with emotional detachment. (I’ll explain this more fully in a future blog) That emotional detachment (my risk aversion) will build with experience.

We have some new money introduced to the fund from a current contributor. This money will dovetail into the fund at the present fund level and will not affect your profits. The fund remains flexible in the sense that money can be withdrawn partially or fully anytime within reasonable trading timeframes. However, as this would be a distraction, I would be grateful for any notice that’s possible. I make no charge on the fund, however, once I have doubled your original investment amount I may reconsider this.

Thank you for your trust and patience. Here’s to a good trading year.

New Money

New money: Some of you (investors in the slow trader fund) have asked about adding to your fund.

A good time if you wish to do so, and before the end of next month. I’m away for a week soon so anticipate that it will be the end of February before our trades are again proportional to the fund amount.

Additional funds will not affect the investments of those not adding in. Our amount risked per trade is a simple (moving) percentage of the total fund. Therefore your percentage gain on trade is much the same regardless of the size of the fund. Moreover, combining our funds allows us to trade more thoroughly than we would otherwise be able to do with the amounts we have invested individually in the fund.

Costs: The only measurable price to us is a small interest charge by the broker for each consecutive day that we hold a trade. There are no other charges.

What to do with your medium-term stocks: consider holding for a while. Stocks have taken a battering recently, particularly the banks, but a recovery over the next few weeks is a reasonable probability. Whether we see a new high – or, just as probable, a retrace in a few months to a lower low – is too early to tell.

New software: I explained in a previous blog the need to backtest, coupled with a change of charting software that has taken a few weeks to sort. The new software provides a higher degree of trade placement accuracy and is, we now know, a good improvement on our previous system.

Monthly Slow Trader Fund update – 13th January 2016

The fund remains up by 8%.


The last month has been a time for what can be called ‘backtesting’. In other words, development of trading strategies by using historical charts. As in any practice, most benefits gained when tests are as realistic as possible. And I would say that in many ways, backtesting is more exhausting because of the equivalent of several days of trading in just a few hours. But backtesting is an essential part of a traders life.

For the fund, live trading starts again this Monday. It begins slowly, that is with small risk and builds as proficiency builds. The build-up is subjective but I would expect to go to full fund entries within 2 to 3 weeks.

I aim to achieve a monthly gain of 5% to 10% going forward. I use this as a guide to help me balance risk. No trading day is the same, but it is reasonable to expect to find between 5 and 15 sound trades per day. My maximum risk (for our fund size) starts out small but builds to about £400 maximum risk per trade. More often than not I will take a half risk (£200) on most trades.

I provide this information so you can see how a traders day is a constant consideration of gaining an edge through good chart reading and awareness of risk, reward and probability. And as this gains in momentum, day after day, the 5% to 10% monthly gain is not ambitious but very achievable.

Taking a month to backtest can be frustrating to (you) the investor. It is indeed a luxury that most fund managers do not have. However, most funds lost more than 10% last month. Just a thought.

Weekly Diary – Slow Trader Fund 7th November 2015

I will provide the fund amount with the first Saturday of each month, or close to it.

We are 7% up on our original investment:


The name Slow Trader referred to my trading style. Namely my steadiness regarding: ‘the tortoise and the hare’. It was not intended to refer to the pace at which the fund will grow. I’ve moved from indicator based trading to raw charts and price action trading; this is a trading style where the stabilisers have been taken off. And, as with that analogy, once we are comfortable without the stabilisers, we can achieve so much more.

I have been very cautious only trading with small amounts over many months. We have not missed opportunities because in price action trading there are several opportunities daily. What is important is that we learn how to read the charts with a high level of confidence.

The trading amount will build naturally. I wouldn’t like to say if it will take a couple of weeks or a couple of months. It will just happen at the right time. A professional price action trader to go from okay (that is if her fund survives the learning stages) to successful would take 3 to 7 years.


Above is the 5-minute chart of the EUR USD from yesterday. As we can see, we took a buy at the blue arrow and sold at the green arrow. We scaled in and scaled out, but the result overall is the same. We had done this eleven times over the last couple of days without a loss. However, what I’m about to show proves the need to maintain an overall awareness of what is happening in the market.


The blue box above is the same chart information as the first chart. The reason it looks all squashed up is that of what happened a few minutes later: the announcement of the monthly nonfarm payroll in the USD. This significant movement distorts the vertical (y-axis). I don’t trade these announcements. They are difficult to predict. Often moving significantly one way only to reverse.

The S&P 500 weakened due to the report but in the chart above the US dollar strengthened. Also, short or long spreads (the spread is where a broker makes her profit) increases dramatically during these volatile moments. The bottom line is that it is essential to know about these events and if we don’t have a strategy – stay out.