Jump to content
drbubb

Dr.B's Trading Diary : v.1 - Jan.'09

Recommended Posts

001kt4.jpg : JAN.'09 - v.01 / Latest Diary HERE

Dr.B's Trading Diary :: Edition v.1 : 27 Dec. 2008 .. charts : join Advfn

=================

 

Well, as we wind up another year, its seems like a good time to look forward to a new features that I hope will make GEI a more interesting and useful place for the traders and investors that visit GEI.

 

I have been talking about starting a Trading Diary for months. And there is no time like the present to get things going, and launch it, since I would like to talk about some trading strategies for the beginning of the new year.

 

Let me know if you like what you see here, and please offer suggestions which will make this more useful for GEI readers.

 

The beginning of a year can be a good time to enter fresh trades. Many professional traders, including Hedge Funds, and the prop traders in banks will have closed their books at the end of the prior year. They will start out with a new ledger, and want to see . And that can mean steady buying or selling on new trades. This tends to give good directional momentum in January.

 

So what will we be looking for? Oversold or overbought markets with a "tired" look, where a new year's reversal is possible,

 

Practical Matters

Here's how I plan to structure my comments in the Diary: I want to track a real portfolio, and give the entry and exit points for actual trades that I am making within hours, or at worst, a few days after the trades are done.

 

I think this will require a period of experimentation. So I will start small, with a modest amount in the trading account. I intend to put Pds.5,000 into a spread betting account with the next few days. And I hope to launch the first few trades in early January.

 

Here are a few other early ideas about my trading portfolio for the Diary:

 

+ I have had very successful runs in trading, where within a few months, I have run trading portfolios up by 300% - 500% or even more. I dont believe that will happen with this portfolio because: such "high performance" trading can be very stressful, and require a lot of hours monitoring the market. This exercise will not be as intensive as that, neither will it be as aggressive. I really do not want to be encouraging people to trading is such a fashion. It can prove very reckless. Early profits have a way of fading fast, when you are trading too often.

 

+ I intend to have more of an FX oriented focus in this portfolio than I have had previously. This is because I personally want to learn more about trading FX online, and I think that this will better suit my trading hours. I have friends here in Hong Kong who trading US equities and options. This brings plenty of stress, and very long hours. That doesnt suit my present lifestyle. I certainly believe that anyone who trades frequently, needs to use a system that fits in with their living pattern, and does not require them to embrace uncomfortable trading habits. I have said previously that Gold tardes outside New York trdaing hours tend not to be very meaningful, and tend to get retraced. This may change eventually if China and HK become more active in the market. But it hasnt changed yet, and so I dont think the porfolio will have too much gold. But lets see how that develops.

 

+ I intend to divide my portfolio into five parts, risking only about Pds.1,000 per trade. It hasnt been my style in the past, but intend to use stops on these trades. By putting in the stop on day one, so that my risk is limited to Pds.1,000, then I can really limit my exposure to that amount. Since this hasnt been my habit in the past to use stops- since I worry about them being hit too soon, it will take some trial-and-error to work out what works. I reckon that the initial stop will represent a risk of 5-10% of the face amount of the trade.

 

What are some markets to look at?

 

PERFORMANCE

===========

My most active trading account is :

In Jan.'09 : up + 16.2% (so far, to 25.Jan.)

In Dec'08 : up + 26.8%

 

Well here are some charts I will be watching... (to be continued)

 

aaaxs3.gif

SPIN-OFF threads and Related Links

===========

Oil Price Signals.... :

UK Gold Producers : http://www.greenenergyinvestors.com/index.php?showtopic=5782

& GEIN#1 thread.. : http://www.advfn.com/cmn/fbb/thread.php3?id=18930891

Share this post


Link to post
Share on other sites

Yes.

Thanks for the comment. I intend to cover those topics.

And I may experiment with different spread betting firms, and so forth

Share this post


Link to post
Share on other sites

Here are some charts I will be watching: FXA, FXB, FXC, FXE, and FXY. ... FX etf charts

 

These are etf's for: A$, Cable, C$, the Euro, and the Japanese Yen, respectively.

 

I observe their charts, because they come with volume data, which aids my technical analysis. How's that? Well, when volume is healthy and it is in line with the trend (ie rising when the price is rising), I assume the momentum is strong, and the trend will continue. On the other hand, when volume is flagging, but the price is still rising, then the strength of the uptrend may be ebbing away, and a downturn may be at hand. The same goes with downtrends. Where the volume is strong on falls, the falls may be inclined to continue. A new low which comes on light volume, may be one that is about to be followed by a new uptrend.

 

A$ ) FXA ... update

aa1xr8.gif

 

I am presently long FXA, having bought around FXA-61 on that initial low. Since my investment is ungeared, I was unworried when it fell back to make that second bottom a few weeks later. It now looks as if the downtrend may be about to be broken, which woudl suggest further upside in FXA.

 

To aid my ongoing technical analysis, I have parked some relevant charts on a new thread at Advfn. They are dynamic, and self-updating charts.

 

Chart Link: http://www.advfn.com/cmn/fbb/thread.php3?id=18725927

 

For those that are Advfn members already, you can click on the link, and use your sign-in details to log-on.

 

For those who are not yet members, you can join (it is free!) But i may ask you to join through a Link that I will post here. I am setting up GEI has a referrer, and we will make a modest commission ($1.50), if you join through that link. The membership on Advfn remains free. If you want to have a look while you are awaiting the new Referral link, snd me a PM, and I will give you a temporary user ID and password.

 

...more on the FX charts on Advfn is coming... Which one looks as if it may be near a turn?? You may be surprised

 

(Please Vote on the Poll/Ratings for online FX trading sites: see thread )

Share this post


Link to post
Share on other sites

A trading diary can be a very good way of passing on information to those keen to learn.

 

IMHO, the lesser part of this information is the technical basis for taking, managing and exiting trades, including the rules of the trading system being employed.

 

The greater part would be the emotional aspect of the trading, both before and after entry, throughout the life cycle of the trade and both before and after exit.

 

It would be useful to establish a structured format for commentary, so that you cover the same issues relating to each trade in the same way at the same time. Perhaps, a set of pre-set questions to ask yourself at each stage.

 

Prior to entering the trade, the obvious questions are the big picture, the technical basis for thinking about the trade, the deciding factors that will prompt entry, the deal breakers, etc., along with the feelings.

 

On entering the trade, the target and stop, the decisions behind setting them where they are, feelings.

 

As the trade is managed, ongoing analysis, any changing factors, reasons for moving stops, if relevant, feelings.

 

On exit, the decisions behind exit, feelings.

 

After exit, any relevant reflections on the trade, the platform, the broker, anything.

 

Feelings.

Share this post


Link to post
Share on other sites

Thanks for those suggestions, TTID.

 

You are right. The emotion behind parking A$100,000 in an ungeared investment in FXA was very different than it will be if I try to take the same size position using only 5% margin in a spreadbetting account. Had I done such a trade on 5% margin, chances are that I would have been stopped out on the move up and down. There's a decent chance I would have taken a profit, but I might be out of the trade now, and missing the chance for a bigger profit that me patience is now delivering.

Share this post


Link to post
Share on other sites

It will be really illuminating to hear about those feelings as you walk through the different steps of your trades, particularly to look back on the record of those feelings to identify any way in which they influenced your performance for good or ill.

Share this post


Link to post
Share on other sites

It is tough to buy on the lows.

 

For example, how many people would buy Sterling now? There's even a thread here on GEI talking about how Sterling "is toast." And I can certainly see hard times ahead for the UK, as it deals with the wreck that is its over-indebted economy, and falling North Sea oil production. But remember how negative things looked for the dollar back in Mid-summer? (which "coincidentally" was when oil was near its high.) Since then, the fall in oil prices, and a reduced appetite for imports of all kinds has helped the dollar. Of course, the financial implosion, which has driven Hedge Funds to sell stocks and repay carry trade debt in yen and dollars has been another thing spurring a big rise in these two currencies.

 

To me, the negative sentiment on Sterling means that the FXB charts need a special look now.

 

GBP ) FXB ... update

aa3lr7.gif

 

It looks alot like the chart for A$/FXA before it turned, doesn't it?

 

Of note are:

+ The low volume, which is coming on this latest selloff, it is as low as a previous turn in XX

+ The triple test of the support level near $1.40 (?), with this latest test on the least volume

+ $1.40 compares with the GBP high at $2.xx, that's xx%, very near the Fibonacci level of 68.2%

 

Can I bring myself to buy Sterling here?

 

Probably. I may have a go on some FXB calls when NY trading opens today. My spreadbetting account is not yet funded with the Pds.5,000 trading amount that I spoke about, so I may need to wait a few more days on that.

 

I want to get ahold of a longer term chart on GBP, and see how compelling that chart looks. I have noticed that the Yen has been strong through the financial crisis which broke out after the summer downturn. Both the dollar and the yen were strong, but the Yen is now the "last man standing", as the dollar has begun to ease back, and its slide is again becoming evident. It is interesting to see the order in which the "fallen men" got up again. First, Gold. Then, the Euro. More recently, the A$ and the C$. Now Sterling too, is starting to look like it wants to regain its feet. Is 2009 going to be another year of dollar weakness? If so, we need to be thinking about precious metals, and also the still bombed-out gold stocks.

 

Gold - something big about to happen?

 

"...I am alert to a possible breakout in Gold over $860, an important resistance level.

 

Gold / GLD ... update

bigcz2.gif

 

I am a little concerned that the Gold bulls are getting a bit to complacent. But in their defense, I hasten to add that January is normally a good month for Gold and Gold stocks. If Gold does breakout over $860, it could move $100 rather fast. And this time it seems likely to drag CDNX (and the Juniors) up with it. The tax-oriented selling that we see in the 4th quarter must be over by now. So the move in CDNX could be a sharp one."

Share this post


Link to post
Share on other sites

Gold here (today) is more or less on the 12 months moving average, and so there's a good chance most on GEI who bought over the alst year had a cost below current levels. The 252d.MA also often proves a resistance or support level. So it could make sense to do what someone on the Gold Trading thread (Roman Holiday) has suggested: Sell some gold, to buy some Gold shares.

 

Major gold stocks (GDX) are still trading about 20% below the 252d.MA (near $40)

GDX ... update

aaahq6.gif

 

Here's CDNX - which has hardly moved as GDX doubled ... update

bigjt0.gif

 

I suppose the weak performance is partly due to tax selling, and partly do to concerns that these companies will be unable to finance themselves (at reasonable prices) and will just burn up cash.

 

Some may ask: What do I think of buying juniors here?

 

Well, I own quite a few already, so I personally will not be buying Juniors aggressively now, even though I think they look very cheap. For those who have no position, I might suggest buying, say, 2/3rds GDX or major cash-flow generating gold producers. THe other 1/3 might go into smaller companies, some of which are still trading near their lows.

 

Some stocks have have bought in recent weeks include: SLW at $2.75 (and sold some since then at almost double), EDV.v a near current levels (dont recall the exact price), and CCI.t at about C$3.20 Now $3.79)

 

Silver Wheaton (SLW) ... update

bigdk3.gif

Share this post


Link to post
Share on other sites

aa4tr9.gif

 

They have alot of Junior mining exposure, so I reckon that Endeavour (EDV.t)

should move up as fast or faster than the CDNX index

 

Another positive for EDV.t, is their ability to generate income from future transactions.

 

Endeavour Capital (EDV.t) ... update

bigqt7.gif

 

I also bought some call options on GROW, which should participate in a gold mining rally,

since they manage various gold related funds

 

US Global Investors (GROW) ... update

bigao4.gif

 

Some others you might look at (which I own): NGD, NSU, GSS, UXG ... & many more

 

The above trades are in my IRA portfolio (that's like a US ISA account), where I have no taxes to pay until I extract the money. The broker I use for that account is Fidelity. Because of the frequency of my trading, I pay very low commissions. I often use it for short term punts. I opened it many years ago when I lived in the US, and I dont think it will be easy for UK-based persons to open the same sort of trading account.

Share this post


Link to post
Share on other sites
The above trades are in my IRA portfolio (that's like a US ISA account), where I have no taxes to pay until I extract the money. The broker I use for that account is Fidelity. Because of the frequency of my trading, I pay very low commissions. I often use it for short term punts. I opened it many years ago when I lived in the US, and I dont think it will be easy for UK-based persons to open the same sort of trading account.

 

Re. trading a/c - that's why I'm looking to open with interactivebrokers as they offer plenty of scope for trading:

 

 

 

Not going to bother with futures or options for now (may sort fx though) - as not clued-up enough - but they'll be easy to sort later if I choose to. You have to declare at least a 'good' experience (100+ trades) for any trade products you want to open with IB - having to exaggerate a little!

Share this post


Link to post
Share on other sites
This looks like being a very good thread

 

thanks.

We have run out of room for more "Pinned" threads.

So instead, I added a small button in the menu bar:

aaaxs3.gif

 

This should make the thread easier to find, for those who want to pile straight in.

 

I am finding it difficult to reactivate my trading acct. with Finspreads. I left a minor balance in the account,

so I am still in good standing, but they are having problems locating my password etc.

 

That's a pity, because I wanted to get trading by year-end. Anyway, figures are crossed to sort this out.

Meantime, I can use the Fidelity account. I am tempted to add to the position in GROW.

 

Here are some compelling reasons;

+ Price is cheap: $4.14 versus range: 2.90 to 20.20

+ PE is low...... : 9.72

+ Dividend...... : 5.74%

Share this post


Link to post
Share on other sites

Why not make a new category for this with sections on research, fx, pm stocks, actual trades, etc - or stuff like that. Might help keep things tidy if this thread get busy/goes commercial.

 

P.S. the skin has gone odd for me - can't see that new button - can't see usual title banner either.

Share this post


Link to post
Share on other sites
Why not make a new category for this with sections on research, fx, pm stocks, actual trades, etc - or stuff like that. Might help keep things tidy if this thread get busy/goes commercial.

P.S. the skin has gone odd for me - can't see that new button - can't see usual title banner either.

 

Good idea. Will probably do that eventually.

Let's see how popular this thread becomes. I hope that people will make tons of money off the ideas here,

and them maybe donate a bit of their profits to GEI once I get the "Donate" button sorted out,

 

SKIN?

====

Which Skin are you using now ?? (genuine question)

 

I recommend that you go to the bottom of the page, and choose this skin:

"IPB 2.2.0 Default/ GEI members" - that is the one that I am optimising,

Once I get this one working well, I will modify the other skins too.

Share this post


Link to post
Share on other sites
Good idea. Will probably do that eventually.

Let's see how popular this thread becomes. I hope that people will make tons of money off the ideas here,

and them maybe donate a bit of their profits to GEI once I get the "Donate" button sorted out,

 

SKIN?

====

Which Skin are you using now ?? (genuine question)

 

I recommend that you go to the bottom of the page, and choose this skin:

"IPB 2.2.0 Default/ GEI members" - that is the one that I am optimising,

Once I get this one working well, I will modify the other skins too.

 

Haven't got that one??? Maybe that's what prob is. Not showing for me in Firefox or IE. Only got may, pro and guest skins. Odd. Might be your tinkerings if same for others.

Share this post


Link to post
Share on other sites
I'm the same.

No "GEI Member skin"

Next to this symbol -

rss.png

I have these choices:

+ May2007 skin (default?)

+ IP.Board Pro

+ IP.Board Guest skin

 

Same here.

Share this post


Link to post
Share on other sites
Good idea. Will probably do that eventually.

Let's see how popular this thread becomes. I hope that people will make tons of money off the ideas here,

and them maybe donate a bit of their profits to GEI once I get the "Donate" button sorted out

 

I would happily donate 10% (post tax, commissions etc) of any gain, on a quarterly basis (once a certain level was reached) . This has the makings of very good thread.

 

Share this post


Link to post
Share on other sites

I will happily donate 30% of my commission :D

 

 

Share this post


Link to post
Share on other sites

thanks for those posts. Let's see how things develop here.

 

Re:Sterling, I posted this on the "gates of hell" thread;

 

I'm still in the "Watching" mode.

 

Bullish noises? You`ve got company..

http://www.bloomberg.com/apps/news?pid=206...&refer=home

EXcerpt:

"Dec. 29 (Bloomberg) -- The pound may rebound from its worst year on record against the euro as investors start betting on a recovery in the U.K. economy, according to the world’s biggest currency traders.

 

The U.K. currency will strengthen 14 percent against Europe’s common currency next year, after depreciating about 24 percent in 2008, based on the median forecast of 42 analysts and strategists surveyed by Bloomberg. Deutsche Bank AG, the largest trader as measured by Euromoney Institutional Investor Plc, predicts a 20 percent gain.

 

“We will see some signs of life in the U.K. economy sooner than we do in the eurozone,” said Henrik Gullberg, a strategist with Deutsche Bank in London. “Even though we might be far away from a rate hike in the U.K., the focus for currency traders will shift to that sooner in the U.K. than in the eurozone.”

==

 

That worries me a bit. Too many banks may be betting on a bounce.

Before buying, I would like to see GBP/FXB test the old lows and bounce. The volume on the bounce will be critical.

 

bigfi9.gif

 

Okay. We have the retest. Let's see if there is a bounce, and what volume that may bring.

It is too early to rule out Cgnao's meltdown. The pattern here so far is similar to the Nov. break below $1.54.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×