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Mining stocks are so out of favour right now. I can't wait for them to see some life. I remember Cetamin Egypt, Griffin Mining, and some others - only a small investment would turn in to a 5 or 10 bagger. I won't be looking at them until the right moment comes.

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Jesse Livermore How toTrade - and no it is not Reminisces of a Stock Operator. Good read, I'm halfway through it, and I take it is not well publicised. He gives details of trading using breakouts from new highs and position trading. He was not a day trader.

 

AN EXAMPLES of his strategies ?

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The first time he mentions trading with an example is page 9, and again on page 22. He is buying on a new high breakout. In the roaring 1920s, it seems stocks went from $20 to $400 in a relatively quick time. If the price action it fell back into a long standing trading range, he would sell as it was a false breakout. Note he doesn't use the words breakout or false breakout.

 

On page 20 he talks about never buying from a recent great fall, we call it catching a falling knife today. This is relevant as there is overhead resistance; buyers trapped at higher prices, who will sell into a rally to break even. No random walk, this is human psychology.

 

On page 61 and a conclusion of the lessons learned on page 63, he talks about buying before the price action in anticipation of a breakout (trying to be clever and not following his system because he was convinced he was right), which lost him a lot of money. My conclusion is that the weakest link in any system, is the human operating it. I.e. Human Emotion, which is why he traded in quiet away from others as told in Reminisces of a Stock operator.

 

Going back, on page 59 he talks about pyramiding into position - the sort of thing when I was talking about the gold/houseprice ratio - no one can get into a trade the the full position in one go with the time available, as time and capital are limited factors. Note he doesn't use the word pyramiding either, but I understand the concept.

 

There are other important bits I can't quote but are in there, such as raising your stop to the last swing low, and how being away from the day traders and noise, one person can position trade profitably with 3-day delayed data, in the mountains.

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HPCMAR.PNG

 

Equities look like a pullback, we'll see how it pans out after a few days of red. Gold in £ doesn't look too good, but we need another week of data to be sure.

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HPCMAR.PNG

 

Equities look like a pullback, we'll see how it pans out after a few days of red. Gold in £ doesn't look too good, but we need another week of data to be sure.

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Goldmansachs issues a sell note on gold, they must be using the same charts as I am. I m not Convinced so I m giving it till Friday like I said before. It isn't helped by cyprus announcing that they are to sell 400m eur of gold. This looks like Browns bottoms again.

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I think this is another sell signal in gold I'm starring at in GBP, circa £980/Toz. Wow is all I can say. We had one in 2008, but that was a liquidity squeeze that bashed everything. It needs to get back above £1000/Toz ASAP over the next few weeks to cancel the signal. For the shorter term it maybe wise to step aside and not try to stop a train with a brick wall.

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untitled.PNG

We had a technical sell off in 2008 because there was a global liquidity squeeze. It was then cancelled when it went higher than its breakdown (became neutral), and then became a bullish buy signal when it made new highs. However this time which I feel is slightly different, the CRB commodity index has shown weakness, which is confirmed by the constituents within it. Jesse Livermore describes the importance of group action (e.g. Platinum, Pladium Silver, as well as gold). It will take some time for gold to recover, unless there are unknown, unknowns.

 

bull.PNG

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AN EXAMPLES of his strategies ?

 

This is a Livermore quote I kept,

 

After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance

 

Kept to remind me when someone says buy and hold is dead ;)

 

 

EDIT: This is a good thread b.t.w, must remember to visit more often :)

.

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I'm glad you're enjoying the thread. :) I had started a monthly stock picking competition on HPC (running for some near 6 months now) in the financial sub forums, and have taken a break from it, so if you enjoy action in UK shares, there's some more trading stuff there. http://www.housepric...hp?showforum=34 OR here http://illuminatedca...ompetition.html and of course GEI's UK Stock Sub Forum http://www.greenener...php?showforum=8

 

9780071469791.jpg

An essential read is How to Trade stocks, as it is written by the man himself, rather than by a story like context. I received mine over the weekend which has some added charts by Richard Smitten (some of which I disagree with in my humblest opinion). It shares some overlapping concepts with Stan Weinsteins book, such as selecting the strongest stocks in the strongest groups. I may post pictures of the corrected charts on here if anyone wants a look.

 

I came across another Tim Sykes video - (consider him a stock promotor), apparently he paid $18K for the first edition of How to Trade Stocks by Jesse Livermore.

http://www.youtube.com/watch?v=7LVUwotQC7M

 

 

untitled.PNG

Here is what's on "the board." XX:ASX is the FTSE-all share index, the UK equivalent of the SP500. PHGP is the UK gold ETF. Has the squid won............?

 

Jesse Livermore identifies "pivotal points" on the tape. Areas on the tape where we see significant action in a small space of time. Weinstein calls them breakout support and resistance points on charts. If you are familiar with Weinsteins methods for bull moves, just turn the chart upside down for bear moves. Look how gold has dropped away when it fell beneath £1000/Toz. "The board" doesn't lie, as I posted these screen shots way before the drops we've had in the last few days.

 

Pivotal points are important, because you put your stop on the other side of it, which mitigates losses if you are proved wrong. Have a target price at least 2x your risk (where the stop is triggered).

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So what next for gold?

 

This still stands;

 

These are my forecasts, valid for the next 3 months (just for educational purposes, and not investment advice).

GOLD$ - Neutral stance, until it closes weekly under $1490/Toz I would be bearish, above $1810/Toz I would be bullish.

GOLD£ - Neutral stance, until it closes weekly under £990/Toz I would be bearish, above £1100/Toz I would be bullish.

http://www.greenener...860#entry269229

 

If we can move up back in the trading range on a weekly close, on a weekly chart, in the next three months, then I return to a neutral stance. If we can close above $1810 /Toz, in the next three months, I will be bullish and will be buying a trading position (and £1150 in sterling on "the board", I've added an extra £50 to be on the safe side). Trading and Investing are different. Trading doesn't care where you bought or what price you paid, it is capital that is in continual circulation according to Livermore seeking out percentage gains. We become long term investors accidentally when we don't close out a trade when we should.

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I am fascinated by the life of Jesse Livermore. Why did he kill himself? He went bankrupt before and bounced back. According to the video evidence by his relative(?) further up the thread, the SEC changed the rules and he could not adapt to them. Thinking about Darwins evolutionary theory - it is not the strongest who will survive, but who is the most adaptive. Perhaps if Livermore adopted more facets of income, he'd wouldn't have ended his life prematurely. Remember he traded for capital gains, i.e. one source of income. That is probably why Richard Branson has so many different income sources - Railways, Media, Airlines, etc. The Virgin group comprises of some 400 companies according to Wiki.

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Jesse Livermore describes in his writings, to select the strongest stocks in the strongest groups (for the UK it will be within the FTSE-all share index).

 

If anyone is interested I have constructed a page to identify the strongest groups quickly -> http://illuminatedca...ctor-index.html

 

It is under construction, as I am slowly adding the correct links to dissect each group, but usable right now anyway.

 

The strongest groups right now at a quick glance at the five charts are:

NMX3530 Beverages +58%

NMX3720 Household Goods +57%

 

And the weakest groups right now are:

NMX3530 Industrial Metals -75%

NMX1770 Mining -43% (no surprise really)

 

If we look further into NMX3530, we get a chart like this:

dge.PNG

 

So we should be looking to at buying DGE 1,979p? Expensive share, but lets monitor this, and see if there is a potential entry point if it closes above the £20 potential "pivotal point". Why £20, well it looks a key round number. Not before £20, but above on a weekly close. I am so impatient, hurry up!

 

"Whenever I have had the patience to wait for the market to arrive at what I call a Pivotal Point before I started to trade; I have always made money in my operations."

 

"It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon."

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If I can devise some sort of filter that selects the strongest stock index of the world, and then within that country the strongest sector group, and then the strongest stock in there, that would be pretty neat.

 

filter.PNG

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And the weakest groups right now are:

NMX3530 Industrial Metals -75%

NMX1770 Mining -43% (no surprise really)

 

 

stockcha+apr.PNG

^Look there's CR in 6th!

 

From http://www.stockchal...e.co.uk/ There are 76 entrants for the April league table, and it has been a tough month to be a bull as equities have pulled back severely at the begining of the month. As a relatively new strategy I wanted to be half long and half short where I can to be balanced. I had 3 short positions, and two of them happen to be weak stocks (African Barrick Gold, and Kazakhmys) in the weak groups - mining. There is something to this group scan!

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And the weakest groups right now are:

NMX3530 Industrial Metals -75%

NMX1770 Mining -43% (no surprise really)

 

Looking at the other extreme, we have the industrial metals; NMX3530. There are only two companies in that group - FXPO (me old favorite) and EVR. If we flash up a comparison chart over the last two years, FXPO (trades now 161p) is the weakest of the two, and the potential pivotal points I can identify are above 500p (to be bullish), and below 150p (to be bearish).

 

---

 

I am a bit peeved to find out my spreadbet demo account (aka the modern day bucket shops!) has cut the number of shares that it trades. And IG Index no longer provide an individual demo account. I can't trade Diageo or Ferrexpo even though they are FTSE350 companies. Hmm the company share price that runs the spreadbet business is trading at multi-year lows, so I guess money must be tight and cut backs have to be made. Don't put all your money with one bucketshop if you have substantial net worth!

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Here is an interesting chart with MCD coming up and crossing a pivotal point at $100 which was the last previous major high at the beginning of the year. Why did I look at this? There was news that sales are down with McDonalds. http://www.bbc.co.uk...siness-22212564 It is good practice to look up the company chart if you ever read any news - how many people do this? Not many. Another thing is if you see a new trend in the real world - I saw self service tills appearing everywhere and ATM machines. If you notice, the logo is NCR corporation and this is a listed company. If you see something, make a mental note, and look it up later.

 

Anyway - MCD didn't cross the pivotal point convincingly this week - look at the last bar. So MCD will stay neutral. The clue was the lack of volume - 20m shares are normally traded, a "high volume" move should be at least twice that.

 

mcd.PNG

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I finished 15th of 76 in the April 2013 http://www.stockchallenge.co.uk/ with a meager 3.73% monthly gain.

 

The May competition starts a day early, what will sell in May and go away mean in 2013?

 

untitled.PNG

We're off to a good start - unfortunately I didn't realise BUMI had just been suspended which we are short on. Apparently this is so bad that people should be sued for getting listed on the main exchange, according to the the BB chatter. We are following the steps of Jesse Livermore; Long the strongest sectors, short the weakest sectors. That is the strategy.

 

The whiteboard hasn't changed much, still bullish on equities, and gold still needs to close above £1000/Toz to cancel the bearish signal.

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