# Going or Holding Against The TREND....



## SevenFX (23 October 2007)

Requires a healthy account balance, nerves of steel and a stong belief system... well so I experienced b4

Not anymore as my balance is not so healthy, my nerves are not the same, and my belief system is now shattered.... LOL

Guess it's a bit like going up a freeway in the WRONG direction, hoping to find a exit, which you may get lucky.

Cheers
SevenFX


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## The Mint Man (23 October 2007)

what are you refering to?


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## SevenFX (23 October 2007)

The Mint Man said:


> what are you refering to?




The sharemarket would be my first guess.

SevenFX


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## The Mint Man (23 October 2007)

I thought as much but wasn't sure considering it's in the general chat, not the stock chat. I also thought the content was a bit strange as your thread seems to simply be comentating on what your going to do. Not asking a question.
Anyway, Ill add my. 
It obviously depends on if your a trader or not..... I'll be holding.


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## alankew (23 October 2007)

SevenFX I have done this recently and it has paid off but has been nerve wracking and anything else you might like to add.Bought both IRMO and also LMLO(these in particular where a pain as i only part filled my order so when they were down things werent so bad but when they went crazy I was a little upset!)Anyway both came very good so sometimes these things work out-others will probably say i am crazy and might agree with them


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## juw177 (23 October 2007)

How do you know the trend ends?
Will you expect a bounce based on historical support and resistance?


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## SevenFX (23 October 2007)

The Mint Man said:


> It obviously depends on if your a trader or not..... I'll be holding.




Perhaps I should have detailed further, as it was more for New Investors or Traders.

As holding a LOSS against your trading/investing timeframe or the ones above it can be done for only so long....

There a 101 ways to explain it, but to coin  most popular phrase "Cut your Losses, & let your Profits Run" is whats sticks in my mind.

SevenFX


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## The Mint Man (23 October 2007)

SevenFX said:


> There a 101 ways to explain it, but to coin  most popular phrase "Cut your Losses, & let your Profits Run" is whats sticks in my mind.
> SevenFX



I can relate to that

Cheers


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## SevenFX (23 October 2007)

alankew said:


> SevenFX I have done this recently and it has paid off but has been nerve wracking and anything else you might like to add.Bought both IRMO and also LMLO(these in particular where a pain as i only part filled my order so when they were down things werent so bad but when they went crazy I was a little upset!)Anyway both came very good so sometimes these things work out-others will probably say i am crazy and might agree with them




No not crazy at all, as I've done it 2.

And summarise, my reasons were the perception of bargin(which can't fall further) coupled with the STRONG belief that it will bounce soon, the next, day, on the next good news story.

SevenFX


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## SevenFX (23 October 2007)

juw177 said:


> How do you know the trend ends?
> Will you expect a bounce based on historical support and resistance?




I'm no expert here, but I look at 3+ timeframes to confirm trend & trend broken.

Look for entries, not to early as sustained trading in new trend has to be apparent.

Maybe buy the first pullback in new trend....

But again no expert here, just apprentice, hoping to help other very new apprentices with basics.

The circle indicates somewhere I may buy.... with hindsight at my side.. LOL
but it's repeated hindsights that give us confidence... perhaps...???


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## 2020hindsight (23 October 2007)

SevenFX said:


> Requires a healthy account balance, nerves of steel and a stong belief system... well so I experienced b4
> 
> Not anymore as my balance is not so healthy, my nerves are not the same, and my belief system is now shattered.... LOL
> 
> ...



Tek,  sooo interesting this - gets to the question of your philosophy when it comes to trading - and/or gambling - my  as follows ...  ( but thanks for broaching the subject)

1. "The trend is your friend etc" 
Surely the trend is not your friend.  

2. "Who Dares Wins?" 

3. "Buy on bad news (needs nerves of steel)
sell on good (ditto, but less so)".

4. Best way out (of a trough in the graph) is through etc.

PS I think this discussion can easily sit in General Chat - it can be totally unscientific for instance etc.  ( as if there is anything scientific about this stuff, lol).


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## blaze87 (23 October 2007)

i can relate to that.. 
i bought RHG at 0.96 a month ago.. and i have to say.. the drop of 60% drives me crazy.. it makes you wonder about your overall investment strategy

im still holding RHG btw.


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## vishalt (23 October 2007)

When I had a huge amount of BHP @ averaged @ $26 and it starting rising I shorted more and more Rio, so even though BHP went up to $35 or whatever and Rio was under radar for a takeover, I made no money. 

I've realised fighting the trend or going short is very speculative and should be only short-term with strict stop-losses. 

Stocks are only going to go up, there's 3 billion people expected to come in this planet by 2030 and they're all going to need materials, energy, financial services etc.


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## tech/a (23 October 2007)

blaze87 said:


> i can relate to that..
> i bought RHG at 0.96 a month ago.. and i have to say.. the drop of 60% drives me crazy.. it makes you wonder about your overall investment strategy
> 
> im still holding RHG btw.




Blaze.
There are many like yourself.
But I ask this question. (Not having a go).

Why would you not have a stop at say 10% from buy price and then reveiw the stock at a later date.

Had you done this you could now buy the stock still have the veiw that its going to be a great investment 50% cheaper and you could afford to buy 100% more than you did originally?

Over the years Ive been human and ignored stops.That when Ive lost the most on individual trades.

Ive learnt
(1) Let the trade come to you.(Minimise entry risk)
(2) Let it tell you when your wrong.(Find a stop level which shouts YOUR WRONG)
(3) Let it give you what it can.(Learn how to read where a trades at in its history).

Finally regardless of timeframe or instrument---no trend in your favor no profit.


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## blaze87 (23 October 2007)

tech/a said:


> Blaze.
> There are many like yourself.
> But I ask this question. (Not having a go).
> 
> ...




i invested into RHG fully aware of the trouble facing RHG. Even at this point, my valuation of RHG remains unchanged. 

I knew RHG price might go south, but i was confident that RHG would pull through over the long run(ie 1-2 years), hence no stop-loss. Alas, the westpac deal really pull a fast one on me. 
On hindsight, stop-lossing RHG would be great, but i still believe that stop-loss doesn't fit into boring strategy of buy and hold.


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## nikki (23 October 2007)

tech/a said:


> Ive learnt
> (1) Let the trade come to you.(Minimise entry risk)
> (2) Let it tell you when your wrong.(Find a stop level which shouts YOUR WRONG)
> (3) Let it give you what it can.(Learn how to read where a trades at in its history).




hi tech/a - i like your 3 points. would you mind terribly giving some of us an example of what you mean!! obviously not asking for too much detail but whatever might give us a better sense of what it might look like in practice.


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## explod (23 October 2007)

I have traded for the most part on the trend.    Basic concept is, stock sideways for at least 6 months then sudden rise of about 10% is the buy signal.   Set a stop of about 5%. As it goes up, make that a trailing stop all the way.  Simple as that.

Google "Trend following" there are a number of good texts, Covels is the best I know but I think some of Guppy's stuff is good too.

I like gold at the moment for example because it has been in a firm uptrend since 2001.  So I apply the basic trend system to gold stocks.

There are variations with the stop levels as you get used to a stock you may see it effected by general market volatility so you could well hold through a 10% correction once it has travelled up some distance.   But for a beginner hold to the 5% and your portfolio values will grow.

Just my 2cents worth.

And my overrider "when in doubt, get out"


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## tech/a (23 October 2007)

nikki said:


> hi tech/a - i like your 3 points. would you mind terribly giving some of us an example of what you mean!! obviously not asking for too much detail but whatever might give us a better sense of what it might look like in practice.





OK
I traded live MGX on this thread

http://www.thechartist.com.au/forum/ubbthreads.php?ubb=showflat&Number=67639&page=1#Post67639
I've had a few trades and am still in a trade in MGX but over the first 3 pages of the thread you'll be able to follow the initial trade.

All other trades have been taken and held on similar principals.


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## roland (23 October 2007)

nikki said:


> hi tech/a - i like your 3 points. would you mind terribly giving some of us an example of what you mean!! obviously not asking for too much detail but whatever might give us a better sense of what it might look like in practice.




Hi Nikki, I can put my own spin on the 3 points.

If you want to buy, set the price you want to pay to make it worthwhile. For example, yesterday Babcock & Brown dropped, I checked my holdings and decided that I wanted the stock at no greater than $26.30. I put my order in and watched the SP drop to $26.30 - I didn't get it, it bounced a few orders above mine - I was very tempted to chase but resolutely stuck to Point # 1. Yesterday I did the same with Zinifex and scored a packet at $17.00 by waiting. Basically my style is not to chase the stock - set your limit and let it come to you.

Point 2, if you have let your stock come to you and keeps falling beyond your comfort zone - pull it. Personally I am not good at this (I hate taking a loss), I would be more inclined to take another position at a lower SP and average it.

Point 3 sounds like knowing something about the stock and what it it's capable of. It is of little interest to me buying a stock in a dip at the top of cycle. If you follow a stock long enough, you know when it is at a bargain price, you would also know when it is peaking and you should take your profit.

That's my simple take


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## 2020hindsight (23 October 2007)

blaze87 said:


> i invested into RHG fully aware of the trouble facing RHG. Even at this point, my valuation of RHG remains unchanged.
> 
> I knew RHG price might go south, but i was confident that RHG would pull through over the long run(ie 1-2 years), hence no stop-loss. Alas, the westpac deal really pull a fast one on me.
> On hindsight, stop-lossing RHG would be great, but i still believe that stop-loss doesn't fit into boring strategy of buy and hold.



I agree blaze - don't like stops at all  (sorry tech)

Then again - I had shares in one coy (minor portion of the portfolio) - I held because of the fact that the initials are the same as the kids. 
(Told you it needn't be scientific lol) - but after I'd lost 50% .... I pulled the plug on it.  Boy did that piss off the missus.  

I explained to her......... Let's just pretend the kids are called something else .
I now refer to them by their new nicknames Bernard Hal and Penelope.


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## 2020hindsight (23 October 2007)

Trading against the trend ??
I think this thread should be combined with "Problem Gambling" lol


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## explod (23 October 2007)

blaze87 said:


> i invested into RHG fully aware of the trouble facing RHG. Even at this point, my valuation of RHG remains unchanged.
> 
> I knew RHG price might go south, but i was confident that RHG would pull through over the long run(ie 1-2 years), hence no stop-loss. Alas, the westpac deal really pull a fast one on me.
> On hindsight, stop-lossing RHG would be great, but i still believe that stop-loss doesn't fit into boring strategy of buy and hold.




IMHO buy and hold is the most dreadful strategy that I know and believe that it was created to serve the interests of lazy analylists and financial advisers.  Hence the great losses on Telstra 2, HIH et al.

Got rid of my last adviser 5 years ago when a third of my portfolio was in an overseas Wrap and our dollar was rising from 50cents and I said barley charlie.  If I had held and stayed with him I would be down at least 50% on that.


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## blaze87 (23 October 2007)

i doubt buy and hold is the worst strategy.
if so, explain how warren buffet became the second richest man purely by investing


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## explod (23 October 2007)

blaze87 said:


> i doubt buy and hold is the worst strategy.
> if so, explain how warren buffet became the second richest man purely by investing




Warren Buffet researches the nuts off a company and then often goes about value adding by his input.   The buy and hold does not account for misshaps, if a stock suddenly dives and you cant see the reason one should get out in my view.    

Perhaps my statement was a bit of a stretch but to the newcomer the continued emphasis on buy and hold can if not qualified cause problems in overall approach.

A good stock brought for dividend return, yes whole different ball game but still a large drop with no explanation is a danger signal IMHO.


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## motorway (23 October 2007)

blaze87 said:


> i doubt buy and hold is the worst strategy.
> if so, explain how warren buffet became the second richest man purely by investing




A master of taking advantage of trends and technical positions esp

technical positions of overbought and oversold

that is what the Mr Market analogy is about

and doesn't that have an interesting lineage


It is about when You Buy and When You hold
After You have determined what.

   The price you pay determines the future return..
 The entry is the one thing You can totally control 100%


motorway


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