# Ryan's Trading Journal (F/A+T/A Strategy)



## Rypieee

Hey ASF readers!

I have finally decided to take the jump and start up my own thread, I wish to open myself and my trading up to ASF readers, new or old, to share my thoughts and my methods, my decision making process and trade management techniques. I hope that by doing this, I will be held accountable by the many experienced traders/investors on this network and be able to fast track my journey. For the new folks, I hope you enjoy this thread by a inexperienced/new trader and maybe even learn a thing or two from my mistakes.

*Basic Info of myself*
I am a young adult, based in Melbourne, who graduated out of RMIT in 2016 with a Economics and Finance Degree, I am currently working in the financial planning industry with the aspiration to become a financial adviser. I am also interested in the proprietary trading scene and might take a chance with it in the future should the opportunity arises (I get fired from financial planning :x).

*Trading History*
I started my trading journey back in December 2015 where I started to read up on various books by recommended authors, the Australian Financial Review, websites by fund managers and podcasts to really build my knowledge up. I begun trading real money - did not use a demo account because I was too eager - on June 2016. Between June 2016 till March 2017, I was fine-tuning my strategy and trading plan to come up with something solid, my progress between that time have been a pretty wild swing, overall, from March 2017, I have lost a bit of my original capital. What I got out of that experience though, was a pretty solid trading plan, experience in the market with ups and downs, developed my stomach to take losses and be logical when there are winners. Regrets? No.

*Trading Strategy*
The trading strategy that I employ consist of 3 levels in the following order:

1) Global/Australian economic view

2) Bottom-up Fundamental Analysis (Outsourced majority of the work to Stock Doctor)
https://www.lincolnindicators.com.au/  <--Here's the link to them

3) Technical Analysis to determine entry, exit, demand, supply & direction.

To simply break it down, I would take a view on the Global & Australian economy and try to locate where the headwinds and tailwinds are. Once I determine which sectors have a headwind behind them, I would then review them fundamentally. For example, if Australia's current headwind is that we could see the AUD depreciating to further levels from it's current point, I would start searching for companies that derive their earnings from overseas to take advantage of the currency advantage. If I located a tailwind that could impact a current stock holding, I would start to see how big the impact would be and consider exiting the stock.

Fundamental research have been outsourced to Lincoln Indicators aka Stock Doctor*(SD)*, and I rely on their financial health ratings. SD have 5 ratings for all companies on the ASX which are listing in the following order of highest to lowest *[Strong, Satisfactory, Early Warning, Marginal and Distressed].* I will only, at all times, trade in stocks that are at least *STRONG *or *SATISFACTORY*. SD also have recommended stocks called Star Growth Stocks and Borderline Star Growth Stocks (there is also income stocks but as I am growth focused, I will not include them in the thread). I will lean in favour to a Star Growth Stock/Borderline Star Growth Stock over a Non-Star Growth Stock should I have to make a decision between the two. One thing that I like (fundamentally) to see in a stock that I will trade in are strong & continued Earnings per share growth in the double digits, I believe that strong earnings growth and strong share price appreciation have a high correlation.

Once I have a pool of stocks that have passed the above filter, I will then do my technical work on it. My technical analysis does not use any indicators, only *Price Action, Volume, Support and Resistance levels, Moving Averages and Average True Range(for determining my stop loss).* I would enter a stock from breakout, the main setup that I like would be a B/O above horizontal resistance [shout out to Peter2 for his thread and teaching me what to look for], however, I do use other setups from time to time. I also like to use volume analysis before entering a trade and even managing a trade to see what the markets are doing[buyers and sellers] and for volume analysis, I still have a lot to learn but Tech/A have helped me in learning VSA through his thread "Tech/A's interesting charts". 

*My trade goals:*
My short term focus for each and every trade would be to make money on the breakout, once the breakout is completed and price action continues in that direction, I would alter the trade to a more trend following approach in order to ride it as far as I can go.

*Setting my Stop Losses*
To make it as brief as possible, I will set up the stop loss levels within x2 to x4 ATR from the entry level. I will *try* to find a level which sits below 2 points of support.

*Outlook for the future*
I intend to keep working on this portfolio and it's strategy to the point whereby I am comfortable with it, I know exactly how to manage it in the proper way and it is a profitable system. Once I feel that I have completed the task, I would like to start looking into the futures market and take what I have learnt from this space to start working on futures.

*Research Materials*
1) Stock Doctor (Paid Service) - Provides research on fundamentals of companies on the ASX
2) Bell Direct - Broker Service, $15 per Trade, simple & easy to use.
3) Australian Financial Review - Newspaper/website that I read every morning
4) Chat with Traders by Aaron Fifield - Listen to traders getting interviewed and hear about other methods out there.
5) Livewire Markets - Free website publishing articles by Fund Managers, this resource has helped me immensely in keeping up to date with things around the world and helps me to formulate my Global/Australian Economic View.
6) Aussie Stock Forums - There are a few threads that I follow on here, to those who are new, ASF is nothing short of a diamond mine for new investors/traders.
7) Podcasts - "Trend Following by Michael Covel (Apple Podcast App), Your money your call - Sky News Business)
8) Trading books - I have collected a few books (10+) since starting my journey and I try to read a new one every 2-3 months.


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## Rypieee

I already have a portfolio that I am currently running so my thread will start with the existing portfolio and I shall start documenting my decision going forward.

My portfolio is almost fully invested with a 7.21% cash balance. I try my best to always have 5-10% Cash within my portfolio because I like the idea that I can participate in a trade that has the stars all aligned should it come up at any time. I should note that if there aren't any opportunities in the market, I am happy to sit in cash and wait for the right opportunity. 

My portfolio is Australian Equities - Long Only.

I should note that this thread will report it's statistics every End-of-week but I scan my watch list every night after the market closes.




Some of my thoughts about my portfolio right now:
1) There are four stocks that sit within the "consumer discretionary", I should only have 2-3 stocks per sector within my portfolio. Having 4 is going over my rule. I also intend to reduce my exposure to the consumer discretionary sector as it is positively correlated to consumer spending. My view on the Australian Economic is that Wage Growth has been flat and will continue to be flat in the near-medium term [not considering the impact of the recently released Budget(2017)]. The property sector will most like be flat or decline in the near to medium term which could erode wealth of Australian families which will further impact Consumer spending.

2) I need to read the budget to understand where the cuts and spending are going to take place. I am quite interested on the budget's infrastructure spending and Medicare Levy + funding of the NDIS. More on this later.

Looking forward to keep you guys updated on my portfolio going forward!


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## tech/a

How do you determine position size.?
Is this a trial portfolio?

Congratulations on putting it up
My initial thought is ---- information overload,

You've worked very hard on stock selection and entry
But I don't see much thought behind trade management 
And diminishing risk.


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## minwa

tech/a said:


> But I don't see much thought behind trade management
> And diminishing risk.




Hmm, I do..New iSl/raised trailing stop/estimated gain or loss at stop and he is aware of weighting in sectors.

That is more risk management than most people.


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## minwa

Rypieee said:


> I am a young adult, based in Melbourne, who graduated out of RMIT in 2016 with a Economics and Finance Degree, I am currently working in the financial planning industry with the aspiration to become a financial adviser. I am also interested in the proprietary trading scene and might take a chance with it in the future should the opportunity arises (I get fired from financial planning :x).




Same course same uni same path as me a few years ago until trading fever took over and I left uni. Good luck interested in following how your trading goes.


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## tech/a

minwa said:


> Hmm, I do..New iSl/raised trailing stop/estimated gain or loss at stop and he is aware of weighting in sectors.
> 
> That is more risk management than most people.




Didn't see the ratcheting stop
A good thing 
The rest is basic


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## Rypieee

minwa said:


> Same course same uni same path as me a few years ago until trading fever took over and I left uni. Good luck interested in following how your trading goes.



Thanks mate, read some of your previous threads and knew you were a melbourne guy, around about my age and went to RMIT


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## Rypieee

tech/a said:


> How do you determine position size.?
> Is this a trial portfolio?
> 
> Congratulations on putting it up
> My initial thought is ---- information overload,
> 
> You've worked very hard on stock selection and entry
> But I don't see much thought behind trade management
> And diminishing risk.




This is a real portfolio with real funds in it and I have been tracking the numbers and transaction since the start of March 2017.

Apologies for the info overload, I just wanted to ensure that I sent the introduction right, put it all on the table so readers understand better how my decision process works.

I thought about adding in position sizing rule but hesitated because everyone have their own way to position their trade. However, I shall put them up now so that experienced traders can read my logic and correct me if i'm wrong.

My position sizing:
1) Determine what you entry point of the stock is (let's say $4.00)
2) Determining where the initial stop loss is (let's say $3.50)
3) My maximum risk per trade is 1% of my total capital (let's say 1% of $50,000 = $500)
4) Difference between entry and iSL =$0.50
5)$500/0.50 = 1000 units of the stock.
6) 1000 x $4.00 = $4,000(parcel size) and this is 8% of my total portfolio which is within the range of 7%-13% that I want per position held.

**Dont want my positions to be too small in comparison to the portfolio nor do I want it too big. hence why i use 7-13% as a gauge. 

I'll type up my risk management after the trade begins. Gotta go to work now!


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## tech/a

I'm having trouble with your maths
You have stock at $130 and $60
If your trading $50k have you bought 
30 or 40 $130 stock?

Why?


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## Skate

Rypieee said:


> Hey ASF readers!
> 
> I have finally decided to take the jump and start up my own thread, I wish to open myself and my trading up to ASF readers, new or old, to share my thoughts and my methods, my decision making process and trade management techniques. I hope that by doing this, I will be held accountable by the many experienced traders/investors on this network and be able to fast track my journey. For the new folks, I hope you enjoy this thread by a inexperienced/new trader and maybe even learn a thing or two from my mistakes.
> 
> *Basic Info of myself*
> I am a young adult, based in Melbourne, who graduated out of RMIT in 2016 with a Economics and Finance Degree, I am currently working in the financial planning industry with the aspiration to become a financial adviser. I am also interested in the proprietary trading scene and might take a chance with it in the future should the opportunity arises (I get fired from financial planning :x).
> 
> *Trading History*
> I started my trading journey back in December 2015 where I started to read up on various books by recommended authors, the Australian Financial Review, websites by fund managers and podcasts to really build my knowledge up. I begun trading real money - did not use a demo account because I was too eager - on June 2016. Between June 2016 till March 2017, I was fine-tuning my strategy and trading plan to come up with something solid, my progress between that time have been a pretty wild swing, overall, from March 2017, I have lost a bit of my original capital. What I got out of that experience though, was a pretty solid trading plan, experience in the market with ups and downs, developed my stomach to take losses and be logical when there are winners. Regrets? No.
> 
> *Trading Strategy*
> The trading strategy that I employ consist of 3 levels in the following order:
> 
> 1) Global/Australian economic view
> 
> 2) Bottom-up Fundamental Analysis (Outsourced majority of the work to Stock Doctor)
> https://www.lincolnindicators.com.au/  <--Here's the link to them
> 
> 3) Technical Analysis to determine entry, exit, demand, supply & direction.
> 
> To simply break it down, I would take a view on the Global & Australian economy and try to locate where the headwinds and tailwinds are. Once I determine which sectors have a headwind behind them, I would then review them fundamentally. For example, if Australia's current headwind is that we could see the AUD depreciating to further levels from it's current point, I would start searching for companies that derive their earnings from overseas to take advantage of the currency advantage. If I located a tailwind that could impact a current stock holding, I would start to see how big the impact would be and consider exiting the stock.
> 
> Fundamental research have been outsourced to Lincoln Indicators aka Stock Doctor*(SD)*, and I rely on their financial health ratings. SD have 5 ratings for all companies on the ASX which are listing in the following order of highest to lowest *[Strong, Satisfactory, Early Warning, Marginal and Distressed].* I will only, at all times, trade in stocks that are at least *STRONG *or *SATISFACTORY*. SD also have recommended stocks called Star Growth Stocks and Borderline Star Growth Stocks (there is also income stocks but as I am growth focused, I will not include them in the thread). I will lean in favour to a Star Growth Stock/Borderline Star Growth Stock over a Non-Star Growth Stock should I have to make a decision between the two. One thing that I like (fundamentally) to see in a stock that I will trade in are strong & continued Earnings per share growth in the double digits, I believe that strong earnings growth and strong share price appreciation have a high correlation.
> 
> Once I have a pool of stocks that have passed the above filter, I will then do my technical work on it. My technical analysis does not use any indicators, only *Price Action, Volume, Support and Resistance levels, Moving Averages and Average True Range(for determining my stop loss).* I would enter a stock from breakout, the main setup that I like would be a B/O above horizontal resistance [shout out to Peter2 for his thread and teaching me what to look for], however, I do use other setups from time to time. I also like to use volume analysis before entering a trade and even managing a trade to see what the markets are doing[buyers and sellers] and for volume analysis, I still have a lot to learn but Tech/A have helped me in learning VSA through his thread "Tech/A's interesting charts".
> 
> *My trade goals:*
> My short term focus for each and every trade would be to make money on the breakout, once the breakout is completed and price action continues in that direction, I would alter the trade to a more trend following approach in order to ride it as far as I can go.
> 
> *Setting my Stop Losses*
> To make it as brief as possible, I will set up the stop loss levels within x2 to x4 ATR from the entry level. I will *try* to find a level which sits below 2 points of support.
> 
> *Outlook for the future*
> I intend to keep working on this portfolio and it's strategy to the point whereby I am comfortable with it, I know exactly how to manage it in the proper way and it is a profitable system. Once I feel that I have completed the task, I would like to start looking into the futures market and take what I have learnt from this space to start working on futures.
> 
> *Research Materials*
> 1) Stock Doctor (Paid Service) - Provides research on fundamentals of companies on the ASX
> 2) Bell Direct - Broker Service, $15 per Trade, simple & easy to use.
> 3) Australian Financial Review - Newspaper/website that I read every morning
> 4) Chat with Traders by Aaron Fifield - Listen to traders getting interviewed and hear about other methods out there.
> 5) Livewire Markets - Free website publishing articles by Fund Managers, this resource has helped me immensely in keeping up to date with things around the world and helps me to formulate my Global/Australian Economic View.
> 6) Aussie Stock Forums - There are a few threads that I follow on here, to those who are new, ASF is nothing short of a diamond mine for new investors/traders.
> 7) Podcasts - "Trend Following by Michael Covel (Apple Podcast App), Your money your call - Sky News Business)
> 8) Trading books - I have collected a few books (10+) since starting my journey and I try to read a new one every 2-3 months.




Hi Rypieee

Minor point about Headwinds & Tailwinds

The term "Headwind" is a wind blowing from directly in front, opposing forward motion, stunting or moving growth lower.

-- whereas --

The term "Tailwinds" is a wind blowing from behind helping to move growth higher.


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## Rypieee

tech/a said:


> I'm having trouble with your maths
> You have stock at $130 and $60
> If your trading $50k have you bought
> 30 or 40 $130 stock?
> 
> Why?




Talking about CSL which is the stock where I bought in at $127, *BASED* on the $500 max risk that I am willing to take on the stock, I would be buying 28 units of CSL.

Btw the figure of $50,000 that I'm using is not my actual portfolio value, just an example. I don't want to disclose my balance so hence, everything is in % and no units are provided


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## Rypieee

Skate said:


> Hi Rypieee
> 
> Minor point about Headwinds & Tailwinds
> 
> The term "Headwind" is a wind blowing from directly in front, opposing forward motion, stunting or moving growth lower.
> 
> -- whereas --
> 
> The term "Tailwinds" is a wind blowing from behind helping to move growth higher.




I had it mixed up! Thanks for clarifying!

Always thought headwind was positive because it's "heading" and that's like a forward moving projection description in my head while tail is like a backwards projection!

I gotta try and remember it in a bird's term, headwind = against you and tailwind=behind you.

Thanks for bringing that up for me


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## ducati916

I always enjoy looking at real time trading of any time frame.

I have no real comment on your plan. Seems to be reasonable. The issue is never the 'plan', the issue is invariably execution of the plan. As Tyson once said, 'Everyone has a plan until they get punched in the face'. So your plan seems fair and reasonable, with all of the important bases covered, it will be interesting to see how disciplined you remain to your plan.

Are 'alterations to the plan' part of the plan? From what you have said above, it would seem that they are.

If they are, how will you differentiate 'subjective alterations' from 'objective alterations'?

How much impact will fundamental/technical dichotomies have on adjusting positions? By that I mean: if a downgrade results in an open trade stock moving from 'good' to 'bad', but the technical signal remains unchanged, what will you do?

jog on
duc


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## Rypieee

ducati916 said:


> I always enjoy looking at real time trading of any time frame.
> 
> I have no real comment on your plan. Seems to be reasonable. The issue is never the 'plan', the issue is invariably execution of the plan. As Tyson once said, 'Everyone has a plan until they get punched in the face'. So your plan seems fair and reasonable, with all of the important bases covered, it will be interesting to see how disciplined you remain to your plan.
> 
> Are 'alterations to the plan' part of the plan? From what you have said above, it would seem that they are.
> 
> If they are, how will you differentiate 'subjective alterations' from 'objective alterations'?
> 
> How much impact will fundamental/technical dichotomies have on adjusting positions? By that I mean: if a downgrade results in an open trade stock moving from 'good' to 'bad', but the technical signal remains unchanged, what will you do?
> 
> jog on
> duc




Now that my trade book is an open book, I hope that the honesty will help me exercise discipline.

As I rely on both technical analysis and fundamental analysis, there are times where I have to pull a stock out based on a discretionary decision (change in fundamentals but technicals still strong).

I will give an example of two recent stocks whose technicals are strong but fundamentals aren't in play.

NHF - the trend is strong with this one but I exit out of the stock at $6.00 when the news of the visa 457 will be cancelled. SDF is an insurance stock that I hold but it runs the brokers, not the insurance policies so I don't see a material impact to them compared to NHF.

NCK - the trend is strong with this as well but when the news about mortgage stress increasing within Australian families, I decided to pull the stock out and start cutting stocks that have a med-high exposure to the property sector.

Now some might ask me (or me talking to myself) why don't you just wait for the technical analysis to tell you when you get out aka. stock hitting the stop loss? My decision to cut it before then would be that the stock is no longer aligned to my views on the macro-side and that the funds from that stock can be used to find another opportunity in a different stock that has the right things going for them.

The opportunity cost of holding a stock until it hits my iSL is that I can't use those funds in another stock, which could run off while i'm waiting for my one to hit the iSL. Could go the other way as well, I mean, NHF and NCK could run off and couldve made me more money but I am happy to be conservative with my risk and allocate my stocks accordingly.


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## ducati916

Would your 'discretion' extend to a situation where a fundamental upgrade from 'satisfactory' to 'good' is in conflict with the technicals, viz, the existing uptrend weakens and threatens to trigger a technical stop? Would you lower/ignore the technical stop?

jog on
duc


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## Rypieee

ducati916 said:


> Would your 'discretion' extend to a situation where a fundamental upgrade from 'satisfactory' to 'good' is in conflict with the technicals, viz, the existing uptrend weakens and threatens to trigger a technical stop? Would you lower/ignore the technical stop?
> 
> jog on
> duc




Technical stops must always be adhered to, so in the situation whereby fundamentals are improving but technicals is weakening, I will follow the T/A's stop loss. Should an opportunity present itself again later in the stock with the right T/A and F/A, then I can re-enter


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## ducati916

So based on your two responses you have illustrated an area of inconsistency in your plan.

In a technical uptrend [no stop being triggered], a fundamental negative takes you out of the trade.
In a technical stop being triggered, an upgrade from satisfactory to good, a fundamental positive, also takes you out of the trade.

Is this an issue? I suppose that depends on market conditions to an extent as far as profitability and how your paid fundamental chaps analyse a stock.

Two examples:

Stock A in an uptrend. Receives SD downgrade from Satisfactory to Bad. Downgrade is based on an increase in leverage and falling coverage of that cost from revenues/net profit.

Stock A continues its uptrend unabated. The increased leverage, over time, increases operating revenues/net profit, coverage returns to normal/acceptable, Stock A continues higher. Real world example would be AMZN.

Stock B initially trending higher on a 'Satisfactory' analysis. Upgraded fundamentally based on winning new contracts. We can speculate that the 'uptrend' was in anticipation of the contracts being won and the news that they are won triggers the upgrade, but, early buyers exit the trade, causing the pullback and triggering your technical stop.

Have you made the correct 'discretionary' decisions?

My concern is: why bother with the fundamentals at all when it is primarily the technicals driving your trading plan?

jog on
duc


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## Rypieee

ducati916 said:


> So based on your two responses you have illustrated an area of inconsistency in your plan.
> 
> In a technical uptrend [no stop being triggered], a fundamental negative takes you out of the trade.
> In a technical stop being triggered, an upgrade from satisfactory to good, a fundamental positive, also takes you out of the trade.
> 
> Is this an issue? I suppose that depends on market conditions to an extent as far as profitability and how your paid fundamental chaps analyse a stock.
> 
> Two examples:
> 
> Stock A in an uptrend. Receives SD downgrade from Satisfactory to Bad. Downgrade is based on an increase in leverage and falling coverage of that cost from revenues/net profit.
> 
> Stock A continues its uptrend unabated. The increased leverage, over time, increases operating revenues/net profit, coverage returns to normal/acceptable, Stock A continues higher. Real world example would be AMZN.
> 
> Stock B initially trending higher on a 'Satisfactory' analysis. Upgraded fundamentally based on winning new contracts. We can speculate that the 'uptrend' was in anticipation of the contracts being won and the news that they are won triggers the upgrade, but, early buyers exit the trade, causing the pullback and triggering your technical stop.
> 
> Have you made the correct 'discretionary' decisions?
> 
> My concern is: why bother with the fundamentals at all when it is primarily the technicals driving your trading plan?
> 
> jog on
> duc





Yeah I see your point in the above, in Stock A's basis, I would exit based on a change in fundamentals as a pre-emptive move, I can be wrong all the time using this but I am comfortable with missing out on further gains on the SP - should the fundamental changes not be as impactful as I thought it will be, I will consider re-entering the stock.

In Stock B basis, while the fundamentals are improving, the changes have already been incorporated into the share price. So when the I am already in the stock and I rode up the fundamental changes that were added into the SP before the announcement or change, should the SP hit my stop after a good change in the company, I'm happy to sell - hopefully with a gain.

My belief is that fundamental changes are always incorporated into the share price prior to the actual announcement, whether it is an immediate change or a gradual change over time. So T/A is a tool that can forecast changes in the fundamentals before it is released.

In saying that, there are cases whereby a stock might continue to rise even though the fundamental odds are against them and that is where I am a little bit more careful. I think investors can be emotional at times and continue to push up an up trending stock even though there is a fundamental disadvantage to the stock. In cases like this, I would sell the stock and look else where because the tailwinds aren't there for me anymore.

I also understand that while I have a lot of the basics down in my trading plan, my intend to combine F/A and T/A into a strategy will not be an easy task. I do not want to solely rely on technicals. I will continue to work on my strategy and try to have it more defined as I progress


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## tech/a

Well currently you have 10 stocks all in profit.
I rarely have my 5 stocks all in profit.
Your doing something right!

Oh and I've never understood why anonymous
People speaking to anonymous people think disclosing
A figure which could just as easily be fictitious Or real
is so Much a secret.


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## Rypieee

tech/a said:


> Well currently you have 10 stocks all in profit.
> I rarely have my 5 stocks all in profit.
> Your doing something right!
> 
> Oh and I've never understood why anonymous
> People speaking to anonymous people think disclosing
> A figure which could just as easily be fictitious Or real
> is so Much a secret.




Only have winners left in my portfolio has my losers have been kicked out Tech/a, still early days to call it
My realised losses are higher than my realised winnings but overall (including my open profits), I am up. Shall post up current performance in a tad!


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## ducati916

Rypieee said:


> In Stock B basis, while the fundamentals are improving, the changes have already been incorporated into the share price. So when the I am already in the stock and I rode up the fundamental changes that were added into the SP before the announcement or change, should the SP hit my stop after a good change in the company, I'm happy to sell - hopefully with a gain.




Not necessarily, really depends on the P/E assigned, and assumed going forward.

They may be, but in your earlier post you alluded that you wanted 'growth' stocks, as you believe that strong earnings growth is closely correlated to share price appreciation.

So in this example, where you have earnings growth, you want to sell the share based on a technical signal, which could take you out of the very fundamental driver you value.

jog on
duc


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## ducati916

Rypieee said:


> My belief is that fundamental changes are always incorporated into the share price prior to the actual announcement, whether it is an immediate change or a gradual change over time. So T/A is a tool that can forecast changes in the fundamentals before it is released.




Technicals are very 'emotion' driven. Buying begets buying, selling begets selling. Fundamentals and technicals can become very disconnected for significant periods of time in both directions.

My point, without belabouring it is: technicals and fundamentals do not mix that well, if at all. To incorporate them both, simultaneously into a trading 'plan', while seemingly logical on paper, rarely works out well in practice.

jog on
duc


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## Rypieee

ducati916 said:


> Technicals are very 'emotion' driven. Buying begets buying, selling begets selling. Fundamentals and technicals can become very disconnected for significant periods of time in both directions.
> 
> My point, without belabouring it is: technicals and fundamentals do not mix that well, if at all. To incorporate them both, simultaneously into a trading 'plan', while seemingly logical on paper, rarely works out well in practice.
> 
> jog on
> duc




EPS Growth % 1yr forecast is definitely a figure that I would look at when doing stock selection. Maybe I could try and clarify it up a bit for myself as well. A lot of the fundamental analysis on my trading strategy works during the filtering stage, I might want to find stocks have have double digit EPSG1Year(>10%), ROA/ROE(depending on what type of company it is) on an improving trend from previous reporting periods. and Rev Growth being positive. I also look for stocks that have P/E ratios within +/- 20 of their industry average and have a 1 year forecast P/E that is decreasing (based on current prices).

However, once I enter the stock, the fundamentals analysis and the economy analysis have already been completed and I now rely on technicals to manage the trade. That being said, while technicals are playing the bigger part in the management of the trade. If a stock's economy or fundamental analysis changes drastically(so i think) then I want to be pre-emptive and take a stock out before the technicals say get out.

Say for example, NHF was a stock that ticked all the right boxes:
Macroview - Population growth is growing in Australia, immigration is growing and private health insurance should rise with those tailwinds.
Fundamental - Great company, not gonna go into full detail there but double digit forecast growth figures, reasonably P/E
Technical - Trending strongly since interim report in Feb. Bought on breakout.

But the government's cancellation of the 457 Visa and introducing a new Visa System could impact the earnings of NHF going forward. I took NHF out based on that. 

It is a gray area and I am aware about it, I also understand that at times, I will be conflicted with my decision but isn't that me just being a discretionary investor/trader?

BTW just want to say thanks for making me think about my trading plan more


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## peter2

Good on you for starting this thread. I'm sure you'll learn a lot and more quickly with the interaction of others. Contributors will raise aspects that may make you question your beliefs and opinions. This will be good as you'll examine and decide what's really important to you and what isn't. 

Ducati has already done that and you should consider your responses carefully. Consistent application of your plan is very important so if there are any aspects that are unclear in your mind (eg the contradictions between the fundamentals and the technicals on your exits) you won't be consistent. 

Your plans will adapt as you gain experience. Some rules that you use now may become guidelines in the future and vice versa. 

@ducati916  Thanks, you've raised many excellent points for a new trader/investor to consider. 



Rypieee said:


> It is a gray area and I am aware about it, I also understand that at times, I will be conflicted with my decision but isn't that me just being a discretionary investor/trader?




It's very important that you minimise/eliminate any gray area's if you want to be a highly profitable trader. You may use discretion when selecting stocks to trade and how much of your capital you'll invest but once the trade has started you should be applying a set of rules.


----------



## OmegaTrader

Rypieee said:


> Hey ASF readers!
> 
> I have finally decided to take the jump and start up my own thread, I wish to open myself and my trading up to ASF readers, new or old, to share my thoughts and my methods, my decision making process and trade management techniques. I hope that by doing this, I will be held accountable by the many experienced traders/investors on this network and be able to fast track my journey. For the new folks, I hope you enjoy this thread by a inexperienced/new trader and maybe even learn a thing or two from my mistakes.
> 
> *Basic Info of myself*
> I am a young adult, based in Melbourne, who graduated out of RMIT in 2016 with a Economics and Finance Degree, I am currently working in the financial planning industry with the aspiration to become a financial adviser. I am also interested in the proprietary trading scene and might take a chance with it in the future should the opportunity arises (I get fired from financial planning :x).
> 
> *Trading History*
> I started my trading journey back in December 2015 where I started to read up on various books by recommended authors, the Australian Financial Review, websites by fund managers and podcasts to really build my knowledge up. I begun trading real money - did not use a demo account because I was too eager - on June 2016. Between June 2016 till March 2017, I was fine-tuning my strategy and trading plan to come up with something solid, my progress between that time have been a pretty wild swing, overall, from March 2017, I have lost a bit of my original capital. What I got out of that experience though, was a pretty solid trading plan, experience in the market with ups and downs, developed my stomach to take losses and be logical when there are winners. Regrets? No.
> 
> *Trading Strategy*
> The trading strategy that I employ consist of 3 levels in the following order:
> 
> 1) Global/Australian economic view
> 
> 2) Bottom-up Fundamental Analysis (Outsourced majority of the work to Stock Doctor)
> https://www.lincolnindicators.com.au/  <--Here's the link to them
> 
> 3) Technical Analysis to determine entry, exit, demand, supply & direction.
> 
> To simply break it down, I would take a view on the Global & Australian economy and try to locate where the headwinds and tailwinds are. Once I determine which sectors have a headwind behind them, I would then review them fundamentally. For example, if Australia's current headwind is that we could see the AUD depreciating to further levels from it's current point, I would start searching for companies that derive their earnings from overseas to take advantage of the currency advantage. If I located a tailwind that could impact a current stock holding, I would start to see how big the impact would be and consider exiting the stock.
> 
> Fundamental research have been outsourced to Lincoln Indicators aka Stock Doctor*(SD)*, and I rely on their financial health ratings. SD have 5 ratings for all companies on the ASX which are listing in the following order of highest to lowest *[Strong, Satisfactory, Early Warning, Marginal and Distressed].* I will only, at all times, trade in stocks that are at least *STRONG *or *SATISFACTORY*. SD also have recommended stocks called Star Growth Stocks and Borderline Star Growth Stocks (there is also income stocks but as I am growth focused, I will not include them in the thread). I will lean in favour to a Star Growth Stock/Borderline Star Growth Stock over a Non-Star Growth Stock should I have to make a decision between the two. One thing that I like (fundamentally) to see in a stock that I will trade in are strong & continued Earnings per share growth in the double digits, I believe that strong earnings growth and strong share price appreciation have a high correlation.
> 
> Once I have a pool of stocks that have passed the above filter, I will then do my technical work on it. My technical analysis does not use any indicators, only *Price Action, Volume, Support and Resistance levels, Moving Averages and Average True Range(for determining my stop loss).* I would enter a stock from breakout, the main setup that I like would be a B/O above horizontal resistance [shout out to Peter2 for his thread and teaching me what to look for], however, I do use other setups from time to time. I also like to use volume analysis before entering a trade and even managing a trade to see what the markets are doing[buyers and sellers] and for volume analysis, I still have a lot to learn but Tech/A have helped me in learning VSA through his thread "Tech/A's interesting charts".
> 
> *My trade goals:*
> My short term focus for each and every trade would be to make money on the breakout, once the breakout is completed and price action continues in that direction, I would alter the trade to a more trend following approach in order to ride it as far as I can go.
> 
> *Setting my Stop Losses*
> To make it as brief as possible, I will set up the stop loss levels within x2 to x4 ATR from the entry level. I will *try* to find a level which sits below 2 points of support.
> 
> *Outlook for the future*
> I intend to keep working on this portfolio and it's strategy to the point whereby I am comfortable with it, I know exactly how to manage it in the proper way and it is a profitable system. Once I feel that I have completed the task, I would like to start looking into the futures market and take what I have learnt from this space to start working on futures.
> 
> *Research Materials*
> 1) Stock Doctor (Paid Service) - Provides research on fundamentals of companies on the ASX
> 2) Bell Direct - Broker Service, $15 per Trade, simple & easy to use.
> 3) Australian Financial Review - Newspaper/website that I read every morning
> 4) Chat with Traders by Aaron Fifield - Listen to traders getting interviewed and hear about other methods out there.
> 5) Livewire Markets - Free website publishing articles by Fund Managers, this resource has helped me immensely in keeping up to date with things around the world and helps me to formulate my Global/Australian Economic View.
> 6) Aussie Stock Forums - There are a few threads that I follow on here, to those who are new, ASF is nothing short of a diamond mine for new investors/traders.
> 7) Podcasts - "Trend Following by Michael Covel (Apple Podcast App), Your money your call - Sky News Business)
> 8) Trading books - I have collected a few books (10+) since starting my journey and I try to read a new one every 2-3 months.




Good luck with it.

Well done for being really open and also honest with yourself.

I think another aspect to look at is standard deviation and return of your strategy. Compare this to the return and risk of the market, passive investment.

In the analysis adjust for taxation and commissions. Now try to match the profiles of the two strategies.

You can use borrowing to gear a lower volatility strategy and smaller position size to reduce a higher volatility strategy and vice versa. 

Now  your strategy should be higher than the market risk return profile. Of course over time this will change and mistakes/learning etc etc. Sometime higher, sometimes lower than the market, but over time  from a pure economical perspective it has to be consistently  higher in the longer term to be economically profitable.

The rate the strategy is achieving above this passive strategy is the surplus created by active management.

If you want to take it further, to be economically above working 

own capital available* surplus return > Wages

prop capital available *profit split* Return > Wages 

If that capital is from yourself or prop changes the assumptions etc etc

Also part of it is the hobby and knowledge side, to take responsibility for your own financial future, is normally a good thing. Sometimes we do things because we like it,rather than for money.



My limited two cents


----------



## Rypieee

OmegaTrader said:


> Good luck with it.
> 
> Well done for being really open and also honest with yourself.
> 
> I think another aspect to look at is standard deviation and return of your strategy. Compare this to the return and risk of the market, passive investment.
> 
> In the analysis adjust for taxation and commissions. Now try to match the profiles of the two strategies.
> 
> You can use borrowing to gear a lower volatility strategy and smaller position size to reduce a higher volatility strategy and vice versa.
> 
> Now  your strategy should be higher than the market risk return profile. Of course over time this will change and mistakes/learning etc etc. Sometime higher, sometimes lower than the market, but over time  from a pure economical perspective it has to be consistently  higher in the longer term to be economically profitable.
> 
> The rate the strategy is achieving above this passive strategy is the surplus created by active management.
> 
> If you want to take it further, to be economically above working
> 
> own capital available* surplus return > Wages
> 
> prop capital available *profit split* Return > Wages
> 
> If that capital is from yourself or prop changes the assumptions etc etc
> 
> Also part of it is the hobby and knowledge side, to take responsibility for your own financial future, is normally a good thing. Sometimes we do things because we like it,rather than for money.
> 
> 
> 
> My limited two cents





I still need to learn how to compare my statistics against the market's performance and what you said, standard dev.

I am interested in using the Sharpe Ratio to measure my portfolio performance but I don't know where to start and how to measure it... help?

I do have an intent to introduce margin to the portfolio once I am more comfortable with it, would consider leveraging the portfolio by x2 or x3, never more than x5.

Thanks for the encouragement!


----------



## Rypieee

peter2 said:


> Good on you for starting this thread. I'm sure you'll learn a lot and more quickly with the interaction of others. Contributors will raise aspects that may make you question your beliefs and opinions. This will be good as you'll examine and decide what's really important to you and what isn't.
> 
> Ducati has already done that and you should consider your responses carefully. Consistent application of your plan is very important so if there are any aspects that are unclear in your mind (eg the contradictions between the fundamentals and the technicals on your exits) you won't be consistent.
> 
> Your plans will adapt as you gain experience. Some rules that you use now may become guidelines in the future and vice versa.
> 
> @ducati916  Thanks, you've raised many excellent points for a new trader/investor to consider.
> 
> 
> 
> It's very important that you minimise/eliminate any gray area's if you want to be a highly profitable trader. You may use discretion when selecting stocks to trade and how much of your capital you'll invest but once the trade has started you should be applying a set of rules.




Yes, I will need to really sort out and define my exits properly, wholeheartedly agree with you on that point.

I shall take my exit strategies back to the workshop and shall come out with something better after some thought!


----------



## rnr

Rypieee said:


> I am interested in using the Sharpe Ratio to measure my portfolio performance but I don't know where to start and how to measure it... help?




http://investexcel.net/calculating-the-sharpe-ratio-with-excel/


----------



## OmegaTrader

Rypieee said:


> I still need to learn how to compare my statistics against the market's performance and what you said, standard dev.
> 
> I am interested in using the Sharpe Ratio to measure my portfolio performance but I don't know where to start and how to measure it... help?
> 
> I do have an intent to introduce margin to the portfolio once I am more comfortable with it, would consider leveraging the portfolio by x2 or x3, never more than x5.
> 
> Thanks for the encouragement!




My view is that gearing has a sweet spot. Don't have enough of it and you might as well stay in the bank. Over gear and it causes destruction and ultimately death.

No offense but...

lol mate seriously and you are in financial advisory???

My economics and finance degree covered this in about 30% of units or so...

Sharpe ratio is only one quick indicator.

First you need  the data on your strategy and the market/ a passive strategy.

If you can't calculate std and return then that is concerning but it is very easy to google.


You can google  the maths, alpa,sharpe,retunr,std etc etc

http://www.investopedia.com/terms/s/sharperatio.asp






For example your discount rate is 5% and your portfolio return is 10% and std is 10%. Then sharpe is 
(10-5)/10 =.5 That is you are getting .5 return for each 1 unit of risk. STD is the proxy for risk etc etc

Higher sharpe, higher/better risk return profile etc etc



I prefer to plot it on a graph as well as the stats. Then you can change the assumptions and see how this impacts the equity curve and risk return  aspects of the strategy. For example change the gearing discount rate . Change the position size. Change the overall gearing. What is the sweet spot? Which strategy grows money faster. Which strategy has the best profile.Am I beating the market? etc etc

Part of the process is like optimisation. What is the optimal position size? What is the optimal gearing? What is the optimal decision? etc etc  It goes back to basic economics and opportunity cost.  

Of course all based on the past of course. The future well who knows...

gg


----------



## Rypieee

OmegaTrader said:


> My view is that gearing has a sweet spot. Don't have enough of it and you might as well stay in the bank. Over gear and it causes destruction and ultimately death.
> 
> No offense but...
> 
> lol mate seriously and you are in financial advisory???
> 
> My economics and finance degree covered this in about 30% of units or so...
> 
> Sharpe ratio is only one quick indicator.
> 
> First you need  the data on your strategy and the market/ a passive strategy.
> 
> If you can't calculate std and return then that is concerning but it is very easy to google.
> 
> 
> You can google  the maths, alpa,sharpe,retunr,std etc etc
> 
> http://www.investopedia.com/terms/s/sharperatio.asp
> 
> View attachment 71063
> 
> 
> 
> 
> For example your discount rate is 5% and your portfolio return is 10% and std is 10%. Then sharpe is
> (10-5)/10 =.5 That is you are getting .5 return for each 1 unit of risk. STD is the proxy for risk etc etc
> 
> Higher sharpe, higher/better risk return profile etc etc
> 
> 
> 
> I prefer to plot it on a graph as well as the stats. Then you can change the assumptions and see how this impacts the equity curve and risk return  aspects of the strategy. For example change the gearing discount rate . Change the position size. Change the overall gearing. What is the sweet spot? Which strategy grows money faster. Which strategy has the best profile.Am I beating the market? etc etc
> 
> Part of the process is like optimisation. What is the optimal position size? What is the optimal gearing? What is the optimal decision? etc etc  It goes back to basic economics and opportunity cost.
> 
> Of course all based on the past of course. The future well who knows...
> 
> gg




I think most financial adviser would have no clue about the sharemarket, let alone a Sharpe Ratio However, does not mean I shouldnt know haha. Yeah I did learn about it in Uni but never went to class nor paid any attention during my tenure... so my memory on it isn't clear.

BTW regarding the calculations, I know how to calculate median rate and RFR, but how do I calculate STD of the portfolio?


----------



## Rypieee

rnr said:


> http://investexcel.net/calculating-the-sharpe-ratio-with-excel/




Just read the article, thanks for the link, Ill just excel the STD of my portfolio 




OmegaTrader said:


> My view is that gearing has a sweet spot. Don't have enough of it and you might as well stay in the bank. Over gear and it causes destruction and ultimately death.
> 
> No offense but...
> 
> lol mate seriously and you are in financial advisory???
> 
> My economics and finance degree covered this in about 30% of units or so...
> 
> Sharpe ratio is only one quick indicator.
> 
> First you need  the data on your strategy and the market/ a passive strategy.
> 
> If you can't calculate std and return then that is concerning but it is very easy to google.
> 
> 
> You can google  the maths, alpa,sharpe,retunr,std etc etc
> 
> http://www.investopedia.com/terms/s/sharperatio.asp
> 
> View attachment 71063
> 
> 
> 
> 
> For example your discount rate is 5% and your portfolio return is 10% and std is 10%. Then sharpe is
> (10-5)/10 =.5 That is you are getting .5 return for each 1 unit of risk. STD is the proxy for risk etc etc
> 
> Higher sharpe, higher/better risk return profile etc etc
> 
> 
> 
> I prefer to plot it on a graph as well as the stats. Then you can change the assumptions and see how this impacts the equity curve and risk return  aspects of the strategy. For example change the gearing discount rate . Change the position size. Change the overall gearing. What is the sweet spot? Which strategy grows money faster. Which strategy has the best profile.Am I beating the market? etc etc
> 
> Part of the process is like optimisation. What is the optimal position size? What is the optimal gearing? What is the optimal decision? etc etc  It goes back to basic economics and opportunity cost.
> 
> Of course all based on the past of course. The future well who knows...
> 
> gg




Disregard my question!


----------



## Rypieee

Since I just started out and fairly eager to get things moving, I'll do one daily update for the moment, might phase out later on.

Portfolio performance up to date (Starting 1st of March 2017) = *4.64%*
Market performance (ASX200) up to date = *3.04%*




REA and FPH were bought as the recent downtrend seems to have found some support and a trend reversal is in play, however I would like note that REA has touched the previous high at $65.50 and retreated while FPH is closing in on it's previous high of $10.00.

I have tighten the stop loss on REA to $63.00 to give it a chance to break the resistance @ $65.50. The trade was done late (I should have entered at the $57 B/O for better R/R) so the profit on the trade ,should we hit SL, will be small.

With FPH, the stop loss level will be raise as it approaches the $10.00 mark, hope for the stock to break the resistance level but if not, we will be protecting our profits.

With SDF, SSM, WEB and WTC, the estimated loss on those trades are high at the moment as it was only recently initiated, once the SP make some headway, we will bring up the stop loss levels accordingly.

CGF is a relatively new trade as well but it has always been a slow and steady trender which is a bit too slow for my liking. I did the trade due to it's exposure to the ageing population, low volatility trend and consistency+tightness in the price action. The forecast growth figures of CGF are also in the high single digits to low double digits[not the best as most of the stocks I hold have all their forecast figures in the double digits]. I could get annoyed at this trade, be impatient with it and cut it out in the near future but I need to constantly remind myself of the reason why I bought it in the first place - stability ,predictability and consistency. 

For those who wonder if I have a profit taking strategy:
1) Each stock can wavering between 7-13% of the portfolio holding, the highest one atm is ALL which is sitting on 11.40%. Once a stock hits 13%, I would adjust the size down to 10%. [May revise this]
2) If it hits stop loss

I akin myself to a trend follower so I will try to ride a stock all the way to the top. Profit taking on a stock would help me to top up my cash balance while still having exposure to the stock.


----------



## skc

Rypieee said:


> 1) Each stock can wavering between 7-13% of the portfolio holding, the highest one atm is ALL which is sitting on 11.40%. *Once a stock hits 13%, I would adjust the size down to 10%. [May revise this]*




I think this must be revised. Any trend following strategy needs outsized winners. Chopping it down everytime it reaches 13% of your capital will likely do more harm than good.

You have already managed your capital risk by limiting initial position size relative to capital base. You don't need to do it again when the share is trending in the right direction. 

If you must bank some profits, say take half off when it reaches 5-8 Rs or something like that. And do it only once, and let the rest ride on your trailing stop.

Use CGF and ALL as examples and say you bought 12 months ago. How would your return be impacted by this 13% boundary? My guess is pretty meaningfully negative.


----------



## Rypieee

skc said:


> I think this must be revised. Any trend following strategy needs outsized winners. Chopping it down everytime it reaches 13% of your capital will likely do more harm than good.
> 
> You have already managed your capital risk by limiting initial position size relative to capital base. You don't need to do it again when the share is trending in the right direction.
> 
> If you must bank some profits, say take half off when it reaches 5-8 Rs or something like that. And do it only once, and let the rest ride on your trailing stop.
> 
> Use CGF and ALL as examples and say you bought 12 months ago. How would your return be impacted by this 13% boundary? My guess is pretty meaningfully negative.




I would want to revise the figure as I go, the reason why I'm currently happy with the 13% max threshold is because I have a positive expectancy on my portfolio so as say ALL's size grows, my portfolio's size would grow as well + other contributions from other stocks. Maybe I could do a 15% max threshold?

Though I do get your point as well @skc about taking profits impacting my return. I'll take that back to the workshop and decide how to refine it.

Appreciate your comments and time!


----------



## skc

Rypieee said:


> I would want to revise the figure as I go, the reason why I'm currently happy with the 13% max threshold is because I have a positive expectancy on my portfolio so as say ALL's size grows, my portfolio's size would grow as well + other contributions from other stocks. Maybe I could do a 15% max threshold?
> 
> Though I do get your point as well @skc about taking profits impacting my return. I'll take that back to the workshop and decide how to refine it.
> 
> Appreciate your comments and time!




Just run some numbers and see. Your portfolio will grow over time if you have positive expectancy, but it won't always grow in sync with your best performing position.


----------



## Triathlete

Rypieee said:


> For those who wonder if I have a profit taking strategy:
> 1) Each stock can wavering between 7-13% of the portfolio holding, the highest one atm is ALL which is sitting on 11.40%. Once a stock hits 13%, I would adjust the size down to 10%. [May revise this]
> 2) If it hits stop loss
> 
> I akin myself to a trend follower so I will try to ride a stock all the way to the top. Profit taking on a stock would help me to top up my cash balance while still having exposure to the stock.




Using 7%-13% for position sizing when you first enter a stock is good.
Once in a stock  you will also need to maximize the trend by also adding to positions along the way.
I use a strategy where I add in the ratios 4:2:1.....

e.g 1st entry $4000
Add positions $2000
Add positions $1000

I have entered a stock at $1.00 the stock then runs up to $2.00 before starting to retrace at this point I sell half the original position.
If the stock then retraces less than 50% of the original range say to $1.50,so the trend looks strong and likely to continue...It is now an opportunity to add to the existing position and buy in at this $1.50 level using the $2000

 Remember you now have money from the previous sale of half of your first entry to use.
I will now be looking for the stock to rise towards $3.00 before retracing at this point I sell another 50% of position size.

I then repeat what I have mentioned above only you have one more entry of $1000 left should the trend continue.


----------



## tech/a

20 yrs ago I heard of a strategy where by an investor sold his original
Capital in the stock when the stock doubled in price.

He would then hold the remaining stock indefinitely or until he needed some capital

I don't know how he went long term but do know he had 2000 CBA which at the time were a lot less than today! He had 14 holdings then.


----------



## Rypieee

skc said:


> Just run some numbers and see. Your portfolio will grow over time if you have positive expectancy, but it won't always grow in sync with your best performing position.




After much thought and thinking about what sort of trading strategy I want to employ, I've decided that I am going to be a trend follower. You are right, I have already sized my risk based on my capital, why am I restricting the trade again with the trade's size against my capital. Doesn't make any sense.

A trend follower is one who will ride it as far as the trend takes them and that is what I want to do. 

Going forward, I'm going to scrap the 7-13% rule for trade management. However, I am still going to keep the 7-13% rule for trades that are *new*. Keeping the 7-13% rule ensures that the trade's initial size isn't too big or small and adheres to my trading plan of holding between 8-12 stocks within my portfolio!



Triathlete said:


> Using 7%-13% for position sizing when you first enter a stock is good.
> Once in a stock  you will also need to maximize the trend by also adding to positions along the way.
> I use a strategy where I add in the ratios 4:2:1.....
> 
> e.g 1st entry $4000
> Add positions $2000
> Add positions $1000
> 
> I have entered a stock at $1.00 the stock then runs up to $2.00 before starting to retrace at this point I sell half the original position.
> If the stock then retraces less than 50% of the original range say to $1.50,so the trend looks strong and likely to continue...It is now an opportunity to add to the existing position and buy in at this $1.50 level using the $2000
> 
> Remember you now have money from the previous sale of half of your first entry to use.
> I will now be looking for the stock to rise towards $3.00 before retracing at this point I sell another 50% of position size.
> 
> I then repeat what I have mentioned above only you have one more entry of $1000 left should the trend continue.




I have thought about micromanaging the trade to maximize the return on a higher high higher low trend but have put that thought in the "improvement folder" for later. Might revisit this as I knuckle down the basics first!

Thanks for the tip though



tech/a said:


> 20 yrs ago I heard of a strategy where by an investor sold his original
> Capital in the stock when the stock doubled in price.
> 
> He would then hold the remaining stock indefinitely or until he needed some capital
> 
> I don't know how he went long term but do know he had 2000 CBA which at the time were a lot less than today! He had 14 holdings then.




Probably in some part of the world enjoying his money
Have also thought about "Zero Cost Averaging" in the past, implemented it but wasn't tracking my portfolio probably - lest to say, things got a bit messy. Might revisit zero cost averaging in the future.


----------



## Rypieee

Been watching RHC for some time now, made a B/O over the $72.00 2 days ago. Would I have taken the trade based on the breakout? I can see potential for the stock to hit $84.00 which is the prev high. However, would imagine a heap of supply coming in at $78.00 from the gap down.
Some positive things I note with my amateur VSA skills (@tech/a help!!), the recent dip managed to find a lot of demand for the stock (fundies could be buying in at the time).
Won't be entering the stock because I already have 2 healthcare stocks in the portfolio and I am saving the excess cash for stocks that will benefit from the budget!



CAR another one that b/o recently, the red lines mark the resistance range that I see with the recent price action. The B/O retested the new support level and it has some potential to hit $13.60.


----------



## craft

tech/a said:


> 20 yrs ago I heard of a strategy where by an investor sold his original
> Capital in the stock when the stock doubled in price.
> 
> He would then hold the remaining stock indefinitely or until he needed some capital
> 
> I don't know how he went long term but do know he had 2000 CBA which at the time were a lot less than today! He had 14 holdings then.




What's the difference between leaving capital earned from the market as opposed to other capital? Surely that's just a mind trick. The strategy of selective holdings for the long term surely can not be impacted by the source of the capital.


----------



## tech/a

craft said:


> What's the difference between leaving capital earned from the market as opposed to other capital? Surely that's just a mind trick. The strategy of selective holdings for the long term surely can not be impacted by the source of the capital.




Yes I think your right.
Made him feel better.
Like a pokie player
Its not my money its theirs.
In fact its yours!


----------



## pixel

craft said:


> What's the difference between leaving capital earned from the market as opposed to other capital? Surely that's just a mind trick. The strategy of selective holdings for the long term surely can not be impacted by the source of the capital.



There is no difference:
*Your net wealth is the sum of cash in bank plus today's value of your portfolio* (which includes shares, property, and everything else convertible into cash) *minus total debt.
*
Pretending the current value of shares be any different to cash is a favourite mind game of those failing investors who gloss over their cellar dwellers with the excuse "A paper loss isn't a real loss until you sell." 
(... and then they average down till the stock hits zero.)


----------



## craft

pixel said:


> There is no difference:
> *Your net wealth is the sum of cash in bank plus today's value of your portfolio* (which includes shares, property, and everything else convertible into cash) *minus total debt.
> *
> Pretending the current value of shares be any different to cash is a favourite mind game of those failing investors who gloss over their cellar dwellers with the excuse "A paper loss isn't a real loss until you sell."
> (... and then they average down till the stock hits zero.)



Does the same mindset of differing attitude to capital not also underlie the obsession with break-even stops? Willing to give more wriggle room/ benefit of the doubt in profit than in initial drawdown.

Loss aversion of “new” capital in a trade seems so much greater than the aversion to giving back a bit more of the “open profit” to stay in a trade.

This seems to be so even if the “new” capital has been derived from the market anyway. Seems realising a profit changes how capital is thought about.

Treating losses as "not real" like in your last paragraph would be a different mind game again wouldn't it?


----------



## craft

Rypieee said:


> After much thought and thinking about what sort of trading strategy I want to employ, I've decided that I am going to be a trend follower. You are right, I have already sized my risk based on my capital, why am I restricting the trade again with the trade's size against my capital. Doesn't make any sense.
> 
> A trend follower is one who will ride it as far as the trend takes them and that is what I want to do.
> 
> Going forward, I'm going to scrap the 7-13% rule for trade management. However, I am still going to keep the 7-13% rule for trades that are *new*. Keeping the 7-13% rule ensures that the trade's initial size isn't too big or small and adheres to my trading plan of holding between 8-12 stocks within my portfolio!




Tying in with the previous discussion, I'm assuming you are going to treat your capital position as mark to market.

If so and you happen to have a runaway winner in your portfolio – that will skew your position risk calculations as heat and volatility on that large position impacts all the other decisions.

Try your numbers with a stock you brought at 13% of your portfolio and has become a ten bagger whilst the rest have in aggregate basically marked time. funding new positions at the calculated size may not be possible if you don't sell down the large position, so your intended diversification can be compromised as will the risk you apply to the new positions because relatively small swing in the oversized positions have disproportionate swings in the new position risk calculation.


----------



## tech/a

craft said:


> Does the same mindset of differing attitude to capital not also underlie the obsession with break-even stops? Willing to give more wriggle room/ benefit of the doubt in profit than in initial drawdown.




Two things
(1) My testing on real time stop exits shows that well over 70% diminish to my stop if the stock hasn't risen by 1R IE it turns as soon as I buy it.
So no point in throwing money away.
(2) I'm constantly working on better R/R This helps enormously.



> Loss aversion of “new” capital in a trade seems so much greater than the aversion to giving back a bit more of the “open profit” to stay in a trade.




I'm happy with my aversion if you wish to call it that to loss. Ill minimise it where I can. Leaving it to hit my stop in over 70% of cases is not the smartest thing to do in my view.



> This seems to be so even if the “new” capital has been derived from the market anyway. Seems realising a profit changes how capital is thought about.




When doing numbers on capital invested ---yes.



> Treating losses as "not real" like in your last paragraph would be a different mind game again wouldn't it?



These people have no idea how to value their holdings.
Ostriches.


----------



## galumay

tech/a said:


> These people have no idea how to value their holdings.
> Ostriches.




They always seem happy to book the profits as if they were real! You cant really have it both ways.

There is a truth to saying that losses are not real until realised, but then you have to also say gains not realised are not real.

Of course this is ultimately true if you are honestly considering your cash net worth. Because the share market is so liquid it is reasonably safe for the average investor to assume that the paper losses and paper gains would be approximately realised if he were to convert to cash at market on any given day. But, and its an important but, it is only true for any given moment in time.

I can prove this unequivically! My paper profit on SGH was meaningless, just as my paper losses on NWH were.


----------



## craft

tech/a said:


> Two things
> (1) My testing on real time stop exits shows that well over 70% diminish to my stop if the stock hasn't risen by 1R IE it turns as soon as I buy it.
> So no point in throwing money away.
> (2) I'm constantly working on better R/R This helps enormously.
> 
> 
> 
> I'm happy with my aversion if you wish to call it that to loss. Ill minimise it where I can. Leaving it to hit my stop in over 70% of cases is not the smartest thing to do in my view.
> 
> 
> 
> When doing numbers on capital invested ---yes.
> 
> 
> These people have no idea how to value their holdings.
> Ostriches.



If the story that we use to justify our trade/investment does not accord with reality then we need to exit immediately wherever that may be - breakeven has nothing to do with it. Your immediate momentum story may be valid - if it is then the stop should be wherever you first notice you don't have that initial momentum - full stop - If you want to increase your profitability forget about tying stops to breakeven its an arbitrary level to the market, only important to you driven by an illusion underpinned by the mindset we were discussing.

In relation to (2) don't forget profitability is opportunity x expectancy. Yes scratching at B/E can improve the expectancy but its a negative for opportunity. If you take 20 trades and on average 5 are scratched at B/E then true opportunity is only 15 * your expectancy. Having a lower expectancy but a higher opportunity because you ignore B/E might just be more profitable.

F expectancy - I want maximum profit.


----------



## tech/a

Thanks Craft.

Just quickly thinking about it


craft said:


> if it is then the stop should be wherever you first notice you don't have that initial momentum - full stop



Maybe an even better option.
Ill have to look back on it.

(2) Other trades are generally taken that day or next day.
Think its minimal.


----------



## craft

tech/a said:


> Thanks Craft.
> 
> (2) Other trades are generally taken that day or next day.
> Think its minimal.




Hey Tech I think you might be missing the point on opportunity but considering we are being civilised gentlemen I’ll try some examples.


Let’s say we have a batch of twenty trades, 8 profitable for 2R wins 7 losses at -1R and 5 breakeven.


What do we do with the breakeven’s in our expectancy calculation? We can’t add them to just one side we either must ignore them or add them to both.


Our expectancy calc for the 20 trades is either:

Ignoring break evens (which I suspect most do)

(Probability of win [8/15] x average win [2]) minus (Probability of loss [7/15] * average Loss [1])     

Which = 0.6R multiplied by 15 opportunities = profitability of 9R


Including break even on both sides

(Probability of win [13/25] x average win [8*2/13]) minus (Probability of loss [12/25] * average Loss [7*1/12])     

Which = 0.36R multiplied by 25 opportunities = not surprisingly the same profitability of 9R


Don’t fall into the trap of thinking you multiply 0.6R (from the first calc) by 20 to get the profitability – you either have to subtract or add B/E to both the expectancy calculation and the number of opportunities as proofed by doing either equals the same profitability.  


Next scenario:

Let’s say you didn’t scratch any at B/E all 20 trades went on to 2R wins or 1R Loss at a 50% Win ratio.


Here your expectancy is 0.5R – less than the 0.6R above with the B/E stops. But the thing is from this bunch of 20 trades your profitability is higher 20*0.5R = 10R.


Just as win % is only one part of the expectancy equation, expectancy itself is only one part of the profitability equation.  We want the most profit we can from the number of trades we place.


----------



## Rypieee

EOW 01
Portfolio performance up to date (Starting 1st of March 2017) = *2.64%*
Market performance (ASX200) up to date from 1st March 2017 = *2.32%*




Today we sold off REA @ $62.68, which was under our nominated stop loss of $63.00. Was happy to close the trade off because it was nearing previous resistance level and I had the intention to reduce my exposure to the Consumer Disc. sector.

ALL and CGF(intraday) also hit their stop losses. I missed selling them due to being busy at work and not paying as much attention as I normally would. I need to chin up and take action on them come Monday. What if they bounce back up? Monday's going to be hard...

Overall the portfolio sank by about 1.9% while the market closed down 0.7%.

Current mood and today's performance has gotten me a little bit down and starting to doubt the system (I always doubt the system when I have a bad day), I need to be focused on my objective, think rationally and have a handle on my emotions.

On the bright side, I am happy that we have 16% in the cash account that we can use to start up new opportunity.

Shall run my scans this weekend and see if there is any opportunity!


----------



## peter2

Rypieee said:


> Current mood and today's performance has gotten me a little bit down and starting to doubt the system (I always doubt the system when I have a bad day), I need to be focused on my objective, think rationally and have a handle on my emotions.




1. Obviously that doesn't augur well. Today is only one down day. If you want to be a trend trader then you have to tolerate the ups and downs. The pull-backs (like today) set up higher lows that tell us the trend is intact. It could also be the start of a reversal. Nobody knows, but I hope you recognise the difference when it forms. One day against the prevailing trend is not a reversal unless you're a swing or momentum trader. 

One huge down day with bad FA news might be one of your exits. 

2. If one down day triggers some sells then I'd say your stops are too tight for a trend trader, unless you tightened them based on your trade management rules. eg protecting above average profits, change in market trend, unsatisfactory FA news  etc...

3. Once your exit triggers, sell asap without exception. Even if the DOW rises 300pts overnight. If you wait to see what happens after 10am Monday, you're setting a bad example (and making a trading mistake - which you'll record). You can always re-buy it if price action makes a new high showing the trend is still going. 

I could go on, but I wanted to let you know we're watching and hoping you do a good job. If you make any profit in the next six months that'll be a bonus. 

I hope this thread helps you to stick to your plans. You've got to be excited about 40+ years of compounding profits. Wow.


----------



## Cam019

Good to see you finally got this thread up and running Ryan! Just had a read through the thread and any questions I was going to raise have already been addressed.


Rypieee said:


> ALL and CGF(intraday) also hit their stop losses. I missed selling them due to being busy at work and not paying as much attention as I normally would. I need to chin up and take action on them come Monday. What if they bounce back up? Monday's going to be hard...



I'm going to reiterate what Peter has said about no matter what, if a SP trades at or below your stop loss and this is part of your trading plan, you must sell. What if they bounce up and then tank? You can never predict what is going to happen. Emotion needs to be removed from trading decisions.

Apart from that, good luck and I'm interested to see what the future holds for this portfolio.

*subscribed*


----------



## Cam019

Ryan, is there any reason why your stop losses are not in the market?


----------



## Rypieee

peter2 said:


> 1. Obviously that doesn't augur well. Today is only one down day. If you want to be a trend trader then you have to tolerate the ups and downs. The pull-backs (like today) set up higher lows that tell us the trend is intact. It could also be the start of a reversal. Nobody knows, but I hope you recognise the difference when it forms. One day against the prevailing trend is not a reversal unless you're a swing or momentum trader.
> 
> One huge down day with bad FA news might be one of your exits.
> 
> 2. If one down day triggers some sells then I'd say your stops are too tight for a trend trader, unless you tightened them based on your trade management rules. eg protecting above average profits, change in market trend, unsatisfactory FA news  etc...
> 
> 3. Once your exit triggers, sell asap without exception. Even if the DOW rises 300pts overnight. If you wait to see what happens after 10am Monday, you're setting a bad example (and making a trading mistake - which you'll record). You can always re-buy it if price action makes a new high showing the trend is still going.
> 
> I could go on, but I wanted to let you know we're watching and hoping you do a good job. If you make any profit in the next six months that'll be a bonus.
> 
> I hope this thread helps you to stick to your plans. You've got to be excited about 40+ years of compounding profits. Wow.




I feel that my stops are a little to tight for trend trading at times - either that or the recent run up in my portfolio has made me want to retain my profits, hence why my stop losses might be relatively close to the SP.

R.E selling asap without exception, I thought I was getting good at selling without thinking twice once it hit my stop loss but I guess I still have a little bit of hesitancy within me! Stocks will be out on Monday regardless, if there is opportunity to re-enter like you said, then I shall do so at the time.

I am hoping that this thread helps to keep me in line, one of the main reasons why I started this thread!

40 Years+ of compounding profit!! Long way to go though


----------



## Rypieee

Cam019 said:


> Good to see you finally got this thread up and running Ryan! Just had a read through the thread and any questions I was going to raise have already been addressed.
> I'm going to reiterate what Peter has said about no matter what, if a SP trades at or below your stop loss and this is part of your trading plan, you must sell. What if they bounce up and then tank? You can never predict what is going to happen. Emotion needs to be removed from trading decisions.
> 
> Apart from that, good luck and I'm interested to see what the future holds for this portfolio.
> 
> *subscribed*




Thanks for the encouragement mate! Yeah it is a battle for me to remove emotions from my actions, something I definitely need to work on going forward.



Cam019 said:


> Ryan, is there any reason why your stop losses are not in the market?




I'm actually not sure why I don't haha... I check my portfolio pretty often and never saw the need to. Yesterday have been the only time that I didn't act on my stop loss properly. Emotions got the better of me.


----------



## Rypieee

Peter2 made me think about my stop losses so I went to review my past trades that failed and I found something very common in many of them... I did not give the stock enough time to perform and I was strangling the stocks with tight stop losses. As my strategy is a trend following, I need to allow for the stocks to pull back to it's higher low before continuing. I hardly allowed a stock to do that... ASDGADFHFDG so angry with myself right now!!

Here is an example of a trade that I missed - A2M:
	

		
			
		

		
	




I bought into A2M in the green arrow,with a stop loss at $2.80. I got impatient through the week and I was finding *any excuse* to reduce my portfolio's open losses so I raised the SL to $3.00 which was hit on the day before the SP resumed its trend.

*Impatient, being frugal with my losses and strangling the stock* has made me miss out on the run up... There's more than one example btw in my past.

I also reviewed my portfolio this weekend and noticed that while ALL and CGF has hit it's stop loss, it is still behaving in a normal trend behaviour.

*I am going to review the current stop losses on my portfolio tonight and may need to re-adjust some stop losses.
*
Very annoyed with myself now but at the time same, glad I picked this up early.


----------



## tech/a

Why didn't you re enter
You had plenty of opportunities 
Being stopped to minimise potential losses shouldn't mean the stock should be forgotten

Often my best trades are 2/3/4 th attempts

No point beating yourself up


----------



## Triathlete

Rypieee said:


> Peter2 made me think about my stop losses so I went to review my past trades that failed and I found something very common in many of them... I did not give the stock enough time to perform and I was strangling the stocks with tight stop losses. As my strategy is a trend following, I need to allow for the stocks to pull back to it's higher low before continuing. I hardly allowed a stock to do that... ASDGADFHFDG so angry with myself right now!!
> 
> Here is an example of a trade that I missed - A2M:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 71091
> 
> 
> I bought into A2M in the green arrow,with a stop loss at $2.80. I got impatient through the week and I was finding *any excuse* to reduce my portfolio's open losses so I raised the SL to $3.00 which was hit on the day before the SP resumed its trend.
> 
> *Impatient, being frugal with my losses and strangling the stock* has made me miss out on the run up... There's more than one example btw in my past.
> 
> I also reviewed my portfolio this weekend and noticed that while ALL and CGF has hit it's stop loss, it is still behaving in a normal trend behaviour.
> 
> *I am going to review the current stop losses on my portfolio tonight and may need to re-adjust some stop losses.
> *
> Very annoyed with myself now but at the time same, glad I picked this up early.



I think you have the wrong chart up????? this is costa group not A2...????


----------



## Quant

Rypieee said:


> I bought into A2M in the green arrow,with a stop loss at $2.80. I got impatient through the week and I was finding *any excuse* to reduce my portfolio's open losses so I raised the SL to $3.00 which was hit on the day before the SP resumed its trend





Not sure what that chart is but I don't think its A2M , have you considered using a binary algo stop although that will present problems applying it  . Skillset , software and applications needed . But the harder , smarter you work the easier it will become  . helps if you quantify your stops and do a statistical analysis to determine how tight/loose to obtain the optimum outcome . If you measure it , it becomes easier to improve it . Systematic approaches take a lot of the emotion out of it with defined probabilities ...


----------



## Rypieee

Oh god. LOL, I uploaded the wrong chart. But CGC was one of my other example.

A2M was another one where I entered at $2.40, after a few days I brought my stop loss up(for no reason) and got stopped out at $2.00. Sad to say, I missed out on all the recent run up too.


----------



## Rypieee

tech/a said:


> Why didn't you re enter
> You had plenty of opportunities
> Being stopped to minimise potential losses shouldn't mean the stock should be forgotten
> 
> Often my best trades are 2/3/4 th attempts
> 
> No point beating yourself up




I don't have a re-enter strategy and I am a culprit of not watching a stock even after I'm out of it. Thanks for pointing out to me, it never occurred to me to keep watching for 2nd, 3rd and 4th opportunity.. I will need to draft up a watch list of my old stocks going forward.



Quant said:


> Not sure what that chart is but I don't think its A2M , have you considered using a binary algo stop although that will present problems applying it  . Skillset , software and applications needed . But the harder , smarter you work the easier it will become  . helps if you quantify your stops and do a statistical analysis to determine how tight/loose to obtain the optimum outcome . If you measure it , it becomes easier to improve it . Systematic approaches take a lot of the emotion out of it with defined probabilities ...
> 
> 
> View attachment 71092




I thought about algo/system trading before but I have no idea where to start. I do want to look into it eventually after I get my basics down.


----------



## Quant

Rypieee said:


> I thought about algo/system trading before but I have no idea where to start. I do want to look into it eventually after I get my basics down.



FWIW this is a very simple atr based stoploss code and is full adjustable the 5 is the period of Average and the '3' represents multiple of ATR to determine stop , once you have the basic code its easily adjusted  to the various periods & multiples required . If you are interested in the code PM me 

PS as much as its a stop loss it can be just as easily used for entry as well  so its a versatile tool  , In fact on clean trending instruments I'm sure a complete trading algo could be possible using just this singular tool .

5 period , 3 multiple atr trailer on daily A2M chart


----------



## peter2

I use a dual stop loss technique. You may have noticed it in the momentum thread but I haven't called it as such. It starts wide to allow a retest of the BO level, stays wide if I'm trading a trend to allow those pesky pull-backs, then tightens up when price goes on a tear higher and the profits are above average.

When the wide TS triggers an exit the trend is over. Time to exit.
When the tight TS triggers an exit, I place a re-entry order to buy if price makes a new high (BO-NH).
After the re-entry, the SL is wide and the cycle resumes just like any new trade.

If you decide to research a dual technique then you need to be very clear about the purpose of each stop method. I think the idea is worth observing by placing a wide TS line (5,6*ATR) and a tighter TS line(2*ATR) on your charts.

ps: The only purpose of the trailing exit triggers is to reduce draw-downs to a manageable level. You got to know what your level is.


----------



## Triathlete

craft said:


> Tying in with the previous discussion, I'm assuming you are going to treat your capital position as mark to market.
> 
> If so and you happen to have a runaway winner in your portfolio – that will skew your position risk calculations as heat and volatility on that large position impacts all the other decisions.
> 
> Try your numbers with a stock you brought at 13% of your portfolio and has become a ten bagger whilst the rest have in aggregate basically marked time. funding new positions at the calculated size may not be possible if you don't sell down the large position, so your intended diversification can be compromised as will the risk you apply to the new positions because relatively small swing in the oversized positions have disproportionate swings in the new position risk calculation.




If he is using 13% to start with for position sizing then his portfolio size is 8 stocks to start with.

I can understand what you are saying about heat and volatility, but if you are on a multi bagger there is no need to sell it down until his stops have taken him out IMO......

He has already used his total capital for the 8 stocks based on the original position size and selection process.
The only reason I can see for selling out a good position is if he wants to increase the amount of stocks in his portfolio.


----------



## Rypieee

After much thought from @tech/a , I have decided to review my past trades as well as my new scans to see if there is opportunity to re-enter a trade, CGC and A2M were good examples of trades that I completely missed. 

I have also reviewed my setting of my stop losses according to my strategy, though the problem isn't from my initial stop loss, rather, it is from my adjusted stop loss levels after the trade has begun. 

@Quant I like that idea of having a stop loss "automatically" generated and the graph that you provided with the trailing stop loss! I do intend to start automating some of my trades eventually, any idea on where I can start?

@peter2 I have always taken a liking to your stop loss strategy, giving the space to b/o first and then tightening the SL to accommodate the trend or covering your profit/losses based on your market filter. My iSL strategy is to find a level 2 points of support below current SP and within a x2-x4 ATR. My "new" SL strategy once the SP confirms a trend to is set the SL with x1-x3 ATR and behind one point of support. As you can tell, I adopted your strategy of "Dual Stop Loss Technique" 

Need to develop a technical analysis market filter as well.

I have a few trades that I plan to open up tomorrow and a few on my watchlist as it is nearing B/O. Shall post the trades after I complete them!


----------



## Rypieee

Another down day today with the portfolio, have yet to open new trades yet as they have yet to meet my criteria, I have 7 that I am closely watching for an entry. Our portfolio has about 16% in cash which allows us to start another trade when the opportunity presents itself. None of our stocks have reach their stop losses yet so no action required.

On the weekend when I completed my scan, I found two stocks that I was happy to enter but upon further analysis, those stocks have passed their optimum entry price and therefore I have refrained from entering them and shall wait for a better entry. I have learnt that while picking the stocks that are liking to run is important, execution of the entry and exit means a lot as well and greatly affects your P&L so I will be patient and execute the trades at the right time and place. Patient is a virtue that I have to learn.

I was thinking about the overall strategy of my portfolio and I made it into one of my important guidelines. It goes *"Fundamentals support medium to long term SP Appreciation/Depreciation, Technicals support short to medium term SP Appreciation/Depreciation, a combination of the two allows you to support short to long term SP Appreciation/Depreciation."
*
It is tough when you see down days in the portfolio but you gotta remind yourself that it is normal to see *controlled* down days in the portfolio. My strategy's underlying principle understands that down days are part and parcel of success.


----------



## tech/a

Sorry Ryan but I see these as insipid.



Rypieee said:


> *"Fundamentals support medium to long term SP Appreciation/Depreciation, Technicals support short to medium term SP Appreciation/Depreciation, a combination of the two allows you to support short to long term SP Appreciation/Depreciation."*




This is like saying
I'm going to the Stock shop with a generalized idea of long and shorter term
price movement both positive and negative.

AND----------------

Crank it down
Be specific. What are you going to do when your at the shop.
What if you make a right decision
What if you make a wrong decision
How will you know if your wrong or right decision is altering
How long will you stay wrong OR right?

*Finally*
HOW DO YOU KNOW THAT THE ABOVE WILL BE LONG TERM PROFITABLE?


----------



## Rypieee

tech/a said:


> Sorry Ryan but I see these as insipid.
> 
> 
> 
> This is like saying
> I'm going to the Stock shop with a generalized idea of long and shorter term
> price movement both positive and negative.
> 
> AND----------------
> 
> Crank it down
> Be specific. What are you going to do when your at the shop.
> What if you make a right decision
> What if you make a wrong decision
> How will you know if your wrong or right decision is altering
> How long will you stay wrong OR right?
> 
> *Finally*
> HOW DO YOU KNOW THAT THE ABOVE WILL BE LONG TERM PROFITABLE?





I made that quote up in my head to try to explain the way I trade/invest which is while fundamentals are important in the medium to long term, the technical side(emotions) are important in a short-medium term

Essentially, I choose stocks that have a fundamental growth quality that I seek (med to long term) and then apply my technicals on them (short to medium term) for managing the trade. 

A wrong decision will be action upon immediately through various means - I could be thinking that I am right about the fundamentals backing the stock but if a stock hits a criteria that calls for an exit, I exit knowing that either my analysis was incorrect or my timing was off and I move onto the next opportunity.

I don't know if my strategy will be profitable tbh but I'm okay with that. I run the portfolio with proper stock selection, diversification and risk management and I shall see how it travels over time.


----------



## tech/a

Ryan Trying to help you here.

You need to specifically define in words in a trading plan those things marked on *BOLD.*

That in *BLUE* needs to be in a play book.



Rypieee said:


> Essentially, I choose stocks that have a *fundamental growth quality* that I seek (med to long term) and then apply *my technicals* on them (short to medium term) for managing the trade.
> 
> A *wrong decision* will be action upon immediately through *various means* - I could be thinking that I am right about the fundamentals backing the stock but if a stock hits *a criteria* that calls for an exit, I exit knowing that either my analysis was incorrect or my timing was off and I move onto the next opportunity--and keep an eye on the stocks in my watchlist which I add to and cull if the *following* happens..
> 
> I don't know if my strategy will be profitable tbh but I'm okay with that. I run the portfolio with proper stock selection, *diversification* and *risk management* and* I shall see how it travels over time*.




You really need to be very specific and decisions need to be black and white and instant---no hesitation/indecision or procrastination.
I see Procrastination/indecision as one of your (and other Newbs ) stumbling blocks at *both* ends of a trade.


----------



## Rypieee

tech/a said:


> Ryan Trying to help you here.
> 
> You need to specifically define in words in a trading plan those things marked on *BOLD.*
> 
> That in *BLUE* needs to be in a play book.
> 
> 
> 
> You really need to be very specific and decisions need to be black and white and instant---no hesitation/indecision or procrastination.
> I see Procrastination/indecision as one of your (and other Newbs ) stumbling blocks at *both* ends of a trade.



Hate to admit it but you're right on procrastination, I shall work on defining my TP down to the tee so as to avoid stumbling on either end of the trade.

The part where you marked off as blue, could you elaborate on what a playbook is?


----------



## tech/a

A Play book is a written account of your trades

Why you take it
How you position size it
How you trade manage it
Why and how you exited it.
Why you completely discarded it OR
Why you re entered it.

You can then look for and identify patterns in your trading
that need to be re evaluated OR ADOPTED.


----------



## Rypieee

Hey readers, wondering if I could get your guidance on APX?

I am a bit unsure on how to handle a stock that has a massive gap up in price after an earnings upgrade. From what I can tell the price action prior to the gap was trading in a minor tight consolidation pattern for about a month. And prior to the tight consolidation pattern, it was in a range between $2.40 to $3.

On a gap play like this, I would enter the stock on the day that it gapped(yesterday), set my iSL under the low of the day (i.e under $3.00 so I would set it at $2.90). Gap supported with strong volume (yesterday and today) + brokers raising their price targets.

The only issue I have with APX is that the previous resistance range of $3.40-60 would attract supply(sellers) into the market to B/E.

What would you guys do in this instance? Wait for the gap to fill (possibility of that not happening due to strong volume/interest), wait for the B/O above prev high or move on from the stock?

The stock fits my criteria on the macro front and fundamental side of things, just unsure on how to handle it on the technical side of things. May seem to be deviating from my strategy of B/O transforming into trend at this stage but I believe there is more upside for the stock and a upward trend to begin.

Thanks!


----------



## tech/a

Brief look.
Considering the negativity in the last 2 days its done well to hold up there.
Id like to see a clear break of todays high
OR a pullback to the centre of the gap.

To be honest if this is set to go then resistance should be negligible.


----------



## craft

Triathlete said:


> If he is using 13% to start with for position sizing then his portfolio size is 8 stocks to start with.
> 
> I can understand what you are saying about heat and volatility, but if you are on a multi bagger there is no need to sell it down until his stops have taken him out IMO......
> 
> He has already used his total capital for the 8 stocks based on the original position size and selection process.
> The only reason I can see for selling out a good position is if he wants to increase the amount of stocks in his portfolio.



To answer your question Triathlete – and some waffle to boot.


Modelling around having a runaway winner and the question of what is the right capital figure to use in the calculations suggested in this thread.


Positon size 7 -13%

Initial risk 1%


Assumptions:

Initial account 50K

Trailing stop to ride medium term trends 20%


First question to answer:  what do you regard as your capital?


1)Mark to market.

2)Initial Capital + closed trades

3)Mark to market less heat


Scenario: you brought an initial 8 positions for $6,250 each with an ISL at $5750.

3 stopped out at ISL so you have $17,250 back in the bank.

4 have moved up a bit to $7,500 each and you have moved your trailing stop to -20% = $6000

1 has blown the lights out and is a 10 bagger @ $62,500 trailing stop -20% at $50,000


So with 1) mark to market your capital is $109,750

Your position sizing calc is between $7,680 and 14,265. *Even at 7% you cannot bring your portfolio back up to 8 positions with the capital you have available, unless you buy below your minimum parcel rule.*

Your 1% risk is $1,097.


With 2) Initial Capital + closed trades, your capital is $48,500 and your calcs effected accordingly.
This definition of capital is good for a short-term trader but it can be slow to respond for a trend trader.


With 3) Mark to market less heat, your capital would be $91,250 and your calcs effected accordingly.


Whilst 3) overcomes the slowness of 2) it suffers the same problem as mark to market for basing the calculations.


Imagine your $62,500 position is SRX on the 13 March 2015. Your first chance to exit on breaching your stop, your 1) mark to market capital would be $71,288, 3) M2M – heat would be $65,288 and 2) Initial + closed capital would be $66,288


All your calculations on new position size/risk are being massively influenced by what happens to the one oversized position – is that logical?

While I'm waffling is risking 1% on 7% of your portfolio equivalent to risking 1% on 13% if not why have the same initial risk calc for both sizes. If you can't guarantee your stops against gap how much faith in the precision of the calculation should you have.

Maybe a standard position size (ratcheted over time) is worth considering.


----------



## Rypieee

tech/a said:


> Brief look.
> Considering the negativity in the last 2 days its done well to hold up there.
> Id like to see a clear break of todays high
> OR a pullback to the centre of the gap.
> 
> To be honest if this is set to go then resistance should be negligible.




Hey @tech/a ,

Appreciate the post, initially I was going to post directly on your charts of interest but decided to do it on my thread hoping you and others would answer


----------



## Cam019

Rypieee said:


> Hey readers, wondering if I could get your guidance on APX?
> 
> I am a bit unsure on how to handle a stock that has a massive gap up in price after an earnings upgrade. From what I can tell the price action prior to the gap was trading in a minor tight consolidation pattern for about a month. And prior to the tight consolidation pattern, it was in a range between $2.40 to $3.
> 
> On a gap play like this, I would enter the stock on the day that it gapped(yesterday), set my iSL under the low of the day (i.e under $3.00 so I would set it at $2.90). Gap supported with strong volume (yesterday and today) + brokers raising their price targets.
> 
> The only issue I have with APX is that the previous resistance range of $3.40-60 would attract supply(sellers) into the market to B/E.
> 
> What would you guys do in this instance? Wait for the gap to fill (possibility of that not happening due to strong volume/interest), wait for the B/O above prev high or move on from the stock?
> 
> The stock fits my criteria on the macro front and fundamental side of things, just unsure on how to handle it on the technical side of things. May seem to be deviating from my strategy of B/O transforming into trend at this stage but I believe there is more upside for the stock and a upward trend to begin.
> 
> Thanks!




Ryan, if I were trading your strategy I would be waiting for a breakout and close => $3.64. Todays trading has displayed the supply between $3.40 - $3.60 that you mentioned. As you have stated, your strategy is based on a breakout transforming into a trend, and my confirmation of supply withdrawing or being absorbed by demand, would be a close => $3.64. Just my opinion.


----------



## Triathlete

craft said:


> To answer your question Triathlete – and some waffle to boot.
> 
> 
> Modelling around having a runaway winner and the question of what is the right capital figure to use in the calculations suggested in this thread.
> 
> 
> Positon size 7 -13%
> 
> Initial risk 1%
> 
> 
> Assumptions:
> 
> Initial account 50K
> 
> Trailing stop to ride medium term trends 20%
> 
> 
> First question to answer:  what do you regard as your capital?
> 
> 
> 1)Mark to market.
> 
> 2)Initial Capital + closed trades
> 
> 3)Mark to market less heat
> 
> 
> Scenario: you brought an initial 8 positions for $6,250 each with an ISL at $5750.
> 
> 3 stopped out at ISL so you have $17,250 back in the bank.
> 
> 4 have moved up a bit to $7,500 each and you have moved your trailing stop to -20% = $6000
> 
> 1 has blown the lights out and is a 10 bagger @ $62,500 trailing stop -20% at $50,000
> 
> 
> So with 1) mark to market your capital is $109,750
> 
> Your position sizing calc is between $7,680 and 14,265. *Even at 7% you cannot bring your portfolio back up to 8 positions with the capital you have available, unless you buy below your minimum parcel rule.*
> 
> Your 1% risk is $1,097.
> 
> 
> With 2) Initial Capital + closed trades, your capital is $48,500 and your calcs effected accordingly.
> This definition of capital is good for a short-term trader but it can be slow to respond for a trend trader.
> 
> 
> With 3) Mark to market less heat, your capital would be $91,250 and your calcs effected accordingly.
> 
> 
> Whilst 3) overcomes the slowness of 2) it suffers the same problem as mark to market for basing the calculations.
> 
> 
> Imagine your $62,500 position is SRX on the 13 March 2015. Your first chance to exit on breaching your stop, your 1) mark to market capital would be $71,288, 3) M2M – heat would be $65,288 and 2) Initial + closed capital would be $66,288
> 
> 
> All your calculations on new position size/risk are being massively influenced by what happens to the one oversized position – is that logical?
> 
> While I'm waffling is risking 1% on 7% of your portfolio equivalent to risking 1% on 13% if not why have the same initial risk calc for both sizes. If you can't guarantee your stops against gap how much faith in the precision of the calculation should you have.
> 
> Maybe a standard position size (ratcheted over time) is worth considering.




I see what you mean.
I am sure we all have different ways of managing our portfolios.

Maybe I need to clarify the point when I said we should let the winners keep running, I will only let that stock occupy 20% maximum of the portfolio after that % is reached I would either add more funds into the portfolio or start to reduce the position.


----------



## Rypieee

Hey readers!

EOW 02
Portfolio performance up to date (Starting 1st of March 2017) = *2.31%*
Market performance (ASX200) up to date from 1st March 2017 = *0.40%*

Have been a busy week with work and studies so I haven't done a proper update - I will at least do a weekly update on the portfolio

This week I sold CGF on the 18/05/2017 during the market down day after it hit the stop loss, we managed to sell the stock at $12.43, incurring a loss of -0.52R. Our stop loss level was marked off as $12.45 so we have suffered a minor slippage of $0.02.

This week I bought into IRI @ 3.00 with a iSL of 2.60. The recent B/O above that $3.00 range isn't as "strong" but I do like the fact that it has made a higher low of $2.85 compared to its previous low of $2.60, which indicates to me that people are buying up the stock when it pulls back. I expect the trend of IRI to continue.




We are sitting in 18% cash at the moment and I am starting to become more cautious of the market due to political risk by the Don and technical chart of the ASX200 is closing in on it's previous low. I will be more cautious with opening up positions this week and will be tightening my stop losses on trades that have already run, especially the ones that I opened up recently.

I have yet to run my scans for the week yet but on first glance of my watchlist, it does not look like there is an opportunity right now + as my market risk turns cautious, I become more hesitant to open up positions. We may wait for the ASX200 trend to find support before using our excess cash!


----------



## ducati916

Here is where a little diversity in trading methodology is important.

You have capital available, but your single strategy, viz trend following, is marginal currently as there is possibly some uncertainty around the strength of the overall market trend.

Market neutral strategies are one way of diversifying the portfolio.

Long term holds and working the position are a third way. There are of course a number of other strategies, all have their own risk/reward profiles and do not depend on a unilateral trend direction.

Don't think 'stock diversification' is the only type of diversification that you ought to think about.

jog on
duc


----------



## Rypieee

ducati916 said:


> Here is where a little diversity in trading methodology is important.
> 
> You have capital available, but your single strategy, viz trend following, is marginal currently as there is possibly some uncertainty around the strength of the overall market trend.
> 
> Market neutral strategies are one way of diversifying the portfolio.
> 
> Long term holds and working the position are a third way. There are of course a number of other strategies, all have their own risk/reward profiles and do not depend on a unilateral trend direction.
> 
> Don't think 'stock diversification' is the only type of diversification that you ought to think about.
> 
> jog on
> duc




I do have plans to set up a long/short portfolio in the next 12 months! I need to get the basics down first before venturing off into the unknown - not really, I'm just going to flip my strategy around and do a short version But I need to get my trading plan properly defined.

What is an example of a long term hold strategy and "working the positions"?

Are you talking about buying the dips on fundamentally strong companies?


----------



## ducati916

Rypieee said:


> What is an example of a long term hold strategy and "working the positions"?
> 
> Are you talking about buying the dips on fundamentally strong companies?




It can be a company [stronger the better], or an ETF [which I prefer] or a commodity which I also prefer [silver/gold] where you take an initial position by selling a Put option.

Once filled [exercised] you sell a call, but you don't allow the position to be exercised unless you are selling part of the position to take profits.

Then, once you have sold part of the position through being exercised, you can sell another higher call and also, sell a put to buy a dip. Over time, your position grows and you take increasing premium.

This is a buy and hold position, you just use options to trade the position. You trade the position based on the technicals. The fundamentals dictate that you can hold indefinitely.

Over time you want the market to move both higher and lower. This works well with high dividend and rangebound stuff.

If you catch a real flyer that does nothing but go up, well at some point you close it out and start again.

jog on
duc


----------



## Rypieee

EOW 03
Portfolio performance up to date (Starting 1st of March 2017) = *3.97%*
Market performance (ASX200) up to date from 1st March 2017 = *0.82%*

This week we sold off SSM @ $1.34 after purchasing it from it's breakout at $1.25.
I regret the sell and there wasn't even a reason to sell the stock. I was afraid of the supply block at $1.40-45 by Thorney Opportunities Ltd who seems to be the one selling once SSM gets to those levels. I did not even execute the sell properly and just sold it randomly at $1.34 rather than $1.40 or higher and allowed myself to be influenced from external parties. I got into the trade on a good entry price but i exit the trade on a terrible price and my reward on the trade has suffered.

I will look to re-enter SSM in the coming week/s.

Asides from SSM, all the other positions within the portfolio are gunning away! ALL released their interim report this week and the market liked it, brokers have all raised their targets to $23-26 which fuels more momentum for the stock. FPH also released their interim report last week but on the day itself, the market seems to be half half about it on the day itself but towards the end of the week on the last trading day, we saw a heap of demand coming in for FPH and the SP ended much higher. I would expect FPH to have some trouble against the previous high resistance at $10.20 but since the move to push against the resistance level was done on a gap up, I am not as worried.

IRI seems to be going into a continuation phase and a Ascending Triangle pattern is developing, I shall be careful of the price action of IRI in the coming week.

Overall, pretty happy with the performance of the portfolio, except for my mistake of selling SSM for no apparent reason (I am still clueless at myself as to why I sold it in the first place... )




Since the sale of SSM, we have about 28% in the cash account ready to take up some opportunities as they come out. Not too long ago, I was in a situation whereby there was so many opportunities to take but I didn't have the resources. Now I have the cash ready but no opportunities within my pool of stock. Rather than to venture outside of my pool of stock (which I have done in the past and didnt end well), I will be patience for the opportunity to present itself.


----------



## Gringotts Bank

Ripieee, how many ASX stocks do Lincoln rate as being in the 'strong' or 'satisfactory' categories, as a general guide.   Thanks.


----------



## Rypieee

Gringotts Bank said:


> Ripieee, how many ASX stocks do Lincoln rate as being in the 'strong' or 'satisfactory' categories, as a general guide.   Thanks.




450+ from memory, I think they have a pie chart that shows 30-40% of the market is within those categories. The financial health rating is an aggregated score based on a companies' balance sheet, Profit & Loss  and Cash Flow Statement.


----------



## Rypieee

Once again, hello to all who are following!!

EOW 04
Portfolio performance up to date (Starting 1st of March 2017) = *5.11%*
Market performance (ASX200) up to date from 1st March 2017 = *1.46%*

This week sells: SDF 
This week buys: COH, APX, BBOZ

We sold off SDF this week after buying in 4 weeks ago, the SP of the stock has been trading sideways since entering the trade and I have decided to close the trade off and reduce our exposure to the financial sector to nil. SDF was brought in at $2.749 and sold out at $2.70 with a minor loss.

This week we also opened up a few trades, I have been watching APX for awhile since it's earnings upgrade to find an entry point. Since the gap up to the $3.60 levels, we have seen a minor/healthy pullback before more demand came in for the stock, suggesting to me that this gap will not be filled. We are maxing out our exposure to the IT sector with the inclusion of APX now. I have also opened up another position with COH after it broke out of it's previous high at $142, had a pull back and made new all time highs. This COH trade means we are maxed out on our limits within the healthcare space as well as we have 3 H/C stocks in the portfolio now.




I have taken a contrarian view on the banks and to a smaller extend, the overall market now due to an "impending" property market correction, apartment oversupply that is due to come onto the market in major cities, China's credit risk and their current debt levels which could have an adverse impact on the Australian economy should **** hit the fans. BBOZ is a bear ETF which is leveraged by x2 and tracks the ASX200 inversely. As the banks make up majority of the ASX200 index, this is my method of hedging/shorting the banks and the overall market. We have placed a stop loss on BBOZ in case my perceptions do not come to light. As it stands right now, our portfolio is still 85% Long, 7.5% short and 7.5% in cash. If the ASX continues downwards, we may look into scaling into the BBOZ trade.

Have a great weekend all!
Ryan


----------



## skc

Rypieee said:


> Once again, hello to all who are following!!
> 
> EOW 04
> Portfolio performance up to date (Starting 1st of March 2017) = *5.11%*
> Market performance (ASX200) up to date from 1st March 2017 = *1.46%*
> 
> This week sells: SDF
> This week buys: COH, APX, BBOZ
> 
> We sold off SDF this week after buying in 4 weeks ago, the SP of the stock has been trading sideways since entering the trade and I have decided to close the trade off and reduce our exposure to the financial sector to nil. SDF was brought in at $2.749 and sold out at $2.70 with a minor loss.
> 
> This week we also opened up a few trades, I have been watching APX for awhile since it's earnings upgrade to find an entry point. Since the gap up to the $3.60 levels, we have seen a minor/healthy pullback before more demand came in for the stock, suggesting to me that this gap will not be filled. We are maxing out our exposure to the IT sector with the inclusion of APX now. I have also opened up another position with COH after it broke out of it's previous high at $142, had a pull back and made new all time highs. This COH trade means we are maxed out on our limits within the healthcare space as well as we have 3 H/C stocks in the portfolio now.
> 
> View attachment 71396
> 
> 
> I have taken a contrarian view on the banks and to a smaller extend, the overall market now due to an "impending" property market correction, apartment oversupply that is due to come onto the market in major cities, China's credit risk and their current debt levels which could have an adverse impact on the Australian economy should **** hit the fans. BBOZ is a bear ETF which is leveraged by x2 and tracks the ASX200 inversely. As the banks make up majority of the ASX200 index, this is my method of hedging/shorting the banks and the overall market. We have placed a stop loss on BBOZ in case my perceptions do not come to light. As it stands right now, our portfolio is still 85% Long, 7.5% short and 7.5% in cash. If the ASX continues downwards, we may look into scaling into the BBOZ trade.
> 
> Have a great weekend all!
> Ryan




Ryan... just a suggestion. Your BBOZ trade appears to be a different kettle of fish compared to the rest of your positions. I am not saying the position is or isn't without merit, but I think it should be excluded from your calculation of portfolio performance - and ideally excluded from your capital used.

Because ultimately you are recording your trades to measure how well your strategy (as detailed on your first post) is going. By all means start another record showing how well you interpret, time and execute your macro contrarian views, but keep it separate.


----------



## Rypieee

skc said:


> Ryan... just a suggestion. Your BBOZ trade appears to be a different kettle of fish compared to the rest of your positions. I am not saying the position is or isn't without merit, but I think it should be excluded from your calculation of portfolio performance - and ideally excluded from your capital used.
> 
> Because ultimately you are recording your trades to measure how well your strategy (as detailed on your first post) is going. By all means start another record showing how well you interpret, time and execute your macro contrarian views, but keep it separate.




Hey SKC,

Thanks for the tip on not including BBOZ in my portfolio and run it as something separate so I am able to measure the performance of the strategy properly. From my POV, BBOZ is a macro play on the ASX and I still apply T/A to the trade and have it categorized as a "Trend Reversal". As I only run one portfolio and not multiple portfolios across different time-frames or asset classes, I didn't think to exclude it from the portfolio.

If i did take out the capital used to purchase BBOZ for calculation of my performance, how would I go about doing it?

Do I remove the amount of capital used to purchase BBOZ from my capital on the date of purchase?

As I calculate my performance based on my starting capital as of the 1st of March vs current capital, do I reduce the 1st of March capital by the amount used to fund the BBOZ purchase?

I do agree with you on not including it in the portfolio so I can better judge the strategy but unsure on how to proceed with it.


----------



## aus_trader

Thank you Rypieee for liking my new post "Medium/Longer Term Stock Portfolio", it got posted today with just two stocks to begin with... I have been watching your portfolio in this forum all along and quite impressed by your performance. You can be sure that I will continue to keep and eye out for you and wish you all the best with your strategy as it develops...


----------



## skc

Rypieee said:


> Thanks for the tip on not including BBOZ in my portfolio and run it as something separate so I am able to measure the performance of the strategy properly. From my POV, BBOZ is a macro play on the ASX and I still apply T/A to the trade and have it categorized as a "Trend Reversal". As I only run one portfolio and not multiple portfolios across different time-frames or asset classes, I didn't think to exclude it from the portfolio.




If BBOZ trade is part of your strategy and you believe it makes sense to measure it alongside your other long positions, don't let me tell you otherwise. There is no absolute right or wrong answer, just depends on what you are trying to measure/record/evaluate with the record. It's your money so you can do what you want.



Rypieee said:


> If i did take out the capital used to purchase BBOZ for calculation of my performance, how would I go about doing it?
> 
> Do I remove the amount of capital used to purchase BBOZ from my capital on the date of purchase?




What I meant was, taking up a position in BBOZ would use up capital and change how many positions you can take (or their sizes) in your longs otherwise. So the suggestion was to eliminate that indirect impact if possible. But if you don't have the capital to compensate then there isn't much you can (or need) to do about it.


----------



## Rypieee

skc said:


> If BBOZ trade is part of your strategy and you believe it makes sense to measure it alongside your other long positions, don't let me tell you otherwise. There is no absolute right or wrong answer, just depends on what you are trying to measure/record/evaluate with the record. It's your money so you can do what you want.
> 
> 
> 
> What I meant was, taking up a position in BBOZ would use up capital and change how many positions you can take (or their sizes) in your longs otherwise. So the suggestion was to eliminate that indirect impact if possible. But if you don't have the capital to compensate then there isn't much you can (or need) to do about it.




That is a fair point there SKC about the position affecting my position sizes for other long positions. The portfolio will ultimate be developed into a Long/Short portfolio so I will just include BBOZ as the short play in the portfolio for the time being It aligns with the portfolio's macro views and T/A and will be my go-to shorting strategy until i open up a CFD account that allows me to short specific stocks.

Thank you for the tip nonetheless!


----------



## Quant

I suggest you compare returns to accumulation index not just straight XJO . The gross returns for dividends is north of 6%  .  BBOZ is an index trade and whilst I haven't checked your portfolio stocks against index correlation probably a good idea to do so   . Nice work and stick to it  ..


PS BBOZ is something traded on SMSF not sure why you wouldn't include it in any portfolio  , WHY wouldn't you ?  Easiest way to expose super to short side imo  . or any portfolio fwiw  , to not include it is stupid imo


----------



## aus_trader

If I can suggest a simple modification, Add a column to your portfolio table that shows:

Code, Fin Strength,*Direction*, Purchase Date, Entry Price etc... If table getting lengthy call it Dir. Then in the columns below it could be an "L" for long or "S" for a short. That way if you wish to run an analysis later, you can group all the "L"s together or "S"s together and see the performances individually.

That's what I would do if I included any short positions in my*"Medium/Longer Term Stock Portfolio". *


----------



## Rypieee

Two opportunities have come up on my radar once again and I only have enough available cash to take one of the position. I will be looking to offload my holding in CSL after holding it for about 6 weeks with little to no performance. The chart of CSL have displayed some support at $129 but seems to lack momentum towards northeast.
Should I offload CSL today, I will have enough to take the 2 opportunities that came up last night and their growth metrics + charts looks much more promising at this stage. An exit from CSL will result in a small profit to cover the cost. If I do not offload CSL, I will incur the opportunity cost of missing out of one of the two positions and at the current moment, the benefits are leaning towards the newer opportunities!
More to come
BTW I only disclose my buys and sells at the end of the week when I have time to write up my EOW post


----------



## aus_trader

Just be careful mate with cutting and chopping here and there. If there is no fundamental change or any news developments or there is no technical reason (e.g. break below support level) you may regret getting out of positions early.

If there is a good reason such as news development that you had with NIB holdings (NHF) that you mentioned very early in this forum, then it may prove worthwhile as shown below...


----------



## tech/a

aus_trader said:


> Just be careful mate with cutting and chopping here and there. If there is no fundamental change or any news developments or there is no technical reason (e.g. break below support level) you may regret getting out of positions early.
> 
> If there is a good reason such as news development that you had with NIB holdings (NHF) that you mentioned very early in this forum, then it may prove worthwhile as shown below...




Hmmm don't know about that.
If a stock is stagnant and other opportunities arise
I'd certainly cull it.


----------



## Rypieee

aus_trader said:


> Just be careful mate with cutting and chopping here and there. If there is no fundamental change or any news developments or there is no technical reason (e.g. break below support level) you may regret getting out of positions early.
> 
> If there is a good reason such as news development that you had with NIB holdings (NHF) that you mentioned very early in this forum, then it may prove worthwhile as shown below...






tech/a said:


> Hmmm don't know about that.
> If a stock is stagnant and other opportunities arise
> I'd certainly cull it.




Mmhmm! CSL had 6 weeks to perform but seems to lack direction therefore the cull to allow room for other positions. I sold CSL today @ $131.74 from a purchase price of $127.555 for a small profit to cover brokerage and some other minor losses in the portfolio 

I opened up 2 new trades today:
1) CGC - Bought in at $4.714 after allowing the price to weaken more from yesterday close (Taking advantage of an overall down day on the ASX) iSL for CGC is marked down at $4.20.

2) NST - Bought in today at $5.075 with an iSL at $4.40. Another play within my portfolio to hedge/capitalise on growing geopolitical risks in the world + other risks.

Overall, portfolio is still majority long with about 15%** on the short side (with NST and BBOZ). The banks are starting to pull back heavily, ASX went below 5700 today and further supports my trade idea on the macro level and using BBOZ as my exposure to the short side I am fully invested at this stage and *MAY* start looking to protect profits on my long positions should the situation deteriorate. 

** Truthly the amount of the portfolio being invested on the short side is a inaccurate because BBOZ is a ETF that tracks the ASX inversely with x2 leverage so the short side is actually a little higher

Very happy with my long positions at the moment though and will give them the required room to to trend. As we see a broad base selling in the blue chips, we should expect some of that funds to come back to the small-mid caps growth stocks such as those within my portfolio. 

Let me know what you guys think!


----------



## Rypieee

Quant said:


> I suggest you compare returns to accumulation index not just straight XJO . The gross returns for dividends is north of 6%  .  BBOZ is an index trade and whilst I haven't checked your portfolio stocks against index correlation probably a good idea to do so   . Nice work and stick to it  ..
> 
> 
> PS BBOZ is something traded on SMSF not sure why you wouldn't include it in any portfolio  , WHY wouldn't you ?  Easiest way to expose super to short side imo  . or any portfolio fwiw  , to not include it is stupid imo



Hey Quant,

Might be a silly question here but where could I find the accumulation index? What is the ticker code for the accumulation index of the ASX200?

Have thought about your suggestions and have decided to follow through on it to display a more accurate reading of my performance


----------



## Quant

Rypieee said:


> Might be a silly question here but where could I find the accumulation index? What is the ticker code for the accumulation index of the ASX200?



https://au.investing.com/indices/s-p-asx-200-accumulated-chart


----------



## aus_trader

Do like your NST(Northern Star Resources) stock, which is one of the stocks that have gone up a lot compared to most other gold stocks on the ASX. It should perform well if the gold price keeps rising which it generally does when uncertainty comes into play.


----------



## skyQuake

aus_trader said:


> Do like your NST(Northern Star Resources) stock, which is one of the stocks that have gone up a lot compared to most other gold stocks on the ASX. It should perform well if the gold price keeps rising which it generally does when uncertainty comes into play.



Flows related. Imo it will underperform over the next few months


----------



## Rypieee

skyQuake said:


> Flows related. Imo it will underperform over the next few months



Hi SkyQuake,

Could you elaborate on your comment on NST regarding "Flow Related"?

Assuming it is F/A related?

Ryan


----------



## skyQuake

Rypieee said:


> Hi SkyQuake,
> 
> Could you elaborate on your comment on NST regarding "Flow Related"?
> 
> Assuming it is F/A related?
> 
> Ryan




Nah, flows = weight of money.
GDXJ is making some changes to its methodology to accommodate large cap stocks.
Announced early April.
NST EVN OGC have been the beneficiaries while the small cap golds have been slammed. Looking for reversion coming up...


----------



## skc

skyQuake said:


> Nah, flows = weight of money.
> GDXJ is making some changes to its methodology to accommodate large cap stocks.
> Announced early April.
> NST EVN OGC have been the beneficiaries while the small cap golds have been slammed. Looking for reversion coming up...




I think it's started already. Look at RSG's strength today. GDX/GDXJ is becoming a bit of a joke where you have to front run the front runners, and flip may be two days before the actual rebalance against the direction of the rebalance itself.


----------



## peter2

@skyQuake   Thanks for the info. 

I've been wondering about the strange movements in some gold stocks. I've a short term trade in SBM that has gone nowhere even though the POG has risen $30/oz. It's always been a tricky sector for me and I'll stick to trading the POG directly.

Sorry for the golden diversion in your thread Ryan.


----------



## Rypieee

peter2 said:


> @skyQuake   Thanks for the info.
> 
> I've been wondering about the strange movements in some gold stocks. I've a short term trade in SBM that has gone nowhere even though the POG has risen $30/oz. It's always been a tricky sector for me and I'll stick to trading the POG directly.
> 
> Sorry for the golden diversion in your thread Ryan.



Don't be! I am also learning something from all this!


----------



## aus_trader

I also heard about this but wasn't sure which stocks are affected as I have not looked at the constituents of the index GDXJ (J is the junior Index). When huge global funds move their funds around due to re-balances etc the companies that are in that index can change prices by a lot. But I think they will do it gradually either buying up slowly or selling down slowly to avoid market shock. I'll be watching...


----------



## Rypieee

Today is an example of how we let a stock go and the stock running off up higher!

CSL was sold at $132 and today we saw a big bounce by them! I am still confident with my decision to let CSL go in order to give room to newer opportunities and will definitely not be letting this movement by CSL put me off or doubt the system

Some stocks are started to show signs of weakness - namely IRI and CGC and I shall be watching them closely over the next few days. I may consider selling them before they hit their stop loss as the price actions have suggested weakness in order to prevent further losses**.

There is 3 opportunities that have popped up on my scans tonight which I have great interest in, pretty bummed out that I'm always out of capital but that is how a med to longer term timeframe works

Skyquake's comment on the GDXJ has sparked an interest in a small gold miner and I shall follow this over the coming days to find an entry point. This would increase my portfolio's exposure towards the short/hedging side but as the risk around the world continues to escalate, I have conviction in my decision to be flexible and adaptable with my portfolio.


----------



## aus_trader

Agree with looking for ways to look for hedging short side of the market as well. Because with market pull backs a portfolio can take a fair hit. But with hedging instruments it can minimise that and with any luck those positions should increase in value during those times.

I've also been researching for instruments (Stocks, ETFs etc)  that should increase in value or provide hedging during market drops without directly shorting stocks which is very risky. Came across 
ANTIPODES GLOBAL INV FPO (APL) which takes long and short positions in stocks to look for portfolio gains, so added it to the *Medium/Longer Term Stock Portfolio.*


----------



## traderxxx

hey aus-trader
you dont have to look far to find a way for hedging short side of the market,
you can go short (or long) the market to the value of around $150,000
worth of stock for less than $10.00  commision, all instantaniously at
the click of  button.


----------



## Rypieee

Hope you are all having a great week!

EOW 05
Portfolio performance up to date (Starting 1st of March 2017) = *6.16%*
Market performance (ASX200) up to date from 1st March 2017 = *-0.47%*

This week sells: CSL
This week buys: NST, CGC

Overall portfolio doing well! As per my previous post, we are watching IRI and CGC closely to see if further price weakness develops, CGC had a small rebound today but IRI continues to display aimless direction and lack of strength. This week we also saw two political events happening - UK general elections which has put some pressure on the pound and the investigation of Comey. While we will not know the outcome of those just yet, we are prepared with a % of the portfolio on the short side to mitigate any downturn. A stock that we got rid of about 2 weeks ago - SSM - have had a plunge today of about 8% mid-day before recovering to be down 6.5% for the day. I suspect this has something to do with an oversupply on the market and am wiping my forehead on that decision. I made the SSM decision with a recommendation made by someone else but am thankful none the less. I realised that if possible, I should also be aware of supply and demand on a stock through the order flow.




I am considering to include a plan to scale into well performing trades such as ALL, WTC, CTD and FPH. I shall think of how I would like to approach scaling into a position if it continues to give further entry signals. This would mean that my portfolio will and could become VERY concentrated and it can be a double edge sword. More on this later!

I am also considering to start looking into the resource sector again for a variety of reasons such as "expectation" of lower AUD/USD, China's recent inflation data and their plans to build the silk road which could start off the second commodities boom & our quality miners who have reduced their cost bases and operating cost down over the past few years of lower commodity prices. Should those three factors mentioned above do come into play, margins for producers would be through the roof and mining stocks will get re-rated. Of course this will come attached with risk - the first one being with the Chinese government ability to change their mind at any moment without warning... the second one being that the US does not raise rates as quickly as they initially planned to, closing the gap between the interest rate parity "premium" that Australia currently holds [we want the gap to be as wide as possible to result in a lower AUD in comparison to the US]. Shall think over this on the weekend and maybe come to a conclusion

Asides from that, I am very happy with the portfolio as it is, and while I have all my capital tied up in those funds, I will still be on the look out of the next best idea.

This week has also been EXTRAORDINARY for myself as I had a causal meeting with a fund management company who then halfway through the meeting, offered me a role with the firm as a junior Australian equities analyst. I will be leaving my role with my current financial planning firm to take this up as an opportunity like this do not come by often! This new role will give me the skills and knowledge to improve on my fundamental analysis and I cannot wait to see what is in store for me!

Have a great weekend all! Until next time!
Ryan


----------



## skc

Rypieee said:


> This week has also been EXTRAORDINARY for myself as I had a causal meeting with a fund management company who then halfway through the meeting, offered me a role with the firm as a junior Australian equities analyst. I will be leaving my role with my current financial planning firm to take this up as an opportunity like this do not come by often! This new role will give me the skills and knowledge to improve on my fundamental analysis and I cannot wait to see what is in store for me!




Nice one. Best of luck with the new challenges.


----------



## Rypieee

skc said:


> Nice one. Best of luck with the new challenges.



Thank you SKC


----------



## aus_trader

Wish you all the best Ryan. Very happy for you. Keep us posted as to how you go...


----------



## Rypieee

So I have done my scans today since it is a long weekend and I wanted to enjoy my Saturday and Sunday celebrating with my friends and family on my new job

This week, as our portfolio has no available cash, we can do the following:
1) Sell weak stocks (IRI I'm watching you closely) to make cash available for new opportunities
2) Scan the market as per usual but just create a fake portfolio and "pretend" to buy opportunities to continue to improve my skills, reading charts and entry signals.

I will personally be watching IRI over the coming week to see how it goes, should continue going nowhere, I will be pulling the trigger on IRI as it has been in the portfolio for 4 weeks with little to no performance. Opportunity cost of a stagnant stock = other possible winners OR losers.




The chart above is SSM - Service Stream, which we bought in on the B/O of $1.25 and sold out at $1.34 for a small 7% profit. When SSM peaked at $1.45, we saw a LOT of supply coming into the market and not just small orders spread across different price points... We saw big supply blockade on the stock's order flow. I have had assistance of another fellow investor who pointed that out to me and I started to investigate it further.. I have crafted my theory that the majority shareholder, Thorney Opportunities Ltd, who owns 25%+ of SSM's listed securities, have been selling down their holding of SSM after holding it since the $0.20 era for profit taking. They have made a KILLING on the stock and I would imagine that they are now trying to release capital to seek other opportunities. From the 23/05 onwards, I was watching SSM's Order flow that it started with one big sell order at $1.45, and then another one at $1.40 and it kept going down. I decided to pull the plug on the trade and wait for the SP to overcome Thorney's profit taking before considering entering the stock again. What happened on the 09/06 at 1.36pm was a sudden plunge of supply which took out all the buy orders and sent the SP down to a low point of $1.16. I'd imagine after 2 weeks since putting the supply block at $1.45, Thorney Opps Ltd got impatient(for whatever reasons they may have) and decided to release capital regardless of price. This occurrence coincides with the coming end of financial year I would imagine, I would further ascertain that this supply block will go away again when we enter into the new FY. We shall see how it pans out..

** Let me know what you guys think about my theory!!

Onto some new opportunities that I have been watching but unable to participate in:
First off, we have RWC which made a B/O on the 08/06 above the $3.45 resistance level and zoom up again on the 09/06 to a closing price of $3.55. On the chart, the green line is where I would be placing my Stop Loss and base my position size on that. RWC is a relative new company to the exchange and they specialise in high quality water flow products used within the plumbing industry and is a market leader. 70% of their sales in generated in the US market (which supports my macro view of a lower AUD/USD in the short-med term). Watching the building approval in the US is a good indicator of how well this stock will perform Another risk is that they have large customers but only a few of them, should one of them pull out or change supplier, it would adversely affect RWC's earnings.




Another Stock that I have had an interest is in SAR, another gold miner which displayed an entry signal recently. It supports my view that geopolitical risk around the world is increasing and that gold is still the safe haven that people go to in times of crisis. A lower AUD/USD also helps miners/producers keep their margins high. It has been on a downtrend as marked by that big red arrow before consolidating and creating a Horizontal breakout @ $1.10 on the 07/06/2017. If I had capital to take part in this position, I would be doing a half position on the B/O above $1.10 and the other half on the breakout of $1.30.




Between the two new opportunities, I would be going with RWC over SAR - HOWEVER... if by the time I received funds from the sale of weak stock RWC has already run off on high demand, I would then lean towards the one that offers the best R/R. RWC is my bread and butter trade and even if I miss the B/O (which I have already) I will be waiting on the small pull back to enter.

Hope you have a great week ahead of yourselves!!
Regards,
Ryan


----------



## tech/a

I agree Ryan


----------



## Rypieee

tech/a said:


> I agree Ryan



Always good to get confirmation from a highly regarded ASF member Will be looking within SSM over the month of June/July for another entry confirmation


----------



## Rypieee

Mid-week trading update:

We sold off IRI yesterday due to little or no momentum in the share price that seems to just be going sideways. If IRI displayed a stronger entry signal, we will re-consider entry back into the stock! IRI was sold with a minor loss of -4.89%

We also sold off WTC yesterday as the technology sector fell (or only selected stocks) and WTC hit it's stop loss at $7.50. It has now bounced back to $4.60 but we managed to lock in a nice profit of 16.84%. Should WTC display another entry signal, we will reconsider entering the stock again. 

I do like both IRI and WTC fundamentally and the recent sell off has reduced my exposure to the tech sector from 3 stocks to just one (APX). But I need to follow my hard and fast rules (in regard to WTC) and my discretionary decision (regarding IRI)

A new inclusion into the portfolio is Saracen Mineral Holdings Ltd(ASX.SAR) and this would mean that we now have two gold stocks within the portfolio. Gold stocks are supported by my macro view as per previous comments. 

What I have been watching closely in recent times is the AUD/USD and a weaker AUD/USD will help a lot of the stocks held within my portfolio as most of them derive their earnings from overseas market. It will also most definitely help the gold miners within the portfolio.

We still have 7.1% of the portfolio sitting in cash at the present moment and there will be a capital injection coming shortly. We will always be on the look out for upcoming opportunities and the work will never end if I want to achieve above market returns within my portfolio!!
***[HELP]** How can I include the new capital into the portfolio without disrupting my performance/data? How do you guys deal with new capital in a portfolio???*

Final note, our position in BBOZ has been hammered as the market recovered strongly over the past two days, the position is now closing in on it's stop loss at $16.10. Pretty sad that this isn't work out as well as I thought it would but that also means that the remaining stocks in the portfolio won't be doing as well as it has!! Should my timing on the BBOZ trade be incorrect, we will be taking our losses and exiting out of the trade.

Happy investing and may the stock market odds be ever in your favor
Ryan


----------



## Rypieee

Hi readers! 

Apologies for not posting last week, was down with a horrible cold and couldn't even get out of bed, feeling much better this week though

EOW 07 
Portfolio performance up to date (Starting 1st of March 2017) = *7.76%*
Market performance (ASX200) up to date from 1st March 2017 = *0.19%*

This week we bought RWC into the portfolio @ $3.51 but was removed @$3.38 due to the gap down in the price. We got out with a small loss of -3.70%. We put in an order after the stock broke out of the $3.50 and it was filled when the stock gapped down strongly from $3.70. Was a discretionary decision to quit the position and sit on the sidelines for the time being.

We have a capital injection coming into the portfolio which I will include at the end of next week as it is the end of the financial year. Going forward into FY 17-18, we will be restarting the performance of the portfolio down to 0% and I will be recording the performance of the portfolio as per financial year.

So far the portfolio is chugging along just fine, on the big ASX down day of -1.5% (21/06/2017), our portfolio was up 0.25% due to our position in BBOZ and COH - COH's Nucleus 7 received a FDA approval on the 21/06 and also due to being in a defensive sector (healthcare) it fared pretty well on a massive down day.


----------



## aus_trader

Good to see these stocks have held up well while the banks, mining and oil stocks dragged the market down a bit which I've been monitoring.
I'll also be waiting for my tax return for some extra capital


----------



## Rypieee

**Mid week thoughts**

I am starting to re-consider my gold trades with NST and SAR as they have not performed as well as I wanted them to. I got into Gold due to increasing geopolitical risk around the world and as a hedge against my portfolio but it seems that on a down day in the ASX, the gold players were also down. In fact, on the previous big down day (21/06/2017), what was holding my portfolio up was the BBOZ position and COH.

Is gold really a good hedge for the portfolio, specifically against geopolitical risk? Would I rather hedge the portfolio using BBOZ? Is having quality stocks within the portfolio sufficient enough to ward against drops in the markets? Or should I just go to cash as a form of protection in my portfolio?? 

I just have a sinking feeling that the gold stocks are holding the performance of the portfolio down...

On a brighter note! The end of financial year is coming this Friday and that means that our performance is restarting for the new financial year. We will also be injecting additional capital into the portfolio on the weekend. I am also going to start using the ASX200 Accumulation index to be the benchmark against the portfolio rather than just the XAO as it will give a better indication of performance.

In the past few weeks, I have been considering new strategies to deploy in the portfolio and any gaps in my trading that I want to work on as we come into the new financial year. 

One of which is scaling into strong positions. *(Anyone who is reading and does use scaling in as part of their strategy, I would be interested to hear your thoughts and how you approach scaling in). *The idea that I have in mind right now would be to start a position with a capital of 10% of the portfolio and if it shows strength in the price action down the road, to add another 5% of capital into the trade - however, the 5% can only be added in when the stock's stop loss is higher than the entry price. What I have is pretty weak at the moment as I have been

The second thing that I want to be better at in the new FY is to execute my trades properly. There have been a few trade that I have done in the past (after reviewing my previous trades) that were executed SOOO FREAKING BADLY and I completely messed up my risk/reward on the trade, taking on *unnecessary* risk for minimal profit.

The third thing I would like to work on is to remember that my portfolio/trading plan is based on a longer term time frame and have more patience with my trades.
In the past, I have set my stop loss level to closely, giving no room for the stock to move. I have also discretionary remove a stock from the portfolio due to little performance and guess what happens after I remove the stock from the portfolio?? Murphy's Law kick in and the stock zooms off... Examples of this is IRI and CSL which i remove due to lack of performance and look where it is at now  If there is no reason to remove the stock from the portfolio (changes in fundamental, macro or technical view) then I should leave the stock be.

Have a good week everyone
Ryan


----------



## Rypieee

Hi all!

EOW 08
Portfolio performance up to date (Starting 10th of March 2017) = *6.05*
Market performance (ASX200 Accumulation) up to date from 10th March 2017 = *-0.06%
*
Today was a terrible day on the market, what a way to end the financial year!

Actions this week:
Sold off BBOZ yesterday just before the market went sour today.... My decision to sell BBOZ was due to us coming towards the end of the tax selling period and that my original intention of the BBOZ trade was not enacting anytime soon (in the next 1-3 months). If we had BBOZ today, that would've been awesome... but it could've gone the other way too. As July is normally a seasonally strong month + the surge of capital flowing into super fund accounts due to regulatory changes which will be invested in the coming month. I am still happy with my decision to sell.

We topped up our position in APX after it closed on $4.00 yesterday, injected another 3.33% of my capital into that trade after it displaying some strength (again) in recent times.




We have ended the financial year with a out performance of 6.11% in a period of 4 months. Now that we are heading into the new financial year and I have managed to knuckle down the way i track my performance, how i manage my trades and various techniques to improve on, I cannot wait for the new financial year to begin and start recording my portfolio for the full financial year (and many more) going forward.

CTD and ALL have hit their stop loss today on a massively down day but I decided not to sell the stocks as the negativity in their share prices were due to the overall market being down and a contagion effect from the US market last night. *HOWEVER* I will be keeping a close eye on them next week, especially CTD which is sitting on a relatively high P/E of 47.34 compared to industry peers of 24.63.

July will be a very interesting month as mentioned before, the super industry have experience a huge inflow of capital due to the changing regulations and investors trying to get their $540,000 contributions in before the EOFY. Along with that, history shows that July is normally a seasonally strong month as the tax selling and restructuring of portfolios by investors and fund managers subside. Me thinks this July will be even stronger in comparison to previous years. Do note that risk across the globe is slightly elevated such as Trump's inability to push through reforms or keep to his promises, Geopolitical risk in the Middle East, China sea and North Korea, equities across markets are considered "Over-valued" by many professionals and the end of the "Easy money" as central banks start to unwind their monetary policy easing - could potentially see inflated asset price come off.

We will be riding the uptrend until the all comes tumbling down Expensive stocks can become MORE expensive and cheap stocks can become MORE cheaper - 101 Trend following.

One thing that I am looking forward to in my portfolio are my gold stocks - NST and SAR. The greenback against the Aussie is widening due to overall weakness in the USD, I am expecting for the USD to start improving against the AUD as the fed starts raising and erasing the premium gap that Australian bonds have over the US bonds. This would bode well for the aussie goldies as they would benefit from a stronger USD once they translate the currency back. One thing that could stop that from happening would be if the resource sector starts running hot against due to the Chinese property market, which would elevate the AUD, the commodity currency. Geopolitical risk has not be in the newspapers as much as it was 2-3 months ago but that does not mean that it has subsided and we are still erring on the side of caution. 

Have your portfolios done well in FY2016-17?

IF there is something that you have learnt about yourself in the last 12 months and you know how to apply that to investing to improve your outcome, what better time is there to implement the changes than the start of a new financial year!? I know I have learnt a lot more about investing/trading and also on my personality and I still have a long long road ahead of me, but I am excited to meet new challenges head on as new doors start opening for myself!

Have a happy new financial year!

Warm regards,
Ryan


----------



## Skate

*Hi Ryan 

A REMINDER from your previous post:*
"The second thing that I want to be better at in the new FY is to *"execute my trades properly".* There have been a few trade that I have done in the past (after reviewing my previous trades) that were executed SOOO FREAKING BADLY and I completely messed up my risk/reward on the trade"

"I have also discretionary remove a stock from the portfolio due to little performance and guess what happens after I remove the stock from the portfolio?? Murphy's Law kick in and the stock zooms off..."

*MY TAKEAWAY*
Ryan saying to himself - "I should execute my trades according to my plan - or Murphy's Law will kick me in the butt"

*REMINDER from this post:*
CTD and ALL have hit their stop loss today on a massively down day but I decided *"not to sell"* the stocks as the negativity in their share prices were due to the overall market being down and a contagion effect from the US market last night.

Hmmm....
So much for following your plan.

A mate of mine once told me *"don't ever think your better than your strategy"*


----------



## Rypieee

You're right skate, I need a definitive plan to exit my trades.

When I was referring to the execution of my trades, I was thinking of my entries rather than my exits though. I tend to chase the price which destroys my R/R on the trade.

Thinking back to CSL and IRI, I still do not regret letting them go, especially with IRI, I shouldn't have entered the trade in the first place. 

Reason why I didn't follow my stop loss with ALL and CTD is because I believe the trend has not been broken. The SP for them plunged because the entire market was down. 

I'm giving them till next week to recover and resume their trend without allowing the broader market to indicate their intraday performances.  

However, I still agree with you that I need to follow my plan if not Murphy's law will continue biting me. Have to continue working on my Trading plan as we go.

Thanks for the lookout, appreciate it


----------



## aus_trader

Rypieee said:


> Have your portfolios done well in FY2016-17?



Good to see you have done well with your portfolio this FY and hopefully keep it up in the FY ahead. I have also had a good outcome in my "longer term stock portfolio" in the open positions. These will carry through to next FY with new positions added along the way...

As Skate mentioned it's good to stick to your plan. It's a learning experience though, and fine-tuning it will come with reviewing the outcomes. So there will be set backs, learn from them but don't give up.


----------



## skc

Rypieee said:


> Reason why I didn't follow my stop loss with ALL and CTD is because I believe the trend has not been broken. The SP for them plunged because the entire market was down.
> 
> I'm giving them till next week to recover and resume their trend without allowing the broader market to indicate their intraday performances.
> 
> However, I still agree with you that I need to follow my plan if not Murphy's law will continue biting me. Have to continue working on my Trading plan as we go.
> 
> Thanks for the lookout, appreciate it




I agree with Skate here. The correct action is to sell the positions that hit the stop loss. Revise trading plan such that stop loss is placed correctly (where trend has been broken), and do so for positions going forward.



Skate said:


> A mate of mine once told me *"don't ever think your better than your strategy"*




I think if you are the one who came up with the strategy... then by definition you are waaay better than any one of your strategy. All strategies can be improved. All strategies die. The key isn't to never change your strategy. The key is *never change your strategy on the fly *(when you may not have the right emotion to make sound decisions).


----------



## Gringotts Bank

skc said:


> ....when you may not have the right emotion to make sound decisions).




^^^

Emotion always interferes with decision making because money is an emotional topic (for most people).


----------



## skc

Rypieee said:


> Reason why I didn't follow my stop loss with ALL and CTD is because I believe the trend has not been broken. The SP for them plunged because the entire market was down.




Just one more point. I don't think this reasoning is sound. The share price for all stocks are a product of company fundamentals and overall market sentiment. If one has price based stop loss, he/she shoudn't try to isolate whether a movement in price was caused by one or the other. It feels like a recipe for creative accounting on your own trading.
_
"I made $1m profit last year on my stock picks... but the negative overall market sentiment caused my positions to drop by $1.2m. I am a great stock picker. QED."_


----------



## Rypieee

Yeah, you are right @skc  and @Skate,

I have made my stop loss too reliant on discretion and can foresee it affecting my performance down the road. I will be sticking to my stop losses from now on.

ALL have been sold at $22.21 for a profit of 29.56%
CTD have been sold at $22.92 for a profit of 17.50%

I am guilty to the fact that I just wanted to give the stocks one more day to "revert" back to their all time high prices - especially since those 2 are one of the better performers within the portfolio, hence the emotional attachment. 

Thanks for pointing that out, truth to be told, I couldn't really see myself getting attached to a stock until now...


----------



## skc

Rypieee said:


> Yeah, you are right @skc  and @Skate,
> 
> I have made my stop loss too reliant on discretion and can foresee it affecting my performance down the road. I will be sticking to my stop losses from now on.
> 
> ALL have been sold at $22.21 for a profit of 29.56%
> CTD have been sold at $22.92 for a profit of 17.50%
> 
> I am guilty to the fact that I just wanted to give the stocks one more day to "revert" back to their all time high prices - especially since those 2 are one of the better performers within the portfolio, hence the emotional attachment.
> 
> Thanks for pointing that out, truth to be told, I couldn't really see myself getting attached to a stock until now...




Good stuff Rypieee. I admire your attitude.


----------



## peter2

I hope I'm not setting a bad example by seemingly using too many discretionary exits in the ASX momentum thread. It probably looks like I use them a lot, but not really. The most common event that I use a DE is after an unexpected price spike up. I DE or sell 1/2 knowing that the win is bigger than normal. The exit is based on knowing my AW stats. A recent example of this is the DE at T3 after ALQ spiked higher. 

When prices fall unexpectedly the exit is quick but they're based on an exit stop that has been triggered by the falling price not on a DE. 

Another DE circumstance would be do I sell at T2 or wait for T3. These decisions are based on prior swing highs or the current market sentiment. If it's bullish I'll wait for more. If it's bearish I'll take what I can get even if it's only +1R. 

Other decisions that may seem to be discretionary are probably not. Raising exit stops may seem to be discretionary but they're done in response to price surges and changes in the market filter. Managing overall portfolio heat results in some decisions that may seem to be discretionary on individual trades but they're part of an overall portfolio management process.

If you've read the ASX momentum thread then you would have noticed that I'm aware of the dangers of too many DE's. I monitor the overall performance of my exits versus a few objective exit strategies. I presented a little table showing the performance of my exits vs a few common strategies and made a few observations about the comparision. 

You may considering doing something similar to monitor the performance of your DEs.


----------



## Rypieee

peter2 said:


> I hope I'm not setting a bad example by seemingly using too many discretionary exits in the ASX momentum thread. It probably looks like I use them a lot, but not really. The most common event that I use a DE is after an unexpected price spike up. I DE or sell 1/2 knowing that the win is bigger than normal. The exit is based on knowing my AW stats. A recent example of this is the DE at T3 after ALQ spiked higher.
> 
> When prices fall unexpectedly the exit is quick but they're based on an exit stop that has been triggered by the falling price not on a DE.
> 
> Another DE circumstance would be do I sell at T2 or wait for T3. These decisions are based on prior swing highs or the current market sentiment. If it's bullish I'll wait for more. If it's bearish I'll take what I can get even if it's only +1R.
> 
> Other decisions that may seem to be discretionary are probably not. Raising exit stops may seem to be discretionary but they're done in response to price surges and changes in the market filter. Managing overall portfolio heat results in some decisions that may seem to be discretionary on individual trades but they're part of an overall portfolio management process.
> 
> If you've read the ASX momentum thread then you would have noticed that I'm aware of the dangers of too many DE's. I monitor the overall performance of my exits versus a few objective exit strategies. I presented a little table showing the performance of my exits vs a few common strategies and made a few observations about the comparision.
> 
> You may considering doing something similar to monitor the performance of your DEs.





Nonono Peter, you have been setting a great example of a good trader. I was just being too lax with my rules and think I know better...

I have much to learn and apply to my trading, baby steps i suppose 

If anything, I should *ALWAYS* follow the stop loss that I set for my stocks. I didn't with ALL and CTD on Friday last week and it is a bad habit i do not want to learn.

I have filtered my trades between "Discretionary" and "Hard stop outs", don't have a lot of data at the moment but as i progress, I can evaluate and determine what I'm doing right and wrong.


----------



## Rypieee

skc said:


> Good stuff Rypieee. I admire your attitude.



Thank you sir


----------



## Triathlete

Rypieee said:


> Yeah, you are right @skc  and @Skate,
> 
> I have made my stop loss too reliant on discretion and can foresee it affecting my performance down the road. I will be sticking to my stop losses from now on.
> 
> ALL have been sold at $22.21 for a profit of 29.56%
> CTD have been sold at $22.92 for a profit of 17.50%
> 
> I am guilty to the fact that I just wanted to give the stocks one more day to "revert" back to their all time high prices - especially since those 2 are one of the better performers within the portfolio, hence the emotional attachment.
> 
> Thanks for pointing that out, truth to be told, I couldn't really see myself getting attached to a stock until now...



Not sure what timeframes you are using for CTD, but I will make this comment if it was the daily chart then I would have looked to get out at $23.36 with an eye on a quick reversal to get back in.
If you are using the weekly than this is a standard pullback and will be watching the prices that are important now which I will be looking to hold at the $22.61 - $22.24 if it does than another run up towards $25.00 I would be looking at.....keep your eye on its next moves......


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## Rypieee

Triathlete said:


> Not sure what timeframes you are using for CTD, but I will make this comment if it was the daily chart then I would have looked to get out at $23.36 with an eye on a quick reversal to get back in.
> If you are using the weekly than this is a standard pullback and will be watching the prices that are important now which I will be looking to hold at the $22.61 - $22.24 if it does than another run up towards $25.00 I would be looking at.....keep your eye on its next moves......




I will definitely be keeping an eye on ALL and CTD for possible re-entry if a entry signal appears

Learnt from Tech/a to keep an eye on older trades


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## Rypieee

EOW 01 (FY17-18)

Portfolio performance: -1.26%
ASX Accumulation Index Performance: -0.31%

This week sells - ALL, CTD & NST.
This week buys - GTK, CGC (top up the position)

NST was sold off after hitting our stop loss at $4.60.
ALL & CTD were sold off after hitting their stop losses as per previous post.

Portfolio is sitting on 34% cash at the moment and we shall be waiting for entry signals to allocate funds.




Shall be running our scans to look for any potential/set ups within our pool of stocks

Been a little rough start to the new financial year but I gotta remind myself that this is only week 1 of 52 and to not be blinded by short term-ism.

Hope you guys had a great start to the financial year!!


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## Skate

Rypieee said:


> Been a little rough start to the new financial year but I gotta remind myself that this is only week 1 of 52 and to not be blinded by short term-ism.




Rypieee your playing in a game where rational people sometimes make irrational decisions a game where you win some and you lose some.

Portfolio performance: -1.26% isn't ideal but keeping your wins and losses to percentages is the secret of disassociating stress from your trading. If you relate your Portfolio performance in dollar terms it does exactly the opposite.


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## Rypieee

Skate said:


> Rypieee your playing in a game where rational people sometimes make irrational decisions a game where you win some and you lose some.
> 
> Portfolio performance: -1.26% isn't ideal but keeping your wins and losses to percentages is the secret of disassociating stress from your trading. If you relate your Portfolio performance in dollar terms it does exactly the opposite.




Leaving it in percentage terms is always the more "rational" number to look at and compare

Using dollar terms makes me start thinking what my losses/winnings could've bought and that is a recipe for disaster 

-1.26% isn't an ideal way to start the year but it is part and parcel of my trading strategy, so I just have to keep believing in the system, don't make any unforced errors and stick to it.


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## Cam019

Any updates or news on this portfolio @Rypieee?


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## Rypieee

Cam019 said:


> Any updates or news on this portfolio @Rypieee?




Hey Cam019,

Unfortunately the place where I work at now do not allow me to post on forums or give my ideas/opinion on trading/investing as I am now a representative of their business as it may be seen as a conflict of interest to the business clientele. [Surprisingly, they know about my thread on this forum]

I have also been busy and have not had much time to work on my portfolio as well

Overall my portfolio has been under performing the index so not happy about it as well but will hope to see some light at the end of the tunnel Still keeping my losses small and letting my winners run but in the current market, winners aren't running as hard and more losers within the portfolio. I have reverted to a "Protection" mode which means no new stocks will be entering the portfolio until the market stabilizes and finds it's direction again.

Current holdings in the portfolio are:
BUD, CAJ, CGC, GTK, IRI, LVH, MGX, OZL and PRT
Cash holding in the portfolio is 40%

Hopefully you are doing much better than I am!!  I still follow your work on ASF.


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## aus_trader

Hi Rypieee, It's been a while and good to know you are keeping tabs on ASF.


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## Rypieee

As some of you may be aware, I recently got a job as a sell side equities analyst with a firm. I was previously basing my stock picks and research from their material and disclosing them to you guys via the stocks that I hold. 

As I am now privy to information within the business and the trading policy that I have to adhere to as an employee of the business, it is difficult to maintain the current trading strategy as I will not be able to enter/exit as quickly as I could have previously on covered stocks.

Through my attempt over the past 6 months at trying to combine fundamental and technical within my trading plan, I have also noticed that my performance have be sub par at the most and that there is too much discretion in my decision making.

Since i begun work in my new role, I have been thinking about how I can still trade without fundamentals and I have always loved @peter2 & @tech/a 's work on the forum and their strategies that they employs. 

Moving forward, I will be employing a new trading plan to suit my current situation and needs. 

The trading plan will be reliant on technical analysis more so than ever (up to 90%) with a top-down overlay. 
I will be trading a 10 period breakout with high volume and the time frame of holding will be much shorter than my previous strategy. 
My preferred pool of stocks will be sitting in the Mini and Small Caps zone (as far away as possible from my firm's coverage). 
I will be starting a position with roughly 3-4% of my starting capital with the expectation to scale into a position should the price action strengthen.

When I have gained more experience in fundamental analysis and when I begin my Masters of Applied Finance next year, I want to specialize in Bottom up analysis with a focus on the Mini to Small caps area and I may create a new thread for that purpose

Keep in mind that I won't be able to be as active as I was previously because my workload has increased and my free time is spent not looking at stocks [especially after 8 hours+ of financial statement analysis and modelling :'( ]

My current portfolio at the moment is shown below, there are a few stocks within the portfolio that are still based on the previous strategy. It will take a bit of time to wash those stocks out. I will also be out of Australia for 3 weeks from next week onward so even less activity on this thread will be expected.


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## aus_trader

Great to see you back in action. Have a great trip.


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