# SKC 2010 trade review journal



## skc (18 January 2010)

There had been some good discussions over on the trading review process thread https://www.aussiestockforums.com/forums/showthread.php?t=18349. And given that it's the start of the new year, I've decided to get organised and log my trades in some details a week to 10 days after a position is closed. I will try to log every trade, review the entries, exits and risk management along the way.

The primary objective of this thread is to motivate myself to review trades in a disciplined manner, learn from past mistakes and successes, and to learn from others.

Your input and comments are definitely welcomed. But please respect the time and effort that I will put into this thread and try to keep things constructive, clean and uncluttered if possible.

For the purpose of this journal, the starting capital is $100K. My actual capital is either lower or higher.


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## professor_frink (18 January 2010)

skc said:


> There had been some good discussions over on the trading review process thread https://www.aussiestockforums.com/forums/showthread.php?t=18349. And given that it's the start of the new year, I've decided to get organised and log my trades in some details a week to 10 days after a position is closed. I will try to log every trade, review the entries, exits and risk management along the way.
> 
> The primary objective of this thread is to motivate myself to review trades in a disciplined manner, learn from past mistakes and successes, and to learn from others.
> 
> ...




Good luck with the journal. All the best for a good year


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## Sugar Dunkaton (18 January 2010)

yes, will be very interested to watch this space.


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## skc (18 January 2010)

*Trade #1 - RMS
*
*Entry date: *5/1/2010
*Entry price:* $0.545
*Stop:* $0.515
*Risk: *1%
*Quantity: *33000
*Position size: *~18% of capital
*Pattern: *Triangle

*Exit date:*8/1/2010
*Exit price:* $0.605
*Reward:*2R

*Entry discussion: *RMS is a gold stock that's lingered relative to its sector peers, and has been (and still is) engaging in a takeover battle for DIO with Avoca. The chart is showing some sign of life and good basing pattern. Prices seem to have consolidated long enough (and reached 50% retracement) since the significant surge in late Nov / early Dec, forming a decent looking triangle. Also at the time, the gold chart was looking bullish. So I took an aggressive entry and bought on breaking the mid-point of the triangle. I did leave the stop relatively loose at $0.515.
*
Position management:* The initial target was basically a new short term high. With a great deal of luck, a good production report was leased the next day and the stock jumped on good volume. But the momentum did not continue for long, and a bit of reversal day on 8 Jan had me cold feet and I jumped off towards the close that day. 

*Post mortem:* The speed to which the stock reached my target was a surprise, and the urge to take a 2R profit to start the year was too strong. At the time of exit, the gold chart no longer looks bullish to me. It looked like doing the middle up leg of a 3-wave decline (dotted line on the gold chart) and I would be caught long a gold stock. So I talked myself into exiting even though the RMS chart still looks good to me. But another reason for taking the profit was that there is still a tight re-entry to be had if the stock is to breakout higher. The risk was obviously that I would have missed out if it was to gap up on me the very next day. 

*Rolling record*
*Trades: *1
*Wins: *1
*Win ratio:* 100%
*Avg win: *2R
*Avg loss: *N/A
*Commission paid: *$30.5 (0.08% of transaction size)
*Closed PnL: *$101,949.5


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## johnnyg (18 January 2010)

skc said:


> The primary objective of this thread is to *motivate* myself to review trades in a disciplined manner, learn from past mistakes and successes, and to learn from others.




Something I'm really struggling with at the moment. 

Be good to see your reviews skc.


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## Trembling Hand (18 January 2010)

johnnyg said:


> Something I'm really struggling with at the moment.






skc said:


> The primary objective of this thread is to motivate myself to review trades in a disciplined manner, learn from past mistakes and successes, and to learn from others.




Best way to "learn to love your review" IMO is to start by focusing on the good. What you nailed, How it added to you trading well and how you want to repeat it. 

Most people focus on controlling their crap and end up sitting at the screens trying to enjoy swallowing razor blades. With predictable results.


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## skc (20 January 2010)

*Trade #2 - LNG*

*Entry date: *7/1/2010
*Entry price:* $1.175
*Initial stop:* $1.04
*Risk: *0.9% of capital
*Quantity: *6666
*Position size: *~7.8% of capital
*Pattern: *End of retracement / reversal

*Exit date:*13/1/2010
*Exit price:* $1.055
*Reward:*-0.88R
*Trade PnL:* -$812

*Entry discussion: *LNG is in the LNG space (funny enough) and has a relationship with AOE to build their smaller scale LNG train in Gladstone. On 4 Jan LNG made an announcement regarding a restructure on the Gladstone LNG project. Essentially it put less commercial / financial burden on LNG, the smaller partner. Market reacted well to the news, gapped up on open and sending the shares to a high at $1.25 on good volume, from $1.12 before the announcement. 

I waited a couple of days anticipating some retracement, and placed a limit buy order at the top of the gap which was executed on 7/1/2010. Zooming out a little bit, it is clear that LNG has also retraced significantly since the  run up in Jul from ~50c to a high in mid Sept of $1.9. $1 and 62% Fib retracement levels were both broken briefly, but prices have since held above these well. The recent spike up has put in the first higher high since the end of the downleg. All looked good to me.

Stop was placed at $1.04, basically back into the trading band in late Jan. The thinking was that if prices was to go back into this zone, the news probably wasn't as positive as I made it out to be. It is also quite a volatile stock so I don't want too large a position due to a super tight stop (i.e. bottom of gap at $1.13). 

*Position management:* The initial target was an ambitious $2.5, based on a renewed leg up equal to the first up leg. A few days of low volume drift lower in a weaker overall market had me losing confidence and was clear that this move will not be impulsive, so I moved the stop tighter up to $1.07 before the market opened on 13 Jan. Stop was triggered that day and executed at $1.055.

*Post mortem:* This was a trade where the larger time frame looked great, the smaller time frame looked good, and news announcement was positive. If it wasn't for the few negative days I would probably still be riding it. I must admit however that I don't know LNG intimately to fully assess the impact of the news item. Prices has drifted somewhat aimlessly since. It remains on my watch list for further setups. 

The lesson is that, given the tight setup and the very target, a stop limit to buy on the break of the higher high would still offer good risk reward.

*Rolling record*
*Trades: *2
*Wins: *1
*Win ratio:* 50%
*Avg win: *2R
*Avg loss: *-0.88R
*Commission paid: *$42.4 (0.08% of transaction size)
*Closed PnL: *$101,137.7


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## skc (20 January 2010)

Here are the charts... a longer term view showing the upleg and retracement, and a zoomed in view of the gap, the more recent spike and stop placement (blue line).


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## Sugar Dunkaton (20 January 2010)

I am really enjoying this analysis. Great contribution


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## skc (20 January 2010)

*Trade #3 - FBU*

*Entry date: *7/1/2010
*Entry price:* $6.51
*Initial stop:* $6.33
*Risk: *0.6% of capital
*Quantity: *3333
*Position size: *~22% of capital
*Pattern: *End of retracement reversal / flag

*Exit date:*13/1/2010
*Exit price:* $6.75
*Reward:*1.33R
*Trade PnL:* $765

*Entry discussion: *FBU is a building materials company with a fair amount of operations in NZ as well as Australia. Apart from that I don't know a great deal about the firm's operations. But I know that it is one of the few building materials firm that didn't do a big capital raising last year - to me that says they are managing OK and not too highly leveraged. 

On the chart, the bigger time frame shows a retracement to sub $6 following a good swing up from $5 to $7 (July to Oct 09). Zooming in closer, a small flag pattern was evident. So I placed a stop buy order at top of the flag ($6.5) and a stop order at the bottom of the flag ($6.33). The entry order got filled on 7 Jan. The risk size was kept small given the tightness of the stop and low liquidity of the stock (see below) - as you can see the position size was already 22% of total capital. This is pretty much where I like to keep things to avoid significant single name exposure.

*Position management:*The initial target was a simple 50c, or just under $7. The target was based on the size of the recent swing up (~$5.9 to $6.4) before the flag (thereby placing the flag in roughly the mid point). $7 was also the recent high where some resistances are likely to be experienced.

The price moved up steadily until the 12 Jan. On that day, the overall market did a nice tumble falling about 80 points from the intraday high. FBU is always a bit of thin stock, and thin stock tends to lag the market in terms of price movements. Having already moved back from intraday high of ~$6.8 and with the market depth looking terrible in the afternoon (may be a few thousand bids at my price and nothing below until $6.3), I decided to take profit based on where the overall market was heading.

*Post mortem:*Although profitable, a nothing sort of trade really. If I didn't take profit I would have moved the stop to breakeven on 12 Jan which would have been hit Monday this week. In hindsight taking the profit was somewhat wise... given that my target was $7, there's not much point risking my open profit of 24c to get another 24c, esp. considering the weakness in the overall market and low liquidity. 

*Rolling record*
*Trades: *3
*Wins: *2
*Win ratio:* 66.7%
*Avg win: *1.665R
*Avg loss: *-0.88R
*Commission paid: *$77.8 (0.08% of transaction size)
*Closed PnL: *$101,902


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## MRC & Co (20 January 2010)

Beautiful structure and presentation of this review journal SKC.  

Are you taking long signals only, what if the broader market shows another down wave?


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## skc (21 January 2010)

MRC & Co said:


> Beautiful structure and presentation of this review journal SKC.
> 
> Are you taking long signals only, what if the broader market shows another down wave?




Thank you. It is amazing how writing things down makes you think about what you are doing.

I have little experience with short trades and have yet to take any setup. If the whole market was to tank I'd probably take out some shorts on the futures as a hedge / trade, and use a smaller pot for practicing some short trades.


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## skc (21 January 2010)

*Trade #4 - DOM*

*Entry date: *5/1/2010
*Entry price:* $3.76
*Initial stop:* $3.55
*Risk: *0.95% of capital
*Quantity: *4500
*Position size: *~17% of capital
*Pattern: *End of retracement reversal / micro triangle

*Exit date:*15/1/2010
*Exit price:* $3.57
*Reward:*-0.9R
*Trade PnL:* -$881

*Entry discussion: *DOM is a gold miner that caught my eye in late 2008, when everything was falling like flies, DOM started its climb from $2 to a high of $5.7 by May. Since then, it started a choppy decline that would last 9 months (and still continuing). 

Back in Oct last year when gold price was the talk of the town, DOM was the few gold stocks that were not making new 12 month highs. The DOM vs spot gold chart shows the significant divergence that has occurred. On my chart it has reached the Fib retracement level since the May peak, and the decline has certainly gone on long enough time wise. 

It looked like a double bottom in place at $3.35 and a couple of strong day up followed by a tight micro triangle gave me the setup to go long. Initial stop was $3.55 just at the base of the triangle patter.

*Position management:*With all the choppiness on the way down there are many points of resistance. I wasn't 100% set on a target, but I was looking for it to run up to $4.25 without too much problems. As you can see, price simply unwilling to get on with it after my entry, and several bad down days from 13 Jan onwards had my initial stop triggered. On hindsight I should have moved my stop up on 13 Jan to below $3.7, but I decided to give it more space and leave the stop as is, as DOM can often throw some long shadows intraday. 

*Post mortem:* One thing that came up to me while I am writing this review, was that DOM is actually an Aussie gold producer. AUD gold price probably fell since May last year thanks to the rise in $A. DOM's input prices have gone up but their product prices have not... so by looking at the DOM vs gold price in $US I reached the wrong conclusion that they are somehow lagging the gold market.

Many of these retracement / reversal patterns that worked wonders last year are no longer working for me. Prices point up only briefly and lack conviction most of the time. They chop around a lot and it's hard to make money from breakout trades. 

*Rolling record*
*Trades: *4
*Wins: *2
*Win ratio:* 50%
*Avg win: *1.665R
*Avg loss: *-0.89R
*Total commission paid: *$104.2 (0.08% of transaction size)
*Closed PnL: *$101,021[/QUOTE]

Longer term chart



Details around entry



DOM vs $US spot gold


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## MRC & Co (23 January 2010)

Out of interest SKC, why are you using this method when you are having good success with pairs trading?


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## skc (24 January 2010)

MRC & Co said:


> Out of interest SKC, why are you using this method when you are having good success with pairs trading?




I am continuing with pairs trading and very happy with the way I am compounding my capital over there. 

The technical trading here is a smaller part of what I do, but there are many good reasons.

- There will be times when this method will be more profitable than pairs trading, esp if we enter a smooth uptrend with low volatility. Might as well build up the skill now.

- I found chart reading skill complements pairs trading well. e.g. I get a signal to short something that looks like breaking out and the overall market is trending up... wait a couple of days and I'd get a way better entry. 

- My pairs trading also brings attention to various stocks that are behaving funny in the market. It sometimes throw up charts that look bullish and I'd trade the long side only. They then fall into this trade journal.

Quite a few losses coming up, stay tuned.


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## MRC & Co (24 January 2010)

Ah, I see now.  Thx.  Will stay tuned.


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## skc (24 January 2010)

*Trade #5 - OZL*

*Entry date: *13/1/2010
*Entry price:* $1.21
*Initial stop:* $1.10
*Risk: *1.1% of capital
*Quantity: *10000
*Position size: *~10% of capital
*Pattern: *Gap close / range breakout

*Exit date:*19/1/2010
*Exit price:* $1.17
*Reward:*-0.36R
*Trade PnL:* -$418.5

*Entry discussion: *OZL, a copper and gold miner, had a pretty disastrous 12 months. They forgot to tell everyone about their refinancing obligations, sold their best assets at the very bottom of the cycle and been sitting on a pile of cash in the last 9 months when the commodity market shot up around them. Based on their track record I've no doubt by the time they decided to buy something it would be the top of cycle again! 

Anyhow, the share price has gone up from <50c to $1.3 by Oct, and has been zigzagging in a 20c range for the 3 months. Early Jan saw strong moves by OZL, including a gap up on 5 Jan. It looked poised to make a break above the recent trading range. I decided on an aggressive entry and placed a limit order at close to the bottom of the gap on 5 Jan (I also had a stop buy order above actual breakout in case it didn't retrace). A week on, the stock paused and reversed to close the gap, filling my order in the process. The stop was a very far away $1.1, but that was somewhat arbitrary as I was making a gap play (see below). The wide initial stop was simply there so my position was a nice round number of shares.

*Position management:*There was no firm initial target - I have looked for a breakout above $1.3 and to probably ~$1.5 area. On the night my position was filled I moved the stop right up to $1.17, just below the low of the candle before the gap. The assumption was that - gap has been closed, and I want no part unless the share price can get on with it.

Alas, it didn't. The stop was triggered on 19 Jan.

*Post mortem:*I remember the market intraday action on 19 Jan was very bearish, so I was pleased with being stopped out of an often volatile stock. The share price movement hadn't lived up to my expectation and I got out where I wanted to get out. In that sense the execution was OK.

But as I write this review I realised my mistake... when I place my pending order on ~6 Jan, it looked to me that a 3 wave flattish decline is completed, and the stock will simply close the gap and start moving to new highs. However, by 12 Jan, before entry was triggered, I should have noticed the possibility of a 5 wave triangle, which is also quite a common pattern. I failed to review the chart for developing patterns after putting in a pending order. 

So there are two key lessons:
1. Keep my mind open for alternate interpretation of chart (i.e. see the 5 wave triangle before it happens)
2. Review daily any pending orders to look for emerging, alternate patterns 

A week on the share price looked like reversing after a better than expected quarterly report. But with the market looking a bit iffy I am hesitate to open a new long on this. 

*Rolling record*
*Trades: *5
*Wins: *2
*Win ratio:* 40%
*Avg win: *1.665R
*Avg loss: *-0.71R
*Total commission paid: *$122.7 (0.08% of transaction size)
*Closed PnL: *$100603

Longer term chart




Details around entry. Blue lines showing the stop.


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## skc (24 January 2010)

*Trade #6 - SRL*

*Entry date: *8/1/2010
*Entry price:* $1.76
*Initial stop:* $1.62
*Risk: *~1.17% of capital
*Quantity: *8333
*Position size: *~14.7% of capital
*Pattern: *End of retracement / range breakout

*Exit date:*19/1/2010
*Exit price:* $1.64
*Reward:*-0.86R
*Trade PnL:* -$1022.7

*Entry discussion: *SRL is a bit of hybrid miner / resource investment house...it is listed as a coal stock but from my pairs trading I know it is not correlated to any of the coal stocks whatsoever.

This trade relied on a very similar pattern to #2 LNG and #4 DOM. Good leg up since Mar 08 low, followed by a significant retracement to around 50-60% Fib levels. Note that the large gap in early Sept was due to a 30c special dividend, and not some terrible news. I thought this gap would throw off some traders who don't look at company announcements, and hence SRL may need to do some catching up compared to other resource stocks since Aug/Sept. 

Between Oct to Dec, it put in decent basing zone between $1.5 to $1.75. At the start of the new year, the top of that zone was broken, and a new higher high was put in place. On 7 Jan the share price experienced a large range (11c, ~7%) day, tested the $1.75 (now support) and closed quite strong. I took it as a signal that the retest is completed and the strength will continue, and placed a limit order at $1.76. The initial stop was $1.62, which is based on 62% retracement of the most recent swing up. It is also roughly midway through the 3 month basing zone described above.

*Position management:*There was no firm initial target - but I thought 25c based on the basing zone was achievable in the short term.  

The price floated between $1.7 and $1.8 for a week (11-15 Jan), mirroring the overall market and I decided to stay patient as it is still at the top of the basing zone. Come 19 Jan, with the overall market looking weak, and the SRL chart looking like complete out of steam, I decided to "pull it" and sold on market for $1.64 before the stop was hit.

*Post mortem:*On hindsight this was not a trade that I should have taken. There were resistances ahead that were way too close. There would probably be resistance either side of the gap at $1.9 and $2.0, making the risk/reward ratio pretty bad. I also should have moved the stop up more aggressively. My expectation of a "breakout" above $1.75 would clearly have been wrong below $1.70, so a stop at say $1.68 would have saved me a few more cents.  

A poor decision to trade this, no doubt clouded by the new year confidence and enthusiasm. 

*Rolling record*
*Trades: *6
*Wins: *2
*Win ratio:* 33%
*Avg win: *1.665R
*Avg loss: *-0.75R
*Total commission paid: *$145.4 (0.08% of transaction size)
*Closed PnL: *$99,581

Longer term chart



Details around entry. Blue lines showing the stop.


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## Nero64 (24 January 2010)

Hi SKC, 

Enjoying the thread. 

Interesting comments about DOM because I have been trading that as well. Although the longer term trend has been down it has been spiking counter trends for a good 50-60c profit here and there. I was wondering why the divergence with the Gold price and see that yes the Aussie gold price has been going down as well and its correlation to that.


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## skc (24 January 2010)

Nero64 said:


> Hi SKC,
> 
> Enjoying the thread.
> 
> Interesting comments about DOM because I have been trading that as well. Although the longer term trend has been down it has been spiking counter trends for a good 50-60c profit here and there. I was wondering why the divergence with the Gold price and see that yes the Aussie gold price has been going down as well and its correlation to that.




Those spikes are somewhat tradeable for a good swing trader (not me). But I would probably trade LGL or NCM if looking for more decent correlation with gold price.


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## So_Cynical (25 January 2010)

Great thread SKC...surprised to see you buying into the tops of the up legs (DOM & SRL) since your entry level seems to be discretionary, i have to ask why aren't you just buying at the bottoms - support ?


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## skc (25 January 2010)

So_Cynical said:


> Great thread SKC...surprised to see you buying into the tops of the up legs (DOM & SRL) since your entry level seems to be discretionary, i have to ask why aren't you just buying at *the bottoms *- support ?




Come on... that's a bit of a hindsight comment?!

How was I supposed to know that was the bottom before it turned up? If it didn't turn up how was I supposed to know that the support would hold / held?

They are both back at the bottom now... would you buy them now?

I was trading patterns, not investing based on intrinsic value or anything like that. There is no pattern to trade unless they had turned up. If you want to see some buy support trades, go see "My conservative trading strategy" thread by Luke... and see how he went.

Plus, you need to see the chart in a longer term context. While both were nearer to the top of the up legs, they are still way low compared to their 6 month highs. As long as the reward was there compared to the risk, they were valid setups.


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## So_Cynical (25 January 2010)

skc said:


> Come on... that's a bit of a hindsight comment?!
> 
> How was I supposed to know that was the bottom before it turned up? If it didn't turn up how was I supposed to know that the support would hold / held?
> 
> ...




You posted the hindsight charts and the first thing im looking at are those clear as a bell support lines...and yep that's where i would of been buying and holding till they came good....i actually had a good look at SRL again last week as it seemed to be channelling the way i like stocks to channel.

And i still reckon Luke's support trades will come good in time (the 2 i posted about in that thread) support buying seems to be working ok for me, i don't think i would enjoy trading with margins and time pressure....time is prob the best friend a support buyer has.

Of course you never know if support is going to hold but you do know its support, and it is support because its held in the past....support buying is a gamble that support will hold...is that any worse than the gamble/decision you took that resistance would break?

Not looking for an argument skc...just thinking out loud.


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## skc (25 January 2010)

*Trade #7 - HSP*

*Entry date: *18/1/2010
*Entry price:* $5.05
*Initial stop:* $4.89
*Risk: *~0.8% of capital
*Quantity: *5000
*Position size: *~25.3% of capital
*Pattern: *Channel support / breakout retest

*Exit date:*19/1/2010
*Exit price:* $4.89
*Reward:*-1R
*Trade PnL:* -$840

*Entry discussion: *HSP is a healthcare player with operations in hospitals and pathology - a relatively stable industry that is less susceptible to the overall economic climate.

HSP share price has been on a 10 month uptrend. The price action has been choppy, but within a well defined channel. Since Sept 09, $4.9 has held prices back except for a false breakout in early Dec. Prices finally broke through in the new year, but has since slowly drifted down to retest the breakout level against a rising overall market.

On 18 Jan, prices touched $4.9 and reversed immediately (see the hourly chart). I interpreted this as the retest of the breakout was completed. I bought on market at $5.05 and place initial stop below the day's low at $4.89.

*Position management:*I looked at an initial target 2 ways. The top of the channel which is ~$5.5, and the depth of the triangle (~40c) prior to the breakout which offered a target of ~$5.4.

As it turned out that's all academic and prices turned down the very next day (19 Jan, the reversal into the current correction) and triggered the initial stop late in the afternoon. 

*Post mortem:*Another questionable entry. The volume on 18 Jan was not particularly strong and while there was a _chance _that prices will move up after bouncing off the support, I have no idea _the probability _of such chance. Given the poor reward / risk ratio (~40c reward / 16c risk), not a good trade even if it had works out.

Key lesson - make more honest assessment of reward / risk.

*Rolling record*
*Trades: *7
*Wins: *2
*Win ratio:* 29%
*Avg win: *1.665R
*Avg loss: *-0.803R
*Total commission paid: *$185.8 (0.08% of transaction size)
*Closed PnL: *$98,739

Longer term chart



Hourly chart around entry.


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## skc (25 January 2010)

So_Cynical said:


> You posted the hindsight charts and the first thing im looking at are those clear as a bell support lines...and yep that's where i would of been buying and holding till they came good....i actually had a good look at SRL again last week as it seemed to be channelling the way i like stocks to channel.
> 
> And i still reckon Luke's support trades will come good in time (the 2 i posted about in that thread) support buying seems to be working ok for me, i don't think i would enjoy trading with margins and time pressure....time is prob the best friend a support buyer has.




I don't understand what you are trying to say... are you suggesting buy at support, not have a stop, and wait for the price to turnaround even when the support is broken? Luke's most recent trade DJS and WOR both would be stopped out. Are you saying you would still be holding? How do you manage your risk and position size?

I don't trade on margin so time is not a pressure as far as I am concern. However, prices continue to fall, is my concern.



So_Cynical said:


> Of course you never know if support is going to hold but you do know its support, and it is support because its held in the past....support buying is a gamble that support will hold...is that any worse than the gamble/decision you took that resistance would break?




This seems inconsistent with what you just said above. So when the support fails, do you hold or do you get out?

My gamble was not for resistance to break... my gamble was simply on that the stock will trend until it hits the next resistance. Is that any better? Dunno. But at least my risk are really well defined.



So_Cynical said:


> Not looking for an argument skc...just thinking out loud.




Hey all thoughts welcome and understand you are not arguing.


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## Ato (25 January 2010)

I really like your threads of trades you do, skc.

Couple of questions if that's okay.

1. For the 4th trade of DOM, I notice that your initial stop was $3.55 but it sold at $3.57. Why was that? Sometimes I notice slight discrepancies like that (not necessarily in the trades you've posted here, just in general), and wonder why this is? 

2. For trade 7, HSP, you mention "the depth of the triangle (~40c)". How do you calculate that?

Cheers


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## skc (25 January 2010)

*Trade #8 - SGN*

*Entry date: *4/1/2010
*Entry price:* $0.76
*Initial stop:* $0.715
*Risk: *~1.2% of capital
*Quantity: *26,667
*Position size: *~20.3% of capital
*Pattern: *Reversal swing trade / sector play

*Exit date:*20/1/2010
*Exit price:* $0.82
*Reward:*1.33R
*Trade PnL:* $1566.3

*Entry discussion: * SGN is a media company - a sector severely battered during the GFC and many companies have yet to recover.

The most obvious feature on SGN chart is the resistance/support at ~66c. This held prices back until Aug, and supported prices in early Dec. I was alerted to this chart from my other trading strategies. Essentially, every media stock have reached or touching new 6 month highs, yet SGN was still a fair way off. See the 3rd chart below and look at how SGN prices compared with Fairfax, APN and News Corp. Given good strength in the overall market at the start of new year, I elected to long SGN anticipating some catching up to its peers.

Entry was made on 4 Jan with a market order at $0.76. Stop was $0.715, roughly 2xATR(14) away.

*Position management:*The target was a new high at ~$1. This $1 also coincide with the depth of the triangle before the August breakout. The share price moved up nicely from entry, and I trailed the stop up. The falls in the market last week had the stop triggered at $0.82. 

*Post mortem:*I was very tempted to take profit at 84c, and again at 86c (~2R). But I held back and moved the stop up very tight instead. Again, it was the sector wide movements that had me looking for more upside. FXJ was breaking out into new highs and several other well correlated stocks were poising for a breakout. I thought the tight stop was a reasonable middle ground solution to keep exposed to the upside without giving back too much open profit. 

This remains on my watchlist, although the media sector as a whole has come off a fair bit.

*Rolling record*
*Trades: *8
*Wins: *3
*Win ratio:* 38%
*Avg win: *1.556R
*Avg loss: *-0.803R
*Total commission paid: *$219.5 (0.08% of transaction size)
*Closed PnL: *$100.305.5

Longer term chart



Close up chart showing entry and stop level moving up



SGN vs FXJ, APN and NWS. Note discrepancy at time of entry.


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## skc (25 January 2010)

Ato said:


> I really like your threads of trades you do, skc.
> 
> Couple of questions if that's okay.
> 
> ...




Glad that I can entertain a few people while trying to improve my own trading. To your questions

1. With DOM I actually executed the exit at market. The market depth looked terrible, the overall market was falling bad, the chart pattern was already broken so I decided to save myself a couple of cents.

2. See below.


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## Ato (25 January 2010)

Goodo, thanks.

Do you ever find your stocks selling at below your stop loss? If so, what's the general cause? (Eg you set stop loss at $6.50 and they sell at $6.00)

I think I basically understand the triangle. I'll have to read some more on TA though.


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## nomore4s (25 January 2010)

Ato said:


> Goodo, thanks.
> 
> Do you ever find your stocks selling at below your stop loss? If so, what's the general cause? (Eg you set stop loss at $6.50 and they sell at $6.00)




It's called slippage Ato.

Your stop loss gets triggered and executes at market but by the time the order goes into the market price has fallen further and you are forced out at a lower price.


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## skc (26 January 2010)

nomore4s said:


> It's called slippage Ato.
> 
> Your stop loss gets triggered and executes at market but by the time the order goes into the market price has fallen further and you are forced out at a lower price.




There are 3 main forms of slippage.

1. As described above, when the trigger price and market price is different. This happens a lot esp in low liquidity stock with wide spreads. But rarely as bad as 50c for a $6 stock.

2. Share prices can gap overnight and fall right through your stop price

3. Company makes announcements or trading halt during the day and prices gap through that.

These things do and will happen. You are unlucky if you hit them, but they should be taken into account in your overall risk management approach.


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## Ato (26 January 2010)

Alright, cheers guys. Sorry for the derail. Back to the interesting trade reviews!


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## Largesse (26 January 2010)

skc said:


> Glad that I can entertain a few people while trying to improve my own trading. To your questions
> 
> 1. With DOM I actually executed the exit at market. The market depth looked terrible, the overall market was falling bad, the chart pattern was already broken so I decided to save myself a couple of cents.
> 
> 2. See below.




i dont profess to be an expert but what the heck is that triangle based on?


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## skc (26 January 2010)

Largesse said:


> i dont profess to be an expert but what the heck is that triangle based on?




Fair comment. Not really a textbook triangle. The resistance at $4.9 was prominent, but not for the red triangle as marked.

What is important to me however, was just to show that HSP was capable of 40c swings as demonstrated in that last move.


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## skc (28 January 2010)

*Trade #9 - ARU*

*Entry date: *14/1/2010
*Entry price:* $0.915
*Initial stop:* $0.840
*Risk: *~0.88% of capital
*Quantity: *11,667
*Position size: *~10.7% of capital
*Pattern: *Reversal / flag

*Exit date:*20/1/2010
*Exit price:* $0.895
*Reward:*-0.267R
*Trade PnL:* -$250.23

*Entry discussion: *ARU is a small cap rare earth player. Rare earth was a very hot sector back in August / Sept 09 and all the larger players milked the market for equity at pretty good prices. Many of their prices have come down a fair bit since then. I liked the fundamentals of this sector, and I thought the implications of the capital raisings should be all flushed out by now. 

ARU retraced from peak of $1.3 in mid Sept to a low of 70c by end of Dec last year. The fall was choppy and relatively low volume. In the new year, it popped up with a strong 14% move on 4 Jan, and formed a little triangle / flag below $0.91, which also happened to be a resistance zone in Nov. I placed a stop buy order at $0.915 and placed the stop loss at the base of the micro consolidation pattern. Entry was triggered on 14 Jan.

*Position management: *The initial target is $1.5. A figure calculated from the length of the last upleg of 85c (45c to ~$1.3) to the recent low of 70c. 

The share price gained throughout the day on entry, and closed at the high near $1. Straight away I moved my stop to $0.895 to reduce most of my risk. Unfortunately, the move up could not be sustained and it the next 4 days it fell back and triggered my stop on 20 Jan.

*Post mortem:* It was very exciting to see a stock jump 10% the day you entered, and it was very disappointing to get stopped out shortly thereafter at a small loss. The hindsight question was: Should I have taken profit the day after the entry? Or should I have moved the stop to at least above breakeven, given that blowoff candle on 15 Jan which finished well off the day's high?

To me the chart on 19 Jan still looked quite good, representing a small flag sitting on the recent spurt. The blowoff high was noted at the time, but I looked at the intraday volume which suggested that the decline was pretty low volume. So taking profit was definitely off. I think moving stop up would be a 50/50 call, and moving it to above breakeven was probably the way to go.

One other thing of interest - ARU responded to a speeding ticket on morning of 15 Jan which basically said nothing. The price still spiked up on the open but ran out of buyers soon after. Perhaps a stock's behaviour after a speeding ticket offers a hint as to whether the move has substance or not...

*Rolling record*
*Trades: *9
*Wins: *3
*Win ratio:* 33%
*Avg win: *1.556R
*Avg loss: *-0.714R
*Total commission paid: *$236.4 (0.08% of transaction size)
*Closed PnL: *$100,055

Longer term chart



Chart ~3 days after entry... still looked like a flag on a pole.



1 week after exit


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## brty (28 January 2010)

SKC,

The first thing I noticed about this trade and your others is that the stock has already moved substantially in both price and time when you buy them.

ARU has moved nearly 30% in price in 19 trading days with not more than a 3 day correction along the way. It was itching for a larger correction over a time period consistent with its cycles. To trade a breakout like this I would have to have a much larger stoploss, back down at the 60c level, in other words not my way to trade.

Over the longer term people people note that the indexes rise by about 10% pa, and hope to beat that performance. Lets say you hope to make a 100% return for the year. A stock moves 10% in one day, after moving up ~30% in a few weeks, stops dead at resistance, and you ask what you should do???

What are your contingency plans for different types of moves?? 

Your trading style is different to mine, for instance I bought AJL today, but I think your idea of this thread is excellent.

brty

brty


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## skc (28 January 2010)

brty said:


> The first thing I noticed about this trade and your others is that the stock has already moved substantially in both price and time when you buy them.
> 
> ARU has *moved nearly 30% in price in 19 trading days with not more than a 3 day correction along the way*. It was itching for a larger correction over a time period consistent with its cycles. To trade a breakout like this I would have to have a much larger stoploss, back down at the 60c level, in other words not my way to trade.




Very valid point and I don't really have much research into cycles apart from some fib retracement and time lapses...

Looking at the ARU action in August / Sept, it seems that a strong spike is always followed by ~20% correction. Project that to the current spike and 80c is about the right place for it to come back to, even if it was still able to get on with it. Which meant that my stop was too tight, or I should have waited for the correction before making the entry.







brty said:


> Over the longer term people people note that the indexes rise by about 10% pa, and hope to beat that performance. Lets say you hope to make a 100% return for the year. A stock moves 10% in one day, after moving up ~30% in a few weeks, stops dead at resistance, and you ask what you should do???
> 
> What are your contingency plans for different types of moves??




Not sure what you are getting at. Personally wouldn't care too much about the market's return in the context of this stock...

I have to say my trading skill is lacking when trying to handle a volatile uptrend.



brty said:


> Your trading style is different to mine, for instance I bought AJL today, but I think your idea of this thread is excellent.




Definitely. AJL is still falling and I have no skill in catching a falling knife from a technical perspective.

In terms of overall trading style... I have a pretty limited repertoire. I've only learned how to buy high and sell higher. This worked well in middle parts of 2009 but may or may not work in 2010.

Thanks for dropping by.


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## brty (28 January 2010)

> Not sure what you are getting at. Personally wouldn't care too much about the market's return in the context of this stock...




The context is more with what to expect. If something rises 10% in one day after already being up what are the odds of further galloping gains before significant correction. In my world I'd say slim. ARU actually went from opening at 88 up to 104 at the high next day, 18% move over ~day, much greater than most expect the market to do in 365 days (250 trading). To expect a repeat the following day,two days or week, is relying on hope, not on probability.

I have a rule that says "take outsized gains". Most of my rules of trading are sublime to say the least, but they serve me well. This would qualify to me as "outsized gain".



> I have to say my trading skill is lacking when trying to handle a volatile uptrend.




No, that is what being prepared is all about, you know what you will do if the market/stock does a,b,c or d. This should be in your position management section (you don't have to post it, just know it your self).

To me the cardinal mistake you made on this trade was letting something that was 14% in your favour turn into a loss, despite having an original 8.8% 'risk' on opening the trade. As the trade unfolded you let the 'risk' grow to ~14.5% by raising your stop to 89.5 when the price was up to 104.5. 

I hope this makes sense.



> I've only learned how to buy high and sell higher. This worked well in middle parts of 2009 but may or may not work in 2010.




Not too many years are like '09 with a ~60% move for the whole market from the bottom. Then again not too many years are a copy of what's happened the year before, very few actually. Have a look at different years and how your strategy would go in different market conditions, in other words more research.



> AJL is still falling and I have no skill in catching a falling knife from a technical perspective.




Most traders think it is really dumb, how do most traders go?? There are falling knives and then there are falling knives, we'll see how this one goes.

brty


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## Wysiwyg (28 January 2010)

I have a constructive question SKC. Many stocks started to come off their yearly highs from Sept./Oct. That is they aren't making new highs and are trending down. 

Are your long entries enabled for any stage of a stock's trend or market conditions?


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## skc (29 January 2010)

brty said:


> The context is more with what to expect. If something rises 10% in one day after already being up what are the odds of further galloping gains before significant correction. In my world I'd say slim. ARU actually went from opening at 88 up to 104 at the high next day, 18% move over ~day, much greater than most expect the market to do in 365 days (250 trading). To expect a repeat the following day,two days or week, is relying on hope, not on probability.
> 
> I have a rule that says "take outsized gains". Most of my rules of trading are sublime to say the least, but they serve me well. This would qualify to me as "outsized gain".




Excellent point. I think the comparison is not just to the overall market, but also to how the same stock has moved in the past. And in this case both measures pointed to outsized gains without doubt.



brty said:


> No, that is what being prepared is all about, you know what you will do if the market/stock does a,b,c or d. This should be in your position management section (you don't have to post it, just know it your self).
> 
> To me the cardinal mistake you made on this trade was letting something that was 14% in your favour turn into a loss, despite having an original 8.8% 'risk' on opening the trade. As the trade unfolded you let the 'risk' grow to ~14.5% by raising your stop to 89.5 when the price was up to 104.5.
> 
> I hope this makes sense.




Makes sense. When I move my stops I don't really consider the open profits in relation to the original risk size... I move my stops based on the chart. It does make sense to keep that in perspective to the original risk size however. I need to make some changes to my spreadsheet so I can track this easily.



brty said:


> Not too many years are like '09 with a ~60% move for the whole market from the bottom. Then again not too many years are a copy of what's happened the year before, very few actually. Have a look at different years and how your strategy would go in different market conditions, in other words more research.




09 was my first year of trading and that's all I've seen. No doubt conditions like that cannot repeat on a regular basis.



brty said:


> Most traders think it is really dumb, how do most traders go?? There are falling knives and then there are falling knives, we'll see how this one goes.




I don't think it is really dumb. I was just making the point that I don't have the skill to trade those myself.

Thanks for all the input brty... makes all the journal entries worthwhile already.


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## skc (29 January 2010)

Wysiwyg said:


> I have a constructive question SKC. Many stocks started to come off their yearly highs from Sept./Oct. That is they aren't making new highs and are trending down.
> 
> Are your long entries enabled for any stage of a stock's trend or market conditions?




I entered the new year with an expectation that the overall market is heading towards 5000-5200. So I traded long in line with those expectations.

Yes many of the stocks are trending down from Sept highs, but my over-arching read was that the Sept-Dec correction was part of the larger uptrend since March... so 6 months up, 4 months down, and time to move up again.

Many of the trades were entered when they looked like reversing the downtrend. e.g. SRL, LNG and ARU all made higher highs within that down trend. Clearly many of them have not played out... partly due to the individual stock, and partly due to the overall market.

I am not entering any longs at the moment, but that's as much to do with my imminent travel plans as the shakiness in the overall market.


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## Wysiwyg (29 January 2010)

Okay thanks. Like the honesty.


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## skc (29 January 2010)

brty said:


> Your trading style is different to mine, for instance I bought AJL today, but I think your idea of this thread is excellent.
> 
> brty




Sidetracking my own thread... did you know something was up? Which way will the news go?

http://www.asx.com.au/asxpdf/20100129/pdf/31nd8jb3gl83xc.pdf


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## brty (29 January 2010)

I have absolutely no idea, I trade on technicals only. What do AJL do??

All I know is that it met my criteria for a buy. Look at the volume increase recently without an acceleration of price. The selling was running into buyers.

If the news is bad, sei la vie, I may have to repair the position.

brty


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## lukeaye (29 January 2010)

Hey dont take a shot at me SKC!

yes i will admit i got those 2 trades wrong, i got stopped out, but thats ok i was wrong. But if you also saw my statement for the other support trades i took, the profits i made from the previous weeks made up for more then 10x that. I posted that in another thread, i beleive it was adapting strategies to suit the market.

And in SKC defense, his strategy is different to mine? There isn't just one technique that works. There are several. If he can apply it consitently to profit, then can it be a bad strategy? I don't think it can be.

PS today i took a support buy, on RIO and FMG.


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## skc (29 January 2010)

lukeaye said:


> Hey dont take a shot at me SKC!
> 
> yes i will admit i got those 2 trades wrong, i got stopped out, but thats ok i was wrong. But if you also saw my statement for the other support trades i took, the profits i made from the previous weeks made up for more then 10x that. I posted that in another thread, i beleive it was adapting strategies to suit the market.
> 
> ...




Haha thanks for dropping by. I was just using your thread as an example of buy support trades... not taking a shot at you mate.

FMG actually makes sense, but please watch your position size relative to your account size...you know how FMG can gap!


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## skc (31 January 2010)

*Trade #10 - MCR*

*Entry date: *6/1/2010
*Entry price:* $1.87
*Initial stop:* $1.75
*Risk: *~1.2% of capital
*Quantity: *10,000
*Position size: *~18.7% of capital
*Pattern: *Reversal / gap close

*Exit date:*20/1/2010
*Exit price:* $1.795
*Reward:*-0.63R
*Trade PnL:* -$779

*Entry discussion: *MCR is a smallish nickel miner explorer which seems to have managed through the GFC "relatively" well - obviously their share got hammered due to fall in the nickel price, but in terms of debt position and operations they actually did OK.

The chart pattern is again very similar to several trades already reviewed in this thread. A hard run between Mar low and Aug high (up ~6x) and steady, choppy decline from Aug to Jan, down to the 50% retracement level. In Dec the stock made a few false starts to reverse, failed but managed to hold the ~$1.7 level. Come 2010 it started to move sharply and gapped up on 5 Jan. 
With the expectation of an up swing in the whole market, and MCR having a fair bit of catching up to do, I entered on the close of that gap at $1.87.

*Position management: *Steady rise after entry was met by a reversal day on 12 Jan at resistance just below $2. I decided to play it patiently and adjusted my stop trailing ~10%. Stock continued to drift lower there after. With the market looking sad on 19 and 20 Jan, I exited at market at $1.795.

*Post mortem:*Looking back I asked myself why I didn't move the stop up more aggressively... e.g. a 6 day low stop would have the stop at ~$1.85. I remember me thinking that I want to be patient with this trade, as MCR has been a great runner in the past. I traded it last year and it treated me well, so that gave me some false confidence about the share price's prospects.

Aside from the "past performance" influence, I don't think there is a great deal of "process mistakes" in taking the trade... the loss is a direct result of reading the market incorrectly. 

The share price has tanked considerably since exit and now at ~62% retracement level. But I am hesitate to trade this again unless the resource sector as a whole can show some strength.

*Rolling record*
*Trades: *10
*Wins: *3
*Win ratio:* 30%
*Avg win: *1.556R
*Avg loss: *-0.701R
*Total commission paid: *$265.8 (0.08% of transaction size)
*Closed PnL: *$99,276

Longer term chart



Detail around entry


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## skc (1 February 2010)

*Trade #11 - PLA*

*Entry date: *8/1/2010
*Entry price:* $1.09
*Initial stop:* $1.035
*Risk: *~0.83% of capital
*Quantity: *15,000
*Position size: *~16.4% of capital
*Pattern: *Potential breakout

*Exit date:*21/1/2010
*Exit price:* $1.21
*Reward:*2.18R
*Trade PnL:* $1772

*Entry discussion: *PLA, as the name implies, is a platinum producer. I know little of the company apart from that it has done a capital raising last year (so unlikely to do one again soon), and it attracted the investment of George Soros in Oct last year which caused a nice spike.

This stock since July has been range bound btw 80c and $1.1, testing the resistances twice and the support 4-5 times. Early 2010 the stock tested $1.1 for the 3rd time, and consolidated a few cents below that for 3 days. With the overall market looking quite positive, I entered the trade at market on 8 Jan, anticipating a breakout. Stop was placed at $1.035, which was just below the 5 day low and gave me a reasonable position size in terms of % of capital.  

*Position management:*Initial target was 30c, the same distance as the 6 month consolidation range btw 80c to $1.1. Fortunately, prices spiked up 4 days in a row after entry to a high of $1.28. Stop was moved to $1.17 on 15 Jan to lock in some profit. I have traded this stock last year (on the George Soros spike), so I was familiar with how it can move up and down in large range. The stock retested above $1.25 several days despite weakness in the overall market from 19 Jan. On 21 Jan, the market looked set to open with a sharp fall and I was no longer interested in giving it room to move, so I placed an order to exit on the open at $1.21. 

*Post mortem:*A good outcome to get 2.1R, but I did also let go ~1.2R of open profit. During the holding period, I felt more "in control" than usual. It was probably due to the fact that I traded this before, and have started with a mind set of taking profit where I can, rather than just hoping it would run. To me this highlighted the importance of being aware of the individual characteristics of each stock / market that one trades.

A week on, it's fallen sharply back into the range. I am keeping it on my watch list to see if it bounces off the lower range again. 

*Rolling record*
*Trades: *11
*Wins: *4
*Win ratio:* 36%
*Avg win: *1.712R
*Avg loss: *-0.701R
*Total commission paid: *$293.4 (0.08% of transaction size)
*Closed PnL: *$101,048

Longer term chart



Detail around entry


----------



## skc (4 February 2010)

*Trade #12 - LNC*

*Entry date: *8/1/2010
*Entry price:* $1.715
*Initial stop:* $1.635
*Risk: *~0.92% of capital
*Quantity: *11,500
*Position size: *~19.7% of capital
*Pattern: *Reversal

*Exit date:*21/1/2010
*Exit price:* $1.635
*Reward:*-1R
*Trade PnL:* -$950.8

*Entry discussion: *LNC is a stock in the energy industry. Something about a technology that makes use of coal deep underground that are otherwise uneconomical. Anyway, like many new technologies, they are probably a fair way from realising any cash flow from their work. This means the share price movement will predominately be driven by sentiment.

Similar chart pattern to many trades before. Sharp move from Mar low to May high and retreated back to test support at $1.3 just as quickly. Since then, it threatened to burst up several times, each one were high in intensity but low in duration. 

In late Dec the price lingered at $1.5 before a sharp spike to $1.7 in the new year. It retraced for 3 days and I placed a stop entry order above the recent high. Entry was triggered on 8 Jan on relatively high volume. Initial stop is $1.635 which is the low of the 3 day retracement.

*Position management:* Initial target was ~$3, measured on the length of the upleg back in Mar. Prices chopped around either side of my entry and tested my stop on 13 Jan. With that retest it looked poised to move up but did so for only 2 days. It declined steadily since then, gapped down on 21 Jan and triggered the initial stop.

*Post mortem:*As mentioned LNC spikes a lot. Since the May high, it's done so 3 or 4 times, and each time it runs for 40-60c over a week. I see now that my entry level was ~25c over the recent low... so immediately one would conclude that this spike has already run a good part of its way. I didn't do this check as part of my entry. It's all about being aware of the price characteristics of a stock which I must do more work on.

I should probably tighten the stop after 19 Jan when the market was rolling over. That would have saved me ~0.5R.

The share price now looks headed towards $1.3 zone of support. I am keeping half an eye on it and see if I can capture the next run earlier.

*Rolling record*
*Trades: *12
*Wins: *4
*Win ratio:* 33%
*Avg win: *1.712R
*Avg loss: *-0.738R
*Total commission paid: *$324 (0.08% of transaction size)
*Closed PnL: *$100,098

Longer term chart



Detail around entry


----------



## skc (4 February 2010)

*Trade #13 - AGS*

*Entry date: *11/1/2010
*Entry price:* $0.63
*Initial stop:* $0.58
*Risk: *~0.80% of capital
*Quantity: *16,000
*Position size: *~10.1% of capital
*Pattern: *Reversal

B]Exit date:[/B]21/1/2010
*Exit price:* $0.60
*Reward:*-0.6R
*Trade PnL:* -$496

*Entry discussion: * AGS, junior uranium explorer (that's all I know really). Another chart with run up from Mar low to Aug high, followed by retracement to ~62% from Aug high to Dec low.

From Dec low, share price moved from 51.5c to a high of 67.5c (sort of a 5-wave impulse up for those who want to speak Elliot wave) over 13 days, then retraced to find a low of 58.5c which is ~55% retracement to this most recent up swing.

I placed a stop entry at 62c waiting for the swing up again, and initial stop was below the recent pivot low at 58c. Entry was triggered on 11 Jan when price gap opened.

*Position management:*Initial target was 85c, based on ~1.5x the length of the last upswing. Price moved up as intended and reached a high of 69.5c on 15 Jan. At that point I moved the stop up to 60c based on 3-day low. It then failed to hold its gains against the weaker overall market from 19 Jan, eventually triggering the stop. 

*Post mortem:*Looking at the chart now I still quite liked the entry. It had a good chance of an extended wave 3 or C run that should go to minimum of 74c. So the risk (4c) to reward (12c) was there. 

I think the trailing stop was not aggressive enough given the price action. After the spike high to 69.5c and a clear rejection on the charts, I had plenty of opportunity to move to at least breakeven if not more. Keep trailing the 3-day low would get me to 63c. This is a similar mistake to the ARU trade earlier.

*Rolling record*
*Trades: *13
*Wins: *4
*Win ratio:* 31%
*Avg win: *1.712R
*Avg loss: *-0.723R
*Total commission paid: *$339.9 (0.08% of transaction size)
*Closed PnL: *$99,602


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## skc (4 February 2010)

AGS charts here...

Longer term



Detail around entry


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## Albi (4 February 2010)

You guys work so hard, I feel that I need to study more to lock the profit. I always hesitate to take risk. Thanks SKC for starting this thread. It is motivating. I should reflect upon my trades.


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## brty (4 February 2010)

SKC,

I notice the earlier trades seemed to have a bit of FA in the decision making, but now it seems more technical, as in.....



> junior uranium explorer (that's all I know really).




compared to....



> I liked the fundamentals of this sector




Any reason for the change?? Does this affect stock selection and performance of your system in response to the change??

Also you have bought both breakouts and pullbacks. From your research is there a difference in win %, R/r ???

Finally, is your system performing as you expected given the current market over the same period??? Did you test how it would work in the negative period we have had/are in??

brty


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## skc (5 February 2010)

brty said:


> SKC,
> 
> I notice the earlier trades seemed to have a bit of FA in the decision making, but now it seems more technical, as in.....
> 
> Any reason for the change?? Does this affect stock selection and performance of your system in response to the change??




As you may notice the dates of trade entries they were not necessary all later trades... they were just being reviewed later.

I guess stock fundamentals for me is a filter to not to take a trade, rather than a filter to take the trade. I usually look at a stock's Webiress profile and the headline for recent announcements. With junior explorers there is really no point in doing anything in the finanicals, and I am not knowledgable enough to understand their exploration prospects. But I do tend to check that they have enough cash to last more than just a few quarters. I have not detailed these in the review.

I have not reviewed whether performance is better with stocks that I am more familiar with. But given my short holding times in the average trade, I doubt one can easily attribute any observation to fundamental knowledge or there lack of.



brty said:


> Also you have bought both breakouts and pullbacks. From your research is there a difference in win %, R/r ???




Unforunately documenting the type of trade is only a recent addition to my trade record, so I don't have enough data to make a good analysis. It is a good suggestion. Probably something I can do down the track by looking back at all my trades last year.

But I will say that, from what I recall, breakout trades will probably have a smaller average loss - as it's easier to set move stop up fast and tight once the breakout fails. Whereas pullback trades will have better R/R since they have more scope to run (if they do in fact run that is). 



brty said:


> Finally, is your system performing as you expected given the current market over the same period??? Did you test how it would work in the negative period we have had/are in??
> 
> brty




The trades here are really discretionary and are based on strategies and patterns I picked up from various books, and stuff from my Nick Radge subscription (not individual trades, but the trading methodology). As such they are not readily back tested as a system.

How do I know it's profitable? I cannot be sure. But I know it is a tested methodology from someone who's been around for a long time. _And I know it will make money in a rising market. _ I don't expect it to be profitable in a negative period. And in times like now, I simply switch this strategy off - I have no position open at the moment.

My overarching game plan is actually quite simple... I put on many smallish trades when the market looks to be rising (which it did to me in early Jan), using patterns that probably have good chance of playing out _in a rising market_, and manage my risk relatively aggressively so I'd be out if things don't work out. 

In Jan I've done ~25 trades and I ended with a loss of 3% (hopefully I will find the time to detail all these trades), while running head in to a 10% market correction. I know it's no point just beating the market, but as a strategy, I think the risk / reward is there. If the market was to move up 10% instead, I'd expect my return will be far greater than that.

I am reasonably certain that this strategy will not work all the time, but it should work quite well in a more volatile environment like we are having now. The most important factor is probably how early I start putting on trades on the market's upswing, as opposed to how well I read charts and pick individual trades well. It suits a new, low skill trader like me, and gives me the opportunity to learn about other aspects of trading (like things I've identified in this journal) within an environment of fairly controlled risk.


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## skc (5 February 2010)

Albi said:


> You guys work so hard, I feel that I need to study more to lock the profit. I always hesitate to take risk. Thanks SKC for starting this thread. It is motivating. I should reflect upon my trades.




Thanks Albi. Since starting this journal I have gained a lot just through self reflection and input from others. You do get out more when you put in more...It's time consuming but well worth it.


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## travwj (6 March 2010)

Hi SKC

Are you still running this thread. I have enjoyed reading it an it has been about a month from your last post. I have learnt a bit from this thread, so please continue to update us on your trades and reasons behind the trade.

Thanks

Trav


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## So_Cynical (6 March 2010)

travwj said:


> Hi SKC
> 
> Are you still running this thread. I have enjoyed reading it an it has been about a month from your last post. I have learnt a bit from this thread, so please continue to update us on your trades and reasons behind the trade.
> 
> ...




I think hes on Holidays. :alcohol: :bandit: imp:


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