# Am I Wasting My Time?



## roland (22 February 2010)

Yes, I know - cut your losses and let your winners run.....

It sounds easy, and I'm happy to say that I have done it on other stocks but for some damn reason I couldn't get that in my head with OZL.

I got burnt a little with ZFX and stubbonly didn't want it's problem child OZL to do the same.

I have held through what should have been stops, I've pyramided, I've averaged down and all the other bad things - but I think I'm getting there.

My research on OZL has me confident that my fun with trading shouldn't char off too much skin, but if I need a smack in the head to set me right - then feel free with your comments.....

First image shows the trades - showing a gain of $1,680.34 gain (inc Div)

Second image is current position - showing an 11.2% loss or $3,269.34


Figures include brokerage

What I am doing is is entering at around each $0.05 fall and then sell off a larger parcel each recovery - taking a miniscule profit each time and offsetting the larger portion to my highest cot parcel. 

My initial average was $1.97, my current average is $1.1937. As the cycles continue, I should be able to continually pull my average down and increase the profits.


Does this sound in any way like a valid trading system  ?

Does anyone else trade this way, or am I on my own???


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## roland (22 February 2010)

Oh, if anyone is wanting to know what the column headings are for the current position - here it is again with a title bar.

Thanks for your comments


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## roland (22 February 2010)

Actually, I did the same thing with Westpac:


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## roland (22 February 2010)

come to think of it, Westpac was a little different - I just held on for dear life


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## So_Cynical (22 February 2010)

I was going to say this is what happens when your only paying $6 a trade...then i noticed your paying $19.95  almost a 1000 bucks in brokerage in just 1 stock (first image) to make $1,680.34

Thanks for sharing....makes me fell a littler better about some of the silly things i do.


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## xddc (22 February 2010)

i dun get it....how come the first xls includes 25/07/08 and 01/08/08 and the second doesnt?


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## roland (22 February 2010)

xddc said:


> i dun get it....how come the first xls includes 25/07/08 and 01/08/08 and the second doesnt?




As mentioned in the post, the first image are historical closed trades, the second image is current live position.

Does that help????


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## skyQuake (22 February 2010)

What happens if there is no recovery? Or when you run out of cash to average? 

Look up martingale systems on wikipedia


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## xddc (22 February 2010)

can u post the xls?
i might/not be able to help but id like to see whats goin on....


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## roland (22 February 2010)

skyQuake said:


> What happens if there is no recovery? Or when you run out of cash to average?
> 
> Look up martingale systems on wikipedia




Good point and a valid worry. OZL in this case has no debt and very well cashed up, so I consider it less of a rick than others. I have enough cash to follow it to $0.50 if necessary


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## roland (22 February 2010)

skyQuake said:


> What happens if there is no recovery? Or when you run out of cash to average?
> 
> Look up martingale systems on wikipedia




OK, I don't believe that I am using a Martingale System since I am not doubling up. I am actually happy to hold with an expectation of dividends returning.

Adding to my motives is the need to trade enough to keep my Comsec Pro Trader free, at least 8 trades per month for free access, otherwise $85 (or so) a month.


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## nunthewiser (22 February 2010)

and along comes BNB,SGW...........ETC ETC ETC

Good luck with it, not my cup of tea.


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## roland (22 February 2010)

nunthewiser said:


> and along comes BNB,SGW...........ETC ETC ETC
> 
> Good luck with it, not my cup of tea.




thank you nun for the heads up, I agree the risk needs to be managed and I wouldn't do it with companies running on debt like your BNB example.


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## skyQuake (22 February 2010)

roland said:


> thank you nun for the heads up, I agree the risk needs to be managed and I wouldn't do it with companies running on debt like your BNB example.




Trouble is you won't know where the next BNB may pop up. What if you started averaging in FMG at $10? $8? and these are the companies that have survived!

Not to mention those that do cap raisings.


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## roland (22 February 2010)

skyQuake said:


> Trouble is you won't know where the next BNB may pop up. What if you started averaging in FMG at $10? $8? and these are the companies that have survived!
> 
> Not to mention those that do cap raisings.




yes, again I agree. As mentioned, I don't do it on all stocks. In this case OZL have no debt and a billion in cash, a cash positive gold and copper mine and some hard learnt lesson behind them. Of course a calculated gamble.


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## roland (22 February 2010)

P.S. I am not actually trying to average down.

I am averaging down because I can, and because I can still pull a little profit whilst doing it.

My main goal is to channel trade a parcel of shares with a 4-5% target, since that has been the historical swings through the channel.

The problem I am having, is that I am getting caught with market sentiment pulling the channel the wrong way. So I leave the parcel there to channel trade once the SP gets back to that channel.


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## Trembling Hand (22 February 2010)

roland said:


> Adding to my motives is the need to trade enough to keep my Comsec Pro Trader free, at least 8 trades per month for free access, otherwise $85 (or so) a month.




 I wonder how many other traders try get over the 8 trades to get their "Free" data.

As just about everything else "free" it ends up being more expensive by factors of 10 to 100. In not just money but wasted time.


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## brty (22 February 2010)

The points raised are very valid, averaging down any company by any method has not been a good strategy, except on the companies that are near current highs. I hope you have heard of survivorship bias.

A better question would be, Where is your uncle point?? Where do you bail if it doesn't work on a particular stock?? Can you stop the damage from being catastrophic to your trading if OZL came out with a market statement that they had just lent 2 billion dollars (half loaned) to a minor subsidiary (10% holding) that is run by Skase, Bond and Spalvins??



> Adding to my motives is the need to trade enough to keep my Comsec Pro Trader free, at least 8 trades per month for free access, otherwise $85 (or so) a month.




So you spend $160 per month on brokerage to 'save' $85. You don't see a problem here do you??

brty


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## roland (22 February 2010)

Trembling Hand said:


> I wonder how many other traders try get over the 8 trades to get their "Free" data.
> 
> As just about everything else "free" it ends up being more expensive by factors of 10 to 100. In not just money but wasted time.




Yes, I would be interested to know that as well.

I have plenty of time and still get a thrill from making a trade. The 8 trades are not a necessity, but as I said there is some motivation there.


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## brty (22 February 2010)

Those Trembling Hands obviously make you type faster than me.

brty


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## roland (22 February 2010)

brty said:


> The points raised are very valid, averaging down any company by any method has not been a good strategy, except on the companies that are near current highs. I hope you have heard of survivorship bias.
> 
> A better question would be, Where is your uncle point?? Where do you bail if it doesn't work on a particular stock?? Can you stop the damage from being catastrophic to your trading if OZL came out with a market statement that they had just lent 2 billion dollars (half loaned) to a minor subsidiary (10% holding) that is run by Skase, Bond and Spalvins??
> 
> ...




I guess you have to confident enough where the SP is likely to go.

I agree that averaging down is not a good strategy - I did mention in a later post that averaging down wasn't my goal. My main goal is to channel trade a parcel for a 4-5% gain.



> So you spend $160 per month on brokerage to 'save' $85. You don't see a problem here do you??




Putting like that, it looks like a problem, the reality is that each sell trade covers round trip brokerage with a small profit. Also OZL is only 8% of my portfolio - and I don't channel trade the others and have definite stop losses.

In most months I don't need to trade OZL to cover the 8 trades needed for free access - but losing $85 when I don't need to is something I aim at.


"Uncle Point" - that is where my inexperience would be tested.


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## Julia (22 February 2010)

Roland, you must have a lot of time on your hands, to apply so much energy for such a small profit.

Or else you have developed an unhealthy obsession/attraction to OZL.

Plenty of other much more profitable ways to spend your time imo.

I'd say that if you really had confidence in what you've been doing, you wouldn't have been putting it up for scrutiny.


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## roland (22 February 2010)

Julia said:


> Roland, you must have a lot of time on your hands, to apply so much energy for such a small profit.
> 
> Or else you have developed an unhealthy obsession/attraction to OZL.
> 
> ...






The small profit with OZL is not the intention. I want a big profit, but I feel comfortable chipping away at it.

I do have an unhealthy obsession with OZL - it's stupid, but they owe me some dollars!!!!



> I'd say that if you really had confidence in what you've been doing, you wouldn't have been putting it up for scrutiny.




aha, it's up for scrutiny because in essence I know it's wrong, but I need to learn to know why.

It's up for scrutiny because I know a lot of others do the same thing and I feel it's a good thing to discuss as to why it's the wrong thing to do.

The profit margin is (temporarily) so low because I am using the profits to sell higher cost parcels. My original average was $1.92, now it's $1.19 - so I am getting there.

Thank you for your comments


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## Trembling Hand (22 February 2010)

roland said:


> Putting like that, it looks like a problem, the reality is that each sell trade covers round trip brokerage with a small profit. Also OZL is only 8% of my portfolio - and I don't channel trade the others and have definite stop losses.




A trade should be taken with consideration to Risk to Reward FULL STOP

What you are doing is exposing yourself to risk just to 'save' $85 bucks. When you start doing stuff like that you stop looking out for dangers and just look for the reasons to take the trade. Like may I suggest changing of conditions, ah la breaking of the channel. 

This of course goes to the question of your post. "Does this sound in any way like a valid trading system?" It has up to now but what about when it breaks, will you be ready when it breaks? It will happen sooner or later. How much is that change from past conditions going to cost you?


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## xddc (23 February 2010)

so you've turned a ~$4k position into a ~$30k one just to average down?
ok so ur turning some gains each time you avg down, but the unrealised p/l and time spent doesnt bother u?

and while you had ur mind set on that strategy, why the break in oct 08 and mar-jun 09? that kinda cost u.


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## roland (13 August 2010)

Update

Since 19th Feb 2010, realised profit has increased from $1,680.34 to $2,130.05

Unrealised loss has reduced from -$3,269.34 to -$340.89

so a position improvement of $3,378.16

Holding exposure has reduced from a risk of $29,186.34 to $8,359.89


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## tech/a (14 August 2010)

In my view you need to seriously look at the way you evaluate situations.
You have made OZL your nemesis. Yet its inert it doesnt know of your existance!

Moving away from it to other opportunity shows you have won not been defeated!

Years ago a friend of mine watched as a few of us were taking advantage of the property boom.
He was in the middle of divorce preceedings that were dragging on for years.
He was scared to death that any profit he made would be included in his wifes settlement.
So while in the position to take advantage of extremely rare opportunity he chose to ignore it.

In the end he settled at around $160K while 5 or 6x that over the 5 yr period went begging.

While you have chipped away at your open loss with OZL one trade could have wiped that out in a few weeks.

Ever heard the saying
None are as blind as those who cannot see?

The battle is with YOU 

Time to throw off the shackles dont you think?


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## Dracuu (15 August 2010)

With no back-up plan your risk is 100% and so far you have made very little money over many trades over a long period of time so your reward is minimal. On top of that you are paying $100 round trip on a 10k lot and you seem to be only buying when the majority are selling and selling when the majority are buying.
This is the exact opposite to how I trade so I cannot say I like it.


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