Am I Wasting My Time?

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??



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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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??

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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.

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.

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.

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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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.

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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

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.

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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?

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.

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

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?

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.