ASX Stock Pairs Trade Journal

[nulla nulla]

How is trade 31 going? Did you close it out our are you still riding the roller coaster?

 

[skc]

New trade #39 opened. Long ILU @ $11.63. Short MDL @ $5.205. Size = 10%.

How is trade 31 going? Did you close it out our are you still riding the roller coaster?

Still open. It's not really much of a rollar coaster. The ratio has only been moving in ~2% range.

 

[skc]

EOD



A poorly closed trade in BLY/ASL even though that it was a win. I tend to close pairs early if the pair has gone offside by a fair bit. BLY/ASL was down ~8% at one stage... it's as much psychological as anything else as I look for the relief of avoiding a large loss. Something I need to work on.

 

[SilverRanger]

EOD

View attachment 47768

A poorly closed trade in BLY/ASL even though that it was a win. I tend to close pairs early if the pair has gone offside by a fair bit. BLY/ASL was down ~8% at one stage... it's as much psychological as anything else as I look for the relief of avoiding a large loss. Something I need to work on.

Well, I know exactly how you feel cuz I closed it off yesterday too, though my excuse was to free up the margin for new trades

 

[skc]

Trade #29. Long FWD / Short UGL. FWD is leveraged to the mining boom with a good portion of its business in the manufactured building space for mining developments and had a remarkable run from the bottom of the GFC. Because of this leverage it will likely run harder if the market stays in risk-on mode. FWD is threatening resistance at $12.1 and if broken offers a potential ~$12.5. UGL is also at a sloping resistance and has retraced ~50% of the recent downleg. Profit target ~4%.

Trade closed. Sold FWD @ $12.20. Covered UGL @ $12.815. P&L = 1.44%.

Just scratched this trade - liquidity has been poor and limited upside (target has moved to only 2.5%). I spent too much time watch this flicking 100 shares at a time when there are more important things to do (like watching paint dry)...

Well, I know exactly how you feel cuz I closed it off yesterday too, though my excuse was to free up the margin for new trades

Yes I had to really resist hard on closing that trade 2 days ago. Having this journal actually helped. Feels like I am less inclined to make random actions when the record is on public display...

 

[skc]

New trade #39 opened. Long ILU @ $11.63. Short MDL @ $5.205. Size = 10%.

Trade closed. Sold ILU @ $11.62. Covered MDL @ $4.995. Profit = 3.95%.

The target was ~6% so 2/3 of the way in one day. MDL is quite a thin and tricky stock and there was only a few thousand shares on the ask for exit before the spread jumps anyother 3%. ILU looking like it's headed towards a strong close.

 

[skc]

New trade #40. Long PPT @ $22.82. Short IFL @ $6.08. Size = 12.5%.

 

[skc]

EOW. Account up 6.99%, up 1.4% for the week. 28 closed trades vs 12 open trades at small profits.



Have a nice weekend.

 

[skc]

Trade #28. Long CPU / Short IRE. Both companies are stock market activity levels - CPU benefits from capital raising and corporate events, while IRE from trading volumes. Fundamentally both stocks have similar place in my mind - former market darlings priced for growth that are now being re-rated. On the charts, IRE has enjoyed a 10% bounce from recent lows right into resistance zone in $6.6-$6.8. CPU is only up ~2% and if it manages to get back above $7.6 it can potentially retest $8.20. Profit target ~6-7%.

Trade closed. Sold CPU @ $7.36. Covered IRE @ $6.425. P&L = 2.3%.

I am going to have an interrupted week trading wise so just closing a few trades that are slow to get going. CPU failed to break $7.6 resistance so not a lot going on here.

Trade closed. Sold ILU @ $11.62. Covered MDL @ $4.995. Profit = 3.95%.

The target was ~6% so 2/3 of the way in one day. MDL is quite a thin and tricky stock and there was only a few thousand shares on the ask for exit before the spread jumps anyother 3%. ILU looking like it's headed towards a strong close.

Dodge a bullet here. ILU with a poor update and share price fell 20%. If this trade was open the MDL short would have coushioned the blow as it fell ~8%. The P&L would have been -6-8% which is not disasterous.

 

[skc]

New trade #40. Long PPT @ $22.82. Short IFL @ $6.08. Size = 12.5%.

Trade closed. Sold PPT @ $22.76. Covered IFL @ $5.90. Profit = 2.7%.

Full profit target was ~4%... 2/3 of the work in one day.

 

[skc]

New trade #31 opened. Long SGP @ $3.12. Short CQR @ $3.41. Size 12.5%

Trade closed. Sold SGP @ $3.13. Covered CQR @ $3.305. P&L = 3.4%.

 

[skc]

EOD



3 closed trades today to get the total number of open positions to a easier managable level. I was very tempted to close IOF/GMG on Friday given how long it's been open, but missed the opportunity so have to wait and see if the profit comes back. MGX seems to be trying to hold onto $1 and it's a key level to watch over time. NWH reverted from recent strong run so a better timing / additional layer would have been profitable.

 

[skc]

Trade #41 opened. Long PTM @ $3.88. Short IAG @ $3.56. Size 7.5%.

Analyst downgrade causing PTM to fall 5% in a flattish market. I am not sure if the selling is done yet so will look to increase the position if there are further falls on PTM.

 

[skc]

Trade #41 opened. Long PTM @ $3.88. Short IAG @ $3.56. Size 7.5%.

Analyst downgrade causing PTM to fall 5% in a flattish market. I am not sure if the selling is done yet so will look to increase the position if there are further falls on PTM.

Got a little bit more. The line now reads: Long PTM @ $3.86. Short IAG @ $3.545. Size 10%.

 

[skc]

Got a little bit more. The line now reads: Long PTM @ $3.86. Short IAG @ $3.545. Size 10%.

Trade #41 closed. Sold PTM @ $3.8. Covered IAG @ $3.50. P&L = -0.26%.

Lol nothing beat a profit downgrade 1 hour after your entry. PTM announces 10% lower profit after the share price fallen 7%, and there I was thinking it was just a broker downgrade related flow event. I didn't know how to take the news so exit seems like the safest course of action. PTM EPS is ~22c and fundamentally I can't see why it should that support at $3.80+ share price. A more normal PE of ~12-14 suggests a range ~$2.6-$3.1.

Trade #33 opened. Long MIN @ $8.88. Short CPB @ $55.48. Size = 10%.

Trade #33 closed. Sold MIN @ $8.855. Covered CPB @ $54.05. P&L = 2.3%.

I had a breakeven stop loss in mind for MIN and can't afford to hold it long while it goes to test recent lows for the 3rd time.

 

[skc]

Trade #30. Long ENV / Short SKI. Gas vs electricity distributor. The utilities / infrastructure sector makes good pairs trading as they tend to have lower risk of company-specific shocks. The main fundamental factor I look is the dividend yield (and the ex-dividend date). ENV enjoys a higher yield, and the ex-div dates are both far enough away for it to not matter much yet. ENV is hitting lower bounds of a 5-month channel between 76 and 81c. SKI's chart is a bit scary for a short as if it breaks $1.54 there might be a 10% run in it - but I do intend to fade the break and build the position further if it happens. Hopefully the resistance will hold SKI back while ENV rotates back towards the top of the channel. Profit target ~5%.

Trade closed. Sold ENV @ $0.795. Covered SKI @ $1.54. P&L = 2.25%.

There was a chance to layer in but I didn't capitalise on it. The divergence has diminished since the trade opened and there's only a tick left - that's not worth chasing as I need to be away from the screens tomorrow.

 

[skc]

EOD



34 closed trades vs 7 open trades at small loss.

This portfolio has been lucky - it dodged ILU by a day, and PTM's profit downgrade didn't really affect the share price too much. But I am pleased to be out of the trade with very minimal impact - the market can be savage against profit downgrades.

 

[SilverRanger]

EOD

View attachment 47828

34 closed trades vs 7 open trades at small loss.

This portfolio has been lucky - it dodged ILU by a day, and PTM's profit downgrade didn't really affect the share price too much. But I am pleased to be out of the trade with very minimal impact - the market can be savage against profit downgrades.

Only did short LLC vs long MGR today, which is kind of a reverse trade of long SGP vs short MGR earlier.

Otherwise I have both long DXS vs short GPT and long MRM vs short NWH in heavier loss than your pairs

 

[skc]

Charts...

STO/OSH - Normally I avoid any stock that has recent fundamental news and STO last week announced a cost blowout (which they denied) on their LNG project which caused the share price to fall sharply. But the chart suggests that there's good buying below $10.50 plus it's always a takeover target. The OSH chart is right on resistance at $6.80 and I can see a possible retracement back into $6.4-6.5. The STO/OSH ratio is at 6 month low.

Full convergence up to 8%, but profit target ~5% depending on price action.

Trade closed. Sold STO @ $10.5. Covered OSH @ $6.36. P&L = 2.03%.

I had a mental note to close the trade if STO falls below $10.50 again (although on hindsight it looks like it is supported) so trade closed to protect downside risk.

Only did short LLC vs long MGR today, which is kind of a reverse trade of long SGP vs short MGR earlier.

Otherwise I have both long DXS vs short GPT and long MRM vs short NWH in heavier loss than your pairs

I think DXS/GPT "should" comeback, although DXS has been weak for a while. Don't know much about MRM but my FGE/NWH is not going awesome either... the liquidity of FGE is pretty poor and it's probably off my trade list from now on.

 

[skc]

FGE/NWH - Two smaller mining services stock that have decent fundamentals if the mining boom doesn't disappear overnight. NWH is up 18% from the recent low, FGE is up only 7%. If the market stays in risk-on mode, FGE can possibly find $5 again, while NWH is looking at $3.6. So with good luck and timing there'd be a profitable time to exit the pair from now till they get there.

Full convergence is a massive 13%. Profit target ~6-7%. Position size kept small as FGE can be thin at times.

View attachment 47752

Trade closed. Sold FGE @ $4.275. Covered NWH @ $3.135. P&L = -0.15%.

FGE is too illiquid so I just close the trade given the opportunity.