PANIC!!!!! (Strategies for those long)

[Uncle Festivus]

The real test for today is if there is follow through buying after the initial flush, usually about 10:50 - 11:00, or gradually fades to a gain of 40 points or so in the XJO?. Lower highs & higher lows = wedge market till breakout either way?.

 

[tech/a]

Tech,
Nothing to do with your count but the way Miner's software sees the simple ABC, of course not including projections for the larger degree W(2). By the way, would the B wave in your chart be right labelled abc as opposed to 123???

Seems to be setting up well.

 

[tech/a]

I think XJO will remain under 6000 for

THE NEXT 5 YEARS

Tree.
Thought Id just remind you.
Should have had a Scotch on it.

 

[nizar]

Correction is over?

 

[CanOz]

Correction is over?

We need to see new highs though Niz...could be today?

Cheers,

 

[yonnie]

Re: PANIC!!!!!

Was tempted to short the ASX200 last night, was only 40points down with IG

IG will be at the other side of this trade I suppose.....would they really offer you a fair price in a fast moving market?

 

[yonnie]

hello guys,

interesting thread

however from what I have read sofar, nobody has come up with a strategy that when they have a long portfolio a correction will be neutral to their p/l.
And lets be fair: the correction was only small, but NOBODY knows what might happen tomorrow.
Could be a 25% drop, anything is possible.

Things being said:
1. I have a stop loss of 10% on my positions: you still lose at least 10%

2. I sold all my positions, because I felt a correction was near: your timing could be totally wrong and you would "lose" a lot of money in opportunity cost

3. the worst is the majority of traders: they hope for the best, but could lose the lot.

A professional wont give money back to the market and would be COVERED for every eventuallity -
no professionals here????

 

[dj_420]

hello guys,

interesting thread

however from what I have read sofar, nobody has come up with a strategy that when they have a long portfolio a correction will be neutral to their p/l.
And lets be fair: the correction was only small, but NOBODY knows what might happen tomorrow.
Could be a 25% drop, anything is possible.

Things being said:
1. I have a stop loss of 10% on my positions: you still lose at least 10%

2. I sold all my positions, because I felt a correction was near: your timing could be totally wrong and you would "lose" a lot of money in opportunity cost

3. the worst is the majority of traders: they hope for the best, but could lose the lot.

A professional wont give money back to the market and would be COVERED for every eventuallity -
no professionals here????

well yonnie i am holding my long term portfolio (disc PDN, JML, GBG, UMC and CUY)
have sold the rest of my short-termers on open this morning.

now have around 30% cash to pick up some bargains. havent gone to 100% cash like others as if i sell my long term portfolio will be up for some big CGT.

so im sorta stuck, i have sold what i could now holding what i see as some sound stocks (IMO anyway).

ready to pick up KZL, CBH at bottom of a pending correction. zinc will have its time in the sun again, so ready to jump on that metal.

 

[yonnie]

havent gone to 100% cash like others as if i sell my long term portfolio will be up for some big CGT.

so im sorta stuck, i have sold what i could now holding what i see as some sound stocks (IMO anyway).

that`s why you need a good strategy for those days that WILL come around.
some say: ah well I`ll weather the down turn and it will go up again. She`ll be right mate; just plain laziness.
Now you`re also hesitant to sell if you need to because of CGT. But there are ways to cover yourself without selling your portfolio.

Well when the day comes, there might be no CGT for you to worry about at all.

Be a professional and get your cover.

 

[professor_frink]

hello guys,

interesting thread

however from what I have read sofar, nobody has come up with a strategy that when they have a long portfolio a correction will be neutral to their p/l.
And lets be fair: the correction was only small, but NOBODY knows what might happen tomorrow.
Could be a 25% drop, anything is possible.

Things being said:
1. I have a stop loss of 10% on my positions: you still lose at least 10%

2. I sold all my positions, because I felt a correction was near: your timing could be totally wrong and you would "lose" a lot of money in opportunity cost

3. the worst is the majority of traders: they hope for the best, but could lose the lot.

you could always try hedging.

A professional wont give money back to the market and would be COVERED for every eventuallity -
no professionals here????

No. None of those here

 

[dj_420]

that`s why you need a good strategy for those days that WILL come around.
some say: ah well I`ll weather the down turn and it will go up again. She`ll be right mate; just plain laziness.
Now you`re also hesitant to sell if you need to because of CGT. But there are ways to cover yourself without selling your portfolio.

Well when the day comes, there might be no CGT for you to worry about at all.

Be a professional and get your cover.

im actually prepared to weather the storm in a few select stocks

JML - start producing next month, will take advantage of next zinc upswing, also have benambra deposit, have come off their highs but hold up very well during periods of consolidation. i also have a cheaper entry 45 cents on them so im not really prepared to sell then buy back in again.

GBG - will start producing hematite at the end of this year start of next year. for their resource size i think they are vastly undervalued. they have already secured JV with chinese steel smelter and they are actually building a smelter to handle all of GBG magnatite product. they have 1.4 billion tonnes of magnatite which is quite large resource.

UMC - completely undervalued iron ore junior. goldfields drilling program has proven up a pre JORC 120 mt around 60% fe. they have recently discovered more deposits hidden under surface. i see a huge upside in these guys and i again wont buy or sell to gain a few cents here or there.

PDN - obviously producing uranium, next mine to come online at the end of 2008 i believe, only uranium producer that is exposed to these inflated uranium prices. although been consolidating recently is a great growth story IMO.

actually sold out of CUY this morning, stopped out.

i dont have stops on any of the other stocks i hold. i have also been careful to only invest in metals with strong demand both now and in the foreseen future.

IMO my strategy is that i have a long term part of my portfolio which i wont touch at all (if only to add to positions), a medium term and short term. have recently been stopped out or sold my short termers.

now have some cash for a correction if we get it.

IMO next stocks to run will be zinc again, CBH, JML, KZL, ZFX.


i also might add that i have recently been looking into producers or near term producers for maximum gains. IMO this is agreat way to get into a metal with high demand.

 

[yonnie]

hi dj

just a little uncertainty about economics or a melt down somewhere and there will be no ships waiting to be loaded.
And as far as your metal stocks are concerned, nobody would be interested in the least that they are near production

 

[wayneL]

A professional wont give money back to the market and would be COVERED for every eventuallity -
no professionals here????

Not quite true. Some professional will hedge themselves, but hedging (in speculative terms rather than productive terms) simply transfers risk from one spot to another.

For example, someone with 100 AAPL shares for which the investor has purhased an ATM put option, has taken out a hedged position. The investor has removed the downside risk in the stock completely. However, he/she has introduced a replacement risk; that is the risk that the investor will lose the entire extrinsic value of the put option.

There will always be risk, and therefore a least desired outcome, even for professionals. Furthermore, time and price movement may introduce new risks that may require re-hedging, costing money, and forcing a specific view of the future.

That someone can cover themselves for any eventuality, automatically, is nonsense.

 

[yonnie]

Re: PANIC!!!!!

I doubt I'll see longterm buy signals for a while as they operate off the Highest high for 70 bars and a cross of the highest bar for the last 10 bars (double dutch I know) but it keeps you out of taking long positions longerterm if there is a prolonged correction.

hi tech/a,

Do you trade index futures?

Highest high for 70 bars means highest price for the last 70 days and what is a cross of the highest bar for the last 10 bars?

Is this your long term account with positions lasting months/years?

thanks tech

 

[yonnie]

hi Wayne,

we can only try to cover our risks as good as possible.
thats why I have 2 internet connections and 2 computers and stop loss orders in the market in case we have a technical breakdown and I am helpless and can only watch.
a library with a computer/internet connection is around the corner from here.

for the long position risk you can have a short portfolio to balance the market risk.
drawbacks are that you probably lose or break-even at best in a rising market and double the work with 2 portfolios`

for market risk I would rather have a OTM option than ATM
option on an index rather than a stock.
it has been calculated that the insurance will cost about 3% of the portfolio value per year.

and what about your money/cfd/shareholding with your broker: are those assets insured somehow if your broker goes belly up.

strange that everybody seems to take home insurance for granted and you might never claim against it in your whole life.
as for portfolio insurance you bet it will happen in your life time, so it is wise to think about it.
unless you can afford to lose

if my trading is just a hobby ok, but if it is my bread and butter I better look at it as a business and minimise every risk. there is far more to it than just trading.

so there`s nobody here with a good market neutral strategy?

 

[dj_420]

hi dj

just a little uncertainty about economics or a melt down somewhere and there will be no ships waiting to be loaded.
And as far as your metal stocks are concerned, nobody would be interested in the least that they are near production

i think you will find that in the event of a correction the stocks that hold up relatively well and rebound nicely are the producers and near term producers.

only been investing for nearly two years now, i originally had all my money in explorers lost a lot of money and changed my strategy, since changing my strategy have increased portfolio by around 250% in 9 months. now i focus on metals in demand and companies that are near to producing those metals.

obviously you are criticising my methods and my long term plan. IMO you are trying to sell insurance of some sort to the masses.


regarding your market neutral strategy what do you suggest investing in a range of industries or hedging against positions?

i would actually prefer to be more knowledgable in one industry than know a small amount about all industries. and why not go where the money is? you may argue that infrastructure stocks are the safe sound way to go for the future but in the meantime miss out on spectacular gains in other areas as that industry may not be as atractive.

maybe you have a very low appetite for risk and as such should be investing in "mummy and daddy" shares in a range of industries. i might also add that from your remarks we can obviously deduce that you yourself must be a professional and as such you have the best market neutral strategy.

 

[yonnie]

Good on you dj for such a good performance. you`re doing better than I do with my performance at only 77.5% without leverage in about the same period.

And no, I`m not critisizing your methods at all, but I just would like you to KEEP what you already achieved.

And no, I`m not selling anything - I just leave that to the gurus`

As to my protection plan, I just have an idea but I would like to see what other people do to protect their asset, but I think that nobody is really interested in a 100% protection.

And you`re right to concentrate on a particular part of the economy that is doing so well.

I`ve been at it for 9 years now - usually 2 steps forward and 1½ back and now I am making very good money with a good strategy, I dont want to lose it somehow. That`s why I am in the process of covering every angle as a true professional. After all trading pays all my bills plus plenty left and I want it to keep doing that even when the market goes down.

With on average 50 trades a month I dont consider myself a mum and dad investor and my appetite for risk is pretty high. And that`s perfectly alright as long as you know where the exit is.

Well dj, when you are weathering the storm - I will be running for the shelter

 

[wayneL]

hi Wayne,

we can only try to cover our risks as good as possible.
thats why I have 2 internet connections and 2 computers and stop loss orders in the market in case we have a technical breakdown and I am helpless and can only watch.
a library with a computer/internet connection is around the corner from here.

for the long position risk you can have a short portfolio to balance the market risk.
drawbacks are that you probably lose or break-even at best in a rising market and double the work with 2 portfolios`

Yeah,

I would call this proactive trading rather than "cover". Cover to me implies a passive "insurance" style strategy such as a permanent put option. Probably just a matter of semantics.

for market risk I would rather have a OTM option than ATM
option on an index rather than a stock.
it has been calculated that the insurance will cost about 3% of the portfolio value per year.

The thing with OTM puts is that you have low delta, and hence more downside risk. It becomes cheaper, but your "excess" (to use insurance parlance) becomes very much greater, viz, more risk. Therefore this sort of cover is really only against a black swan. Maybe that's all you're after, but that's not "Every eventuality". At 3% per year, thats quite a long way OTM at current volatilities, 600 pts or so at a guess.

and what about your money/cfd/shareholding with your broker: are those assets insured somehow if your broker goes belly up.

Agree, I don't like CFD's for that reason... counterparty risk.

strange that everybody seems to take home insurance for granted and you might never claim against it in your whole life.
as for portfolio insurance you bet it will happen in your life time, so it is wise to think about it.
unless you can afford to lose

if my trading is just a hobby ok, but if it is my bread and butter I better look at it as a business and minimise every risk. there is far more to it than just trading.

Truuuue, but the thing to weigh up is if the insurance costs more than the risk. For me it depends on the circumstances. There are times when the insurance is just not worth it... or not even worth being in the position. Judgement call.

so there`s nobody here with a good market neutral strategy?

My specialty, I have lot's of them. Again, not all is cut and dried here either. Market neutral bets (using options that is) is inherently a volatility bet. Better know what your doing here.

 

[dj_420]

Good on you dj for such a good performance. you`re doing better than I do with my performance at only 77.5% without leverage in about the same period.

And no, I`m not critisizing your methods at all, but I just would like you to KEEP what you already achieved.

And no, I`m not selling anything - I just leave that to the gurus`

As to my protection plan, I just have an idea but I would like to see what other people do to protect their asset, but I think that nobody is really interested in a 100% protection.

And you`re right to concentrate on a particular part of the economy that is doing so well.

I`ve been at it for 9 years now - usually 2 steps forward and 1 ½ back and now I am making very good money with a good strategy, I dont want to lose it somehow. That`s why I am in the process of covering every angle as a true professional. After all trading pays all my bills plus plenty left and I want it to keep doing that even when the market goes down.

With on average 50 trades a month I dont consider myself a mum and dad investor and my appetite for risk is pretty high. And that`s perfectly alright as long as you know where the exit is.

Well dj, when you are weathering the storm - I will be running for the shelter

thanks yonnie, sorry i took your posts the wrong way.

i am prepared to weather the storm for a FEW particular stocks not all.

cheers

 

[tech/a]

Re: PANIC!!!!!

hi tech/a,

Do you trade index futures?

No

Highest high for 70 bars means highest price for the last 70 days and what is a cross of the highest bar for the last 10 bars?

Looking for momentum.
The highest high for 70 days must CROSS the highest high for the past 10 days if it doesnt cross a recient high then its possibly a 70 day high without a pull back. All explained on the Q&A section of the method.

Is this your long term account with positions lasting months/years?

The one on Reefcap isnt my personal account.I do have some stocks held in that account in mine.(I have 3 longterm systems trading) The one on the net is out performing my own by a few %,and I thought I had improved on the original!