Ryan's Trading Journal (F/A+T/A Strategy)

[ducati916]

In Stock B basis, while the fundamentals are improving, the changes have already been incorporated into the share price. So when the I am already in the stock and I rode up the fundamental changes that were added into the SP before the announcement or change, should the SP hit my stop after a good change in the company, I'm happy to sell - hopefully with a gain.

Not necessarily, really depends on the P/E assigned, and assumed going forward.

They may be, but in your earlier post you alluded that you wanted 'growth' stocks, as you believe that strong earnings growth is closely correlated to share price appreciation.

So in this example, where you have earnings growth, you want to sell the share based on a technical signal, which could take you out of the very fundamental driver you value.

jog on
duc

 

[ducati916]

My belief is that fundamental changes are always incorporated into the share price prior to the actual announcement, whether it is an immediate change or a gradual change over time. So T/A is a tool that can forecast changes in the fundamentals before it is released.

Technicals are very 'emotion' driven. Buying begets buying, selling begets selling. Fundamentals and technicals can become very disconnected for significant periods of time in both directions.

My point, without belabouring it is: technicals and fundamentals do not mix that well, if at all. To incorporate them both, simultaneously into a trading 'plan', while seemingly logical on paper, rarely works out well in practice.

jog on
duc

 

[Rypieee]

Technicals are very 'emotion' driven. Buying begets buying, selling begets selling. Fundamentals and technicals can become very disconnected for significant periods of time in both directions.

My point, without belabouring it is: technicals and fundamentals do not mix that well, if at all. To incorporate them both, simultaneously into a trading 'plan', while seemingly logical on paper, rarely works out well in practice.

jog on
duc

EPS Growth % 1yr forecast is definitely a figure that I would look at when doing stock selection. Maybe I could try and clarify it up a bit for myself as well. A lot of the fundamental analysis on my trading strategy works during the filtering stage, I might want to find stocks have have double digit EPSG1Year(>10%), ROA/ROE(depending on what type of company it is) on an improving trend from previous reporting periods. and Rev Growth being positive. I also look for stocks that have P/E ratios within +/- 20 of their industry average and have a 1 year forecast P/E that is decreasing (based on current prices).

However, once I enter the stock, the fundamentals analysis and the economy analysis have already been completed and I now rely on technicals to manage the trade. That being said, while technicals are playing the bigger part in the management of the trade. If a stock's economy or fundamental analysis changes drastically(so i think) then I want to be pre-emptive and take a stock out before the technicals say get out.

Say for example, NHF was a stock that ticked all the right boxes:
Macroview - Population growth is growing in Australia, immigration is growing and private health insurance should rise with those tailwinds.
Fundamental - Great company, not gonna go into full detail there but double digit forecast growth figures, reasonably P/E
Technical - Trending strongly since interim report in Feb. Bought on breakout.

But the government's cancellation of the 457 Visa and introducing a new Visa System could impact the earnings of NHF going forward. I took NHF out based on that.

It is a gray area and I am aware about it, I also understand that at times, I will be conflicted with my decision but isn't that me just being a discretionary investor/trader?

BTW just want to say thanks for making me think about my trading plan more

 

[peter2]

Good on you for starting this thread. I'm sure you'll learn a lot and more quickly with the interaction of others. Contributors will raise aspects that may make you question your beliefs and opinions. This will be good as you'll examine and decide what's really important to you and what isn't.

Ducati has already done that and you should consider your responses carefully. Consistent application of your plan is very important so if there are any aspects that are unclear in your mind (eg the contradictions between the fundamentals and the technicals on your exits) you won't be consistent.

Your plans will adapt as you gain experience. Some rules that you use now may become guidelines in the future and vice versa.

@ducati916 Thanks, you've raised many excellent points for a new trader/investor to consider.

It is a gray area and I am aware about it, I also understand that at times, I will be conflicted with my decision but isn't that me just being a discretionary investor/trader?

It's very important that you minimise/eliminate any gray area's if you want to be a highly profitable trader. You may use discretion when selecting stocks to trade and how much of your capital you'll invest but once the trade has started you should be applying a set of rules.

 

[OmegaTrader]

Hey ASF readers!

I have finally decided to take the jump and start up my own thread, I wish to open myself and my trading up to ASF readers, new or old, to share my thoughts and my methods, my decision making process and trade management techniques. I hope that by doing this, I will be held accountable by the many experienced traders/investors on this network and be able to fast track my journey. For the new folks, I hope you enjoy this thread by a inexperienced/new trader and maybe even learn a thing or two from my mistakes.

Basic Info of myself
I am a young adult, based in Melbourne, who graduated out of RMIT in 2016 with a Economics and Finance Degree, I am currently working in the financial planning industry with the aspiration to become a financial adviser. I am also interested in the proprietary trading scene and might take a chance with it in the future should the opportunity arises (I get fired from financial planning :x).

Trading History
I started my trading journey back in December 2015 where I started to read up on various books by recommended authors, the Australian Financial Review, websites by fund managers and podcasts to really build my knowledge up. I begun trading real money - did not use a demo account because I was too eager - on June 2016. Between June 2016 till March 2017, I was fine-tuning my strategy and trading plan to come up with something solid, my progress between that time have been a pretty wild swing, overall, from March 2017, I have lost a bit of my original capital. What I got out of that experience though, was a pretty solid trading plan, experience in the market with ups and downs, developed my stomach to take losses and be logical when there are winners. Regrets? No.

Trading Strategy
The trading strategy that I employ consist of 3 levels in the following order:

1) Global/Australian economic view

2) Bottom-up Fundamental Analysis (Outsourced majority of the work to Stock Doctor)
https://www.lincolnindicators.com.au/ <--Here's the link to them

3) Technical Analysis to determine entry, exit, demand, supply & direction.

To simply break it down, I would take a view on the Global & Australian economy and try to locate where the headwinds and tailwinds are. Once I determine which sectors have a headwind behind them, I would then review them fundamentally. For example, if Australia's current headwind is that we could see the AUD depreciating to further levels from it's current point, I would start searching for companies that derive their earnings from overseas to take advantage of the currency advantage. If I located a tailwind that could impact a current stock holding, I would start to see how big the impact would be and consider exiting the stock.

Fundamental research have been outsourced to Lincoln Indicators aka Stock Doctor(SD), and I rely on their financial health ratings. SD have 5 ratings for all companies on the ASX which are listing in the following order of highest to lowest [Strong, Satisfactory, Early Warning, Marginal and Distressed]. I will only, at all times, trade in stocks that are at least STRONG or SATISFACTORY. SD also have recommended stocks called Star Growth Stocks and Borderline Star Growth Stocks (there is also income stocks but as I am growth focused, I will not include them in the thread). I will lean in favour to a Star Growth Stock/Borderline Star Growth Stock over a Non-Star Growth Stock should I have to make a decision between the two. One thing that I like (fundamentally) to see in a stock that I will trade in are strong & continued Earnings per share growth in the double digits, I believe that strong earnings growth and strong share price appreciation have a high correlation.

Once I have a pool of stocks that have passed the above filter, I will then do my technical work on it. My technical analysis does not use any indicators, only Price Action, Volume, Support and Resistance levels, Moving Averages and Average True Range(for determining my stop loss). I would enter a stock from breakout, the main setup that I like would be a B/O above horizontal resistance [shout out to Peter2 for his thread and teaching me what to look for], however, I do use other setups from time to time. I also like to use volume analysis before entering a trade and even managing a trade to see what the markets are doing[buyers and sellers] and for volume analysis, I still have a lot to learn but Tech/A have helped me in learning VSA through his thread "Tech/A's interesting charts".

My trade goals:
My short term focus for each and every trade would be to make money on the breakout, once the breakout is completed and price action continues in that direction, I would alter the trade to a more trend following approach in order to ride it as far as I can go.

Setting my Stop Losses
To make it as brief as possible, I will set up the stop loss levels within x2 to x4 ATR from the entry level. I will try to find a level which sits below 2 points of support.

Outlook for the future
I intend to keep working on this portfolio and it's strategy to the point whereby I am comfortable with it, I know exactly how to manage it in the proper way and it is a profitable system. Once I feel that I have completed the task, I would like to start looking into the futures market and take what I have learnt from this space to start working on futures.

Research Materials
1) Stock Doctor (Paid Service) - Provides research on fundamentals of companies on the ASX
2) Bell Direct - Broker Service, $15 per Trade, simple & easy to use.
3) Australian Financial Review - Newspaper/website that I read every morning
4) Chat with Traders by Aaron Fifield - Listen to traders getting interviewed and hear about other methods out there.
5) Livewire Markets - Free website publishing articles by Fund Managers, this resource has helped me immensely in keeping up to date with things around the world and helps me to formulate my Global/Australian Economic View.
6) Aussie Stock Forums - There are a few threads that I follow on here, to those who are new, ASF is nothing short of a diamond mine for new investors/traders.
7) Podcasts - "Trend Following by Michael Covel (Apple Podcast App), Your money your call - Sky News Business)
8) Trading books - I have collected a few books (10+) since starting my journey and I try to read a new one every 2-3 months.

Good luck with it.

Well done for being really open and also honest with yourself.

I think another aspect to look at is standard deviation and return of your strategy. Compare this to the return and risk of the market, passive investment.

In the analysis adjust for taxation and commissions. Now try to match the profiles of the two strategies.

You can use borrowing to gear a lower volatility strategy and smaller position size to reduce a higher volatility strategy and vice versa.

Now your strategy should be higher than the market risk return profile. Of course over time this will change and mistakes/learning etc etc. Sometime higher, sometimes lower than the market, but over time from a pure economical perspective it has to be consistently higher in the longer term to be economically profitable.

The rate the strategy is achieving above this passive strategy is the surplus created by active management.

If you want to take it further, to be economically above working

own capital available* surplus return > Wages

prop capital available *profit split* Return > Wages

If that capital is from yourself or prop changes the assumptions etc etc

Also part of it is the hobby and knowledge side, to take responsibility for your own financial future, is normally a good thing. Sometimes we do things because we like it,rather than for money.



My limited two cents

 

[Rypieee]

Good luck with it.

Well done for being really open and also honest with yourself.

I think another aspect to look at is standard deviation and return of your strategy. Compare this to the return and risk of the market, passive investment.

In the analysis adjust for taxation and commissions. Now try to match the profiles of the two strategies.

You can use borrowing to gear a lower volatility strategy and smaller position size to reduce a higher volatility strategy and vice versa.

Now your strategy should be higher than the market risk return profile. Of course over time this will change and mistakes/learning etc etc. Sometime higher, sometimes lower than the market, but over time from a pure economical perspective it has to be consistently higher in the longer term to be economically profitable.

The rate the strategy is achieving above this passive strategy is the surplus created by active management.

If you want to take it further, to be economically above working

own capital available* surplus return > Wages

prop capital available *profit split* Return > Wages

If that capital is from yourself or prop changes the assumptions etc etc

Also part of it is the hobby and knowledge side, to take responsibility for your own financial future, is normally a good thing. Sometimes we do things because we like it,rather than for money.



My limited two cents

I still need to learn how to compare my statistics against the market's performance and what you said, standard dev.

I am interested in using the Sharpe Ratio to measure my portfolio performance but I don't know where to start and how to measure it... help?

I do have an intent to introduce margin to the portfolio once I am more comfortable with it, would consider leveraging the portfolio by x2 or x3, never more than x5.

Thanks for the encouragement!

 

[Rypieee]

Good on you for starting this thread. I'm sure you'll learn a lot and more quickly with the interaction of others. Contributors will raise aspects that may make you question your beliefs and opinions. This will be good as you'll examine and decide what's really important to you and what isn't.

Ducati has already done that and you should consider your responses carefully. Consistent application of your plan is very important so if there are any aspects that are unclear in your mind (eg the contradictions between the fundamentals and the technicals on your exits) you won't be consistent.

Your plans will adapt as you gain experience. Some rules that you use now may become guidelines in the future and vice versa.

@ducati916 Thanks, you've raised many excellent points for a new trader/investor to consider.



It's very important that you minimise/eliminate any gray area's if you want to be a highly profitable trader. You may use discretion when selecting stocks to trade and how much of your capital you'll invest but once the trade has started you should be applying a set of rules.

Yes, I will need to really sort out and define my exits properly, wholeheartedly agree with you on that point.

I shall take my exit strategies back to the workshop and shall come out with something better after some thought!

 

[rnr]

I am interested in using the Sharpe Ratio to measure my portfolio performance but I don't know where to start and how to measure it... help?

http://investexcel.net/calculating-the-sharpe-ratio-with-excel/

 

[OmegaTrader]

I still need to learn how to compare my statistics against the market's performance and what you said, standard dev.

I am interested in using the Sharpe Ratio to measure my portfolio performance but I don't know where to start and how to measure it... help?

I do have an intent to introduce margin to the portfolio once I am more comfortable with it, would consider leveraging the portfolio by x2 or x3, never more than x5.

Thanks for the encouragement!

My view is that gearing has a sweet spot. Don't have enough of it and you might as well stay in the bank. Over gear and it causes destruction and ultimately death.

No offense but...

lol mate seriously and you are in financial advisory???

My economics and finance degree covered this in about 30% of units or so...

Sharpe ratio is only one quick indicator.

First you need the data on your strategy and the market/ a passive strategy.

If you can't calculate std and return then that is concerning but it is very easy to google.


You can google the maths, alpa,sharpe,retunr,std etc etc

http://www.investopedia.com/terms/s/sharperatio.asp





For example your discount rate is 5% and your portfolio return is 10% and std is 10%. Then sharpe is
(10-5)/10 =.5 That is you are getting .5 return for each 1 unit of risk. STD is the proxy for risk etc etc

Higher sharpe, higher/better risk return profile etc etc



I prefer to plot it on a graph as well as the stats. Then you can change the assumptions and see how this impacts the equity curve and risk return aspects of the strategy. For example change the gearing discount rate . Change the position size. Change the overall gearing. What is the sweet spot? Which strategy grows money faster. Which strategy has the best profile.Am I beating the market? etc etc

Part of the process is like optimisation. What is the optimal position size? What is the optimal gearing? What is the optimal decision? etc etc It goes back to basic economics and opportunity cost.

Of course all based on the past of course. The future well who knows...

gg

 

[Rypieee]

My view is that gearing has a sweet spot. Don't have enough of it and you might as well stay in the bank. Over gear and it causes destruction and ultimately death.

No offense but...

lol mate seriously and you are in financial advisory???

My economics and finance degree covered this in about 30% of units or so...

Sharpe ratio is only one quick indicator.

First you need the data on your strategy and the market/ a passive strategy.

If you can't calculate std and return then that is concerning but it is very easy to google.


You can google the maths, alpa,sharpe,retunr,std etc etc

http://www.investopedia.com/terms/s/sharperatio.asp

View attachment 71063



For example your discount rate is 5% and your portfolio return is 10% and std is 10%. Then sharpe is
(10-5)/10 =.5 That is you are getting .5 return for each 1 unit of risk. STD is the proxy for risk etc etc

Higher sharpe, higher/better risk return profile etc etc



I prefer to plot it on a graph as well as the stats. Then you can change the assumptions and see how this impacts the equity curve and risk return aspects of the strategy. For example change the gearing discount rate . Change the position size. Change the overall gearing. What is the sweet spot? Which strategy grows money faster. Which strategy has the best profile.Am I beating the market? etc etc

Part of the process is like optimisation. What is the optimal position size? What is the optimal gearing? What is the optimal decision? etc etc It goes back to basic economics and opportunity cost.

Of course all based on the past of course. The future well who knows...

gg

I think most financial adviser would have no clue about the sharemarket, let alone a Sharpe Ratio However, does not mean I shouldnt know haha. Yeah I did learn about it in Uni but never went to class nor paid any attention during my tenure... so my memory on it isn't clear.

BTW regarding the calculations, I know how to calculate median rate and RFR, but how do I calculate STD of the portfolio?

 

[Rypieee]

http://investexcel.net/calculating-the-sharpe-ratio-with-excel/

Just read the article, thanks for the link, Ill just excel the STD of my portfolio

My view is that gearing has a sweet spot. Don't have enough of it and you might as well stay in the bank. Over gear and it causes destruction and ultimately death.

No offense but...

lol mate seriously and you are in financial advisory???

My economics and finance degree covered this in about 30% of units or so...

Sharpe ratio is only one quick indicator.

First you need the data on your strategy and the market/ a passive strategy.

If you can't calculate std and return then that is concerning but it is very easy to google.


You can google the maths, alpa,sharpe,retunr,std etc etc

http://www.investopedia.com/terms/s/sharperatio.asp

View attachment 71063



For example your discount rate is 5% and your portfolio return is 10% and std is 10%. Then sharpe is
(10-5)/10 =.5 That is you are getting .5 return for each 1 unit of risk. STD is the proxy for risk etc etc

Higher sharpe, higher/better risk return profile etc etc



I prefer to plot it on a graph as well as the stats. Then you can change the assumptions and see how this impacts the equity curve and risk return aspects of the strategy. For example change the gearing discount rate . Change the position size. Change the overall gearing. What is the sweet spot? Which strategy grows money faster. Which strategy has the best profile.Am I beating the market? etc etc

Part of the process is like optimisation. What is the optimal position size? What is the optimal gearing? What is the optimal decision? etc etc It goes back to basic economics and opportunity cost.

Of course all based on the past of course. The future well who knows...

gg

Disregard my question!

 

[Rypieee]

Since I just started out and fairly eager to get things moving, I'll do one daily update for the moment, might phase out later on.

Portfolio performance up to date (Starting 1st of March 2017) = 4.64%
Market performance (ASX200) up to date = 3.04%



REA and FPH were bought as the recent downtrend seems to have found some support and a trend reversal is in play, however I would like note that REA has touched the previous high at $65.50 and retreated while FPH is closing in on it's previous high of $10.00.

I have tighten the stop loss on REA to $63.00 to give it a chance to break the resistance @ $65.50. The trade was done late (I should have entered at the $57 B/O for better R/R) so the profit on the trade ,should we hit SL, will be small.

With FPH, the stop loss level will be raise as it approaches the $10.00 mark, hope for the stock to break the resistance level but if not, we will be protecting our profits.

With SDF, SSM, WEB and WTC, the estimated loss on those trades are high at the moment as it was only recently initiated, once the SP make some headway, we will bring up the stop loss levels accordingly.

CGF is a relatively new trade as well but it has always been a slow and steady trender which is a bit too slow for my liking. I did the trade due to it's exposure to the ageing population, low volatility trend and consistency+tightness in the price action. The forecast growth figures of CGF are also in the high single digits to low double digits[not the best as most of the stocks I hold have all their forecast figures in the double digits]. I could get annoyed at this trade, be impatient with it and cut it out in the near future but I need to constantly remind myself of the reason why I bought it in the first place - stability ,predictability and consistency.

For those who wonder if I have a profit taking strategy:
1) Each stock can wavering between 7-13% of the portfolio holding, the highest one atm is ALL which is sitting on 11.40%. Once a stock hits 13%, I would adjust the size down to 10%. [May revise this]
2) If it hits stop loss

I akin myself to a trend follower so I will try to ride a stock all the way to the top. Profit taking on a stock would help me to top up my cash balance while still having exposure to the stock.

 

[skc]

1) Each stock can wavering between 7-13% of the portfolio holding, the highest one atm is ALL which is sitting on 11.40%. Once a stock hits 13%, I would adjust the size down to 10%. [May revise this]

I think this must be revised. Any trend following strategy needs outsized winners. Chopping it down everytime it reaches 13% of your capital will likely do more harm than good.

You have already managed your capital risk by limiting initial position size relative to capital base. You don't need to do it again when the share is trending in the right direction.

If you must bank some profits, say take half off when it reaches 5-8 Rs or something like that. And do it only once, and let the rest ride on your trailing stop.

Use CGF and ALL as examples and say you bought 12 months ago. How would your return be impacted by this 13% boundary? My guess is pretty meaningfully negative.

 

[Rypieee]

I think this must be revised. Any trend following strategy needs outsized winners. Chopping it down everytime it reaches 13% of your capital will likely do more harm than good.

You have already managed your capital risk by limiting initial position size relative to capital base. You don't need to do it again when the share is trending in the right direction.

If you must bank some profits, say take half off when it reaches 5-8 Rs or something like that. And do it only once, and let the rest ride on your trailing stop.

Use CGF and ALL as examples and say you bought 12 months ago. How would your return be impacted by this 13% boundary? My guess is pretty meaningfully negative.

I would want to revise the figure as I go, the reason why I'm currently happy with the 13% max threshold is because I have a positive expectancy on my portfolio so as say ALL's size grows, my portfolio's size would grow as well + other contributions from other stocks. Maybe I could do a 15% max threshold?

Though I do get your point as well @skc about taking profits impacting my return. I'll take that back to the workshop and decide how to refine it.

Appreciate your comments and time!

 

[skc]

I would want to revise the figure as I go, the reason why I'm currently happy with the 13% max threshold is because I have a positive expectancy on my portfolio so as say ALL's size grows, my portfolio's size would grow as well + other contributions from other stocks. Maybe I could do a 15% max threshold?

Though I do get your point as well @skc about taking profits impacting my return. I'll take that back to the workshop and decide how to refine it.

Appreciate your comments and time!

Just run some numbers and see. Your portfolio will grow over time if you have positive expectancy, but it won't always grow in sync with your best performing position.

 

[Triathlete]

For those who wonder if I have a profit taking strategy:
1) Each stock can wavering between 7-13% of the portfolio holding, the highest one atm is ALL which is sitting on 11.40%. Once a stock hits 13%, I would adjust the size down to 10%. [May revise this]
2) If it hits stop loss

I akin myself to a trend follower so I will try to ride a stock all the way to the top. Profit taking on a stock would help me to top up my cash balance while still having exposure to the stock.

Using 7%-13% for position sizing when you first enter a stock is good.
Once in a stock you will also need to maximize the trend by also adding to positions along the way.
I use a strategy where I add in the ratios 4:2:1.....

e.g 1st entry $4000
Add positions $2000
Add positions $1000

I have entered a stock at $1.00 the stock then runs up to $2.00 before starting to retrace at this point I sell half the original position.
If the stock then retraces less than 50% of the original range say to $1.50,so the trend looks strong and likely to continue...It is now an opportunity to add to the existing position and buy in at this $1.50 level using the $2000

Remember you now have money from the previous sale of half of your first entry to use.
I will now be looking for the stock to rise towards $3.00 before retracing at this point I sell another 50% of position size.

I then repeat what I have mentioned above only you have one more entry of $1000 left should the trend continue.

 

[tech/a]

20 yrs ago I heard of a strategy where by an investor sold his original
Capital in the stock when the stock doubled in price.

He would then hold the remaining stock indefinitely or until he needed some capital

I don't know how he went long term but do know he had 2000 CBA which at the time were a lot less than today! He had 14 holdings then.

 

[Rypieee]

Just run some numbers and see. Your portfolio will grow over time if you have positive expectancy, but it won't always grow in sync with your best performing position.

After much thought and thinking about what sort of trading strategy I want to employ, I've decided that I am going to be a trend follower. You are right, I have already sized my risk based on my capital, why am I restricting the trade again with the trade's size against my capital. Doesn't make any sense.

A trend follower is one who will ride it as far as the trend takes them and that is what I want to do.

Going forward, I'm going to scrap the 7-13% rule for trade management. However, I am still going to keep the 7-13% rule for trades that are new. Keeping the 7-13% rule ensures that the trade's initial size isn't too big or small and adheres to my trading plan of holding between 8-12 stocks within my portfolio!

Using 7%-13% for position sizing when you first enter a stock is good.
Once in a stock you will also need to maximize the trend by also adding to positions along the way.
I use a strategy where I add in the ratios 4:2:1.....

e.g 1st entry $4000
Add positions $2000
Add positions $1000

I have entered a stock at $1.00 the stock then runs up to $2.00 before starting to retrace at this point I sell half the original position.
If the stock then retraces less than 50% of the original range say to $1.50,so the trend looks strong and likely to continue...It is now an opportunity to add to the existing position and buy in at this $1.50 level using the $2000

Remember you now have money from the previous sale of half of your first entry to use.
I will now be looking for the stock to rise towards $3.00 before retracing at this point I sell another 50% of position size.

I then repeat what I have mentioned above only you have one more entry of $1000 left should the trend continue.

I have thought about micromanaging the trade to maximize the return on a higher high higher low trend but have put that thought in the "improvement folder" for later. Might revisit this as I knuckle down the basics first!

Thanks for the tip though

20 yrs ago I heard of a strategy where by an investor sold his original
Capital in the stock when the stock doubled in price.

He would then hold the remaining stock indefinitely or until he needed some capital

I don't know how he went long term but do know he had 2000 CBA which at the time were a lot less than today! He had 14 holdings then.

Probably in some part of the world enjoying his money
Have also thought about "Zero Cost Averaging" in the past, implemented it but wasn't tracking my portfolio probably - lest to say, things got a bit messy. Might revisit zero cost averaging in the future.

 

[Rypieee]

Been watching RHC for some time now, made a B/O over the $72.00 2 days ago. Would I have taken the trade based on the breakout? I can see potential for the stock to hit $84.00 which is the prev high. However, would imagine a heap of supply coming in at $78.00 from the gap down.
Some positive things I note with my amateur VSA skills (@tech/a help!!), the recent dip managed to find a lot of demand for the stock (fundies could be buying in at the time).
Won't be entering the stock because I already have 2 healthcare stocks in the portfolio and I am saving the excess cash for stocks that will benefit from the budget!


CAR another one that b/o recently, the red lines mark the resistance range that I see with the recent price action. The B/O retested the new support level and it has some potential to hit $13.60.

 

[craft]

20 yrs ago I heard of a strategy where by an investor sold his original
Capital in the stock when the stock doubled in price.

He would then hold the remaining stock indefinitely or until he needed some capital

I don't know how he went long term but do know he had 2000 CBA which at the time were a lot less than today! He had 14 holdings then.

What's the difference between leaving capital earned from the market as opposed to other capital? Surely that's just a mind trick. The strategy of selective holdings for the long term surely can not be impacted by the source of the capital.