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 An Experiment In Not Losing Too Much Money
Subtitled: Loose Trading Loses Money. (4 jonu  )
So this is concerned with buying stocks with the intent of selling them at a higher price later in order to make a profit.
In a word: Trading Long. (OK, in two words).
Buys are limited to stocks in the ASX300 at the time of purchase.
The initial 'cash' for this experiment is $25,000, which creates the first set of problems - it is not a lot of money.
Among the rules of trading are that you:
- never risk more than 2% of your capital on any one stock;
- have diversity in your trades;
- cut your loses;
- let your profits run.
Best Wishes
Paper Tiger
Last edited by Snow Leopard; 14-03-2015 at 07:41 PM.
om mani peme hum
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Ahh, but are you talking about loosing - as in freeing up, or perhaps more appropriately, losing?
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 Trade Size
Trade #1:
Date: 10-Mar-2015
Buy: 375 ASX.RMD (ResMed Inc) for $3,307.50 ($8.82 each),
brokerage of $15.37;
total is $3,322.87.
Minimum No-Loss Sell Price: $8.905.
Maximum Risk Amount: 12.5% of buy.
Risk Sell Price $7.795 (about where the green line hits the right hand edge); (loss $415.36)
ASX-RMD-20150309.PNG
Is joining a fairly rapid uptrend that is nearly five months old a good idea?
Time and the sell decision will tell.
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With only $25,000 total initial capital and brokerage at a minimum of $15.37, then $3,300 is [arbitrarily] chosen as one initial (maximum) limit on trade size - this allows 7 parallel trades and brokerage for the round trip is less than 1% of the initial buy.
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 Predicting the future is difficult
Trade #2:
Date: 12-Mar-2015
Buy 1550 ASX.SPO (Spotless Group) for $3301.50 ($2.13 each)
brokerage of $15.37
total is $3316.87
Minimum No-Loss Sell Price: $2.15
Maximum Risk Amount: 10.8% of buy.
Risk Sell Price $1.90 (project a nice trend line across those three lows); (loss $371.87)
ASX-SPO-20150311.PNG
Listed for less than a year but a lovely uptrend - surely the sensible idea is to buy in when the price has just tested the trend line?
Time will tell.
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This and the prior buy of RMD were made by this simple process:
Find all the ASX300 stocks where the closing price for the day (9-Mar for RMD & 11-Mar here) was higher than any other close in the 12 months;
Pick any one;
Buy it next day.
Last edited by Snow Leopard; 14-03-2015 at 08:53 PM.
om mani peme hum
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 Wot stops the stop being broken
Trade #3:
Date: 16-Mar-2015
Buy 1965 ASX.ASB (Austal) for $3301.20 ($1.68 each)
brokerage of $15.37
total is $3316.57
Minimum No-Loss Sell Price: $1.700
Maximum Risk Amount: 5.3% of buy.
Risk Sell Price $1.59 (a recent resistance level?); (loss $176.85)
ASX-ASB-20150316.PNG
[Piccy is of state of play after Friday 13th - not Monday 16th]
Sort of broke out from a couple of months rest from the uptrend. The price $1.59 figures reasonably often in this period as a high and/or closing value and so in theory makes a good (but tight) value to place a stop at.
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The idea is to look in on our portfolio at the end of the day and if the closing price for the day is below our stop value then, if we still own it, we aim to sell the next day.
This of course means that we may actually lose more than our at risk amount. But hopefully a decision to sell as been made before this final exit point is reached.
Last edited by Snow Leopard; 16-03-2015 at 09:55 PM.
om mani peme hum
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 And now for something completely different
Trade #5:
Date: 20-Mar-2015
Buy 371 ASX.GXL (Greencross) for $3305.61 ($8.91 each)
brokerage of $15.37
total is $3320.98
Minimum No-Loss Sell Price: $8.995
Maximum Risk Amount: 6.8% of buy.
Risk Sell Price $8.30 (low close in Feb before the sudden spike); (loss $226.31)
ASX-GXL-20150319.PNG
Peaked around $10.70 last august (not shown), then four month down trend to $7.28 and now three months of up, having survived that little bubble a month ago.
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You may have spotted that I am currently buying each alternate trading day - working to a timetable as opposed to waiting patiently for opportunities - in the real world it is better to be patient and do nothing than buy for the sake of it.
Flicked through the charts till I found this - but wanted to avoid buying another 'setting new highs' job.
Best Wishes
Paper Tiger
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State of play at close of day on 11 Sep 2015
I have fiddled with the format slightly:
EXP-20150911.PNG
But we have had a good week despite being late on our buy of OML.
Currently sitting on a Gross [unrealised] wind-up profit of $3,206.21 or 12.81%.
Best Wishes
Paper Tiger
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 I could be theoretically poorer instead of theoretically richer
When I 'bought' SPO on 12-Mar-15 another candidate which could well have been chosen under the selection criteria was Sirtex Medical.
Doing a what if on this scenario would have resulted in:
Buying 85 ASX.SRX (Sirtex Medical) for $3326.05 ($39.13 each)
brokerage of $15.37
total is $3341.42
Even allowing for the full $500 risk then the stop loss sell price would have been set at $33.25.
Yesterday it closed at $17.53 and thus we would be selling today.
Assuming a sell at $19.00 per share in the early hours of trading then we would have realised a loss of $1,741.79.
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By the grace of the good fortune the actual position of the portfolio at close of trade yesterday is a total value of $25,346.14 (or a gain of 1.38%).
Best Wishes
Paper Tiger
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