An Experiment In Not Losing Too Much Money

[Snow Leopard]

I'm looking at your first trade- You have Resmed. I don't know Resmed but I do own a lot of FPH. I believe they roughly compete against each other and there share prices have both gone up exponentially together. FPH has a P/E well over 30 now and I believe resmed has as well. I would have thought spending 12.5% of your capital in a company with a P/E well over 30 in an illiquid market (ASX) isn't an 'experiment for not losing too much money'. I'm sorry if I'm being argumentative here, I'm just worried people might follow this 'safe' advice.
PS I haven't looked at your other trades so I'm sorry if I'm generalizing.

Not sure what you are getting at here, at all.

Do you regard 12.5% as a lot?

It is not illiquid - average daily turnover is about 4,500,000 shares (or AU$40M).

How would you describe it?

It was 'bought' because it is going up and will be 'sold' when it stops (however that is defined).

This thread is currently about trading for a profit and limiting the losses on route.

The fundamentals of any of the companies have not come in to it.

But the idea is to
A) Post 'trades' in near real time (within a day);
B) Have discussions - such as this

Best Wishes
Paper Tiger

[Jay]

Thanks PT for this.
Under idea B) - I am interested to see how a relatively simple entry strategy pans out. Though as you said a bit of luck is involved re the SRX case, but that does not happen everyday or every week.

Have you defined your exit strategy (once in profit) yet and/or how you lift your stop such as % trailing stop or based on ATR?? Looks like a trailing stop and is this a fixed % say 15% or is it based on your maximum risk amount % at buy.
Are you using the same MA's for all trades and if so they look like a 30/50 and 150 or 200??

[Snow Leopard]

...
Are you using the same MA's for all trades and if so they look like a 30/50 and 150 or 200??

I can answer the lines on the charts question easily enough.
The lines are the same on all the charts and are just to give a sense of what is going on.
Apart from the line of daily closing prices with the daily high/low range there is:
In blue - a 16 day EMA (Exponential Moving Average) - a guide to the short term action;
In green - a 50 day EMA - as this seems to be popular on this forum;
In red - a 200 day EMA - also well liked round these parts;
In black - an ATR (Average True Range) like stop loss indicator (The maths on this may be a little different from the text-books).

Non of them should be taken as being the current stop-loss for the stock.

Best Wishes
Paper Tiger

[Snow Leopard]

...I am interested to see how a relatively simple entry strategy pans out. Though as you said a bit of luck is involved re the SRX case, but that does not happen everyday or every week.

Have you defined your exit strategy (once in profit) yet and/or how you lift your stop ...

Here is my current thoughts/beliefs - open to change

In trading the buy is of no-importance at all, the important thing is how you then conduct the trade and especially the sell.

So to back track quickly - a good entry system that gives you a high(er) probability of making a profitable trade is worth finding.

But however you go about finding an entry point you should enter with an initial stop-loss exit point defined.

You should also have an initial trading plan.

You should be willing to adapt the plan as time progresses and the actual price action happens with the aim of increasing your profits.

You should not be adapting your plan to avoid acting on a signalled exit - you should be disciplined.

Best Wishes
Paper Tiger

[Snow Leopard]

...Have you defined your exit strategy (once in profit) yet and/or how you lift your stop...

I have strategies, sort of , but it may be better to discuss them when a decision look like it needs to be made.
(At the moment things are going unnervingly well . Current portfolio value is $25,934.43 at EOD)

Best Wishes
Paper Tiger

[Jay]

Thanks PT.

yes agree the buy is not as important as a good exit strategy, that is not to say throw a dart at a board and buy that share as long as your exit strategy is sound you will be Ok - perhaps might try that
Again agree "You should not be adapting your plan to avoid acting on a signalled exit - you should be disciplined". That is the hard part, especially if you get a run of losses only to see the share price go up again within a day or so.

I am using ATR as the main rule for selling but with rules for a sudden drop in a day or alternatively it jumps up - e.g. doubles in price over a short period, will then sell some or move the stop - i.e. lessen the ATR multiple

Anyway, Good work PT, as said interested to see what happens .

[Baa_Baa]

.. snip ..
In black - an ATR (Average True Range) like stop loss indicator (The maths on this may be a little different from the text-books).
.. endsnip ..

Very interesting PT, thanks for your efforts on this thread.
What settings are you using for your ATR?

[Snow Leopard]

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.

----------------
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

[Snow Leopard]

Very interesting PT, thanks for your efforts on this thread.
What settings are you using for your ATR?

Think of it as an EAPTTTR - an Exponentially Averaged Paper Tiger Type True Range.

The ones you see here involve a 32 day period and an exponent of 10.

Best Wishes
Paper Tiger

[babymonster]

Thanks PT, I might try this myself and I will post on here as well..