The X Factor.

Now that it looks like we are out of the woods (markets have been positive today) I did see cautious buying. I am gonna wait till tomorrow as the Wall Steet is the X factor in the equation. If all goes well then this correction will become history.

My scan did pick up UGL but as I said above, hold fire :)

The day after, or the day before ?

Friday night the US stock market saw a major correction. So on Monday I am not expecting a major rise in the XAO or probably any Asian market except China, which continues it run.

I still believe this is a correction and not a crash, yet. This should be a great time for bargain hunters. The question now arises, should I look for some good bargains like BHP, CTX and OXR ? The risk is that there might be further drop in their stock price. I guess the prudent thing to do at this stage would be to poised and be ready at the sidelines and when the market stabilises, then I can pounce on any good deal that presents itself.

The Bloodbath

Today there was red everywhere. But hopefully there is good news out today.

U.S. second-quarter GDP rose 3.4%, so all is not lost. Still extreme caution is required when going Long on stocks. Hopefully you will know what you are doing. If you don't,then stay out of the market till things settle down.

Friday

Most stocks were down yesterday and by the looks of it the US market has opened sharply lower and the ASX might do the same.

So what do we do on days like these ? Watch for stocks that resist the downtrend and even put on a few cents to their price. LLC, CTX come to mind.

So lets just watch and wait it out. Remember Good luck is when preparation meets opportunity.

the day

The overnight drop on US stock prices and the higher CPI figures didn't help either. Most of the stocks fell today and although my scan picked up a few like ORG, CTX, LLC, I would still like to see some good news both here and overseas to look at dipping my feet into the market. In a market like this, standing aside is a skill by itself.

Emotional Control

Recently I have been selling off my runners after a significant run. Now there is nothing wrong in taking profits when the trend has finished and the stock takes a down turn, but I have been selling my stocks when they had just done a higher low. After realising how much money I have been leaving on the table due to this issue I decided to fix it. The first thing I did was to document next time I make the mistake. The opportunity came soon.

I had taken a position in CRG and it had done a nice breakout. On 23rd it opened at 19.23 and closed at 19.18, although intraday it dropped to 18.59. Now I did the same thing I had done before. Sold it. Today it resumed its run and closed at 19.94.

Guilt as charged.

But this time I had records to see why I did what I did. I had taken a screenshot of the chart and typed my comments in it.
Here is the answer:
I was looking at the dollars I had made in unrealised profit. At the back of my mind I wanted to lock in my profits and just grab my money and run to the bank in an armoured vehicle.

The fix.
well this should hopefully fix it. I have decided not to login my brokers trading platform once I have executed the trade. I will watch my trades using Quotetracker. And in quote tracker I will not put the amount of stock I have bought or at what price. This way I will only see that days changes forcing me to concentrate on the stock's performance on that day. Hopefully I won't see the amount I have in unrealised profit and get emotional. Eventually my brain will get trained at looking the charts and not at the profit and act accordingly.

Tuesday

My scan picked up LLC and JBM.

LLC
Although the price is below the 100 day MA it has shown good strength and today the buyers and sellers reached an equilibrium, well almost. Although the market was down today and there was heavy selling, the stock price held it up. Definitely sign of strength, but next couple of days will tell if it had really broken out.




JBM
Looks like JBM has broken its downtrend and buyers have flocked to pick it up. The volume looks good. The last two days big white candles look great.

Monday

On my scan are EXT and IAG.

Ext is not a buy right now, but it has been trying to breakout for a while and it had a long white candle on Friday with some positive volume. Now the next couple of days will define how it manages the breakout, if at all.

IAG
this stock has really taken off and I am hoping it has done a good run based on the positive volume.


The US market had tough day on Friday with bears taking control and this is likely to reflect on the ASX on Monday. The S&P 500 dropped to 1,534.10, a drop of -18.98. Although it was mostly related to the Subprime mess, it still affected the overall market.

Stopped out.

My yesterday's pick did quite well.

SMX was up 3.015% today.
PXS was up 2.899% and
CBA was up 1.240%.

Today I have been watching TRS and DJS.

TRS has taken off but DJS has been consolidating after a decent run. Lets see how it goes tomorrow.

BTW I got stopped out of MRE as it had broken a support line. You can't win all can ya ?


Ok, here is AMP. Its just touched its resistance line today and has been trying to breach it for the last couple of days. The volume has been steadily dropping and if it jumps across the resistance line, then that line should become the support line and it might just do a good run from there. Lets watch this one carefully.

Scan

My scan today brought up SMX, CBA, and PXS.

I do not have the time today to post their charts. But they look good. If I have some free capital, I will definitely pick them.

Testing the rules.

When I had started trading I had set myself some rules:

1. Never chase a stock that has taken off, wait for it to consolidate or let go.
2. Never buy at whim, gut feeling, angel on my shoulder feeling.
3. Never buy at the opening of the market, wait for 1/2 hour to 1 hour.
4. Never buy againt the trend.
5. Check all the indicators. Volume and RSI are must and check market news.

Today ORI broke out in the early morning and I really wanted to jump in as everything looked good, except it was 10:15 and the stock price was 30.15 So I decided to stick to my rules and wait it out. My patience really got tested and I waited till 10:45 before making an entry with 20% of my allocated fund. by this time it had really started its run. If I had made an earlier entry I would have got it cheaper but you can't win all the time, can you ?

ORI finished the day at 31.70 with nice volume.

Quick fire.

ORI

I saw Orica break out from its ascending triangle this morning and took a small position in it. By afternoon the breakout had definitely taken a foothold and kept rising.

Picks

TTS
It had come on my scan about two days ago and its been showing great strength since then with nice volume supporting it. Its approaching its first resistance level at 5.16 and the next one at 5.28. After that its blue skies.





CDU
It has started dropping and I am hoping it bounces off the support line, it will be good time to jump in at that time. People haven't been selling it off in droves, so that speaks volumes :)





WIL
It been consolidating for a while and has formed an ascending triangle. This one is a definite watch. the last bar is a nice signal that those who hold it are not planning to get rid of it in a hurry.





WHG
It has been forming a descending triangle and is on my watch list. The volume has been dropping as well and I hope it will eventually either break out or drop like a rock. From its pattern it looks like its forming a pennant.




COU
this is looking great. Just hit blue skies. Now why didn't I buy it in Jan.

OST is UP.

OST up 3.49% as I type this.
HER up 0.34%
AGF down 0.39%

One thing I need to start looking is the volume on my scans as well. Compared to OST AGF and HER are no where close.

I have not taken any position in either of them as I am fully invested. But will keep looking for the good ones and posting them here.

The Scan

Next on my list are:

HER
It has found a good support line and the volume has supported the move. Now on my watch list to see if it will break that resistance line.



AGF
It had broken the previous resistance line at 1.26 and now approaching the bigger resistance line of 1.28. The volume is up, so this is definitely on my watch list.



OST
Pretty much the same story as AGF except its blue sky region and no resistance above, provided volume supports it. Definitely a close watch as it might drop back into its channel.

PMP

(click on the image to enlarge it)

PMP came up on my scan this arvo and it looks good. There was a massive injection of volume and its above its second support line. My concern is that its below its 200 day MA and its still inside its downward channel. Further past volume injection could not get it to break out.

The Plan

When I first looked at the stock market I decided I would need some good books to go through and a lot of people I talk to recommended me a couple of books. So I picked up the following books and have read them cover to cover:

Van Tharpe - Trade Your Way To Financial Freedom
Nick Radge – Adaptive Analysis for Australian Market
Mark Douglas - The Disciplined Trader
Mark Douglas – Trading in the Zone
Pristine - Swing Trading With Oliver Velez
Alexander elder – Trading for a living

I subscribe to a few blogs, but the first blog I read was Trade4cash by Brian, and I must say he has years of experience and knowledge of the market, but above all he genuinely tries to help you.

Now I have done a spreadsheet in excel which gives me fixed fraction position sizing for my trade. I have divided my trading capital into 6 equal lots so I can only put 1 lot on one stock. My stop loss is 5 %. Now with each lot I make an initial entry with 20% of the amount of the lot. If the position moves in my favor, I pyramid in with 60% of the lot and if the stock really is running then I top it off with another 20%.

I also try to find a good Return to Risk ratio (R/R) of atleast 2:1 to make an entry.

I had been paper trading for three months before I finally decided to jump in and what a difference it is. The emotions, the rush, fear, greed, all at the same time is to impossible to feel if you are paper trading.

In the next few posts I will discuss some of stocks I have taken a position in and the rationale behind them.

The Beginning.

And so it begins. My journey as a trader. Learning as I go and unlearning what dosent not suite my style.

So you ask why this blog ?

Well to document my journey and share and exchange what I have learned so far with all the experienced traders out there.

I'll be posting a lot more in the coming days and updating where I stand.