tag:blogger.com,1999:blog-51890784236756216952024-03-14T09:55:56.042+11:00Neotrader's DiaryA record of my trading activities as I try to turn A$15,000 into A$100,000 for a down-payment on a house. Alternatively, it could also be a pathetic record of abject and miserable failure.<br>
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<b>YTD Investment Performance ($9907): +51.59%</b><br>
<b>YTD Trading Performance ($5000): +26.02%</b>Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.comBlogger45125tag:blogger.com,1999:blog-5189078423675621695.post-48800427522077388082007-07-14T10:51:00.000+10:002007-07-14T10:59:54.074+10:00I know nothing about OilSad.... but true.<br /><br />Had picked up on oil bottoming at $61 a couple of months ago. Expected it to get to $80 by Jan 08. However, have been surprised by the pace and extent of its price movement. Nearly $74 yesterday, with no end in sight. As a result, haven't remained invested in it, made scraps here and there, but nothing much to shout about.<br /><br />I realise that I always get fazed by its volatility. My biggest fear is to buy at the top, and then get clobbered. In hindsight, had I stayed invested in oil continuously over the last 2 months, I'd be up close to $20K with just 2 contracts. Kicking myself - I saw the opportunity, but didn't capitalise on it.<br /><br />Now, I see a rally developing in Gold (up $12.5 this week) - of course, even though I commented on it <a href="http://neotrader.blogspot.com/2007/06/time-to-buy-gold.html">a while ago</a>, I haven't done anything about it. Need to get a grip, and get a plan going.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-1189330171157557332007-07-04T20:01:00.000+10:002007-07-04T20:15:07.085+10:00Oil's not wellExited my oil positions today - left it about 20 points too late, but c'est la vie. Charts show a bearish divergence - lets see what Thursday brings.<br /><br />In the meantime, Gold is not encouraging, neither is the XJO. Guess, I'll check out the currencies, or else just wait it out.<br /><br />On another note, finally was in a position to withdraw $1000 from my trading profits, and returned it to My Woman. After selling my oil positions today, I'm now in a position to withdraw another $1000. Never thought I'd see the day - just over a couple of months ago, I was down to nearly 40% of my capital, and very miserable.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-86355330175630593362007-07-04T02:32:00.000+10:002007-07-04T02:58:51.264+10:00Trading the first month of FY07-08Not quite sure where equities are going just yet. I would prefer to trade a clear 100 point move, and since I'll probably get in 50 points from the bottom of the move, and exit 50 points from the top - that's a total move of 200 points that's needed. Right now the XJO is moving about in an 100 point range - not good enough for me.<br /><br />Since the XJO takes direction from Wall Street, and since I don't trade overseas indices (not yet anyway), that means that the Street is undecided about where its going to go.<br /><br />Have worked out a rough model of what I'm going to be looking for to see strength in the market:<br /><ol><li>A strengthening of the Dollar Index - for me this means a weaker USDJPY, signalling the return of the carry-trade; and lower bond yields signaling moderate inflation</li><li>That should usually be accompanied by a weakening in Gold prices, and a rebound in base metal prices.</li></ol>The one market that I've been surest about this week is Crude Oil. Have several long positions, at an average of 7040 (WTI August 07). Hopefully, it gets to 7150, which is my immediate profit target. The weekly inventory report, due on Thursday, I feel will be bearish - with bigger builds in crude and gasoline, and better than expected refinery runs. Of course, I have no evidence to back this up, but I just feel its nearly time for Crude to correct to a mid-60s level. In any case, I intend to be long when the report comes out (if my target is not reached by then).Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-12947108693034066302007-06-27T14:28:00.000+10:002007-06-26T22:07:10.678+10:00WaterworldHave been on the sidelines this week. No positions in anything, anywhere. Exited my positions in Gold (Aug) last week and Gold (Spot) this week with small profits.<br /><br />I'm trying to make sense of the <a href="http://www.dailyreckoning.com.au/money-supply/2007/06/26/">massive increase in liquidity</a> around the world. <a href="http://news.goldseek.com/GoldSeek/1182789976.php">This</a> article tells me that, if History is anything to go by, it won't end well for the developed world.<br /><br />I would like to compare the properties of economic power with that of water. In my school days, I learned of the propensity of water to find its own level. A container of water has 2 compartments with a tap connecting the two at the bottom. The tap is closed. Water is poured into one compartment till it reaches a level near the top (say, level L1). The only way for more water to be held in the container is for the tap connecting the 2 compartments to be opened.<br /><br />When the tap opens, 2 things happen: the first is that water rushes in to fill the second compartment. In my economic power/water analogy, opening the tap is akin to the concept of globalisation - and economic power started flowing from the container that has water (the 'haves', like the US, UK, etc.) to the compartment that doesn't (the 'have-nots', like India and China).<br /><br />The second consequence of the tap being opened is that the level of water in the first compartment falls! In my analogy, this means that the 'haves' become worse off - in the real world, this translates into a loss of jobs, technology, etc. To keep the level of water (economic standards) at its previous high (level L1) in the first compartment, the flow of water into it must increase at an equal, or higher, rate as the transfer of water from the first compartment to the second. In the real world this could be taken to translate into credit expansion. However, since the propensity of water is to find its own level, more and more water finds itself into the second compartment. The relative distance between L1 and the level of water in the 2nd compartment keeps on narrowing - in fact all the increase in water in the first compartment goes into filling the second compartment.<br /><br />In other words, the worldwide expansion in credit is the only way for the West to maintain its standard of living and economic power. At this moment, judging by the way asset prices in the developed world have jumped from their historical rate of growth, I'd say that the addition of water into the first compartment is faster than the transfer of water into the second compartment.<br /><br />The consequence, in this theory, is that either the credit expansion will slow down in a hurry (or else the first compartment will overflow, and no one likes to clean up a mess), or this increase in credit will increase its speed of transfer to the developing world - or both. In any case, I need to get my act together on investing in developing markets right away.<br /><br />As money in the developing markets increases, their demand for energy, metals and food will go up exponentially. Hence, my strategy needs to be focussed around these areas.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-25639699735975100722007-06-24T18:23:00.000+10:002008-12-10T10:07:39.131+11:00Double Tops Galore!?The scenario of synchronised double tops all over the place.....??<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_Rv6iQVJXVcY/Rn0xMy4Q4hI/AAAAAAAAACk/3dXtqUgwiy8/s1600-h/DJIA_240607.png"><img style="cursor: pointer;" src="http://3.bp.blogspot.com/_Rv6iQVJXVcY/Rn0xMy4Q4hI/AAAAAAAAACk/3dXtqUgwiy8/s200/DJIA_240607.png" alt="" id="BLOGGER_PHOTO_ID_5079270050629739026" border="0" /></a><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_Rv6iQVJXVcY/Rn0w-i4Q4fI/AAAAAAAAACU/MdwDEpRH5gQ/s1600-h/Dax_240607.png"><img style="cursor: pointer;" src="http://2.bp.blogspot.com/_Rv6iQVJXVcY/Rn0w-i4Q4fI/AAAAAAAAACU/MdwDEpRH5gQ/s200/Dax_240607.png" alt="" id="BLOGGER_PHOTO_ID_5079269805816603122" border="0" /></a><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_Rv6iQVJXVcY/Rn0w6C4Q4eI/AAAAAAAAACM/MsCvt-ps7uw/s1600-h/XAO_240607.png"><img style="cursor: pointer;" src="http://4.bp.blogspot.com/_Rv6iQVJXVcY/Rn0w6C4Q4eI/AAAAAAAAACM/MsCvt-ps7uw/s200/XAO_240607.png" alt="" id="BLOGGER_PHOTO_ID_5079269728507191778" border="0" /></a><br /><br /><br />So ..... is this the beginning of a correction? A couple of reasons:<br />1. Subprime mess + slowing growth in the US; and its knock-on effect on the rest of the world<br />2. Inflationary fears fueled by higher oil and food prices<br /><br />Lets see what happens when the index meets the 50 day MA.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-70942063669424124402007-06-15T18:40:00.000+10:002007-06-15T01:52:04.019+10:00Time to buy Gold?Stock markets are rebounding - despite that fact that bond yields are at 5.2%+/-. I suppose this is all very encouraging. However, the XJO bounced back off 6150 - and my guesstimate from the weekly chart was that it would drop to at least 6050. So I'm not sure this 'correction' is quite done yet.<br /><br />What I have done, however, is buy 1 Spot Gold contract. Had figured a bottom of $644 at the trendline - it went down to $643.25. Of course, I didn't have an order in then. Went long finally at $648.25 (actually $646.75 + $1.5 IGM spread). Looking to go long Spot Silver @ $12.97.<br /><br />My reasoning is thus: if there is a cartel selling Gold to suppress the price (as <a href="http://news.goldseek.com/JamesTurk/1166457660.php">some</a> suggest), they'd better have a lot of it to sell since India will come back to buy soon - Dussehra is just 3.5 months away - and that means weddings - lots and lots of them. With the economy booming that means a demand for lots and lots of jewelry.<br /><br />Again: higher oil prices + higher food prices = inflation = higher gold prices.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-67108807980371600202007-06-09T11:30:00.000+10:002007-06-08T18:35:51.625+10:00Sitting it outFinancial markets have been falling this week - the <span class="blsp-spelling-error" id="SPELLING_ERROR_0">XJO</span> is down almost 200 points since Monday; however, I'm sitting this out. Part of it has to do with the whip-saw action on Monday that knocked me about; a lot has to do with the fact that these are volatile times and I'd rather watch and learn (for free), than participate and learn (possibly at a cost). Got stopped out of my TTS position along the way. My AGK position is still holding on .... just.<br /><br />Gold, meanwhile, went from $651 to $671, and back down to $657 (as I write). So is Gold the safe-haven its touted to be, or is it just another asset class? You would expect Gold to go through $700 on this recent <span class="blsp-spelling-corrected" id="SPELLING_ERROR_1">manoeuvre</span> by the world markets.<br /><br />Still trying to make sense of what the future holds - not just next week, but for the rest of the year. The Daily Reckoning, as always, has <a href="http://www.dailyreckoning.com.au/golden-era/2007/06/07/">something sensible</a> to say.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-60708833860910956702007-06-06T00:32:00.001+10:002007-06-06T00:35:21.430+10:00Nymex Oil is a beastWhen the June contract hit $66 last night, I was tempted to sell. However, I thought she might break through to $67 today - what with a storm in the Persian Gulf, Bush criticizing Putin etc. So, I bought 2 more contracts @ 6595 (actually 6283 - thanx IGM - that 12 point spread is a real beauty...not).<br /><br />Anyhoo, got stopped out of both of them, as gasoline went south. So - went short @ 6529 (actually 6541 - again, thanx IGM... love your spreads) - got stopped out on that as well, as gasoline went north! In the meantime, I wanted to close my longs @ 6550 - but my computer got all slow on me. Finally, managed to get out of all 3 @ 6540.<br /><br />All in all, got clobbered out of close to $1000 in all this mayhem - actual losses plus opportunity loss.<br /><br />I think if this has taught me one thing, its not to trade frequently. Bide my time, pick my trades - and when I'm convinced - go in strong. At one point, I was up over $6000 - and in the end, came out $4500 ahead.<br /><br />Well, I'll take my profits - hopefully, I'll remember this lesson.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-58323861184181953872007-06-05T12:12:00.000+10:002007-06-05T00:33:17.982+10:00WTF?<p style="font-family:courier new;"><span style="font-family:georgia;">This evening's <a href="http://www.australianstockreport.com.au">ASR</a> report sums it up:<br /></span></p><p style="font-family: courier new; color: rgb(0, 51, 0);" face="courier new">The most interesting feature of today was this region's complete indifference to what happened in China.</p> <p style="font-family: courier new; color: rgb(0, 51, 0);" face="courier new">For those who have not yet heard, the Chinese market fell 8.3% today, closing almost at the lows for the day. This is it’s biggest one day fall since the 28 February correction that shook world markets. On that occasion it fell 10% in a day.</p> <p style="font-family: courier new; color: rgb(0, 51, 0);">It seems however, that we have successfully climbed this wall of worry.</p> <p style="font-family: courier new; color: rgb(0, 51, 0);">No longer do such one-day drops in the benchmark Shanghai Composite Index send shockwaves though Asian stock markets and get European markets rattled (it seems the Dow stopped caring some time ago!).</p> <p style="font-family: courier new; color: rgb(0, 51, 0);">Looking across the continent today, obviously we were up, but so where Hong Kong (+1.03%), Japan (+0.08%) and Singapore (+0.92%). Smaller markets like Jakarta (+1.29%), Malaysia (+0.98%), South Korea (+1.24%), and Taiwan (+0.54%) also fared well.</p> <p style="font-family: courier new; color: rgb(0, 51, 0);">In fact, it seems the Chinese market <i>was the only one to fall</i>.</p><p style="font-family: courier new;"><span style="font-family:georgia;">Looks like every fund manager in Asia read my post from <a href="http://neotrader.blogspot.com/2007/06/dizzying-heights-are-share-markets.html">earlier today</a>.....</span><br /></p>Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-81792010315832621862007-06-04T19:50:00.000+10:002007-06-04T03:11:17.942+10:00Dizzying heights.... are share markets primed for a fall?The SMH carried an <a href="http://www.smh.com.au/news/business/where-will-it-end/2007/06/01/1180205514330.html?page=7">article</a> yesterday, making comparisons between the stock market (crash) of 1987 and the current stock market. Such predictions are not new - one of the more interesting theories is from Mclaren, who <a href="http://www.mclarenreport.net.au/articles/articles/128/1/April-13-2007-CNBC-Europe/Page1.html">says</a> that markets will top out on June 12. Virtually every commentator believes a fall will be due to a meltdown in the Chinese stock market. The Chinese stock market has its fair share of <a href="http://www.financialarmageddon.com/2007/05/bubble_in_chine.html">detractors</a> - from Alan Greenspan down to the novice hack believe that if the events of Feb 27 and last week are anything to go by, a dramatic fall in Shanghai will, well ... shanghai the world markets. Came across a <a href="http://www.egoli.com.au/egoli/egoliStoryPage.asp?PageID=%7B11E622F2-0034-4EE2-8021-E474B5C5C1F7%7D&Section=RudisMessage">differing opinion</a> here.<br /><br />I think a fall in Shanghai now will have little impact on world markets - that's because everyone expects it, and so it's probably "priced in". In any case, China is not known for the consumption power of its individuals - its known for being the factory of the cheap import. The underlying China story is, therefore, going to continue whether or not the stock market goes into freefall. I think a fall, if it happens, will come from an unexpected area - my favourite at the moment is a dramatic increase in the price of Oil.<br /><br />So, where do I stand on this debate? The facts:<br /><ol><li>XJO has hit a wall at 6400. Failure to breach 6400 is a bad sign. Its not just the XJO that looks like its in trouble - the DJIA and the DAX look like they're about to be exhausted as well.</li><li>Bond yields are <a href="http://economist.com/daily/columns/marketview/displaystory.cfm?story_id=9279234">up</a> - indicating interest rates should rise. That's bad news for stocks.</li><li>Oil prices are on the move - upwards. We've entered the Hurricane season in the US, and this year is tipped to be one of 'above average' activity. High oil prices = bad news for the economy.</li></ol>On balance, I think the risk for downside is more than it is for the upside - but not for the reason (China) most (well, all the reports I've read) analysts would like to believe. As a result, I plan to trade more from the short-side on the indices - selling the rallies.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-12541157605483025442007-06-03T04:15:00.000+10:002007-06-04T01:17:46.426+10:00Still hereIts been a while (again!) since my last post. A lot has happened since then - my grand design of getting back even on my positions got hit pretty hard in May. At one point, I was down to $3000 in capital, and with a MTM loss of another $1000.<br /><br />But now, things are way different.<br /><br />On May 8, I sent the following email to a friend in India:<br /><br /><table style="width: 100%;" cellpadding="0" cellspacing="0"><tbody><tr><td class="cbln"><div style="" class="mb"><div id="mb_0"><span style="font-family:courier new;">interesting set-up in crude. if it holds $61 on the weekly chart, that would confirm the ascending wedge. following the chart pattern forward, we could be looking at $80 crude in jan 08...!!</span><br /><br /><span style="font-family:courier new;">if the pattern is confirmed, now would probably be a great time to go long - we wont see this level for a very long time ......</span> </div></div></td></tr></tbody></table><br />My call on $61 being the bottom was right! And this was after crude had fallen for 8 straight days. I took positions @ $62 and $62.15, before I realised that crude is indeed a very volatile beast. 2 days later, I was fighting to save both positions, as a sell off in stocks spilled over into commodities, and sent oil tumbling back to $61.<br /><br />I then realised something interesting about oil - it has an inherent tendency to seek a double bottom before moving on. Also, at the beginning of the trading period, the price would drop about 30-40 cents, find support and move back up till it found the next support.<br /><br />So, I thought, this means - theoretically, I can sell at the closing price, buy back when it double-bottoms and get more bang for my buck! Great theory - in practice, the double-bottom never happened that day, after I'd sold my positions - because Gasoline prices rallied to all-time highs, taking crude along with it. Of course, that was a link I wasn't aware off - and so I missed out on the ride to $66.<br /><br />However, this week gasoline prices came down again, due to refineries in the US firing up production. Crude followed - and this time I was ready. Oil was trading @ $63 (having bounced off $62.50 the previous day) before the the oil inventory numbers on Thursday; a decline in crude stocks sent to price up to $64 initially, however since there was a build up in gasoline stocks, i expected the market to fall. And it did - all the way down to $62.50 - which confirmed both my double-bottom expectation and my chart. I piled in with 3 mini contracts, and plan to hold on to them for a while. Last traded @ $64.85 - and they are the reason why my account has completely turned around.<br /><br />Just 2 weeks ago, I was in despair - all my positions were going down the tubes (in fact, I'm MTM -$1000 on my share CFDs). Since then, I've had a couple of profitable trades on the XJO and some pretty amazing ones in crude futures. I feel like I've crossed a major step in my learning.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-29494707621363141682007-04-25T07:38:00.000+10:002007-04-24T14:39:24.301+10:00Lihir GoldAdded LHG to my investment portfolio @ $3.03.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-4911348047040682292007-04-25T06:02:00.000+10:002007-04-24T13:22:17.357+10:00Developing my Trading RulesTo put my theory of <a href="http://neotrader.blogspot.com/2007/04/its-been-awhile-since-i-posted-anything.html">trading the range in OXR</a> to the test, I shorted @ 305 yesterday - it was 10:13 AM, the stock was up 5 cents from Friday's close. Guess what - WRONG CALL! The market drifted back to 304, before moving inexorably onwards to close at 307. Today - low of 305 (at the open), high of 313.<br /><br />So - the exception to the rule was the one time when I decided to put my money on the line! I don't know whether to laugh or pound my head against a very solid rock.<br /><br />ILU, meanwhile, gave me a shock as well - I have a price target of 571 - but she closed up at 590! Today, she's the only trade that's actually in the green, currently at 577.<br /><br />The XJO is going bananas today. Down 50 pts, then up 50, then down 50 again - and its just 12.41 pm! Getting a bit dizzy.<br /><br />Apart from my profit on ILU, I'm down $480 (MTM basis @ 12:45 PM). Here's what I think I should do with the positions:<br />ILU: let it run to 571<br />OXR: close it as near as 307 as I can.<br />AWB: I see support at 343, so it should do something positive from there.<br />BHP: get out quickly<br />AMP: reset target to take profits @ 1100 - which was touched earlier today.<br />AGK: it closed @ 1610 yesterday. have had faith that this stock will recover so that at the least I can break even on the trade.<br /><br />Further, all of yesterday, I've been thinking about some rules that I need to follow to make this work. This is what I've come up with:<br />1. <span style="color: rgb(153, 0, 0);">Always trade the trend from the trend-line</span>. Whenever I've done that, I've made a profit (eg. ZFX, SMY, VBA trades earlier).<br />2. <span style="color: rgb(153, 0, 0);">Look for complete positive signals from charts</span>. Essentially, avoid doing an AGK or BHP again - where the stochastics were obviously bearish.<br />3. <span style="color: rgb(153, 0, 0);">Do not trade on a whim</span>. Avoid trying to catch a falling knife (like my long AWB @ 360 and short OXR @ 305 positions now)<br />4. <span style="color: rgb(153, 0, 0);">Be patient, not greedy</span>. I'm not going to put more than 2% of my capital at risk. Currently, that works out to $80. This would mean smaller positions and profits - but so be it.<br />5. <span style="color: rgb(153, 0, 0);">Be thankful for my opportunities</span>. I don't mean this is a religious way, but really - thankful to Mr. Market for putting opportunities of profit in front of me.<br /><br />Now, to see if I can stick with these.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-11172555338162798542007-04-23T16:57:00.000+10:002007-04-24T13:16:29.416+10:00Still Standing!It's been awhile since I posted anything here. My CFD trading, however, has not gone away. Have been refining my approach, with varying degree of success. I still need to remember not to jump in on a whim.<br /><br />The last week or so has actually been quite a trial-by-fire for me. The Friday before last, my MTM position was -$451. That was over 10% of my capital, and had me in a bit of thought through the weekend. Things went south when the Aussie crossed $0.83 vs the US$ - causing people to pause and take profits. Of course, I didn't - since it caught me on the hop. However, it was quite a sight - watching the red pile up in rapid succession from the opening bell. It reached -$500 in no time, before I couldn't bear to watch it anymore. Was transfixed - 'shock and awe' are the terms that come to mind, not wanting to book my losses. Talk about having your heart in your stomach! Incredibly, I came out of that last week - and while I still hold the (loss making) positions on AGK and BHP (both ill-thought out and ill-timed positions), in the others (SMY, MXG, ZFX and WPL) I ended up making not too shabby a profit, all things considered.<br /><br />In the meantime, the XJO has reached new heights, I've signed up with Australian Stock Report - and hopefully, this week I should see myself finally turn a profit on my CFD capital. I'm currently about $600 short of $5000 (that <a href="http://neotrader.blogspot.com/2007/04/burnt.html">$1300 hit</a> on Gold 2 weeks ago has left quite an impact), but am short ILU and have plans for AMP and OXR tomorrow. If all goes according to plan, by Wednesday, I should be about $500 ahead.<br /><br />I shorted ILU @ $5.98, and then added a massive short @ $5.81. My target for this is $5.71. I'm planning to go long AMP tomorrow at $10.85 or better - she's about to breakout, though I haven't quite worked out what the upside could be.<br /><br />Also, planning on implementing a new strategy tomorrow. I've noticed that OXR has a dramatic movement in the first 15 minutes of trading. It then swings the other way; and I suppose this is typical of fade-in and fade-out that the big boys do to grab money of us poor unsuspecting sods. The thing that is of great interest to me is that the variation from it's high/low of the first 15 minutes can be 2%. I'm planning to trade the range tomorrow to test my theory, and if it works out, I might just have discovered a fairly reliable cash-cow trade :)Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-59059487091092098412007-04-12T12:50:00.000+10:002008-12-10T10:07:39.381+11:00Bluechip Blues<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_Rv6iQVJXVcY/RhyrWSfrZXI/AAAAAAAAABk/ljtzw0LbozI/s1600-h/awb.png"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer;" src="http://3.bp.blogspot.com/_Rv6iQVJXVcY/RhyrWSfrZXI/AAAAAAAAABk/ljtzw0LbozI/s320/awb.png" alt="" id="BLOGGER_PHOTO_ID_5052101281413031282" border="0" /></a><br />Added AWB @ 355 today. Hopefully, <a href="http://www.theage.com.au/news/business/wheat-crunch-but-single-desk-to-stay/2007/04/10/1175971097774.html">this</a> works out; even so, (I think) the charts indicate its time to breakout.<br /><br />Here's the thing - both the bluechips I'm long in (BHP and NCM) have underperformed. In fact, NCM actually dropped - and I'm down $75 on it today; whereas I'm up $12 in BHP. AGK was a shocker as well - but I think she'll pull up tomorrow.<br /><br />On the other hand, OXR, VBA and ZFX have done wonders, TLS wasn't too bad either.<br /><br />I'm coming round to the view that I need to just trade companies that have a price of $5 or less - for starters, they don't gap at the open, and they're easier to chart.<br /><br />I also think I need to trade fewer companies - I need to find just one good company at a time and increase my commitment to it. Currently, I don't buy more than $5000 worth of CFDs at a time. For example, if I'd just stuck with OXR last week instead of getting involved in the BHPs and NCMs of the world, my profits would have been bigger.<br /><br />The reason I've spread my investment is to diversify my risk. I'm still not confident enough in my ability to read the stock movement. However, truth be told - I haven't done terribly badly. I picked OXR, TLS and VBA before they ran - and in the case of OXR, I managed to buy and sell at the good ends of the run. Besides, I think tracking 1 or 2 stocks is easier than tracking 9 or 10.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-71199824264448003562007-04-11T08:30:00.000+10:002008-12-10T10:07:39.560+11:00Update for todayExited my OXR position @ 321. $330 profit - my biggest so far! Wanted to hold out to 323, but decided against it. In the end, it was a good move, since it closed @ 320.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_Rv6iQVJXVcY/RhsqsyfrZWI/AAAAAAAAABc/zXayDyCGt5g/s1600-h/vba.png"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer;" src="http://4.bp.blogspot.com/_Rv6iQVJXVcY/RhsqsyfrZWI/AAAAAAAAABc/zXayDyCGt5g/s320/vba.png" alt="" id="BLOGGER_PHOTO_ID_5051678355983394146" border="0" /></a>Added VBA @ 264. Similar thinking to my AGK position: lower oil prices = good news for <a href="http://www.virgin.com/AboutVirgin/RichardBranson/WhosRichardBranson.aspx">Richard</a>.<br /><br />Plus, methinx it may be breaking out.<br /><br />Also, added MXG @ 462 - no fundamental reason other than because it broke out of its downtrend @ 451, and should retest its all-time high @ 501.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-10167936711790680962007-04-11T05:23:00.000+10:002008-12-10T10:07:39.779+11:00A Brand New WeekMissed out on the 4.3% drop in crude prices last nite. While I did think about shorting it @ 6634 levels, my experience with gold last week came to mind. I still need to recover $1000 to get back to parity. When I'm well ahead of that figure is when I'll get into the commodity futures markets next, and that too only on the long side.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_Rv6iQVJXVcY/Rhr1ISfrZUI/AAAAAAAAABM/qEUp91N9PmY/s1600-h/smy.png"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 400px; height: 243px;" src="http://1.bp.blogspot.com/_Rv6iQVJXVcY/Rhr1ISfrZUI/AAAAAAAAABM/qEUp91N9PmY/s400/smy.png" alt="" id="BLOGGER_PHOTO_ID_5051619454801896770" border="0" /></a>Added LHG @ 329 and SMY @ 475 to my positions. LHG - since I believe Gold miners should recover soon; SMY (gapped open @ 470) since Nickel prices continue to rise and SMY managed to break through a key resistance @ 442. Target: 500.<br /><br />Also bought AGK @ 1620. With oil prices coming down, that should provide an impetus on its uptrend towards 1700.<br /><br />Closed out TLS @ 479 - profit of $150, so that nets out my <a href="http://neotrader.blogspot.com/2007/03/todays-conundrum-contd.html">earlier loss</a>. Will look to re-enter TLS sometime, since she's going to 500.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-85885313626334866752007-04-10T19:09:00.000+10:002007-04-10T19:27:45.357+10:00The Housing BubbleLets recap:<br />1. Clearance rates and selling prices for the last 3 months have been fantastic<br />2. Rental vacancy rates have dropped<br />3. Rental yields have also dropped<br /><br />The disconnect between #2 and #3 is important (in Economics 101, I was told that rentals (yields) should rise when availability drops).<br /><br />This leads me to the following conclusions:<br />1. First-home buyers are being outbid by investors. I'd probably go further and say that investors/speculators are outbidding each other as well - and since they are using their other properties as collateral, this has all the makings of a nice, big bubble. If "housing" was traded on the stock market, the indicators would be yelling 'overbought'.<br /><br />2. Renters are probably extending their leases, with a marginal increase in rent, and reducing their mobility - this explains why vacancy rates are low - and consequently, why yields are also low. My Woman and I live in inner-city <span class="blsp-spelling-corrected" id="SPELLING_ERROR_7">Melbourne</span>, and in <span class="blsp-spelling-corrected" id="SPELLING_ERROR_8">January</span> we extended our lease for another year and agreed to pay $10 a week more for rent, rather than look for another house and deal with real estate agents. Meanwhile, a house down the street sold for $525k, giving any buyer of our property a yield of only 2.7%. To generate a yield of 5% on that price, our rent will effectively have to double - and even in the inner-city, I don't see that happening without riots breaking out.<br /><br />Would I like to own my house - sure! In fact, that's what this rigmarole with CFDs is all about. Would I like to own it at these prices, and pay 50% of my income in mortgage repayments? <span class="blsp-spelling-corrected" id="SPELLING_ERROR_9">I'm</span> not nuts.<br /><br />When the music stops, I wonder who'll be left holding the parcel.....<br /><br />Came across <a href="http://ampcapital.com.au/K2DOCS/site_corporate/3A11DF47-B030-4380-8106-9982E3A72A65/OINo10.pdf?DIRECT">this</a> commentary from AMP Capital. The main points it makes are:<br /><br />1. Australian housing remains very overvalued:<ul><li>Average Australian house prices remain very high relative to average weekly wages and need to fall about 19% for the ratio to return to more normal levels.</li><li>House prices need to fall about 29% to bring the ratio of house prices to rents (the PE ratio for housing) back to its long-term average (after adjusting for <span class="blsp-spelling-error" id="SPELLING_ERROR_0">infl</span><span class="blsp-spelling-error" id="SPELLING_ERROR_1">ation</span>).</li><li>National average house prices remain well above their <span class="blsp-spelling-corrected" id="SPELLING_ERROR_2">long term</span> trend. Since the 1920s, Australian house prices have risen on average by 3% per <span class="blsp-spelling-error" id="SPELLING_ERROR_3">annum</span> after <span class="blsp-spelling-error" id="SPELLING_ERROR_4">infl</span><span class="blsp-spelling-error" id="SPELLING_ERROR_5">ation</span>, <span class="blsp-spelling-error" id="SPELLING_ERROR_6">i.e.</span> in line with real GDP growth. To revert to their long-term trend, average house prices still need to fall 19%.</li></ul>2. Housing affordability remains too poor to support a strong and sustained rebound in house prices.<br /><br />3. Despite rising rents, housing rental yields remain extremely low making them unattractive to investors. The average gross rental yield is just 3.2% for capital city houses and 4.3% for units.<br /><br />So, will next month's expected rate rise be the straw that break's this camel's back?Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-35264517008053833852007-04-09T00:40:00.000+10:002007-04-09T01:03:53.578+10:00The Role of Gold in my LifeThe Economist has an interesting <a href="http://www.economist.com/daily/columns/marketview/displaystory.cfm?story_id=8984177">article</a> about a study that debunks the notion of Gold as a hedge against inflation or as a safe haven in crisis. In a study from 1995 to 2005, Gold tended to behave like any other risk asset.<br /><br />Being a Gen-X person, Gold, as a store of wealth, has little resonance with me. The use of Gold in jewelry, or as an element that has industrial uses is far more understandable. I've grown up in the post-<a href="http://www.dailyreckoning.com.au/gold-standard-2/2007/04/06/">Gold Standard era</a>, one which has seen incredible credit expansion, and the creation of several pioneering asset classes. To me, backing a unit of credit against, say, land is more plausible than backing it to Gold. For starters, if I did issue credit against physical Gold, and the borrower defaulted, where would I go to convert the Gold into a more fungible currency that, say, the supermarket would accept? On the other hand, there is a ready market of people more than willing to exchange my land for currency.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-35493581322974737252007-04-06T12:10:00.000+10:002007-04-05T19:15:33.995+10:00Burnt!!Got burnt in the jump in Gold. Up 1%, as soon as Iran announced the release of the prisoners. That's because it reacted to <a href="http://www.dailyreckoning.com.au/gold-price-6/2007/04/05/">weaker US data instead</a>.<br /><br />As it turns out my stops were too wide, but they were still triggered - resulting in me losing 20% of my "playing" money.<br /><br />I think a fundamental shift is afoot in the Gold market. Despite numerous columnists exhorting the cause for Gold, its prices and that of its miners languished in Q1 of this year - probably since the focus was on previous quarter earnings of other corporates. Now that the earnings season is over, the focus has shifted to the next quarter, and that probably doesn't look too good.<br /><br />I was caught on the wrong foot due to hubris ("Gold will revert to $655")- the smart thing for me, in future Gold trades, is to remain on the long side. However, am wary at this point about the future moves in Gold - currently @ 673 lvls, and at the top end of the range for the last 2 months. However, have decided to go long on NCM, and have a buy order on LHG @ 329 to keep my battered hat in the ring (my OXR position is also booming along - up 8.68% in 2 days).Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-12701433205331369512007-04-05T12:40:00.000+10:002007-04-04T19:52:19.634+10:00Last nite, I set premarket orders for ZFX (Buy @ 1508), BHP (Buy @ 3008), OXR (Buy @ 284).<br /><span style="font-weight:bold;"><br />Lesson #1:</span><br />Stocks in the ASX gap up. BHP jumped from y'day's close of 3006 to open at 3055. ZFX gapped from 1505 to open 1548. OXR gapped to open @ 288. Hence, you miss out on the major moves in the market - unless you are already in the market. BHP traded in a 3047-3061 range, ZFX in a 1519 to 1549 range.<br /><br /><span style="font-weight:bold;">Lesson #2:</span><br />A Buy Stop is different from a Buy Limit order. And the IGM system doesn't always give you that choice. I set my Buy orders as 'Buy Stop'- as a result, I got in at the first pricepoint of the morning. Which was certainly not what I wanted. I needed to have set a Buy Limit order - which does not execute my order unless my specified price is reached.<br /><br />As a result, I've finished negative for the day in ZFX and barely ahead in BHP - and they're both virtually at my exit prices.<br /><br /><span style="font-weight:bold;">Lesson #3:</span><br />I need to get into (or out of) the market on the previous trading day. That's the only way I don't get burnt by the gap moves. Also explains why I did well on WPL today. I got in near the close yday.<br /><br />So,I've written to IGM to put me on a Standard Account, from a Limited Risk Account - it hasn't worked for me, and I've just ended up paying lots of brokerage. They wrote back to say that I need to have $20K in the bank before I can move. Which, of course, I don't have.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-39503707934131773042007-04-04T15:00:00.000+10:002007-04-03T21:59:02.907+10:00Another goHave shorted Crude @ 6488 (target 6300), Gold (Spot) @ 661.18 (target 655) and Gold (Forward) @ 667.35 (target 662).<br /><br />Since I'm on 'Guaranteed' Stop-Loss with IGM, my entry price is net of their spread of $1/ contract.<br /><br />Now, if the noises coming out of Tehran and London are anything to go by, I might just have a very "Good Friday" (and Wednesday and Thursday)..... :)Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-6122507102158212942007-04-04T09:00:00.000+10:002008-12-10T10:07:39.971+11:00WPL<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_Rv6iQVJXVcY/RhHsutKxwSI/AAAAAAAAABE/K21BgLGJlNY/s1600-h/wpl.png"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer;" src="http://3.bp.blogspot.com/_Rv6iQVJXVcY/RhHsutKxwSI/AAAAAAAAABE/K21BgLGJlNY/s400/wpl.png" alt="" id="BLOGGER_PHOTO_ID_5049076944401973538" border="0" /></a><br />Shorted WPL @ 3923.I think the stock is probably long in the tooth at the moment. Oil should fall tonite, if Iran and UK make headway on the prisoners. Target 3665.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-62441465314748666182007-04-04T07:10:00.000+10:002007-04-03T15:17:31.515+10:00Reworking my exit strategiesYesterday, I had the potential to make about $600 in profits. In the end I ended up with $90.<br /><br />Gold fell early on in the piece - at one point, I was up $324 on my 2 mini contracts. Then, I failed to act in time, as the market turned sharply; and in the end I exited both positions with a $80 profit.<br /><br />Then I went long the crude oil mini contract @ 6673; was up $324 again on this one. Thought - she's going to 6800; and she didn't. Had a stop at 6675 which got triggered as I slept - profit of $10.<br /><br />While I continue to refine my conditions of entry, I seriously need to rethink my exit points as well. So far its been a bit of 'dartboard' and a bit of 'don't have a clue'.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0tag:blogger.com,1999:blog-5189078423675621695.post-57815257118779834482007-03-31T20:00:00.000+10:002007-03-31T03:15:37.666+10:00TradingGold continues to jump about. Added another short @ 671.Gouravhttp://www.blogger.com/profile/17872969853156182021noreply@blogger.com0