We have a trade to look at this evening. Let’s take a look at the chart…
If you recall last night we looked at this chart with the resistance line and the trend line. I mentioned that we had a stop-buy for $61.57 We are in the trade because the price and the 8 EMA (red), our triggers, are above the set up of the 21 EMA (blue) being above the 55 EMA (green). The blue and green set the table with an uptrend setup, permitting us to go long.
The trigger price and red co-operated by crossing the blue. I additionally wanted the price to cross the resistance line. All these things came together today. Our protective stop is placed just under support at, $57.63
Here’s how the numbers look:
The portfolio is $138,528.90 as of May 14th, 2020. Remember, it started at $100,000 January 1st, 2020. You can see all the trades in my book, Basic Trading: ‘A Beginner’s Guide to Trading and Investing…PROFITABLY!’
10% of the portfolio = $13,000
$13,000/$61.57 = 211.14, rounded to 200 shares
Risk = $61.57-$57.63(stop) = $3.94 X 200 shares = $788 (< $2,600)
The trade met all our criteria: to enter a trade, capital allocation and risk management.
UGL is an ETF (exchange traded fund). We use a series of these: 5 up and 5 down. They represent underlying futures. In the case of UGL, it mimics the upward rise of gold – but twice the percentage. (1 % rise in gold = 2 % rise in UGL, the opposite is also true, hence the special attention to protective stops).
Let’s take a look at the gold chart…
If you look at the right hand side, you can see the jump that gold took today. Why? Don’t know, don’t really care. We are trading our signals in five instruments. If we get our set up and trigger, we will be entering a trade. Whatever the talking heads have to say is immaterial to our decision making.
We have a couple of others with stop-buys placed. If they trigger, we will show the details. I provided levels earlier in the week. I am trying to recreate at close to a trading situation as possible. I show the possible trades beforehand, so it is not a case of after the fact 20/20 trading. I am trying to help new or struggling traders. I don’t need to be reminded of what I know.
Which reminds me, if you want to see the trades that started January 1st, you don’t need to buy my book. I will send them to you.
Don’t forget the weekly roundup. We go through all the charts on a weekly basis whether they had any trades or not.
If you have any questions or comments, please drop me a line at: firstname.lastname@example.org.