I summoned up my charts this evening as Merlin might have the spirits at the TOR above. I follow the same procedure as the one I teach new traders and traders struggling to make consistent profits. I check five symbols. The same ones I started trading theoretically in my book: Basic Trading: ‘A Beginner’s Guide to Trading and Investing…PROFITABLY!’ Freshly edited and uploaded to Amazon.
‘What’s new?’ you are thinking after all that self promotion.
Well, let’s start with our open trade in UGL. It has strengthened a little again today. We had placed our trade a little above resistance to avoid being rebuffed. Alas, our stop-buy was triggered and then, despite our caution, the price, as Japanese Candle Traders call it, “fell off the roof”. Not sure what that is in Japanese – you wouldn’t have understood it anyway. I mention this because these things happen. It is part of trading. Now in this case, our stop was placed just below support. We were not stopped out. The price is now almost back at the buy in point.
Over the last couple of trading days, actually back to the weekend round up, I mentioned a couple of symbols that were almost at a buy in point. They just needed to close above a resistance level.
We had one that did, so we are in that one. Let’s take a look at the chart.
SSO is the ETF that imitates the rise of the S&P 500 – double time. You can see we had our resistance line set at $114.74.
Today, it’s little head popped up and closed above the resistance level. We are in at $114.74. I made a tiny error here. I was supposed to wait until we had a CLOSE above that level. The stop-buy should have gone just above the high of the candle that closed above resistance. This is a theoretical exercise, so I could just fix my mistake, but I am trying to make this as close to real as possible.
Details of the trade look like this:
10% of the portfolio = 13,000/$114.74 = 113.29, rounded to 120 shares
Stop at $98.70 (position 2) = $16.04 X 120 shares = risk of $1,924.80 (<$2,000).
I shall update this one also as we go along.
I want to take a quick peek at oil.
Oil has been a bit of a freak show lately. Not for us as that was where we made our biggest gain.
UCO is the ETF that mimics the rise in oil – double time.
Our set up is downtrend as the 21 EMA (blue) is below the 55 EMA (green). This means that even though the price looks like it is about to cross above the blue, we cannot trade long against a downtrend. There is an add on to the rule. If the price closes above the blue and the ROC in the lower pane is above 0 at the time, or within three days, we will enter a stop-buy just above the candle that closes above the blue EMA.
As always details will be reported here as we continue to trade the portfolio that was in the book.
If you have any questions or comments, please drop me a line at: email@example.com