Welcome to this week’s Round Up. It is the time of the week that we review the charts for the five instruments we are following and trading.
I also like to reset what we are doing here. It all started with a gem of a book by me that details all that is needed to take control of some or all of your money – a worthy goal if ever there was one!
Anyway, in that book I set out to prove a point and to teach something, of course. We took a theoretical amount of $100,000 and using 5 market instruments and a simple method that anyone can understand and operate, set sail.
That exercise took us to April 30th, 2020 when the book went up on Amazon. But I had a brilliant idea (it happens!). I thought maybe it would be useful to continue the exercise to help any one working with my book to see trades unfolding.
You can get a look at things here: https://abeginnersguidetotradingandinvesting.gr8.com/offer_page.html
As of writing (as in, today), the portfolio stands at $138,720.10. Not bad, but before we get carried away, this could be the same balance when this exercise and the year expires.
It is one of the lessons you traders need to make sure you understand. We see average returns all the time. Those returns can be had in flashes of strength. Just because we are at this point halfway through the year does not mean we will be double that by year’s end.
We will take what the market gives us by following our process and not forcing things in some misguided attempt to make things happen. Patience is a virtue in a trader.
Our five instruments cover a large swathe of the market place in big picture terms. You can just stay with these forever more – up to you. Their basis lies in the futures market which doesn’t help most of you. Sometimes we need to short something. There are restrictions on certain types of accounts as to what can be held in them.
To solve this we use symbols that trade on the stock market as proxies. That means if we want to short gold, we can buy GLL as a regular stock and it will rise as gold declines – how good is that?
More splainin’ as we go, Lucy…
Let’s take a look at the charts.
S&P 500: SSO = UP, SDS = DOWN
The two symbols above are directional ETFs. If you have a set up and trigger telling you that the market is about to go down, you can buy SDS long and it will rise as the stock market declines.
We use a simple method to determine our trades. The coloured lines on the chart are Exponential Moving Averages: 8, 21, 55.
The trend is revealed to us by the relationship between the blue line (21) and the green (55). In the chart above, the blue is above the green, therefore our set up is an uptrend. Our trigger is either the price or the red (8) crossing the blue. In the case of an uptrend we want them to cross above the blue, which we get.
The reason we are not in a trade is because there was a level of resistance just above our trade point. We needed to have a close above that to act. Not just a rise above the line, a CLOSE. It is a very important distinction.
We shall sit on our hands and wait.
Gold: UP = UGL, GLL = DOWN
We have an open trade for this symbol which represents the rise of gold.
Take a good look at the chart. You can see we again had a pesky level of resistance to deal with, but we had our CLOSE above it. We then placed a STOP-BUY just above the high of the closing-above candle.
We were triggered in. We placed a trailing stop just below support $8.44 below the trade entry point.
The high on Friday of $72.39 has anchored our stop-loss at $63.95. If the price continues to rise, so will the trailing stop.
This trade, as with the others in this round-up, were entered as events unfolded. You can scroll down to previous editions of this blog to verify if you wish. This is not a case of looking back and cherry picking trades. We are taking everything our process kicks out. This is an objective process that has taken us out of the decision making. As soon as you start deciding whether or not to take trades, you are now in the subjective trading world. If you want success, you take ALL trades and remain with us in the world of trades.
Oil: UCO = UP, SCO = DOWN
Oil has been struggling to break out of a basing pattern. We need it to close above the zone of resistance you can see on the chart.
If that happens we may be in even though the blue is below the green. We have an exceptional case card we can play. As with all trades, they are detailed here if triggered. Including position size stop, risk level, etc.
This is another sit on your hands instrument.
20 year treasuries: UBT = UP, TBT = DOWN
This is another open trade. You can see in the chart all the components: 21 EMA (blue) above the 55 EMA (green) and the 8 EMA (red) has crossed above the blue to trigger our trade. You can see the level of resistance that existed for a previous trade that was stopped out after a mysterious price movement. It is why we use STOPS for ALL our trades – without fail!
The trailing stop is $16.04 behind the market price. The high Friday of $143.38 anchored the stop at $127.34.
Dollar Index: UDN = DOWN, UUP = UP
The Dollar index is a battle between the U.S. dollar and a basket of global currencies. When the price rises it is because the U.S. dollar is gaining strength against the basket, when it goes down, the opposite.
To the chart, Robin…
Since this is the down symbol, it means that the U.S. dollar is struggling.
You can see that the moving averages did their work well as did the resistance line. We entered this trade and our sherpa-like trailing stop made base camp .51 behind the trade entry price.
As the price climbed, so did our trailing stop. The high established at $20.88 anchored our stop at $20.37.
In summary, our three open trades are trundling along nicely.
We don’t need our prices to rise much more before the stops are carried above our entry point, which means our trades are risk free. That is a wonderful place to be. Risk free means that if the price falls off of Everest, the worst we can do is break even – always our initial goal.
As it stands the rises in price and the trailing stops have reduced our initial risk amount considerably.
So, once more, all this is described in great detail in my book. Take a look. I have included three videos with the purchase price. The worse you can do is come away with two free books just for taking the time to look.
Any questions, comments, concerns, drop me a line at: firstname.lastname@example.org