Well, here we are again my fine feathered friends, the Weekly Round Up…Welcome!
As you both know, this blog is a continuation of a theoretical trading exercise started in my mammoth best-seller: Basic Trading: ‘ A Beginner’s Guide to Trading and Investing…PROFITABLY!’
Available here with a series of videos:
The portfolio started at $100,000 and traded only five instruments using proxies in the stock market. We employ a very simple moving average cross over system, but adhere strictly to our process. We live in a world of trades as opposed to a trading world.
At the time of writing, the portfolio stands at $138,720.10. A nice return, so far, but as I say repeatedly, we could be still at that level at the end of the year when this blog will cease. The markets move in spurts. We could easily have seen the lot for us for this year. If so, fine. We will not chase anything to make stuff happen, that way lies doom (I may also stop watching Lord of the Rings).
We usually only update this blog when a trade has taken place.
At this time of the week, though, we take a look at all the charts, regardless.
Let’s get started and certain things will be ‘splained as we go along.
S&P 500: SSO = UP, SDS = DOWN. These are two of the ETFs I mentioned. They can be obtained in any account. There is no need to short anything. If you get a signal that the S&P 500 is going to decline, you buy SDS, which will rise like the Dark Knight as the S&P declines.
To the chart, Robin…
You can see from the chart that our EMAs (exponential moving averages) did their work well. The blue (21) was above the green (55) indicating an uptrend – per our rudimentary system. To trade with the trend, which is almost always the best course of action, we need the red EMA (8) or the price to cross above the blue EMA (21) to enter a trade. We were delayed a little because there was a level of resistance, as represented by the black horizontal line. Once we had a close above that level, we placed a stop-buy just above the high of the brave little candle that did the closing. The market then moved past our stop-buy which changed it to a market buy order and we are in.
A trailing stop (protective) was placed just under support, $8.74 under the trade price.
The latest high is $146.75. If we subtract $8.74 from that number we get $138.01. Our purchase price was $140.56. The trailing stop has already eaten up some of our risk.
Gold: UGL = UP, GLL = DOWN
It is almost the same scenario. Yep, deja vu all over again. A level of resistance needed to be conquered and it was, a stop-buy was placed just above that close and the yellow box shows you where this trade was triggered.
We bought at: $65.37. The trailing stop was placed $8.48 below the trade price. The latest high was $83.85. This means our worse case on this one if the price collapses is to be stopped out at $75.37. Which at this point is exactly $10.00 per share profit.
Oil: UCO = UP, SCO = DOWN
Oil has closed above our resistance zone. We have a stop- buy in place at $34.83. If the price for UCO rises above that level, the stop-buy will become a market buy order and we shall be in.
If that happens, details will appear here: position size, stop placement, etc.
20 Year Treasuries: UBT = UP, TBT = DOWN
The same scenario played out here. We purchased at $135.89. The trailing stop was placed just under support at $16.04 below the trade price. The latest high was $147.30, meaning our stop is anchored at, $131.26. We still have a little risk in this one.
Dollar Index: UUP = UP, UDN = DOWN
This is getting repetitive, but same thing again. We entered this trade at $20.67 with a stop placed .51 below the trade price. The latest high for this symbol was: $21.24. So, $21.24 – .51 = $20.73. Since we purchased at $20.67, if there was a total collapse of this stock we would be stopped out with a bit of a profit.
Our conclusion for today is that we find ourselves with open trades in four of the five major sectors we cover and a pending trade for the fifth (oil).
If you have any questions about the above or the investing world at all, please drop me a line: charlesgoddard2020@gmail .com.