This blog is a theoretical trading exercise that started in my mammoth best seller: Basic Trading: ‘ A Beginner’s Guide to Trading and Investing…PROFITABLY!’
Available by clicking here: https://abeginnersguidetotradingandinvesting.gr8.com/offer_page.html
And has been continued on this page.
I only report trades during the week: whether we are buying or selling, position size, stops, profit or loss and revised portfolio balance.
We have one today as we were stopped out of our gold position. The other three open positions all took a hit, but none of them enough to stop us out.
Let’s look at the chart…
UGL is the stock market proxy for gold (UP). We were triggered into our trade at the yellow box: $65.37. At the time we placed a trailing-stop just under support at $8.48 under the trade price.
A trailing stop follows the price up like a faithful Sherpa. If the price falls back, the stop is anchored in place, as in the case of UGL at $8.48 under the highest price achieved after purchase.
The highest price was $83.85 – stop of $8.48 = stop out at $75.37. I am no Jethro, but when I finished ciphering I reckoned the profit equalled exactly $10 profit for each of the 200 shares we purchased which equals a total profit on this trade of $2,000.
Our portfolio which started January 1st, 2020 at $100,000 now stands at: $140,720.10.
Our next step is to wait and see what happens. If UGL turns and crosses back across the blue EMA (21), we would look to get back in again. Our problem is overhead supply. This is created by the folks that bought on the way up and are currently holding losing positions.
They will want to get out as the price reaches (if) their buy-in price. This is called resistance. We would want that selling pressure to dissipate before we buy again. That price would be somewhere around $83.
That does it for now. Drop me a line if you have any questions about the foregoing, or the trading world at all.