Sticking to the plan
Over the last few years, I've begun to trade in a much shorter time frame and my results have suffered. The idea with this blog was to help me to focus on the type of trading that has always suited me and which has been successful and profitable. That is to concentrate on swings; moves which might take a few days or a couple of weeks.
I realised that I'd started the blog but hadn't changed my trading. So I've changed the title from Trade of the day to Trading Calmly to more accurately describe what I'm looking for.
It can be tricky to change patterns but I'll be moving to an approach which was once habitual for me.
11.41 am This morning has been kind to me with the overnight long in LNK pretty much unchanged while MIN has recovered some of yesterday's losses to be back around 1100. Meanwhile, hedges by way of shorts in FMG and ORG are down by 3.8% and 1.7% respectively.
The top 200 index is lower by 79 points and right back to 5680. There have been three recent lows in the market where there has been a bounce from these levels broadly. However, my expectation is that this is a failure and the index could test 5600 quite soon.
It seems to have traced out a pennant shape and the failure today should see new short term lows.
I've been thinking about the long position I have in MIN and have some reservations. My aim is to enter trades fairly close to the start of a swing and ride the move. In this case, I was chasing momentum and the possibility of a breakout. With that in mind, my inclination is to exit later today unless the stock does break out. Here's the current state of play.
There was quite a common pattern at the end of June where new lows were made which were quickly rejected. An aggressive entry would have been around the reversal pattern with a close in the 950s. This is obviously with the benefit of hindsight but the same sort of pattern had played out in FMG and S32 a couple of days earlier.
1.56 pm The market has bounced cautiously but still lower by 60 points.
One stock I've been buying carefully is Independence Group. The weekly chart shows that the stock may be forming a higher low after an initial bounce which began in early May. This rally to 363 overlapped previous lows which implies that the downtrend may be over. This week's high, which was 334 yesterday, broke through the high of the previous week so we could have seen the low.
The company is a diversified miner, well capitalised and it is bringing the Nova nickel mine to full production this financial year. Even with a subdued nickel price and a lack of clarity with mining policy in Asia this low cost mine will be a big money spinner for IGO. Of course, this is no secret, but as the increase in cash flow draws closer the stock could well rally.
The daily chart is plausible and there has been some positive price action with a little three wave advance. I think it's basing but it has been a weak performance today and I'd like to see it hold last Friday's low of 311.
3.44 pm The strength of the rally - down 48 points now - has surprised me so I've revised my view from expecting another leg down to 5600 to having no opinion.
MIN is near the day's high at 1118. I've sold half and I'll keep half as I'm not sure what I think.
Lithium stocks have rallied hard this week but Orocobre has lagged. The weekly has turned up and the daily is pretty strong. I didn't pull the trigger at lower levels earlier today but have bought a few at 378 as it has gathered strength as the day goes on.
It's near enough to the swing lows for the risk/reward to be acceptable. A reasonable leg up might take it to 420. I haven't gone all in as the entry could have been better.
I bought back half of the short in FMG at good levels and will leave the rest.
BTT is a hedging short. It's weak in its own right but a fairly short term trade.
I realised that I'd started the blog but hadn't changed my trading. So I've changed the title from Trade of the day to Trading Calmly to more accurately describe what I'm looking for.
It can be tricky to change patterns but I'll be moving to an approach which was once habitual for me.
11.41 am This morning has been kind to me with the overnight long in LNK pretty much unchanged while MIN has recovered some of yesterday's losses to be back around 1100. Meanwhile, hedges by way of shorts in FMG and ORG are down by 3.8% and 1.7% respectively.
The top 200 index is lower by 79 points and right back to 5680. There have been three recent lows in the market where there has been a bounce from these levels broadly. However, my expectation is that this is a failure and the index could test 5600 quite soon.
I've been thinking about the long position I have in MIN and have some reservations. My aim is to enter trades fairly close to the start of a swing and ride the move. In this case, I was chasing momentum and the possibility of a breakout. With that in mind, my inclination is to exit later today unless the stock does break out. Here's the current state of play.
1.56 pm The market has bounced cautiously but still lower by 60 points.
One stock I've been buying carefully is Independence Group. The weekly chart shows that the stock may be forming a higher low after an initial bounce which began in early May. This rally to 363 overlapped previous lows which implies that the downtrend may be over. This week's high, which was 334 yesterday, broke through the high of the previous week so we could have seen the low.
The company is a diversified miner, well capitalised and it is bringing the Nova nickel mine to full production this financial year. Even with a subdued nickel price and a lack of clarity with mining policy in Asia this low cost mine will be a big money spinner for IGO. Of course, this is no secret, but as the increase in cash flow draws closer the stock could well rally.
The daily chart is plausible and there has been some positive price action with a little three wave advance. I think it's basing but it has been a weak performance today and I'd like to see it hold last Friday's low of 311.
3.44 pm The strength of the rally - down 48 points now - has surprised me so I've revised my view from expecting another leg down to 5600 to having no opinion.
MIN is near the day's high at 1118. I've sold half and I'll keep half as I'm not sure what I think.
Lithium stocks have rallied hard this week but Orocobre has lagged. The weekly has turned up and the daily is pretty strong. I didn't pull the trigger at lower levels earlier today but have bought a few at 378 as it has gathered strength as the day goes on.
It's near enough to the swing lows for the risk/reward to be acceptable. A reasonable leg up might take it to 420. I haven't gone all in as the entry could have been better.
I bought back half of the short in FMG at good levels and will leave the rest.
BTT is a hedging short. It's weak in its own right but a fairly short term trade.
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