According to the last Taking Stock post, only 4 units out of a total portfolio of nearly 42 units is kept aside for trading - and I wonder whether it is worth my time to actively explore short to medium term trading. Since almost all of my portfolio are in tax deferred accounts, I can take a very long term view of them - so I wonder whether it would be best for me to focus only on asset-allocation type of investing and buy-and-forget type of investing. Let go of trend-trading.
Although I am am sure that I can be successful doing trend trading, it perhaps needs more time on a more consistent basis than I have to spare.
I am going to look for more long term targets from now on. I need to get those 4 units working for me. The task now is to identify four good stocks as targets for these 4 units at one unit each. I currently have two dividend plays (INTC, VZ) and one combined play (DEO) stocks. It would make sense to look for some growth plays next.
On a related note, I need to clearly articulate my exit strategies in face of market upheaval. Which accounts do I continue to stay invested in an weather the storm? Which accounts I use to strategically exit with intention to re-enter at friendlier times? In such cases, what will be my exit and entry points? I will tackle these in a subsequent post.
Showing posts with label Trend Trading. Show all posts
Showing posts with label Trend Trading. Show all posts
Wednesday, December 5, 2012
Tuesday, November 20, 2012
Market Knows Best
Following my earlier discussion of INTC, I am reminded of my previous folly of thinking that I can outwit the market. I would see a stock with great fundamentals, that is going down, and would attempt to go against the market. I would win some time but would lose more often.
I finally hit rock bottom while trying to catch a falling knife with amazing fundamentals (low PE, good dividends, great growth prospects). I was so sure in my evaluation of the company that I continued to buy as the stock kept going down. By the time I reached my risk tolerance and got out, I had lost big - BIG. That was the end of my investing based on fundamentals. Since then I got into either do a buy-and-forget or when you trade, trade based solely on price and price history - no other factor - otherwise known as Trend Trading.
Using only price to make trading decisions is not as arbitrary as it sounds. The Efficient Market Hypothesis does state that all the information available to the market is already baked into the price - so there is no sustained advantage to be gained from looking at any other factor. Plus, in today's hyper-information age, the Market as a whole surely has much more information than a single investor, however gifted.
So, buy-and-forget for long term investing; only price based trend trading for short and medium term trading. This seems to be working for now.
Picasso, Guernica
I finally hit rock bottom while trying to catch a falling knife with amazing fundamentals (low PE, good dividends, great growth prospects). I was so sure in my evaluation of the company that I continued to buy as the stock kept going down. By the time I reached my risk tolerance and got out, I had lost big - BIG. That was the end of my investing based on fundamentals. Since then I got into either do a buy-and-forget or when you trade, trade based solely on price and price history - no other factor - otherwise known as Trend Trading.
Using only price to make trading decisions is not as arbitrary as it sounds. The Efficient Market Hypothesis does state that all the information available to the market is already baked into the price - so there is no sustained advantage to be gained from looking at any other factor. Plus, in today's hyper-information age, the Market as a whole surely has much more information than a single investor, however gifted.
So, buy-and-forget for long term investing; only price based trend trading for short and medium term trading. This seems to be working for now.
Picasso, Guernica
Monday, November 19, 2012
EWZ
I have been following the downward trend in EWZ for some time - looking for a momentum shift so that I could get in. I might be close to that - as the chart below shows:
EWZ has older support at around 50 - so it seems like a good situation to enter. I am going to let it go today and if EWZ is still in the positive tomorrow, then I am getting in with a planned exit for when it breaks the older support. The support can be seen in the 1Year chart below:
Tomorrow will tell us what to do about EWZ. This is a holiday shortened week and I am reluctant to pull the trigger in this short week - it all depends on how convincing the evidence is for EWZ's turnaround tomorrow. Essentially, I am looking for EWZ to have an upward slope in PSAR, be above EMA(20) and have positive MACD.
Manet, Bar at the Folies Bergères
EWZ has older support at around 50 - so it seems like a good situation to enter. I am going to let it go today and if EWZ is still in the positive tomorrow, then I am getting in with a planned exit for when it breaks the older support. The support can be seen in the 1Year chart below:
Tomorrow will tell us what to do about EWZ. This is a holiday shortened week and I am reluctant to pull the trigger in this short week - it all depends on how convincing the evidence is for EWZ's turnaround tomorrow. Essentially, I am looking for EWZ to have an upward slope in PSAR, be above EMA(20) and have positive MACD.
Manet, Bar at the Folies Bergères
Sunday, November 18, 2012
Dali
This is a Trend-Trading account. The current holding is VNM.
I entered at $15.65 on 11/15/2012. The current chart is below:
I guess I am betting on a current floor of $15.50. Despite the recent downward trend, it seems to be finding a floor. PSAR is pointing up, MACD is going positive. VNM found a floor at 14.40 an year back.
Currently, I am operating under a very tight exit. I will look to get out at around $15.30. If VNM bounces from the support level of 14.40 - then I will look to get back in - if not then I will look for it to find a more sustainable bottom.
Dali - Persistence of Memory, 1931
I entered at $15.65 on 11/15/2012. The current chart is below:
I guess I am betting on a current floor of $15.50. Despite the recent downward trend, it seems to be finding a floor. PSAR is pointing up, MACD is going positive. VNM found a floor at 14.40 an year back.
Currently, I am operating under a very tight exit. I will look to get out at around $15.30. If VNM bounces from the support level of 14.40 - then I will look to get back in - if not then I will look for it to find a more sustainable bottom.
Dali - Persistence of Memory, 1931
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