The Home Trading Blog

It’s been a month since the last update and the market hasn’t really changed that much. We are moving sideways since the last major decline and waiting how the situation in Europe develops over the coming months. To be honest I am quite happy about this as we are still on holidays and the way it looks I haven’t missed any buying opportunities. We have just come back from the beautiful Lago di Garda in Italy, which brought me back to the days where I went there a couple of times a year as it is relatively close to Germany. Lots of sunshine and pizza that tastes like real pizza plus plenty of Gelato – who cares what the market is doing!

Anyway after receiving a couple of messages if the blog is still active I decided to see how the portfolio was doing and apart from two more sells there wasn’t any activity. As mentioned in the last update ILU had two closes below the uptrend band and we sold it on the 15^th August for a total profit of 176%. If I had bought back the half that got sold early on (profit taking) and adding to the position along the way, the profit would have been much higher. I will keep a closer look at this in future. The second was DOW, which stopped us out last week for a loss of 15%.

The transactions were:

15^th August: Sell 1370 ILU at 15.93 for a profit of 176%
5^th September: Sell 2584 DOW at 3.52 for a loss of 15%

I now have most of the ASX100 stocks in a confirmed downtrend (according to the Home Study Course) and haven’t identified any buys for this week.

The portfolio as of 9^th September 2011 is

Back on to the market rollercoaster ride. At the start of the week the markets continued to move lower with momentum, but in the end recovered much of the earlier losses. In don’t think I have ever seen that many big bullish pin bars (open and close at top of the bar) when going through the stocks of the week. Still too early to say if we have found the bottom yet (that’s my point of view).

In times like this it is easy to get emotional about the market and to feel like the market has turned against you. Let me tell you this is the natural cycle of the market and even moves like this present lots of opportunity to make money for people that keep their cool. I know this is easier said than done. The actual opportunity to use this period to make nice profits may not come immediately and it might take weeks, months or even years for you to benefit from this move.

What I mean is not part of the Home Study Course and I won’t elaborate too much at the moment, but if you understand what price action is, it is definitely worthwhile to watch your bars when price returns back to any major low or in the current case to big moves up or down.

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It’s been a difficult year thus for to make profits following the Home Study Course (HSC). This goes hand in hand with the Australian share market as it is just not getting any real momentum and while the index is moving slowly higher it is more in a sideways movement. Most trades that we exited this year, were losers. For anyone just starting off with the HSC I would recommend to look for trades that carry less than 15% risk and possibly enter trades with less money than you would otherwise. Don’t get discouraged though. The market will pick up and you want to be ready for this.

It is important to cut the losers and on the other hand let the winners run. Take a look at ILU, which is up by almost 300% since we bought it. Whilst the Australian share market finished the week lower the profit of the open positions are up to over 14% again. This is mainly due to the fact that we got stopped out of two positions during the week with one of them (JHX) incurring the maximum 15% loss. This brings down the profit of our closed positions to 8.5%. Again this is not the true return on investment if you would reinvest your earnings, this figure would be much higher.

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The Australian share market continued its strong run and we are almost at the high from February again. The blog portfolio is following this strong showing and our profit in the open positions is up to almost 13%. The main driver here is ILU (Iluka Resources Ltd) which posted another healthy gain for the week. At moments like this you look back and wonder why on earth did I take profits that early and more importantly why didn’t I use any of the Add positions triggered. But still I am happy to have some money in the bank already. ILU is currently up more than 260% from the original purchase price.

Based on the Home Study Course (HSC) Basic Trading course I have identified 3 stocks in the Aussie 100 as a buy for the week. They are: NAB (National Australia Bank), WBC (Westpac Banking) and carry over from last week NWS. NAB and WBC have been buys earlier and are already in the portfolio. If the current run continues we’ll have many more buy signals being triggered over the coming weeks.

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Last week we saw Australian shares posted their worst week in three months. We saw a similar picture in the major international markets and our blog portfolio followed the downward trend as well. With ILU (Iluka Resources) and PDN (Paladin Energy) we still had some strong performers helping to limit the overall loss. The current positions are still up by 7.52%.

As mentioned last week we have added CPU (Computershare Ltd) and MQG (Maquarie Group Limited) to bring the total number of positions up to 20 again. Both finished the week lower though with CPU retreating 6.29%. Next week we’ll be selling JBH (JB Hi-Fi) and DJS (David Jones Ltd) as both had two closes below their uptrend band.

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Excuse me for sounding like a broken record, but we are still in a period of uncertainty in the market. What initially looked like a good week (looking at the international markets), ended with a sharp fall of the US and European markets on Friday. This meant the major markets finished the week slightly down compared to the week before.

However the Australian market and our portfolio finished the week marginally up compared to the week before. Most stocks in the portfolio didn’t move much with the exception of ILU. Last week’s profit on ILU was 37.81 % compared to when the stock was bought and this week’s profit is 48.77 %. A shame that we sold half of our holdings some time back. On the other hand, I am quite happy to have some profits secured. You never know how the market will be moving and most analysis and future prediction is made based on probability. One of the biggest mistakes an investor can make is not to lock in profit. I have spoken to many people that have seen a 30% profit turn into a losing trade and this really hurts. I happily accept the fact that I can’t be correct in each of my trades and that a minority of them end up being losing trades. What I can’t accept is having made some good money on a trade and then losing it all.

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