My Tailored Trading Journey

[TheTailoredTrader]

Hi,

I will be documenting my tailored approach to trading here. I have previously been a member of T2W but since that account is very old I decided to open a new one.

I have called myself TheTailoredTrader cause I am documenting my tailored approach. I never had the money to do it until now. and even that is not a lot at £1000 per month approx. I trade the FTSE 250 and below including AIM. I also will be documenting my Spreadbetting. Again these positions are small ranging from £1 per point to around £5 per point max.

I have a blog which I will link to in the next few days as it is still under construction, contains all the proof one needs like screenshots of the BUY and SELLs and entry points.

What is my goal?

- I want to buy a house, well at least a deposit of £150,000 over the next 9 years with a total portfolio of between £400,000 and £500,000. I plan to invest about £10,000 per year.

What do I presently have in my portfolio?
Stocks:
- KNOS bought at 199.98
- HWDN bought at 480

Spreadbets
- Bought KNOS at 229.33, £1.75 per point
- Bought KNOS at 215, £2.5 per point
- Bought SOPH at 248.88, £2 per point. Made a mistake here that I will outline. Getting rid tomorrow after realising it and down aswell. Plan to replace with WIZZ @ £1 per point.

I will provide better updates in the coming days. Feedback is very much welcome. I plane to update every Wednesday evening and give a monthly portfolio update on the first of every month.

Thanks,

TTT


Mods
- If you wish to know my old account please let me know and I will be happy to supply the details.
- My blog contains nothing that I can sell, and I am not providing or intend to provide advice in any shape or form. I am a newbie!! It is just a record of my trading journey. I am more likely to get better feedback here, hence the trading journal.

 

[f2calv]

Spreadbets
- Bought KNOS at 229.33, £1.75 per point
- Bought KNOS at 215, £2.5 per point

Averaging down already?

 

[TheTailoredTrader]

Hi f2calv,

Nope. There was profit taking at that level. Also, there was a lot of movement 8% down in the 2 days before entry into the small cap index which caused the drop. I believe its called a tree shake. It was not done as an average down by any means. I went long again seeing value there.

My targets are 260 and 280 for both and have different level stops for both.

Have a sell order executed for Severn Trent at 2200 aswell since last night.

 

[tomorton]

Thanks for sharing your trades. These look like swing trades but I'm sure TA isn't your only criteria for entry?

Also, what about exit strategy/ies?

 

[TheTailoredTrader]

Hi tomorton,

You're welcome. I would consider myself mainly fundamental with a small amount of tech that needs to be improved. KNOS and HWDN were bought on specific criteria like Pre-tax profit/Mkt Cap Ratio, Debt levels, EPS, earnings, ROE etc. I used TA to pick a base for buying off in these trades and checking how they were trending, but thats all I used TA for with them. Its all outlined in the link I will share and hopefully it will be blog setup will be finished soon. I try to buy high and sell higher. So look for a 52 week breakout and go from there.

Severn is a pure TA play on a trend using Support and Resistance. I have a stop and limit in should it become active at 2200. I would rarely do this hence why I am risking such a small amount. I play defense a lot and limit myself to an 8-10% loss. I make sure to find my bail out point before profit.

To be honest my exit strategies still require a lot of work. i will give a share a 10/12% level of correction once a 15% profit has been made. I am studying Price/Volume and exhaustion gaps at present for an exit. I also track this with the general sector move. I am looking a bit at Bollinger bands aswell but if you have any idea of places to point my towards some other info that may be useful I would be happy to study it.

FWIW, I placed HWDN on the 24/07/15 and KNOS on 26/08/15 +/-3 days as I cant see my platform atm.

Thanks,

TTT

 

[tomorton]

Thanks TTT, what you're saying is making sense with your trades now, thanks. I don't look at FA any more, it inherently ignores or at least under-emphasises share price, which is what the world says, not just what the company's FD says. But you can still make money this way obviously.

But exits are my biggest problem. Again and again I find total unrealised profit rides up nicely without any of the positions showing convincing TA reasons to exit, then it falls back even faster and scares me out of everything. Grrr! (to use a technical term).

 

[TheTailoredTrader]

Thanks TTT, what you're saying is making sense with your trades now, thanks. I don't look at FA any more, it inherently ignores or at least under-emphasises share price, which is what the world says, not just what the company's FD says. But you can still make money this way obviously.

But exits are my biggest problem. Again and again I find total unrealised profit rides up nicely without any of the positions showing convincing TA reasons to exit, then it falls back even faster and scares me out of everything. Grrr! (to use a technical term).

To you keep a stop loss in place?

I remember a quote form Market wizards form one of the very successful ones. "My problem is, I buy to late and sell too early". Calling the top and bottoms can be near impossible it seems but I try not to worry about a point or two.

Thanks for the reply btw.

 

[tomorton]

Yes, always have initial stop loss in place as the trade opens, based on standard TA.

Typically every 2-3 weeks I find my basket of SB positions shows a nice unrealised profit which I then burn off waiting for a TA exit signal on each individual trade, that never comes. I'm starting to think I should ignore TA once the basket's running, take the early gain on the whole bunch and come back after a week off.

 

[NVP]

Yes, always have initial stop loss in place as the trade opens, based on standard TA.

Typically every 2-3 weeks I find my basket of SB positions shows a nice unrealised profit which I then burn off waiting for a TA exit signal on each individual trade, that never comes. I'm starting to think I should ignore TA once the basket's running, take the early gain on the whole bunch and come back after a week off.

As soon as you think this tom the opposite will happen ......

 

[0007]

Yes, always have initial stop loss in place as the trade opens, based on standard TA.

Typically every 2-3 weeks I find my basket of SB positions shows a nice unrealised profit which I then burn off waiting for a TA exit signal on each individual trade, that never comes. I'm starting to think I should ignore TA once the basket's running, take the early gain on the whole bunch and come back after a week off.

That has often been my experience too! If the profits are looking good I now tend to grab them while they're there and if trade itself is still looking good I re-enter. Goes against the grain of letting your profits run but seems to work better for me.

 

[tomorton]

That has often been my experience too! If the profits are looking good I now tend to grab them while they're there and if trade itself is still looking good I re-enter. Goes against the grain of letting your profits run but seems to work better for me.

Goes against the grain - yes exactly, or conventional wisdom, that's why I'm not doing it. But if the crowd is losing, the best way to lose is do the same as the crowd.

 

[barjon]

Yes, always have initial stop loss in place as the trade opens, based on standard TA.

Typically every 2-3 weeks I find my basket of SB positions shows a nice unrealised profit which I then burn off waiting for a TA exit signal on each individual trade, that never comes. I'm starting to think I should ignore TA once the basket's running, take the early gain on the whole bunch and come back after a week off.

Hi Tomo,

If you have an idea of what you need to take from a trade to keep your account ticking along nicely (like shopkeepers setting their price knowing what proportion of their stock they are likely to sell and what costs they need to cover) you could make sure you always get that if your profit starts to "come back".

For example, I know that I need to gain 1.5:1 reward to risk on successful trades to keep my account moving along satisfactorily. So, I won't take a trade unless I see 1.5:1 there (retracement back to last high(low) in my case) and I will protect that 1.5:1 level if price comes back to it when it's gone past it.

 

[tomorton]

Hi Tomo,

If you have an idea of what you need to take from a trade to keep your account ticking along nicely (like shopkeepers setting their price knowing what proportion of their stock they are likely to sell and what costs they need to cover) you could make sure you always get that if your profit starts to "come back".

For example, I know that I need to gain 1.5:1 reward to risk on successful trades to keep my account moving along satisfactorily. So, I won't take a trade unless I see 1.5:1 there (retracement back to last high(low) in my case) and I will protect that 1.5:1 level if price comes back to it when it's gone past it.

Sounds pragmatic jon, I do check to make sure there are potential gains after entry, and based on TA like yourself, not just the £ I'd like. I find few hit my initial stop but many hit the same sized trailed stop if I move this to b/e. Not only that, I seem to find most of my forex pairs, although different currencies, although mixed long and short, move into then out of profit at the same times.

This made me wonder about cycles in forex and I had a quick look at weekly bars earlier. There are 15 major pairs I trade. Checked to see if each pair acted "normally" in last few weeks - by normally I mean price rose if it started above the 200EMA, or fell if it started below the 200EMA. The week before last, 12 out of the 15 acted "normally", and my unrealised profit was well up: this week, only 4 have moved normally, and profits were cut right back. not suprising the profits went this way I suppose as I only go long above the 200 and only short below it. But I'm wondering if this behaviour oscillates between extremes. And if on a regular time period.

 

[TheTailoredTrader]

My Spreadbet on Severn Trent based on the trend didn't work.

I had a sell order at 2200 when the price was at 2230. It hit 2199 on Friday about 3.45pm and activated my short. Was the lowest of the day but had stop at 2230 and was hit this morning.

Shows the necessity of the stop as it has had a high of 2253 and at 2241 currently. Was only £1 per point so not too bad and good to learn with small amounts at risk.

Bought IvanHoff books on swing trading. I like them but they could do with more explanation on the charts.



Thanks,

TTT

 

[TheTailoredTrader]

My blog has finally gone live.

Few new updates needed but feedback would be great. Will fill in the newest updates over the next few days.

It is:

http://www.thetailoredtrader.co.uk

Thanks,

TTT

 

[TheTailoredTrader]

Below I have attached a screenshot of my Shares Portfolio for the 1st of October 2015. There FTSE figures were taken from IG on the evening of the 1st and the Share Prices were the closes of each share on the same day.

The main points to note are:

• Bought HWDN on the 24/07/15,Gain of 1.34%
• Bought KNOS on the 26/08/15, Gain of 9.58%
• PnL excl. costs, £110.43 or 5.46%
• PnL incl. costs. £75.97 or 3.72%
• FTSE 100 change since 24/07/15 of 11.05%*

Screenshots of trade proof in my blog http://www.thetailoredtrader.co.uk

Would appreciate feedback on it.
Thanks,

TTT

 

[TheTailoredTrader]

My First Realised Loss

My first loss in this tailored journey was on spreadbet on SOPHOS (SOPH.L). I went long on a MAR-16 contract at £2.50 a point. Massive money! My loss for this trade was the spread of 3 points (it is wider the further out the contract) which was £7.50 plus the amount the trade went down (P/L) £35.43 as seen below. My total loss came to £42.93.

Why did I place the SpreadBet?
- It had a Market Cap to Pre-Tax Profit of 3.5
- The story of moving into cloud anti-virus and expansion was exciting
- Movement into EMEA markets
- Little Debt
- Good Return on Equity
- Moved to Small Cap Index
- Some Institutional Support
- Rising Profits and Revenue
These are just a number of the reasons I decided to go long. Once the research was complete I needed to pick the amount per point to be placed and where I was going to place my stop. With normal positions I currently buy £1,000 worth of shares, giving me an exposure of £1,000. I decided that since the maximum I was willing to risk is £1,000 per share, the maximum exposure I would feel comfortable with in a spreadbet would be the same figure.
With an approximate price of 250p, the amount I would have been willing to risk £4 per point (250*4 =1,000) should the share crash. As this was my first spreadbet I decided to be more careful and only risk £2.50.
Before this I needed to place my stop. My risk is usually set at 8% below the current price or just below an established support base. From the chart below, I concluded there to be support at 240 and 230. I placed my stop at 228 which is 8% below my entry price 248.88. All was going well and I pressed BUY. To be honest I wasn't necessarily excited. I was a bit relieved that my strategy found a share.

What went Wrong?
A number of things went wrong. Firstly, I mistook Gross Profit for Pre-Tax Profit. When I re-did the calculation of Mkt. Cap/Pre-Tax Profit with the correct figure for pre-tax profit it gave a ratio of 48!!!Next I looked at the chart and it is obviously downward trending which is another big NO! I still wonder how I missed that one. Thirdly, I didn't buy from an established base. Finally, it didn't buy on the back of a 52 week high or 50 high.
What are the Positives?
I sold at 234.71 which is 6 points above my stop loss. I got out when I knew I was wrong and didn't applying my strategy correctly. There was minor hesitation of about 20 minutes but I got out and to be honest I am quite proud of it. A number of the thoughts about leaving it there and see what happens or it could go up crossed my mind but only briefly. I have read the mistakes a lot before and since this trade and thankfully they were running around in my head so as not to avoid holding on to the share. There was no major flood of relief, no overly excited feelings, just a small bit of happiness that I realised I was wrong and got out before any more damage could have happened. I know it would have only been another £15 (6*£2.50) but from my researching it is about minimising my losses and protecting my capital. I would also have been annoyed if my first profit was from a mistake!

Screenshots are on my blog http://www.thetailoredtrader.co.uk

Thanks,

TTT

 

[TheTailoredTrader]

i put on a £5 per point spreadbet on Next Fifteen (NFC.L) yesterday afternoon with the funds left from my loss above. Will document soon.

Thanks,

TTT

 

[TheTailoredTrader]

Timing My Buy

This post is about when I find a share when do I buy or place a spreadbet on. I have a lot more detail in my spreadsheet but these are the main points.

Firstly I am looking to go long the following types of Shares:

1. Stocks that crushes earnings estimates by a wide margin. Price is a catalyst f its own

2. Stock with very high relative strength that breaks out from continuation patterns. Look for stocks that are breaking out of a 52 week high (or at least new 50-day high), from tight bases on a weekly timeframe

3. Recent IPO's

4. Stocks that currently belong to a hot sector

When I have found a share I look at the following things before I buy:

Is the Share in an Uptrend?

Or is there a previous uptrend? I am looking for price momentum that leads ahead of earnings as the anticipation of future earnings often drive investing in growth stocks, not the reality.

Is it at the 52 week high or a min 50 day high?

Is the Industry Trending Upwards?

You will see this as a stocks from the same industry will keep appearing in the 52 week breakouts and check against the relevant composite index

Low Volume Consolidation with Range Contraction

Is there Tight Side Consolidation on below average volume anywhere between 2 and 20 days or Range Consolidation, particularly on low volume just before the breakout? Range contraction may mean that stocks are under accumulation.

Closing prices of the past couple of days are close to one another
Are the closing prices of the last few trading days are very near to one another? Addition to the last point.

Established Base and within 5-10% of the current share price
The vast majority of long-term trends start with a breakout from a new 52 week high, from a proper base. Is there an established base within 5-10% of the current stock price?

Is the Stock Rising?
Has the stock risen more than 10% in last week, 20% in last month or 30% in last quarter?

Moving Average
Are the 50 and 200 day moving averages pointing up?

Price/Volume
Is there a 2% rise in price with a large rise in volume? By volume I mean a doubling of average volume at minimum. I will buy using this criterion if it has hit a 52 week or 50 day breakout with the current price within 5-10% of the last established base.


Thanks,

TTT

 

[tomorton]

Sorry to hear about your Sophos experience but a very interesting read, thank you. In general, its always easier to buy shares already in a uptrend, short shares already in a downtrend - trends tend to continue, that's how they get to be trends. On which point, a share which only IPO-ed in June hasn't had much time, some would say hasn't had enough time, to maker a trend yet: although my chart shows it is now established above the 200EMA, the chart is only 84 days long, so this useful rule of thumb can't give as much help as usual.

Re Sophos specifically, I'm sure you've seen what happened late on 20/10 and since. Though you might have been glad to get out, value seekers might have been glad to get in. Another generality - you get a clearer price action picture the nearer we get to the Close.

A query - why take the March SB? Was a rolling daily SB not offered by your SB firm?