February 28, 2015
February 19, 2015
FPHAX with 5.6% in 34 days
Nice trade that tracked pretty well to plan, with 5.6% profit in 34 trading days.
I was especially happy of how the trade conformed to my plan of buying at RSI 20 and selling at RSI 80. These upper and lower limits are indicated by the yellow lines on the RSI study.
According to Investopedia, Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.
Stocks are vibrational. The follow a general trend, and then vibrate above it and below it. If they go too high, they pull back. RSI measures the strength of the pull. It works a little like bollinger bands with less guesswork.
In my words, it tells you how strong the rubber band is pulled away from the longer term trend. If RSI is under 20, or over 80, a spring back is likely. If its over 90, sell for sure. Under 10, and it's a once in a year buying opportunity in mutual fund. Just be careful, RSI will still oscillate even when the trend is long term down.
I recently adjusted my RSI settings to be more conservative. They were previously a very aggressive 10 and 90, which means I was missing too many opportunities at the bottom end and waiting to long at the top end.
Note that I use an RSI interval of 5 days. I experimented with this interval to try and get maximum correlation with the price variation. I first added an RSI-7 study to my trading layout after attending a seminar at the Online Trading Academy. I prefer 5 as trends are more visible.
The blue dashed lines are my rough trend lines, the green dotted line the actual trade.
Annotating graphs is a way to clarify your thinking and the rules that you are trading by. It takes the emotions out and lets you treat fine tune your technical analysis approach.
You can see on the graph below, RSI is giving a much clearer signal than anything else about when to enter and exit the trade. If you had timed each oscillation strictly using the 20/80 rule, you would have made around $6 per share profit while the overall stock moved only about $2.50. Plus, your money would have only been invested about 60% of the duration of the 'buy and hope' investor.
I was especially happy of how the trade conformed to my plan of buying at RSI 20 and selling at RSI 80. These upper and lower limits are indicated by the yellow lines on the RSI study.
According to Investopedia, Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.
Stocks are vibrational. The follow a general trend, and then vibrate above it and below it. If they go too high, they pull back. RSI measures the strength of the pull. It works a little like bollinger bands with less guesswork.
In my words, it tells you how strong the rubber band is pulled away from the longer term trend. If RSI is under 20, or over 80, a spring back is likely. If its over 90, sell for sure. Under 10, and it's a once in a year buying opportunity in mutual fund. Just be careful, RSI will still oscillate even when the trend is long term down.
I recently adjusted my RSI settings to be more conservative. They were previously a very aggressive 10 and 90, which means I was missing too many opportunities at the bottom end and waiting to long at the top end.
Note that I use an RSI interval of 5 days. I experimented with this interval to try and get maximum correlation with the price variation. I first added an RSI-7 study to my trading layout after attending a seminar at the Online Trading Academy. I prefer 5 as trends are more visible.
The blue dashed lines are my rough trend lines, the green dotted line the actual trade.
Annotating graphs is a way to clarify your thinking and the rules that you are trading by. It takes the emotions out and lets you treat fine tune your technical analysis approach.
You can see on the graph below, RSI is giving a much clearer signal than anything else about when to enter and exit the trade. If you had timed each oscillation strictly using the 20/80 rule, you would have made around $6 per share profit while the overall stock moved only about $2.50. Plus, your money would have only been invested about 60% of the duration of the 'buy and hope' investor.
February 17, 2015
FSDPX (finally!) with 1.3% and 5.5% profit
This was a long complicated exit strategy to get myself out of a bad trade.
The original position was open at $85.81. This was a losing trade for a long time by my standards. This position closed only at a 1.3% profit because of a dividend payment. The dividend was partly what caused the steep dropoff in price in October.
In between was another profitable trade from $80.12 to $83.56. (4.3% in 26 trading days)
With a big loss on the original trade, I bought back at $77.27 to try and neutralize the loss. Buy timing was indicated by RSI at 18, a bounce off the lower bollinger band. In hindsight a little early.
The final trade ended going up nicely, with 5.2% profit in 41 trading days.
RSI on the daily chart is at 97, so expect this to drop back this week.
I think I will stay clear of this fund for a while. The whole thing was a bit exhausting.1
February 5, 2015
FSHOX 4.8% in 30 days
This trend may continue all the way up to the upper bollinger band....or it may not. Volume indicates the trend has still more to run, but with a RSI of 80 and such a strong run this week, it may drop off just as sharply.
Closing at the top of a big green candle with a nice profit for 30 trading days.
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