Showing posts with label Closing Long Position. Show all posts
Showing posts with label Closing Long Position. Show all posts
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
November 14, 2014
FSCHX - Poised for a downturn
This is rather retrospective....haven't been posting many trades as Christmas holidays got in the way.
I closed this early as the chart looked like it was poised for a downturn, based on at RSI over 80 and other market conditions at the time.
Target was $156. Profit was 2.6% in 9 days.
Here is the retrospective look. Was I right?
That's why RSI 80 (yellow line on the bottom graph) is the sell signal. Don't hang on too far.. you get greedy. It's better to look for new opportunities than try and squeeze profits out and then get in a panic when you a month's profit disappear see them disappear in a few days
The powers of destruction are always greater than the powers of creation.
Take the profits why you are paying attention, not while you are distracted by falling prices.
I closed this early as the chart looked like it was poised for a downturn, based on at RSI over 80 and other market conditions at the time.
Target was $156. Profit was 2.6% in 9 days.
Here is the retrospective look. Was I right?
That's why RSI 80 (yellow line on the bottom graph) is the sell signal. Don't hang on too far.. you get greedy. It's better to look for new opportunities than try and squeeze profits out and then get in a panic when you a month's profit disappear see them disappear in a few days
The powers of destruction are always greater than the powers of creation.
Take the profits why you are paying attention, not while you are distracted by falling prices.
November 4, 2014
Closing FSCHX 6.0% in 30 days - retrospective
Hindsight shows how well timed this exit was.
A ton of exit signals on this one - confirmed in hindsight:
- Exceeded profit target (blue dotted line to $156)
- Upper bollinger band penetrated with a big runup to the bollinger band that week
- sequence of bars edging closer to the bollinger band
- RSI above 70
- EMA 5 above EMA 13
- MACD 5 (blue) above MACD 13 (yellow)
September 5, 2014
Closing HPQ 7.7% in 9 days
Profiting off earnings. 7.7% in 9 days is definitely a sell.
Sell signal RSI-90
Sell signal RSI-90
March 4, 2014
Closing FSDPX 8.1% in 24 trading days
This trade in Fidelity Select Materials (FSDPX) worked out perfectly - capturing 8.1% in just over a month.
Entry was classic entry on a pullback in a long term uptrend with regular cycles. You can see the overall uptrend as the blue dotted lines on the graph. This trade assumed the uptrend would continue to track within these channels.
Entry signals were the candles penetrating the bollinger band under both the 5 and 13 week EMA lines (pink and green), after a huge reactionary selloff by the market as a whole in January. Call it the 2013 hangover selloff.
MAC-D showed negative, meaning the movement would soon to be to the upside.
RSI of 19 meaning the stock was oversold and had a high chance or returning to its overall trend from the last months.
There was risk that the selloff was the start of a boarder market selloff, but overall market conditions tended to indicate that the overall bull market was continuing.
Sell point was over target price at exactly 90 on the RSI graph, with two green candles penetrating the upper bollinger band, indicating a pull back is highly probable. Watch in the next days for the pullback back to about $85 where the green moving average is.
Effectiveness of this trade compared with long term term fund performance:
My trade
8.1% in 1 month
Overall fund performance
20.8 % over 1 yr
10.2 % over 2 yr
12.6% over 10 yrs
Entry was classic entry on a pullback in a long term uptrend with regular cycles. You can see the overall uptrend as the blue dotted lines on the graph. This trade assumed the uptrend would continue to track within these channels.
Entry signals were the candles penetrating the bollinger band under both the 5 and 13 week EMA lines (pink and green), after a huge reactionary selloff by the market as a whole in January. Call it the 2013 hangover selloff.
MAC-D showed negative, meaning the movement would soon to be to the upside.
RSI of 19 meaning the stock was oversold and had a high chance or returning to its overall trend from the last months.
There was risk that the selloff was the start of a boarder market selloff, but overall market conditions tended to indicate that the overall bull market was continuing.
Sell point was over target price at exactly 90 on the RSI graph, with two green candles penetrating the upper bollinger band, indicating a pull back is highly probable. Watch in the next days for the pullback back to about $85 where the green moving average is.
Effectiveness of this trade compared with long term term fund performance:
My trade
8.1% in 1 month
Overall fund performance
20.8 % over 1 yr
10.2 % over 2 yr
12.6% over 10 yrs
February 23, 2014
Closing FIUIX 4.7% profit in 39 days
This FIUIX trade was entered after the EMA- cross (pink crossing green) in an uptrend. MAC-D on the second graph lines were closing in on each other, indicating an uptrend was forming.
The MAC-D lines were about the baseline indicating continuation of the uptrend.
The trade hit my price target of $22.75 after 39 trading days. RSI wasn't indicating a definite sell as it was only at 82. RSI-5 at 90 is my 'Strong sell' level, although if an uptrend is strong you can let it run above 90.
This fund could still go higher, but I was happy to take 4.7% profit.
February 11, 2014
Closing FRESX 5.95% profit in 34 days
This was a nicely timed 401K trade netting 5.95% while the overall market went up and down like a yoyo.
This stock is clearly in a slow downtrend, with several 5 - 15% swings evident in the last eight months. Blue lines on the graph represent potential trend and cyclic structure of the swings. These could be because of dividend payments, I didn't take that into account - the analysis was purely technical. If I managed to get a dividend payment I'll chalk it up to dumb luck.
Buy signal was the bounce off my blue dashed lower trendline on the top graph. Purchase was right on the green 5-day EMA on the weekly chart. The daily chart for these funds has two much chatter going on, but the weekly chart clearly shows the cyclic trends. This fund charges a short term trading redemption fee if the duration is less that 90 days (i.e. 12 bars on the graph), so I had to pay 0.75% to exit where I did. This was worth it considering the cyclic nature of the chart.
The red bars did not penetrate the lower bollinger band, indicating the downtrend was not too dramatic and dangerous. Often the penetration of red candles in the lower bollinger band can signal and accelerating downtrend.
MAC-D was below the line, with a series of red bars diminishing in size, showing the downtrend and slowed and was reversing, and a classic technical trading pattern of the MAC-D cross about to occur. The blue and yellow averages form a closing triangle, signaling an optimum buy point prior to the MAC-D cross.
RSI for the buy point was a little late - already at 45. Optimum entry point when you are trading based on RSI would been down at 10, but this stock turned around before then. And RSI way down at ten could be in a severe downtrend, so caution is required using that indicator alone.
Exit was conservative at $0.35 short of my target exit price. I could have let it run a little further, but the RSI was already 90 on the bottom graph, signaling that the stock is close to a reversal.
Overall market conditions of bullish in a bear market meant that the conservative exit taking 5.95% profit in 34 days was quite good. A buy and hold investor buying this fund in June last year (assuming by luck they bought at the low) would have made the same return in 8 months as this technical trade did in 34 days. A periodic investor in a 401K investing monthly would have probably ended up with a small profit, as the buy points would have varied, with some profitable and others not.
This stock is clearly in a slow downtrend, with several 5 - 15% swings evident in the last eight months. Blue lines on the graph represent potential trend and cyclic structure of the swings. These could be because of dividend payments, I didn't take that into account - the analysis was purely technical. If I managed to get a dividend payment I'll chalk it up to dumb luck.
Buy signal was the bounce off my blue dashed lower trendline on the top graph. Purchase was right on the green 5-day EMA on the weekly chart. The daily chart for these funds has two much chatter going on, but the weekly chart clearly shows the cyclic trends. This fund charges a short term trading redemption fee if the duration is less that 90 days (i.e. 12 bars on the graph), so I had to pay 0.75% to exit where I did. This was worth it considering the cyclic nature of the chart.
The red bars did not penetrate the lower bollinger band, indicating the downtrend was not too dramatic and dangerous. Often the penetration of red candles in the lower bollinger band can signal and accelerating downtrend.
MAC-D was below the line, with a series of red bars diminishing in size, showing the downtrend and slowed and was reversing, and a classic technical trading pattern of the MAC-D cross about to occur. The blue and yellow averages form a closing triangle, signaling an optimum buy point prior to the MAC-D cross.
RSI for the buy point was a little late - already at 45. Optimum entry point when you are trading based on RSI would been down at 10, but this stock turned around before then. And RSI way down at ten could be in a severe downtrend, so caution is required using that indicator alone.
Exit was conservative at $0.35 short of my target exit price. I could have let it run a little further, but the RSI was already 90 on the bottom graph, signaling that the stock is close to a reversal.
Overall market conditions of bullish in a bear market meant that the conservative exit taking 5.95% profit in 34 days was quite good. A buy and hold investor buying this fund in June last year (assuming by luck they bought at the low) would have made the same return in 8 months as this technical trade did in 34 days. A periodic investor in a 401K investing monthly would have probably ended up with a small profit, as the buy points would have varied, with some profitable and others not.
February 26, 2013
FSCSX 11.2% in 51 days
Closed this a couple of weeks ago and haven't had time to catch up.
Market is overbought and the sequester coming up. Closed with 11.2% profit (including the dividend) in 51 trading days.
4 out of 4 profitable trades in FSCSX in 2012, total gain 23%. Not bad for short term gains that are not taxed as short term gains because they are in my 401K....
Market is overbought and the sequester coming up. Closed with 11.2% profit (including the dividend) in 51 trading days.
4 out of 4 profitable trades in FSCSX in 2012, total gain 23%. Not bad for short term gains that are not taxed as short term gains because they are in my 401K....
January 29, 2013
FRESX overbought - Closing Long Position
Closing FRESX long position for similar technical reasons as VGSIX.
6.4% profit over 73 trading days. Zero commission if you have an account with Fidelity
Technical Sell Signals were similar to VGSIX
Technical Sell Signals were similar to VGSIX
- Bollinger band - penetrated by green candles three times - sell signal
- MACD-5 line (blue) is way above the volume bars - sell signal
- RSI-5 above 90 - sell signal
RSI on the monthly chart is at 87, which indicates I could hang on longer to squeeze more out of this rally, but I'd rather take the profit. This trade is in my 401K account, where my emphasis on seeing the account balance go up every month and taking profits when they present themselves, rather than watching the balance go up and down with the market.
Of the last 18 trades in my 401K, 17 were profitable, so the strategy of taking profits seems to be working. Better than the usual 'buy and hope' investing that is encouraged in retirements accounts.
If a 'buy and hope' investor had bought FRESX in 2008, around 5 years ago, they would have made around 6.4% profit over 5 years. They would have seen their investment be at a loss for around 90% of that time. If they'd had the courage to hold to the market bottom in 2009, they would have seen their investment lose 70% of its value within the space of a year, before recovering over the course of the following 4 years.
Through use of technical analysis, this trade made 6.4% profit in under 3 months.
If a 'buy and hope' investor had bought FRESX in 2008, around 5 years ago, they would have made around 6.4% profit over 5 years. They would have seen their investment be at a loss for around 90% of that time. If they'd had the courage to hold to the market bottom in 2009, they would have seen their investment lose 70% of its value within the space of a year, before recovering over the course of the following 4 years.
Through use of technical analysis, this trade made 6.4% profit in under 3 months.
January 24, 2013
VGSIX Overbought - closing Long Position
VGSIX (like most of the market right now) looks oversold based on multiple technical indicators. Closing long position with 7.6% profit over 72 trading days.
Entry was a little early. Should have been a bit more patient.
Technical sell signals
Nice profit. Note to Vanguard. Won't be trading this fund again because it has a high commission - $75 both ways.
Entry was a little early. Should have been a bit more patient.
Technical sell signals
- Bollinger band - penetrated by green candles three times - sell signal
- MACD-5 line (blue) is above the volume bars - sell signal
- RSI-5 above 90 - sell signal
Nice profit. Note to Vanguard. Won't be trading this fund again because it has a high commission - $75 both ways.
January 18, 2013
Sold FSHOX - 5.2% in 30 days and high risk of pullback
Monthly RSI of 94 means high risk of pullback. Sector seems strong, retail investors are piling into the market, time to be cautious and take profits.
This trade was right up the center of the channel marked in red, and 5.2% (including the dividend) in 31 trading days.
Pullbacks always happen faster than profits, and you can't use trailing stops on mutual funds with my broker. Profits in the bank rather than hope when the technicals say the rally is breaking down.
This trade was right up the center of the channel marked in red, and 5.2% (including the dividend) in 31 trading days.
Pullbacks always happen faster than profits, and you can't use trailing stops on mutual funds with my broker. Profits in the bank rather than hope when the technicals say the rally is breaking down.
January 8, 2013
Timing Swing Trades on HPQ
Take your pick: these trades represent how crap I trader I am, or how good?
Trade 1: Entered too late based on the technicals. HP was coming off a ten year low, so I needed some convincing that the bottom really has been reached. HP Discover in Frankfurt did seem to be a success, so the stock jumped strongly. Clearly should have exited several days earlier when the candles were inside the bollinger band. That would have been 5% in 5 days, but I was thinking more along the lines of a long term trade. After the sharp decline on 12/16, I the stock was turning around and about to dive again, so I opted for small profit rather than turn a nice rally into a loser. Turned out the returns on this trade were juiced by the dividend paid on 1/3, giving an actual 2.9% profit in 5 days, which is not bad. The ideal technical entry would have been between 11/16 and 12/3, where the candles are within the green and pink EMA lines.
Trade 2: This trade is still open. Again, not my best entry technically, should have waited a few more days of consolidation. Turns out this second rally is more solid, and currently at 6.7% in 14 days.
Disclaimer: I'm an HP employee, and that helps approximately zip with trying to figure out what how many billions my employer will write off next, and where the stock is going!
Trade 1: Entered too late based on the technicals. HP was coming off a ten year low, so I needed some convincing that the bottom really has been reached. HP Discover in Frankfurt did seem to be a success, so the stock jumped strongly. Clearly should have exited several days earlier when the candles were inside the bollinger band. That would have been 5% in 5 days, but I was thinking more along the lines of a long term trade. After the sharp decline on 12/16, I the stock was turning around and about to dive again, so I opted for small profit rather than turn a nice rally into a loser. Turned out the returns on this trade were juiced by the dividend paid on 1/3, giving an actual 2.9% profit in 5 days, which is not bad. The ideal technical entry would have been between 11/16 and 12/3, where the candles are within the green and pink EMA lines.
Trade 2: This trade is still open. Again, not my best entry technically, should have waited a few more days of consolidation. Turns out this second rally is more solid, and currently at 6.7% in 14 days.
Disclaimer: I'm an HP employee, and that helps approximately zip with trying to figure out what how many billions my employer will write off next, and where the stock is going!
Cleaning up miscalculated entry point on HPQ
Exiting this HPQ trade as the entry point was miscalculated as the bad news about HP just kept on coming.
December 27, 2012
Taking profits out of FSPTX before the Cliff
Taking profits out of this FSPTX 401K trade before the market goes over the cliff along with the reputation of the Republican party.
It was tracking up my blue dotted trendline nicely, but I've decided to minimize exposure right now.
It's quicker to buy back in if you are wrong, than wait for it to come back. It's also easier psychologically to deal with kicking yourself for being cautious, than kicking yourself for two months while the market recovers.
It was tracking up my blue dotted trendline nicely, but I've decided to minimize exposure right now.
It's quicker to buy back in if you are wrong, than wait for it to come back. It's also easier psychologically to deal with kicking yourself for being cautious, than kicking yourself for two months while the market recovers.
May 26, 2012
5.1% profit in ONXX in 7 trading Days
Normally I don't like pharmaceutical companies, with all the rumor and hype cycles about their latest FDA approval sagas. But this chart looked interesting, with a huge selloff after a big rally, support around $42, and a new uptrend developing.
The chart showed long term rise, and after May's meltdown of the market in general (don't tell me I didn't warn you as far back as March...) I thought ONXX might be an interesting reversal play.
Turns out 5.1% in 7 trading days was a worthwhile trade. It didn't quite reach my 1% per trading day profit goal, but as there were three green daily candles in a row, and it blasted up to through the upper bollinger band, a pull back is overdue already. If this trade had exited a day earlier, so would have put the money straight into Pandora again, and made another 16% profit by Friday after their earnings announcement.
ONXX could go higher, as you can see from the continuation of the rally after I exited (blue dotted line is my trade). However, I think we are going to see a summer of volatility, so I'd prefer to take profits that match my trading plan, rather than gamble on further gains when the market has no clue idea how it is going to respond to Europe's on-again off-again summer of self destruction.
The chart showed long term rise, and after May's meltdown of the market in general (don't tell me I didn't warn you as far back as March...) I thought ONXX might be an interesting reversal play.
Turns out 5.1% in 7 trading days was a worthwhile trade. It didn't quite reach my 1% per trading day profit goal, but as there were three green daily candles in a row, and it blasted up to through the upper bollinger band, a pull back is overdue already. If this trade had exited a day earlier, so would have put the money straight into Pandora again, and made another 16% profit by Friday after their earnings announcement.
ONXX could go higher, as you can see from the continuation of the rally after I exited (blue dotted line is my trade). However, I think we are going to see a summer of volatility, so I'd prefer to take profits that match my trading plan, rather than gamble on further gains when the market has no clue idea how it is going to respond to Europe's on-again off-again summer of self destruction.
May 10, 2012
Pandora delivers 12% in 13 trading days
After gritting my teeth and praying on volatile Pandora (P), the genie came out of the box and delivered a healthy 12% in 13 trading days. This real money trade had an entry at $8.70 and closed at $9.77.
Pandora got a big boost this week from news that they announced an 52% increase in listening hours - maybe from people like me who run Pandora in the background while analyzing stock charts...So this could be the start of a bigger trend. Remember I was was set up to make 40% on Pandora earlier in the year, but got stopped out because of the volatility and was too scared it was going to crash again to get back in.
On this trade my judgement call was that a nearly 1% per day gain is a situation where you want to take profits and then look for a re-entry point back closer to the EMA - shown by the green line on the graph below. I'm using the 5-day EMA because mostly I characterize myself as a swing trader. A longer EMA would have too much lag time, leading to missed entry and exit points. Another factor in my decision to take profits was that I had no stop loss, trailing stop or profit-taking order on this trade. Pandora's volatility is such that any of these strategies are going to backfire one way or another, so you just have to grit your teeth and trust your daily decision making skills.
My profit on this trade perfectly fit the analysis on SeekingAlpha.com (see article link above) so all credit to their powers of observation "I still see Pandora as a stock for investors who like to play ranges. Look for low points near $8.50 and high points near $9.25 for the time being"
Pandora got a big boost this week from news that they announced an 52% increase in listening hours - maybe from people like me who run Pandora in the background while analyzing stock charts...So this could be the start of a bigger trend. Remember I was was set up to make 40% on Pandora earlier in the year, but got stopped out because of the volatility and was too scared it was going to crash again to get back in.
On this trade my judgement call was that a nearly 1% per day gain is a situation where you want to take profits and then look for a re-entry point back closer to the EMA - shown by the green line on the graph below. I'm using the 5-day EMA because mostly I characterize myself as a swing trader. A longer EMA would have too much lag time, leading to missed entry and exit points. Another factor in my decision to take profits was that I had no stop loss, trailing stop or profit-taking order on this trade. Pandora's volatility is such that any of these strategies are going to backfire one way or another, so you just have to grit your teeth and trust your daily decision making skills.
My profit on this trade perfectly fit the analysis on SeekingAlpha.com (see article link above) so all credit to their powers of observation "I still see Pandora as a stock for investors who like to play ranges. Look for low points near $8.50 and high points near $9.25 for the time being"
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