Dave’s Trading Diary: A New Two Speed Economy (And It’s Not Resources)
This excerpt from the trading diary is for educational purposes only and is not to be interpreted as trading or investment advice. See Terms Of Use here.
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Managing risk is the name of the game. When putting any money into the stock market our main aim should be to manage the risk: most everything else will take care of itself.
I say “manage” risk, because avoiding risk altogether is not possible. To buy a company share is to put your money at risk of loss with the idea that its price will go up and you will make money. So because we cannot avoid risk, we manage it.
How do we manage our risk?
Very simply, by risking only an appropriate amount in the market, and keeping a level in mind where we will get out if the trade goes against us (i.e. a stop loss). I’m bringing this up because at the moment we are seeing some solid gains from stocks in the Industrials Sector (a sector we called as strong more than 6 weeks ago), but there are still risks about in countries like Greece, Italy, Portugal and the likes. It it prudent to be in the market and enjoy these gains, while at the same time limiting our losses if things go bad.
The New Two Speed Economy
At least for now, we are seeing great gains in the Industrials Sector, while all other sectors are falling behind.
A Month Of Dividends
In March a lot of companies go ex-dividend, so it will be interesting to see where the market goes during this time.
Our current trading diary holdings are performing exceptionally well. Much better than anticipated, with only three losing trades out of 26 in total. As the average over time is usually around 60% wins and we are currently sitting on 88% wins, I expect this will even out eventually. No one gets an 88 percent win percentage forever, but occasional winning streaks are definitely possible.
BLY (Boart Longyear), TOL (Toll Holdings), IMD (Imdex) and CAB (Cabcharge) are all performing well. Honestly, you will have to check out the diary to see for yourself, there are too many good trades to mention here.
New Additions To The Diary This Week
Cashing in on the Oil Price, I put some money into OSH (Oil Search), then SDM (Sedgeman) and SLX (Silex). Frankly, I have no idea what these companies do, but the price action has prompted me to see a new uptrend in price and buy. So far so good, but as mentioned above my stop loss is set if things go bad.
Hope this week’s market watch and trading diary have helped you in some small way.
Got an opinion on all of this? Leave your 2c worth in the comments section below.
Happy trending until next week!
Dave McLachlan
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March 4, 2012
Tags: ASX, trading diary Posted in: Dave's Trading Diary
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