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A prayer before Top40 explodes

 

Our Fed, Who art in Washington, Yellen be thy name, Thy printing come, Thy will be done by Ben as it is with Janet, Give us this day our daily billion, and increase our debts, As we bail out our debtors, And lead us not into inflation, But deliver us from down markets, For thine is the printing, the bubble and the euphoria, Forever till taper. Amen

Hi Pilot,

 

Great thread, been following it since you started it.

 

I was wondering how you determine in which way the trend is heading? Is it through technical analysis?

 

Hi pilot thanks for the great advise. I'm sure most of us would like to know this but you keep talking about you triggers and indicators. Would you mind giving your break down of your ticks/rules that a trade needs to make for you to consider it?<br /><br />Thank in advance. 😄

 

Morning Gents

 

Just to give you bit of background.

 

I have been investing since 1994 and was fascinated with the Stock Exchange (and I still am). I have a strong maths background and wanted to figure out why and when to buy shares. Warren Buffet , had me hooked on value investing by 2005, but I was a big fan of technical analysis. So since 2006 I backed only value shares and used technical analysis to determine good entry points. I started using SSF in 2008 to increase my exposure, but at the end of 2008 and beginning of 2009 I lost everything. I was holding shares like BRN, OML, SHF and TKG. In those days it was the best value I could find on the market, and had I held them till today, I would have done well. But if there is panic and fear in the market, you can hold the best of shares, they will get smash. And when you think its the bottom.... they get smashed some more. 19 and 20 February 2009 was the end for me when OML dropped 7,3% and 5,8% in succession, after dropping from my R8-00 entry to R7-00 before the 19th. Not happy times, to say the least.

 

Now on to the better news. The lessons I learned from this experience, has changed my view on the way the market is moving. Fundamentals wasn't moving it, in the short term anyway. So my interest changed to reading up everything on market cycles and trends, which shares do best in which part of the cycle. It is all good to know this, but when is the start and when is the beginning and when do the certain sector start moving. It was very vague. And that took me right back to my Technical analysis. Three years ago I was full time into technical analysis and tried about 100 different technical indicators. Using them in different ways, and added % chance of success on each of them. Most of them don't work on their own effectively, but I had about 15 that worked the best.

 

The last year my focus swung to what happens right before an uptrend or downtrend and I found that certain (modified) indicators do the same thing nearly every time a new trend starts (about 85% success). In March this year I ran preliminary data on Jan, Feb and March of 2015 and came to the astonishing conclusion, of doing 67%, 80% and 55% in each of those months (with gearing of course). Around 10-20% without gearing.

 

My next step was to prove it with real trading scenarios and thus the thread, I started here on sharechat. I am in the process of leaving my current job, and to pursue trading shares full time. 

 

If someone can come up with a descent 8 digit amount for my model, I would sell it.   But I don't want to jeopardise the sale of my model by giving all the information that I have. 

 

 

I do use RSI indicators, Divergence indicators (I developed myself), STS indicators (modified), MFI indicator (modified), sma's and wma's. Most of these indicators values have been changed to give smoother and more accurate trigger points. Some of the short term Indicators need to do the same thing at the same time, to validate a trend changes, but then I need to see a trend break on the RSI indicators as well. (Not on the graph). I would sometimes say a trend has broken, but it has broken on the RSI and not on the graph. 

 

Lastly, I would go to the graph, and especially with big formation breaks, it confirms the new trend and the break. Then a new trend has started (most of the time)

 

I know I'm not giving you a lot of information, but hope this will help. 

 

In the meantime, I will be posting on here, to share my view. Thanks to everyone for all the interest!

 

Happy Trading

 

 

Pilot

Attached is tommorrow's shares. 4 New shares showing bull trend entries and changes to some of todays missed trades.

The traded shares today did well with the 2 x one star Long positions (BAT + INL), being weakish, but is in the uptrend.

 

Heaven knows why I went for R66-00 on IMP today (should have been R67-30, where top 3 day resistance was)

Might have dozed off  Anyway, all traded positions are in trend.

 

JDG is a scary long, after its hard push, but has entered a new uptrend. (Not sure how fast it will move or for how long)

 

 

hey A, where do you get your seasonal info from? thx.

Learning the hard way by trading against it through the years, but mostly from UBS and their cycles!

 

Best is to go back and study historical charts (don't always follow the same pattern but more or less), other key factors includes earnings season months, ECB meeting dates, futures close-out, Santa rallies (triple witching), seasonal bearish/bullish months etc

 

Jan  - Earning season month (first half bearish..second bullish)

Feb - Bullish but if Jan bullish followed by an uptrend then could be a top month (refer to previous years)

March - Bearish first half but futures close-out month so rally latter part

April - Earning season month (first half bearish..second bullish)

May - Tricky, sometimes bullish sometimes bearish but known as a very zig zag month

June - Mostly bearish but futures close-out month, after it is bullish...

July - Earning season month (first half bearish..second bullish)

August - Depend on bullmarket or bearmarket, if bull then bullish, if bear then bearish

September - Futures close-out month, first half bullish, second bearish

October - Earning season month (first half bearish..second bullish), also called month of bottoms

November - Bearish

December - First half bearish, latter bullish (Santa rally)

 

BUT...all of this must fit in with the tape, pattern and trend it is busy with!

 

Again, not set in stone but a good overall guideline!

 

A

If Advanced Health (AVL) can execute to plan they look set to significantly benefit from a potential secular shift in the healthcare industry.  In an attempt to reduce costs the Health Insurance providers (Discovery Health leading the charge) are incentivizing specialist to perform more surgeries at day clinics. South Africa is only has 45 day clinics vs 245 private hospitals so there is plenty of room for growth.

 

AVL is raising R100mln to triple the number of Day clinics they operate. If mgmt can execute this stock could be a 5 bagger over the net 5 years.

 

Nevertheless the 100c/shr listing price looks reasonable. 

 

Here are some of my thoughts and numbers http://wp.me/p3RKee-6x . 

 

 

Good analysis although you may want to spend a bit of time doing a bit more risk analysis. The risks to this business are substantial.

Firstly, regulatory risk - as you know the private sector is under scrutiny and prices could soon be regulated (read WILL be regulate). Now this as you say could well play into the hands of Advanced Health. Thing is though, in the words of Warren Buffet, you need a moat and I don't see how these guys will compete against the like of the big groups. Surely if the trend begins to push patients from hospitals into day units the big boys are not going to sit around and watch it happen? If this market is viable, mark my words, you will se aggressive expansion of the big hospital groups into it. Advanced Health could get bought out if they have enough mass by then, or they will be relegated to minor leagues.

 

My question is, if they are so brilliant at what they do, why is it they have only 2-3 clinics in Oz?

 

ps, to be honest, I like this sector and possible macrotrend. I've seen it personally in other parts of the world and SA is slow to the crease however I'm not convinced this company is the right one to take advantage of it.

 

Just my 2c..

It reads also:
"MRI’s coal briquetting plant at the Vaalkrantz Mine in Kwazulu-Natal in South Africa (‘the Project’), which commenced operations from run of mine coal in October 2013, has now installed and fully commissioned a re-suspension unit allowing it to operate from the fines stockpile of the plant. With this initial ramp up now complete, the Project can commence full commercial production".

They have been producing briquettes from the 10% run off from the wash plant to date as they are right next to it with their briquette production. The waste fines stockpile is massive, it means now they can eat into the stockpile as and when they wish as well as using the day to day run off. They are ramping up production. Making as many Briquettes as they can. Good News.

Hi LWVi,

 

There are numerous options here:

 

1) TRADING IN YOUR PERSONAL CAPACITY

 

Pros

- Any profits/losses can be added to/deducted from your other income (salary etc) under normal circumstances (there are exceptions if make recurring losses, ie. ringfencing if you're taxed at the maximum marginal rate, but that becomes very detailed)

- Cheaper structure than Trust or Company

 

Cons

- If you're a director, hold a bond or have any other "risks" associated with your personal capacity, your portfolio is at risk to your creditors

- Forms part of your estate and when you die, would be subject to estate duty

- Can become quite tricky on your personal tax, and will probably lead to quite a few tax queries in the future in the case of losses

- Comes administrative, unless an accountant deals with the secretarial issues

 

2) COMPANY

 

Pros

- Easily accessible for other investors as you mentioned

- Can be sold quite easily (sell the shares of the company)

- Lower effective tax rate than marginal individual rate of 40% (38.80% taking into account profits after dividends tax distributed)

- Tax affairs are easy to deal with (for accountants anyway)

- Company continues after your death (see Cons - shares)

 

Cons

- May require an audit or independent review (unless you are the sole director and hold the shares in your personal capacity, and the Public Interest Score in terms of the Companies Act is low enough, then it would just be a compilation) - which can become costly (ie. more expensive structure)

- Shares will fall into your personal estate and are not protected (same as for individual capacity) unless the shares are held in trust - which will then definitely require at least an independent review of the financial statements (costly)

 

3) TRUST

 

Pros

- Assets are protected against your creditors if you maintain the trust structure properly

- Assets don't form part of your estate (better tax planning)

- Profits can be distributed to the beneficiaries and taxed in their capacities (ie. at lower rates), unless section 7 is triggered (don't want to go into the detail here, it can become lengthy)

- Tax affairs are fairly simple to deal with (by an accountant anyway)

- Cheaper than a company structure

- No audit required unless it is required in terms of the trust deed

 

 

Cons

- Not as easy for other investors to enter as you'd have to amend the trust deed and create very specific beneficiary groups - although if you have other investors interested you can start a company and dispose of the shares in terms of group rules (a simple section 42 transaction could then transfer the portfolio into a company structure, with the company's shares held in the trust)

- Can be slightly administrative (secretarial records, trustees, resolutions etc), but much less so than with a company structure

- New legislation regarding the capital gains in trusts expected soon, and it is expected to be onerous amendments

- If profits are not distributed, it is taxed in the trust at 40%, but that's the same as the individuals' maximum marginal rate.

 

 

Hope that helps. If you want further detail you could go see an accountant (CA) or attorney on the above.

 

From the info you've supplied, I would suggest a trust as this would be the least costly whilst protecting your assets.

Money Management (when trading) is simple:

Do not expose more than 2 – 3% of your trading on any given trade. So if your trade flops, do not lose more than the 2-3%.

 

The more difficult part is your trading strategy (regime and discipline). In theory, using the above Money Management strategy, will allow you to never lose all of your trading capital, BUT there will come a time when the money remaining (after many losing trades with little to no winning trades), you cannot physically adhere to the Money Management strategy anymore. So the goal is to balance your preservation strategy for money management with your growth strategy (trading strategy) for wining trades. It is a double-sided ethos.

 

Example: R100k trading account. Do not risk more than 2% per trade, thus a trade may never incur a loss in excess of R2k. This leaves you with trading a single Mini or 2 x Micro contract(s). Your trading strategy will be better if you allow a couple of 100 points leeway, so now you are left with trading 2 Micro contracts on ALSI (assuming IG) of which you will not risk / incur more than 500 points loss (a healthy margin in current market if you ask me).

 

If it is not clear, money management (how much and at what risk) is one side of the formula, the other is your actual trading strategy(when, how long and in which direction).

 

And also I know it's a broad question and many opinions, but what's the best way to money manage?

Even the Best Trading Strategy Won’t Save You

 

Trading strategies, systems and methods always look great on paper, but when it comes to trading in the real world, market chaos and human unpredictability often make even the best strategies seem inadequate to the task. The hard truth all traders eventually learn is that trading is far more difficult when your chips are down and the pressure is on, even if you have a very effective trading strategy.

Whilst the trading method you use is extremely important, it simply isn’t enough by itself. There are essentially three main components to successful trading: Mind, Money and Method, and if you don’t have all three pieces of the puzzle in proper working condition, you are going to be like a lost sheep, lacking long-term consistency in your trading.

 

 

Note, whilst I have said that a concrete trading strategy alone is not enough, I am not trying to suggest that you don’t need a good strategy, because it’s obvious that we need an effective trading edge to get us into high-probability trades. However, IF that is all your looking for, you’re going to end up broke, poor, bankrupt and depressed, because the other two parts of successful trading, mind and money, are just as important as the method you trade with.

 

You need to think of trading as 3 things: Mind, Money and Method

Successful trading is an art and a skill and unless you are firing on all cylinders; mind, money and method, you aren’t going to make it. When we have our real money on the line, it fires up our emotion, and the more money you risk, the greater your emotional responses to the market will be. Therefore, the simplest and most effective way to keep your emotions in-check as you trade and to make sure the “Mind” component of successful trading is working properly, is to manage your risk intelligently and logically on EVERY TRADE you enter.

 

Managing your risk properly will go a long way to helping you achieve the proper trading mindset, because it will keep your attachment to trades at a low level and will help you ignore the feelings you have after losing or winning money in the market. However, this is not the only piece of the Mind puzzle unfortunately. Traders still tend to over-trade and over-analyze the market, even if they are managing their risk properly. Thus, if you really want to be sure that you have the Mind portion of the three M’s in proper working order, you need to only practice proper risk management, but you also need to have patience and discipline to follow your trading plan / strategy and not over-trade. You also need to know how to trade during market uncertainty and volatility and not become obsessed with economic news and over-analyzing the market.

 

Money management seems to be like the elephant in the room that all traders are aware of but few want to discuss or be honest about. After all, facing the fact that you should only risk R6 per pip because you only have a R 50 000 trading account is not really something that excites many traders. But, the reality is that if you don’t practice proper money management, you will never succeed as a trader, even if you have your Mind and Method in order.

 

Proper money management makes controlling your mindset and emotions significantly less difficult, in this way, money management is like the “glue” that holds everything together in your trading. If you don’t practice proper money management, your mindset is probably not going to be calm and consistent enough to make money even if you’ve mastered your trading method.

 

Beginning traders often understand the importance of money management, but due to greed and other emotional errors, they think they can get away with putting it off its implementation until some later date after they’ve made XYZ amount of money in the market, this day never comes. Whether you have a R10 000 account or a R1 000 000 account, if you do not manage your risk and money properly as you trade, you will never make money over the long-run, even if you’ve somehow managed to master your mindset and your method is solid

The trading method, strategy or system that you use to trade the market with is obviously important, but as I’ve stated above, it will not reward you in the way it is supposed to if you don’t have your Mind and Money in proper working order, so keep that in mind.

 

If you’ve been following my posts for a while, you know that I trade the trend. I’ve been a huge proponent of simplifying one’s trading strategy "buy the dip", simply because it makes sense and it works. If we were in a bear market, i would say sell the rally. Also, trading with a simple bare-bones trading method like buy the dip, has a very positive effect on Mind and Money.

Traders who trade strategies or systems that require them to have indicators and other such nonsense plastered all over their charts are also usually over-analyzing their trading and thinking too much. This obviously is a problem for the Mind aspect of your trading because it makes achieving a calm and collected mindset nearly impossible.The moment you start thinking while trading, you are usually f*cked. I call the market a b*tch, it's out to f*ck everyone. 

 

Focus on what works in the real world, not what looks good on paper or what sounds good

 

Viva La Bull          

Positive trading statement from Santova this morning:

 

Shareholders are advised that Santova expects Group headline earnings per share for the
financial year ended 28 February 2015 to be between 29.7 and 32.2 cents per share, and
Group basic earnings per share to be between 26.9 and 29.2 cents per share, both
amounts increasing between 20% and 30% compared to the results reported in the
previous corresponding period.
 

"Shareholders are advised that the dates for the fulfilment of the conditions precedent to (i) the

     Disposals, Tellumat Acquisition and Private Placement and (ii) the Digicore Acquisition, MRI Acquisition
     and Goliath Gold Acquisition have been extended to 28 February 2015 and 31 March 2015, respectively." - CVN SENS 15/12/2014

 

I am still confident and holding strong especially after the resolutions being passed. After the actual transactions go through, we will get a sens from MRI stating that CVN has acquired 30% + of securities at the equivalent of 10cps and it is this news that I am hoping will make us move

Thanks. I somehow missed this one. Apparently MRI are having a roadshow in Cape Town sometime soon. I'm going to try and find out when. I hope that it hasn't happen yet.

Oh and it looks like CVN is issuing shares in order to acquire the 30% Which means that we won't have the chance to sell at 10cps on the market, if that was the hope for CVN picking them up at 10cps. But the value will still have to translate to the market somehow I guess. I'm holding thumbs here  

mate i'm only tugging your sporren...all's good. this forum must be careful of itself...there are some pros here and some novices...all should respect where they fit..and don;t let envy rule...stupid people mock those seem better than themselves....these persons make themselves obvious. rather learn..listen,think, watch and learn or else we see childish arguments. no place for that...this place is a lecture hall...a place where some teach,some illustrate and others discern.but dont mock the lecturers. anyway i'm off.

Roadmap for Starship Enterprise...

 

Those who have something worthy to share (in the true spirit of the game) are the only legitimate posters here in my book.
Those who want a hind *** to suck on should go stay by HDB, but this advise carries a financial health warning.
Taken as read that their brain surgery needs are beyond medical help.
 

I have to wash my mouth and get what you said of my chest Vertebrate. I can't understand why we can't all have a place in this forum. I for one have learned so much from HDB, because his system is simple and straight forward. I have read your threads on the waves, and value it but are still strugling to understand it.I am a simple man and of average intelligence and know my limits. I have to master one system at a time.
At this stage I can not add to this forum as I am still green where it comes to trading. If I have to give anyone on this forum any advice, they will lose money. But hopefully, one day, I will be able to help someone as you guys are doing now. Trading is not an Olympic Sport and no one here will get chosen to trade for their country. It is also not a d#$ k measuring competition (apologies if you are female) You, and every other veteran trader on this forum should get a kick out of the fact that you are helping someone. So what if one of the traders has a bigger following than you have. I know you are successful in the way you trade, but your way is not the only one. Right now the HDB system works for me and others, but I would love to be able to also understand and use your sytem one day and be able to teach it to a greenhorn. Let's let the sun shine on everyone. You will actually find that you will be even more blessed, not just in your trading but also in life.


Sent from my GT-N8000 using Sharenet Sharechat mobile app

Moneyweb Article:

The fascinating history of Solomon Lew and Woolworths.

K

Do you factor in the probability of either side, ie should you believe the probability of the target price being realized is much higher than a return move to the support....do you still not take the trade?

Yes, I do. For instance, I think the probability of going higher now is better than to drop.

 

But for me to take a long I need her to drop to say 40400, and show evidence of reversal (use your favourite indicators here on lower timeframes). 

 

Now my stop will be 40200 and target 40900. R:R 200:500 = 1:2.5

 

Great trade right there.

 

If this does not happen, I sit out! Risk of account emptying is too great.

 

Hope this helps.

 

K

A quick recon i do everyday in morning before opening :

 

Ps note: All IG cash for Alsi and Ftse and also using bid prices

 

 

Alsi IG close at 5pm  Friday  40950

Alsi IG futures at  6.30pm  when FTSE closes 40930

 

 

Ftse IG at 5pm Sa Time when our market closes  6745

Ftse IG at 6.30pm SA time when FTSE closed    6740

 

Rand/pound exchange rate at 5pm  R17.6512

Rand/pound exchange rate at 6.30pm R17.5903

 

Alsi IG as of now 41027

Ftse as of now  6760

Rand /pound as of now  R17.544

 

My calculation of what Alsi should be :

 

6760-6740 / 6740  times 40930   =  122 points  so Alsi should be up to 40930 + 122  =  41052

 

However rand went from 17.5903 to 17.544

 

Therefore Alsi should fall by   17.5903 -17.544  /  17.544  = .0027  times 58% 41052 =   62 points  

 

My calculation of current Alsi =  41052 less 62  = 40990    Current is   41027

 

So 37 points difference is negligible.

 

However i will do all these calculation again at 8am tomorrow morning as futures and pound rate changes

 

 

S is right when he say easier to trade Dow.. There are very few uncertainties to condsider when trading the Dow..

 

However when trading the Alsi there are  100 and one things to consider. Thats why its called the beast and at some times one thinks that it is doing its own thing but that is not correct.

 

Factors to consider first thing in morning before market opens to see which way we will be going :

1. Performance of Ftse futures which is nevetheless influenced by the American markets

2. The pound exchange rate - about 58% of our market is listed in the Ftse

3. As we are resource driven, the dollar exchange rate and price of resources. About 8% of our Top 40 is effected here.

4. The performance of 10cent in Hong Kong as this effects Naspers which makes up about 7% of our TOP 40

5. Performance of Sasol in New York night before as Sasol makes up about 6% of our TOP 40.

6. The Swiss franc/ rand exchange rate as this effects CFR which makes up about 10% of the Index.

7. See what is happening to BHP in Australia as this makes up about 13% of the Index. Ps this 13% is already included in the 58% listed in FTE.

8. Check Australia, Shangai, Hong Kong and Japanese markets to see how they are doing as this may lead to some direction in our market!

9. Watch the economic calender for the day to see if any major news may effect markets.

10. Check any good or bad news on other Bric nations which may effect our market or cause sell off.

10. Last but not least check local news headlines to see if Govt or Malema has not messed up again by making some radical statements in the press which may effect our market only. Also  if any strikes planned. 

 

So if FTSE and Dow are flying does not mean we will also be flying. If rand strengthens against the pound and dollar and resource prices weaken, we could have a red day while rest of world is flying

 

Ps : I may be slightly wrong with my calculations of the TOP40 % constituents above so if anyone can correct it please do!!!

Peter Marks, Chairman of Armadale capital PLC said in the last Armadale RNS: “With maiden revenues from the coal briquetting operations expected imminently, I believe we are well set to realise value from our 40% interest in MRI in the near term. In addition to our MRI investment, we remain focused on developing our portfolio of assets."

 

http://www.armadalec...te 15_10_13.pdf

 

 

MRI said next 6 weeks in their Sens (four days ago). Peter Marks is saying "Imminently"  Sounds like this could be sooner rather than the 6 weeks. Gone up 9.09% today to 13c to purchase these. MRI Did hit 30c at one time without the funding for the briquettes, without being in production and Without the factory machinery. Looks cheap.

Plasma, actually it is very simple. Zoner, may I use your experience now with your longs as an example?

 

DO NOT TRADE ON YOUR HOPES, NEEDS OR OPTIMISMS. And more importantly, never trade revenge trades. Losing trades are that: losing trades. Your aim with your next trade is not to make up for your losses, your aim is to make a profit. Trade by your system and with your mechanisms. If you have a losing trade, and your trading regime dictates a counter-the-losing-trade-trend, by all means, trade it. If you have a off day, take a breather for a couple of days and sit-out and watch. It is a good thing to stay in touch with trends, but don't put money on the deck. --- If you ignore these points, you are gambling.. Finnish and klaar!

 

Yes, I had a sucky day yesterday, why? I was greedy (another reason NOT to trade). Made good points Wednesday, just to give 'em back yesterday. To my fellow novices (< 10 years  ), trade a 100 points a day - it will be worth it, don't go for the big windfalls. Do the math: Say Mini contract (100 points = R1000 per day). 22 trading days (on average) = R22k per month. It is that simple! And of course, don't even go for the Mini contracts if you don't have proven success with Micro contracts.

 

I will say it again, if you don't adhere to the above (universal) principles (barring the 100 pointers - that works for me), you are gambling! it is not worth the stress and money!

 

Use it, don't use it. someone might take heart in this.

 

P.s. I made my +-100 points today, using both a long and short directional trade(s). Now to stick to this. There must be a very compelling trade-signal on my system, before I enter another one! This market is still in a transition phase and it is NOT following the US, so don't take hope from 'em. Come May, we should be following Intl (read US) trends again.