TradeForGain.com
let’s discuss important aspects of trading such as discipline, money management, psychology, setups, etc.
Market Review for March 31, 2008-Strength on the Internet and Biotech sectors
Monday, March 31st, 2008Stock Markets - As you can see on the following table, the Nasdaq and Russel are outperforming the Dow Jones over the last month but the Dow Jones is still the best (if you want to call -4.5%) over a 3-months period.
Commodities and Currencies - Oil outperforming all other commodities, followed by Gold. Big drop on silver over the last month (-13.6%).
Agriculture and Silver - the big one monthly drop probably killed the trend for the time being. Look at the following relative strength chart for both sectors sector (represented by ETFs) versus the S&P 500. Note how the MACD is now below zero:
Top 5 Sectors
The following is a list of the top 5 sectors. Biotech gaining good strength, followed by the internet. Let’s look at their relative strength charts compared to the S&P 500.
The retails is also very strong (you wonder why I’m holding Wal-Mart)?
March 2008 Trading Results
Sunday, March 30th, 2008The total gain % for my closed trades in March was -1%. Is this bad? Not if compared to the monthly returns for the Dow Jones (-2.9%) and S&P 500 (-3.8%) - see below.
Here are some of my conclusions:
- My Win % was still very positive, meaning I’m picking the right candidates and my patterns are working
- My Average Risk % of Capital was TOO HIGH (1.7%), meaning I risked too much on certain trades, or some of my losses were bigger than my gains. Action required: control risk.
RISK MANAGEMENT!
Closed trades in March - The red arrows are showing my sore spots. The individual closed trades list confirms my conclusion about excessive risk. Based on the number of blues I did really well picking the right stocks and trades but my profits were drained by trades where the risk was too high.
Action items for April:
- Control risk
- Refine exit method — I’m thinking about using a Volatility Stop, but not a ATR based. I want to the average of the High minus Low over the last 20 days (1 month).
Hope you did well in March and good luck to us in April.
My Open Positions
Thursday, March 27th, 2008The following is a list of open positions as of March 27. As per my previous posts I am currently playing short term because I believe the market is only in bounce mode - let’s not forget we are in a downtrend.
I am comfortable with my risk levels at this point as well, note that my maximum risk is 1.5% of my account (last column).
Lastly, here are my closed trades since last week. You can look at all the entry and exit posts by clicking on the "Trades" category. (entry and exit). Again, my gain % per trade is small but is happening fast, average of 7 days, which is good to me.
Chart of some of my current positions
Sold Laboratory Corp (LH), PL -3.8%, 7 days
Wednesday, March 26th, 2008=>ENTRY:2008/03/19-Long LH at 76.06, stop@74, risk/unit $2.06 (-4.5%)
=>EXIT :2008/03/26 at 72.60, Net PL -3.8% 7 days
=>ENTRY:2008/03/19-Long LH at 75.809, stop@74, risk/unit $1.81 (-4.2%)
=>EXIT :1900/01/00 at 72.60, Net PL -3.5% 7 days
Well, this trade just didn’t work. The stock is really strong but is drifting along with the Health Care sector.
The weekly ratio chart for the Health Care Sector (represented by the XLV etf). Note how it’s now below the breakout area (bad):
