Saturday, August 18, 2007

Trade Analysis

Another horror day on the SGX. What began with promise quickly vanished. @#$%. I was sitting on two stocks that were up by 4% in early morning but - in less than 20 minutes barrelled down to negative territory.

I'm all in. That's the sad part. Failed to plan adequately and my portfolio is down 30% - some of the smaller shares are down 50%. Hell some of the medium tier shares I own are down nearly 40% too like FerroChina.

Anyhow enough complaining- here's a trade I'm quite proud of. HGO. Hillgrove Resources is an Australian mining company that situated close to Adelaide- that's good because distance can be a real killer expense.

This is a good example of how studying the moving average can help you choose good buy and sell signals.

(I'm sorry that the MA colors are hard to see but that's the aussie broker's system, can't change it.)

In March and April - HGO was forming a nice upward trend. I got in at 29 cents. There were two major breakouts. The 2nd one happened as the moving averages were linking up - that usually send mixed signals - defensive traders might even have sold on that point. (I sold some of the shares at 35 cents at that point). But the short and medium term averages didn't drift pass the long term average (thats the lower moving trend line, so it can still be viewed as safe.)

There was a strong breakout at the end of May - it hit a high of 70 cents- I was watching it when it happened. And I was overjoyed- I thought it would keep on going towards $1.00.

It didn't.

The trend started running of steam at the end of July. I sold all the shares at around that level between 58.5 - 53 cents. I did a pang of pain - cos I was now wishing I had sold some at the high 60 mark. But there's no place for emotions in this game.

As they say the trend is your friend- follow the trend - so see the moving day average descending downwards? Yah, bad sign. Don't buy.

Unfortunately, I did. I bought some back as it was going downward. Thankfully, I didn't buy much - just about 20% of what I had previously sold. But really, that was a silly move.

That's a powerful trend there. So god knows when it will end.

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