Attended the “36 Strategies of the Chinese” trading seminar presented by Daryl Guppy on Saturday May 13 at the Carlton Hotel. This is the first part of three seminars covering the 36 strategies. The next two will be held on the 23 and 24 June 07.
So what strategies were covered in this seminar and how useful are they when it comes to trading in reality? Here is a summary of 5 of the strategies covered:
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When you are on a winning streak, sometimes your ego might get to you. Overconfidence, cockiness, complacency…or whatever..sets in. One bad trade is all it takes to bring you back down to earth.
I spotted an ascending triangle pattern forming with China Infrastructure on Friday, 20 Apr 07. The pattern was set nicely for a breakout.
The Dow had also rallied on Friday. Surely, this ascending triangle pattern would breakout when market reopens on the following Monday.
The Plan was to place a buy stop order at 0.125 for 95,000 shares, with a limit order at 0.13 to make sure I got into the trade when market opens. I was certain that this stock would gap up! Target for this trade was 0.15. Stop loss would be the point of breakout which is 0.12. I stand to win $2,375 while putting at risk $475.
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Weekly Watchlist is up. Table is sorted in accordance to Reward Vs Risk, from highest to lowest. Trading opportunities that present themselves range from short term patterns like the ascending triangles and flags, to medium term stirrup patterns. Stocks that made it to this list satisfy my financial objectives which is as follows:
1. Any winning trade should provide me with a potential net profit of at least 3% of total trading capital (3% x $60,000 = $1,800).
2. Any losing trade should reduce capital by less than 1% of total trading capital (1% x $60,000 = $600).
This literally means taking two steps forward (winning trade) and one step back (losing trade) and keeps me in a profitable situation always.
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Posted by: in Pattern Trades
Out of 9 flag trades executed within a 3 week period from 4 - 23 Apr 07, only 3 trades managed to cross over the finishing line i.e meet the projected price target. The remaining 6 trades lost their way and yielded in 4 losses, with the other 2 showing a small profit. All losses were contained to within 1% of total trading capital ($60,000). This is a successful damage limitation exercise which eventually allowed the profits of the 3 winners to completely overwhelm the losers.
Adding Design Studio, another successful flag completed in the first week of April, onto the winners podium and the results are even more impressive. This literally puts into practice one of the 36 strategies of the Chinese (covered in Daryl Guppy’s Book of the same name) - “The Plum Dies in Place of the Peach”. The Plum in this case means the losing trades. Cutting losing or non-performing trades fast and without hesitation helped improve overall trading results in the month of April.
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Posted by: in Pattern Trades
Unfortunately not all my flag trades went according to plan. In fact only a few made it to their targets. Those flags that lost momentum were cut quickly with no mercy. When trading flags I would expect the breakout to be strong and the excitement should carry prices to its target within 2-3 days. I would be worried if after breakout prices move sideways, and this was what happened with some of my trades. Momentum stalled and the trade(s) had to be closed even at the expense of making a loss!!! All Losses per trade MUST be kept to less than 2% of Total Trading Capital.
China Aviation Oil
Entry Date = 10 Apr 07
Entry Price = 1.53
Position Size = 8,000 shares
Exit Date = 17 Apr 07
Exit Price = 1.53
Loss = $-84.16
Chemoil Energy
Entry Date = 13 Apr 07
Entry Price = USD 0.77
Position Size = 10,000 shares
Exit Date = 19 Apr 07
Exit Price = USD 0.745
Loss = $-535.23
Envirohub
Entry Date = 4 Apr 07
Entry Price = 0.565
Position Size = 22,000 shares
Exit Date = 17 Apr 07
Exit Price = 0.590
Profit = $462.61
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