My Trading Diary 2010

January

Graham D. Telfer
Preface

This document is published as a PDF document suitable for reading on an e-reader

of about b5 paper size. I am using LATEX 2ε to write this diary and produce the PDF
document. LATEX is a powerful document processor originally designed to produce
book quality texts which use large amounts of scientific and mathematical nota-
tion.
I’m starting this diary to document my stock trading activity. I will publish it
monthly so keep checking. It is sure to be an adventurous ride and I hope both you
and I learn a lot along the way. Apart from the daily check I will write sections on
specific topics to do with trading and in particular my own methods of trading.

1
January

Aims and Objectives

6th January
My goal for the coming year is to tighten my trading by observing better risk man-
agement throughout my portfolio. I want to look for Swiss Rolling opportunities
and momentum plays. I think that long term trends are going to be difficult to
find this year.
Over the New Year holiday I extended my spreadsheet to include several new
calculations that I expect will improve my trading. I set up a volatility position cal-
culator, several stop loss calculators and an equity assessor.
I want to use a variety of techniques to improve my trading: in particular I want
to use the Ichimoku KinkyoHyo, Guppy Moving Averages and Point and Figure charts. I
see the Ichimoku chart as a good way to manage momentum trades and the Point
and Figure chart to control stop losses. The Guppy Moving Averages have been
teamed up with Equivolume bars to combine these 2 important aspects of trading.

First Trade
The first trade of the year saw TSCO
closed at £4.20. This was a stop loss
order and got me out in a nice clean
way. The stock has been weakening
over the Christmas period and I expected
to close the trade. My other trades sur-
vived weakness and stops have been
set ready for the start of today.
Tesco Trade

2
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7th January
Tesco which was sold yesterday continued down today and confirmed the trade as
being correct.
Tullow Oil started with a sickening drop but fought back to end in slightly pos-
itive territory.
The price hovered just above my
stop loss figure before clawing it’s way
back.
SSL held level but the candle is show-
ing some weakness. The volume is low
though, and the Guppy Moving Aver-
ages are still strongly upwards. This
suggests some accumulation is going
on. The current price is £7.76 but the Tullow Oil
Point and Figure price target is £13.60. This seems like a lot of space left to increase
in value. When I have another column I will do a new price target calculation.
I will hold the stop loss figures at the same level for today’s trading session. I
haven’t decided yet on any further trades with the proceeds of the Tesco sale.

8th January
Another roller-coaster day yesterday. Tullow Oil again dropped to just above my
stop line before clawing back to finish slightly up. The new stop edges up a little.
SSL also had a bumpy ride and I stayed in by a whisper. Still, the trend is positive
and the stop stays the same. Volatility is increasing for both stocks and so perhaps
I’ll see a jump in the right direction.

9th January
The first week ended in a nail biting session. Once again the stops nearly got hit but
held at the end. The Guppy Multiple Averages are still positive and both Ichimoku
clouds are giving reasonably good support. I will hold the stops as they are for
Monday’s trading and just see how things go. So that’s the end of the first week!

10th January
This morning I added a Risk:Reward calculator to my spreadsheet. I think I will use
a zero cost averaging tactic with Tullow Oil. This means I will sell sufficient stock to
cover the initial investment and leave the balance of the stock in the trade as profit.
This method gives 100% protection of capital and some protection on profits. I will
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sell 249 shares at the stop loss figure. When the price begins to bounce I will buy
the stock again, using the original capital amount. I can do this until the price
target is reached.

11th January
Today was a reasonably good day. Tullow Oil and SSL went up. I decided to buy a
small stake of 200 shares in Barclays Bank. The price rose over the last few days
but of course I bought at £3.23 only to see the price fall back to £3.17. That’s just
above my stop loss. I expect the trade to close out tomorrow when the stop loss is
hit.

12th January
Well, as expected Barclays got stopped out at £3.14. Unfortunately so did my Tul-
low Oil trade. That got stopped out at £12.94 after the price dropped clean through
my mark of £13.01. The Tullow Oil trade made a little over 3 % profit. All in all
a mixed day. At least everything went to plan and I leave this with more than I
started. Once the settlement date is passed I will start to research again.
Oh, one other thing I should mention! I phoned my broker and set up interna-
tional trading. This means I can trade Singapore and Honk Kong. I must research
how trading is done on these markets. I must also find a platform I can use to
monitor trades.

13th January
Another closed trade! SSL dropped and I got £7.61 on enough to cover my original
capital. This leaves 16 shares in the trade. I am trying a zero cost averaging technique
which recovers the capital and leaves any balance of shares to make a profit. If the
price goes up again I will try to buy back in. This is my 2010 approach. I will steadily
keep trading the same 6 or seven stocks and use the zero cost averaging technique
to build holdings. The balance of shares will be profit and I will only need a small
amount of capital to work the plan.

14th January
Three purchases today: Aquarius Platinum which fell yesterday and a small power
company APC.L. I also ventured some money on AVE.L, Avis car rental. I expect to
get out of this after about 17%. At least that is the Point and Figure chart price
target. I shall trade Aquarius Platinum on the zero cost averaging plan but I am
 5

looking at a momentum trade with the other companies. The risk:reward ratios
are healthy!
All my stocks ended even at the end
of the day. I wonder what tomorrow
will bring? It seems odd to me why
so often stock prices in London are overly
influenced by prices in America. Even
with multinational companies there seems
no reason for the influence America has.
Aquarius Platinum
It almost seems a malign influence at
times!

15th January
Bump,bump,bump and down we go. Aquarius Platinum stopped just short of my
stop loss.
All the other trades lost money but
stayed in. Looking at the chart for Aquar-
ius Platinum I think this will rise again.
You can see how the long term group
of averages are nicely moving up and
the sell off was fast but on low volume.
This is profit taking and long term in-
Aquarius Platinum15th January
vestors are accumulating the stock.
This begs the question of should I hold off setting the stop loss. If I set it then
it mut be the same as today, but I am certain it will get hit. The volatility will make
certain of that. I don’t want to get stopped out and the support looks to be there
in the market. I think I am going to hold off with the stop and watch like a hawk
what happens on Monday. If the stock holds pretty firm or rises on opening then
I will put the stop on. If the stock drops any distance I will be faced with selling it.
I might be able to re-jig the other stops to balance the capital loss to 2 % and keep
me in the trade.
Avis also fell with a similar kind of move. The long term averages are turning
up under compression which means buying is under way. As for APC, it didn’t
have any trades all day and so it closed at the same position as Thursday. Even so,
the averages indicate a positive move and so I’ll be patient with it because it is an
illiquid stock.
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18th January
A new week and a beautiful day here. Spring is coming! America was on holiday for
Martin Luther King Day and so there was no influence from there. Trading activity
in Aquarius Platinum was quiet and the price ended up at £4.22.
Avis crept up by 1 penny even though volume was negative. The Guppy Moving
Averages are healthily up and the longest term are contracting upwards too. On
the Ichimoku chart the price is moving ever closer to the top edge of the cloud as
it moves through the resistance. On target for 33 pence.
SSL which I sold to recoup the capital turned positive after a few days of weak-
ness. I might want to buy back into this stock when I get a strong signal. My final
stock has moved down to 10.17 pence from 10.25 pence. There was just a single
trade! This is turning into a mistake because there isn’t enough liquidity here to
make a viable trade. I will give it to the end of the week or let my stop loss take me
out and then sell if there hasn’t been any positive movement.

19th January
Some signs of positive movement but a quiet day on the whole. On Wednesday my
other account will buy £2360 of Tullow Oil which has been good for me in the past.
The price stalled a little over the last 2 days.
The company is likely to buy out the stake of a smaller company in it’s African
exploration fields. Maybe the market is holding it’s breath.

20th January
Well, what a horrible day! At least that what it felt like as AQP dropped like a
stone to £4.00. Commentators said China was spooking the market; but who really
knows? Anyway the whole mining sector fell and so there was nothing personal if
you understand my meaning. I an left with a difficult decision though. By rights I
should bail out because the stop loss figure was breached but the reaction was so
overdone that I am more inclined to buy another £2000 worth of stock. I think I
will buy using a limit order at £4.05.
The other stocks did not fare so badly. Avis dropped but on very light volume
and it hasn’t affected the averages at all.
My second account re-entered Tullow Oil which also suffered from the same
drop as the miners. Of course I didn’t buy at the bottom of the range and so I start
with a loss!
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21th January
I got more AQP stock and of course it headed south almost at once. Indeed the
whole day turned out to be pretty dreadful with all but one stock dropping. I may
have to grit my teeth and sell things. I’m just going to take a look at the charts
before making any decisions. Decisions made! I’ve set stops on AQP, SSL and AVE.
Tullow went down but the averages are o.k. and APC had no trades at all.

22nd January
The week ended badly, there is no other way to describe it. AQP was stopped out
at £3.62 which is a considerable loss of around 5 %.
Although the price recovered a lit-
tle it was too late for me. This chart
showing the equivolume and Guppy Mov-
ing Averages for the last 3 months shows
how things have turned down over the
last week.
The rest of my stocks also fell ex-
Aquarius Platinum
cept for SSL which moved up. China
22nd January
says it wants to rein in lending and the
world’s markets go into a panic. This suggests the recovery is extremely weak and
people are like mariners on a life raft. We wait for a rescuing ship, see a ship ap-
proach but it suddenly veers away. China has been the approaching rescue ship
which has just changed course. Panic in the life raft and precious water spills over-
board.

25th January
Falls in everything except SSL! I will try and sell APC tomorrow because it dropped
9 % today. AVE is also looking weak but might hold. Tullow Oil dropped along with
everything else but I’m keeping this because it hasn’t reached my final sell point.
All in all dreadful with no prospect of improvement.

26th January
The limit price on APC wasn’t hit which means I did not sell the stock. Is this good
or bad? I don’t know. SSL continued to go up but Avis and Tullow both fell. On
weekly charts things do not look so bad. I checked my losses in Open Office and
although they look bad initially I can justify holding on a little longer because the
loss on the portfolio is still under 5 %.
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I said I wanted to follow a swiss roll strategy but so far prices have not allowed
that strategy to begin functioning. It feels much more like hanging on for grim
death right now. I certainly feel every choice is dangerous whereas the reality is
that choices of buying or selling are quite discrete. I must not be scared to trade,
but must follow the plan.
The China effect will look like a small pimple in a few months time. Right now
it looms large like a mountain to climb. It helps to stand back and look at several
years worth of a chart using weekly prices. All those lurches down balanced by
lurches up must have felt just the same as the action now. Each one of those points
resolved itself and this will be no different.
I’m thinking about trying some programming. It is a long time since I pro-
grammed my computer and I am out of practice. Even so I might try and develop
a fuzzy logic trading planner to help with trade evaluation and measurement.

27th January
The storm continues to rage. If you are an angler you will understand the frustra-
tion of setting off, only to find yourself sitting in the car and watching the rain pour
down, filling an already swollen and flooding river. The swollen river is flushing
prices down but I was happy to see TLW show a sign of bottoming out. The narrow
range but heavy volume shows that prices had found a base.
The question is: can the price re-
bound tomorrow and begin to recover
some ground? If so I think I might buy
some more and lay a swing trade up
to around £13.90 which will be some-
thing around a 20 % gain. The other
stocks fell of course. AVE in particular
Tullow Oil
now looks like a sell. The long term av-
erages are contracting from the top and turning down. I have a stop set but I may
tighten it and save a bit of money.

28th January
I went ahead and bought 200 shares of Tullow Oil. The base remained solid and
trade range was better. After a good start the price finally settled at the low of
yesterday. A pity but not a disaster. Other shares remained neutral and so I look
towards tomorrow and the end of a turbulent January. It has not been a very good
month and I have about a 5 % draw down.
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29th January
January comes to a close. Things nudged up a little but the immediate future looks
shaky at best. I will have to keep a tight grip on the stops and watch the overall
portfolio risk carefully in the coming weeks. It’s a waste of time speculating too
much about the future. The best we can do is react as quickly as possible to events.
I think I will be trading swings more — trying to capture 8 or 9 % profits whenever
I can.