Stocks: 15th August 2016

Disclaimer - Read this first!

This is not a signal service. While endeavoring to post signals before time occasionally I will only be able to post signals a day or two late

I am not a financial adviser. These are paper trades. I am not suggesting you follow these signals. If you take any action based on my blog you do so at your own risk.

Weekly Trend Trading (WETT) System

I have decided that there is more value showing a system where I can disclose the rules than continue with the WETT system so from now on I will Use the Easy System shown below.

If you have been following these signals and wish to continue doing so then I would suggest buying Nick Radge's 'Weekend Trend Trading' book. Alternatively, use a 40% trailing stop on open trades and tighten this to 10% if the XAO dips below it's 75 day moving average until the positions wind off.

Easy Share Trading System

System Status: ON (As at 30 May 2016) Take new positions. Trailing stops are approx 25% of the most recent high. Note - I am starting this system 15th Aug 2016

System details

For the past year or so I have been reading Peter Castle's http://EasyShareTradingSystems.com.au site. I can't directly endorse his approach simply because I don't have the facility to back test any of what he talks about but, to me at least, his methods make a lot of sense.

On the page http://easysharetradingsystems.com.au/objective-and-planing/i-know-what-you-want he discloses a weekly system with five rules and very solid returns of around 25% p.a. since 2003. You should read his site for more details and plenty of other good stuff on trading and emotion.

Here are the rules plus I have added rule 6 and 7

1. Only trade the Top 300 shares on the ASX and put 10% of your money in each stock.
2. Select stocks priced between 10 cents and 20 dollars,  they go up more quickly than more expensive stocks and yes there are plenty of stocks in that price range in the ASX 300. 
3. Buy the stock if it makes a 1 year high.  For example: today’s price of $2 is the highest the stock has been for a year.  That’s the buy signal. If there is more than one stock that week making a 1 year high, pick the cheapest one.
4. Sell the stock if it at any time  since it's highest recent price it falls more than 25%.  For example: If you buy the stock at $2, and it rises to $4 but then falls 25% to $3, you sell.  This is called the 25% Stop Loss Rule.
5. Now re-employ that money into another stock that is making a 1-year high and use the same rules as 1 to 4.
6. Any purchase should have a minimum $500,000 a day turnover for my trading size.
7. Use XAO_AX EMA 20 and EMA 30 as an on off switch. This should smooth the equity curve even though it will probably also reduce returns a little.

Entry Method

This is very easy indeed. I have set up a filter on Incredible charts.

This gives the following results which I have sorted by price in ascending order.

I then start at the top of the list and buy the first share that makes a new 50 week high. naturally you do this on the weekend when the system is on and you don't already hold 10 stocks. You also run through your holdings to check for stop losses then set you buy and sell orders for Monday morning. easy Peasy!

I have decided to use a $66,000 portfolio and brokerage of $29.95 a side to test this system.

Opening Stock Trades

Buy MYR on Monday's open

Closing Stock Trades

Nil

Weekly Momentum System

System Status: ON - as at 30 May - Portfolio re-balanced monthly, positions checked weekly. Stop Loss either a weekly close below the 100 day SMA on the WEEKLY chart, or, a spike above 7% in the 2 day volatility on the daily chart.

Opening Stock Trades

Nil

Closing Stock Trades

Nil

RSG was sold last Monday

Chart(s) of the day

Nil

Further Information

Disclosure - Personal Interests: ALU, FBU, MQA, SDF, SIP, SXL

All Stock charts courtesy of www.IncredibleCharts.com

** WETT Trading style is Similar to the methodology described in 'The Weekend Trend Trader' by Nick Radge, Buy his book if you wish to discover how I am generating these signals (note: I do not receive any benefit from promoting Nick Radge, Dave Landry, Andreas F Clenow, Incredible Charts or anything else.)