Musings Performance

Slowly Making Progress

Although I’m still very much at the beginning of what I hope to be an enjoyable and profitable journey, this week felt like a week where I levelled up from complete n00b to beginner level 1!  That may not sound like a particularly big step forward but it’s definitely a step in the right direction.

First, my revised trading strategy began to pay dividends.  My strike rate increased to 63%, with 5 solid, profitable trades from the 8 I made.

Of the 3 losers, one was $FMG, a stock I’ve had trouble with, however I mitigated my loss to only a 3rd of my initial capital at risk.

The second was $TAH or Tabcorp.  The stock was in a clear downward trajectory and the technicals pointed to further declines, however the football World Cup kicks off in less than a week which will be a major business driver for betting firms such as Tabcorp. There was significant positive market coverage over their exclusive streaming rights and the expected business impact this would have and it drove the stock up and I stopped out.  I actually thought this would happen but chose to let my stop protect me instead of selling out early.

The final loser was $AGL. The stock dropped over 4% and I was stopped out on the open for a slightly larger than planned loss.  The damage would have been a lot worse if I had a stop limit order in place as the gap down was significant. I wasn’t entirely sure what drove the sell off at the time as I couldn’t find any negative news, however it turns out the stock was downgraded by Credit Swisse!  Regardless my trusty stop loss saved my bacon.

The 5 winners ($WBC, $QBE, $ANZ, $CPU, $SUN)covered the 3 losers and I ended the week in a profitable position.

I’ve also made the decision to switch my online broker from Saxo Capital Markets to Interactive Brokers.

Saxo have a fantastic platform, it’s well designed, intuitive and very easy use, however their per trade fees and sh*tty forex spread on foreign equity trades mean I start every trade (non AU equities) more than 1% in the hole. It’s basically unmanageable and I needed to find an alternative if I’m ever going to trade overseas markets.

Luckily the smart folks over at the Aussie Stock Forum pointed me toward Interactive Brokers and after opening an account, successfully converting my AUDs into USDs, I’m now set up to trade US equities in their native currency and sidestep the currency conversion conundrum per trade. This means I can better manage how and when I convert any US profits back into Australian Dollars. I’m also eliminating the terrible 1% forex spread on each trade.

To try and put the impact of that spread into perspective, trading 50 shares in Visa on Saxo resulted in an overnight paper profit of $13. Trading 50 shares at the same price, over the same time period on Interactive Brokers resulted in an overnight paper profit of $130!

Thanks for the great platform Saxo but I much prefer my profit!

I’m also further refining my trading strategy and have been back testing the tweaks. So far the results have been very positive and have opened up another profitable, low risk entry point for me to exploit. More on that at a later date.

So overall, a very satisfying 10 days.

Happy trading all.

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