1 / 67

Specialist Share Education

Specialist Share Education. Your Entry to Personal & Economic Freedom 25 February 2011. The Next 10 Years. Developed world stock market indices will go broadly sideways Emerging world stock markets will do well Commodities run countercyclical to stock markets

elton
Télécharger la présentation

Specialist Share Education

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Specialist Share Education Your Entry to Personal & Economic Freedom 25 February 2011

  2. The Next 10 Years • Developed world stock market indices will go broadly sideways • Emerging world stock markets will do well • Commodities run countercyclical to stock markets • Inflation will spike significantly as liquidity filters out into economies & interest rates rise • The 27 year bond market bubble is bursting now • US will be forced to print more & more money as creditors stop buying Treasuries • US money printing made worse as it is mostly short term • US dollar will probably fall in half again

  3. The Next 10 Years • Markets work in cycles • The major cycles are secular (15 to 20 years) • Crashes occur in the early part of the cycle • Later markets are flat with inflation breakout • Sounds easy enough! • Just buy & hold through 15 to 20 years • What about 1987 crash (just a blip on 1982 to 2000 secular bull market & only lasted 55 days) • So we need to know how to trade the cyclical waves that last

  4. Timing The Cycles There are less than 3 ideal times to enter the market per year & that is when sentiment is not positive There are maybe 3 high probability times per year to enter a breakout or trending stock There are 4 to 6 months of the year when it is just tougher to make money

  5. Introduction • The share market has the potential to change your lifestyle substantially BUT …………. • You need • An effective game plan • Emotional discipline • Patience • Resilience • A supportive environment to develop these attributes • To give the process time

  6. How The Program Is Structured Critically important concepts A realistic view of what can be achieved & how The mechanics of trading How to select high probability opportunities in any type of market conditions Developing a business trading plan for you Commence at a low risk level for 20 trades Practice, practice, practice effective processes

  7. What Can You Achieve? • You will develop a business plan to put you on track to achieve your objectives • Medium to longer term active investments • 20% to 30% per annum • Trading without leverage • 40% to 70% per annum • Trading with leverage • 100% + per annum

  8. My Results Since June 30

  9. Recent Example Trades • Traders • MCE (Matrix Composite & Engineering) • FGE (Forge Engineering Group) • CCU (Cobar Consolidated) • BDR (Beadell Resources) • AYN(Alcyone Resources) • Investors • MIN(Mineral Resources) • EQN (Equinox Minerals) • NCM (Newcrest Mining)

  10. Specialist Share Education IMPORTANT INFORMATION Garry Davis is an authorised representative of Financial Services of Australia Pty Ltd which holds Australian Financial Services Licence No. 338 961. Garry Davis, working through Specialist Share Education is licensed to provide general securities advice only and this information which you will be taught has been assembled without regard to your particular investment objectives, financial situation and particular needs. Whilst you will be given education and guidance in how to develop a trading or investment plan which may fulfil your objectives, the decision to trade and the method of trading you choose is for you alone to decide. Specialist Share Education expressly disclaims all and any liability to any person in respect of anything and of the consequences of anything done or omitted to be done by any such person in reliance, whether whole or partial, upon the whole or any part of the information taught. Specialist Share Education will not accept liability for any loss, damage or expense incurred or suffered by you if you rely on any information provided in making trading or investment decisions.

  11. A Touch of Realism You don’t win every time ! Trading can be an emotional roller coaster – be patient It takes practice to get good at it You need to think differently to succeed There is no magic formula – it is just about an edge The price does not go up as soon as you buy it We only deal in probabilities so that means plenty of negative individual trade outcomes

  12. A Touch of Realism It is absolutely worth the effort – the rewards will surprise you You can get off your treadmill and become free, but it takes time & application You can make it fun & enjoyable – it is all in how you approach it

  13. Why is the stock market challenging? • You have to be contrarian at the extremes! • You need a trading environment where that is possible • You need tools that tell you where the market is situated

  14. Why Most Traders Fail • Follow emotions • A need to be right or control • Succumb to fear & greed • Follow the crowd • This is a comfort zone reaction • Fail to do the key basics - define an appropriate exit level if the trade doesn’t work - decide a dollar risk level that is very comfortable

  15. The aim is not to predict • The aim is not to be right • The aim is to make money consistently like any other business • YOU MUST HAVE AN EDGE • Your edge needs to be simple & bullet-proof • Remove emotion with a clear game plan • Exit “failed” trades • Take profits regularly according to a pre-determined plan

  16. How Does This Work? You need to think differently Focus on high probability, low risk opportunities Focus on an activity & financial targets structure instead of individual trade outcomes FOCUS ON THE PROCESS NOT THE MONEY!

  17. Thinking Differently • What does this mean? • Trading is a business • You don’t need to know which way markets will go • Revenue & expenses concept • Look for contrarian opportunities • Be patient • Be disciplined • Trade what you see, not what you think

  18. Successful Trading Method Mind Money management

  19. Successful Trading • Mind • Our mind filters most of the signals we receive unconsciously • When you trade on the basis of fears & fantasies you are responding to the content (bias) in your head and not what the market is telling you • You have a great capacity to delude yourself but your success depends on seeing the truth • So you need decision making system for processing information that is transparent & unbiased

  20. Market Reality • Over short periods markets are influenced by news & random events • This makes it harder to trade • Trading on a longer timeframe is easier

  21. Definitions • Bear market • The market index is below its 150 day moving average which is also pointing down and acting as resistance • Bull market • The reverse is true • This is clear, objective, easily determined • Where are we now?

  22. How Markets Operate • What does the “smart money” do? • We cannot know what they know …. • But we can follow their signals • Main market phases • Phase 1 = consolidation after a big decline • Phase 2 = bull market rally • Phase 3 = topping distribution • Phase 4 = bear market decline

  23. Market Phases

  24. Timing the Market • Key is to stay in alignment with the trend • Stay focused on the bigger picture trend • Trends are relatively easy to follow if you trade what you see and not what you think • In bull markets buy the dips • In bear markets, short sell the rallies, don’t try and buy the dips to make back losses thinking that is the bottom • When the market is choppy sideways • Minimise exposure • Don’t try and make trades that are not there

  25. Vital Big Picture Tools Orientation of the moving averages Chart patterns that indicate tops and breakouts from significant lows Bullish Percent Index

  26. BPSPX

  27. Key Concepts • Trending trades • Trading this way is an attitude or state of mind • Suited to certain types of markets & psychologies • Capture trades • For different objectives and psychologies

  28. Basic Charting Tools Charts are a psychological roadmap to the sentiment of the trading masses Candlesticks & patterns Trends & trendlines Volume Momentum indicators Fibonacci retracement levels Bollinger Bands

  29. Market Phases

  30. Sequence of Process • Determine the market or sector phase • That sets the balance in your trading portfolio • Bullish Percent Index charts to identify the extremes & set direction • I include other factors like VIX, media sentiment, advancing vs declining volume • Apply the strict rules for the chosen trading avenue • Enter on reversal candle pattern or breakout • Exit strictly according to the rules

  31. Trading Avenues • Small stocks • Phase 2 opportunities • Larger stocks • Phase 2 opportunities • Range trading (both buying & selling) • Short selling • Profit downgrades • Declining price patterns

  32. Small Cap Trading • Phase 2 – positive green candle in either phase 1 or the breakout of phase is the flag • Determine your trade purpose • Entry • No later than 2nd day after breakout & no further than 25% from breakout price • ISL 2% under phase 1 low if trading the breakout • Enter after minor retrace or pause + evidence of volume starting the increase again • ISL 10% under the recent low • Maximum 3 thrusts higher

  33. Small Cap Trading • Capture trade exit • Two times risk gap • Move trailing exit to entry at halfway to profit target • OR classic reversal pattern • Trending trade exit • Classic reversal pattern OR • Trail an exit under the swing low

  34. Using Fundamental Analysis • Management skill in using assets • Return on shareholder equity (ROE) • Growth in profits • Earnings/share averaged over 3 years • Industry & company prospects • Manageable debt • Generally 50% of total equity or less • Value • Price / earnings ratio (P/E ratio)

  35. What About Emerging Opportunities There are higher risks pre-production. What gives us a large edge? • proven management to deliver projects • projects closer to production • higher grades and lower impurities • good infrastructure access • blue sky expansion + worthwhile JORC resource

  36. Emerging Opportunities What gives us a large edge? • funding in place • resource in global short supply • Eg Sth American Ferro Metals (SFZ)

  37. Sth American Ferro Metals (SFZ) Junior iron ore producer in Brazil Targeting 20 year mine life @ 3Mtpa Further drilling needed to define the resource Geology well understood next to Vale operation Initial sales into local market Stage 1 to produce $30 million O.P per year Current market cap $62 million

  38. Sth American Ferro Metals (SFZ) • Stage 2 to produce 6Mtpa & $70 million O.P • Produce for export with rail & port facilities available • Vale likely to takeover at some point • Economics • Low cash costs $13 to $23/tonne • Simple processing • Capital already spent on stage 1 • Stage 2 will need ~ $130 million • Fully funded for exploration & development

  39. Sth American Ferro Metals (SFZ) JORC compliant resource expected H1, 2011 Current price very cheap

  40. Short Selling • How does it work? • Short selling dampens excessive price swings • The opportunity - prices fall twice as fast as they rise • Plays out under a very different psychology • Market bottoms are built on fear • Market tops are built on greed • Shorting near the top is harder than buying near the bottom (volatility)

  41. Short Selling • Opportunities • A false break to a new high (one of the strongest signals) • What is the psychology around that pattern • Reversal at top of a range eg BEN • Strong downward trend • Big red candle profit warning eg BKN, TSE

  42. Short Selling • Some rules to observe • Use wider stop loss exits • Maybe a smaller risk per trade • Be prepared to get back in again if stopped out • Be happy with a quick profit and exit

  43. Contracts for Difference • What is a CFD? • How do they work? • How to use them effectively • Trading stocks conservatively • Trading indexes • hedging

  44. Large Cap Buying from Oversold An abrupt single day reversal Double or triple bottom Strong rise from a pause or brief consolidation

  45. Large Cap Buying from Oversold • An abrupt single day reversal • Entry rules • Ideally after price has declined to support • Significant reversal candle + big volume rise • Enter the day following the trigger day (2% of close) • ISL set 1% below the low of the trigger day • Eg BHP

  46. Large Cap Buying from Oversold • Double or triple bottom • Entry rules • Ideally off support level • Weak volume on the first rise, low volume on decline, then volume strengthening on the second rise • Second leg low is inside Bollinger Bands • Trigger day is strong upward candle on rising volume • Entry the day after the trigger day (2% of close) • ISL set 1% below the low of the trigger day

  47. Large Cap Buying from Oversold • Strong rise from brief consolidation • Entry rules • Ideally off support level • Setup is a period of relatively small range trading in tight band on lower volume • Trigger day is a candle 200%+ larger than the 3 previous days candles • Entry the day after the trigger day (2% of close) • ISL set 1% below the low of the pause period

  48. Large Cap Buying from Oversold • Exit rules • Capture trades • 2 times risk gap OR • Reversal outside Bollinger Bands • Move trailing exit to entry price once the price has moved halfway to the profit target

  49. Large Cap Buying from Oversold • Exit rules • Trending trade • Reversal pattern outside Bollinger bands • Trailing exit under the most recent low • Execute whichever one occurs first

  50. Large Cap Trading a Range • Rules for entry • Range needs to be defined by a minimum of 2 points top & bottom (horizontal or inclined) • Buy in lower qtr and short sell in upper qtr • ISL set 2% outside the channel boundary • Rules for exit • 1st profit target at midpoint of the range & move ISL to entry • Exit remainder at the other side of the channel

More Related