SIF/UN
OK, the blue circled arrows represent the buy and sell that I actually did, my stop is the purple line again. I bought in at $14 and sold at $13.65 for a $0.35 loss. I managed to miss the first price dip after my purchase but decided to not let it go as low next time figuring that it would have been a reversal. WRONG
Had I been following my CTP strategy (which I was only just getting into at this point) I might have followed the red circled arrows. Seeing as this is an income trust I try not to short sell as I would have to pay out the dividend should I time it wrong.
For ease of calculations and to reflect what my actual trades might have been, every purchase would have been 100 shares. Ideally I would already have profits on this stock to let me be more comfortable with a wide stop so I would leave the stop set below the lower blue trend boundary line which was established May 21st.
1) 100 shares at $13.00, stop at $12.25
Maximum Loss Allowance (MLA) of $0.75 per share or $75
2) 100 more shares at $13.75, my Average Cost Base (ACB) for 200 shares is now:
((100x$13) + (100x$13.75)) / 200 = $13.375 per share
My stop would be at $13 so my MLA would be $0.375 per share or $75 total
3) 100 more shares at $14.00, so my ACB would be, for 300 shares:
((100x$14) + (200x$13.375)) / 300 = $13.583 per share
My stop would be at $13.40 so my MLA would be $0.183 per share or $54.90 total
Today I might have moved my stop up to $14.75 to be ready for a drop to make some profit and still leave a little room to move or to $14.25 to leave it more room to climb. I do expect the price to open around $14.80 after such a steep climb to $15.13. either way I would have been in the money.
Paper gain would be at $1.547 per share X 300 shares = $464.10.
If I just let the original 100 shares ride the whole time I would be at :
Paper gain would be at $2.13 per share X 100 shares = $213
The real mistake
OK, here is the six month chart after going to the one year and plotting the longer term trend boundary lines, the upper and lower blue lines. These last three months were only a Trend Within a Trend!!! While the above trade with multiple entries might have actually worked, the entire premise for the trade was wrong. Pulling the stop up snug would be prudent as the price is not too likely to break the trend...$14.50 might be the best. The target for this TWT was only $2.50 per share and that stop would only net $1.50. Not worth the risk of adding additional shares tot he trade. Historical studues are fine but they ALWAYS look better after the fact.
The upper trend boundary had been established between November and January and pegs the next peak almost exactly at $15.13 ... today. This is not apparent on the initial six month chart. As my CTP strategy has the trades occurring as close to the trend lines as possible my actual trade was right in the middle, not my ideal trade by any stretch of the imagination.
Now the price is at the upper so I would expect that it will drop from here over the next couple of days and could continue to drop over the next month or two. I need to determine if short selling is going to pay enough to make having to pay out the disbursements worth it at $0.10 per share per month. A little weekend work as I try not to trade on Fridays.
JD.
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