In this months newsletter:

• I have final information on my upcoming speaking events in Port Macquarie and Brisbane.
  
  
• I have an updated chart on the current market.
  
  
• I have a new trade to share with you that I recently undertook.
  
  
• Discover the benefit of using GSLOs (guaranteed stop loss orders)
  

Upcoming Events

I have two events that I am presenting at in the next few weeks – this Friday at Port Macquarie and Brisbane on 1 March. The final details are below and you are invited to come along to these events and hear me speak. I will presenting on trading plans, the current market conditions, CFDs and showcasing some of my recent trades.

Port Macquarie – Friday 13 February

Event: Mid North Coast Group of Australian Shareholders Association

Venue: Senior Citizens Rooms, Munster Street, Port Macquarie.
Ample off-street parking available

Time: Meeting commences at 10.00am and finishes at 1.00pm

Cost: For non ASA members cost is $5.00 which includes morning tea


Brisbane - Sunday, 1 March

Event: Brisbane Sunday Traders group

Venue: Coorparoo RSL Club, 45 Holdsworth Street, Coorparoo

Time: Meeting commences at 10.00am and finishes at 12 noon

Cost: $10.00 per person

Market Update

Not much has happened in the market since my last newsletter to you. The market is still churning sideways at its November 2008 lows, which can be viewed from the chart link below. As you can see in this chart the ASX 200 attempted to make a new low, but bounced back confirming support at 3350 and resistance at 3800.

The reporting season has now started and it is a good sign that it has not pushed the market to new lows. It is only early into the results and some companies have not reported such good results, causing them to fall further, but this has not managed to push the overall market lower. The government is also trying its hardest to assist our economy with a new stimulus package and reduction in rates by a whopping 1%, so far it has had little effect on the share market and it is churning sideways in indecision.

Whilst the market continues to churn sideways it becomes difficult to trade. At present I am not fully invested in the market and I am keeping my eye for a strong break in one direction or another. If the market breaks to new lows below 3350 this will be a bad sign for the market and there could be more downside to come. If you are a trader that short sells then there will be some more profit to be made in this direction.

If the market is able to build enough strength and break upwards above 3800, then this will be a good sign and means that we are seeing some health move back into the markets – whether this will be for the long-term or not, that I don’t know. At present the weekly chart is still in a downtrend, as it is trending below its 30 week moving average which you can see in the chart link below. For a healthy uptrending market to be in place we need to start seeing it making higher highs and higher lows and trending back above this 30 week moving average.

A Recent Trade Update

On 11 November 2008 I opened a short trade on Commonwealth Bank (CBA) at $36 when my daily trading system gave me a sell signal that day. I had been keeping my eye on the bank shares as they had all been trending sideways between strong support and resistance levels for some months. When the break of support came in CBA my trading system identified it and I opened a short position.

I know that short selling is banned in Financial stocks and this ban has been extended until 6 March. But thankfully my CFD provider, CMC Markets, has made shorting available on all stocks throughout the ban, which has meant I have been able to continue to profit from short selling through this bear market.

After my short entry into CBA, the share continued to fall strongly and once my stop loss was at breakeven I added to the trade and bought more a few days later on 14 November at $32.20. The share continued to fall further and rebounded slightly, but my stop loss was not hit. Once it broke to new lows again, and I was in a nice profitable position, I added to the trade again on 22 December at $27.16.

I continued to manage this trade with a trailing stop loss which I moved lower as the share continued lower. The share continued lower again and then rebounded strongly last week, gapping through my stop loss. Thankfully I had set a guaranteed stop loss order (GSLO) on the trade, which I was able to move for free with CMC Markets. I was automatically exited out of this trade at my stop price of $27.26 on 3 February, when the share gapped through my stop and opened at $29.05.

So whilst I did not profit on the third additional entry into this trade, I made a nice profit from the first two entries that provided me with a return of 1340%* on my capital outlay for the trade.

Guaranteed Stop Loss Orders (GSLOs)

One of the benefits of trading CFDs is that you can use GSLOs. These stop losses are guaranteed and mean that you will exit at the exact price that you set, no matter what happens with the share price. As you can see from the CBA trade above, I was able to exit at my exact stop, even though the share gapped through it. This is because I had a GSLO set as my stop, which I was able to move for free as the trade progressed my way.

There are only a few CFD providers that offer this facility and if you are interested in using GSLOs as part of your trading strategy then find one that offers them.

As I mentioned, I trade CFDs with CMC Markets and if this company fits your trading strategy then please contact CMC and mention "Smart Trading" to receive exclusive discounts and special features with your account.

CMC Markets Asia Pacific
Toll Free Number: 1300 303 888
Click here to visit CMC Markets


Until next time, happy trading and hopefully I may meet up with you at one of my upcoming events.

Cheerio

Justine Pollard
Author, Private Trader & Trading Mentor
'Discover the Smarter way to trade'
www.smarttrading.com.au
justine@smarttrading.com.au

*The returns reported are provided for information purposes only. Results of past performance are no guarantee of future returns. No assurance is given that you will incur any profits or losses in your own trading and it should not be assumed that you will experience results comparable to those as reported. Any trade examples listed within this website or associated material are either ficticious or historical and in no way should be interpreted as a recommendation to invest in any particular stock, CFD or investment. Smart Trading Pty Ltd as Authorised Representative No.336312 of CDM Pacific Pty Ltd AFSL 223682 assumes no responsibility for your trading and investment decisions or subsequent results. There is a high degree of risk involved in trading and as such we always recommend that you seek independent financial advice by a licensed professional prior to making any investment decision.