- I have a special bonus for you to download from my Smart CFD Trading Diary.
- I have an update on my last trade that I shared with you, that I have now exited.
- Plus, I will share with you a recent trade that I undertook just before Christmas where I made a 52%* return in just two days, which was 497%* on the margin value of the CFD trade - that was a nice Christmas Bonus to my trading account.
| Market Update |
It's a new year and hopefully a fresh start for the stock market. After a strong bear market throughout 2008, the market is currently churning sideways. It made its last lows on 21 November 2008 and has been trending sideways since.
Have we now hit the stock market bottom and will the health return to the market? That I don't know and only time will tell. What I do know is that the weekly chart is still showing the ASX200 in a downtrend and the daily chart is showing that it is trending sideways between a possible support and resistance level that I have identified in the chart below.
Daily chart of the ASX 200 as at 15 January
The market may just continue to trend sideways for sometime, as it may take a while for confidence to build back into the market and there will be a lot of emphasis on the reporting season that is just around the corner. If buyers do start to move in and the market breaks resistance and moves higher this will be a good sign. However, if this does not happen and the market moves lower there could be some more downside to come.
| Special Diary Bonus |
In October and November 2008 I kept a personal trading diary of all my trading activity for my Smart Traders Mastermind group. During this period I undertook a total of 18 CFD trades and increased my CFD trading account from $5k to $20k - that's a 300%* return in just 6 weeks.
As a special bonus in this newsletter, you can read a sample diary entry from my Smart CFD Trading Diary. This includes the first 10 pages of my trading diary, including the first days entry of all my trading activity. It will give you a good feel for how I trade the market and what I have covered in my trading diary.
The diary is available for purchase and as a bonus it includes access to an exclusive discussion forum that I have set-up to help support you with any questions as you read through my trading diary. The forum has already been active and we have had some great discussions about various trading topics. This forum will be available for access until 28 February 2009.
| Watch my trade continue to progress |
I have now exited the CFD trade I shared with you in the last two emails and can now disclose the share name. The share was Pacific Brands (PBG).
Daily chart of PBG share with my trade marked out*
I short sold a CFD on this share on 21 October at $1.68 when it came up in my daily system scan and gave me a short sell signal (these signals are donated as small blue arrows in the chart of the share) and the share had broken through a significant support level from the past.
I sold half my position on 27 November when the share had more than halved in value and this is one of my windfall profit rules that I have in my trading plan. I continued to hold the remaining half of the trade managing it with a trailing a stop loss, which is shown by the blue line in the chart. As the share made lower closes, I moved my stop loss lower each time.
Usually I exit when the trailing stop was hit. But as the share had fallen to such a low level I felt it was a good time to exit and I bought back the remaining position on 24 December at 34c, closing out the trade.
I held this trade for a total of 64 days and made a return of 67%* on the total trade size. As the trade was a CFD I was only required to outlay 5% of my capital to open the trade. The return on the capital outlay of the trade equated to 1312%*.
It is trades like this that make you the big money in the market and as I am a trader and short sell I have been able to profit throughout 2008 through short selling using CFDs. I also buy CFDs when the signals arise with my daily medium term system and build a share portfolio with my long-term weekly system, which has not traded throughout 2008 and I am looking forward to building up a new portfolio of shares once the signals start to present themselves to me.
CFD trading is not for everyone, as they are highly leveraged instruments and carry a high degree of risk to your capital. Which means it is possible to lose more than your initial investment if you trade well beyond your means - just like going into debt on your credit card and buying things that you cannot afford. So for this reason they are not suitable for all traders.
If you are a person that manages their money well and has strict money management rules, or wants to develop these skills and trade CFDs then spend the time developing a system and trading plan and do your research. I have just added additional information to my website about CFDs, what they are and their advantages and disadvantages, as well as information on how to select a CFD provider.
| CMC Markets |
The provider I use for CFD trading is CMC Markets. CMC is Australia's largest CFD provider. You can trade shares on the ASX or access global markets with over 3,000 share, index, sector, foreign exchange, commodity, treasury and bullion CFDs through their award winning Market Maker platform.
You can find out more about CMC Markets or open an account by clicking on the link below, or alternatively call 1300 303 888 and mention Smart Trading to receive exclusive discounts and special features with your account.
| A Recent Trade Update |
My trading system has started to generate a small number of trades on the long side of the market and if the set-up meets my trading rules, I enter. One trade that I opened just before Christmas was in Sydney Gas (SGL).
Daily chart of SGL with my trade marked out*
The share had been trending down, it hit a bottom at 15c and churned sideways. When it moved upwards and broke through 23c resistance, my trading system gave me a signal and I entered the trade at 28c. The share then went into trading halt the next day pending an announcement to be released by the company that would effect its share price. It re-opened for trading on Christmas Eve and an announcement was made that AGL had made a takeover offer of 42.5c, which had been unanimously accepted for approval by the board.
The share opened after the trading halt at the takeover price of 42.5c. So this means that I have made a return on 52%* in just two days on this trade. As the trade was a CFD, I was required to outlay 10% of the total trade value to open the trade, which equates to a return 497%* on my actual capital outlay. Not bad for a two day trade.
Now these trades are not every day events and when they do come around, they are a nice little bonus to your trading profits. I am very grateful for this Christmas Bonus that the stock market gave to me on Christmas Eve.
| Smart Trading Plans |
I am pleased to let you know that my book Smart Trading Plans was listed as one of the top 10 investment books for 2008 in the ASX December Newsletter. So if you do not have a copy already you can pick one up at most major bookstores or order it from my website by clicking here.. It includes $59 worth of free bonus planning templates to assist you with developing your own personal trading plan for trading the markets.
Enjoy the New Year and I will be in touch later in the month with details of my next speaking event, which is planned for Port Macquarie, NSW, in mid February. I will have more details on this available for you soon.
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.
