Robert's underlying philosophy...
If you are in search of an approach, or some
guiding principles, to help you with investing or trading, the
following key points might help:-
is some benefit in using Fundamental
Analysis — but
to a small degree.
Some people enjoy performing Fundamental Analysis to a very large
degree, and that is okay; but many people might think it is overdone —
each to his own.
Analysis should be used to optimise the entry and exit of
market) investment positions.
Analysis is a sensible and clever blend of
these two analysis approaches.
your key trading criteria already recorded (eg. a trading
Consider things like:
basic approach for stock selection is to look for stocks in a
Robert uses this approach to identify stocks for his Weekly
in a falling trend should not be purchased, and if held, they
candidates for disposal. Of course, stocks in a falling trend could be sold short.
entering a position, we should do a couple of things:
Determine the Initial Stop Loss
position, then calculate the amount of money at risk.
Determine a possible price target, and
calculate the amount of possible reward.
Calculate the Reward to Risk ratio, and if the
value is too low, then skip the stock and look for another.
position size should be optimised. This
will help to reduce the impact
of transaction costs like brokerage, slippage, etc.
Stop Loss - If a stock falls
below my pre-determined Stop Loss level, then it is sold, in order to
minimise losses. Initially this is the initial stop loss,
but as time goes by and the stock hopefully rises, this stop loss level
is raised and then referred to as the trailing stop.
All of this is much easier, and more enjoyable
with good charting software like the Australian
BullCharts software package.
Nimble Short Term Investing
As a result of the infamous GFC of 2008-2012(?) it can be seen that
short term investing can be a clever way to go. But how is this different?
(The following is NOT advice! It is just one approach, and one used by some investors.)
- Look for potential stock purchases on a weekly basis - no need to look daily.
- Even during bear market periods, some stocks can be in rising trends. So, invest with the trend, looking for a rising Moving Average on weekly charts.
- During bull market periods, it is easier to be profitable, and the Stop Loss does not have to be too tight - so we could use a volatility-based (eg. ATR) Stop Loss.
Food for thought and more information?
Sensible Investing - ask yourself "does
that seem sensible?"
Contrarian Investing Redefined - a
revised approach to contrarian investing.
Having trouble getting started? - Are you really Share-Market-Ready?
For more information, see the top of the column at right.
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Any special terms that might be used in the text at left, can probably
be found discussed in the Toolbox somewhere. Perhaps
in Brainy's eBook Articles - see the Master
Index list for details. Or, search
the eBook Articles.
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is Robert Brain?
And whatever you do,
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The information presented herein
opinions of the web page content owner, and
are not recommendations or
endorsements of any product, method, strategy, etc.
For financial advice, a professional and licensed financial advisor
should be engaged.
Copyright 2011-2014, R.B.Brain -
Consulting (ABN: 52 791 744 975).
Last revised: 20 November, 2014.