Tuesday, April 04, 2006

Trading + Family = Bad

Day 4 - Wednesday
Total Account Value: $6343
Available Equity: $3174
Positions Opened: 2
Positions Closed: 1

I'm certain that most CFD/options/derivatives traders don't have to deal with their parents while a large amount of their money bounces around the sharemarkets. But this one does...

A victim of the hoohaa going on at Telstra, my dad was retrenched and now stays at home doing long-planned renovations. Unfortunately this is the house that my office/desk resides in where I both trade on the sharemarket and do preliminary work for a new startup business.

My dad has a hard time accepting the boundaries between home and office, often interrupting me at critical times to ask for help with the renovations or to do household chores. Now sometimes this is fair enough, but today he succeeded in pissing me right off.

At short notice he told me to go to my grandma's investment property to wait for the gas man, who was coming to repair the heater. With no computer all I can do is read for one hour until the guy finally arrives. He then asks me difficult questions about the heating system which I have no idea about as I don't live in that house. A total of two hours spent twiddling my thumbs and hoping that the usual inactivity of the markets around lunchtime would continue. Made me very angry indeed!

Luckily my overall position hadn't suffered too badly when I returned - in the opening two hours it had already risen roughly $500 and I was preparing for a "bubble burst". It turned out I was too late for one major reversal. Yesterday I had gone short on the ASX as strong selling pressure was obvious on the chart. This had continued this morning and I was sitting on a decent profit. However, after that interruption the bearishness had dwindled and a hammer (open near close and long downward stick) had formed as the stock prepared for a recovery. Seeing the strong price movement on the chart earlier in the day had fooled me into thinking it would remain that way the whole day. If it had been 4pm, evidence would have pointed toward a complete lack of buying power in the stock. But I didn't have good foresight and now have only myself to blame.

Another error in judgement was made with Santos Oil (STO). Yesterday it gapped open near resistance and began to fall away slowly and show much indecision, the beginning of a correction. I took my opportunity and went short at $11.62. I expected the price to fall over a few days but it plummeted heavily in the last half hour. I failed to realise that the selling pressure was "used up" in this period, encouraging longs to resume their positions. Sure enough, today it gapped back and made up most of Tuesday's losses. I didn't close my short position as my stop loss was not yet reached. A gap down tomorrow will encourage me to do so.

In other highlights, I was pleased to see my Computershare (CPU) holding resume it bullishness and I closed off my first winning position, a modest $172 on MBL as it began to look unsteady near resistance toward the close. PMN finally repayed my faith by breaking away from its recent sluggish movement, closing at $5.59.

TAH is making me uncomfortable yet again. In my last post I mentioned I was waiting for a recovery on the drop in price of Tuesday. And this it started to do, pushing daily profit on the stock above $300. But just as soon as it climbed it decided to mess with my mind and fall back suddenly, retaining only a slim profit at close. The stock is proving way too volatile for my liking and trading style and I may reconsider my decision to trade with it.

Oh forgot to mention that at 3:40pm, as the market typically begins to flash like a cheap disco, my uncle rang the doorbell. As my dad was off in the garage somewhere, I had to show him around the renovations while acting calm and personable, even though my mind was racing.

I reaaaaalllly need to move out of home soon.


Anonymous Anonymous said...

Seen your posting at Sharesguru and following your blog. Like your dad I used to work for Telstra(Sydney) until I was sent off to pasture 20 months ago. Like you I started trading CFDs but mostly ASX200 CFD. However I didn't have the patience and experience to make any money. Blew a big chunk of my redundancy payment.
Now I trade mostly shares rather than indices and through Margin Loan. Once I have some extra cash I might start CFD again on shares as it's not possible to "PUT".
I wish you the best of luck and will follow your daily adventures.

PS You write really well. Have you consider a writing career?

J King

6:33 am  
Blogger Trader Andy said...

Hey J,
My dad was a subject matter expert on voice, the old POTS legacy stuff. After 30 years there he outlived his usefulness, which sucks pretty bad. What was your role?

Shame that you lost so much on CFDs...I've been telling my dad to invest his redundancy in shares but he's happy with online savings!

PS A few other people have complimented my writing in the past but I cringe when I read it! Writing interests me though so who knows!


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