Ball Finance Trading Journal

Discussion in 'Journals' started by ballfinance, Aug 30, 2007.

  1. I recently began a blog to begin tracking my investment performance. Since I enjoy reading Elite Trader and have obtained lots helpful information from the site I decided to also post my entries here.

    My system is a trend following system that is based on both technical and fundamental guidelines designed to find stocks with growth characteristics. The goal is to pick stocks that are building momentum that will last for several weeks or months. As such my system trades less frequently. Even though commissions are relatively inexpensive, if your system trades to much you will end up bleeding your profits away.

    My stock trading system's rules

    Technical Entry Criteria:
    1.) Buy when the ADX (14) crosses the -DI line from below and
    2.) the Stochastic %K (14) is above 80 and
    3.) the price is above both the 13 day EMA and 55 day EMA
    Note: There must be at least 15 points between the -DI and +DI

    Fundamental Buy Criteria:
    1.) ROE must 16%
    2.) Net Profit Margin must be greater than 10% and improving
    3.) Current quarter earnings must be greater than 25% quarter over quarter
    4.) Sales must be up at least 25% in the latest quarter

    Stop Loss Criteria:
    1.) Place stop loss 3 ATR (14) below purchase price.

    Add To Position Criteria:
    1.) Increase your position by 50% if the Stochastic (14) falls below 20 and there has
    been no fundamental changes in the stock. The stock will often be below its 55 day
    EMA indicating a possible trend change however the Stochastic being below 20 indicates an oversold position. I find the risk worth taking with fundamentally strong stocks.

    Profit Taking Criteria:
    1.) If the distance between the falls to less than 1 ATR (14) sell half of you position. Use the current ATR reading

    Exit Criteria:
    1.) Sell entire position if the 13 day EMA average crosses below the 55 day EMA

    Position Sizing Example:
    Starting Portfolio value - $50,000
    Portfolio Risk - $1,000 (50,000 x 2%)
    Current stock price - $50
    ATR (14) - 2
    Stop Loss - $6 ($2 x 3) 12% (6/50)
    Initial purchase - 166 (1,000/6) or $8,300

    The image that I have posted is an example of a recent trade I made based on my system rules. The stock is China Mobile and I purchased it on 6/25/07 at $53.88/share.

    In addition, on 8/28/07 I purchased shares of China Life Insurance Company at $71.07.
  2. Today I am adding the following 3 stock to my portfolio:

    WDC - Western Digital
    FARO - Faro Technologies
    ATNI - Atlantic Tele-Network