Archives for December 2018

eToro Trading Update – 30 December 2018

December 30, 2018 by James Woolley Leave a Comment

Bad Timing

Joining eToro and opening a live trading account (SteadyProfits) in the middle of November 2018 was not the smartest move I could have made in hindsight.

In fact with the stock markets falling so sharply in such a short space of time, it was probably the worst possible time to open an account because it has been practically impossible to make any money from stock trading during this time.

Yes I could have opened some short positions, but I generally avoid opening short positions unless I am hedging an open position, and to be honest, I really didn’t think the stock markets would fall as much as they have done.

Trading Performance

It is normal to get some kind of Santa rally just before Christmas, but that failed to materialise this year with all the negative sentiment that surrounds the global economies at the moment.

However the markets have rallied after Christmas, and thankfully my portfolio is now looking a little healthier. Indeed, I have also received a few dividends this month, which has also helped boost my account a little bit.

Nevertheless, my account is still down quite a lot, and it was not the start I was looking for because these early stats are not going to attract any followers or copiers at all.

According to eToro, I am currently down 8.32% overall, as you can see below, but this isn’t strictly true.

eToro SteadyProfits Performance - December 2018

I actually made the mistake of depositing a large amount of capital when my account was up a few weeks ago, and this had the effect of negatively distorting my stats.

The chart of my performance shows the real story, and as you can see below, a theoretical starting account of $10,000 is now worth $9,535.93, which represents a running loss of just over 4.46%:

This is still not very good, but with the markets crashing so hard, I am not too dissatisfied with this performance as we head into 2019.

Current Portfolio

At the moment I hold a mixture of UK and US stocks. My core holdings are GVC (GVC.L) and Apple (AAPL), which I am very confident about.

Both are currently in negative territory, but in the long run, I have a target price of $200 for Apple and a minimum target price of 800p for GVC, although looking several years ahead, the price could easily reach £15 – £20 in my opinion if their partnership with MGM starts to generate some decent profits from the highly lucrative US market.

Apart of these two holdings, I have a decent investment in ISF.L, an ETF that tracks the FTSE 100, which should be a good long term investment at these levels, particularly as it pays a dividend of 1%+ every 3 months.

I also have two tobacco companies (BATS.L and PM), which have both fallen sharply in recent months, but they now have low P/E ratios and pay good dividends, so I am confident of making some good long term returns on both of these. However I am kicking myself for buying PM far too early. I definitely got my timing wrong on this one.

Finally, I am also invested in MDY, which tracks the mid-cap S&P companies. I also entered far too early here as well, but once again, this should be a decent long-term investment.

Risk Score

My risk score dropped to 4 just recently since I made a large deposit and started buying real stocks instead of taking leveraged positions. However it has since edged up to 5, possibly because I opened one leveraged position in the past week, which is still OK, but I will be looking to bring this back to 4 or less in the future.

Final Thoughts

Looking ahead, I am still confident that I will make some decent returns from my eToro trading account, and eventually start to attract some copiers in 2019.

My timing has been poor up until now, both in terms of when I opened an account and when I bought certain shares, but I will continue to invest in good quality high-dividend stocks, as well as undervalued ETFs and growth stocks, and will also continue to open a number of short-term trades when the right opportunities present themselves.

So I will finish by wishing you all a Happy New Year, and I hope that we can all make some decent profits in 2019 and beyond.

Follow Me on eToro

If you would like to follow my journey on eToro, simply go to the eToro website and search for SteadyProfits to view my live trading results and to see my latest trades.

Past performance is not an indication of future results. This content is for information and educational purposes only and should not be considered investment advice nor portfolio management. 81% of retail investor accounts lose money when trading CFDs with this provider.

Dow Jones Analysis – Positive Divergence Hints at Santa Rally

December 19, 2018 by James Woolley Leave a Comment

December Price Falls

December is usually quite a good month for stock market traders and investors, but this has apparently been the 2nd worst December on record.

The leading stock market indices have all fallen sharply and there are many reasons why. Brexit, interest rate rises, trade tariffs and the threat of a possible recession have all weighed heavily on the indexes this month.

As a result of this, many people have given up on the idea that there will be a Santa rally this year, but looking at the 4-hour chart of the Dow Jones, there is still hope:

Dow Jones Positive Divergence - December 2018

Positive Divergence

As you can see, the price has recently been posting new lows, but if you look at three of the leading technical indicators, you will notice that there has been positive divergence on each of these indicators.

In other words, as the price has posted new lows, the CCI, RSI and Stochastics indicators have all failed to post new lows, and have actually been trading higher, which suggests that the downward move is running out of momentum.

Future Price Move

This positive divergence suggests that the price is likely to move higher in the coming days, but it should always be emphasized that these are all just indicators. The price could easily turn lower and start a new downward wave.

However with just 4 trading sessions left before Christmas, my own view is that we will still see a Santa rally this year, which could then continue until the New Year, as it so often does.

Therefore a price of 24,000 would be my first target, which should easily be achieved if there is such a rally, and looking further ahead, I wouldn’t be surprised it the price went back to the EMA (100) on this time frame, which is currently around 24,500. This would result in a rise of around 3% from the current price level.

As always, these are just my own thoughts and predictions. This in no way represents professional trading or financial advice. You should always do your own research before entering any positions in the markets.

Possible Breakout on US Crude Oil – December 2018

December 17, 2018 by James Woolley Leave a Comment

Recent Price Action

The price of US crude oil has been trading in quite a narrow sideways trading range in recent times, and seems to have stabilized between $50 and $55 with no clear direction.

However if you draw some trendlines on the daily chart of this particular commodity, you can see that the range is getting smaller all the time, and therefore a breakout is becoming increasingly likely:

US Crude Oil Daily Chart - December 2018

Downward Breakout?

At the time of writing this article, the price has actually dipped below the lower trendline ever so slightly, hinting at a possible breakout, however it is still too early to call.

That’s because you really need to wait for the price to close decisively outside of an established trading range before trading breakouts.

So in this instance we will need to wait until the candle closes at the end of the trading session before seeing if this is an actual breakout or not.

I think it is fair to say that most traders are actually expecting the price of crude oil to bounce back rather than break lower because 89% of traders have long positions on eToro, and 87% of traders have long positions on IG Index, for example.

Therefore it will be interesting to see what happens in the coming hours and days.

Possible Price Targets

If the price does indeed break decisively below the lower trendline, then it could easily fall below $50 to around $48, and possibly as low as $45, although it is very hard to set any price targets with any real accuracy right now.

The fact that we are entering a quiet period of the year for the markets, ie Christmas and New Year, means that volumes are a lot lower, and as a result of this, price moves are harder to forecast because any price swings that occur can either be exaggerated or thwarted by low volumes.

I personally would be a lot more confident about trading an upward breakout because the price has already fallen quite substantially since the start of October. Therefore I would look for the price to close around the $53 level or higher before considering opening a long position, as so many traders are predicting.

However these are just my own thoughts and opinions. This in no way represents financial or trading advice of any kind.

I just thought I would alert you to a possible breakout that could be about to take place on US crude oil as we head into Christmas.

eToro Trading Update – Time To Get Serious

December 13, 2018 by James Woolley Leave a Comment

New Funds

If you read my previous update, you will know that I have been trading CFDs with eToro so far (under the account SteadyProfits) due to my modest account size, which has led me to take a shorter term view that I would normally.

Well all that is about to change because I added some new funds to my trading account earlier today, and so I am now ready to take things a lot more seriously.

By having a larger account, I will now be able to meet the minimum trade size requirements when purchasing stocks, whether for short-term trades or longer term investments, and won’t need to use leveraged CFDs any more, which not only push up my risk score, but also incur small fees every day when they are held overnight.

I have still made some small profits from CFD trading so far, as I will discuss below, but to be honest, I don’t really feel comfortable using leveraged instruments to trade stocks and ETFs because of the fees, which may appear small, but soon add up if you are holding on to positions for weeks or even months at a time.

Recent Results

After a weak start at the end of last month, my trading account is up 6.19% in December, and is now up 1.18% overall at the time of writing, as you can see below:

I’m fairly happy with this after the big market swings that have taken place since I started trading on eToro about one month ago.

At the moment I have no open positions having closed my remaining long positions yesterday, but I did manage to bank some decent profits since my last update by taking long positions on BP (BP.L), Barclays (BARC.L), Imperial Brands (IMT.L) and Lloyds (LLOY.L).

I would have made a lot more, but I got my timing wrong on GVC and ended up cutting my losses on this position, but I will be looking to get back in with an actual share purchase at some point because this stock is grossly undervalued.

Risk Score

As a result of trading CFDs, my risk score of 6 is far too high right now, and I think this will prevent me from being copied in the future, but hopefully this will come down when I stop using leverage.

Future Trades

It looks like the major stock markets are positioning themselves for a Santa rally because they have already risen nicely in the last few days.

Therefore there is a chance that I might not get the opportunity to buy into some of the stocks that are currently on my watchlist, such as British American Tobacco (BATS.L), Imperial Brands (IMT.L), Barclays (BARC.L), Lloyds (LLOY.L), GVC (GVC.L), BP (BP.L), Legal and General (LGEN.L) and Apple (AAPL), but some of them are close to my preferred entry point if there is another sell-off in the markets.

Follow Me on eToro

If you would like to follow my journey on eToro, simply go to the eToro website and search for SteadyProfits to view my live trading results and to see my latest trades.

Why Christmas Is More Profitable For Share Traders Than Forex Traders

December 10, 2018 by James Woolley Leave a Comment

Christmas Trading

We are coming up to one of the most exciting times of the year. A time when we can all take a break from work and spend some quality time with our loved ones.

None of us really want to be thinking about the markets over Christmas, but in this article I want to explain why this can be a very profitable time for stock market traders and investors in particular, and not such a good time for currency traders.

Santa Rally

If you have been trading or investing in stocks for a number of years, you will be probably be aware of what is now commonly referred to as the ‘Santa rally’.

This basically refers to the fact that historically the major stock markets tend to rise over Christmas and New Year. Most of the big rises tend to occur in the middle of December, but prices will often continue to drift higher over Christmas and continue into the New Year.

It is not known exactly why this occurs. It could simply be related to the feel-good factor that everyone has at this time of the year, but it could also be related to bonuses because bankers and traders want to push prices up before the end of the year in order to balance their books and report bigger gains for the year.

Whatever the reasons, it is often a good idea to invest in undervalued stocks at the end of November or the start of December, and hold on to them until after the New Year.

Please note that the Santa rally doesn’t occur every single year. There are years when there is no real rally at this time of the year. However in general this is a profitable time for stock market traders.

Low Volatility Forex Markets

Although Christmas can be a very profitable period of the year for share traders, the opposite is true for forex traders.

That’s because volumes start to drop off quite sharply about a week before Christmas and continue to stay low for the next few weeks until after the New Year.

Therefore because of the reduced volatility, there is a lot of sideways price action and it can be a lot harder to predict which way the markets are going to go. Furthermore, even if you are right about a position, the resulting price moves are often quite small.

Final Thoughts

If you are a forex trader, I would always suggest that you take a complete break from forex trading over Christmas and New Year in order to preserve your capital.

However if you are a share trader, the Christmas and New Year holiday seasons can be very profitable and there are opportunities to make money from the annual Santa rally, but you still need to exercise caution because there are some years when we don’t see a rally over Christmas.

With all the uncertainty surrounding Brexit and trade wars between the US and China, 2018 may well be one of those years.