The Forex Chronicles

My Trading and Investing Goals for 2020

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Introduction

It’s always a good idea to look back on the previous year’s trading results at the end of a year, reflect on these results and set yourself goals for the coming year in order to keep improving as a trader / investor.

So having just completed a full year as a trader on the eToro social trading platform (user account = SteadyProfits), I thought it would be a good idea to talk about my personal trading goals for 2020.

This is primarily for my own benefit so that I can look back at this blog post at the end of the year, and see if I actually achieved these goals, but it may also help you to get into the mind of how an experienced trader thinks (as someone who has been trading the markets for over 20 years now).

Profit Target

The first thing I will say is that I never set myself a specific profit target. I will take whatever I can get from the market.

In 2019 the global stock markets rallied strongly, and even the UK markets surged higher at the end of the year after Boris Johnson’s Conservative party won the General Election.

I would like to think that my trading skills were solely responsible for making a 20.98% gain last year and turning a notional $10,000 into $11,794 since I first joined eToro in November 2018, as shown below, but I have to be realistic and accept that the strong markets contributed to this impressive profit result in a small way.

SteadyProfits Notional Portfolio Value

So what I am basically saying is that I can’t expect to make a similar gain of over 20% if the markets were to fall 20% in 2020.

However my goal is to still make an overall profit regardless of market conditions thanks to having a more diversified portfolio, which could include bonds and commodities, for example, and not just stocks.

High Yield Portfolio

A trademark of both my eToro trading account and my main ISA is that they are both full of good quality large-cap stocks that pay generous dividends.

This is one of the main benefits of investing in the UK stock market. There are many large companies that are well-past their growth stage and now just keep growing their profits slowly and distributing cash to shareholders every year.

Examples of such stocks include Aviva, BP, HSBC, Royal Dutch Shell and Imperial Brands, all of which I currently hold in both my eToro account and my ISA accounts, and I will continue to invest in such stocks in 2020, particularly when their share price trades at a discount and represents good value.

Regular Income

Following on from the last point, I will also continue to invest in stocks that pay dividends regularly in order to give myself a constant revenue stream, which I can then reinvest back into the market to benefit from compounding.

I am a big fan of any assets that pay dividends quarterly, or even monthly if possible, which is why I will continue to buy large-cap stocks that pay generous quarterly dividends, as well as good quality REITs that distribute profits on a quarterly or monthly basis.

Returning to Forex Trading

I used to be quite an active forex trader before I became more of an active stock trader and investor, and I plan on doing a little more currency trading in 2020. That was the whole reason why I started this blog to begin with.

Therefore I will be going back to some of my tried and tested strategies where time permits, and may also start to develop some new forex trading strategies.

Attracting More Copiers

One final goal that I hope to achieve in 2020 is to attract more copiers on eToro. I aim to do this primarily by continuing to produce good results, but also through the use of this website and an increased presence on social media.

As of right now at the start of 2020, I currently have five people actively copying all of my trades, but I would like to have at least 20-50 copiers in the coming year and at least $100,000 AUM (assets under management), which is a fairly conservative target that I should hopefully be able to achieve.

This will enable me to move up through the levels of eToro’s Popular Investor program and subsequently generate more revenue, which in turn can be put to use in the market.

eToro Trading Update – December 2019

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An Excellent Month – Up 5.52%

There are still a few trading sessions left in 2019, but I wanted to write this update now so that I can enjoy the New Year celebrations.

December is often an excellent month for the markets, and thankfully after we saw big losses in November and December of 2018, normal service was resumed this year and my eToro trading account has grown by 5.52% (following on from a 1.83% gain in November).

SteadyProfits eToro Performance Stats 2019

This has brought an end to my first full year as a trader on eToro, and as things stand, I am currently 22.18% up for the year, which is an excellent performance that I am absolutely delighted about.

I said last month that it was looking unlikely that I was going to finish the year 20% up, but the portfolio really pushed higher after this month’s General Election, and ended up smashing through this figure.

Trading Performance / Portfolio Update

One of the big success stories from this month was IAG (International Airlines Group).

I was still holding on to two lots of shares that I bought back in March at 564.11p and 576.52p, and after seeing the share price continually beaten down during the last three years of Brexit uncertainty, it finally surged higher to a more realistic level after the General Election result, and I was automatically closed out at 617.04p for an average gain of around 8.3%.

I also made the decision to sell my FTSE 100 tracker (ISF.L) after the FTSE 100 surged through the 7500 level. This was only a small position, and I was tempted to hold on to it for the long-term, but I felt this was a good chance to bank a nice profit and reinvest the proceeds into something else.

Finally, there was one other sale. With Imperial Brands continuing to stage a recovery, I took the opportunity to reduce my exposure slightly and sell off some of the shares that I bought at 1733.4 p for 1864.8p.

As a result of all this, I am now just over 22% in cash, and have a portfolio of just five stocks – Aviva, BP, Shell, HSBC and Imperial Brands. Three of these are currently in profit, but they all pay really high dividends, making them solid long-term holds.

Dividends Received

It was a quiet month with regards to dividends because there was only one holding that went ex-dividend, namely ISF.L.

The FTSE 100 tracker paid a dividend of less than 1% this quarter, but when you add on the capital gain as well, this was a good overall return when you consider that I only bought it at the start of the month.

Copiers

Last month I had four people copying my trades, and I am pleased to report that I am now ending December with a total of five copiers.

It was actually up to six earlier in the month but one person decided to stop copying my trades for whatever reason, even though he was already in profit.

Anyway I am still happy that I have five copiers, particularly as they are all now in profit at the time of writing this article, with my very first copier now up 5.24%.

Final Thoughts

Overall, I couldn’t be happier with my total gain of 22.18% for 2019. Of course it should be pointed out that it has been a very good year for the markets with the S&P 500 going up by a similar amount, but as a predominantly UK trader, I have definitely outperformed the FTSE 100 index, which is a more applicable benchmark.

I have also been very pleased with the eToro platform because although it does have its faults and limitations (it would be nice to be able to trade a lot more small and medium-cap stocks and have even more ETFs to trade), it’s generally been very reliable and it’s been fun interacting with the community there.

Looking ahead to 2020, I am confident in all my current holdings and believe that they will move higher in the coming year, and if there is a market correction, I have plenty of cash waiting on the sidelines ready to reinvest.

I never set myself any profit targets, but with the markets trading at very high levels, I think I would be happy with a total return of 10 – 20% next year.

I will finish by wishing you all a healthy and prosperous new year.

Follow Me on eToro

If you would like to follow my journey on eToro, simply open an eToro account 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 or portfolio management advice. 81% of retail investors accounts lose money when trading CFDs with this provider.

How The 2019 UK Election Results Could Affect The Markets

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December General Election

A general election was called in the UK because it was seemingly the only real way to get any kind of resolution regarding Brexit.

With three years of uncertainty and unresolved talks, I think many people on both sides of the Brexit argument just want us to leave the European Union with a deal and look to the future.

As a result of this and the untrustworthiness of Jeremy Corbyn, Boris Johnson’s Conservatives are strong favourites to win an overall majority in today’s general election.

However as demonstrated in the last general election, the opinion polls are not always correct, and we can’t take anything for granted.

So in this article I want to look at how the result of this election could affect both the domestic stock market and the British pound.

Election Voting

Conservative Majority

If, as expected, Boris Johnson returns to power with a clear majority, then this could have a dramatic effect on the markets.

For a start, the pound is likely to rally strongly against all major currencies, having been beaten down so much in the last three years.

It has recovered somewhat in recent months, but there is still the potential for the GBP/USD, for example, to go up to around 1.35, with some experts predicting that it could even go back up to around the 1.40 level.

A strong pound and a weaker dollar would ordinarily affect the profits, and therefore the share prices, of many of the leading FTSE 100 companies that report their earnings in US dollars.

However in this scenario, the volume of money being reinvested back into UK stocks may very well overcome this exchange rate factor, and result in some big gains in the coming weeks.

In fact it wouldn’t surprise me if the FTSE 100 rallied back to around the 7500 level in the remainder of 2019, which would represent a gain of nearly 4%, before rallying further in 2019 with an orderly exit from the European Union on 31 January 2020.

Hung Parliament

There is no chance of Jeremy Corbyn’s Labour party winning an overall majority, but there is still a chance that Jeremy Corbyn becomes prime minister if the Conservatives fail to get enough seats and Labour forms a coalition government.

It is hard to predict how this unlikely and unexpected outcome could affect the markets, but it is likely to be hugely disruptive and the repercussions could be huge.

The pound would almost certainly be sold off against all the other currencies as this would reintroduce so much uncertainty regarding the Brexit situation. Having not really made his position clear, we don’t really know when or indeed if we will be leaving the EU in the coming months and years.

This result would almost certainly see a stock market sell-off as well because some of the tax and financial measures proposed by Labour are not generally regarded as being as favourable to UK businesses as the Conservative’s proposals.

Therefore the FTSE 100 could very easily plunge below the 7000 level in the coming days and weeks as the reality of a Labour government starts to take hold.

Final Thoughts

Whatever happens, it is going to be a very interesting few days because the markets are likely to be very volatile and there could be some big moves in both the pound pairs and the domestic stock market.

eToro Trading Update – November 2019

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A Steady Month – Up 1.83%

I would think most people would be delighted if they could grow their trading account by 1.83% per month, but despite this, I am still left a little disappointed that my eToro account (aptly named SteadyProfits) only grew by this amount in the month of November.

That’s because at times my portfolio was significantly higher than this, and the gains that I had made in previously weeks simply tailed off towards the end of the month as certain shares saw their share prices fall.

Nevertheless, any growth should be welcomed and as a result of this latest gain, my overall trading account is now up 15.79% for the year, as you can see below:

SteadyProfits eToro Performance - November 2019

It is now looking unlikely that I will finish 2019 up 20%, which would have been a fantastic outcome, but you never know. If we get a strong Christmas rally, which we missed out on last year, my portfolio is well-positioned to get close to this magical 20% figure.

Before that, though, I want to give you a run-down of what happened to my portfolio last month, outlining some of the trades that I placed and the dividends that I received.

Trading Performance / Portfolio Update

I started the month off by making a badly timed trade on GVC. This has long been a favourite stock of mine, and after it fell to 848p, I decided to buy some for my portfolio, only to see it fall a lot more, which encouraged me to buy more at 809.2p.

Anyway to cut a long story short, I got scared by the possible threat of increased UK gambling regulations, and sold out for a small loss at around 827.2p. Sometimes you have to take a loss and accept that you made a bad call, and that’s exactly what I did when the share price started to bounce back to a more reasonable level.

I did, however, make three decent trades that made up for this loss. I am a big fan of the FTSE 100 tracker ISF.L because of its high dividend yield of around 4.5% and its long-term growth potential, and traded this on three separate occasions.

First of all I bought at 717.40p at the end of October and sold at 730.1p the following week, and after the FTSE 100 fell back again on two later occasions, I then bought and sold this tracker two more times for gains of over 2% each time.

With regards to my portfolio, I now hold shares in six individual companies, all of which are large-cap FTSE 100 stocks that pay generous dividends and appeared undervalued at the time of purchase, and these are Royal Dutch Shell, BP, HSBC, Aviva, Imperial Brands and International Airlines Group.

IAG has been the best performer this month and is now close to my initial entry price, whilst Imperial Brands is still the weakest performer in my portfolio, although the yield of over 10% somewhat compensates for any running losses.

I recently made a new purchase of Aviva shares, which I am confident of in the long-term and will gladly take the 8% yield that is on offer right now. The other three shares – Shell, BP and HSBC – all traded lower towards the end of November, but once again I am happy to hold these for the long-term and collect the 6%+ annual dividends, payable every three months.

Dividends Received

Considering how low companies such as BP, Shell, HSBC and Imperial Brands have fallen, the value of my portfolio has held up pretty well with an overall gain of 1.83%, and this is because of my trading activity to some extent, but more so because of the dividends that I received last month.

November was actually a bumper month for dividends because BP, Shell, HSBC, Imperial Brands and IAG all went ex-dividend during this month, and because eToro pay their dividends on the ex-dividend date, there were lots of additional funds added to the account ready to be reinvested.

Copiers

Although I need a total of 10 copiers to advance to the next level and start earning a regular payment from eToro, I am actually delighted that I now have four people copying my trades on this social trading platform because this is twice as many as I had at the end of last month.

As always, it is all about results, so I will just keep plugging away and keep trying to make gains, both for myself and my current copiers, and hopefully this will be enough to attract more copiers in the future.

Final Thoughts

The goal of this account is to grow profits slowly and steadily, and so an overall gain of 1.83% is more than satisfactory with all things considered.

There were some good trading profits and plenty of dividend payments to keep the account balance heading in the right balance, and it was only really some significant falls in the two oil giants BP and Shell that prevented the portfolio from making some significant gains in November.

So with just one month left in 2019, let’s hope we get a Christmas rally to finish the year on a high and bank some healthy profits.

Follow Me on eToro

If you would like to follow my journey on eToro, simply open an eToro account 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 or portfolio management advice. 81% of retail investors accounts lose money when trading CFDs with this provider.

USD/JPY Analysis November 2019 – Downward Breakout Possible

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Price Action

It has been interesting to watch the price action of the USD/JPY pair in recent months because after hitting a low of around 104.46 back in August, it has been slowly trending upwards since then, and currently trades at 108.80 at the time of writing.

Indeed as you can see from the price chart below, the price has bounced back so much, it has not only touched the 200-day exponential moving average (as indicated by the red line), but has also traded above it for quite a while.

USDJPY Daily Chart - November 2019

Downward Price Breakout

You can also see from the chart above that it was clearly trending within two trendlines that marked the high and low points of this rising trend, but significantly closed below the lower trendline last week.

To be honest, I was expecting that this would probably mark the end of the recent uptrend, and would be the catalyst for a new downward move for the USD/JPY, but so far there hasn’t been a wave of selling to drive the price lower.

This is probably because some analysts, including Goldman Sachs, have been talking down the prospects of a recession in the US and global economy in 2020, predicting growth rates of 2.3% and 3.4% respectively for the coming year.

Nevertheless, there is still a possibility of a strong bearish candle forming on the daily chart in the next few days, so it could still be worth watching.

Future Price Moves

If the price does trade strongly lower, and closes below its two recent lows of 108.24 and 108.28, then I would be fairly confident that this would signal the start of a new downward price breakout.

As a result of this, the price would close below all of its major moving averages (20, 50, 100 and 200-day EMAs) and there is a lot of downside potential because it could easily drop back into the 104 – 106 range.

The alternative scenario is that the recent short-term strength in the USD/JPY continues, and we continue to see the price trading upwards of 109.

If this were to happen, then we would see the 50 and 100-day EMAs cross over the EMA (200), which is a very bullish signal that could attract a wave of buying to push the price above its previous highs of 109.50 and beyond the 110 level.

So the point is that while the picture is still unclear, the price action of the USD/JPY over the coming days and weeks could give you a strong indication as to whether there is going to be a sustained upwards or downwards trend in the near future.

I would probably favour a downward breakout at this moment in time simply because the MACD and stochastic indicators are suggesting that this long-term upward trend is running out of momentum on the weekly chart, but as I say, there is no need to second-guess the direction of any breakout until we get some clearer signals on the daily chart.