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  • Currency | Online Stockmarket Trading Update
    more competitive on the world stage There appears to be a new paradigm for the Australian dollar known as the Aussie Battler sparking growing concern among exporters in recent months The Aussie Battler failed to act in its traditional role as a shock absorber in falling during times of economic weakness which tends to make Australian exports more competitive Economists have been surprised that the dollar has not fallen much given the slump in commodities we have seen in recent months Aussie Dollar versus ASX Stock Market Performance The Aussie dollar tends to be a leading indicator of what is happening in the ASX equities market as illustrated in the charts below CHART 1 Aussie Dollar Performance 2009 2012 CHART 2 Aussie Stock Market Performance 2009 2012 Key facts in the performance comparisons between the Aussie Dollar versus ASX Stock Market Aussie dollars leads the equities market Typically the Aussie strengthens in the last quarter of the year and pulls back from March through to June When the Aussie dollars gets over extended too high funds get repatriated offshore draining funds from the local equities market Aussie dollar strength translates to higher ASX equities prices eg Mid 2010 through first quarter 2011 Aussie dollar volatility translates to weaker ASX equities prices eg Last half of 2011 Aussie dollar weakness translates to lower ASX equities prices eg Second quarter 2011 Conclusion The Aussie dollar is a great barometer for the Australian equities market and should be monitored as a lead indicator for your portfolio The IMF has revealed that it is considering classifying the Australian and Canadian dollars as official reserve currencies which include those currencies held in large quantities by foreign governments through their central bank reserves If the Aussie dollar is granted reserve currency status it is likely to lift demand for the currency from foreign institutions thereby effectively putting a floor under our currency and possibly creating a new paradigm for the Aussie Battler There are concerns that a reserve currency nation also raises the risk of dramatic capital flight from the economy during a severe slump which could exacerbate economic problems For trade ideas and recommendations on how to trade in this market sign up for a free trial of the D2MX Daily Trading Report which provides a daily serving of insightful market analysis from the D2MX Advisory team including Trade ideas and strategies Dividend enhancement strategies Market scans to watch International market analysis and Highlights from the S P ASX 200 To request an obligation free trial call 1300 610 024 or email advisory d2mx com au Also in this series Part 1 Simple Trend Finder Scanning Method Part 2 Going For Gold Part 3 The Gap Trading Method Part 4 The Power of Compounding Part 5 Measuring Your Trading Performance Part 6 Insuring Your Portfolio Michael Hevern Investment Adviser D2MX Trading This report was prepared by Michael Hevern It represents the views and opinions of the author It is not intended for use by any

    Original URL path: http://blog.traderdealer.com.au/tag/currency/ (2013-02-02)
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  • IMF | Online Stockmarket Trading Update
    some strength this week Traders cheered the news that the IMF raised its outlook for global economic growth to 3 5 for the year though the news was tempered by the IMF also urging stronger measures to deal with the eurozone debt crisis In the US the earnings season has begun on a positive note The banks are holding on to recent gains while we are seeing some profit taking in the tech sector and this money appears to be rotating into the downtrodden resource sector which would be good news for Australia Broadly the market indexes are hanging on to their 50 day moving averages but if these levels fail to hold we could see markets retest their 200 day moving averages some 7 below where we are today which would be a healthy correction Traders are having to balance the good US earnings reporting season and the troubles with eurozone debt issues in the PIIGS economies Domestic US economic news has been mixed this week but overnight there was positive news with the index of leading economic indicators posting a sixth straight increase in March while the Federal Reserve said banks will have two years to bring their activities in line with the Volcker rule before regulators start enforcing it which is expected to be seen positively by the banks and investors alike Key European markets are retracing from their 50 day moving averages and look to be on track to test their 200 day moving averages near term European financiers have been visiting the US this week to argue their case that the eurozone financial system needs even more funding than the recent EUR1 trillion LTRO Financial sector stocks have led the markets lower in the eurozone as the costs of borrowing for Spanish Italian and French debt have been edging higher while resource stocks have been generally weaker The eurozone markets are due for a bit of a bounce having closed lower in the past four weeks and the comments from the International Monetary Fund as it raised its forecast for global economic growth in 2012 and 2013 citing improved financial conditions and unwinding of the financial crisis have seen bargain hunters step in late this week The global investor mood is very much dependent on the resolution of the Spanish and Italian debt issues near term In Asia key markets are holding at or above their 50 day moving averages with the Hong Kong market outperforming The Chinese market has bounced strongly in recent weeks as traders anticipate that the Chinese government will lean towards monetary easing in the near term The main news of the week revolved around Chinese economic growth GDP which slowed to 8 1 in the first quarter from the year earlier period below the 8 4 expected Also traders are taking time to digest the ramifications of the announcement by the People s Bank of China to double the yuan s trading range against the dollar on a given day from 0 5 to 1 pushing currencies such as the yen and the dollar higher and hurting commodity prices In Australia the market continues to drift higher A number of major resource companies have reported quarterly production figures which have been impacted by weather conditions but companies are generally holding to their full year production forecasts which should be a positive for the overall market and could be just the ticket for our market to push through the key resistance levels that have kept our markets in check since the melt down back in August last year Commodity prices have been trading sideways this week as the US dollar has eased Crude oil prices are hovering around the US102 support level and copper has again been unable to trade above US4 00 and is holding below its 200 moving average support around US3 60 while gold prices have again found support around US1 640 The Aussie market has again bounced off its 200 day moving average and is testing its 9 month resistance level around 4380 level again On the S P ASX 200 the 4250 level remains the crucial support level and 4400 is the key level on the upside Stocks have effectively been drifting higher as we move into the bank reporting and dividend season but we need the materials sector to participate for the market to reach new highs A number of the S P ASX sectors are performing strongly above their 150 day moving averages having broken through key levels in early March These include the defensive sectors of Healthcare and Property Trusts while Telecoms and Utilities have eased The Financials Consumer Discretionary Consumer Staples Industrials and Energy sectors continue to bounce higher off their 150 day moving averages while the Materials sector looks to be finding support at current levels but it continues to underperform Traders should be looking to protect their profits in this market and reduce their risk by using options and warrants strategies The D2MX Financial Advisory Services team can help with these trades Call me on 1300 610 024 for further information Investors should also be looking to utilise options and warrant strategies to protect their positions and profits Options are a relatively cheap form of insurance as volatility remains low and you can also leverage yourself for breakout trades as they occur Remain attuned to the news from overseas particularly from the eurozone and China in relation to easing policies and the US as their markets back off their multi year highs Monitor the performance of China and the US dollar for a guide to the future direction of commodities and equities prices The S P ASX 200 index is currently trading at 4359 and is holding above the key 200 day moving average Key levels for the index next week will be 4250 and 4420 with 4300 the key short term pivot level By Michael Hevern DMX Retail Trading Desk For Buy and Sell recommendations on ASX listed companies

    Original URL path: http://blog.traderdealer.com.au/tag/imf/ (2013-02-02)
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  • Stock Market Tips | Online Stockmarket Trading Update
    productivity efficiencies and cut costs they may unable to shield themselves from the higher Aussie dollars impacts New Paradigm for the Aussie Battler In recent times the Reserve Bank has been attempting to take some of the heat out of the dollar by stockpiling foreign central banks deposits on its balance sheet However this appears to have had little effect as can be seen in Chart 1 below as the AUDUSD continues to hold above parity It is a case of central banks around the world simultaneously trying to debase their local currency in an attempt to make their economies more competitive on the world stage There appears to be a new paradigm for the Australian dollar known as the Aussie Battler sparking growing concern among exporters in recent months The Aussie Battler failed to act in its traditional role as a shock absorber in falling during times of economic weakness which tends to make Australian exports more competitive Economists have been surprised that the dollar has not fallen much given the slump in commodities we have seen in recent months Aussie Dollar versus ASX Stock Market Performance The Aussie dollar tends to be a leading indicator of what is happening in the ASX equities market as illustrated in the charts below CHART 1 Aussie Dollar Performance 2009 2012 CHART 2 Aussie Stock Market Performance 2009 2012 Key facts in the performance comparisons between the Aussie Dollar versus ASX Stock Market Aussie dollars leads the equities market Typically the Aussie strengthens in the last quarter of the year and pulls back from March through to June When the Aussie dollars gets over extended too high funds get repatriated offshore draining funds from the local equities market Aussie dollar strength translates to higher ASX equities prices eg Mid 2010 through first quarter 2011 Aussie dollar volatility translates to weaker ASX equities prices eg Last half of 2011 Aussie dollar weakness translates to lower ASX equities prices eg Second quarter 2011 Conclusion The Aussie dollar is a great barometer for the Australian equities market and should be monitored as a lead indicator for your portfolio The IMF has revealed that it is considering classifying the Australian and Canadian dollars as official reserve currencies which include those currencies held in large quantities by foreign governments through their central bank reserves If the Aussie dollar is granted reserve currency status it is likely to lift demand for the currency from foreign institutions thereby effectively putting a floor under our currency and possibly creating a new paradigm for the Aussie Battler There are concerns that a reserve currency nation also raises the risk of dramatic capital flight from the economy during a severe slump which could exacerbate economic problems For trade ideas and recommendations on how to trade in this market sign up for a free trial of the D2MX Daily Trading Report which provides a daily serving of insightful market analysis from the D2MX Advisory team including Trade ideas and strategies Dividend enhancement strategies

    Original URL path: http://blog.traderdealer.com.au/tag/stock-market-tips/ (2013-02-02)
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  • Are You Looking Forward To Christmas? Seasonal Trends in the Stock Market | Online Stockmarket Trading Update
    falling throughout the month and has become famous for the 1987 crash the 1997 collapse of the Asian economies and the sharp falls during the credit crunch in 2008 This year s October weakness was slightly delayed beginning in the middle of the month A bottom is often formed in November and early December before a strong rally is seen in the final two weeks of December each year The seasonal odds certainly favour a rally at this time of year In Australia during the last 27 years the Santa Claus rally failed to materialise in just four years 1990 1995 2007 and 2011 The average return over the last two weeks of December is 4 9 If this rate of growth was to be sustained throughout the year we would see annual growth of 119 per annum in the markets Why is it that Christmas only comes once a year Even during 2008 in the depth of the Global Financial Crisis the market managed to rally in December While it may appear that the world is falling apart around us at the moment the odds still favour a strong bounce in December While seasonal patterns are not guaranteed to deliver strong profits to investors or traders the patterns do have a high probability of playing out in the future Not all the reasons for these seasonal tendencies are clear but it can be very profitable to follow them through all the same Last year the rally did not play out as expected however the market rallied both before and after the strong seasonal period Look out for a bottom to form in the current decline sometime during December and the odds favour a strong rebound from the current down trend Jeff Cartridge Education Manager Tags christmas rally global financial crisis market patterns market trends seasonal trends Stock Market Analysis Stock Market Analysis Markets Roll Over The Cliff Weekly Market Wrap Markets Are Sliding Over the Cliff This entry was posted on Friday November 16th 2012 at 11 00 am and is filed under Stock Market Analysis Trading Strategies You can follow any responses to this entry through the RSS 2 0 feed You can leave a response or trackback from your own site Leave a Reply Click here to cancel reply Name required Mail will not be published required Website RSS Feed Twitter Follow Us Sign up to our free weekly e newsletter Feel inspired Start trading Recent Post Markets Cap Best January Performance for Over a Decade Weekly Market Wrap The Covered Call Collar Part 3 1 of Options Trading for All Types of Market Environments Stock Market Analysis Markets Cap Best January for Over a Decade Stock Market Analysis Traders Take Profits Stock Market Analysis Markets Reach Bull Market Territory Stock Market Analysis US Markets Ease Near All Time Highs Markets Higher As Investors Play Catch Up Weekly Market Wrap Investing in 2013 continued Part 9 Stock Trading Tips for All Types of Market Environments Stock Market

    Original URL path: http://blog.traderdealer.com.au/2012/11/16/are-you-looking-forward-to-christmas/ (2013-02-02)
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  • Christmas Rally | Online Stockmarket Trading Update
    apart around us at the moment the odds still favour a strong bounce in December While seasonal patterns are not guaranteed to deliver strong profits to investors or traders the patterns do have a high probability of playing out in the future Not all the reasons for these seasonal tendencies are clear but it can be very profitable to follow them through all the same Last year the rally did not play out as expected however the market rallied both before and after the strong seasonal period Look out for a bottom to form in the current decline sometime during December and the odds favour a strong rebound from the current down trend Jeff Cartridge Education Manager Tags christmas rally global financial crisis market patterns market trends seasonal trends Stock Market Analysis Posted in Stock Market Analysis Trading Strategies No Comments Ho ho ho Tis the Season to Be Jolly Friday December 9th 2011 With Christmas fast approaching the seasonal patterns in the stock market suggest that the markets are likely to be stronger into the end of the year Historically it is normal for the stock market to rally in December This rally is known as the Santa Claus rally and brings Christmas cheer to all investors Seasonal patterns were first discussed by Larry Williams with reference to commodities Larry noted that seasonal price fluctuations occurred in agricultural commodities with prices falling when there was an abundant supply around the harvest times and prices rising when supply was scarce prior to the next harvest These seasonal patterns can also be observed in the stock market as supply and demand for shares fluctuates throughout the year The Australian market is typically strong through March and April as it was this year and then weaker through June before rallying again in July The July rally failed to eventuate in 2011 but the June weakness was certainly visible so much so it carried on through July October has a deservedly bad reputation for falling throughout the month and has become famous for the 1987 crash the 1997 collapse of the Asian economies and the sharp falls during the credit crunch in 2008 A bottom is often formed in November and early December before a strong rally is seen in the final two weeks before the New Year The seasonal odds certainly favour a rally at this time of year In Australia during the last 27 years the Santa Claus rally failed to materialise in just four years 1990 1995 2007 and 2010 The average return over the last two weeks of December is 4 9 If this rate of growth was to be sustained throughout the year we would see annual growth of 119 per annum in the markets Why is it that Christmas only comes once a year While seasonal patterns are not guaranteed to deliver strong profits to investors or traders the patterns do have a high probability of playing out in the future Not all the reasons for these

    Original URL path: http://blog.traderdealer.com.au/tag/christmas-rally/ (2013-02-02)
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  • Global Financial Crisis | Online Stockmarket Trading Update
    savings however these savings will be limited to the first 1 000 of interest earned an extra 177 in your pocket In July 2012 PAYE will be able to simplify their tax returns affecting six million Australians The bracket creep was addresses come July 1 it equates to an extra 9 a week for a workers earning 50 000 Addressing the looming emerging skills shortfall the Government will spend 661 million to provide up to 70 000 new training and places and support about 22 500 new apprentices The budget funding depends on Resource Rent Tax passing and China s insatiable demands for commodities continuing to fund spending Our View The Australian economy has come through the Global Financial Crisis remarkably unscathed and the issues over the sovereign debt in Europe is a timely reminder The government is relying on our growing export markets and the implementation of the Resource Rent Tax to fund the budget Time will tell whether our dream run can continue or whether we too experience contagion from overseas influences By Michael Hevern Head of Research Tags federal budget global fin global financial crisis Healthcare Henry henry tax review tax Posted in ASX Trading News Stock Market Analysis No Comments Old Dog New Tricks Australian Markets 2010 Preview Wednesday January 20th 2010 The Australian markets continue to show strength The technical structures support our view that the markets look set to trade between 4550 to 5400 this year The markets have made a fantastic recovery in the past ten months having recovered 50 from the fall that resulted from the global financial crisis GFC The 5000 level is the obvious key psychological level and once that is penetrated investors will be looking for targets of 5200 then 5400 On the downside the key support is around the 4550 level as seen on the monthly chart below Key drivers for the markets in 2010 include Catalysts Earning reports at least early in the year will have lower thresholds when compared to the previous corresponding period pcp providing support Global demand for resources is likely to continue especially from China Merger and acquisition activity are likely to be a primary focus this year IPO s are likely to be a focus this year Headwinds Rising interest rates Monetary tightening in the Chinese economy US economy still in trouble Impact from central banks unwinding their generous financial stimulus packages Problems in Europe with economies such as Greece and Spain severely impacted for the GFC Our View The ASX market continues to consolidate the gains of 2009 and looks set to track higher this year with the sectors that lead in the recovery from the global financial crisis likely to continue to outperform in 2010 The 5000 level is the obvious key psychological level and once that is penetrated investors will be looking for targets of 5200 then 5400 Michael Hevern Head of Research Tags asx 200 global financial crisis MDS Financial mds financial research Posted in Stock Market Analysis

    Original URL path: http://blog.traderdealer.com.au/tag/global-financial-crisis/ (2013-02-02)
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  • Market Trends | Online Stockmarket Trading Update
    his view We at MDS Financial Research have been keeping subscribers abreast of the movements in the Chinese market since the middle of the year We have been highlighting the fact that the Chinese market has been leading the western world as markets have recovered from the worst market crash since the Great Depression Take a look at these charts from Market Analyser Figure 2 1 United States S P500 Peak to Trough 55 move in 34 weeks Figure 2 2 China s Shanghai Composite Peak to Trough 100 move in 39 weeks followed by a 25 fall in the space of 5 weeks Figure 2 3 Australia s SPI Peak to Trough 55 move in 33 weeks The Chinese market has led the markets of the western economies by around six to eight weeks The recent pullback in the Chinese market was around 25 in the space of five weeks Those traders and investors who after the turmoil of 2007 and 2008 agree that successful trading is all about timing the market and not time in the markets should be protecting their capital in the near term In the United States the S P500 has recovered in a sustained move up from trough to peak of 55 move in 34 weeks while in Australia the SPI has recovered in a similarly sustained move up from trough to peak of 55 move in 33 weeks These charts show that the US and Australia look be in sync with the Chinese market though lagging by around six to eight weeks If we adjust for the fact that the Chinese have been leading the markets of the western economies we can see that our markets may be in for a pullback in the near term China has shown that pullbacks in the current market conditions can be quite sharp hence the suggestion of a cautionary stance Conclusion Trading capital is crucial for successful trading and the lack of trading capital is probably the single most consistent reason why traders fail There is no single right way to trade as every individual is different Key issues traders must resolve Build up trading capital Know your system Know your market Know yourself Concentrate on trading with positive expectancy The ATAA Conference was well worth the price of admission The Annual conference is generally held each October and the ATAA endeavors to rotate the location Australia wide The next conference is scheduled for Queensland next October but if you cannot wait till then refer to the ATAA website to find out when the next monthly meeting is being held at a location near you To keep up to date with market developments visit MDS Financial Research and take up a free trial Disclaimer MDS Financial Group provides a range of specialist services that gives investors and traders the skills to make sound financial decisions We maintain an un biased independent practice across areas of private client advice corporate advisory services online trading research and analysis tools real time market information and stock recommendations This information is prepared for the general information of traders and investors The information does not take into consideration the specific needs investment objectives or financial situations of any person Any individual reading this should discuss with their financial planner or advisor the merits of any recommendation or offer presented in this material for their own specific circumstances and realise that not all investments are appropriate for every individual Incorporating MDSnews Bourse Data and Trader Dealer Online Financial Services are provided by MDS Financial Services Pty Ltd AFSL No 333298 To download this report as a pdf click here Profiting in All Markets now that is what we as traders and investors all aim to do Last weekend the Australian Technical Analysts Association ATAA presented a conference aimed at traders and investors who use charting and quantitative share analytics to identify and trade shares successfully ATAA Annual Conference The conference brought together a diverse range of speakers including market makers market timers short and long term traders These speakers covered topics such as Market Timing Trading Systems Development Trading Psychology Spread Trading Adapting Trading Methods to Market Conditions Penny Stock Trading Methods Risk Management Trend Identification Full Range of Trading Techniques This conference stands out because the presenters actually trade and they enthusiastically share their experience and knowledge with conference participants The key theme of the conference was that trading is a process and traders should be using a systematic and measured approach to trading Traders must understand that markets move in cycles and they must be able to identify when a stock is in trend transition or in a persistent trend Trading is dependent on trade expectancy which must be positive Trading Systems Using a systematic approach requires considerable back testing to give the trader confidence Dr Howard Bandy the author of the acclaimed book Quantitative Trading Systems said that the design testing and trading of a mechanical trading system can take anywhere up to 10 000 hours before the trader is completely confident that the system works When designing a trading system focus on trade consistency equity drawdown and profitability trade expectancy and avoiding over optimisation by careful selection of the market test data sets Do not be afraid to follow a systematic approach which is consistently profitable as this simply means that the trading system being used is in sync with the market Strings of consecutive wins are great Market Timing and Cycles Markets move in cycles and identifying these cycles gives the quantitative chart trader an advantage over other investors Trading when the market cycle is trending either up or down produces the big money Technical analysts aim to trade only when the market is moving and in so doing they must identify trends whether they are creeping or thrusting The earlier the trend is identified the bigger the profits attained However there is a balance between entering the trade too early and waiting for the trend to

    Original URL path: http://blog.traderdealer.com.au/tag/market-trends/ (2013-02-02)
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  • Trading Strategies | Online Stockmarket Trading Update - Part 2
    are a type of warrant listed on the ASX They are a leveraged trading instrument that provides investors with upward of 30 gearing on the underlying asset while having all the benefits of share ownership Investors can choose their level of leverage based on their own risk profile as there are a number of Instalment MINI Warrants or leverage levels available for each stock Before trading Instalment MINI Warrants traders need to read and understand the ASX Understanding Warrants Booklet and then sign the Warrant Agreement form Speak to your broker or contact us at D2MX on 1300 610 024 for further information The key features of Instalment MINI Warrants include Instalment MINI Warrants are traded and regulated on the ASX Stock exchange You can trade long and participate in the dividends and franking credits There are NO margin calls They offer an efficient way to trade dividend paying stocks to boost yields No credit checks or approvals required In summary Instalment MINI Warrants are geared product that are listed on the ASX have known risks are simple flexible and transparent while offering all the benefits of share ownership and there is no risk of a margin call The main benefits of trading Instalment MINI Warrants on dividend paying stocks Listed and traded on the ASX offering flexibility and transparency Increased dividend income and franking credits through leveraged exposure to movements in the share price Pay the Final Instalment any time prior to maturity and receive the underlying shares A lower capital outlay is required to achieve the same dividend income Can offer potential tax benefits The maximum loss is limited to the initial outlay Can be traded in your Self Managed Super Fund SMSF The risk of trading Instalment MINI Warrants As with any leveraged investment product the price of the underlying asset may fall prior to the time of sale or even prior to the ex div date The value of the Instalment Warrant could fall or be significantly less valuable on its maturity date or may expire worthless resulting in a total loss of the initial monies outlaid for the trade Leverage is a two edged sword it enhances any gains but also increases any loss sustained On the maturity date your Instalment MINI warrant may be significantly less valuable or may expire worthless If a Stop Loss Trigger Event occurs the amount a holder receives may be nil Dividends are not final and not guaranteed to be paid Terminology The Instalment MINI warrant is made up of three parameters Instalment Value the price at which it trades Final Instalment Price the loan amount Maturity Date the date on which the Instalment ceases to trade or is rolled Case Study Sam wants to trade ANZ for the dividend and franking credits and is looking to boost her returns She planned to trade ANZ on 4 October 2012 when ANZ was trading at 25 20 and Instalment Warrant ANZJOA is trading at 13 84 ANZ is expected to go Ex div 0 82 on 10 November 2012 Note This case study is general in nature and does not incorporate any specific tax or personal circumstances of the investor Investors should not rely on the information and should obtain specific advice before investing in this product Chart ANZ Trade produced in d2mxIRESS platform The Instalment MINI Warrant and Share Trade Comparisons The trade needs to be held for 45 days to qualify for the franking credits and the calculations are done assuming no capital gain that is assuming ANZ pulls back to the original buying price of 25 20 then the trade calculations are as follows assuming traders tax rate is 46 5 Funding Cost Calculation In order to calculate the amount you are paying in funding costs for holding ANZJOA over the 45 days assumed holding period use the following calculation Funding Cost Loan Amount STRIKE Price Entry date Funding Rate Holding Period 365 11 36 8 5 45 365 0 12 So if ANZ pulls back to its original purchase price after the 45 day holding period and the position is closed there would be no capital gain on the holding but Sam would get to collect 3 254 plus 1 389 worth of franking credits for a grossed up yield of 4 6 in 45 days if she traded ANZ using shares However if Sam traded the ANZJOA instalment MINI warrant then she would collect 5 925 in dividends plus 2 529 worth of franking credits for a grossed up yield of 8 5 in 45 days if she traded ANZ using instalment MINI warrant note if ANZ was trading at 25 20 again there would be a funding cost of 0 12 cents per share part of which would be tax deductible Of course if ANZ is trading above the purchase price after the 45 day holding period then there would be an additional capital gain and conversely a capital loss if ANZ was trading below 25 20 The Trade If you want to take advantage of the bank dividend season then the Instalment MINI Warrants are an excellent way to boost your yield Contact us at D2MX on 1300 610 024 and we can help you trade using Instalment MINI Warrants to boost your returns Each Instalment Warrant has a PDS document which details all the features of the specific warrant For more trade ideas and recommendations sign up for a free trial of the D2MX Daily Trading Report which provides a daily serving of insightful market analysis from the D2MX Advisory team including Trade ideas and strategies Dividend enhancement strategies Market scans to watch International market analysis and Highlights from the S P ASX 200 To request an obligation free trial call 1300 610 024 or email advisory d2mx com au Michael Hevern Investment Adviser D2MX Trading More in This Series Part 1 Shorting With Limited Risk Using MINIs Part 2 Boosting Dividend Yield Using Warrants This report was prepared by Michael Hevern It represents the views and opinions of the author It is not intended for use by any third party without the approval of Michael Hevern While this report is based on information from sources which are considered reliable its accuracy and completeness cannot be guaranteed Any opinions expressed reflect my judgment at this date and are subject to change Contracting Hevern Pty Ltd is a Corporate Authorised Representative No 408868 of D2MX Pty Limited ABN 98 113 959 596 AFSL No 297950 D2MX and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd Opinions conclusions and other information expressed in this report are not given or endorsed by D2MX unless otherwise indicated The information contained in this Report is General Advice only as the information or advice given does not take into account your particular objectives financial situation or needs Disclaimer Using leverage to invest can be a two edged sword as it can magnify your returns when the stock price rises but will in turn magnify the losses if the trade does not perform as expected Tags dividend yield Dividends instalment MINI warrants MINIs Trading Strategies warrants Posted in Trading Strategies No Comments Identifying Trends Using the D2MX Chart Tool Friday October 5th 2012 The basis of technical analysis is to identify a trend and then trade in that direction There are a number of different ways to identify a trend and today we will take a look at some of the tools in the D2MX Chart system that can assist you with this process D2MX Charts are part of the D2MX Trade Tools plugin available in the d2mxIRESS Bourse and Market Analyser platforms The simplest way to identify a trend is to take a look at the bars or candlesticks on a D2MX chart A series of green candles or bars show a rising trend while a series of red candles or bars show a falling trend Using this simple analysis allows you to quickly identify a trend It works particularly well in longer timeframes like weekly or monthly as some of the noise is filtered out Taking trend analysis one step further we can take a look at the definition of a trend which was created by Charles Dow who also created the Dow Jones Index This is known as Dow Theory and states an uptrend is defined as a series of higher lows and higher highs A downtrend is defined as a series of lower highs and lower lows At a transition between trends the share fails to make a higher high and forms a lower high This is not yet a downtrend until it breaks below the previous low blue line to form a lower low From this point on there is now a downtrend in place You can also use trend lines to define the direction of a trend A downtrend line is drawn above the share price joining up as many of the highs as possible This line is then monitored for a break to the upside signalling a change in trend An uptrend line can be drawn underneath the share price joining as many lows as possible A break in this line signals a change in trend A word of caution however a break in a steep downtrend line may just mean the share is no longer going down as fast as it was Take a look at the chart below for an example of a break in the downtrend in GRY The initial breakouts did not signal the start of a new uptrend instead the share is no longer falling as fast A break of a flat trend line close to horizontal is better as the share price has no choice but now to move higher Other than just looking at the chart and the candles you can use indicators to identify trends as well The most common of these is the moving average If the share price is above average it is rising and if it is below average it is falling While this simple definition can work it is more common for two moving averages to be combined to identify a trend When the faster moving average red line is above the slower moving average blue line then the share is in an uptrend and when the moving averages turn down and the faster crosses below the slower average the share is now in a down trend One more indicator that is widely used to define a trend is the MACD Before a moving average crosses over the two averages must come closer together The MACD is an indicator based on the distance between two moving averages The MACD was originally calculated as the difference between a 26 period and a 12 period moving average red line A signal line of 9 periods blue line is then used to provide a crossover signal similar to that which occurs in a moving average The indicator is also displayed in the chart below as a histogram with bars above and below the zero line We have looked at a number of different ways here to define a trend It is obviously not possible and certainly not recommended to use all of these approaches Choose one that you are comfortable with and then stick with it Jeff Cartridge Education Manager Tags charting d2mx chart moving averages technical analysis technical indicators Trading Software Trading Strategies Posted in Trading Software Trading Strategies No Comments Measuring Your Trading Performance Part 5 Stock Trading Tips for All Types of Market Environments Friday September 28th 2012 Trading is a business and investors must treat it that way to be successful in the markets One of the keys to running a business is being able to measure performance and profitability As a trader you know that the only thing you can define before entering a trade is the amount of risk you re prepared to accept How much money are you willing to lose per unit of your investment if you are wrong about the direction of the trade Note there will be times when your loss is greater than your initial risk for example when the market gaps on open Systematic traders will risk a predefined amount on each trade and therefore it is possible to rate the performance of your trading by comparing your profits losses with the amount initially risked in the trade Initial Risk R A key principle for both trading and investing success is to always have an exit point before you enter a position a point where you know that you are wrong about the trade Van Tharp in his best selling book Trade Your Way to Financial Freedom says that trading without a pre determined exit point is like driving across town and not stopping for red lights you might get away with it a few times but sooner or later something nasty will happen Van Tharp has championed the use of initial risk and R multiples to measure trade performance The exit point that you have when you enter into a position is the whole basis for determining your risk or R and the R multiples i e reward risk ratios of your profits and losses can then be measured Stops Determine Risk R A stop is a predetermined exit and should be used to preserve your trading capital You can use a trailing stop which adjusts the stop when the market moves in your favour thus giving you a profit taking exit opportunity Trading Using R A couple of golden rules of trading 1 Never open a position in the market without knowing exactly where you will exit that position 2 Cut your losses short and let your profits run Know When to Exit Always have a predetermined exit point before you enter a position The purpose of that exit point is to help you preserve your trading and investing capital And that exit point defines your initial risk 1R in a trade For example you buy a stock at 50 and plan to sell if it drops to 40 Your initial risk or 1R is 10 per share i e 1R 50 40 Now you have a number of possible outcomes on this trade If you exit the trade when the stock reaches say 70 then your reward risk ratio is 2R i e 2R 70 50 10 where 1R 10 If you are using a trailing stop and are stopped out at say 45 then your Reward Risk ratio for the trade would be 0 5R i e 0 5R 45 50 10 where 1R 10 Cutting Your Losses There are many reasons for adjusting or trailing your stops and cutting your losses The way you define your losses or trail your stops will depend on the trading style that you use Just remember you need to know when you are getting out of a position your initial exit point or stop to determine your risk Letting Profits Run Using trailing stops and knowing your Reward Risk ratio for the trade can enhance your confidence in the trade improve your ability to trade and give you the confidence to adjust your position size according to your profitability Risk or R In Dollar Terms We ve provided an example of calculating risk according to the share price but you may like to think about it in a slightly different way through dollar terms If your minimum unit of investment is 10 000 and you decide that you will sell if the value of your investment dropped to 9000 then your initial risk is 1000 and 1R is 1000 R is simply the initial risk per share of stock or per minimum investment unit Trade Example Using Risk or R A trade in CSL demonstrates how to you can use Risk to measure and manage a trade In mid February CSL broke to a new trading range above 32 90 For this trade setup we entered the trade at 32 90 with initial stop at 29 90 The initial risk 1R was 3 00 1R 32 90 29 90 If you were trading on a weekly system the trade would be still active with a 4 1R open profit i e 45 20 32 90 3 00 where 1R 3 00 So if you initially risked 1 000 you would be in profit to the tune of 4 100 at this time Managing Risk or R Investors and traders tend to be overly optimistic about the trades that they make particularly in the early days They often don t understand their worst case risk or even think about such factors as slippage gapping and the like Using initial risk or R to measure your trading performance can help build your confidence and improve your trading In subsequent articles we will use IRESS Trader to demonstrate how to determine position sizing and discuss measuring portfolio performance using R multiples Investment returns over a long period are not so much dependent on the amount of money you have to invest but rather they are more a function of managing your trade risk and letting compounding work its magic by starting to invest as early as possible refer to the article on The Power of Compounding For more trade ideas and recommendations sign up for a free trial of the D2MX Daily Trading Report which provides a daily serving of insightful market analysis from the D2MX Advisory team including Trade ideas and strategies Market scans to watch International market analysis and Highlights from the S P ASX 200 To request an obligation free trial call 1300 610 024 or email advisory d2mx com au Also in This Series Part 1 Simple Trend Finder Scanning Method Part 2 Going For Gold Part 3 The Gap Trading Method Part 4 The Power of Compounding Michael Hevern Investment Adviser D2MX Trading This report was prepared by Michael Hevern It represents the views and opinions of the author It is not intended for use by any third party without the approval of Michael Hevern While this report is based on information from sources which are considered reliable its accuracy and completeness cannot be guaranteed Any opinions expressed reflect my judgment at this date and are subject to change Contracting Hevern Pty Ltd is a Corporate Authorised Representative No 408868 of D2MX Pty Limited ABN 98 113 959 596 AFSL No 297950 D2MX and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd Opinions conclusions and other information expressed in this report are not given or endorsed by D2MX unless otherwise indicated The information contained in this Report is General Advice only as the information or advice given does not take into account your particular objectives financial situation or needs Disclaimer Using leverage to invest can be a two edged sword as it can magnify your returns when the stock price rises but will in turn magnify the losses if the trade does not perform as expected Tags measuring risk risk in trading stock trading tips Trading Strategy Posted in Trading Strategies No Comments The Power of Compounding Part 4 Stock Trading Tips for All Types of Market Environments Friday September 14th 2012 Compounding can be used to great effect in your day to day trading I ve had a number of people ask how to use compounding to improve investment returns so today we will discuss this in more detail The Greatest Mathematical Discovery Ever Made Albert Einstein once remarked that the most powerful force in the universe is compound interest He came up with a formula called the Rule of 72 It states that if you take 72 and divide it by the annual percentage return it will give you the number of years it would take for your investment to double For example say you invested 100 into a stock that gave you an annual return of 20 At the end of one year you would have 120 Instead of taking out the 20 profit you leave it inside for another year at the same 20 At the end of the second year your investment would grow to 144 The next year it would grow to 172 80 and on the fourth year it would grow to 207 36 Using the Rule of 72 you can quickly do the maths In this example if you calculate 72 divided by 20 you get 3 6 ie in 3 6 years your investment of 100 will have doubled Warren Buffett Compounding is one of the wonders of the world and Warren Buffet has used it to great effect in getting the value of his investments to grow at spectacular rates He has heralded compounding as his secret weapon in creating the second biggest fortune in the world purely by investing in US stocks Warren Buffett achieved an average annual return of 24 7 for 49 years This means that his money doubled every 2 9 years 72 24 7 He turned an investment of 100 000 in 1956 into 4 200 000 000 4 2 billion today To put it simply over longer time frames the impact of compounding becomes dramatic Compounding and Retained Earnings Warren Buffett Warren Buffett has referred to the use by a company of its retained earnings as a test of company management He says that if a company can earn more money on retained earnings than the shareholder can the shareholder is better off taxation aside if the company retains profits and does not pay them out in dividends If the shareholder can achieve a higher rate of return than the company the shareholder would be better off if the company paid out all its profits in dividends taxation situation again excluded so that they could use the money themselves In summary if a company can retain earnings to grow shareholder wealth at better than the market rates available to shareholders it should do so If it cannot it should pay the earnings to shareholders and let them do with them what they wish In the book The Snowball Warren Buffett and the Business of Life there are some great revelations including realising the power of compounding Compounding is like a snowflake that rolls into a snowball with time 10 000 invested at 7 is worth over 20 000 in 10 years time In 50 years time that 10 000 is worth more than 300 000 Of course this does not take into account inflation eating away at your capital but with many stocks offering a 7 yield the capital growth could mitigate the effect of inflation and in fact beat it Applying Compounding in Day to Day Trading The average investor can follow the path of the investing icons like Warren Buffet if they have the time and the patience to implement his methodology There are a couple of additional rules that Warren Buffet adheres to in investing Rule 1 Do not lose money and Rule 2 Do not forget Rule 1 Active Investors and Compound Returns Active investors can apply the same compounding philosophy into their trading plan through the utilisation of compound returns Compound returns are achieved when you invest a sum of money at a particular rate of return Instead of removing the monies that you have accumulated from the investment you add it back to the principal sum and reinvest this larger sum So the next time the rate of return is on a larger principal sum This continues until the returns become greater and greater Compound return is return that is paid earned on both the principal and also on any accumulated monies from past years It is often used when someone reinvests any interest earnings they gained back into the original investment Over time compound returns will make much more money than simple returns because the interest is earned on larger and larger amounts The formula used to calculate compound return is M P 1 i N M is the final amount including the principal P is the principal amount i is the rate of return per year N is the number of years invested Let s say you had 10 000 to invest for 3 years at rate of 5 compound interest Using the above formula your 10 000 would be worth 11 576 after 3 years Using a Microsoft Excel spreadsheet you could simply enter 10 000 1 05 3 and Excel will return the answer Practical Application of Compounding Returns We have done some analysis of how you can use compounding returns to improve your trading performance Active traders can use this in their Trading Plan to increase their capital invested by reinvesting their winnings In the chart below we have started with a 10 000 initial investment and calculated possible returns at varying investment returns We have calculated the returns weekly with investment returns of between 2 and 10 per week These returns would be your net returns after any costs For example if we had a 10 000 initial investment and reinvested monies earned at 2 per week after 10 weeks you would have 12 190 to invest If your investment return improved to 4 per week after 10 weeks you would have 14 802 to invest After 20 weeks of consistently earning 2 and 4 per week you would have 14 859 and 21 911 respectively From the chart you can see the returns are magnified if you can consistently grow your investments at a steady rate of return Returns generated on an initial investment of 10 000 compounding weekly on various rates of returns Note the lognormal chart axis The secret is consistency time and the power of compounding I have also supplied the table used for this chart for your reference Keys To Success For compounding to work you need to generate consistent returns Be realistic about your goals for investment returns Requires a systematic approach to your trading We have used 30 weeks in the chart example provided because there will be weeks when your trading produces a loss There are 222 trading days for the year which equates to 44 4 trading weeks So you can improve your results if your are consistently profitable Manage your losses and keep them small We will discuss how to accomplish this in later articles Conclusion The power of compounding is one of the greatest wonders of the world It works especially well for wealth generation and investing icons like Warren Buffett have used it to dramatic effect on the growth rate of portfolio returns The example given in this article clearly highlights the magic that the process of compounding works on one s trading By generating consistent returns and letting your money compound over time you have the potential to improve your returns Investment returns over a long period are not so much dependant on the amount of money you have to invest but rather they are more a function of letting compounding work its magic by starting to invest as early as possible For more trade ideas and recommendations sign up for a free trial of the D2MX Daily Trading Report which provides a daily serving of insightful market analysis from the D2MX Advisory team including Trade ideas and strategies Market scans to watch International market analysis and Highlights from the S P ASX 200 To request an obligation free trial call 1300 610 024 or email advisory d2mx com au Michael Hevern Investment Adviser D2MX Advisory TABLE Returns generated on an initial investment of 10 000 compounding weekly on various rates of returns Also in This Series Simple Trend Finder Scanning Method Part 1 Stock Trading Tips for All Types of Market Environments Going For Gold Part 2 Stock Trading Tips for All Types of Market Environments The Gap Trading Method Part 3 of Stock Trading Tips for All Types of Market Environments This report was prepared by Michael Hevern It represents the views and opinions of the author It is not intended for use by any third party without the approval of Michael Hevern While this report is based on information from sources which are considered reliable its accuracy and completeness cannot be guaranteed Any opinions expressed reflect my judgment at this date and are subject to change Contracting Hevern Pty Ltd is a Corporate Authorised Representative No 408868 of D2MX Pty Limited ABN 98 113 959 596 AFSL No 297950 D2MX and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd Opinions conclusions and other information expressed in this report are not given or endorsed by D2MX unless otherwise indicated The information contained in this Report is General Advice only as the information or advice given does not take into account your particular objectives financial situation or needs Disclaimer Using leverage to invest can be a two edged sword as it can magnify your returns when the stock price rises but will in turn magnify the losses if the trade does not perform as expected Tags buffett compound interest investing stock trading tips Trading Strategies Posted in Trading Strategies No Comments Webinar Playback A Bottom Up Approach to Trading Friday September 7th 2012 In a bottom up approach to you look for the shares that are doing well regardless of the current state of the market or bigger picture of the economic environment In this webinar we used the Market Analyser 7 to demonstrate how to find trade ideas using this bottom up approach And if you like this check out the top down approach as well What s up next in the webinar program Tags Iress iress trader Market Analyser trading education Trading Strategies trading webinar Posted in Market Analyser 7 Trading Software Trading Strategies No Comments Bottom Up Trading Using D2MX Trade Tools Friday September 7th 2012 There are over 2000 shares listed on the Australian Securities Exchange and it can be difficult to find the diamonds amongst the rocks that are scattered through the market Fortunately the D2MX Trade Tools make it easier to find the opportunities by allowing you to quickly filter out shares that you are interested in This approach to the market is known as bottom up trading identifying the shares that are doing well regardless of the current state of the market or bigger picture of the economic environment The main tool you can use to quickly scan the markets is the D2MX Analyser This allows you to identify shares that meet your criteria whatever they may be However with a wide range of indicators and criteria to choose from how do you know which is the best to use To make money in shares you buy at a lower price and sell at a higher price It sounds easy but is it Here we are going to use a filter that identifies shares that have gone up 20 in the last month because rising share prices is how you make money From the indicator drop down list select the indicator Price Change Above Below Set the parameters to Close Price Increase 20 30 These parameters identify shares where the closing price is more than 20 above the price 30 days ago A nice simple filter but very effective One challenge with this scan is you will pick up a lot of illiquid shares A share that trades very low volume and is below 10 cents can easily add 20 in a month It only has to move 2 cents to achieve this You can filter out these shares using the Filter Settings in the D2MX Analyser Wizard Click on Filter Settings and you can filter by price volume or both In the screenshot above the price has been set to 0 10 10 cents in Analyser which is different to what is displayed elsewhere in the program The volume has been set to 500 000 and this volume applies to the last trading day only it is not an average A word of caution is necessary when setting this volume filter volumes are very low at the start of the trading day in all shares If you were to run a scan at 10 30am you will find more shares filtered out than if you ran the same scan at 3 30pm Select the watchlist from Analyse Lists and you can now run a scan on your chosen watchlist In a future release you will be able to scan the whole market but for now you can scan up to the Top 300 shares or any of your User Watchlists In the Quote screen you can use the Navigator and then click Industry You can save the list of shares in an industry sector as a User Watchlist and then run a scan on that watchlist By creating a watchlist for each sector you can then scan the whole market The results of the scan are displayed in the list You can then quickly flick through these shares using the black buttons at the top of the D2MX chart Keep flicking through until you find a share that looks interesting from a technical analysis point of view Typically this means a share that is rising steadily from bottom left to the top right of the chart You can quickly add it to a watchlist with a right click on the chart then Add to Watchlist and select the watchlist you want to add to Once the shares are in the watchlist you can analyse them further Set up your screen with different charts and data windows and use the D2MX charts to view the shares You can also take a look at the fundamental info by opening the Security Info tab located under the Security menu Once you have your screen configured the way you want it use the Broadcast function to analyse the shares in more detail Right click on the share in the watchlist and click Broadcast to update all the open windows While the timing may not necessarily be right for immediate entry into these trades you have quickly identified potential opportunities Even though you are effectively ignoring the bigger picture of what is happening in the markets this approach will highlight more shares in the stronger sectors and also more shares when the markets are strong as well Using this approach you can quickly narrow down the choice of shares you wish to trade and find those diamonds in the rough Jeff Cartridge Education Manager Tags Analyser Wizard finding trade ideas Iress software training Trading Software Trading Strategies Posted in Market Analyser 7 Trading Software Trading Strategies No Comments Top Down Analysis A Valuable Approach Part 3 Stock Trading Tips for All Types of Market Environments Friday August 31st 2012 In the last few weeks we ve highlighted the Top Down Analysis approach to selecting stocks in your trading universe In our most recent webinar Jeff Cartridge on Top Down Analysis which used the D2MX Trade Tools in our IRESS Trading platform to demonstrate how you can drill down into the market then into sectors to identify trading opportunities on the ASX We ve also recently applied Top Down Analysis to find opportunities in the Gold Mining sector and today we ll review how well that strategy has performed Top Down Analysis is a fairly simple 3 step process Step 1 Identify the sector that you are going to trade Watch this webinar playback for ideas on how to do this Step 2 Within that sector identify the strong and the weak stocks see how we did this for Gold stocks Step 3 Once you have identified the stocks that show some promise then evaluate each stock s relative strength and fundamentals In our analysis of the ASX gold mining sector at the start of this month we identified eight stocks that showed promise Alacer Gold

    Original URL path: http://blog.traderdealer.com.au/category/trading-strategies/page/2/ (2013-02-02)
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