SANTOS TRADE – DAY 1.
Welcome again to the follow my trade section of this site and today I’m going to show you the entry I took yesterday with Santos. This is an energy stock on the ASX and one that I have been watching for a while.
Its been hugely influenced by the oil price which as we know has been in the doldrums for quite a while.
However if you have been following my weekly updates I have been saying for a while that this sector looks like it has seen a lot of demand coming in at the lows and it has broken its downtrend.
It is for this reason that Santos was firmly on my radar.
So I thought the best way to share my thoughts and show you how I took this trade would be to put together a short video which you’ll find below.
Well I hope that wasn’t too confusing and gave you some idea of how I take my trades and how position sizing is crucial in your planning.
Oh and heres the buy confrmation as well, I like to make sure everything is above board and transparent with proof of purchase.
I’ll update this trade as it progresses so keep coming back to this section or follow me on facebook and we’ll see how it pans out.
SANTOS TRADE – DAY 8.
Ok so if you’ve been following along on facebook you would have seen a few updates of this trade, and there was a failed attempt to move above resistance at $4.80 a few days ago.
This failed attempt produced a no demand bar at resistance and this is a sign of weakness. This video explains what a No Demand bar is in more detail but it essentially means that there is no demand for higher prices at that time.
They are typified by their narrower spread, usually found right on a previous resistance level and on lower volume than the preceding 3 bars.
It is this declining volume and lack of fuel to drive prices higher that we take note of, in order to understand the importance of volume I would recommend reading my post, volume the fuel that drives the markets.
So today sees this trade at a make or break point. It closed right on the lower line of the channel yesterday after a gap down and a significant increase in volume. Being mindful that the SM are always out to wrongfoot the herd in the market, this could be a shakeout move.
Shakeouts are explained in this video here.
I will have to see if todays close sees a break out of the channel or it stays in there.
This has all the hallmarks of a shakeout at the moment but because my entry and position of my stop have minimised my risk I can sit and watch what happens with very little risk should things break and close lower.
This is why the entry and stop placement are so crucial and this is a great example of why.
So here’s the chart of the current action and it now remains to be seen how todays trading will pan out. My plan is to do nothing until end of day and see how it is going to close and what the price action is telling me at that time.
My stop loss is the final line in the sand but I would exit this trade on a close out of the channel because that would signify a change in the conditions of this trade with potentially a new trend starting.
I’m expecting it to break lower on the open.
SANTOS TRADE – DAY 10.
Well today saw me exit this trade at $4.295 for a total loss excluding commisions of $85.26. A shame because for the first few days there it was looking quite good.
This is why it is so important to be able to read the action on a bar by bar basis. I saw weakness coming in when the No Demand bar appeared on the 8th June and it was a case of monitoring the trade from there on and giving it every chance to prove itself. You can see this on the chart below.
Yesterdays close was right on the demand line and as I stated in my facebook update today it was going to have to either rally or close above yesterdays close for me to stay in.
It never looked like doing that and the fact that prices couldn’t even rise above yesterdays close for me was a big sign of weakness. I finally sold out mid afternoon in anticipation of a poor close, which we got.
Exiting early means that I didn’t wait for the stop to be broken. There was no need to as it was obvious from the action during the day that it wasn’t going to fill my criteria to stay in the trade.
Always nice to get out ahead of a stop loss and save a few dollars.
So for now its back on the sidelines and wait for another opportunity.
What are your thoughts and what would you have done in these circumstances? Leave me a comment I’d love to hear your view.