Free UK Technical Analysis 03/03/2015

DISCLAIMER: I am not FCA authorised or authorised in any sense to give financial advice. Do not regard any of the following links, or information as investment or trading advice.


Today's Analyses:

https://drive.google.com/open?id=0B0wd9XTIWftmfjBPQWtvSTZubHd4bjFzQ2E4NTc5eng1d2t6REUtYm9SY2hiNXV6eG8wMXM&authuser=0

How to use these reports:

• This system is currently based around Simple Moving Averages (SMAs) that are based around the principals of Fibonacci numbers. These are used alongside a Slow Stochastic Oscillator (SSO) to create buy and sell signals, which are given numbers based upon their strengths.

• Over time, I adjust the stochastic coefficients and the weightings of the moving averages to create more reliable results during my back testing (for my use), but to also make the system more reliable generally.

• Attached in the linked folder will be a file called "buysignallers.txt" and "sell signallers.txt", which can both be used to show the position of a stock against the others that are analysed. This is where you will find the total signal strengths for stocks.

• It is worth noting that not all stocks and shares may load or process due to where the program gets its data from and some stocks with share prices below 0.10p will currently not analyse properly.

• These reports are all made up of a list of signals and comments and the data for these are taken daily. E.G. Today's signals use yesterday's closing stock prices - given in pence, not pounds! 

• The "signals" show the fibonacci SMAs that crossover and or any slow stochastic notifications.

• The "comments" show the value of the said SMA with the value of the previous day shown in brackets.

e.g. 

# Signals

Sell - 24.802226076843513707865168540 - 34 crossed 144

# Comments

SMA 3 - 25.50 (25.50)

SMA 5 - 25.50 (25.50)

• More information regarding this project can be found here:

http://themaskedstocktrader.blogspot.co.uk/2014/11/my-experience-with-quantitative-finance.html

Stox App (beta) - A Review.

I'm normally not particularly interested in apps, but Stox caught my eye for three reasons:


1. It's aimed at teaching basic investing knowledge - a subject I'm particularly passionate about.

2. It looks pretty unique as far as educational apps on the subject go.

3. It has a beautiful Graphical User Interface (GUI) - something that men in their late teens and early twenties like myself really need to bother using any app.


Now, being in its beta stage, the app is obviously not finished, but of what I was able to play around with I was incredibly impressed!


I ran Stox on my Samsung S2 and I found it to run very smoothly and the "swipe" and "tap" UI effects were a great way to separate the app out into appropriate information sub-sections, which took you through the very basic ideas surrounding the stock market mechanisms. I particularly liked the way in which the app tested you on the completion of each section and then took you back to the relevant information if you made a mistake.


As a professional trader, I knew there was a danger that I would fall into the "this has too little information camp" regarding the app, so I tried to review this app as a novice and on doing so I actually felt that people new to the trading and investing world would really appreciate and benefit from the way in which the app uses very basic examples to relay information that has the potential to become very complicated when you begin to get technical.


I ought to warn readers now that I am both English and went to a grammar school and consequently may have a bias regarding my single criticism of the app, which was that it felt a little slow to give information - I'm a bit impatient and when I ask a question immediately want an answer. I just felt that the app was holding information just out of reach of the speed that I wanted to take it in at as a user, but I feel that this issue probably says more about me than the app itself! This could be improved by just reducing the time it takes for the "tap to continue" icon to appear, but I think that in reality most people aren't likely to see this as a real issue, especially if the users are actually members of the target audience (novice investors).


Overall, I felt that Stox has the potential when it comes fully live to continue to be both a highly informative and fun app for those who are taking their first steps into the world of investing and I look forward to testing the app further as it comes out of its beta stage.


For those interested the beta version of the app can be downloaded free on the Play Store for android devices:


https://play.google.com/store/apps/details?id=io.stox.app


All the best,

The Masked AIM Trader.

A coffee trip:

Good morning,


A couple of days ago I had the huge pleasure of meeting up with one of my school contemporaries. Having gotten top grades in his A-levels and just having finished his first year at LSE studying economics, my friend is probably one of the smartest and hard working people I know.


We were meeting to discuss my attempted run at trading so far and what my friend could do to improve his demo trading account and while we were there I asked him the question I ask all other professionals and or prospective professionals:


"What is your opinion on the current bull market run?"


Now, my friend is very switched on, but I can remember the long pause that followed after asking him this, which was then followed by something along the lines of:


"I've never thought of that before."


I didn't ridicule him, but nevertheless, I was surprised that someone so smart could not have an opinion on something so important - especially for those trading high beta stocks on the FTSE100 or S&P500 it's always essential to have an opinion.


Trading and investing is all about having an opinion; yes, you may end up on unprofitable side of a trade, but without having an opinion you'll never be able to trade successfully.


Other questions I ask prospective traders are questions like:


"If people became invincible what would your trades be to take advantage of this?"


This is a technique I stole from Richard Farleigh (a man who is basically my hero) to assess the raw idea generating ability of people. I've met many people who say they could do a great job at trading, but you ask them a question like this and they stumble.


Good luck guys,

The Masked AIM Trader

One of my biggest mistakes.

Good morning again,


I'm writing this with one eye on a live graph on my other monitor, so I apologise in advance for any awful spelling, punctuation and or grammar issues.


Probably the worst trade to date that I have ever made was in a company called Armadale Capital. Without going into excessive detail, they invest in other companies within the natural resources sectors, such as Mine Restoration Investments in South Africa along with a few others.


My mistake here was failing to do a full check on the board of directors and also forgetting that the sector is very slow to evolve. It's because of this that I've added to my trading rules the following line: "Do not invest in the natural resources sector - it will take you an age to get your money back".


My failings to profitably trade this company doesn't mean that the company is bad. In fact, it has many aspects that I think are great: the low cost Mpokoto Gold Project in the Democratic Republic of Congo and the low cost fine processing and recycling plant that's a branch of Mine Restoration Investments. I made the mistake of thinking that some quick number crunching from me and a realisation of a distinct difference between the value and price after doing this would make the share price soar.


The share price didn't soar - in fact it fell almost 35% and I closed out that position with a hefty loss (for a nineteen year old).


I think that for me what caused the downwards pressure in the share price was that the Board of Directors had a tendency to release "media updates" that in hindsight were effectively unable to tell shareholders anything new. This combines with their very high salaries gave the impression to shareholders that they weren't pulling their weight properly. I felt like even more of a tit after this trade because I had been given a warning about the board of directors before - albeit on an internet forum.


I learnt a lot from this position:


1. Look for proof of a good consistent board of directors - emailing them first about something arbitrary and seeing if they reply is often a good indicator.


2. Natural resources are a slow evolving area and you'll find it hard to make profits actively trading these companies (although doubtless many people do).


Good luck trading,

The Masked AIM Trader

Why I Trade Small Caps.

Good morning,

One of the questions people tend to ask me is why I am currently so focussed on the UK small caps. It's not fair to say that I don't trade medium and large cap companies as well, but my biggest successes have come from investing in companies that have very low market capitalisations.

My reasoning behind this is that smaller companies are overlooked much more often than larger companies. This could be simply due to the restrictions on many funds from investing in on the AIM and exposing themselves to the smaller companies that float there, but it also comes down to other factors relating to liquidity (the ease of buying and selling a security) and position weighting within the fund.

It's therefore clear that as private investors we are able to take advantage of this anomalous area where the professionals don't take as much interest. I have found that my stock picks that were the most successful within this area were those picked based on support lines and fifty-two week lows within stocks that are sub penny shares with market capitalisations between five and eight million pounds.

This isn't to say that I haven't made mistakes; I have made many. In fact, I'm going to write about my biggest mistakes in separate posts. Nevertheless, my best trades have always been within these small cap companies and my biggest mistakes have always been when I break my own rules and or move out of this market capitalisation zone.

Now, just because this has worked for me, doesn't mean that it will be a good strategy for everyone to employ and I implore you to do your own research and test the waters perhaps with a demo trading account to decide if you are more of a short term or long term holder.

The Global Economy

Good evening,

I think that before embarking on a quest to make a position in the stock market in any capacity, be that long or short, one needs to have an opinion on the global stock markets and the worldwide economic situation. 

I've had two opinions on the global economic climate since I started actively managing my portfolio: 

The first opinion that I held adamantly for several months was that the global markets were destined to capitulate and sink again as they did in 2008/9.

The second opinion (one that I still hold) is that the global economies aren't necessarily in a great position overall, but that the the stock markets will continue to rise as a result of external pressures. 

My reasoning behind moving from the first opinion was that I very quickly realised that it's become very popular to take the counterargument when it comes to discussing the stock markets. Now, what I'm about to say doesn't really apply to AIM (where I primarily invest), but it does hold true across world markets:

The market is like a super-computer that processes all of the information in the market and then comes up with an appropriate price as close to the "true value" of the market as possible.

Therefore, if the stock market has been rising for a week, it's not necessarily true to say that the value within that market has increased, but that the price has. 

This is important in my opinion, because it's the main driving point behind my current market opinion (since January 2014). I am a believer that the global stock markets will continue to rise because the external interest rate factors have made the stock market the only place where a return above inflation can be made. In short: value has not necessarily increased with this bull run of the stock market, but prices have.

As a traders we primarily profit from being able to determine the effects on the price of an instrument and not the value (although value investors do certainly exist and I have a lot of respect for them). It's because of this that I'm comfortable with still going long on the S&P 500 and the FTSE 100, but nevertheless, I believe that we have to be very careful as investors and traders not to become pulled in too much by the current bull run.

For example, jobs and housing figures in the US has only recently began to deliver more consistently positive results and yet the markets have continued to rise.


To conclude, it's in my eyes that the current bull run is sustainable and that we could likely see further increases in the major stock indices. I am therefore bullish on price increases, but not necessarily bullish on the value added to our major markets. Low interest rates that seem likely to remain low as a result of uncertain macro-economic conditions worldwide. This combined with the environment created by quantitative easing makes the bullish pattern seem stronger in my eyes.


Good luck and good night.