CBA [ASX]
One of Kaye's recent trades.
Almost $2000 net profit on a three day call option trade. Bought at 24c and sold at 45c - a gain of 87.5%.
DETAIL
Based on the particular news events at the time [an expected interest rate rise did not occur], an entry was made on Tuesday 6 April on the anticipation of a continuation of an established uptrend.
As price approached resistance the decision was made to exit on Friday 8 April, rather than risk holding over the weekend.
ANALYSIS
This trade is not strictly by the rules!
It is an example of an experienced trader who knows the stock and is paying attention to news events and sentiment indicators.
The MACD was supportive of the entry but not much else was.
So there was some anticipation in the timing of the entry. The Bollinger Bands were collapsing but this can be used as a guide to a potential reversal.
Notice in particular how the MAs were rapidly approaching each other and actually crossed on the entry day. And volume increased the day after the trade.
The trade was entered on the understanding that if the price move was not as anticipated, then a prompt exit would be made.
LESSONS
Sometimes anticipation, based on sound principles, can be effective.
But this strategy requires experience and an understanding of the stock and its reaction to news events.
Novice traders should not stray from the rules until they have the track record necessary to establish the required level of confidence.
David Chandler
www.StockMarketGenie.com
Ordinary People Making Extraordinary Profits!
The above comments are offered for eduactional purposes only. We are not providing you with financial advice. We are simply sharing with you what has and hasn't worked for us personally. If you wish to trade or invest in the stock market you should obtain advice from a registered licensed advisor.
