I have written before about ceres, and today I thought I would post my thoughts about a recent price break-out to the upside, from what was a very strong bearish wedge. ie., the chart indicated that the price would fall out of the wedge.
By way of background, when my business relationship with Alan ended, he suggested that I might find trading a profitable pastime, an observation that I initially and scornfully dismissed for two main reasons.
- I did not consider it to be “honest” work;
- Humans like patterns, and I did not “like” the “self-fulfilling” aspect of the chartist.
But after realising that I have been in the wild for too long, and that I did not really want a proper job, I decided to look at trading more closely as I have touched upon here.
And, quite possibly, this is the best “job” I have ever had, so good in fact, that I get that “Sunday evening feeling” on a Friday night because I know the markets are closing for two days! Damn the markets and thank god for – in no particular order – mountain bikes, paragliders, friends and 24/7 crypto$ to keep me occupied at weekends!
There are far better people out there that can explain what trading is and I still consider myself to be an amateur, but I can set out what I think trading is.
Before I do, however, I will state that I do not use leverage for my trades. I will either own shares or cash, but I will never be closed out by a third party.
Firstly, there are the fundamentals – facts.
The first type of fundamental to me is the financial statements and their ratios and (un)fortunately (without application they are completely boring) I had to learn about these when I was training to be an accountant.
My favourites are these; price/earnings, price/book value, current and quick ratios.
The next fundamental to me is an assessment of the prospects of the company and the industry that it is in.
Finally, for fundamentals, there is the assessment of the impact of political policies and worldwide events on the above (news has never been so interesting to me as it is now!).
The chartist approach is to look at the charts, and using the tools that are available to, and used by, all traders, to try to predict the next movement in price.
There is also the psychology of trading:
- don’t be greedy; unless everyone else is fearful (and vice versa, of course),
- don’t be afraid to realise a profit,
- don’t fear missing out (“fomo”),
- never try to catch a falling knife (trying to find the bottom on the way down),
- recognise the type of trader that you are. For eg., a seller of strength or a buyer of weakness?
- have faith in your assessment of the resilience of a company when the price is tanking,
- don’t sell at a loss – unless you intend to use your curtailed proceeds to buy back more shares at a lower price,
- be patient – know when to do exactly nothing (except maybe some mountain biking or paraglidingπ),
- beware of tactics used by powerful wholesale investors to squeeze out the leveraged positions of retail investors, and finally,
- you usually get a second chance!
Okay, so back to Ceres …
What do I think happened? This could have been a perfect short squeeze on leveraged retail investors, and the price is due to tank again.
However, I think it may also have something to do with Sleepy Joe’s recent inflation act, which contains “the biggest climate package in U.S. history”.
Regardless, and this is not investment advice, it is a small relief to me because I have been losing fingers trying to find the recent price bottom of Β£4.85.
My money is on the fundamentals. Time will tell. Happy trading!
