There are two emotions in the market fear and greed,
the problem is we hope when we should fear and
fear when we should hope.

William J O’Neil

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We hope that the market will rescue us from a poor trade and fear that the market will take back all of our profit. I started trading dividend Investment Trusts because my stop loss policy wasn’t resolute enough.

The above is a simplified Ichimoku chart

The Ichimoku chart was developed by Goichi Hosoda under the pseudonym Ichimoku Sanjin before World War II. Ichimoku charts are a trend-following system with an indicator similar to moving averages. The chart consists of five lines using data taken from the mid points of historical highs and lows in various ways to create a panoramic view of price movement.

The KISS strategy is if the price is above the cloud the sun is shining, below it’s raining on your parade.

Nothing works all the time, otherwise there would be no markets.

Darvas box theory, developed by Nicolas Darvas, is a momentum strategy that combines market momentum theory with technical analysis to determine optimal entry and exit points in the stock market. Let’s delve into the details:

What Is Darvas Box Theory ?

Darvas box theory targets stocks using highs and volume as key indicators.
The technique involves:
Buying stocks that are trading at new highs.
Drawing a box around the recent highs and lows to establish an entry point and placement of the stop-loss order.
A stock is considered to be in a Darvas box when the price action:
Rises above the previous high.
Falls back to a price not far from that high.

How Does It Work?
Darvas boxes are created by drawing a line along the recent highs and recent lows of the time period the trader is using.
The theory works best in a rising market and/or by targeting bullish sectors.
Traders focus on growth industries that are expected to outperform the overall market.
Darvas used volume as the main indication for strong moves.
Once an unusual volume is noticed, a Darvas box is created:
The box has a narrow price range based on recent highs and lows.
Inside the box, the stock’s low represents the floor, and the highs create the ceiling.
When the stock breaks through the ceiling of the current box, traders:
Buy the stock.
Use the ceiling of the breached box as the stop-loss for the position.
As more boxes are breached, traders can add to the trade and adjust stop-loss orders.

Fundamental Analysis in Darvas Box Theory:
While largely technical, Darvas box theory originally mixed in some fundamental analysis:
Targeting industries with the greatest potential for exciting investors and consumers with revolutionary products.
Preferring companies with strong earnings, especially during choppy market conditions.
In summary, Darvas box theory is a powerful tool for traders seeking momentum-based entry and exit points, especially in rising markets and bullish sectors.

Co pilot

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Always allow some wiggle room, look at support and resistance as an area not a strict level as u may be whipsawed.

This will not be a portfolio constituent in the foreseeable future. I think most of us recognise Technology advances are going to continue. ATT is a quasi tracker in that if u buy and can choose when to sell, it could be multi years, u will print a profit. No dividends so a trading share only. The graph shows a Darvas box, just watch to see which it breaks and hope u don’t get whipsawed.

The long term chart, if u had bought at the end of the dotcom boom it would have been 16 years before u were in profit. Note how the market always rises just enough to make u hope u will get back your losses if u wait it out. Which of course u did but it was a long wait.

Trading is simple but not easy. Warren Buffett

If your opinion was the dependence on Technology would increase, u could have added to your position, one of the very Trusts I would recommend doing so without a dividend, in case u are wrong, again.

On 15 March 2021, Allianz Technology Trust PLC (the ” Company “) published its annual report setting out its intentions to undertake a sub-division (the ” Sub-division “) of each of the Company’s ordinary shares of 25p each (the ” Existing Ordinary Shares “) into 10 ordinary shares of 2.5p each (the ” New Ordinary Shares “)

Companies sometimes sub divide their shares when the price rises similar to PCT as the view is private investors, unlike in America don’t like buying high priced shares.

Private Investors having earned profits with the share, hold hoping that the share price will rise, in time, to a similar price but instead of having one share they will have ten. A portfolio maker.

The share price would have to rise to above 340p for the yield to fall below 7%, so nothing to do except keep watching and waiting.

My investment pot has swelled to £46,100 in eight years – have I dug myself into a capital gains tax trap?

Story by Harvey Dorset

I’ve been making regular monthly investment contributions and reinvesting the dividends.

I have paid £300 in each month for the past 97 months, and in doing so have accumulated £46,100 from a total investment of £29,100 plus the dividends that I have reinvested.

How can I calculate capital gains tax on this investment, and have I dug myself into a tax trap?

Please remember at all times the blog is about sensible investing, trading the plan as a long term buy and hold portfolio. Like today if there is an opportunity to book a ‘profit’ I will but only for re-investment in the portfolio.

It’s a waste of my time re-inventing the wheel so below is the warning from the Naked Trader blog.

COPYING TRADES: I can’t stop you from copying a trade I made but remember the price may already be a lot higher than I paid indeed I hope it is as buying at good prices is what I do for a living. You may be buying at the top and could easily lose money. Also I can make terrible mistakes and have done in the past. I could also sell before you or before the share tanks. I may still be holding in a year when you sold at a loss. Always do your own research, don’t jump in blindly. Market makers are very clever at knowing how to make you pay top dollar and then push you out at a loss. This site is about sensible investment and learning how to trade sensibly and is not a tipping site. Beware.

Never push buy on anything till you’ve done proper research and got yourself a sensible price.

The Naked Trader

GL

If u know the reference without googling it u are showing your age.

Because of the high yield AEI often trades around its NAV sometimes at a premium, if it continues up I will book some more profit. If it doesn’t I am more than content with the current yield. Mr. market is always right but sometimes not that bright.

I’ve sold another 53 shares in AEI for a ‘profit’ of £150.00.**

Now there are 3 options.

The price continues up and I can book more ‘profit’ (see earlier post)

The price flatlines so it’s the right decision to book ‘profits’

The price falls and u may be able to buyback the shares that were sold at a better price.

** I sold earlier today because I wanted to make a general comment about ‘profit taking. It’s a loss of profit of around ten pounds so no problem but a profit is a profit is a profit but I would have sold as the price rose.