HAPPY TO SIT AND WAIT

I keep finding myself looking at other medium to long term trade opportunities, or Investment Case's as they I've been calling them, and taking them into serious consideration. The fact is though that the 4 trades that are currently on the table are quite enough. MTN is at present slightly down, however I am not too worried. CSB is also slightly down, but after the R2.73 dividend is factored in, the trade floating around the break-even point. CML and BAT are both doing really well and I closed the MTN/AGL pair trade while it was ever so slightly profitable (a more detailed report will follow at month end).

So instead of recommending another trade, or investment, I think I should explain the philosophy with which I am approaching these trades, or investments. Admittedly, I do not want to give away too much of the trading model, but I will share with you some of the money management principles that are applied.

As always, making use of examples are best; so let's say that I have a Futures account with a margin of R100k. In all technicality, I have about R 1 mil to trade with, however I will not gear myself more than 5 times. Meaning that I will limit myself to 5 trades of R100k each, or, I can do 10 trades of R50k each, and no more. So with 4 trades open, that leaves space for one. 

I have been watching Imperial (IPL) for a while now and feel that it has space to come down to about the R165.00 level. Also worth noting that if the transportation industry strike comes to an end, IPL should recover rather quickly. So this is a share that you could add to your watch list so long. 

IPL 1 hour chart

But for now, I sit and wait patiently until either something dramatically changes, or a trade reaches its target and I take profit, or IPL shows me what I want to see and I take a long position. Remember, you must always be in a position, and there are three types of positions  that you can be in; Long, Short, or Cash.