How did I get into investing?
It all started in 2019 when my school entered several teams into the Student Investor Challenge, which ran from October 2019 through to February 2020. My team didn’t fulfil the criteria to progress through to the final but, out of all my school’s teams, my team made the most money. I found this interesting and wanted to learn more.
The first book I referenced was Dr Elder’s New Trading for a Living, which seemed to be an excellent book with information ranging from psychology to risk and reward. I’m still dipping in and out of this book as there is a lot to take in.
Soon after Dr Elder’s book, I discovered Point and Figure charts. How could a series of X’s and O’s in columns help me? That lead to me looking at a book by Jeremy Du Plessis describing everything about P&F charts.
The charts illustrated in the book were from a company called Updata Analytics. I found out who the CEO was and contacted them. David Linton generously allowed me access to his software programme for the duration of the Student Investor Challenge 2020/21. This got me very interested in Point and Figure charts. (Unfortunately, the Student Investor Challenge was subsequently cancelled for 20/21 due to Covid). I took the time to learn and practice on P&F, which was very helpful. I then subscribed to the cheapest entry-level package.
The more time I spent practising on P&F, the more I liked it. I found it to be particularly useful when trying to determine a share’s trend. I have sinced move on to using SharePad’s P&F charts on an intraday 30 min 0.5%, a daily 0.5% and a daily 1%, all on close 3 box reversal. There are four main reasons why I am taking the time to learn P&F; 45 degree bull/bear lines, price count targets, buy/sell signals and oscillators.
- 45 Degree Bull/Bear Lines allow me to quickly assess the trend of a share. Sometimes if a trend line is bearish I might buy a contrarian bottom picker that looks like it could be basing out. Sage was an example of this when I bought it. Other times I might buy a bullish share on a good pullback to its bull line.
- Price Count Targets tend to be uncannily accurate. I typically set my selling orders based on these targets.
- Buy and Sell Signals on P&F charts are a very easy way to establish whether the chart is on a buy or sell signal pattern. I have found that a chart on a buy signal with a newly activated bullish price target is worth further investigation. One of the shares I am currently watching on my charts is Taylor Wimpey. As an example, the daily 0.5 x 3 close chart has shown this share to be in a selling pattern since the 22nd of April 2021.
- Oscillators are easy to run off a P&F chart and appears to give dependable, powerful readings.
In general, I have found Point and Figure used on close with 3 box reversal tends to filter out a lot of the daily noise. Which, given I am trying to build up a portfolio for my future, suits me well.
I now use SharePad because I can use the Point and Figure charts along with the incredible amount of fundamental information and great filtering tools. This seems to give me everything I need.
I am using Phil Oakley’s dividend filters as I am keen to build up a dividend portfolio for the future. I have also recently set up a “best of sector” watch list using the compare tool.
I am trying to buy dividend shares when the timing seems right but will buy shares to swing trade sometimes too.
I have also enjoyed reading John Kingham’s blog and have set up a dividend-based valuation tool on SharePad as I believe this has the potential to be very helpful.
What were the first stocks you picked and how did you decide to pick them?
BAE Systems
BAE started to look interesting to me in late October 2020 when it hit a support at 468p. However, my P&F chart indicated I should wait. The price continued to drop right down to 399p, which was a target price on the chart. The P&F chart reversed into a column of X’s, and the first buying signal was at 443p with an upward target of 544p (just under a resistance line). The risk to reward was a massive ratio of 7.8 at this price. I normally looked for a minimum ratio of 3. I bought it at 445p and put in a selling order at 541p, which was filled in June. I initially bought BAE as a dividend share but decided to take the profit to reinvest as it looked like it was topping out at around 541p.
GlaxoSmithKline
I bought this share in April 2021 after it spiked down to 1196p. I waited for the P&F chart to change direction into a column of X’s and a price target of 1566p. I bought the share at 1315p. I have bought it as a long-term investment but if it were to reach the 1566 target I would sell.
The Sage Group
I bought Sage in March 2021. I had been watching the price base out since December 2020. During March 2021 my P&F chart showed a buying signal and a new upward target of 690p (the risk-reward ratio was about 2.9, which was just below the 3 normally aimed for). I bought at 606p and set a selling order at 689.5p, which has just been filled.
Telecom Plus
I bought this share in June 2021 when it spiked down from where I thought it was basing out. My charts were showing a divergence with a potential backbreaker. I checked on the dividend-based valuation tool and a fair price for TEP was 1110p. I waited for my P&F chart to change into a column of X’s. I bought it at 1149p once the price target of 1276p had been activated. I have set my selling order at this price.
I am currently watching quite a few shares and waiting for them to reach my purchase targets before buying. The fundamental tools on SharePad are helping no end to enable me to monitor and filter potential buys. This also helps me to balance share trading with my school life.
I find share trading fascinating with the potential to be different each day and I hope to trade for many years enabling me to build a good portfolio.
I am currently studying for my A-level Maths, Computer Science and Music so I don’t have lots of free time (or money), but I am learning a lot about trading, especially since using SharePad’s tools.
_____________
William St John Bacon
Note from editor: As the current legal age to own shares is 18, William’s account is currently operated by his parents.
Well, if the trading does not work out, you could always become a writer of sorts. Very well written for a 17-year-old.
Thank You, I enjoyed writing it.
A very well written article. Of the shares you sold, do you think you may have been better off holding them for the long term dividends and any growth?
Thank You. It possibly could of been better to stay in for the long term, but I have been keeping an eye on the S&P 500 BPI chart. Since the beginning of June it has been in a column of O’s coming off a triangle with a selling pattern. Because of this I made the decision to take some profits.
Congratulations on getting into the market at such a young age. I wish I’d started much sooner than I did.
Great article and I look forward to following your progress!
Thank you, I enjoy reading your articles as well!
I have a sneaking feeling you have a great future ahead of you, whatever you decide to do. Perhaps a job in fund management?
Many thanks. We will see what happens!
Well done Point and Figure seems to be a lost science these days.
I’ve had the pleasure of attending several lectures on P&F Charting Jeremy and David Linton after they merged their two companies in 2002. Jeremy certainly is an expert.
My introduction to P&F came from a book, on the subject, by Tom Dorsey who has a simple and straightforward approach.
Dorsey considers relative strength charts to be the cornerstone of P&F Charting.
Add the relative strength chapter in his book to page 503 of The Definitive Guide to Point and Figure by Jeremy du Plessis would be my small contribution to your article.
Thanks for your advice. I’ve ordered Tom Dorsey’s book and read Jeremy’s page 503. I’ll be able to link it together once I get Tom Dorsey’s book!
Well done, William.
Psychology is very much an underestimated part of investing and trading. IMHO, there are plenty of examples on SM and manic forums that demonstrate investing or trading is not for them. The stress of a even a fundamentally strong company reversing from a buy point and perhaps racing towards the SL trigger is too much for some people. They make rash decisions.
I started investing at 18. 10 months later, the 1987 crash. I’ve survived the rest because I learned from the first two that markets always bounce back.
Very good read.
Good luck.
Elric
Thank you very much for such sound advice. It is very helpful.