Industrea Ltd (2)

I came very close to exercise my stop loss on IDL yesterday. The share price went down close to 15%, on top of the dropped on the day before (when I bought on the dip). I do not wish to catch a falling knife (again!). Industrea today, however, announced that they secure a new contract worth US$9.5 M, including first South Africa sale.

So, despite the ASX big drop of 119 points, IDL was actually on the green by as much as 13%. Looks like I am going to hold Industrea shares  that I bought yesterday for a little longer.

Out of my three short termers, by the time I write this post, all of them are not too bad.  Girallia is so far unchanged, and Deep Yellow is up by 3%

Industrea Ltd

Managed to get some Industrea's shares today at $0.14 per share. The share price dropped as much as 30% from $0.195 today on the announcement that IDL lowers its NPAT guidance.  I intended to treat this purchase as a short time trade. Stop loss at 25% lower than purchase price.

From the news today:

Industrea lowers NPAT guidance

Marcus Berghouse

   

16/01/2009 12:00:00 AM.  

Industrea Limited (IDL) said the termination of its contract with Xstrata, combined with unseasonably high rainfall, had lowered expectations for FY09 revenue and NPAT. The company said NPAT would be between $42 million and $47 million, down from the $55 million to $60 million forecast last October.

The company said revenue would drop by 12% to between $290 million and $310 million.

On Wednesday, Industrea requested a trading halt indicating it had received notice from Xstrata plc's Mt Isa Mines that it was placing its Handlebar mine on care and maintenance and as such would be terminating its contract with Industrea for the provisioning of mining services. The company said the termination would be effective from 10 February 2009.

Investors reacted poorly to the news with Industrea's shares coming out of trading halt down around 26% down.

Industrea said its other mining services contracts in the wider Mt Isa region, including those with Xstrata at the Blackstar and Ernest Henry mines, remained operative. The company noted that at Blackstar there were plans to increase production by 38%.

The mining services company said it was in negotiations with various partners to replace the lost contract.

CEO Robin Levison said that aside from the disappointment at losing the Handlebar contract, the other business units of the company continued to  perform in line with forecasts.

"While the termination of the Handlebar Hill contract was disappointing, Industrea remains in a strong financial position," he said.

"Industrea also continues to explore new avenues for growth across its diverse client base and geographical markets with particular emphasis on the Chinese market in order to meet the Chinese Government's long term goal of increasing coal production to satisfy increased energy requirements over the next decade," Mr Levison said.

http://www.livenews.com.au/Articles/2009/01/16/Industrea_lowers_NPAT_guidance

Trading Plan - Work in Progress

I started to re write my trading plan yesterday. It still a work in progress now, and to be modified continually. Readers may use it as a trading plan sample and post their comments on the plan.

MY TRADING PLAN

1. I understand that I cannot predict and control the markets. I will control myself by adhering strictly to my trading plan. 
2. The only factor to be taken into account during trading should be the facts and not any preconceived ideas no matter how well-founded, nor other people's opinions.
3. I will only trade on days when I am rested, relaxed and not distracted. I will stick to my trading plan, as it will help to prevent me from making trades that are poorly conceived and executed. I will not trade on days when I am feeling sick, tired or when I am distracted by other events in my life. 
4. My daily trading goal is to trade according to my plan. 
5. The instruments that I will trade are Australian Stocks listed on the ASX. 
   
6. I will start my trading at 09.00 and finish at 11.30 every trading day. 
   
7. I will ensure that of the 15 hours per week devoted to trading. 
   
8. Each day, I will ensure that yesterday’s trades are analysed and that my trading journal is updated.
   
9. I am a a risk averse trader and always seeking to minimise risk wherever possible. I will achieve this via diversification and risk management regime. 
   
10. My maximum exposure in the market will not exceed a combined total of 10% of my capital at any one time. 
    
11. My maximum exposure in any one sector will not exceed a combined total of 5% of my capital at any one time. 
    
12. For every trade I enter, I will decide in advance where to place my stop loss.  Full exit to be taken when stop loss is reached without exception
    
13. When my trading equity exceeds the amount I need to trade my strategies, I will withdraw the surplus and transfer it back to my bank account. 
    
14. I will utilise a trailing stop which I will position10% below the lower high in an uptrend or 10% points above a higher low in a downtrend. 
    
15. I will close my whole position immediately upon the price crossing the moving average. 
    
16. I will close half my position upon a 50% increase/decrease in volume compared with the previous price bar. 
    
17. In addition to recording all my trades, I check to confirm that all trades are executed in accordance with my plan. 
    
18. I will update my trading journal regularly with my thoughts about each trade and my conclusions about the day as a whole. 
    
19. If I break one of the rules detailed in my trading plan I will stop trading for a full day and focus on the reasons why there was a breach of discipline. 
    
20. After a winning trade I will guard against over confidence and ensure that my attitude remains consistent, and remind myself that executing the trade in accordance with my plan is more important than the outcome of the trade. 
    
21. After a losing trade I will examine the trade and learn what I can from it, check to ensure that I executed all aspects of the trade in accordance with my plan, and professionally unemotional with the loss.

Re-writting My Trading Plan

This week I will focus on re-writting my trading plan.  There are many things that I missed on my previous trading plan, and the fact that I haven't been very discipline on it, does not help either. This lack of discipline, has caused me a lot of unnecessary loss in profit. 

For those who are interested in writing their trading plans, or rewrite them, I found a good article and trading plan sample at:  

http://www.trade2win.com/media/knowledge/tim-wilcox/T2W_Trading_Plan_Template_2005.pdf