Wednesday, April 27, 2011

Potash Corporation of Saskatchewan, Inc. (POT)

We've covered both CF Industries and Mosaic in the last week, so let's go ahead and take another look at Potash Corporation to round out the set. 

Just as an FYI, due to low (and even negative) expected returns and/or risk profiles , I no longer trade Agrium, Monsanto, or Freeport-McMoRan, and I've never traded Intrepid Potash. 



1. LONG the week of 9.2.03 at $3.84. Using $3.41 for my stop, the initial risk (R) on the trade was $0.43. Stopped out and reversed to short at $10.11 the week of 9.26.05. The percentage gain on the trade was 163.3%, and the reward-to-risk ratio was $6.27/$0.43 = 14.68. 

2. SHORT the week of 9.26.05 at $10.11. With my stop at $12.17 the R was $2.06. Stopped out and reversed to long at $10.62 the week of 2.27.06. The percentage loss on the trade was -5.0%, and the reward-to-risk ratio was -$0.51/$2.06 = -0.25. 

3. LONG the week of 2.27.06 at $10.62. The stop was $8.47, so R = $2.15. Stopped out and reversed to short the week of 6.5.06 at $9.05. The percentage loss on the trade was -14.8%, and the reward-to-risk ratio was -$1.57/$2.15 = -0.73.

4. SHORT the week of 6.5.06 at $9.05. With my stop at $11.53 the R was $2.48. Stopped out and reversed to long at $10.84 the week of 9.5.06. The percentage loss on the trade was -19.8%, and the reward-to-risk ratio was -$1.79/$2.48 = -0.72.

5. LONG the week of 9.5.06 at $10.84. My stop was $9.15, so R = $1.69. Stopped out and reversed to short the week of 9.2.08 at $53.47. The percentage gain on the trade was 393.3%, and the reward-to-risk ratio was $42.63/$1.69 = 25.29.

6. SHORT the week of 9.5.06 at $53.47. Setting my stop at $76.33, the R on the trade was $22.86. Stopped out and reversed to long at $29.98 the week of 4.27.09. The percentage gain on the trade was 43.9%, and the reward-to-risk ratio was $23.49/$22.86 = 1.03.

7. LONG the week of 4.27.09 at $29.98.  Using $18.48 for a stop, the R = $11.50. Stopped out and reversed to short at $28.33 the week of 9.28.09. The percentage loss on the trade was -5.5%, and the reward-to-risk ratio was -$1.65/$11.50 = -0.14.

8. SHORT the week of 9.28.09 at $28.33. With the stop at $36.92 the R was $8.59. Stopped out and reversed to long the week of 11.16.09 at $38.08. The percentage loss on the trade was -34.4%, and the reward-to-risk ratio was -$9.75/$8.59 = -1.13.

9. LONG the week of 11.16.09 at $38.08. The stop was $28.88, so that means R was $9.20. Stopped out and reversed to short the week of 5.3.10 at $33.25. The percentage loss on the trade was -12.7%, and the reward-to-risk ratio was -$4.83/$9.20 = -0.53.

10. SHORT the week of 5.3.10 at $33.25. My stop was set at $42.23, so the risk on the trade was $8.98. Stopped out and reversed to long at $37.80 the week of 8.2.10. The percentage gain on the trade was -13.7%, and the reward-to-risk ratio was -$4.55/$8.98 = -0.51.

11. LONG the week of 8.2.10 at $37.80. The stop was $29.08, so R = $8.72. Closed last week at $57.96 with a $50.50 stop. The percentage gain on this trade is 53.3%, and the reward-to-risk ratio is $20.16/$8.72 = 2.31.

Bottom Line:
Winning Trades: 4 | 36.4% | $23.14/share avg.
Losing Trades: 7 | 63.6% | -$3.52/share avg.
Average Trade: Gain of 49.8% | $6.17/share | Reward-to-Risk Ratio (R): 3.57

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