End of May Review: What Moved, What Mattered

Learning to get better

May delivered another strong wave of catalysts for Australian traders, with a mix of company-specific news and macro events creating powerful setups.

Firstly, the seasonal phenomenon known as “confession season” was in play. This is the last practical opportunity for companies in Australia to publicly revise or confess any earnings downgrades, operational issues, or negative surprises before the June 30 financial year-end. A smaller set of companies use the calendar financial year-end, so they also report their first-half results in this month.

Secondly, the current US administration continues to do things its own way - scrapping the old rules and stirring up market chaos around the world through tweets and executive orders. Basically, making things up as they go along.

As ever, I believe the closing of the month offers an opportune time to reflect and digest.

Here were some of the major takeaways I noted:

→What's the worst that can happen: join the catalyst and just accept the outcome. Trading is about dealing with incomplete information and uncertainty. There will no doubt be bad beats and slippage. However, the highest EV is often around that early action. I am in this seat to take risks. Visualise the distance to stop, and focus on where the trade idea is wrong early instead of overanalyzing.

→The best trades go from the start: when price action immediately rewards, shift gears to exit management and maximise mode. Add and then be hands-off. There will be some examples that come back, but it is those major trends that pay the bills. I do not always have to go for the home run, but at a minimum hold a meaningful position until the real turn.

→The best trades are often the hardest to get into: the size of the gap may reduce the EV, but the big flows have not yet been put to work. The stock needs price and time.

→Spend more time mastering discipline, system, and emotions vs going deep: Accept the price action instead of searching for more information to try to increase certainty. A quote from Jimmy Balodimas, Hedge Fund Market Wizard, on using fundamentals: “No, never….I wanted to spend my time mastering my discipline and focusing on what was going on with me emotionally that was causing me to make certain choices.”

→Take stops quickly when wrong and automate: make life easy by holding positions that are working early, and cutting those that are not. Sounds obvious, but just do it. I faced a moment of complacency where I shorted Gold stocks on the blocking of the Trump tariffs by the international court. I was wrong from the start. I cut 1/2, but I did not stop in full. The other 1/2 never comes back, and all I do is compound the problem and stress.

What follows are some snippets from trade write-ups for one strategy that illustrate these points and more.

Top Trades From May

1. Uranium on 23/5/25

Catalyst: Reuters reports that Trump is to sign orders to boost nuclear power as soon as Friday. The aim is to jumpstart the industry by easing the regulatory process on approvals for reactors and strengthening supply chains. This article hit after the US session closed and saw the URA ETF rip +3% in the after-hours market. Given the timing, this was a strong edge that may catch the market off guard. Short bases are extremely high across the sector, with BOE at 20% and PDN at 15%.

What I did: The Australian stocks quickly priced this headline and gapped significantly. As a consequence, I entered the open in a smaller size. BOE went from the start, so I fought for price in front of the 390 bidder to scale in. However, it couldn’t lift in time. Given my poor adds, I was forced to cut out on the first breakdown through vwap and retest of open despite being the obvious spot and low volume. The stock instantly reclaimed, so I added back on the turn through 390. Spikes into 400 but just no trend for the rest of the day with choppy pullback. A frustrating one.

Key moments: Gap and go with strength from the start. Had to add quickly into 388/390. However, multiple breakout attempts fail by 10.30 am.

Mistakes: There was no need to add more on the spike into the 400s at 11.15 am. Stock is very extended here, so now it needs time to set up. I was too eager to get bigger after cutting the initial size. The true turn and low-risk spot was up through 390. No subsequent breakout to play.

What I need to improve: Ultimately, this is a very whippy action that will always get my system. However, I need a clear structure for adds versus initial entry. This should be early momentum with tight risk or a tight breakout structure.

BOE:

PDN:

• Fair value based on the Canada close was 560. Opens 590s, so the market was extremely efficient.

• Entered on open and stopped in the right place. I re-entered on the potential break, but was too loose with the subsequent stop as it just dropped out.

2. Uranium on 26/5/25