I have just placed a new buy order for the morning. The order is to buy Qinetiq at £1 per point at a price of 128 with a stop set at 120.
Looking at the chart the stock is in a downward trend. ADX(14) > 30, DI- > DI+, MA(20) < MA(50), MA(50) < MA(200) so you may be asking yourself why oh why are you buying when you probably should be selling. The reason I am looking to buy is because price hit a new low on 15th Feb, retraced between 1/3 to 2/3 of previous price move and has failed to go back through the low. If the price passes the high set on 22nd Feb this could be the start of a new upward movement.
This is by no means certain and there is every possibility that the price will continue to fall or do nothing. I am willing to take an £8 risk on this. I suspect this could be the start of a reversal pattern and I am willing to trade this to find out.
I have set a buy order for 128. The current ask price is 128.5 so in order for my trade to trigger price needs to fall slightly. The reason I have set my by below the current ask as what normally happens when markets open is prices move very quickly. So if I was to place my buy price at say 128.7 it’s very possible that I could end up buying in at 129, 129.5, 130 or even higher. This will not do. It has happened to me before. I would rather miss out on the trade all together than risk the chance of getting in at a much worse price. It’s slightly risky as if the price starts to fall it could continue to fall.
I have set my stop sufficiently below the most recent low of 124.5 and just below the low of 15th Feb(which is the 52-week low) of 120.8. As with all my trades time will tell how this one pans out.
Some of todays action. After posting yesterday I don’t think my Beazley position will trigger the price dropped nearly 4% at the opening and I entered the trade at 108.7 after slippage instead of 109. This illustrates why I prefer to set my entry prices below the ask price when markets are closed. I don’t mind slippage in my favor.
My position in RSA stopped out at 123.7 for a £10.30 loss. This was way below the price I had moved my stop to 126. This is an example of bad slippage. Because the markets trade so fast when they open I have lost an extra £2.3 on this trade. One of the reasons price has dropped for RSA is because of the dividend it has paid. I received a payment of £4.72 last night at 23:50. This is something that I need to be aware of as I could’ve avoided being stopped out of the trade by factoring this dividend payment into the price.
I will probably post early again tomorrow.
Disclaimer: Don’t take my posting of these trades as a recommendation that you should make the same trades!
