The markets had a bad day yesterday falling by around 130 points. A fall on the day of over 2% and today is even worse. The FTSE 100 fell a massive 191 points around 3.4% cha ching. I have to day I’m glad my pension pot is mostly in cash. It’s been sitting in the cash fund for a while. Ever since the sideways market opened up I moved it until a confirmation of the uptrend continuing was confirmed. Obviously that has not been forth coming and doesn’t seem like it will be for the near future. Keeping my funds in cash during this down turn is the best option for me. I can’t make money from shorting the FTSE All Share via my pension fund as they don’t work like that. I can however sit out the down turn and then get back in when it starts moving upwards again. That way I should outperform a buy and hold approach of the FTSE index itself. One other option would be to hedge my pension fund using spread betting. This would involve leaving my pension in the FTSE All share and then I go short on the FTSE. There are a few problems in doing this though. Firstly I can only short the FTSE 100 via a spread betting account. I don’t think I have access to trade the FTSE All Share index. Secondly my spread betting account size is nowhere near big enough to match the hedge the amount I have in my pension. Not that I have millions in a pension, it’s just my spread betting funds are small. Anyway like with all things in the financial markets time will tell and we’ll see how pans out. Hopefully for the best.


I also made one new spread bet yesterday. No surprise it’s a short bet. I sold Aberdeen Asset management at 207.52 with a stop at 235. I moved the stop last night according to my strategy to 227 so a £20 risk. I know this is above my 1% risk that I usually harp on about but I am happy to take on the slightly extra risk, firstly because I have more confidence in the strategy I now trade and secondly it was the only trade that came close to my risk tolerance. Hopefully it will work out for the best and we’ll find out in due course.


So that’s a quick update from me. I wonder if tomorrow will prove to be another bad day for the markets? Is this the start of a new down trend? So many questions but I guess we’ll have to wait for the answers.


Until next time,
“May the markets be with you!”
The Spread Betting Beginner

August 4, 2011 by Harry
Category: blog