Firstly here is a summary of my open positions.
I closed my position in ARM holdings out this week manually. I did this to free up some resource for trading in one of my accounts. However this broke my rule of never clicking the buy or sell button and I have paid the price for it. As soon as I clicked the sell button the price continued to rise and has done so ever since. So far I have lost out on a further 7 points and who knows how much more potentially. I am not going to rush back into the position because of this. In the past I have done this and it’s a sure fire way to lose money. The fact is I took a £30 profit manually when I should’ve been trailing my stop at my 3ATR range and let the position stop out when the current uptrend movement is over. I will not be making this mistake again.
Anyway moving on. I opened two new trades this week. One in Kesa Electricals and the other in Spice.
If you take a look at the chart Kesa is a shodow of its former self at 127.8 down from highs around 370 in 2007. It has recently rallied from 111 and at the moment is pausing for breath before re-aserting itself to the upward movement once more. I could be wrong of course but this stock fits with my 1% risk strategy and has potential for a good return. I have gone long at £1 per point at a price of 128.1 with a stop set at 120. I will need to monitor this position closely as it has failed to break through the most recent high to return to the uptrend. If the stock starts to fall back it may be wise to move my stop in closer end exit the bet early.
Spice has dropped considerably since October 2009. It has an all time low level of 24.198 set in September 2004. I suspect this level could act as potential support for this stock. A resistance level is a level at which a price drops to and immediatley bouces back up from. With the stock falling a further 6% on friday I decided to go long at £1 per point. I brought in at 28.3 with a stop set at 18.3. This is well below the potential support price of 24.198. As soon as any of my positions start to move into profit I start to move my stop up by 2ATR of price to break even then by 3or4ATR of price to give the position room to breath. I used to move all positions by 3ATR after break even but I have felt lately that for some positions this has been too close and I have been stopped out prematurely. Therefore on some postions I have decided to allow 4ATR as a stop distance. I will give this strategy more time to see if it works well. If I feel I am still being stopped out too soon I may look to trail my stops as a percentage of price say 10% or 15%. I know people who employ this strategy and it seems to have worked very well for them.
You may have noticed that I have opened a new position in premier foods. My old position stopped out at 33.1 for a 1.30 loss on the 10th March. I still believe this stock has great potential so I have brought back in at the better price of 32.3. This is a very small risk bet with my stop set at 29. So only 3.3pts risk. I could’ve gone more than £1 per point on this bet with and still achieved my 1% risk target. I could’ve gone £3 per point which would be £9.9 risk however, I decided not too. I have decided to stick with a maximum of £1 per point on all bets now untill I recoup my losses. I was nearly back to break even at the beginning of the year and started to bet more than £1 per point on stocks with a disastarous effect. I lost about £400 in a month and since then I have decided that sticking at £1 per point untill I learn more about what I am doing is fine with me. The good thing is if I make £30 profit on my premier foods position this will be nearly at 10:1 reward to risk ratio. I aim for a minimum of 3:1 reward to risk so 10:1 would be excellent. If only all my positions return 10:1 I would be laughing. You never know it could happen.
Anyway I have some more orders that I have placed this week which I will list below. An explination behind them will have to wait untill I have more time.
Aberdeen Asset Management £1 per point Buy, 123, stop 113
F&C asset management £1 per point Buy, 59, stop 49
SIG, £1 per point Buy, 114, stop 104
Luminar £1 per point Buy, 45, Stop 35
E2V technologies £1 per point Buy, 39, stop 29
As always if you have any questions please feel free to e-mail me.
I am also in the process of writing a book about Financial Spread Betting an my experience. If you would be interested in reading through a copy of the manuscript and providing me with feedback and any errors that you may spot please e-mail me.
Untill next time