Sorry for no post yesterday. I was working late and by the time I’d finished I’d had enough. Not that much to report on the trading front. Persimmon was my star performer climbing around 25pts on the day. It closed at around 360 so currently around £21 in the black. I’ve moved my stop slightly to 335 just below the recent low around 336. This reduces my monetary risk on this trade to £4.25. I would love to move my stop in closer but I would risk stopping out too early, I want to stop in and make as much out of the trade as I can.
Moving stops has always been something the I have found to be tricky. Take this trade for example. Since it’s moved into a decent profit I’ve moved my stop to below the most recent low. This makes sense. If the trade continues to rise rapidly as it has yesterday, then where do I move my stop. Do I trail it below the low of the last few days? I know in Malcolm Pryors book winning spread betting strategies he suggests, “When the trade reaches the half way point(between support and resistance) trail the stop below the low of the last two weeks.” The thing is if the price continued to rocket the way it has the trade could peak and I could miss the boat.
Making these comments about stops has made me realise that this is something that I seriously need to work on. I’m clearly trading here without a fully defined strategy behind the trade. As we all know trading without a clearly defined strategy is a sure fire way to the poor house, “Failure to plan, is a plan to FAIL!” I think this weekend will I will be spending some time on getting the strategies that I trade clearly defined. If they are not clearly defined then I cannot trade them. Simple as that.
Moving on to other news in the world of financial spread betting. The FTSE 100 looks to me as if it’s all set to be touching or passing the 6000 mark before the year is out. I don’t know what other peoples thoughts are on this but looking at the chart I think the recent upward move is set to continue. I’d love to be able to trade the FTSE 100 but my spread betting funds just don’t justify the trade. I guess that I at least have one thing right in my trading. I think my money management is spot on. In fact I think if it wasn’t I would not be trading today.
Anyway back to the FTSE 100. I do have some money invested in the FTSE, although it’s the FTSE all share not the FTSE 100. I have a self invested pension. There are several funds which I can choose from one of which is a FTSE all share index tracker. I know it’s not exactly the same as the FTSE 100, but the charts tend to pan out roughly the same. It’s not an ideal trading solution. If I move the funds it takes a few days for the trade to execute, so I can’t go moving it in and out on a daily basis. What it does enable me to do is look for the longer term trends and move it in and out accordingly. I moved it out in April 2008 and back in in April 2009. I tried more recently to move it out in April and back in in Jun/July. I wasn’t as successful this time and I think I ended up losing more than if I had just left it alone but hey you can’t win them all. Hopefully if I can sit out most of the down swings and get most of the upward moves then this will grow my pension nicely. I think in 2009 I managed to grow it by around 25% if my memory serves correct. I would be nice if I could achieve this every year, but the reality will be somewhat different I’m sure.
I’ll possibly post again at the end of the day with a brief update on how my trades have progressed.
Until next time,
“May the markets be with you!”
Spread betting beginner