Archive for January, 2009

Friday wasn’t that good day for me. At 10:00 I saw the Dow around 7950 2% down even before the start of the trading. But I had to go out and I didn’t want to open a position when I can’t monitor it.

So I called my friend and asked him if he want to join me to put a long bet on the Dow. He said no. He already opened a position on GBP/USD at 13520. It is a good price he said. So I checked and it was 13502. Good I though to myself… but by the time I hung up the phone the price was already 13550 (less than 5 minutes…)

So I put an order to buy at 13520 and left home without open a position on the Dow. That was a mistake and I knew it…

The end? The pound went up and up to 13800 and the Dow jumped to 8100. And I was out… 450 points went a way! The only thing I managed is to catch Barclays at 48p. Now it is 51.2. But I think it has a good chance to bounce back to 80-90. I do hope!

Hi all,

Paddypower the Irish spread betting platform is offering to a new clients that open an account a £75 credit free. All you need to do is to deposit £170 and make 4 trades by the end of the month. Then they will credit your account with £75. Not bad…so you have extra money to take more risk.

I really like Paddypower platform and I will review it soon.

Good luck!

Hi all,

Many time you open you favourite spread betting platform choose the Index you like, click on  the chart and thinking: should I go long? should I go short? where the hell the market is going to?

well take a look at this chart of the Dow:

this is a chart between the mid October till now. This is after the big crash of beginning of October. Now lets say you want to enter to the market at 8500 and you don’t know if the market will go up or down. Lets check what has happened on both scenarios:

Short:

You were lucky on the first day, but the day after the market went up by almost 1000 points. That’s a lot. And I am sure that your stop loss cut your losses way before that. But wait a minute, before you use the stop loss, think again.

Since your trade the market has come back 28 times to 8500 until today! I will say it again, 28 times. In other words if you didn’t take your profit on the first day, and then by the second day the market run away from you, you had another 27 days to break even or to take some profits.

This is the same story if you went long. The first day you lost 200 points but the next day the market came back to you and you were up 1000. I’m sure that by this time you closed the position and invited your girl for a nice dinner. But if you didn’t you still had plenty of chances to take profit.

My point is that stop loss is important tool but can really cause you damage. In our chart if you went short and close your position on the second day you LOST. Or if you bought the Dow on the first day, and in one point the index went all the way down to 7900 you lost again. Heavily.

Patient is the name of the game. It is not easy and you need a deep breath, but it pays off.

Now take a look on the chart before Mid October

You can see that if you went long on the Dow at 10000 on the 6 of October you had only the following day to recover. But…
If you don’t remember the beginning of October were extraordinary, almost one time event. And there were a lot of bad news. In this case it crazy not to use stop loss. Or it is even crazy to go in and trade, because it is more like a casino. But even if you did, and on the first day you lost 500 points, you still had one day to recover and take profits!

I need to learn this lesson myself. We are human and we get stressed from losses. It is only natural. But before you open a position you need to set yourself a target. How much you aim to make. Once your reach that point, don’t close the position but asses the situation. If you think the market can go more stay. But don’t be greedy… because as the chart shows it will work against you.

Hi all,

To be honest I thought that Wall st will react better to the new president. I thought that Mr Obama will come with a great speech that will carry Wall st with great optimism all the way up. I was wrong.

When Barak Obama made his speech, the Dow was around 8150 soon after it went down to 8100 and then all the way down to 7950. Great start. So if Obama didn’t understand the task in front of him now he does.

But with banking sector near collapse some analysts talk about the Dow around 6000 and the FTSE has 2 at the beginning. My advice is calculate your risk. If you still want to go long on the market buy put option. Just in case. But put options are expensive these days because no one can see good news in the near feature.

I know that I am willing to take a risk and going to buy Barclays if they touches 65p. At the moment it is 72.95 so I am not far. But this is for long term investment. I think they are one of the few that have a chance to get it through, and if they do, the sky is the limit for this share.

Today RBS lost 66.5% and went all the way down to 11.60p. At one point they even touched the 10p. After they reported earlier this morning that they are going to lose 28 billion pounds (All time record in Britain) the City lost all the confidence and sold out RBS.

The government has increased their stake in the bank to 70% and now it is just a mater of time before it will be full nationalised. I am really sad about it. I love the share and although I’ve made some heavy losses with them, I also made a lot of profit. So in total I think I earned more than I lost… It is one of the few share that I know inside out, but I didn’t expected them to go home.

Sad day for British banks.