Posts Tagged ‘Dax’

I decided to go short against the DAX. But here is my mistake. I did it not because any of my indicators sent me a short signal but because I felt it has already jump to much and correction should come.

So yesterday evening I opened a short position on the DAX at 4941 with stop loss at 5001. By 7:30am I was 35 points in profit so I moved my stop loss to 4940 and went to eat breakfast and drink coffee. By the time I was in front of the screen again I was out. The DAX jumped to 4961 triggered my stop loss and through me out. Then it went down again to 4920.

Here is my my second mistake. I was upset that maybe I am going to miss a big down trend only because I moved my stop loss. So just from pure emotions I placed an order to sell the DAX again this time at 4960 with stop loss at 5021. Needless to say that by 11:00am the order was executed when the DAX jumped to 5000. So now I was -40 points… but it went down again and by the time the Dow opened I was break even. Around 16:00 the DAX was still around 4960 and I felt confidence that it will go to my direction. It closed at 4957 so I even had little profit.

But then the Dow moved up strongly and took the DAX up to 5023. I was out by 20:30 and this time really upset. Then of course it went down and while I am writing these lines it is around 5000. And tomorrow it can still go down, but I am already out.

And here is my mistakes:
1) Because my decision to open the short position wasn’t based on indicators I was nervous
2) Because I was nervous I opened a position after the first one has been closed. This was a mistake.

Good thing that I did:
1) Moved the stop loss to a profit zone on the first trade. If you can do it, then your money is protected.
2) At 21:00 told to myself that it wasn’t my day and my timing was really bad. I learn from it and move on.

It is! and this is what my friend has just did. And this is how he did it with 3 trade only:

Bought a PUT option 4700 on the DAX for at 7, £10 a point. A day after the Dax lost 3% and the option was 40. 33 points = £330.

Last Friday he open a short position (£4 a point) on the Dow with 100 points stop loss and 50 points profit target. The Dow almost touched his stop but changed direction and he got the 50 points or £200 profit.

Yesterday again on the Dow he went short with £5 per point and got 120 points or £600 profit.

All together £1030 profit and with the £70 the balance is £1100.1471% profit in 10 days. Amazing but…

I don’t think this is the right way to trade. In fact I think my friend did all the mistake he could… but he has a lot of luck. The way he trade is more like gambling when you may have a good strike but in the end the Casino most of the time wins.

Mistake number 1:

Trade on all the money in the account. It is ok when you have only £70 in your account to trade on all. But when you account is more than £1000 it is not wise. One bad trade and you are out.

Mistake number 2:

Thinking that only the £70 is his money. He always says I don’t mind losing – it is only £70. What I try to explain him is that was £70. Now it is £1100 and it is belong to him. He can take it and put it in his bank account.

Mistake number 3:

No strategy. He opens positions according to guts feelings. He follow the market quite long and he has the experience, but he is not using technical analysis to back up his instincts.

Today he opened a new position on the Dow. This time it is £15 a point with 75 stop loss and 100 points profit target. Again this is a mistake because the ratio between potential loss and profit is to low. You should always aim for 2:1 at least.

I do hope for him that it will go well for him but I don’t recommend you to follow this method. Although with 1471% profit some will be tempted

Hi all,

I am not a big fan of stop loss. I think they make you lose money. So I don’t use them. But today I had sometime and I decided to use Worldspread offer of £250 cash back.

I saw the Dax up strongly today and I know that the 4950-4975 is the upper resistance at the moment. So I opened a position to sell the Dax on 4946 with 25 points stop loss – £10 a point.

At one point I was £150 up, but my target was £1000 or 100 points. But an hour later the Dax was strong again and peaked 4978. I was out. 2 hours later it was 4900… and the again it was up to 4975 and down again.

25 points stop loss is a joke. If you really serious about trading and you still want to use stop loss then use 200 points on Index like the Dax. Otherwise you will be out before you know it.

Stupid Newham council has took my car because according to them I parked in foot path. Needless to say it is bull$hit but it cost me £250 and half a day which I wasn’t happy with it at all. I can dedicate a whole blog about Newham and their annoying mayor, but this blog is about money and not politics.

So I promised my wife that I will cover the lost with spread betting and I had a plan. Worldspread has offered me £250 cash back if I open an account with them. So my plan was to take this offer and cover up the (stupid) Newham loss.

But I am so busy lately that I haven’t had the time to deal. But on Thursday morning I saw the Dax at 4815 and I thought this is my chance. That day was my birthday as well so I thought it must be my luck day.

My target was to make £1000. So I’ve made a £2000 deposit into my new account and I was looking to open a short position on the Dax, £10 a point, with 25 points stop loss so my £250 cash back will be the limit, meaning no lost what so ever.

Good plan but Worldspread doesn’t offer the option to add a stop loss to an order! so I couldn’t just order and forget. I had to open a position manually and then put a stop loss. But I didn’t have the time to follow the market. I had a meeting with a client on Friday and nothing was ready yet. And it was my birthday so many phone calls.,. so my plan to open an order at 4830 with 25 point stop loss was all gone.

And what happened in the end? The Dax went down to 4730… my £1000 profit if I could stay focus follow the Dax and choose the right place to enter. Instead I had nice birthday, finish the project for my client at Friday (early) morning and still have £2000 in my Worldspread account waiting to be invested. After all I need to cover this parking ticket.

The Dow is 8185 after it has already touched 8250 today. The FTSE 100 is 4189 and the Dax is 4704. Is it the time to sell? I think we are getting near the point when the direction is going to change south. I think that the economies are still in dire situation and there is no real substance for the latest rally.

But the question is when to enter the market and sell? it is a good question which I don’t have the answer but I feel that by somewhere next week the direction will change. It is only guts feeling which you don’t really want to count on but I am quite sure that we will see the FTSE & the Dow below 4000 and 8000 respectably.

What I am going to do is wait and see. Once I see that on both side the atlantic the indexes are down by more than 1% I am in. Selling.