Posts Tagged ‘Dow’

Hi all

I hate stop losses. I had one on Rentokil at 39p the share went down to 37 triggered my stop loss and went all the way up to 44. Dam!

You can see it quite well on the graph. I should stop using stop loss tool. The way I see it, it is most of the time play into the spread betting firms than it really helps you.

From now on if I want to stop, I will do it by clicking on the ‘sell’ button. This wasn’t a good week for me. Sometimes I feel very confident that I can beat the market and sometimes not. This week I felt clueless. It is good indicator to stay out.

I thought to but the Dow today at 7350, but I wasn’t sure it is clever move so I didn’t. By the end of the day I will know if it was a smart move…

Yesterday I recommended to take the 4100 PUT option Feb 09 on the FTSE. The price was 59. Now it is 93 and it was during the day 141! those who took my advice had a nice profit and it could be more.

Did I take it? no. No? no. Why? because… it was late I was tired and god knows why.

Instead this morning I bought a 7740 CALL option on the DOW at 42. I though the DOW was way too down in the pre-hour market and I hoped it will bounced back. So I bought it when it was 7680. Now (19:30) hour an half before closing time my option worth nothing.

That’s ok sometime you lose sometimes you win. But my mistake was not to hedge my position. On that time I could buy the 7640 PUT at 55. Now it worth much more and it would cover my losses from the CALL. It is true that when you hedge your position you limit your profits but it is better to have little profits than big losses.

In the bottom line it is all depends what you are looking for. For me if I can make 10%-15% on each trade I am happy. For some they are looking for much more. But then when they lose they lose more.

A friend of mine lost his nerves on Thursday and decided to go and bet on half of his account on the Dow. So when the Dow was 8250 he shorted it £20 a point with 50 points stop loss.

Mistakes:
1) Never bet of half of the size of your account.
2) Never but never put stop loss of 50 points on the Dow when you put more than £3-£4 per points. The Dow moves so fast that in 2 minutes you can be out. I think this is the first thing the instructor in IG Index has told us. “People put 50 points stop loss on the Dow and don’t understand why they are losing money”.
3) If you decide to put tight stop loss then don’t put it on a nice number like 8300. The spread betting firms know that and will push the price up or down so the stop loss will triggered. In fact this is what has happened to my friend. The Dow went up to 8297, but his spread betting firm quoted 8300 and he was out.

So easily he waved goodbye to £1000 (50 points * £20 per point). I was sad for him because he is a good friend and usually he gives me great advices.

But the next morning he called me at 8:30 am and said I managed to get it back. This time he shorted the Dow without stop loss and he managed to get it back with 20 points profit (£400).

I am always amazed how easy is to loss money and earn money so quickly. I know they in my day job as a freelancer I need to work very hard to earn this while on my spread betting platform I can do it in minutes.

The problem is that I can loss it in minutes as well… But I think this is the problem with spread betting. It seems too easy. If I will only put £200 per point on the Dow and it will move 100 points up, I will make £20,000 tax free. I won’t say it is hard to get it, but you need to have the right strategy and strong nerves . Can you see red on your screen? how do you handle loss? and if you will see that you are down £2000 what will you do? this is the questions you need to ask yourself before. And you can test it. Put £1 per point on the Dow and see how you deal with it when it goes against you.

I know that in the beginning I was panicking. I was so terrified of losing money that I closed positions as soon as they went against me. Or even worst as soon as I made a little profit. But you must learn from your experience and mistakes and move on. I am still not that good on losses but I try not to panic. And it pays off big time.

Have a nice weekend!

is the time frame. It opens at 14:30 which is ok and closes at 21:00 which is a problem! On 17:00 I need to go and pick up my son then playing with him, dinner, bath going to sleep and after all that the time is 21:00.

It is not a problem when you are out and don’t have an opened position. But if you have one it is really hard to follow and make the right call. This is why I closed my position today at 8031. Well what I did was to move my stop loss to 8031 when it was 8051. By the time I looked back I was out. The lowest it went down was 8031 and then all the way up to 8100… it always make you wonder if the spread betting companies are doing it on purpose.

But I am quite happy with my profit and already put an order to but the Dow at 7950.

8:00 am this morning. All London is under heavy snow. I’ve just came back from the outside checking the snow and I saw the Dow at 7921. By the time I logged in the Dow was already 7947. I thought this is a good entry level so I opened a position at 7945. That was a mistake because 5 minutes late the Dow went down to 7920 and then 7900, 7880 and hit bottom of 7860.

I didn’t panic but I didn’t like the idea that after 40 minutes or so I am already 80 points down. But because it is pre hours trade I was confident it will come back to me by 14:30 when the Dow starts. I was wrong again. It was still down around the 7900.

I went out for 2 hours and by the time I came back I was in the money. So I have added a stop loss at 7950 meaning I won’t losing money on this one. The index continue to rise and in one point it touched 7975, meaning 40 points profit. But that wasn’t my plan. I was looking to close the position at 8100 – 8200 range.

And again it went down and hit my stop loss. I have won 5 points. Great. Anyway I kept looking at the screen and for good 25 minutes it was around 7925-7935 range. I said to myself if it touches the 7920 I am in again. And it did.

I opened a position to buy at 7918 and 10 seconds after I did it I was already 20 points down. Another 5 minutes and I was 40 down. I needed a break. Nice dinner and back to screen I was in the money. Tea and looking on the graph it went up very quickly and touched 7990. 72 points profit almost 1%. A quick though crossed my mind to close the position but this is not my target. So I stayed and it went all the way down to 7936. 18 points profit and the position is still opened.

I do hope that it will cross the 8000 tomorrow! But I am prepared for another bumpy ride.