Following on from yesterday’s post the FTSE went all the way back up causing my total running loss to increase to 400 Euro. The good news is that I held out and sure enough a sucker bow was landed and the FTSE is back down where I want it. At 13:30 today the US GDP results came out and remain unchanged followed by more grim unemployment figures. Dow futures are now trading at -82 and hopefully the bit of downward momentum will continue.

I have a stop at 6000 and the FTSE is now trading 5990 which would give me a profit of 200 Euro. My second position a -2 sell at 5900 is looking a little better but could use a bit of help. Here is a bad trade story to counteract my good trade, every dog has his day.

http://www.paddypowertrader.com/blog/index.php/2008/02/28/going-back-to-bed/

This is one of those days I should have listened to my gut instincts. Yesterday the FTSE broke the 6000 mark and closed 6100 where I promptly took on a sell for -2 Euro. All was going to plan this morning and I should have tightened up my stop loss or closed out my position before Big Ben stepped in to ruin the day. After a three day rally on the Dow I also thought today would be a nice day to cool off and reassess the buoyant buying glut. But no, let the rally continue as the bears are asleep.

This is like the worst boxing match where the looser just wont stay down so as it stands I was up 200 and now I’m down 200. I now have two sell positions open but I’m comfortable with both for the moment. I can’t see the rally continuing for too long and we are overdue a shock to the markets. I also just read that the U.S. will lift portfolio caps on Fannie Mae which has rallied their shares by 7%. Just stay down!

A potential $3 billion may not be enough to keep Ambac Financial Group Inc. from being downgraded. This story has been playing out in the markets for the past two months and with my short not doing much I wish they would let story go on to its logical conclusion i.e. the downgrade. I have to say I’m not sympathetic to banks being bailed out. If mortgage holders have to pay up or get out why doesn’t the same medicine apply to the financial institutions that sold these to them? The loss of the AAA rating would plummet the markets into a selling frenzy for about two days after which traders would wake up and realise the world hadn’t ended and a cathartic recovery could take place.

Back to me and my open position which is now trading at a loss of 80 Euro as the FTSE slowly surrenders its points from a high of 6011 to 5940. I think this week could see the FTSE test 5750 as breaks to the upside have failed and more bad news can’t be that far away.

As the work load has mounted I have only been glancing at the markets and as such have missed two key entry points. Today I jumped back in too late at 5900 on a -2 Sell on FTSE. This immediately rallied 35 points but is now back down around my entry point. It was a relatively slow week last week which makes me glad I stayed away. Whilst I’m not expecting any big gains my exit point is around the 6850 mark or there about.

The European banks are reporting this week and Barclays increased its write-down’s to 1.6 billion while Credit Suisse shares are down 6% after unexpected pricing errors. A.I.B are due to report tomorrow and from the Irish perspective it will be interesting to see if any more exposure crops up. US Dow futures are due to open +60 points.

Spread betting is one of those leverage products that allows you the dream of huge financial success without having a vast capital to begin with. Unfortunately the reality is a little different and while you can win big you can lose in glorious style too. This year I have set myself the realistic goal of making 10% profit on my investment by the year end. Whilst that doesn’t sound that great don’t forget my recent heavy losses which now make the task of break even look hard.

And to that effect I last week made a tidy 400 Euro bringing me back from the dead and onto the life support machine. My FTSE rally ended at 5780 where I cashed in my chips and enjoyed the weekend. To show you the extent of my relaxation I didn’t bother buying the weekend papers and it felt great. However I’m back to work now and the FTSE has just dropped to 5717 and seems to be heading lower. I had expected like most that this week would be similar to last week but you never can tell.

To make me feel better here is an article from someone who lost bad last week and someone who made it good.
http://marketmonkey.typepad.com/blog/2008/02/10th-february.html
http://themarketspeculator.blogspot.com/

I have been mostly watching the markets on the sideline for the past two weeks. I opened a position six days ago shorting the FTSE at 5890 and closed it yesterday for 230 Euro profit. Due to my shattered account I am now trading 2 Euro instead on the normal 3. As there is a minimum order amount of three I have to place the order and immediately sell 1 Euro worth for a loss of a 2 Euro. With only 800 Euro in my account I feel more comfortable with this.

Yesterday I opened a buy trade on the FTSE at 5724 for 2 Euro. At the moment I’m in profit of 120 Euro which will hopefully rise as the day progresses. The rebound seems to be in part the establishment of a trading range and the fact that the ECB (no move) and BOE (-.25) have finished their business of rate stays and cuts. Whilst the markets seem to be establishing rages market volatility is seeing those fluctuate radically from -200 to +75 which will take out any reasonable stop loss. This is causing a few headaches as even correct trades are being stopped out. To counteract this I’m trading FTSE March futures and can leave the trade open for weeks and am applying mental stops rather that actually placing the stop when placing the trade. This is risky but considering the small trade size I am comfortable with this approach.

As the title of the post suggests my trading strategy is to buy into weakness and sell into strength. This seems to be what is establishing the trading range so as they say follow the trend. The FTSE range seems to be 5750 (+/- 30) – 6000 (+/- 30) which gives me ample room to make a few quid.