I believe it is always good to be able to look at your self objectively. My recent trades have been disastrous mainly due to my fear of losing too much capital. This has to be the worst case scenario when trading as it impairs and clouds your judgement. My FTSE buy went into positive last week and instead of letting it run I positioned my stop at break even and as expected the market slumped stopped me out and continued upwards. My second buy was then closed out at a loss of 190 Euro bringing my losses to 300 Euro.
However we are nearly into a new quarter and while we may finish out this quarter on a positive note I am definitely in the bear camp for the next round. There was an interesting article on write downs by Colin Barr called “Wall Street’s ship of fools” which reinforces my thinking. To match this belief with action I sold FTSE -3 at 5720 and if today’s rally continues I would look to sell again coming into next week. Another interesting article by Doug Kass highlights prosperity killers which could see markets trading lower as we get through the downturn.
With the banks reporting first quarter results I think (and hope) we are in for interesting times.
As a trader it’s all well and good to have strong views but it another thing to exercise those views and stick to your core belief in the face of adversity. This is what trading is all about and it’s a lesson that has taken a long time for me to learn. I read about it and knew what to do but it’s not until you gain the confidence within yourself that you can actually execute this strategy.
In my last post I stated I was down 1000 Euro on the two positions I held but I wasn’t overly worried. However there was a point last week that I did become very worried as the loss mounted. The collapse of Bear Stearns and subsequent sale for $2 drove the market to test recent lows. This unforeseen event had the potential to really drop the markets leaving me high and dry. My decision to stay firm but closely monitor events was because the market reacted better than I expected to the news. I was ready to cut losses if needed but there was heavy selling and I believed the market was heavily oversold. Cut to today and we see Bear Sterns are looking for a $10 per share, US home sales starting to look good and my position in the blue.
The current ebb and flow of the markets seems to be forming a trend and as the old proverb goes as soon as you see the trend the trend re adjusts. At the moment I believe the FTSE will reach 5820 but my previous confidence of 6000 has changed. I fully agree we are in a bear market and as such I am looking to short anywhere near 5800 and take profits at 5500. The same strategy of sell strength and buy weakness still applies and this rally could well turn out to be a good bear trap. These also seems to be a lot of short covering and with oil diving below $100 and gold retracing to $990 money could well flow back into equities for the short time.
Going back briefly to the original point I do strongly believe that if you can afford to lose the money you trade better because the fear is partially removed. The disassociation of trading well and monetary gain is hard to achieve, I still look at trades and calculate my earnings for winning trades but for losing trades I figure out a trading plan. Until I break this cycle I am risking taking bigger losses and cashing in on smaller wins which is not what I want.
Until then happy trading!
Tags: BearStearns, FTSE
Go away for a day and look what happens, markets collapse and I’m no where near an Internet connection. As you may be aware yesterday was St. Patrick’s Day and I was away enjoying the festivities. I did look at the news in the morning to see the FTSE down 100 points but with my quest to enjoy pints instead of points I wasn’t too interested. Next time I looked it was down to 5414 and thankfully I wasn’t sure if it was me or the market that was wobbling so I left good enough alone.
As today is FED day everyone seems to be waiting in anticipation of a one percentage point rise which we will have to see. I should have opened a position this morning but didn’t as I though markets would just meander around till the decision was made. Unfortunately I was wrong and the FTSE is now at 5575 75 points off where I should have opened my trade. The trades I do have open are well in the red, the first being the 5820 buy which I reduced to +2 Euro and the 5638 +2 which should come good on this bounce.
Over the next few days I will be looking to jump into the bounce which I expect to last for the usual two days of euphoria before a plunging dollar and rising gold and oil bring the party to an abrupt close. I had wanted to buy again at 5500 but that boat seems to have sailed so I’m going to sit tight and wait for big Ben to do his thing.
Outspoken Jim Rogers yesterday stated on CNBC that if he was in Bernanke’s position he would “abolish the Federal Reserve and resign.” whilst a little heavy handed I agree on a lot of what he stated including “Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes — if you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich,” Read the full CNBC coverage here. And why not add your voice to the Poll
This morning I woke like most mornings put on the coffee made the toast and sat down to watch the market open. Expecting a drop of 40 points after the Dows performance I rubbed my eyes to see a 2% drop in the FTSE. This is on the back of Carlyle who last week missed margin calls from banks on its 21.7 billion dollars of residential-mortgage-backed bonds. After selling over 5 billion of backed funds banks have now forced the liquidation of the remaining 16 billion dollars.
The news sent Asian markets into free fall and Dow futures are down 180 points. So is this the hand back of the 415 gain? Lucky for me I decided at the height of the rally to offload 1 Euro so my position is now +2 buy at 5820 on FTSE. Today based on US open which will be monitored closely I will hopefully place another buy +2 at 5650 and if worst comes to worst another at 5550 (Ok worst case could be 5300). It’s not that I’m bullish but I am buying into weakness and selling strength.
Best of luck if your trading today.
Tags: JimRogers, Fed, Dow futures, Carlyle
Today the fed launched its $200 billion effort to ease the credit crisis. In essence they will take bank junk for a term of 28 days rather than the normal overnight. While the Dow futures rose 250 points which translated at the opening the FTSE trailed off its high of 5780 to 5730 where it stands at present. Financials have all rallied even the dogs but the FTSE still seems to be dragged down by commodities.
While my call to buy the weakness was right I failed to act on my advice this morning when I had a chance and in the few hours I was away a lot has changed. So now I’m left bitter because (a) I didn’t seize the opportunity to buy at 5600 and (b) to sell and unload my position at 5780 where I would have suffered a small loss.
As the market stands it looks uncertain where to go after the initial push and seems to be trailing lower. I’m not sure if I want to go near the market at the moment as a rash decision will probable cost me dearly.
In other news Google shares are up 5% after the being given the green light to purchase Double Click. Their shares were trading at a 52 week low and now stand at 430.50.
Tags: Fed, $50 billion, credit auction, FTSE, Dow, Google
Robert Peston business editor at the BBC has an interesting article called “Credit Crunch 2.0″. The title is great and I can easily see it in popular usage six months from now are we continue to wallow through the financial mire. Click here to read
Another good article was in the Guardian over the weekend this time looking at the builders and the surmounting gloom facing them. Click here to read
My own personal credit crunch just got worse as I see the FTSE diving to 5648 which seems to be providing some support. My position is well off the 5820 and not looking too healthy I have to say. I’m not too worried and still of the bull mindset in the short term although re testing to 6000 may be difficult. 5800 could be the new resistance point with 5500 being the new support yet to be tested.
In the short term I may be trying to offload some of my position if there fails to be a move to the upside coming, especially the closer we get to the FEDs rate decision. Oh there we go another 10 point lower……Hmmmmm
I have been for some time of the opinion that Ben Bernanke isn’t the great force we had hoped for. In contrast a man of few worlds Jean-Claude Trichet has stuck to his guns from the beginning and still holds strong in the face of adversity. That’s a man I can trust, a man that gives me confidence in times of uncertainty even if he is proven wrong. The importance of this confidence underlines the stability of equity markets and clearly our friend Ben is shitting himself.
Just 10 minutes before a terrible job number the blunders in and announces 100 billion in liquidity. At first the markets obliged and liked his token but then woke up the reality that in another 3 minutes something bad was going to happen and did it ever. The US payrolls number was down 63,000 with downward revisions to January and December. So those of you who had thought a recession was still 50/50 wake up and realise we are knee deep in it. Mr. Buffet in quite plain and non dramatic tone stated this fact two days ago and has made quite a tidy sum being right. Now the accusations will fly that the FED is behind the curve and reacting rather than reassuring the markets.
From my sad state of affairs I’m down 350 on the day but am still happy with the position which was a FTSE buy at 5820. I think a possible test of the 5500 mark is possible but the 5300 mark is unlikely. If we close below 5650 I would be looking to double down in the short term but long term would be quite bearish.
Meanwhile the hedge fund Peleton collapsed with 800 million losses and Carlyle Capital Corp are now under pressure from further margin calls. Expect more news like this in the next few weeks and more and more margin calls are made.
Yesterday all my troubles seemed so ……
Yeah you know the song. Well both trades went well yesterday netting me 3000 in my demo account (see previous post) and 300 Euro in my real account. Today a string of woes seems to have stirred some downward momentum in US markets dropping the FTSE to 5575. The dollar has pushed up to $154 against the Euro as Trichet reaffirmed his outlook and both the ECB and BOE kept rates on hold.
In other news crude hit $106 a barrel and gold backed off to $990 an ounce. Banks have led the downward march with Merrill Lynch stopping issuing subprime mortgages and cutting 650 jobs. Other rumours of small bank collapses and various margin call defaults have shaken an all ready nervous market.
The bad news is I’m 7500 shy on the wrong side of a FTSE trade in my demo account and 100 shy in my real account. I placed a -3 FTSE buy at 5820 when I should have waited. I’m not too worried in the short term unless the 5700 barrier is broke. If that happens I will be firmly committed to shorting the markets.
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