GREAT START TO THE YEAR
It's been a fabulous start to the year hasn't it? Well, hasn't it?
If you've lost money so far, quit trading! Conditions have been excellent and for right now there is no sign of them stopping. The market is, of course, perverse.
The moment you are making decent sums, the chances are the market will turn on you when you least expect it and bite you on the bum.
Those of you who have been shorting the market since early December will have lost money. Your day will inevitably come but you should never go against a market trend until the trend is obviously broken.
For right now the market isn't interested in going down much. We need to make hay while the sun shines
Here's an interesting story from a reader;
He opens a spreadbetting account and puts 50 grand into it.
He decides because it has gone up a lot, that he should immediately short all the main indices.
He loses 20 grand of it quickly as they all rise against him - his trades were at £50 a point - absolutely huge trades for an index!
Then to try and make it all back he decides to buy back his bets...and then goes long just as they fall for a couple of days.
You get the picture! In other words, he is just gambling and might as well have just gone into a casino playing red or black.
No safeguards in place, no stops no trade plans no idea of why he is going one way or another.
He ends up with 15k left. Now, he says, he has to make it all back - and quickly.
In other words he is going to continue gambling when instead he should make it back slowly, this time trading properly with a plan and stops.
I met another trader at a seminar. She put 150k into a commodity stock. No stop, no plan.
Two days later the share tumbles 20% overnight. She loses 30k. However sensibly at this point she cuts the loss.
She tells me she just regained the money, over eight months with slow and sensible trading.
That's the way to do it. In the first example this reader is going to attempt to win the whole lot back quickly by gambling again. He could get lucky and pull it off but if he carries on like this he will lose his capital.
The second example pulled it back slowly and by being sensible is now likely to make money.
Don't try and make your million overnight. Trade sensibly and slowly with a plan and stops.
I am like a boring old fart uncle.. go and ignore me, you know you want to!
Turning to current trading, I've been building a nice position in Filtronic. Started buying this 4G company at 16p then in the 20s and 30s and topped up in the 40s.
A nice trading statement shows all is on track for what looks like a very exciting year and I think the shares are trading way too low compared to their peers.
And so I think they will catch up and expect them to be trading in the 70s-80s before the real sun hits in...err...the summer.
Nanoco with its dot technology is another one I think has a long way to go despite already rising strongly.