The Santa Rally Made Me A Profit.
I've had a number of you ask me how the Christmas rally trade ended up... so here's the update!
I bought the FTSE (and this time also the Dow Jones as the US market was very strong) in bits and pieces starting around 7,450 with 12 trading days or so left and had another bite around that price and at around 7,500. Initial stops were at 7,300.
Yet again from there the FTSE rose as per usual - not by big amounts – but it did gradually go up. I was feeling very confident (perhaps too much so in retrospect) and I ended up with quite a mighty bet of more than £200 per point.
I would never ever suggest you do this! It is massive but after years of taking decent profits I was prepared to do a bigger gamble this time round. With the stops I had I was essentially risking £30,000 at the 7,300 stop.
It gradually kept going up. Usually I would be out by the end of December but it just kept going into January 2018.
I decided why not just raise the stop into profit so by beginning of 2018 I raised it to 7,600. That didn't get hit and it kept going, I raised again to 7,650. Then it just kept going hitting 7,780.
At that point I thought, Bloody hell that's £66,000 profit. My finger twitched on the sell button but instead I raised the stop to 7,725. I was in hindsight right to have sold at 7,780 but in the end my 7,725 stop was hit overnight but I did bank around £55,000.
And I also banked a lot backing the Dow Jones too. The main thing to point out is raising the stops worked well and took me out unemotionally. The more you are making then gradually the nearer you can set the stop to the current price.
if it had carried on going up, I would still have been in the game, trying to run the profit. With the FTSE trading 24 hours it was a standard stop, no need for guaranteed which would have cost extra.
The bet did cost me a few quid in costs, my guess is around £500 (because I'm too lazy to add it all up). That's because I did a daily bet and it costs a little every night. but this was a bigger bet so it cost me a lot more.
So very happy with that rally and I shall look forward to the potential 2018-19 one. Of course it should be pointed out one year it won't work. If there was an economic meltdown or some such I would leave well alone. I probably got lucky with this one as there wasn't much volatility so there were no sudden downlunges to push me out.
Be sensible! Make sure you use a stop and know what your total risk is, and what you may have to pay if it doesn't work out. Remember in this instance I was risking £30,000. Lucky for me now I am a fat cat I can risk that easily. if you can't risk the money, don't make the big bet!