SOD'S LAW WORKS AGAIN
So, the best law in trading worked in August. Yes you guessed it - sod's law. Last August was horrible so this one was bound to be good right?
And it was, I'm sure most of you made money. The question now is when to bank the profits -the hardest question of all.
I've banked part profits here and there.
September is here and this is usually the time to be a bit cautious, especially as it's been a good summer. If things start to sink, what better than spread betting to take advantage because we can go short.
September can be a stinker. Fund managers are back from the beach and they might want to take profits, Euro troubles are still there. However do remember sod's law. It's best to follow the market and take an open view.
Just because September can be a stinker it might not definitely happen this year. Best to keep on top of things - there is always time to take action if things do start to sink.
There are some positive signs around and remember the market looks forward.
Moving on from September I'd like to talk about averaging up.
A lot of traders make what I think is a big mistake of "averaging down". For example you bought something, it's gone down so you buy more now hoping at least to breakeven. It goes down some more and you repeat this same thing ending up with a massive loss.
Averaging up is what has made me a lot of money over the years. Averaging up is buying something then carry on adding to it as it goes up.
I know there are some commentators/writers who suggest never to let one position grow to more than a certain percentage of your total pot. I don't agree - so there!
I'm quite happy to let big positions build up if I have one that carries on producing good news.
Dialight is one that springs to mind, first bought at 150, I added all the way up in the 200s, 300s and as it went up to the current price of around £10. I think it probably has further to go so I don't rule out getting more. Profits in this are up and over the £100,000 mark.
Another is Carclo, bought in the early 100s, I added as it went up and that's now around a fiver.
On the other hand, if I buy something and it starts to fall I do the opposite and just get out.
An example would be Sepura which I bought recently. At the time of writing I'm up about 7 points and now considering my first "average up". However if I'd bought it and it was now down 7 points I suspect I would simply have already taken a small loss.
If it carries on rising I expect I will continue to average up. However of course if question marks should appear I would start to exit.
Anyway I wish those of you back from holidays all the best in September, I hope those post holiday blues don't kick in!