We are down 4%
To be clear, the down (or up when we get it) is always reference to the initial amount. So, last month we were down 6% and this month we have gained and we are now down 4%. Wow.
That is a point in itself: and why it is important not to be down too much. If we lost, say, 50% of the portfolio then we would need to double whats left (i.e. achieve a 100% gain) just to bring the fund back to its starting point.
The previous month we were invested primarily in the UK (FTSE 350) and I placed stops too close for the quick change that happened. All our trades last month were for the market to short (go down).
Early this month we made a number of winning trades, again all from short positions. But the amounts were mostly small. Probably because I was wary of our recent loss and kept the trades light. Those winning trades took us back almost to even in the fund. I have tidied up the fund (let go of some trades that did not go as planned) which has brought the fund down to the -4%.
More lately this month we are invested primarily with the US (S&P 500). Again all short trades.
I am not predicting the market going down, these days I don’t get involved in those sort of long term thoughts. I am simply following my own indicators for each individual share and I’m only finding shorts. There are a few longs to be had but they don’t show strong enough on my indicators to consider buying. So short it is.
As an aside, whist on holiday recently I devoured one of Larry Williams books – Long term secrets to short term trading. Not that I’m short term, more short to intermediate. Mr Williams’ lessons on entering a trade to gain best results has helped. His book also reinforced my already established strategy.
Strategy: find intermediate trends to trade.
Sounds easy but most people get this bit wrong. Again that is why we are short at the moment. I cannot find suitable long intermediate trends.
As part of our money management, I have moved our maximum investment per trade from 1.5% to 2% of total funds. Again, if you think about it, this is another reason to gain money as this has an exponential effect on each 2% traded as the 2% is relative to the amount in the fund at the time.
Also, we will be looking at a maximum of 55% equity used. We are presently at 43%. For those that think I should be fully invested, remember that this is a leveraged account. Its like taking out a mortgage, you get a lot more for your pound. And we need a buffer as we don’t want a margin call.
More next month, and see you soon.