We are down 4%

To be clear, the down (or up when we get it) always references 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 some winning trades, again all from short positions. But the amounts were mostly small. 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 following my indicators for each share, and I’m only finding shorts. There are a few buys to be had, but they don’t show strong enough on my indicators to consider buying. So short it is.

As an aside, while 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 have helped. His book also reinforced my already established strategy.

Strategy: find common trends.

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. It’s 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.