We are up 5%.
The markets have been interesting. We were right to go short for this trading period. A few lessons along the way. Soon after I blogged last month, within a couple of hours actually, we took a hit from Carnival. You can see below how the share spiked up. Marked by the arrow.
Our stop was just at the top of this spike. However, I immediately re-traded the share to go short and as you can see, this was correct. The lesson for me wasn’t necessarily the stop position, that was one of those things, it was more that I had invested in Carnival PLC (London Stock Exchange) and Carnival Corp (S&P 500). Both shares are intrinsically linked. So when one spiked the other spiked. This meant our risk wasn’t 2% but 4%.
Our fund dropped to 8% below. From this low we have achieved about a 16% increase this month to be 5% up. Without the Carnival error we would have been much higher. To that end, I have taken it a step further and, unless a good reason not to, only trade one share per sub sector at anyone time. This is because shares within sub sectors tend to be similar. If one drops quickly the whole sub sector often drops quickly. Its all about risk management.
Here are a few other trades we took this period: (We went short so entered at the top arrow and exited at the bottom arrow)
You will notice that we don’t try to judge the tops and the bottoms. I did, however, exit too early on many, this is a skill I am working on. But a profit is still a profit! Each of the trades made us more than £350.
As the market neared the end of the downward period we sold out completely. We are now, albeit with some caution, only taking trades to go long, i.e. the market is moving, rather hesitantly, into an upward phase. This upward phase may be brief or prolonged. But as we are short to intermediate trading that is not so much a factor.
All the best, see you next month.