Tag Archive for 'stop loss'

ROLLS ROYCE – A Lesson Re-learned

Published on November 15, 2010 in Education and Market Reviews. 0 Comments Tags: , , , , .

Our Rolls Royce trade last week was particularly annoying. We fell for – or rather, didn’t allow enough for,  one of then oldest tricks in the market makers’ armoury.

When it is pretty obvious to all that a stock (in this case Rolls Royce), that has suffered a minor price pullback on some ‘bad’ news, is about to make a recovery the market makers’ trick can be to push the price hard down at the open before they then start buying like fury to lift the price dramatically upwards.

What that does is not only to take out those, like ourselves, who had just opened a Long trade in anticipation of the upmove but also to dissuade others who were about to do the same. This then leaves the market makers with an open ‘Long trade’ goalmouth.

Click on the chart to enlarge it.

Why did we not pay more heed to our instincts and experience that this might happen? The only answer that we can provide is that we were put off entering a lower stop-loss price by the size of the gap when we suggested opening the trade at the 618p price ( on the 9th Nov.).

Our initial instinct was to set the stop at 558p – i.e. under the previous day’s wide-spread low. But to have done that meant a gap below the opening price of some 9.7% and we thought this too large a gap and so settled for the slightly higher stop at 574p. Mistake! Wrong! We should have used our initial analysis or we should have eschewed taking the trade. As it was a 9.7% risk would not have been too out of bounds given that the potential for profit was put at + 22.3%.

We made a mistake and re-learned an old lesson.

Review of the FTSE, S&P, DJIA and Nasdaq Market Indices

Published on December 13, 2009 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , , , , .

The major indices have moved sideways for several weeks now. This is making life a little difficult as it does tend to have an attrition effect on our trading. This is simply because of the up and down whipsawing nature of a sideways moving market which creates an higher incidence losing trades as protective stops are hit.

So we ask ourselves, should we be in this market at all? Would it not be more sensible just to sit this period out on the sidelines and wait for a more positive directional trend to set in?And we answer ourselves by again analysing the trending signals being given by each market index and, again, coming to the conclusion that we should stay in and keep trading.

The main point being that although the risk of a downside move is increasing slightly by the week as the indices fail to make upward progress the fact is that the indices are holding their own, moving sideways, within the overall dominant Uptrend. The very fact that it is an Uptrend indicates that higher prices should continue – even though there will be price consolidations and corrections from time to time.

So, we worry and fret that the next bit of bad news could cause a tumble in share prices but we remain true to the faith that the dominant trend will assert itself and, whilst it is an Uptrend, take share prices higher at some point. Any tumble could be relatively short lived anyway as all of the major indices have potential support levels not far below current prices.

It is an important part of the decision to stay invested and investing that, after such a relatively long time going sideways, the markets are much more likely to pole-vault upwards once they do start to move. The crucial level is, as we have repeated for several weeks now, the 1122 level on the S&P 500. If that is broken to the upside then just watch (and, if invested, enjoy) the resulting rush upwards in share prices in London as well as on Wall Street.

To shorthand the individual stock market reviews here is our view of the potential prices that the markets could move up to, together with the first levels of potential support in the event of a ‘bad news’ reaction –

Market                   last week                                             potential level                                 support level

when Uptrend reasserts                   if market falls

—————       ———————                                    ——————————-                  ———————

FTSE 100         Weak. No progress for 8 wks                         5770                                          5108 (then 4670)

FTSE 250         Weak. No progress for 12 wks                      10600                                          8888 (then 7980)

FTSE SmCap   Weak. Becoming endemic                               2910 (then 3230)                        2425

S&P 500           Stalled at resistance level (1111/1122)            1290                                           1000 (then 940)

DJIA                 Pushing upwards                                           10785 (then 11800)                      9705 (if 10333 fails)

NASD 100        Stalled. 5 wks sideways                                   1827 (then 2040)                         1740 ( then 1629)

Individual market commentary and illustrative charts are available at http://www.sharehunter.com/news/market-review/

Hot Share Tips and Stock Picking Services

Published on November 13, 2009 in Education and ShareHunter News. 0 Comments Tags: , , , , , , , , , , .

Only gradually have we, at ShareHunter, become aware of the difference that exists between what a lot of people say they want when it comes to investing in stocks and shares for profit and what they really need.

Our increasing awareness of this growing problem, one that is constantly casting many an investor onto the financial scrapheap, shows that there is fault on both sides. The companies that provide all of the ‘hot tip’ hype are, of course, milking the unaware investor for as much as they can; but the other side of the coin is that not all investors are genuine seekers of truth either – many of those who subscribe to the cheaper ‘hot tips’ are not disciplined investors at all but are just plain greedy and want to make a fast buck to boast about.

There are innumerable ‘hot stock’ type services available over the internet but very few of them actually provide a service that will allow a subscriber to profit from following the tips. All of them provide, or purport to provide, the latest ‘top share tip’ but few, very few, offer anything like a back up or risk control service to support the subscriber as he or she tries to make money from the stock market.

It is a salutary fact that nearly 90% of individuals who try to make money trading in stocks end up not just losing but losing nearly all of their available capital. Some, of course, are just plain unlucky; yes, there is a large element of luck involved in timing an entry into the market for the first time. But when it is discipline and knowledge that dictate the accrual of profits the hyped investor is left very much on his own.  Most investors action their ‘hot tips’ without any concept of when to take their profit or how to protect the downside.

Most tipster companies are just after the fast buck so they charge little and promise much; they want your email address so that they can sell more to you later – often at an higher price (by promising you something close to the moon) and they need new subscribers all the time in order to replace those who fall by the wayside having lost all of their seed-corn trading capital on the bum-steer stock tips.

Then again many who subscribe to these cheapo tipsheets do not want to be bothered learning how to invest properly; they actually want to be hyped up, they enjoy it, they think that because someone has provided a ‘hot tip’ that it is bound to make money. The greater the hype the more they are sucked (and suckered!) in. Such people do not understand or even want to know what it takes to be a successful investor on the stock market.

ShareHunter is one of the very few companies that provides a ‘cradle to grave’ type share alerts service where not only is the original stock alert carefully identified and analysed (from big, liquid stocks, not hard-to-sell small cap or AIM stocks) but also where stop-loss and profit-protection prices are provided and continually updated so no subscriber is left alone without professional and successful back up. In turn this means that ShareHunter does not seek subscribers through hype but provides a genuine service based on trading expertise and experience. Promises of great riches are not made – even though that may be the end result!!