The perfect trend trade....
In November 2012 my trading system noted that Northgate plc was rising and I bought £2000 worth of the shares. Did I analyse Northgate's business (car and van hire)? No, all I could see was that the price was rising!
Buying shares that are rising is the easy part of the trade. Watching the shares rise in price is even better, but I don't make a profit until I sell the shares (it's a bit like your house going up in value - doesn't make you richer unless you sell it). The hardest part of the trade is deciding when to sell the shares. I never set a profit target. After all, how do I know how far the share will rise (or fall)? I don't know, of course. So what I do is to set a trailing stop which I only move upwards, as the share rises in price.
There are a number of options for where to set the trailing stop, and I use different techniques for different instruments. For Northgate, I used the 50MA(weekly). I set the stop-loss figure just below the most recent 50MA price and move it up, ideally each week (but sometimes I'm lazy and don't move it for a few weeks, which can sometimes be a good thing and sometimes a bad thing - but that's a topic for another blog-post)
This week Northgate's share price dipped below the stop-loss, closing the trade and netting me £1,700, or 85% in 20 months. Not bad for a few clicks of the computer! Why oh why didn't I buy more?!!!! (Note the greed setting in: this is what causes me to sometimes take too large a position and then suffer from fear as the price plummets and I lose money. But most traders don't talk about their losses......)
The Northgate trade is not in my list of trades on the website, because I opened it before I started this blog. It was a nice long-term, low stress trade, just the way I like them.
Buying shares that are rising is the easy part of the trade. Watching the shares rise in price is even better, but I don't make a profit until I sell the shares (it's a bit like your house going up in value - doesn't make you richer unless you sell it). The hardest part of the trade is deciding when to sell the shares. I never set a profit target. After all, how do I know how far the share will rise (or fall)? I don't know, of course. So what I do is to set a trailing stop which I only move upwards, as the share rises in price.
There are a number of options for where to set the trailing stop, and I use different techniques for different instruments. For Northgate, I used the 50MA(weekly). I set the stop-loss figure just below the most recent 50MA price and move it up, ideally each week (but sometimes I'm lazy and don't move it for a few weeks, which can sometimes be a good thing and sometimes a bad thing - but that's a topic for another blog-post)
This week Northgate's share price dipped below the stop-loss, closing the trade and netting me £1,700, or 85% in 20 months. Not bad for a few clicks of the computer! Why oh why didn't I buy more?!!!! (Note the greed setting in: this is what causes me to sometimes take too large a position and then suffer from fear as the price plummets and I lose money. But most traders don't talk about their losses......)
The Northgate trade is not in my list of trades on the website, because I opened it before I started this blog. It was a nice long-term, low stress trade, just the way I like them.
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