American financials are rising
How do you choose between a collection of different stocks that are all rising - Goldman Sachs, Bank of America, Lazards? Their recent graph profiles all look similar to me. Instead of buying one, I am going long on an ETF that is a collection of US Financial stocks - XLF:
I don't think anyone would dispute that this is a graph that is trending upwards. I will follow the upwards move with a trailing stop and at some point the trade will come to an end - and hopefully make me a profit...... Of course, it could all go wrong and things could crash. Er, yeah that is possible... and that's why I will have a trailing stop in place. The weak point in the process is if the trade goes into reverse in the first few weeks of the deal - this is where my risk is highest. As the price rises, my trailing stop will initially reduce the risk exposure, and then will start to lock in profits if the price continues to rise. This is why I do not have all my funds at risk at any one time, and only add to my exposure on a week to week basis. I aim to minimise my risk of having my funds wiped out by an overall market crash
How will I go long? I have a number of possibilities:
1. Buy the share
2. Do a 'buy' spreadbet
3. Buy a long-dated 'call' option
All three have their advantages and disadvantages which those of you who are members of my site will know about
If you are interested in my views of the markets this week then click here to view a video (5mins)
If you would like to see how my trades have fared this week then click here to view on video (8mins)
This trade is simply what I am doing, and, as always, this should not be taken as advice to you. If in doubt, have a look at my disclaimer here
Have a great week, and I look forward to catching up with you in due course!
Andy
I don't think anyone would dispute that this is a graph that is trending upwards. I will follow the upwards move with a trailing stop and at some point the trade will come to an end - and hopefully make me a profit...... Of course, it could all go wrong and things could crash. Er, yeah that is possible... and that's why I will have a trailing stop in place. The weak point in the process is if the trade goes into reverse in the first few weeks of the deal - this is where my risk is highest. As the price rises, my trailing stop will initially reduce the risk exposure, and then will start to lock in profits if the price continues to rise. This is why I do not have all my funds at risk at any one time, and only add to my exposure on a week to week basis. I aim to minimise my risk of having my funds wiped out by an overall market crash
How will I go long? I have a number of possibilities:
1. Buy the share
2. Do a 'buy' spreadbet
3. Buy a long-dated 'call' option
All three have their advantages and disadvantages which those of you who are members of my site will know about
If you are interested in my views of the markets this week then click here to view a video (5mins)
If you would like to see how my trades have fared this week then click here to view on video (8mins)
This trade is simply what I am doing, and, as always, this should not be taken as advice to you. If in doubt, have a look at my disclaimer here
Have a great week, and I look forward to catching up with you in due course!
Andy
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