Dougs Trades Since 2008
Archive for September, 2012
Square One Again
0Still getting it wrong !
The substantial “long term” position, opened yesterday, on Excite (XEL) hit its stop loss this morning when the SP dropped over 5%.
Clearly I had thought that a stop loss of about 5% would have been prudent and unlikely to be hit in the light of the great RNS just issued,. Wrong!
As I write this the SP is planing along the level of that stop loss, which confirms that it may have been just that little too tight for a share as volatile as this one.
If it heads on down, I’ll still reconsider another position on XEL.
Current profit (LOSS!) -£1.45
Reconnection
0After a whole week without any internet connection, France Télécom has managed to get it to work, with only occasional interruptions, today !
It turns out that the Melrose limit order that I had hoped to edit worked out OK as the shares have dipped quite a bit since .
I managed to open another position on the EUR/GBP, following the same principles as the previous one which succumbed to a stop loss too tightly set. Alas the same problem occurred – hitting the stop loss, although it was reasonably set – I had learned – honest, but there was an end of day spike that was really out of the blue which closed my position, which would have gone on to yield a good return.
There is a school of thought that says if you believe in your position you don’t need a stop loss, if you don’t, you shouldn’t have opened it. I don’t systematically set stop losses for my ordinary share purchases, but that can lead to some spectacular and totally badly managed losses!
With today’s crash in the Xcite SP, following, what to me looked like a good piece of news, I set a limit order to buy at 111p. The end of day saw the SP drop another 3p and the order triggered at 110.79p. The position is showing a loss of £49.32 on a £18/pt bet. Stop Loss set at 103.79p. I have not set a limit to sell yet and the position I see a relatively long term – expiring in March 2013. AT £18/pt this bet represents almost £2000 worth of shares bought in the normal market. Time to get serious I thought. Fingers crossed.
There are possibilities for Excite – either just recognition of its innate value, or, ideally a takeover bid.
I have other limit orders in place : CIG and BZT(see Sept 11th post), and an order to short Abcam (ABC) at £2/pt at 404.5p. This latter is purely following this week’s Naked Trader diary. He, of course, sold at 411p, so I’ll never make what he’ll make if the target price of 370p is achieved, but I’m looking for profits and am happy to make something. Also by opening a short position I’m trying to overcome my (and lots of peoples’) resistance to shorting.
Why not short the FTSE? Too scared! I’ve lost money on this before – only because I didn’t ride out the rollercoaster. That said, I have bought SUK2 (What a name!), as an Exchange Traded Fund purchase through my normal broker. To give it its full name, SUK2 is the “ETFX FTSE 100 Super Short Strategy ETF”. Interactive Investor imposes a questionnaire about your knowledge of “complex instruments” before they’ll let you buy this! Effectively it goes up by twice the percentage the FTSE goes down and vice versa of course.
I opened my £2500 position on this when the FTSE was at 5848 and I could have closed for a £150 profit at one point, but held on, so it’s now showing a £45 loss on paper. I quite like having this open as it always provides a ray of sunshine when everything else is falling!
So logically a spread FTSE short seems interesting – perhaps if the FTSE reaches 5900 again and I’m still doing OK with my return to spread betting! We’ll see, psychology is very important in this business.
Current Profit: £137.98
Melrose on auto-pilot
0My posting on September 8th explaining how clever I was going to be in the face of MRO seeming to be on a roll, came to nothing.
Having written the post I then went to the IG site to implement it all, but my Internet connection was down – one of the lesser pleasures of working from a cave in France!
No matter I thought, I’ll make the changes just before the market opens in the morning, but France Télécom wasn’t cooperating and I was unable to make the changes and the limit sell price triggered and yielded a nice £100.70 profit. A profit is a profit as they say, but looking at the price today I think that it would have been good to be able to make the changes I wanted and ride the winner a bit.
I’ve placed two more optimistic “buy” orders: for Admiral (ADM) and the City of London Investment Group (CLIG), both of these orders were inspired by seeing that they both have imminent XD dates for significant dividend payouts (3.92% and 4.89% yields respectively). I used the Investors’ Chronicle Dividend Calendar for the dividend dates – a very useful site.
The plot will be, if the position triggers to take the dividend and close if the SP doesn’t fall more than the dividend value. If it does fall I’ll keep the position open a while as both stocks look promising anyway.
Current Profit: £160.38
Melrose surprise
0I was surprised on Friday evening to see that the Melrose position was at 253.48p and showing a profit of £103.29 profit. Odd, I thought, as the limit sale price was 252.82p, which would have yielded £100 profit.
Looking closely at the charts revealed that this price was an after hours auction price and spread limits are not activated out of hours apparently.
Melrose seems to be on a rise – 6% last week against a FTSE rise of 1.42% and brokers are targeting 160p. The XD date is 19/9/12 and dividends are paid on this date for spread bets. (The SP may dip as the dividend value is “lost”, but not always).
As a result I hope to ride this as winner. I have raised the “sell” limit to 262p, really with the hope that it doesn’t trigger before the XD date when I’ll get a £13 dividend on top. I’ve moved the stop loss to 235p, which means that if it goes absolutely pear shaped I should still see a small gain.
If the position stays open, once the dividend is banked, I’ll think seriously about closing at any price above the original target.
Bezant Resources
I placed an order to open a buy position on this miner. A year ago it was announced that they had sold an option to buy an asset at a fixed priced for several millions. This is payable whether or not the deal is done. The cash will provide a special dividend in January 2013.
This news led to a SP price rise that looked reasonable given the dividend. The SP however fell back and continued to fall after I sold at a loss – at about the price it has now come back up to.
The SP is beginning to look quite positive and I am wondering if we are beginning to see interest rising in a share that should yield 125% (34p div on SP of 27p). It just seems logical that any price under 34p is just silly and bound to rise.
I probably should just open the position however I placed an order hoping to pick up on a dip to 26p. Will I miss the boat by being too greedy? There seems to be solid support at 24p so the downside is also limited.
Order to open at 26p at £30/pt, stop loss 22.5p. No limit set for the time being – this I see as a long term bet and the expiry is March 2013.
Melrose triggers
0I didn’t have to wait long for this to happen!
On the face of it this order to buy worked as planned – there was a convenient little spike down in the SP this morning which triggerd my buy order – set at 233p – to be activated at 232.82. Ideal as long as the spike down isn’t the beginning of a price slide.
The position is currently showing a loss of £8.46 which effectively is the “spread” difference between the buy price I just paid and the sell price. I need the mid price to be greater than 233.6p to break even.
I have set a rather optimistic order to buy Wessex Exploration (WSX) at 6p. Broker Man Dan (brokermandaniel.com/) has reported rumours of a possible takeover here and company news is very positive. BMD reports have been known in themselves to cause SP movements, so I have set this price well down from the current price of 6.85. The order is for £100/pt – sounds a lot, but at 6p the bet represents the equivalent of an investment in 10000 shares or £600. (The Melrose position at only £5/pt equates to 500 shares or £1164.)
Current Profit: £59.68p
Return to business
0During the summer while I had only occasional internet access I closed the Vectura position at 78.75p, for a profit of £96.
This was clearly “a good thing”, but again I failed to follow my initial policy where I had set a limit sell at 81.5p, which would have given me £125 profit as Vectura continues to rise and now sits at 83.44p. It’s reassuring to remember the saying that “there is no such thing as a small profit”, but the lesson again must be: Stick to your policy!
Incidently the GBP/EUR position that lost me £35 on hitting my reduced stop loss value, would have (just) hit the original stop a couple of days later, so it was just as well. With a slightly bigger stop loss figure the bet would have gone on to achieve to target profit easily within a week. Stop losses are hard to judge.
Currently I have no positions open, but one order to buy Melrose (MRO) at 230p at £5/point. I thought their recent report was encouraging and that the drop in SP recently seemed mainly due to particular elements in the last quarter that made it untypical. There is a XD date on September 19 wich will pay immediately £13. My target and limit price is 252p which would give a profit of £110 – plus the dividend. Stop loss to be set at -8pts (222p).
One of the reasons that encouraged me to keep my spread betting account open is the access that it gives you to market data. It’s not level 2, but you get a graph showing tick prices – which is very useful when you are thnking of making a trade beit a spreadbet or actual pruchase. I often have the tick chart running and press the “Trade Now” button as the chart moves favourably.
Current Profit: £59.68p
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