This is the Second Part of a 3 Blog Series produced by @vilage_idoit with a focus on Short Term Trading and how to make Money consistently from those Junky AIM Stocks that we all know and hate. If you haven’t read Part 1 then you can find it here, where you will also find a summary of Michael‘s experience and capabilities:
This Part really starts to get into the ‘Nuts & Bolts’ of how he does things and once again a huge THANK YOU to Michael for providing this excellent text.
My friend Michael (@vilage_idoit) is a highly skilful and successful Short Term Trader who fights with the Markets on a daily basis to snatch Profits from various situations and often this is around Buying and Selling those horrible Junky, WheelieBin-type, AIM Stocks. Quite often he would only be holding a Position for a few hours or so and I don’t think he holds a Position for many Days although he probably does this occasionally. This is not for the faint hearted and it takes a lot of ability to do it, but if you have the dedication and focus that Michael has then it can be done. One of the most amazing things is that he has only been involved in the Markets this way for a few years but the speed with which he has created an Approach which works and generates a lot of Cash for him shows just how exceptional he is. This is borne out by the fact that Michael does not ‘work’ and has funded his own Living Expenses etc. for several Years now. Bear in mind that I think he is still under 30 as well (ok, he looks young !!).
This first paragraph is being written after all the rest in this Part of the Blog Series. Having now completed a very good Draft of it, I have decided that it is extremely involved and lengthy and for this reason I will separate the Examples out into its own Part - Part 3 - and now the Blog Series will run to 4 Parts with the final one being a Conclusion that brings everything together.
Finally I have got around to starting on these Examples - I have been struggling with precisely how to do it as I had a few ideas in my head but often that is not actually helpful and it merely meant that this state of indecision was simply stopping me getting on and writing the darned thing !! Anyway, I have sort of settled on the basic way of doing it and I am starting typing and shoving in pictures in the possibly forlorn hope that it will sort of coalesce into something that makes sense.
This is the Final Part of a Series of Blogs - if this is the first time you have been unlucky enough to find this Series then Links to the earlier Parts are at the bottom of this one if you scroll down.
I am hoping that I have done these Blogs in a way which Readers can makes sense of and will enable them to think about how to go about such Index Trading themselves if the urge takes hold. You can use ETFs like XUKS (a way of Shorting the FTSE100 that you buy and sell like a Share. To go Long on the FTSE100 you could use something like ISF I think - you will need to check this) instead of Spreadbets and of course things like CFDs will give a similar result (but these come with Tax disadvantages when compared to Spreadbets). But it goes without saying (but I will say it anyway !!) if you do fancy having a go you must be extremely careful and start with a Practice Account perhaps or at least start with very low Position Sizes - don’t go betting £1000 a Point on the FTSE100 on your first Trade !! (that would be equivalent to about £7.2m of Exposure by the way !!!).
Before I finish the Blog Series off, I just want to stress the following Key Points:
This is the Second Part in what should be 3 chunks regarding what is a pretty complicated and hefty subject - before getting stuck into this, I would strongly suggest reading Part 1 which you can find here:
Trade Types I am particularly looking for
As with all things in Trading and Investing it is extremely important to strive for simplicity and in line with this I essentially have 4 different ‘Types’ of Trade Setups that I am particularly after; and they can be grouped into 2 different types - Long and Short.
In the Final Part of this Blog Series I intend to produce some Examples using real Charts of these types of Trades so Readers can get a much better appreciation of what I am going on about.
Anyone who has read some of my Blogs and Tweets and followed what I get up to with my Trades cannot have missed my obsession with trying to Hedge my Long Portfolio of Stocks using Short Spreadbet Positions on Major Indexes.
This is all about trying to lower Downside Risk - in essence there are 2 types of such Risk - ‘Stock specific’ which can be diversified away by holding a number of Positions and by such things as Sizing to Volatility, diversity of Strategies, diversity of Sectors, diversity of Stock Types (Income, Defensive, Growth, Value, etc.). The other Risk is ‘Market specific’ - this can only be practically reduced or largely mitigated by the use of Index Shorts - which is what this Blog is about.
Some time ago a Reader emailed me with some Questions about how I learned to muck about with Charts and I have reproduced much of it here and added a lot to it. Apologies to that Reader if I did not ask your Permission to do this but I have been very careful to remove any references that might give away your Identity and you seem like a reasonable Chap so I am sure you will be happy that I share this around. And I am confident you will appreciate the improvements I have made to that original text !!
As always I never seem to have enough time to really think hard and focus on a Blog and I have one formulating in my mind about the Evolution of an Investor which should cover how we mature as Investors (and Traders to some extent) as the Years go by and what this means in terms of how we behave and how we deal with the Markets from a psychological and practical viewpoint. Hopefully in the Blog I eventually produce there should be a lot more to it than that but as things stand I am just not in the mood to start on that one so I am jumping into what I think will be a much more straightforward one and I can bash it out with little (if any !!) preparation.
This is one I have had in mind for years but only now am I finally getting round to it - silly really cos in truth it isn’t all that complicated although it is a hugely important Subject and I suspect Readers (especially Peeps early in their Investing Evolutionary Journey) will find it a really valuable and insightful concept.
Thought I'd do a recap of simplicity in trading and how it can be all lost in complex analysis and then still be incorrect, so this is a short blog on the no nonsense approach to the stock market.
My approach won't be for many but I feel it will keep you alive and finish each year with a decent gain.
I see the magical words “Santa Rally” bandied around all the time and I thought it might be useful for Readers to summarise the info on this from the 'UK Stockmarket Almanac 2016’ so we get a clearer understanding of what it really means (you can buy the Almanac for 2017 from Wheelie‘s Bookshop but I note it is quite expensive at the moment - I am delaying buying a copy until into 2017 when the price usually drops. Once a Value Investor, always a Value Investor…..). I am sure majority opinion thinks of it as a December Rally but this is really not true at all. I had intended to include a bit on this in my Blog from last night regarding the Charts but by the time I had watched the Apprentice Final I had pretty much timed out.
Welcome to my Educational Blog Page - I have another 'Stocks & Markets' Blog Page which you can access via a Button on the top of the Homepage.
Please see the Full Range of Book Ideas in Wheelie's Bookshop.