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educational blogs |
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This is without doubt one of those Blogs that I really should have written ages ago, but I guess it has not even occurred to me before to do it because it is about something that is so mundane and everyday for me, that I didn’t even figure that actually it might be quite useful for Readers.
For many years now I have been utterly obsessed by Hedging my Portfolio of Stocks and Long Spreadbet Positions by using Short Spreadbets on Major Indexes such as the FTSE100 and the S&P500. I think the simple truth is that I have always had a fascination with Technical Analysis (the posh name for ‘Charting’) and part and parcel of that is Short-term Trading which is very much an approach which will not work without a good understanding of some basic Technical Signals/Principles. Thankfully this experience and practice with Shorting has really helped me a lot in the current Market difficulties.
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This subject is quite complicated so if you have not read the first Part then it is probably best to look at that first - you can find it here:
http://wheeliedealer.weebly.com/educational-blogs/the-mechanics-of-a-trade-part-1-of-3 Example 2 - You want to buy 3 Shares in Company XYZ but this time you use a ‘Limit Order’ The basic Assumptions are as I listed at the start of Example 1. This time you still want your 3 Shares in XYZ but because it got kicked back at you in Example 1, you have decided to use a Limit Order through your Broker, where you indicate a maximum Price you are prepared to pay for the Shares. For this one, here are the steps as your Order flows through the various Processes:
It’s funny the things in life than can really get under our skin and something that really grates with me is when I see people on Twitter sending out a Tweet to the effect of “A big Buy for 200,000 Shares just went through on XYZ……” (heck, even just typing this is getting my Blood Pressure up !!).
Apart from the fact that the vast majority of people who Tweet sh*te like this are probably Rampers (or perhaps they are just not very clued up on what is really going on), the big issue with this is that if there is a Buy for any Shares then it is a simple truth that there is always one or more Sells on the other side. So if you are taking notice of a Buy Trade and thinking that this is a good thing, then you must be making the cognitive leap that whoever was on the Buy side knows more than whoever is on the Sell side. Without knowing who the individuals are, that is obviously impossible to know and even if you did know who was Buying, you are making an assumption that they are correct (no one is 100% right - even Warren Buffett gets things wrong).
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 NOT A TIP OR RECOMMENDATION. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITES.
This morning I sold about 2/3 of my RCDO position (held via Spreadbets only) and this is a very quick summary of why I made this decision last night after the markets had closed. I think RCDO is a World-Class business and of the utmost quality - however, it has just run up quite a bit and I am nervous on the Markets in general and happy to bank some profits and reduce Risk. As I only hold this as a Leveraged Position, I am running a Higher Risk on it than if I had normal Shares.
THIS IS NOT A TIP OR RECOMMENDATION. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITES.
I dumped my Small Holding (why am I talking about Farmyards?) in Alliance Pharma APH on Tuesday 28th April 2015 at 43p as per my Tweets and the updated ‘Trades’ page of this Website. As usual, I will do a quick run through of why I made this Decision - hopefully it will help Readers with their thought processes and it may assist me to evaluate if I really have done the Right Thing.
There was a bit of discussion last night on the Tweet Factory about Bull Flags - I suggested one might be forming on Empresaria EMR and I got back the fairly likely question “what’s one of them then?”
I love Bull Flags (you will find a lot of people with a tad of Technical Analysis bent will be of like mind I suspect) because they are a very reliable Indicator that the Price is likely to move up soon. This should be a quick Blog to just give a clear illustration of what they look like and some other factors around them which are well worth knowing. I will use Dart Group DTG as an example and show what is happening over at EMR and why I highlighted that I thought a Bull Flag was perhaps starting to form.
THIS IS NOT A TIP. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITES.
Back on Thursday 16th April 2015 I added to my existing position in Empresaria EMR at 64p. This is a business which has struggled for many years with some major problems in Germany and a big Debt Pile. However, it seems like they are back on top form and the Stock looks extremely undervalued - as Readers will hopefully glean from this dive into the guts (that is a horrible expression, Wheelie !!). I have held a very small position in EMR for bloody years. I have had them since about July 2010 - but I always felt that there was something very good here and always planned to buy more once it was clear things were on the mend. Just a shame it has taken so long but the position was only about 0.5% of my Portfolio so it has had little real drag.
THIS IS NOT A TIP. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITES.
Well, this Blog has got a bit hijacked by Events. I wrote a reasonable draft at the weekend and expected to issue the Final Blog before I bought more Iomart (IOM) - however, the Stock started to move and I bought some more earlier today (Wednesday 15th April 2015). This Blog is about a strange quirk that arises sometimes where if you are alert you can make some gains out of Takeover Situations. Classical Market theory would say that such anomalies should not exist - but the reality is that they do. This is of course pretty much always the case with ‘Market Theory’ from the ‘Experts’ - very rarely any use to Actual Investing. There are several strange things about Takeovers which can give you an Edge but there is one particular one that I want to write about tonight - essentially it is a situation where the Market tells you exactly what the Takeover Price is likely to be - and you can buy hugely cheaper in many instances.
THIS IS NOT A TIP. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITES.
A couple of weeks back on the 23rd March 2015, I topped up on my Tristel TSTL holding at 73p after some superb Results. I have been in this Company for quite a while - maybe even a year, but I like the story here and it really strikes me that they are increasingly gaining acceptance with Customers with regard to their Infection Control offerings. It is quite a small Company, with a Market Cap around £30m and is listed on AIM. This makes it inherently Risky and I have put about 2.5% of my Total Portfolio Value in it. I expect to hold this for the Long Term - and maybe several years if all goes to plan. |
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