Good morning. The market continues to be very unpredictable and the US market feels as if there is more downside to come which European markets will struggle to escape from. There is plenty for the market to worry about whether it be Brexit, interest rates or the general acknowledgement that growth is going to slow next year. More volatility is certain which in many respects is a return to more normalised conditions which have been absent for a large part of the last decade as the world attempted to deal with the aftermath of the 2008 financial crisis. I like volatility, but sometimes it can be more difficult to read as it is now with so many stocks trending down and more uncertainty than usual as we head towards the Brexit vote next month.
I think focusing on the defensive stocks is probably a better strategy at present although even here there is little in the way of price stability that can be used for short term trading. Centrica have issued a trading update this morning which has disappointed the market although there are to my mind enough positives to hopefully keep the shares close to their recent trading band which I will be watching for over the coming days. SSE is another on my list although it too has plenty of headwinds to face. The yields on both stocks are safe and are supportive in a difficult market. Imperial Brands which I have mentioned recently is losing ground again partly due to an ex dividend today, but the shares are struggling to find support which keeps them off my trade list for now. Experian is on my list as the shares tick most of the boxes now apart from valuation which is rich, but justifiable given their growth outlook. The only risk here is if the market de-rates growth stocks further. Compass Group has shot up and stayed up for now after excellent numbers, but there is a good chance the shares will consolidate again if the broader market remains weak. I am also watching Vodafone which has gone ex dividend today. I am hoping that my trade momentum will pick up to more normal levels soon, but for now it easier to let the market show some stability first.
I have been a professional money manager in London for over 25 years and trading my own funds simultaneously. Unlike many popular traders, I have a very different approach to my trading and focus almost solely on risk management and fund longevity. Another difference is that I don’t trade indices, forex, commodities or glamour stocks. My focus is on cyclical UK FTSE 100 blue chips where the leverage of CFDs and spreadbets allows you to take advantage of the more predictable and staid price action. Trade volumes are low so as to minimise costs paid away to the market, often a significant drain on performance for a trading portfolio.
At any one time I may be studying around a dozen such equities but unlikely to be holding more than one position I don’t profess to get it right every time as markets and information changes which can cause movements that you simply cannot predict. What I try to do is manage my risk with small enough position sizes which also provides the potential to diversify when conditions are right to do so. I keep strict stop losses to avoid damaging my account when positions go wrong. It is much better to get stopped out and revisit the position than continue holding and hoping!
I like the concept of true copy trading as it allows Followers to see the true activity of a trader’s account and make honest and accurate decisions. By taking a lower risk approach and trading in modest sizes my intent is for any Follower to be able to use their ‘multiplier’ to gear up my trade sizes if they personally wish to scale up the trades in search of higher returns.
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