Friday, April 12, 2013

Two stocks, profits in two directions

I've shown charts of two stocks below, one a US solar stock, the other a UK mining stock, which show profitable trends, in both directions, in the last few months.

There are dozens that have shown similar characteristics, however I've shown these as they have been traded in this period by myself and other traders in the mentoring programme. 

There is no difference in trading a stock in both directions to that of a trend following futures trader following his signals on index futures, commodities, or anything else. The principles stay the same - if you get a valid signal, you allocate a small portion of your available equity to the trade, open the position, and wait to see what happens. this should happen even if successive trends are going in the opposite direction to each other.

If you lose, it's a cost of doing business, and will cause little damage to your portfolio. If you win, then it allows you to grow your account via compounding. You simply bank the profits (after an appropriate exit signal is given), wipe the trade from your mind, and move on, looking for the next valid signal, where you can place another small bet. Simple, but oh so effective.

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