Wednesday, 14 July 2010

I actually learnt something

I may have actually learnt something from my previous experiences!

Didn't do anything on the forex or the indices today, but noticed that Barclays had gapped up so went short. The spread on IG is so huge ended up making no profit whatsoever, but made a little on the other a/c

With my previous experience of the behaviour of the DJIA at the end of the day I went long at 10334 (a little early) then again at 10318 which was better but a little as could have got in at 10310. There was a moment when the profit was at 70 when I could have sold, but I hung on hoping to see 10400. It never got there and in fact dropped to breakeven and it took all of my willpower to stick with the plan.
And the plan? Well, I have noticed that after an early dip there seems to always be an end of day rally - I believe this to be index futures short covering rather than actually share buying but I can't be sure. Also holding shorts over night in a rally is a bad move and shorts must cover before the closing bell. I also believe the rallies are mostly futures trades and less about the underlying shares. The underlying psychology of shorting is that I think it's more difficult to get right than going long and at the end of the day (meterphorically) shorts have to close out.
Some profit and I didn't hold out right to the bell so not a bad result in the end.

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