Everyone has a slightly different perspective on how to trade CFDs
No single method is right or wrong, but in MHO some being tried here are potentially quite dangerous.
One example is trying to "pick" market tops or bottoms.
I.E.
PRE-EMPTING the market turns (up or down) in either an individual share or an index.
Worth remembering some old market sayings:
1/ THE TREND IS YOUR FRIEND 'TILL THE BEND IN THE END.
2/ The market can stay irrational longer than you can remain solvent.
3/ The shares dont know or care if you own them. ( the same thing applies if you are short)
.................................................
Most of you would probaby not know of Ian Sykes, a very wealthy Mebourne resident who owned IXL petroleum in the 1980s
He reasoned that the market was overpriced and shorted it with futures.......Lost $32 Mill or maybe more... and was broke....by preempting the market top.(before the bend in the end) The market continued to rise ( irrationaly long after he became insolvent)
Ironically, eventually the market did crash, but too late ....he was broken and busted.
Put simply:
He second guessed or prempted the "end of the trend" and it cost him everything.
Had he waited until it became clear, this would not have happened.
Only a fluke to pick it exactly anyway......so why bother trying.
It's worth waiting and giving up some potential profit for a little more certainty/safety.
Links to a couple of articles on Sykes below : Well woth reading and then thinking about.
This is a chart of the XAO from March 86 going forward Sykes was short from Nov (or before) and as per the second article remained short at the end of April 87.
As you can see, the market continued to rise for a couple more months.
The market remained irrational longer than he could remain solvent.
The "bend in the end" came in mid-late Sept 87 when the market almost halved over the next 6 weeks.
He could have made a fortune..... BUT !!!!!
At the moment we have a RISING MARKET (maybe irationally)
BUT
The moral of the story is ........
.......................................... And finally a story of a Broker standing on the marina jetty pointing things out to his son.
"There is broker As yacht, and there is is broker Bs yacht, and there is banker As yacht" ETC
