Email of the day 4
Comment of the Day

July 23 2015

Commentary by David Fuller

Email of the day 4

On trading and the Chinese government:

Just have to share this one with you. Alerted by your focus on the share, I sold Apple at 130.4 on Tuesday evening and rebought it at the opening next day at 122, to see it rise through the day to 125.2  A gain of 2.6% instead of a loss of 3.8%.  Unfortunately only a small position.

Yes sometimes one can be lucky with a bit of guesswork.  Usually I take profits too early and then can't get back in, as the share just keeps on rising. (Disney, Nike, Novo).

Incidentally, you state that the Chinese government wants to get the stock market higher again.  Is this common knowledge or mainly speculation?  I thought it had just engineered the plunge.

David Fuller's view

Your trading success has a lot to do with paying attention, including watching the chart action, to help you develop a feel for instruments of interest to you.  Also, small trades cause considerably less stress.

With momentum moves – Disney, Nike, Novo, etc. - we all sell too early, but you could try using trailing stops with some of those positions.  That may not be as much fun, and it will deny you the exquisite challenge of selling at the peak, but we usually get free rides once the stops on longer-term trades are in profit. 

Re China: Yes, I would say it is common knowledge.  Most countries would be happy to see their stock markets somewhat higher, because it creates paper wealth which improves confidence and helps the economy.  However, no responsible government wants to create a bubble because it will inevitably burst, with negative repercussions.  China did bring down its stock market, somewhat belatedly, but it has taken extensive measures more recently to support prices and rebuild confidence.  

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