Trade of The Week: Skyepharma

You may remember that previously I had a couple of nice trades in Skyepharma documented here

Having last stopped out of this stock at 95p-per-share, I noticed that today (22 Nov 2012) I could re-enter at about 70p-per-share; a discount of about 25%. I knew this because the “Stop-Out List” explained in my Position Trading book told me so.
Being able to re-enter at a discount, or selling high then buying low, was not sufficient justification in its own right. I was also tempted by the fact that my re-entry price looks to be at a level that was a previous support level (in June 2012) and resistance level (in July 2011) as can be seen in the following IG chart:
Trade of The Week: Skyepharma
In case you’re wondering: my reason for choosing IG in order to demonstrate this trade is not only because they are one of the few spread betting brokers to provide a market in Skyepharma shares, but also because their charts automatically show my trade (the solid line) and associated stop order (the dashed line). So it’s easy for me to see what’s going on, and easy for me to show you too.

No guaranteed stop order was available in this case, but I’ve utilised a trailing stop order that will rise in line with the (hopefully) rising price. Or will get me out with a manageable loss if the observed support/resistance breaks.

If this trade goes well, I’ll provide an update in the future. If it fails, you’ll never hear of it again! Just like most trading “gurus” 😉

Two Steps to Better Spread Betting:

1) Buy the Better Spread Betting Book
2) Sign up with Capital Spreads, IG, ETX Capital, or Spread Co

Disclaimer: this posting is for general education only; it is not trading advice.