Trade of The Week on Tesco

After falling off a cliff in January of last year, the Tesco share price traded sideways in a range from (about) 305p-per-share to (about) 345p-per-share throughout most of 2012. I told you before how I had managed to buy long towards the bottom of this range at 309p-per-share on 5 October 2012, and how I had subsequently managed to raise my guaranteed stop order so as to “lock in” some profit.

A few months later in the life of this position trade, I have managed to trail the guaranteed stop order some more to 344.6 as shown in the Capital Spreads chart below and I have decided (today, 11-Jan-2013) to add a second pyramided position at 351p-per-share.

Trade of The Week on Tesco

My brief rationale for the pyramiding was that the rising price had paused and had fallen back a little since very recently “breaking out” of what we might have interpreted as the prior trading range. Furthermore, the potential loss-to-stop of £5 (per £1-per-point staked) on the second position is more than compensated by the £35 (per £1-per-point staked) that is “locked in” by the guaranteed stop order on the first position. If they both stop out at 344.6, I’ll bank a net profit of about £30 on a £1-per-point (for each position) basis. Scale up to your tastes.

In order to place the stop order on the new position at exactly the same level as the stop order on the original position, I couldn’t guarantee it, which is a problem because it leaves me at the mercy of a possible price gap. The good news is that my Capital Spreads account — and my InterTrader account too, for the record — allows me to guarantee an existing stop order retrospectively; so that’s what I’ll do as soon as a positive price move affords me the opportunity at the level I want.

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.