It seems a good time to show what a couple of position trades look like when they progress as expected. Those of you who follow my “trade of the week” features will not be surprised to see that the two stocks I have chosen are Sainsburys and Barratt.
The following screenshot shows how the example (but real) Sainsburys pyramided position trade is looking:
In the last pyramiding session I pyramided twice within a few days, very slightly “averaging down”. As explained in the book I’m now more comfortable than many about averaging down… providing it is done safely. What do I mean by safely? Well, if you “do the math” you will see that my guaranteed stop orders assure me a profit on the combined positions no matter what happens next.
The risk-averseness can be even better demonstrated by the Barratt position trade. Would you believe that en route to the current ~£200 profit (see below) I never risked any more than about £20 of my own money? It’s because I pyramided by recycling the profits locked in by my trailed stop orders, and I never took on more risk (on new positions) than was covered by the locked-in profits.
As you can’t see, every one of those Barratt positions is guaranteed to exit at a profit due to the guaranteed stop orders. And you “high rollers” can scale up to a profit of £20,000 in six months for an own-money risk never higher than £2,000.
I began by saying that it was a “good time” to show off these position trades. A good time, of course, because the latest third edition of my Position Trading book has just been published. It tells you everything you need to know about this strategy.
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1) Buy the Better Spread Betting Book
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Disclaimer: this posting is for general education only; it is not trading advice.