With news of Italy’s sky-high borrowing rates spooking the markets, and the FTSE taking a turn for the worse, it’s no surprise that my account suffered some stop-outs today.

You’ve probably noticed that so far I have established only UK (and one Irish) equity positions in my account — no indexes, commodities or forex currency pairs. There are reasons why I’m focusing on UK equities.

In trading circles we talk about risk a lot. But what exactly is it, how can we measure it, what can we do to avoid it or contain its effects, what should we do when it happens, and (hey!) can it be good as well as bad?

Some months ago I set about constructing a spreadsheet to calculate the difference between spread betting costs and regular share-dealing costs for different position sizes held over various lengths of time.

The other day I told you that it can sometimes be okay to average down, providing you can do so at less risk, and that’s exactly what I’ve done today.

At the end of the first week I’m pleased to report that the overall portfolio value is pretty much at break-even at £997.86, having varied on Friday between ~£986 and ~£1005.

While averaging down is generally frowned upon in trading circles, for good reason, in some cases I feel justified in doing so because I am establishing the new positions at less risk. Let me explain…

I didn’t tell you at the time, but on Wednesday of this week I created an opening order to sell Homeserve at £1-per-point if the price nudged up to 351p.

In my previous posting I told you that I had established new long positions in Mothercare, Man Group, Wolfson Electronics, Home Retail Group, and Enterprise Inns, but I didn’t tell you why.

I have proceeding to make the first few trades with my new spread betting account, these first few being a series of penny share punts. You will recognise some of these as beaten-down retail stocks.