Trading Trail #18: Almost Spent Up!

Having begun this real-life position spread trading project with £1000 of Trading Resources and no open positions, at this point I find myself with almost 50 positions — most at £1-per-point, a few at £2-per-point — and with less than £50 worth of Trading Resources remaining for establishing any new positions. So I’m almost spent up!

Once I’ve allocated the remaining £50 (but I don’t have to) I will then have to wait for existing positions to stop out before I have trading funds to allocate elsewhere. Oh, and trailing my stop orders up to break-even can often free up additional trading funds. Either way, unless I introduce some new cash, I’ll have to recycle some of the existing cash.

I’ve discounted the possibility of introducing more funds with which to pick up more bargains in this account, because that didn’t go down too well with readers of my previous trading blog. Apparently I was cheating by failing to stick within my original trading budget and I was throwing good money after bad. I didn’t see it that way, but I could understand it.

With little in the way of available trading funds, I fear that some of my opening orders (see below) will fail to execute when the prices of my target stocks fall to levels at which I’m willing to buy. On the other hand, these opening orders might not get anywhere near executing anyway because — as I write this — prices seem to have started rising across the board.

Opening Orders

The portfolio value is currently sitting at a little over £700, which means it’s down by almost 30% since the start, but looking at it another way: in the course of a very significant market ‘correction’ I’ve lost only £300, some of which I would have lost simply from the combined spreads on my numerous open positions. While this spread bet portfolio could be volatile the upside potential is massive compared with the downside risk, and if the markets embark on a sustained up-trend from here I will be declared a hero for having become more-or-less “fully invested” at exactly the right time. It’s a nice thought, but maybe a little optimistic.

Without further ado, here is the latest snapshot of open positions, in which Admiral is a beacon of profitability within a sea of mainly red:

It’s nice to see my double-position in Thomas Cook also is profit, after I caught the falling knife and averaged down, and who knows what might happen now that the company has obtained new lending from its banks.

Tony Loton is a private trader, and author of the book “Stop Orders” published by Harriman House