For 2006 I have been reasessing my investing ideas to try to be more successful.
Last year I took small profits from a wide range of shares and missed out on some huge rises, made some large losses on the duds by not getting out soon enough-then some recovered!! one or two have gone bust and one or two like NLR have rewarded me well and kept me solvent. However some of you are obviously doing far better than me so I thought I'd change methods--any tips welcome. This year I'm going to look for shares with a smaller spread and limit the number so that I can buy say 50k then move in and out as the sp changes-I don't feel confident with spreadbetting but this seems the buy method closest to it-if it pays off I shall have to pay the CGT without complaining.
Lots of methods coming in
1 Good Stock Selection-research buy and hold. instinct and luck applies here too
2 Capital Preservation-by using stop losses.
3 Instrument selection--CFDs and Spreadbets
4 Buy high risk shares for possible higher rewards.
5 Position sizing- hold enough to trade profitably.
6 Margins--choose shares with a narrowish spread or you wait for a big rise before you make any profits.






Is this a good summary Gausie?

Try not to get carried away on the mood of a thread and like big Al says always know your exit strategy before you enter a trade. Your new strategy via your opening post is a good one in that 50k in a tradeable liquid stock can make you money but always remember to trade with the underlying trend.

If you have made money and are uncertain about whether to exit then take profits on half your holdings, set your stop loss at your entry point on the other half and concentrate on something else

The main warning from me is to be very careful not to get sucked in my posters like suehelen. They give themselves credibility by copying and pasting lots of `bumf` from elsewhere but they are out and out rampers. For example look at this thread which is very typical of this person DMR

Gallick

"Fair point you could reduce to 2 or 3% per trade, but that means that you may have up to 25 trades open or coming up. IMHO that is too many to keep track of. The 4% level would risk only 48% of your entire portfolio if everything went belly up."

Hmmm not sure that's right - but this is why no single part of a strategy should be taken in isolation.

Suppose, for example, you were to consider buying BT.A at current levels.




Suppose your stop was 216 and your target 235. At an entry price of 220, you'd be looking at risking losing 4 points (220 minus 216) against gaining 15 (235 minums 220) - roughly 4 to 1 risk reward. If you decided this were acceptable and were trading normal shares, then with a pot of, say 10k, and a maximum risk of say 2% of your capital, you would be prepared to lose 2% of 10k= 200. If you're risking 4 points for 200 then you're sized at 50 a point - ie 5,000 shares. Without margin, these would cost slightly more than your entire pot - and you'd have one share to watch.

On a margined account (eg CFD) with, say 10%, then the exposure is the same, but you'd be able to hold 10 similar sized positions, so you'd be watching 10 shares.

I'm not sure where your 25 comes from. Is that spread betting? or very high margin?

Moneyplus - perhaps you might add "Position Sizing" and "Margin" to the bullet list, under money management.

Gausie

How many of you sell in May and come back in October? always seems a very dull time through the summer months. Also it seems very often a good idea to sell just before results with most companies as no matter how good they are the sp is always knocked back.

I think the answer is actually simpler than most realise. Be greedy when others are fearful and fearful when others are greedy.

The best way to make 1mill in shares is to start with 2mill

Scripophilist - post 26, I think you just hit the nail on the head, that stratgery has worked well for me in the past. Other than that I'd say never buy on a whim, always be sure of why your buying, why the price will rise and whats going to happen to make this rise. A little research into the board is always handy too, who whats to be in on the budding company with a great product thats being run like a family run business. Failing that just buy what Alan doesn't!!!!

MP. MKS neatly demonstrates your point this morning. A good trading update leads to a fall in SP. Granted it has been accentuated by a negative market today, but the theory still seems about right.
Alan

My take on investing is generally
1 Only invest in something you understand
2 Ignore bulletin board tipsters as they are usually rampers or de-rampers because they have a position in the stock and an axe to grind, but use them for a base for further research. Very few posters are knowledgable but you do get to know them.
3 Have a decent spread of shares across sectors
4 Bite the bullet and sell when a share goes pear shaped
5 Short term dealing costs money in spread and commissions
6 Smaller company spreads are sometimes massive, for example Dimension Res has a spread of 33%, which is a lot to make up before you make any money, so I don't bother.
7 My biggest failing is to buy too early in the day on impulse after a share has already gone up a bit, thinking the momentum is in its favour, or to sell on impulse when I see a bit of red...
8 my biggest successes are almost all long term holds with FTSE 100 stocks paying increasing dividends, my biggest failures are impulse AIM purchases. I will learn eventually.
9 There is an old adage that if you give a dealer a screen, he will deal. I am learning to stay away form my screen! But then I can as I am early retired
10 Have fun!

Thats about the size of it from my point of view

cheers

>>coeliac1

disagree with 1 & 5.

That's probably why it's my list and not yours!

Agree with 1, disagree with 3

>> Gausie

I would not set such a close stop-loss as in your example. After all if you are expecting the market to rise you have to give it a chance. I usually use the 40 day moving average and put the S/L just below this. So let us say the current price is 235, my stop loss is 200 and my trading account is 10K. However for technical reasons I want to get in only at 240. I place an order for 240p. My risk is 40 points. 4% of my trading pot is 400. So i bet 10 per point (40 points x 10) = max loss 400.

I restrict my trades to 12 as a max. So if I lost 12 x 4% I would lose 48% of my account. The idea is that even in the worse case scenario you would lose less than half your money.

regards
gk