rather than pick out individual stocks to trade, it can often be worthwhile to trade the indices themselves, especially in times of high volatility.

for those so inclined, i attach below charts for FTSE and FTSE 250, though one might equally be tempted to trade Dow or S&P, which is significantly broader in its coverage, or even NASDAQ

for ease of reading, i have attached 1 year and 3 month charts in each instance

there's no question that this fiscal cliff nonsense will be resolved - as i posted earlier, as usual, it will be the 59th minute minute of 11th hour ...... i really do get very cross with these american nincompoop senators who think only of playing heavy-handed partisan politics and clearly have no great concern for the general wellbeing of the country or its perception in the wider world (as if they even know that exists)

Just catching up with all the posts here - wonderful cartoons Skinny :0)

Had a lovely ride on my shorts today, and then went long at one time, thinking the DOW would surely pick itself up at around 13000 but got beaten up!

Speculative or stupid? Long Dow @ 12,953. Caps futures.

inevitably speculative, but i do not think stupid, but then i bought more at 12945

EUR German Trade Balance 17.0B consensus 17.2B previous 18.1B

EUR French Trade Balance -5.0B consensus -5.0B previous -5.3B

I'm staying short with the trend on the DOW, I don't think it matters when the fiscal cliff is resolved, the US debt situation remains and will eventully lead to austerity. The ongoing QE programme is likely to remain under Obama, the yield on 10-year treasuries should fall back to 1.5% or lower and the dollor remains strong despite the massive increase in money supply. So short dollor, short Wall St and now to pick my entry points.

Just as a matter of interest, do you not hedge your currency activity with a pairs trade, just in case it all goes wrong?

I never hedge my currency trades Harry and will admit I've been caught out a few times. If you short GBP/USD what would you buy to hedge? EUR to me would be the obvious obe against USD but really the position only magnifies losses if USD gains...

I never hedge currency trades either, just can't seem to reason why I should effectively bet against myself. I know lots of people do, just doesn't work for me.

Some people just play minimum stakes below the minimum bet allowed, to do this you can hedge to reduce your exposure. e.g. GBP/USD minimum is 50 cents, if you wanted to just play 10 cents you could open a short at 60 cents in say the December future and then a long position of 50 cents in the January future to achieve a 10 cent short. The downside of doing this is you tie up funds covering the margins against each bet.

There are two ways that I'm aware of to hedge currency trades.

Using cable and fiber as examples, as there's an element of correlation between sterling and the euro...

The first method can be used to offset short-term price fluctuations of a long-term trade. Suppose you're long cable and are happy to hold for several months. If the price is going to go up, it obviously isn't going to go up in a straight line, and there will be down hours, down days and down weeks along the way. You could use a series of fiber shorts on any of those faster timeframes to hedge the long-term cable long trade for those times when things aren't going quite to plan.

The second method can be used as a hedge as part of a grid trading strategy. Grid trading is very dangerous as it breaks one of trading's golden no-no rules of never adding to a losing position to average down. In grid trading, if you're long and the price moves down by, say, 30 pips, you add to your long... and continue to do so at every 30 pip step. Your average entry price is reducing all the time and you will be working with a very low profit target of, perhaps, 5 pips. Sooner or later the average entry price will be low enough to get out of all the trades in your basket en-masse and bank the measly 5 pip profit.

The risk of this system is that the market continues going the wrong way and you get a margin call or, worse still, are forcibly closed. One solution is to trade cable one way (eg. longs only) in the grid and hedge by trading fiber the other way (shorts only), as one pair will be banking profits all the time that the other pair is adding to its losing positions.

The strategy might sound hare-brained, but I'm an introducer for lots of Forex brokers and, trust me, I can tell you that it's VERY popular!

Looks like AAPL is on for another short position...

confess even i have become disillusioned and shall swallow the very bitter pill

Nice to see you back as an occasional poster Hils, and as as usual with a positive contribution.

I thought you'd exited a while ago Cynic.

foolishly not ..... it is a stock i have traded successfully over recent months but completely f'd up this time ..... stupid boy :-(

Gone long GBP/USD DFT 1.59881

Here's an example of a multi-currency hedge trading system.

Check the balance and equity curves. The equity will sit below the balance for long periods of time as the system holds out of the money hedged positions and adds to the basket. Once the overall profit target has been reached, it'll close all of the trades in one hit (maybe 50 or more simultaneous open trades) to bank its profit before starting over again.

If you get the position sizes and risk right, it can be reasonably safe even if it might seem a crazy way of trading at first glance. This system has only drawn down 3.5% and made 6.4% in 3 or 4 months, so there's certainly no margin pressure.

Out at 1.59928

Nice model Hilary, I love the rick of ruin display. I prefer short durations though using 3 - 5 min charts and taking small quick profits often using oscillators and a 5% rate of change. Not the most scientific approach and does mean I have to watch the screen but it works well for me.