This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Silver miner Fresnillo trades fresh 2018 lows after a 12% share price plunge Thursday and another 7% today. Why? Analysts at Morgan Stanley downgraded it to Underweight and cut their target to 715p (from 1100p). Why? A series of bills in the Mexican parliament that could restrict mining.
This highlights a glaring issue for long-term investors. Do they really understand the fundamentals?
If so, you’re in the minority and probably timing your investments accordingly. If you don’t, you can still invest long-term, whilst trading the ups and downs which shares will experience.
Do you think Fresnillo is oversold (now trading 2.5-year lows) and might bounce? If you’ve been holding Fresnillo for a long time, you may be nursing losses and may need the shares to recover significantly to achieve breakeven. Keep in mind, though, that there are some investor tools to help you along the way (for more read Mike’s blog from last week).
For short-term investors, however, profiting from even a small 2-3% bounce is attractive, in and out within a few hours/days. Trading with CFDs, you only require a 20% deposit (e.g. £2000 margin for £10000 exposure), meaning a 3% move can produce a £300 profit. Of course, if the shares fall by another 2%, your loss will be £200.
An added benefit is you can never lose more than the value of your account with CFDs. If you only put down the minimum 20% deposit, there’s an automatic stop at 10%, providing you a 10% safety cushion, limiting the damage from big intraday falls like Fresnillo’s.
The question is, of course, how to time these short-term trades to capture small moves in either direction. This is where Accendo Markets comes in. We have dedicated brokers monitoring the markets each day and an experienced research team highlighting multiple daily trading opportunities accoring to your taste.
Do you like fallers like Fresnillo or Centrica? We can keep you informed about key support & resistance levels. Like Ranges, Momentum and Breakouts? We cover them all. Want to be the first to know the latest corporate news? Our Morning Report and daily updates from brokers can help you trade results plays. Perhaps dividends is you thing? We can guide you through weekly Dividend Plays.
You don’t have to be a financial expert to trade UK Index blue-chips because we’re here to support you. To take advantage of trading opportunities in Miners, Banks or Housebuilders, sign up for our award-winning research and get involved in the daily trading action.
Avin Nirula, Trader, 23 November 2018
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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Prepared by Michael van Dulken, Head of ResearchComments are closed.