This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
“I’m waiting for the Big One!” You wouldn’t believe how often I hear this from UK Index investors. Whether it’s Brexit, US-China trade war or Bitcoin, many traders keep waiting for the markets to rally or correct on the back of some major financial or geopolitical event. What I see are all those successful trading opportunities they miss out on.
Remember the big no-confidence vote in UK House of Commons this week? The news media hyped it up as a major financial event. But the markets are efficient, they already correctly accounted for the risks, and the vote turned out to be a complete non-event in terms of influence on the stock market.
What the media and the man-on-the-street may think of as significant future event, could turn out to be already priced in by efficient markets. So what’s the point of waiting for the Big One, instead of trading market opportunities that are in-play as we speak?
Financial markets are fluid and volatile. New trading opportunities appear on the UK Index every day, both Bullish and Bearish. The past week, for example, offered a bonanza of trading entry points for market Bulls. Those who like trading on Momentum and Breakouts would have been especially pleased.
Water utility company United Utilities broke out of December highs on Tuesday and continued to rally another +6.5% in 3 days. It’s now +15% from January lows. Property owner INTU bounced off 107p support since early January. This week, it traded as high as 117p, +9.3% bounce. Housebuilder Barratts moved +9.3% after trading a breakout since last week.
Just a few examples of attractive Bullish opportunities we highlighted to clients. In November-December, when markets were selling off, our Research team scoured the UK Index for similar Bearish ideas.
And if the above plays don’t convince you, think of it from a risk management perspective. Let’s say, you invest your trading capital in a single Big Idea, ahead of some specific event. What if nothing happens, like with the no-confidence vote? What if your idea goes against you?
Sure, you can put in stop-losses to limit your exposure, but why not go a step further? Instead of putting all your eggs in one jackpot basket, why not find 5-10 solid opportunities? Sure, a couple of them might not work out. And they might not all go +100% or -100%. But that’s not how professional investors trade.
Scalp a +5% here, +10% there, that’s the right stuff. That’s how you build your trading pot without breaking the bank betting on a single Big Idea, or waiting for the Major Event that might never materialise.
I fully realise that for retail investors, it’s easier to keep track of big events and get caught up in the media frenzy. But not everybody has the time to keep their face glued to the computer screen all day long, waiting to scalp a few per cent off a BT range. That’s exactly why I’m here. Accendo Markets won’t just highlight attractive opportunities for our clients. We also keep an eye on our trading clients’ positions and inform them of key corporate events and technical levels.
If this something you might be interested in taking advantage of? Taking the first step is easy. Just click here to subscribe to our Gold Pass and start receiving our daily trade opportunities directly into your inbox.
Amrit Panesar, Trader, 18 January 2019
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Prepared by Michael van Dulken, Head of ResearchComments are closed.