Taking Profits to Give Margin Room

I’ve held CHW for a couple of weeks now and it’s had a high of £150 paper profit for me. Today the price dropped a few points and reduced my paper profit to £90. I decided to ‘double down’ at this point after reading p.165 chapter VII of ‘Reminiscences of a Stock Operator‘ last night. In the chapter, Jesse Livermore suggests somwthing he describes as ‘pyramiding’. The gist seemed to be that when you are in a positive swing in your direction, buy more, “stocks are never too high for you to begin buying or too low to begin selling”…

Taking this a little too much to heart, my position in CHW was up £90 on paper, so I decided to buy more.

Later in the evening, I spotted what looked like a bit of a rally in Spot Gold as the price rose to just a point past previous resistance. I felt the urge to trade SHORT here but didn’t have enough margin on account.

I decided to take my profits on the initial CHW position of £110.50 to give me margin room for  quick gold short with a VERY tight stop loss. After placing the trade @ 1622 £20 p/p I realised I was trading against the general trend. I think I might have been too eager here.

1622 looks like previous resistance, but by going short here, I’m trading AGAINST the recent trend. Am I too eager??

Opened Positions

Spread Bet Longs:

  • CHW : 197.49 @ £10 p/p with 10pt STOP LOSS

Spread Bet Shorts:

  • Spot Gold : 1622.2 @ £20 p/point with STOP LOSS at 1625

Closed Positions

  • CHW : Opened at 185.46, closed at 196.51 @ £10 p/point = £110.00

Profit/Loss for Day

+£110.00

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