Mark I wonder if we can have a separate section for posts on this theme. What I’m trying to do is build a set of rules on how to trade the market which are handy reminders for me and more importantly help you and help followers know why I’m doing the trades I do. Perhaps we could end up with ‘A Jobbers Bible’.
So I increased the book a lot from a certain point yesterday, we need to know when it makes sense to do that. Well one of the times. if selling, is when expected good news comes out. The old adage is “buy on the rumour sell on the fact” and we must stick to that. That doesn’t mean sell precisely at the moment the news comes out, one might need to start a bit before hand to avoid the rush, or the market might go up initially on the news before falling, like it did on the Scottish ‘no’ vote. But what about yesterday, no news came out. Well the key is to sell after the move, ‘well of course’ you might say but when is that? It’s when the market has closed, again this isn’t absolutely precise. During the day the move on the story, in this case hope of central bank stimulus is powerful but once the market closes and the dealers in the stocks and shares that make the FTSE up have gone home what then? Well in the morning ‘the story’ is yesterdays story, sure the same theme might drive the market higher again at some point but generally there will be more reason to take profits first thing than to come in and buy again after the move.