Bad Assed Trader: Whilst Faceless Bureaucrat toils at the coalface of NHS management my forces are unleashing... On Monday night I spotted another opportunity to trade. This time it was "DOM-LON" which is not a company peddling rubber/leather/spikey stuff but rather the bog standard Domino pizza chain. I'm a keen pizza fan myself which did warm me to this opportunity. But of course the trade had to meet my exacting criteria and so it did.
To translate a little from my earlier technical entry, when trading it's important to follow the cyclicity of price - when a stock price is going up it doesn't just shoot up, it goes up and then backs down a little, then goes up again followed by another retracement.
We aim to catch the trade when the price has just retraced and is ready to bounce back up again. But how do we know when it is about to bounce back up? We have a number of means, but the most important is to find it bouncing off a particular line on the chart. The best one is the 50 day moving average. This line is automatically put onto the charting software and shows the average price for the last 50 days (with a bit of technical whizz put in which gives stronger weight to the most recent price action). Price likes to return to this line regularly so it's a good idea to catch it when it does and make a trade. When price is going up steadily the 50 moving average runs along beneath it and the price action runs away from it (up steeply) and then whiplashes back to it before bouncing off to shoot up again.
So back to my Domino trade. I spotted it was an uptrend, I spotted it was retracing and I spotted it about to bounce on the 50 day moving average line and hopefully spring back up rather than crash right through. So I placed an order that would be filled if the price went up a couple of pounds from Monday's high. And it did the next day, Tuesday.
Of course I've been checking it regularly to see what happens and now I've just come home from work and checked its progress and there's a tidy £145 sitting in my profit and loss section of my trading account. I had risked about £130 on that trade by placing a stop loss about 19 points below my entry price so that if the price went down I would be taken out of the trade at that level and take that loss - but thankfully it went the right way.
My first successful stock trade....which means Bad Assed Trader has officially been born.
congrats! it's always nervy putting a trade on, especially in the beginning. Now don't do what so many people do and fritter away those winnings!
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