Live Trade on the FTSE 100
It’s six in the morning UK time and there has been some negative news coming out of the US over night. It would seem that Ben Bernanke, the chairman of the US federal reserve is still extremely wary of the dangers that lie ahead for the economy and when that news is coupled with the interview that the governor of the bank of England gave to Reuters yesterday evening, it is likely that the market will react in a negative way when it opens this morning.
Whilst this may be seen as bad news for the individual who is trading in traditional shares, for financial spread bettors it means that there could very well be an opportunity to make some money, so with that in mind I log into my IG Index account with the intention of selling the FTSE 100. I am well aware that the negative outlook will have already been factored into the price but I have been monitoring the price with a simple moving average indicator which shows me that if the price of the FTSE 100 index drops through 5853 it is likely that it will drop further and I will jump in with a small trade.
I decide to wait until the market opens properly at 8am before I consider making a trade and it is my personal preference to wait about 15 minutes until it has settled a little. At this point I like to make a few notes about what my exact aims are for this trade and it is important to mention that if a trade does not present itself I will not be getting involved. I realise that it can be somewhat of an anti climax when you are all ready to have a bet, and it is something that I really struggled with when I first started out, but if you fall into the trap of just having a financial spread bet for the excitement of it, over the long run it will only lead to disappointment.
Anyway, back to my trade, at 8.26 the price of the FTSE 100 stands at 5850.2 to sell, 5851.2 to buy so I am going to get involved. I am betting at ?5 per point and the moving average chart that I am using tells me that the next resistant point will be around 5810 so I make a note that my target is to get out and take a profit at 5814 which will give me a profit of around 36 points which would equate to a sum of ?180.
I have set a stop loss at 5870 which to be honest is a little close but I have taken everything into account and that figure suits me. As usual, the FTSE has a mind of its own and as soon as I make the trade the price rises to 5860 and this is where trading within your comfort zone comes into its own. If I was trading with money that I needed to pay the bills I would no doubt be starting to feel a little anxious to say the least, but ?5 per point and the bank I am using means that if I lose this trade I will be disappointed but it won’t have any effect at all on my personal life.
Just after 9am the price starts to drop and I smile to myself as the price falls to 5814 and I close my trade with a very nice ?180, profit and that is me finished for the day. You should be aware that after a nice early morning win like that it is tempting to think it is your lucky day and start to make a few other trades on the spur of the moment that have not been thought through properly. Please don’t do this, the markets have a nasty habit of biting you on the bottom if you are not careful, so with that in mind I am turning off my computer and fully intend to enjoy the rest of the day.
