With the banks coming under pressure this week I have a couple of shares I bought 2 weeks ago that have been hammered. The Investec stock I bought has dropped by 10%, a huge drop when I am trying to make between 2-3%. What does this mean? Ok, if I put R1000 rand as a margin into the stock, the daily profit or loss (in this case a loss) has dropped to equal my margin amount i.e. R1000. Is this a train smash? Well not really, as I have only got 10% of my entire trading float in this share, so I can afford to hold it (for 2 months if necessary) until the stock recovers. It may not recover fully, but I have a chance of recovery whereas if I had a stop loss in place I would be out of the stock, with no chance of recovering my loss. I am only doing this because I have a very small amount invested in the stock, and won't lose my shirt on the trade.
This is how the trade went. I bought the share for 9800, putting a 2% take profit onto the trade, and no stop loss. The share started dropping as soon as I bought it (typical!) If I had put a 3% stock loss I would have sold the stock when it plummeted through 9506 . It keep up it's free fall, right to 9000. I was reeling, over 10% down. But I hung in and slowly it's started a recovery. I am hoping that it will get back to my buying price, and then I'll get out.
The only question is ...can I employ that capital better somewhere else and make up the losses faster??
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Trading Forex News
Over the years, foreign exchange trading has become more and more popular. Today, the forex market is worth billions of dollars. Currency pairs are traded on the market round the clock among traders from all parts of the globe. Many traders use a litany of different strategies in order to maximize their profits. Like any other financial market, the forex market is also highly volatile and reacts violently to news from different parts of the globe. While the influence on the market is relatively little from other parts of the globe, the market’s biggest movers come from the United States.
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