Trends - No Limits, With Stops

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The idea of this trend is to prevent our losses going below a certain amount. This would mean that we are looking to increase the odds of getting a heft reward, by redcuing the amount we can lose. An example of this would be:

We buy two 10 of shares in two companies each valuing at £10.00 per share (Share A and Share B),and we set a stop in place at 5%. That day we see mixed results. For some reason Share A shoots down 50% whilst share be actually goes up 10%.

Ordinarily we would have made a loss that day as it would have looked somethng like this:

                     Start             Return            End
Share A        £100              -50%            £50
Share B        £100                10%           £110
Total            £200               -20%           £160

Obviously, it is good that the winnings of Share B have helped to offset some of the losses of Share A, but we cannot allow for that every day. With a Stop in place the results would look something like this:

                     Start             Return            End
Share A        £100              -5%               £95
Share B        £100                10%           £110
Total            £200                2.5%           £205

I know which one of those I would rather have! I am holding out a lot of hope for these results, because as with the last group the saying is ride your winnins and cut your losses. This trend is the very empitomy of that phrase. But we will never know until we get started!

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