China’s New Stimulus Plan A Boost To Equities

Equities returned from the brink (for now), boosted by plans for a fresh stimulus plan from China. Gold regained some poise and the Dollar index hit a 3-year high.

The timing and entry of my toe-dip long in FTSE was bang on. Unfortunately the after-care was poor. In this business we’re always learning, but very few learn from just one mistake. I’ve conquered one of my earlier problems, selling at the bottom of the market, but I’m still too cautious when trying to trade the turn. Last night I bought FTSE at 3495; a great level, except that when the market pushed ahead to 3550 I rushed my stop loss up to 3510, to lock in a gain. That was perfectly sensible, except that trade at the extremes is always a bit prickly and needs more room to breathe.

The market dropped in late US trade, stopping me out for a paltry £15. I left a limit order to buy £3 at 3480, but the market fall stopped just short, leaving me without a position to benefit from today’s gains.
I didn’t get around to buying FTSE today as I got all tied up in the forex market. The theme was pro-Sterling, buying GBPUSD on three occasions and GBPJPY twice. The net outcome was a few more notes for my back pocket, but a single early buy in GBPUSD, with a sympathetic wider stop loss would have taken up less time and yielded a greater reward.

My first trade in GBPUSD was a £5 purchase at $1.4066, after it crossed above the pivot point. I was due to do the school walk, followed by a quick gym session, so I closed out £3 at $1.4088 for £66. I set a limit order to close the balance at $1.4096 and brought my stop-loss up to $1.4066, and you can guess which of the two was hit in my absence.

Later I bought a fiver at $1.4098, selling £3 at $1.4109 before being closed out at break even. And this afternoon I paid $1.4113 for a token £1 bet, the smaller size because I was already running bets on GBPJPY. This one’s still running at the time of writing.

I bought GBPJPY twice, in £1 each time and both at around Y140.40, which isn’t looking too clever at the moment.

The reason for buying Sterling in both cases was backing a return in confidence as equities caught a bid, but I’m not that sure about running the positions overnight; there could be all sorts of fun and games as we approach interest rate announcements in Europe and the UK tomorrow.

There’s been plenty of speculation surrounding the introduction of Quantitative Easing by the Bank of England. Today’s gilt auction went down like a wet weekend in Blackpool, which might just be the green light for the Bank to lend a helping hand in buying gilts.

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