The Great British Trade Off (10)

THE GREAT BRITISH TRADE OFF

HUMBUG SELLS OUT OF CHINA (FOR NOW)

SHARESCOPE CHART OF THE OLD MUTUAL CHINA EQUITY FUND

My red lines are somewhat different to Theresa May’s red lines, in that mine mean what they say, whereas her’s are just a bit of spin that mean nothing.

My system tells me to sell either to bank a profit or stem a loss when the price breaks down through the red line. It’s a six week moving average, the idea being that its loose enough to cut prices enough slack to cope with the natural ebb and flow of the market, but tight enough to limit any downward movement to a sensible level.

It works well in either a steadily rising or falling market, but can suffer death by a thousand cuts in a sideways one.

As is the way with the stock market, you don’t know what you’ve got, till after you’ve got it.

Over the weekend I placed a selling order for both the Old Mutual China Equity Fund and also the Fidelity China Consumer Fund.

SHARESCOPE CHART OF THE FIDELITY CHINA CONSUMER FUND 

Both had been nicely in profit, but those monies had bled away in the steep falls of the last three weeks and both had crossed my red line, meaning they had to be sold..

I’d invested £5k in each, my loss on the Fidelity China Consumer Fund was just £38 and my loss on the Old Mutual China Equity Fund was £102.

Both funds bounced up in price yesterday and whilst its too early to know, if that positive movement continues they’ll shortly be crossing the green line (the two week moving average) which is my buying signal.

Its always a pain being whipsawed out and then back in to something, but it seems to me that its more important to protect from the downside than anything else.

Just like golf, you might or might not win with the length of your drive down the fairway, but you will certainly loose when you take 15 strokes to get back out of the woods after a dreadful shot caused by trying too hard.