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Dow Rocket ship Print
Written by Site admin   
Thursday, 26 January 2017 14:45

 dow2000

Dow at 2000, will it become a distant memory?

We had the Trump rally part one following his election, which was largely based on 1. massive short covering by

those who assumed Hilary would win and were heavily short the market aka George Soros who reportedly lost a a billion dollars. 2. An assumption that Trump would reflate the economy by bringing jobs back to the the US.

Trump rally Part Two may not be the same. Up it just shot with a fanfare from commentators and pundits far and wide with Dow at 30,000 by 2020! the most optimistic headline I read this week. A look at the chart gave the buy signal three days in advance, but what now?

Alternatively the market has it all wrong. Just maybe we are about to see 'BTRSTF' again. Buy the rumour, sell the fact happens time and again. This time could the expectation of 20,000 Dow be too much to resist, up it runs onlt to find there are now more buyers?

What happens next....hold on tight as volatility will bring the unexpected.

 

From the blog

ESMA 1st August!!!!!!

At long last ESMA has set the day.

From 1st August 2018, retail traders will have to pony up more margin. Gone are the days when brokers were falling over themselves to give the 'Best', lowest, margin rates that allowed almost anyone to control a big slice of the pie with a miniscule account.

I rember the story of the guy who opened an account on a Thursday with £8,000. By close of play on Friday night, he had run it up to £100,000 plus, on the Dow. Margins were crazy low and he was able to use the open trade profit as more margin! By close of play Monday the day put in a modest correction. Result, he was wiped and owed the broker money which they enforced. A great introduction to spread betting.

All that is no longer possible, illegal within ESMA. The new regs take us back and beyond how it was when I started trading Forex, 50:1 margin was the maximum anyone offered, in line with US regulations. Now Forex is 30:1.

This is the gist:

For major FX pairs, leverage is adjusted to 30:1 (3.33%).

Suppose GBPUSD is trading at 1.3200, £1 per pip will be 13200 * 3.33% * 1 = £ 440. At £10 per pip it's £4,440

For indicies, leverage will be adjusted to 20:1 (5%).

Suppose WS30 is trading at 24000, £1 per pip will be 24000 * 5% * 1 = £ 1200. At £10 per pip you will need a minimum of £12,000.

Unrealised gains can no longer be used as margin and the broker has to close out your position if the market runs against you and your margin funds drop by 50%.

One of the spread betting companies admit that the old system encouraged over trading (punters lost money has corrections took them out and so spraed bet companies made huge profits). They now admit that clients who trade well within their account size are more succesful.

So what to do now??

Under trade under trade!

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