Dave’s Trading Diary: The Risk Is Greece, The Payoff Is Cheap Money For Markets
This excerpt from the trading diary is for educational purposes only and is not to be interpreted as trading or investment advice. See Terms Of Use here.
Risk and Reward: the two great pillars of trading and investing. Understand the concept of Risk completely, and you will become a great trader and reap the appropriate outstanding rewards. Fail to understand it, and it will send you broke very, very quickly. How do I know this? Because I’ve been on both sides of the equation here.
Currently in the world, the great risk is Greece, and European debt. As far as I’m aware, Greece is a country with 11 million people – half the size of Australia – with outstanding debt of 1.3 Trillion dollars. That’s 1,300 Billion, or a heck of a lot of zeros after the “1,3″. Obviously if this goes bad, countries and banks will implode. And considering how inter-related world finance and banking is, the dominoes that fall will touch almost everyone.
Conversely in the world, the potential payoff is all the cheap money being poured into the market, that has to be invested somewhere. Money is being lent at 1%, and it is looking for a home. This is why world markets, despite the horror of things going on, are rising in a very orderly fashion.
Trading Diary Buys This Week
I got a few entry signals this week, and did not take all of them. The three I took were SFR (Sandfire Resources), CAB (Cabcharge) and IMD (Imdex).
Current standouts in the diary are COF (Coffey int), now with a 19% gain, DML (Discovery Metals) with a 5.5% gain, MND (Monodelphous) and ASL (Ausdrill) with 6% gains, and SFR (Sandfire Resources) going for a 4.4% gain in one week.
Current losers are SGM (Sims Metal Group) and ILU (Iluka Resources) with around 3% losses each.
Know When To Fold ‘Em
Of course, having a large amount of open positions is not ideal with the Greece Risk at the moment. If Greece is sorted out this week (i.e. they get the funds to pay their owing bond payment, and bailout funds from the EU) then money flow should see the markets rise.
If Greece falls over, stop losses are in so I can get out quickly. My crystal ball is broken at the moment, so it comes down to knowing and managing risk, which is what I will do.
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Happy Trending everyone!
Dave McLachlan
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February 12, 2012
Tags: Dave McLachlan, Dave's Trading Diary Posted in: Dave's Trading Diary
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