Q.Dear Josh, what should I keep an eye out for this week when trading equities?
A.We are getting stuck in to the UK earnings season now and there are a number of firms announcing this week, including Barclays, Intercontinental Hotels, BAE Systems and the miner Anglo American. Barclays will be the major focus because it is the first big UK bank to report and the market is expecting a rise in full-year pre-tax profits. Barclays’ earnings could give a valuable insight into how the UK banks will perform after the largely mixed earnings from their US counterparts.
Miners were under pressure on Friday after China raised its reserve rates yet again and it will be interesting to see how the sector fares this week. Concerns over Chinese demand for resources have resurfaced and the miners’ good performance last week may have prompted traders to take profits.
The Eurozone debt issue is also one to keep an eye on – don’t forget the potential EU bailout of Greece and the heavy falls suffered last week by the Spanish stock index. So there is lots to whet your appetite this week.
Q.Dear Josh, I use stop losses but not limit orders as I don’t want to limit my gains. Is this right?
A.I think you could have the balance right in terms of trying to limit your losses and run your profits. However, limit orders are not there to restrict your profits, they are there to help you achieve your target. If you cannot keep an eye on the market at all times but have a target in mind, a limit order can be a great tool to help you manage your positions.
If you don’t have a target in mind, then I recommend keeping an eye on your positions – using a computer, a mobile platform or an iPhone app – so that you don’t miss out on an opportunity to cash in your gains when the markets reach a level you are happy with.
Q.Dear Josh, when looking at charts, I don’t know which time intervals to use. Which would you recommend?
A.The time intervals are really dependent upon what sort of trader you are. For example, day traders may choose to look at the minute charts as their aim could be to take gains of only 25-50 points. But if you are looking to place a trade for a week or so, a longer-term perspective will give you a better idea of the current trend and volatility for that time frame.