Gold initially dropped along with the other stock markets in mid-March, hitting 1450. Since then the precious metal has rallied over 18% to 1716. Analyst Online UK offers a daily prediction on Gold through the Morning Note. More than 70% of the trades have been profitable and the losers have had tight stop losses, where a risk/reward of usually 2:1 is undertaken.
The uncertainty of the equities markets prevails and although we are experiencing a V-shaped recovery, the market is looking artificially high here. Further upside could well continue for the immediate short-term but I favour a larger correction within the next 2 months. Gold seems to be an attractive safe haven posting a high of just above 1760 this year. I favour a break of this level within the next few weeks and a move beyond 1800 in the coming months. There is support at 1700 and further at 1670.
Almost one month ago, I published an article: 4 Blue-Chips We Would Buy Now! Let us now revisit those plays. Whether you allocate a few thousand GBP or a few million GBP, the diversified approach of picking up an equal allocation in each stocks would have worked very well.
Taking into account dividend payments, Lloyds LLOY is down -2.8%, Vodafone Group VOD is up 19%, Hikma Pharmaceuticals HIK is up 8.7% and Royal Dutch Shell RDSB is down -1.6%,
This represents an aggregate gain of 23% for a month hold, with an average gain of 5.75% per holding. The majority of any profits should certainly be taken off the table. Leaving some on with a heightened stop loss is a good strategy for the opportunity to capture further potential gains.
Our Managed Account service: Analyst Alpha Strategy is up 17% for the month and with only one full trading day left in the month, our trader is not looking to take on any further risk. To offer a better insight, we have a monthly target of 5%, however this is adjusted according to progressive performance. Should this gain be achieved within the first week, then we would target 10% overall gain. This month our Head Trader found the market to be very receptive to his strategy. He was able to take advantage of both the upside and even profit from the decline witnessed in the second week of the trading month.
After achieving 10% gain for the month, he would often reduce his trading size on further trades so as to minimise risk on banked gains. To make an extra 1 or 2% after achieving such a good gain, is it worth the risk? In this instance, he still managed further gains but there have been months where it has worked well to protect banked profits. Our trader is remunerated on performance so this is always the focus.
This is a very successful strategy which you could use in your own trading. Simply set yourself a monthly target and use the above tactics to get the best return on a risk/reward basis. This should result in a less stressful and more sustainable trading experience.
We managed a return of 70% in 2019 for our PREMIUM Trade Signals service using fairly low leverage. Further performance details can be seen here: Annual Return. Too busy to trade? Further details of our Managed Account Service.