Sell In May Go Away - How a Trader Trades the Markets
I am going to put my "Balls" on the line in this post
You may of heard of the saying:
“Sell in May go away”
When I was trading in the City; some of the traders used to mock me as I liked to use Charts as an aid to my trading. This is known as Technical Analysis. They would say to me:
“Peter and his magic charts.”
Most traders in the City do not pay too much attention to Charts, they are like tea leaves for fortune tellers. However; some traders live and die by them.
For me they are just a part of a picture. Fundamentals play a big part too.
The Banking Dynasty the Rothschilds coined the phrase:
“Buy on the Cannon and sell on the Bugle”.
On the announcement of the battle of Waterloo, this is the mantra on trading a lot of big events.
As a trader there should be no hard and fast predictions. Trading for me comes down to three important rules:
Trade what you see
Trade on Probabilities
Accept the Risk
Bearing this in mind let’s look at the attached chart. Each Bar Red or Green equals trading activity within 4 hours.
Notes on the Chart:
The first round of the French Presidential Elections produced a GAP at 12,080 on the German DAX.
The price then continued upwards then moved around sideways for the rest of the Week, as if waiting for something.
That something can be anything nowadays it could be the Outcome of the French elections, The market’s response to the Trump’s administration’s Tax policy or Nuclear War with North Korea. The main point is that most GAP’s get filled at least 85% of the time. If this is the case then the Price of the Markets in Equities whether in Germany, France or Britain are likely to drop a massive 355 points. If we are to trade at a serious GBP 100.00 per point that is GBP 35,500.00 if your right.
Of course the price may go even higher, as the DAX is at it’s all time highs at the moment. It’s hard to say when the price is likely to drop most probably on my Birthday the 7th of May!
What makes this attractive is that both Technical and Fundamental factors are at play here. To cover one’s self you would need to be watching the market like a hawk if trading GBP 100.00 per point setting your stops just above 12,500 or take some slack off and trade GBP 50.00 per point hopefully netting a cool 17,750.00 within a month between friends. Or be even more cautious and trade: GBP 25.00 a point for GBP 8,875.00.
Let’s see how this one play’s itself out. I don’t know what events will push the price down exactly; I only know that the Market seems bearish at the moment.