RE: While he’s talking to himself.30 Aug 2022 20:03
What I don’t get RD, is why those in need of taking profit dont simply spread bet instead. Example:
Little Johnny has 20k in his ISA. His full allowance. He buys 20k shares at £1. Those shares rise to £2. Johnny sells 10k shares and still owns 10k shares. He has £20,000 profit. The shares rise to £3. Johnnys shares are now worth £30,000.
If the above had been done as a leverage, you could take 20k shares for 4K at £200 per point, keep 16k aside minus the spread) in your account (or at least available outside your account) and if the shares go up to £2 Johnny ends up with…… you guessed it £20,000 profit. This 20k can be withdrawn from your account without reducing your exposure at all (200 per point still or 20k share equivalent) if it rose to £3 you’d have 40k profit (another 100x200pp) and so on and so forth and you could just keep pulling out this profit. Now, if you feared a big pull back you could just reduce your exposure, or……. Leave a lot less available in your account. If some horrific news were to land then your account would blow itself to pieces and you’d only be liable for your available funds (unless you have a professional account whereby you’re accountable for the lot). Anyway….. just some thoughts for those wondering how long they can hold on for.