Page 4 - Buildingastrategy

BUILDING A STRATEGY PART 2

SHORT TERM FLIPS CONTINUED

Return on investment % Target

The maths is important in any strategy but a return on investment target is just that a
target! If your target return on investment is 15%, and you're at 12% but see the market
slowing down, do not be afraid to exit because you have not met your target. This helps
build around your return on investment target to aid in eventually getting there. Using
past trades from the same strategy for historical data will help with this and help you to
spot trends.

From my records using this strategy showed that when trading a forward player with a
name most fans will know, playing against perceived week opposition, a 15% return on
investment is capable six out of every ten successful trades resulting in a price increase.
So I will go with a 15% Target

Stop Loss

A Stop loss is the lowest price you will let a player drop too before you sell and it should
work hand in hand with your return on investment target, I usually have my stop loss at
half the value of my return on investment target profit so in theory I could lose three
trades but win two and still be in profit! for example my return on investment target
was 15% then I would have my stop loss at 7.5% approx. If you are sitting on a 5% loss
but some negative news has dropped then if you do not act your player could be at a
15% loss quite quickly so be prepared to get out before you wanted too.

As my return on investment target on Memphis Depay is 15% then my stop loss when I
will exit the trade is 7.5%

Entry Point Break down

Now finally you enter the trade and buy a player relating to your strategy brief , next
you need to give a breakdown on these questions.

How did you enter? This is simply a question of how many shares? and how much the
player cost per share? This gives you a good record of risk and reward.

Why did you enter? Why did you decide to enter the trade at this point?

When did you enter? What day or what time did you enter? this can be very helpful
when trying to pick up on and work out market price and trade patterns in correlation
with events leading up to executing your strategy.

Let me answer my three questions using my current trade with Memphis Depay

I purchased 50 shares of Depay and his price per share was 82p = £40.

I Purchased on the Monday AM before his Thursday fixture as records shows this is
when price movement starts on average.