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Online Share Trading

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Second Discussion of Installment Club August.

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barry_1
Super Contributor
Thanks all members for your encouragement.There is really no right or wrong method when trading,just possibly easier and more difficult methods.Sometimes a method works for a while ,then again it does not.Some would say it takes COMMONSENSE!,my thought on that is that commonsense is really not that common as to do a thing in the best possible way requires VISION,CRYSTAL CLEAR THINKING AND THE WILL TO CARRY OUT THE IDEA!.I am going to reveiw some of the members installment shares during the month as well as all my own.I try to give my opinion in the fewwest ,easiest to understand words possible,no doubt there are better explanations around every comment i deliver.Please add your own comments etc.I hope i don't offend any member as i am only trying to help.For the time being we shall stay on this website as it is likely to serve the most members and we have SimonPB aboard for those difficult educational questions.Regards Barry..
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29 REPLIES 29
Not applicable
Barry, great way of looking at it. I think that any trading system can be used to trade just about any product, be it installments, warrants, SSF, CFD's etc. Obviously your risk/emotional/research/ta profile will determine how and when you use what stratergy. I doubt one glove fits all styles as every person has hs/her own interests and profits in mind so has to look at how thy trade. We might all find a way to improve our own systems and defunk what might have been a bottle neck to our locking in max profit with min losses.
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Mr_S
Super Contributor
Hi barry, i have 2 questions: 1) From what i have heard so far about instalments, the only risk here is basically the share price falling below the excercise price? in which case you lose yr bucks 2) how do i identify an instalment that can roll over, and how long do they roll over for? 3) the main diffrence between a warrant and an instalment is firstly the gearing (instalment slightly lower), expiry dates (instalments roll over) and the dividend income. I am so keen on starting with instalments, but i dont want to make the same mistakes i did with warrants.
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barry_1
Super Contributor
Please Mr S,the best idea would be for you to read help and education,the installment course.I suggest u first read it through,then tackle the first twenty pages.As you are not in installments at the moment don't worry too much about roll overs etc.at this stage.
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barry_1
Super Contributor
Its also a good idea to read the first club letter which is under the warrant heading.
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barry_1
Super Contributor
The first share that i want to write about is GRINROD....Werners and my my favourite!....The price fell over 50% in the recession,but has been picking up steadilty for some time.Last year headline earnings were 95% higher and the interim dividend increased by over 100%.With a wonderfully low PE and trade picking up with the east.I prefer to ignore the joke that has some truth in it at this stage,namely "how do you say bubble in Mandarin?".A wondedeful SHARE to BUY RIGHT NOW AS THEN YOU CAN RECEIVE TWO DIVIDENDS WITHIN SEVEN MONTHS....hang on now what about the INSTALLMENT?....In my book,its too late to buy the installment now as the Last trade date date is around 4/9.There after the installment will fall faster than the share as it is six months to the next dividend date.To clarify the cost of the installment is according to Simon about 1% per month of the price.Shares most of the time drift down.Let us say that GRD driftd by about 10%,then the installment will drift down by say 20%.SURELY A BETTER idea to buy the Grinrod installment about three months before the next interest payout in say January.At least thats what i have in mind and i shalll do!In this shorter period probably another kind of derivitive will give better rsults?
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coolwaters
Occasional Contributor
Can anyone comment on the liquidity of instalments? I have seen some instalments going days without trading. Is this something to be concerned about? Thanks.
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barry_1
Super Contributor
For me this has never been a problem as the market maker is usually the counter trader i.e. SBK for example..As long as u are within the limits set u should trade.That is why its important to watch the underlying share and then decide when to trade.I've found not a good idea to try and get a higher price than whats shown on the screen.If u want more wait till the price climbs to what u consider when to sell.You must use the MATRIX to decide what is the correct selling price.If the Matrix is not up to date ring SBK.Actually the best method of trading INSTALLMENTS is by telephone IMHO.There are times the price of the share is not correllated to the installment price so use the matrix and also ring them.
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barry_1
Super Contributor
SHOPS of all kinds are really increasing well and now seem to be having their "second wind".The fact that shops turned first shows that the recession is on the wane.Here are the increases in capital value since 23/july/2008. JDG +66%..LEW +45%..MPC +73%..SPP +37%..FOS +69%..TRU +45%....NOW OVER THE SHORTER PERIOD:- SINCE 18/July/2009..FOS +24%..WHL +21%..JDG +20%..LEW +12%.
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barry_1
Super Contributor
In the first disscussion i asked why INSTALLMENT over JDG.Well there is still no installment of Standard over JDG.There is one available of Ned,but it ends in October too close to the dividend date in Nov and i do not know if they will be replacing it.I suppose i can phone but i prefer to trade Standard Instalments. Please,please issue one over JDG....What do other club members think?
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Not applicable
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barry_1
Super Contributor
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Oom_Boom
Frequent Contributor
Hi Barry, nice newsletter on an often overlooked investment vehicle. What are your thoughts on KIO, I bought my first installment a week or so ago with the 14/8 div in mind. So far a nice climb on the instalment price, but waiting in anticipation too see what happens ex div.
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barry_1
Super Contributor
Hi, Of course you received more installments for your money than shares and will get the full dividend,but generally i find it does not pay to buy installments so near to the payout dates as it does not give time for the gearing to work effectively.Furthermore i personally don't trade resource installments as they are usually very volatile....I don't know how long you intend keeping this installment,read what i said about GRINROD for my veiw....One thing in your favour is that the market now seems to be in a full recovery phase,so the underlying share is more likely to increase.In installments once bought watch the regression line on the charts.This is the most important,On both the three and five year the graph is moving up to the line,so is likely to continue,eventually breaking through and pulling the regression line up further.
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barry_1
Super Contributor
At this stage ex-div unlikely to go down by much more then the payout as prices of the underlining commodities are rising.Really only my opinion.
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barry_1
Super Contributor
error .that should read THE UNDERLYING SHARE should not go down by much more than the payout for a couple of weeks,there after its likely to drift down as the next dividend is six months away....
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barry_1
Super Contributor
I meant to add Oom Boom,congrats, with your success,this is the way to go!
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barry_1
Super Contributor
OML seems to have the worst behind it,if u have the share good idea to hold ad the price is definitely going to increase over the next six months as they say they are likely to pay a final dividend.How ever as the price increased this morning and there is to be NO interim dividend payed ,i sold out of OMLSTD at a 32% capital gain!....I shall consider buying back again in three months time!
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Oom_Boom
Frequent Contributor
Thnx Barry, I will let you know how things pan out.
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barry_1
Super Contributor
Hi CPS,just to tell u ,i've decided to look for a website for our discussion group as well.Thought i could use it as an ARCHIVE to keep the old discussions ,might need your help quite soon.About eight years ago i messed about building my very first website,trouble was on one of the first free websites,not terribly successful as they were inclined to then wipe all one s work off after a couple of weeks.Then lost interest.I have now found another "free" website,i see there ads at the side been run,i don't remember giving permission!also seems it might be full sooner than i would like.But for a start it will do.i would like to include forumite request features in it,perhaps a members area,discussions about property,small caps etc.My self was thinking of a list of good trading books which members could also add their own with reveiws. Hav e a look at www.barryvision.webs.com and tell me what u think! Same goes for any other forumite.!
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