Dear investors,
Here is a new update from ES Stock Trading, written by Henry van Ginkel, manager of ES Stock Trading.
July proved to be a challenging month for ES Stock Trading. We closed with a loss of -4.84%. The biggest setback came from our position in ARM Holdings, which fell sharply in value. Our investments in NVIDIA and Broadcom also failed to deliver the desired results.
One bright spot during this period was our decision to close our position in CrowdStrike halfway through the month. This proved to be a wise move, as the share price fell by no less than 46% in the two and a half weeks following our sale. Another success was our position in Apple, which ended the month as a clear winner. We also posted small gains on stocks such as Palo Alto Networks.
August began with a major shock for global stock markets. The Japanese central bank unexpectedly raised interest rates by 0.25%, which turned out to be bad news for many investors. Our portfolio initially reacted negatively when the New York Stock Exchange opened, but by the end of the day, the damage was not as bad as we had feared. In fact, at the time of writing, we are even recording a small profit.
As you may have noticed, we are currently trading with a position size of approximately 40% of our total capital. This means that 60% of the capital remains in cash in the account.
If the markets continue to rise, we will gradually return to being 100% invested. However, if the market continues to stagnate or even decline, this strategy means we are exposed to less risk. This change in our position size is fully integrated into our algorithm.
I would like to take this opportunity to point out the risks of trading on margin, especially if you are trading independently on the same account in addition to following our signals. When the market picks up again, ES Stock Trading will use 100% of the required capital of €12,500. Therefore, please ensure that you keep this amount available in your account.
It often happens that clients are unable to take the necessary ESST positions because there is insufficient margin available. This means that you may be investing with borrowed money, which entails considerable risks. If ESST is unable to buy, you have effectively borrowed approximately 100% of your capital. A 10% decline in a share could then lead to a loss of 20% of your capital. To recoup this loss, you would need to realize a profit of 25%. A 33% decline would require a return of almost 50% to break even. Using margin is therefore very risky if you are not fully aware of the potential dangers.
You can expect a new update from me in three to four weeks.
Sincerely,
Henry van Ginkel
Manager ES Stock Trading