Is this breakout a good trade for you?
Will HSBC turn, or will it the breakdown continue beyond 640p?
- The chart shows the last 8 months of price action for HSBC.
- The shares have broken below a support line at 668p.
- Now trading at 641p (at time of writing).
- The ‘trend is your friend’. Will it continue?
- Shares -17.4% from 2018 highs; +10.6% from 2018 lows; -16.4% year-to-date
- As an Asia exposed bank, the risk of a US-China trade war is weighing on sentiment
- Source: Bloomberg, FT, Reuters, DJ Newswires, AlphaTerminal
Trading HSBC – An Example
Let’s say the breakdown appeals to you, you think it’s likely to continue. You decide to sell exposure to £10,000 worth of HSBC using a CFD, at the current price of 641p. To do this, you need £2,000.
Let’s assume HSBC’s trend continues towards recent lows of 600p (-6.4%). Your profit would be £640, from your initial investment of £2,000.
Conversely, let’s assume you open the above position, and place a stop-loss at 3% from the current price. HSBC’s trend reverses, rising 3% and it hits your stop-loss. Your loss would be £300.
This is provided for information purposes only. It should not be taken as a recommendation.