Is this trend a good trading opportunity?
Will BAE Systems turn, or will it continue to fall below 419p August ’15 lows?
- The chart shows BAE Systems price action since June 2016 Brexit-vote lows.
- Shares -32.3% from 2018 highs; now trading at 2018 lows; -22.65% year-to-date.
- Shares have fallen almost 12% in the past 2 days.
- Now trading at 443p (at the time of writing)
- Merill Lynch downgraded BAE Systems to Neutral (from Buy).
- Analysts say profits upgrades are slowing and growth returning to low teens.
- Will the strong negative momentum continue?
- Source: Bloomberg, FT, Reuters, DJ Newswires, AlphaTerminal
Trading BAE Systems – An Example
Let’s say the trend appeals to you, you think it’s likely to continue. You decide to sell short exposure to £10,000 worth of BAE Systems using a CFD, at the current price of 443p. To do this, you need £2,000.
Let’s assume the BAE Systems trend continues to 419p August ’15 lows (-5.4%). Your profit would be £540, 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. BAE Systems rises 3% and hits your stop-loss. Your loss would be £300.
This is provided for information purposes only. It should not be taken as a recommendation.