Q. “Timon, do you have any risk or money management rules you take, during this capitulation (consolidation) stage? I want to continue trading during the Twilight Zone, but I want to be more cautious with my trading.”
A. Hi Mark, I also like to continue trading during these phases.
It keeps us in the loop of the markets. And it prepares us for when the market does enter into a more evident trend which we can profit from.
While I don’t have any miraculous solutions or secret strategies.
I can share my approach, rules and actions during these uncertain times.
These actions, no doubt, will help us protect and preserve our trading accounts.
Action #1: Drop your risk even more
If you’re feeling uneasy with the markets, as many have – drop your risk.
You can even drop your risk to a range of 0.5% to 1% per trade, as opposed to the usual 2%.
This will keep you in the game, so you don’t miss out on any moves.
Action #2: Hegde your portfolios
I consistently employ hedging strategies, both Longs and Shorts.
As long as your losses are smaller than your winners, then your winners will outweigh.
And this will help keep your portfolio in check,
Action #3: Diversify
The JSE ALSI 40 isn’t the be all and end all of trading.
You need to learn to diversify into other markets.
I’m talking about Forex, Indices, and even intraday trades.
Q. “I see this year has seen a revolution in Artificial Intelligence . Everyday I read something about a company who is incorporating AI into their business model. Meta, Linked in, ChatGPT, Dallee, Midview and the list goes on… Do you have a list of Blue Chip companies that I can add to my watchlist when it comes to AI tech?”
A. AI is definitely one of the big trends of this century.
And yes, I believe these are great companies to invest in the future.
Here are my top companies that are incorporating AI into their businesses.
1. Microsoft (MSFT):
Develops, licenses, and supports software, services, devices, and solutions.
2. Advanced Micro Devices (AMD):
Designs and sells computer processors and related technologies.
3. NVIDIA (NVDA):
It designs graphics processing units (GPUs) for gaming and professional markets.
4. Palo Alto Networks (PANW):
Offers cybersecurity solutions and firewall technology.
5. Meta Platforms – formerly Facebook – (META):
Operates social media and virtual reality platforms (e.g., Facebook, Instagram, WhatsApp, Oculus)
Note: Oculus 3 Headset is coming out next year and it’s going to include and introduce Augmented Reality to the world.
6. Palantir Technologies (PLTR):
Develops data analysis software and provides data integration and analytics platforms.
7. Adobe Inc. (ADBE):
Creates software products for content creation, multimedia, and marketing.
8. Apple Inc. (AAPL):
Designs and markets consumer electronics, computer software, Virtual Reality and online services.
9. Micron Technology (MU):
Micron Tech. inc. designs, develops, manufactures, and sells memory and storage products worldwide.