On the 6th December 2016 the FCA put out a consultation paper for Stricter Rules for Contract For Difference (CFD) products.   This resulted in the share price for many CFD providers to crash and one in focus here being IG Group (LON:IGG). On December 6th IG had a stock rank of 96.  It was seen as a high quality company and was popular in amongst many of the investors that I follow.

During the course of the day as the price fell over 40% I was a little bewildered at the amount of buying by many of these respectable investors.   It is an important rule for me to sell on any bad news, so I wondered why folks were actually buying.   Most do not use stop losses and some were averaging down, nursing some losses.   Others of course saw the price collapse as an opportunity to buy in 'at the bottom', but at the time I saw no indication of an established bottom so I wondered if this was catching the knife.

I wanted to revisit IG Group after waiting on the sidelines to see if there is now a buying opportunity.   I also wanted to reflect if using stop losses and sitting on the sidelines for a period of time is still a good strategy for me.   Did I miss out on any significant bounces?

I found this the perfect time to use Stockopedia's new charting tools.  To me this clearly demonstrates my thoughts and how (of course in hind site) that the risks of using stop losses, waiting to reflect, and not trading for revenge has worked for me.  I have gained or lost nothing.

Left Click on chart for a larger image (right click to open in new tab)


I was not in IG during the days of it reaching the highs.   But looking at possible stop loss rules I may have been out and taking profit before the FCA investigation was announced (lucky).  However I always have some sort of stop in place and hopefully my broker would have got me sold out 725 - 750 area.  Maybe the stop would not have worked.  Saying that I felt a lot of revenge trading going on on that day and proceeding couple of days.   Would people get their money back so quickly?

The yellow area was…

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