Reply to: Spread Betting

[AtW]

Whatever you do don't risk any more than 2% of your account!

Or just get 50 accounts with equal money if you can't resist going all in ...

[cojak]

Whatever you do don't risk any more than 2% of your account!

[ChimpMaster]

Any calls for the following week? Long, short, do nothing?

Fiscal cliff looming. Obama win isn't great for stocks. etc etc. Charts looking ominous like they did just before the big crash of 1987.

What to do?

[BlasterBates]

.....My single biggest daily loss is in the region of £40k.....

Is that all!

...amateur

[psychocandy]

SC, the answers were meant to shock - probably to shock me as well as you. I'm trying to show that I am one step higher now in terms of my learning cycle, in that I have identified my weaknesses and am working on them (or at least trying to) .

I have blown my account several times over the years, and it has been a very expensive lesson for me to learn. My single biggest daily loss is in the region of £40k. I have traded shares, CFDs, Covered Warrants and now SB. My knowledge of the markets is up to date and I keep an keen eye on news and macro events. But clearly I have a weakness in my trading.

I also think I aim high, too high. I can take a sum and multiply it several times over by highly leveraged trading, but then blow it on one bad trade. I need to learn to settle for a lower risk, more realistic return. Do you have a target return each week/month/year? Or do you just trade to win and the amount is not of consequence?

I am interested in knowing how you re-programmed yourself. Would you be so kind as to share?


Your notes are great - thanks for taking the time out.

40K in one day? <Gulp> Now that would spoil my day!

[SantaClaus]

The book is already written: Spread Betting the Forex Markets: An Expert Guide to Spread Betting the Foreign Exchange Markets: Amazon.co.uk: David Jones: Books

I went to one of his seminars and he was giving out a few copies randomly. The guy next to me was all "Me! Me! Me!" so I was handed the free copy as he probably guessed he'd be paying for his own one as soon as he got home.

The only thing I would say is David Jones works as an analyst for IG Index. The section on support and resistance might be useful I guess, but I look to fade trade calls from analysts such as himself.

[BigTime]

The book is already written: Spread Betting the Forex Markets: An Expert Guide to Spread Betting the Foreign Exchange Markets: Amazon.co.uk: David Jones: Books

I went to one of his seminars and he was giving out a few copies randomly. The guy next to me was all "Me! Me! Me!" so I was handed the free copy as he probably guessed he'd be paying for his own one as soon as he got home.

[SantaClaus]

SC, the answers were meant to shock - probably to shock me as well as you. I'm trying to show that I am one step higher now in terms of my learning cycle, in that I have identified my weaknesses and am working on them (or at least trying to) .

Thats good!

I have blown my account several times over the years, and it has been a very expensive lesson for me to learn. My single biggest daily loss is in the region of £40k. I have traded shares, CFDs, Covered Warrants and now SB. My knowledge of the markets is up to date and I keep an keen eye on news and macro events. But clearly I have a weakness in my trading.

£40K is a huge amount to lose in a day. Reduce your lot size to a level where you can stomach 5 losses in a row. Identify your weakness through observation and record keeping as I have discussed earlier.

I also think I aim high, too high. I can take a sum and multiply it several times over by highly leveraged trading, but then blow it on one bad trade. I need to learn to settle for a lower risk, more realistic return. Do you have a target return each week/month/year? Or do you just trade to win and the amount is not of consequence?

Consistency is the name of the game. anyone can multiply an account with a bit of luck, but staying in the game for the long-run is harder. I will quit for the day if I lose 6% of my account. Sometimes you just aren't in tune with the market and it's best to come back another day. If I'm winning, I will keep on trading - there are no targets for me.

The other thing is you never know when a "Black Swan" event is going to happen, i.e. a terrorist attack, and the market may gap a few hundred pips. I have never had this happen yet, but it happens to most pros at some point. If you are leveraged to the hilt, it will bankrupt you.


I am interested in knowing how you re-programmed yourself. Would you be so kind as to share?

It came to a point where I had no choice but to enforce discipline or give this up for lack of money - that was the turning point. Also, once I started recording "before" and "after" charts of every trade and gathering statistics on an excel spreadsheet, I was able to gain a positive expectation for my strategy. That is to say, I know over x number of trades, I will be profitable. This eliminates fear and rash decisions, such as closing a trade early, only to see it take off straight after.

I also read a few psychology books. The best one I have ever come across is High Performance Trading: 35 Practical Strategies and Techniques To Enhance Your Trading Psychology and Performance: Amazon.co.uk: Steve Ward: Books

Your notes are great - thanks for taking the time out.

NP! I know what you are going through, and I live and breathe this stuff, so happy to give some advice

See answers in bold above

[eek]

Matched betting is better. Cant lose with this.


I probably made about £3K on casinos and £1K on bookies a few years ago. Takes up time but its fun and OK if youre on the bench at least.

I spent many an evening in the late 90s playing blackjack for matched funds and easily picked up a TV, all my beer money and a £10k brand new car with the "winnings".

Since 2005 its not been worthwhile so I haven't bothered.

[psychocandy]

Matched betting is better. Cant lose with this.

Basically, it involves taking up free bet offers when you sign up. You usually have to place a qualifying bet first, say £25, but you lay the opposite on Betfair (for instance, bet man utd to win with bookies, then bet against man u winning on betfair). Aim here is to lose as few % as possible. Usually here you'd lose a £ or 2.

Then you get a free £25 bet. Do the same again. Lose another few £. But remember this time the £25 wasnt yours so know you're £20 or so up. Cant lose. Sometimes u get Quidco cashback as well.

Did it with casinos as well a few years ago. Usually, pay in £50, get £50 free but then you have to wager so many times. If you play blackjack properly the margin is pretty low and you can often end up with £90 left or so. Again, sometimes you get £50 quidco also so its a no lose situation.

Not so good these days because both casinos and bookies have wised up a lot since 5 years ago.

I probably made about £3K on casinos and £1K on bookies a few years ago. Takes up time but its fun and OK if youre on the bench at least.

[ChimpMaster]

ChimpMaster, I am shocked by some of those answers! From what you have said, you will blow your account and continue to blow many accounts until you are bankrupt.

You can trade the markets with a statistical set of results that give you confidence in your strategy or you can gamble with the markets by taking potshots, adding to losing positions, risking too much of your account, etc. You have chosen the second option.

You have already highlighted the mistakes in your post which you must correct, otherwise you will eventually fail:

• No trade plan.
• Massive over-leveraging. You should be risking no more than 2% of your account in the market at any one time.
• Chasing losses/Revenge trading
• No confidence in your strategy (believing no retail traders have an edge). If you believe this, don't trade and go to a casino instead.
• Not being able to accept losers. This is what is killing your account - "I then get hit hard by a big losing trade".
• Not having a statistical sample of trades to tell you if aiming for high win/loss ratio vs high risk/reward will pay off.
• Reinforcing negative behaviour by winning "bad" trades or potshots paying out, as you have mentioned.
• Not learning from your mistakes or analysing your mistakes
• Not keeping records of your trading activites.

Believe me, doing the wrong things and instilling bad habits soon turns trading into a gambling addiction. When I first started trading, I couldn't control my emotions for a few years. After taking many potshots, averaging down, watching every tick of price movement, etc., I had to literally "re-program" myself to do the right thing. This is the problem that all new retail traders have.

SC, the answers were meant to shock - probably to shock me as well as you. I'm trying to show that I am one step higher now in terms of my learning cycle, in that I have identified my weaknesses and am working on them (or at least trying to) .

I have blown my account several times over the years, and it has been a very expensive lesson for me to learn. My single biggest daily loss is in the region of £40k. I have traded shares, CFDs, Covered Warrants and now SB. My knowledge of the markets is up to date and I keep an keen eye on news and macro events. But clearly I have a weakness in my trading.

I also think I aim high, too high. I can take a sum and multiply it several times over by highly leveraged trading, but then blow it on one bad trade. I need to learn to settle for a lower risk, more realistic return. Do you have a target return each week/month/year? Or do you just trade to win and the amount is not of consequence?

I am interested in knowing how you re-programmed yourself. Would you be so kind as to share?


Your notes are great - thanks for taking the time out.

[SantaClaus]

Very wise and sage advice Santaclaus.

There must be a way to mentor inexperienced retail traders in a way that benefits you and them (without you coming across as a snake-oil salesman). You can't spend a lot of time doing it without benefit and many sorely need it.

Small word-of-mouth recommendations I guess.

How about self-publishing a small, useful book?

Thanks Cojak for your kind words.

Maybe I'll write a book one day, but happy to occasionally contribute to this thread for now.

[cojak]

I think SC has a handle on this and good luck to anyone having a punt but please dont bet the farm or your future on this game. If you have to do this, I would urge you to ringfence 10% of your liquid assets to blow and pack in when thats gone if you can.
Even if you put huge effort into this, proper company/market research, psychology, literature from people who have been and done it etc this is very risky and you can be undone easily if events outside your control go against you.
I read about a guy saying if you want to know what day-trading is like, take 50k in cash, go into your back garden and set fire to it all, sooner or later you will have a day when that happens...
FTSE100 long term return is 7%, it's unspectacular but make some regular savings, add time and with a bit of compounding and PCA it will soon add up, especially if you keep your nerve in the drops.

SC has already mentioned (and I have highlighted) the most important part of his post.

You should be risking no more than 2% of your account in the market at any one time.

This is a business and should be treated like one. If treated like a gamble/throw of the dice then expect to lose your house.

[lukemg]

I think SC has a handle on this and good luck to anyone having a punt but please dont bet the farm or your future on this game. If you have to do this, I would urge you to ringfence 10% of your liquid assets to blow and pack in when thats gone if you can.
Even if you put huge effort into this, proper company/market research, psychology, literature from people who have been and done it etc this is very risky and you can be undone easily if events outside your control go against you.
I read about a guy saying if you want to know what day-trading is like, take 50k in cash, go into your back garden and set fire to it all, sooner or later you will have a day when that happens...
FTSE100 long term return is 7%, it's unspectacular but make some regular savings, add time and with a bit of compounding and PCA it will soon add up, especially if you keep your nerve in the drops.

[cojak]

Very wise and sage advice Santaclaus.

There must be a way to mentor inexperienced retail traders in a way that benefits you and them (without you coming across as a snake-oil salesman). You can't spend a lot of time doing it without benefit and many sorely need it.

Small word-of-mouth recommendations I guess.

How about self-publishing a small, useful book?