A beginner's story - One year on

grimweasel said:

bravo and i hope it all turns out well for you. TD has recently suggested becoming a master of 1 market rather than a jack of many. Do you ever look at forex etc still? Keep us posted on developments!

Click to expand...

knight_trader said:

Hi everyone, I am fast approaching my first year of trading full time and have learnt an awful lot. I have been very quiet on these forums but now felt like I wanted to share my experiences with people in the hopes that it may help some others. I have by no means "made it" but like to think I'm at a point where I've gone through many of the hard lessons.

To begin with my apologies as I expect this will be a long post...

Firstly some background. When I started trading full time, I had been working in the city for approx. 3 years. I was not a trader myself but worked closely with them and various market participants. I had learnt enough (I felt) to go it alone and see where I could get to. I was at a point where I had cash saved up and it was probably going to be the best opportunity I would ever get.

Step 1

Firstly I did what it seems everyone else does, I started looking for a system. I had a number I'd been testing for about 6 months before I went full time as well as a number of others I began working on once I started. The first lesson I learnt was that just because it works on paper and over backtests there is no cast-iron guarantee it will work going forwards. I soon started to lose heart in the systems I had chosen to begin with and started inventing others, looking at more indicators, trying to use free ones from the forum. It seemed there was no holy grail.......an obvious comment to the experienced reading this but the novices will firmly believe it exists and will spend weeks/months searching for it.

Step 2

I got disheartened and to all intents and purposes went on tilt as the poker community call it. I just started trading by the seat of my pants annoyed by technical indicators and complicated systems. And you know what....

...I made as much money in two days as I used to make in a month at my previous job in town. I'd cracked it, who needs a system when you just have a god given ability to trade off your own intuition. So guess what happened next...

I lost all that I'd just made and then some Not stupid amounts but enough to make me sit back and think again.

Step 3

I reviewed what I'd been doing and saw that my trades were intuitively being based on very simple principles....support and resistance. Admittedly I was also watching a couple of moving averages to give me a broader view of what was going on but mainly I would go with these lines. All this time I'd been looking for systems that tell me to trade when the MACD does this, the RSI does that, blah blah blah, all the time looking for a perfect entry. However I found I could identify a simple resistance line on a chart, watch an index come back to it two whole trading days later and bounce off it to a 1 pip accuracy. When you start to see this happening time and time again you realise that perhaps the complicated systems aren't needed after all.

I noticed when I first started out reading the forums (and hence why I stopped) that each day I'd find a new system, or a new way to trade and it would end up confusing me more. Then one day I came across a post from a very experienced member (apologies for not having a link) that just said simplicity is the key. It was stuck at the bottom of a post containing a method using about 8 different indicators

Step 4

Despite being able to pick perfect entry points and winning trades I was still losing money overall. What now could be the problem.......and then I realised...it was me!

Some of my friends are shocked when I tell them I could sit them in front of a chart and tell them when to enter and when to exit but that they would more than likely lose money, even if the trade were destined to be a winner.

Human beings are, by their very nature, greedy, impulsive, impatient etc. When you have a loser you start to think "but why let it stop out, I'm sure it will come good" and when you're on a winner how hard is it to close a trade that's just made you 20 pips in 5 minutes?

I have no pearls of wisdom for this one as it has taken me most of the last year to work this one out, steps 1-3 I probably did in the first few months. One thing I can recommend is a book called "Trading in the Zone" by Mark Douglas. I know NKruger and others have recommended it and I have to say it has revolutionised my trading.

Probably one of the simplest concepts is a method of entry and exit done in 3 parts. You take a trade of quantity 3 (say £3 per pip with an SB), you close £1 out very quickly as the trade moves in your direction. For example if you enter on support you would close just as the trade starts to bounce, maybe just for 2-3 pips. You then close part 2 on your pre-defined exit point, you do not run the trade. Part 3 you then lock the stop at entry and leave it running as a free trade.

The one thing that you will very quickly learn is that part 3 very rarely does better than part 2, i.e. 9 times out of 10 your initial exit was spot on and if you'd let the trade run it may have made a few more pips but then more than likely reversed to your entry. Part 1 is always a nice pick me up for when the trade does go bad in that not only does it mean you got a few pips in (rather than stopping out 10 pips negative say) but also it gives you a little confidence boost that your entry was right...just this time it wasn't meant to be.

Step 5

So here I am now trading the FTSE100 exclusively and using spread betting to do it. When I first started I read so many posts saying the FTSE100 wasn't volatile enough, or that it's impossible to make profit with SB firms yet here I am still cracking away.

I have traded many different instruments in the past but came back to the FTSE100 for my education as being based in the UK it was one I could understand quite easily. It is not the best, the range can be very small and when the US opens all bets are usually off Still it works for me for now until I am happy and proficient enough to add on other instruments or move to something else entirely.

As for the spread betting debate, I have had a hell of a time. I've used Capital Spreads and IG Index and out of the two IG is by far the better one but does have a 2 pip spread on the FTSE rather than a 1 pip as with CS. Still I'm not going to get into that here, just to say I trade through an SB and can do so profitably. Eventually, when capital allows, I look forward to trading the futures directly



I trust this little insight into my history gives others some help with their own endeavours. If you have any questions feel free to post a reply or contact me directly. Additionally if there is anyone else out there trading the FTSE100 on a support/resistance bases and an intraday timeframe it would be great to hear from you. Trading can be a lonely business and a pen pal to swap ideas with would be most welcome!

Click to expand...

colincolin said:

Hi Mate are you making a good return with the last 2 months trading ? i have 50k in my capital spreads account but am a novice looking for some help trading in return for a cut

Click to expand...

knight_trader said:

Hi everyone, I am fast approaching my first year of trading full time and have learnt an awful lot. I have been very quiet on these forums but now felt like I wanted to share my experiences with people in the hopes that it may help some others. I have by no means "made it" but like to think I'm at a point where I've gone through many of the hard lessons.

To begin with my apologies as I expect this will be a long post...

Firstly some background. When I started trading full time, I had been working in the city for approx. 3 years. I was not a trader myself but worked closely with them and various market participants. I had learnt enough (I felt) to go it alone and see where I could get to. I was at a point where I had cash saved up and it was probably going to be the best opportunity I would ever get.

Step 1

Firstly I did what it seems everyone else does, I started looking for a system. I had a number I'd been testing for about 6 months before I went full time as well as a number of others I began working on once I started. The first lesson I learnt was that just because it works on paper and over backtests there is no cast-iron guarantee it will work going forwards. I soon started to lose heart in the systems I had chosen to begin with and started inventing others, looking at more indicators, trying to use free ones from the forum. It seemed there was no holy grail.......an obvious comment to the experienced reading this but the novices will firmly believe it exists and will spend weeks/months searching for it.

Step 2

I got disheartened and to all intents and purposes went on tilt as the poker community call it. I just started trading by the seat of my pants annoyed by technical indicators and complicated systems. And you know what....

...I made as much money in two days as I used to make in a month at my previous job in town. I'd cracked it, who needs a system when you just have a god given ability to trade off your own intuition. So guess what happened next...

I lost all that I'd just made and then some Not stupid amounts but enough to make me sit back and think again.

Step 3

I reviewed what I'd been doing and saw that my trades were intuitively being based on very simple principles....support and resistance. Admittedly I was also watching a couple of moving averages to give me a broader view of what was going on but mainly I would go with these lines. All this time I'd been looking for systems that tell me to trade when the MACD does this, the RSI does that, blah blah blah, all the time looking for a perfect entry. However I found I could identify a simple resistance line on a chart, watch an index come back to it two whole trading days later and bounce off it to a 1 pip accuracy. When you start to see this happening time and time again you realise that perhaps the complicated systems aren't needed after all.

I noticed when I first started out reading the forums (and hence why I stopped) that each day I'd find a new system, or a new way to trade and it would end up confusing me more. Then one day I came across a post from a very experienced member (apologies for not having a link) that just said simplicity is the key. It was stuck at the bottom of a post containing a method using about 8 different indicators

Step 4

Despite being able to pick perfect entry points and winning trades I was still losing money overall. What now could be the problem.......and then I realised...it was me!

Some of my friends are shocked when I tell them I could sit them in front of a chart and tell them when to enter and when to exit but that they would more than likely lose money, even if the trade were destined to be a winner.

Human beings are, by their very nature, greedy, impulsive, impatient etc. When you have a loser you start to think "but why let it stop out, I'm sure it will come good" and when you're on a winner how hard is it to close a trade that's just made you 20 pips in 5 minutes?

I have no pearls of wisdom for this one as it has taken me most of the last year to work this one out, steps 1-3 I probably did in the first few months. One thing I can recommend is a book called "Trading in the Zone" by Mark Douglas. I know NKruger and others have recommended it and I have to say it has revolutionised my trading.

Probably one of the simplest concepts is a method of entry and exit done in 3 parts. You take a trade of quantity 3 (say £3 per pip with an SB), you close £1 out very quickly as the trade moves in your direction. For example if you enter on support you would close just as the trade starts to bounce, maybe just for 2-3 pips. You then close part 2 on your pre-defined exit point, you do not run the trade. Part 3 you then lock the stop at entry and leave it running as a free trade.

The one thing that you will very quickly learn is that part 3 very rarely does better than part 2, i.e. 9 times out of 10 your initial exit was spot on and if you'd let the trade run it may have made a few more pips but then more than likely reversed to your entry. Part 1 is always a nice pick me up for when the trade does go bad in that not only does it mean you got a few pips in (rather than stopping out 10 pips negative say) but also it gives you a little confidence boost that your entry was right...just this time it wasn't meant to be.

Step 5

So here I am now trading the FTSE100 exclusively and using spread betting to do it. When I first started I read so many posts saying the FTSE100 wasn't volatile enough, or that it's impossible to make profit with SB firms yet here I am still cracking away.

I have traded many different instruments in the past but came back to the FTSE100 for my education as being based in the UK it was one I could understand quite easily. It is not the best, the range can be very small and when the US opens all bets are usually off Still it works for me for now until I am happy and proficient enough to add on other instruments or move to something else entirely.

As for the spread betting debate, I have had a hell of a time. I've used Capital Spreads and IG Index and out of the two IG is by far the better one but does have a 2 pip spread on the FTSE rather than a 1 pip as with CS. Still I'm not going to get into that here, just to say I trade through an SB and can do so profitably. Eventually, when capital allows, I look forward to trading the futures directly



I trust this little insight into my history gives others some help with their own endeavours. If you have any questions feel free to post a reply or contact me directly. Additionally if there is anyone else out there trading the FTSE100 on a support/resistance bases and an intraday timeframe it would be great to hear from you. Trading can be a lonely business and a pen pal to swap ideas with would be most welcome!

Click to expand...

It's amazing how, when the money starts to run out, you then start learning how to *really* trade.

Click to expand...

knight_trader said:

My first advice would be to get the 50k out of your Capital Spreads account, if nothing else it's earning you zero interest but more importantly I wouldn't trust CS to sit on £10k of my money let alone £50k. You have to ask yourself how safe is that deposit? Anyway that is purely my opinion, nothing more, for true CS bashing you can go visit the thread dedicated to them on this forum.

I'm afraid I am in no position to advise anyone on trading strategies, however I would warn you that posting messages like that is likely to get you a few PMs from some unscrupulous people out there who will happily sell you their system for a few £k. Again wholly my opinion and a simple word of warning.

The best piece of advice I can give is to take £49k out and mess with £1k to start with. If you have that much money sitting there I'm going to hazard a guess that you are not scraping around trying to pay the bills and hence it won't matter if you make 10% a year or 100%. Even better get yourself on something like TradeSense over at IG where you can start for a few pence a point, I began that way and learnt a lot, plus they send you some useful beginners guides as part of the package.

They key issue I found, as mentioned in my earlier post, was the psychology of trading rather than the system. There will be methods out there and this forum is full of them, indeed some of them work extremely well......in the hands of the creator. However you may take the system and be a bit trigger happy, or too quick to take profits, etc. By not putting a large chunk of your account on the line you should remove a lot of the emotion and hopefully learn a few lessons. Unfortunately though most traders only learn this once they have lost a fortune (or two). One important point I did not note in my original story is that I used up all the funds I started with, as far as I'm concerned it was my education. It's amazing how, when the money starts to run out, you then start learning how to *really* trade.

If you are looking for a system then perhaps check out Trader_Dante's at this link http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html

The key thing to look for here is that he has outlined a system that would appear to work on a regular basis. Now look at how many people can actually follow his success. People look at different charts and see different things, some people set their stops wider, some people take profit too early. Therein lies the human factor and the one which will become your greatest obstacle to overcome.....the trading system is only a very small part of your overall success.

Click to expand...

knight_trader said:

My first advice would be to get the 50k out of your Capital Spreads account, if nothing else it's earning you zero interest but more importantly I wouldn't trust CS to sit on £10k of my money let alone £50k. You have to ask yourself how safe is that deposit? Anyway that is purely my opinion, nothing more, for true CS bashing you can go visit the thread dedicated to them on this forum.

I'm afraid I am in no position to advise anyone on trading strategies, however I would warn you that posting messages like that is likely to get you a few PMs from some unscrupulous people out there who will happily sell you their system for a few £k. Again wholly my opinion and a simple word of warning.

The best piece of advice I can give is to take £49k out and mess with £1k to start with. If you have that much money sitting there I'm going to hazard a guess that you are not scraping around trying to pay the bills and hence it won't matter if you make 10% a year or 100%. Even better get yourself on something like TradeSense over at IG where you can start for a few pence a point, I began that way and learnt a lot, plus they send you some useful beginners guides as part of the package.

They key issue I found, as mentioned in my earlier post, was the psychology of trading rather than the system. There will be methods out there and this forum is full of them, indeed some of them work extremely well......in the hands of the creator. However you may take the system and be a bit trigger happy, or too quick to take profits, etc. By not putting a large chunk of your account on the line you should remove a lot of the emotion and hopefully learn a few lessons. Unfortunately though most traders only learn this once they have lost a fortune (or two). One important point I did not note in my original story is that I used up all the funds I started with, as far as I'm concerned it was my education. It's amazing how, when the money starts to run out, you then start learning how to *really* trade.

If you are looking for a system then perhaps check out Trader_Dante's at this link http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html

The key thing to look for here is that he has outlined a system that would appear to work on a regular basis. Now look at how many people can actually follow his success. People look at different charts and see different things, some people set their stops wider, some people take profit too early. Therein lies the human factor and the one which will become your greatest obstacle to overcome.....the trading system is only a very small part of your overall success.

Click to expand...