Going for it

I opened my first spread bet account last week with CMC Markets. I put in a £500 deposit, which I can afford to loose (to be honest, entirely expect to). Having spent over a year reading this site and others, and playing with test accounts - I decided to go for it with real money.

In my first week, I've managed to make over £100 profit - mainly on US crude oil. Using a strict method of buying / selling at support / resistence. Is this normal? I'm putting quite generous stops in to avoid getting shaken out, and am letting profits run - so although I've had some nasty loosers, my profits tend to be significantly more when I call it right. Oil seems to have very large swings in price (over 200 pips is not uncommon). Does this sound like a reasonable start, or is it begginers luck? I know I'm risking much more than is recommened per trade, but otherwise the oil swings will shake me out.

Any other new starters have a similar experience, only to loose most of deposit in a string of bad trades, or is this agressive start required to build up a bigger deposit, and them calm it down, diverse more.

I can't say I love CMC's java app. Its a bit crap. Also, a lack of trailing stops is missed when I trade into a big oil spike.

I think you're going to blow up the £500 account betting on US crude oil. Either add another £2500, or bet on something smaller.

Pure luck. Sort out your entry and refine your stop.

Or many T2W members will mock you ruthlessly.

fibonelli said:

I think you're going to blow up the £500 account betting on US crude oil. Either add another £2500, or bet on something smaller.

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Agreed. The light crude has made me light headed. The charts terrify me, which tells me I shouldn't be doing it. Lesson one learned, but luckily not the hard way.

I've been trading purely on S/R and price action, and its working well for me. I don't use any indicators, because I don't really understand them yet, and I think the simpler my strategy the better (I read trader_dante's making money thread - excellent read for anyone new). I'm trying to avoid making all the well known mistakes, but my human instinct makes it hard to resist learning the hard way! There's so much opinion on this site its hard to separate fact from folklore.

I'm trying to look into trading gold against USD and vice versa - is this possible? Does anyone do this? The idea being, I trade each way - with stops each way, and when one gets stopped out, I let the other run into profit. This sounds like a good long term strategy on paper, is the reality not so simple? Can anyone suggest any other pairs that play well against each other.

You can trade XAU/USD on Oanda.

CMC Markets is a pile of crap btw, trade with something that has better execution, VDM have good execution and let you trade at 10p/tick.

What do you mean by and vice versa? You want to be long and short at the same time?

arabianights said:

What do you mean by and vice versa? You want to be long and short at the same time?

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Yes is this a terrible idea? The thought just crossed my mind today I've not thought it through or looked at any charts though. I could look for a buy entry point on one, and place a stop if it moves against me, and find a sell entry point on the other, and place a stop if that moves against me. I take the less on one, and take the profit on the other. Is this a tried a tested trading methodology, or a tried and rejected one?

I don't mean long and short on exactly the same instrument, but two instruments that tend to move in opposite directions, such as gold and currency.

choc13 said:

You can trade XAU/USD on Oanda.

CMC Markets is a pile of crap btw, trade with something that has better execution, VDM have good execution and let you trade at 10p/tick.

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Yes CMC seem to spend all their money on marketing, and need to invest in some better technology. The inability to place a trailing stop is obviously a business decision mind you, it can't be that hard to implement in practice.

If you are long/short on something with a negative correlation you will prob be stopped out on both.

If what your doing's working and has been working on demo then keep doing it. Do it to build up your account and don't change things when you have done. You don't necessarily need tighter stops although you do need to be able to withstand a string of losers.. There's no definitive approach to money management just as there's no definitive way to trade. If you trade how everyone else tells you too you'll have the same results (95% lose money) so just keep doing things your own way and let experience teach you. You say you can afford to lose the £500 which puts you at a huge advantage to begin with so just go for it (That said you don't want to lose more than necessary so maybe keep your size down to begin with).

Aspire said:

If what your doing's working and has been working on demo then keep doing it. Do it to build up your account and don't change things when you have done. You don't necessarily need tighter stops although you do need to be able to withstand a string of losers.. There's no definitive approach to money management just as there's no definitive way to trade. If you trade how everyone else tells you too you'll have the same results (95% lose money) so just keep doing things your own way and let experience teach you. You say you can afford to lose the £500 which puts you at a huge advantage to begin with so just go for it (That said you don't want to lose more than necessary so maybe keep your size down to begin with).

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Thanks for that its made me feel more positive! My tested method is to look at a few charts that I know inside out in the morning, about an hour after open. Draw the trends and support for the last week at 1 hour, then do the same for the last two days at 15 mins, then I'll decide what support / resistence I want to buy / sell at. Then put some stops in that will will get hit if the trend clearly moves against me, and put some limits in for when I want to sell (this is where I'd rather have trailing stops instead, because my potential profit is fixed). For example, I might buy at a support and sell at the next resistence. I'll only trade if the potential profit on the trade is greater than the potential loss at the stop. Then I'll go to work and forget about it. At lunchtime I'll do the same for US markets (although I'll only plan my trade, I'll execute it later in the afternoon after US has opened in case it gives me any surprises). This works very well for me. I learned early on not to be tempted to log in and 'have a fiddle', as I'd close profits early only to miss out on more. Although I will check every now and then and move a stop to break even if it looks unlikely to be hit, just for safety. This is what earned me 20% in my first week, and has proved to do well in testing.

To be honest I'd be a bit pissed of if I lossed the £500 have been practicing on paper for so long. I'm only trading £1 a point. I'm treating it as if it were a larger sum of money for the sake of disipline. No point trading £5 a point then getting wiped out in a bad run.

pjharvey said:

Yes is this a terrible idea? The thought just crossed my mind today I've not thought it through or looked at any charts though. I could look for a buy entry point on one, and place a stop if it moves against me, and find a sell entry point on the other, and place a stop if that moves against me. I take the less on one, and take the profit on the other. Is this a tried a tested trading methodology, or a tried and rejected one?

I don't mean long and short on exactly the same instrument, but two instruments that tend to move in opposite directions, such as gold and currency.

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So for example being long EURUSD but short gold? This is known as spread trading and is a fascinating subject but forget trying it with spread betting if for no other reason than you couldn't possibly get the ratios right with five hundred quid in the bank. You wouldn't use stops on the individual positions though you would use them on the spread itself, broadly speaking at least.

arabianights said:

So for example being long EURUSD but short gold? This is known as spread trading and is a fascinating subject but forget trying it with spread betting if for no other reason than you couldn't possibly get the ratios right with five hundred quid in the bank. You wouldn't use stops on the individual positions though you would use them on the spread itself, broadly speaking at least.

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Yeah I've just had a cigarette and a good think about it and come to a similar conclusion. Maybe I'll come back to that one day in the future.

Lesson 2 just figured out BTW, its easy sticking to a strict model when you've trading on paper. It's funny how greed and emotion take over when using real money. It's a totally different ball game, and temptation must be avoided, even if it means phyiscal blocking yourself from your account after you've traded.