Trial and Errors Journal

I've jumped in head first as is my way, learning through experience as I go. I've got 3000pounds bankroll, and I am trading CFD's via IGmarkets platform (limited risk).

April 30th

Been trading 2 weeks now and until today managed to break even despite losing 500 pounds one day. Alas, today I lost 1000 pounds, so I have 2000 left. I am not too despondent, as I have bought into Royal Bank of Scotland with 10,000 shares at 43 pence. They should hit 50 in the next week or so, which will net me about 700 pounds.

I have suffered mostly from a lack of patience and a desire to buy at the opening bell. All too often, I have bought long at the highest point of the day, and short sold at the lowest point as a result.

My first deal was buying Anglo American and Xtrata just about three minutes before George Soros stated that the banks were insolvent, which sent the market crashing. I refused to take a loss of about 300 pounds, so instead watched the losses build up to 1500 pounds. I waited for the market to turn, which it did when the the US treasurer (Greitner) stated that the banks had adequate capital.

I was tempted to buy GlaxoSmithkline on tuesday as the swine flu was moving the share price up. I admit, I did feel troubled by benefitting from such circumstances. I ended up buying long just before the share price started to fall. I lost a couple of hundred. I decided to let it go when I found myself wishing for bad news. I have decided not to buy into such quandaries again.

I made money on Barclays, Anglo American, Xtrata, Kazarkhyms and Antofagasta. I like the miners because they tend to have consistent patterns; Anglo American often follows the ftse index.

I have suffered by having expectations of how Wall St will perform, largely dictated by futures activity, which proved not to be the case, at least in the trading until the LSE closed.

I am excited by the promise of profits, which I can see, but have yet to attain largely because of all my novice mistakes and impetuosness.

I have decided to wait until 10-10.30 am to monitor more properly how the stock is performing and will likely perform that day, and look for a suitable entry point. I also am studying the trading patterns as I go. I am looking forward to one of those massive profit-taking days, where you can't really screw up.

Anyway, any advice is much appreciated. Will keep you posted every now and then.

Rob

May 8th

If the goal was buying at the high point and selling at the low point, I would probably be halfway to millionairedom by now. I made some profits from rbs, but instead of selling at 50p, I got greedy and put my whole bankroll in at 51p. The sp subsequently fell to 42.7p, at which point I panicked and sold, losing much of my roll. I had opened more than one contract in order to acquire more shares, and had to stagger my stop points, so I didn't have any flexibility with moving one of them down a few points if I wanted to hold anyway. Once the first stop got hit and I lost 600 pounds, closing the positions on the others was just a matter of time. Of course, the sp started going up just after I closed my positions, and annoyed by this, I bought in again with the rest of my roll to try to make back some of the losses.

The lessons I learned are to only open one contract per issue at a time. To hold back from buying when it seems like the upward movement will never abate. Instead I will wait for the correction, then buy in at what appears to be a low point. In this case, it was less of a corrections, but more just bad news. Still, I think there is more upside to rbs so I should have held and not let my emotions take control. Another lesson in patience.

I have also decided to concentrate on just four mining stocks that I know well. I am monitoring their accumulation and distribution and feel confident at identifying low points. I will no longer short sell shares, but instead just focus on buying at the low point for a while.

I am also giving up short term trading, i.e. over a day or two, but instead work on trading from low to high point, which tends to be a week at least for the mining stocks at the moment. I am also gathering data to compile a trading index to identify when the market is overbought or oversold, and will attempt to buy in when the market is oversold.

Wall street continues to defy what the futures indicate and I continue to suffer from misplaced expectations, so by not day trading, I alleviate this problem.

I've made some bad mistakes and ignored the advice I had acquired before I started. Now I'm down to the last thousand, I've got to make better decisions from now on.

Are you cleaned out yet?

"make back some of my losses no wonder they call it spread BETTING"

Pound foolish said:

Are you cleaned out yet?

"make back some of my losses no wonder they call it spread BETTING"

Click to expand...

Yeh I got cleaned out. I shorted rio tinto, which was what my distribution chart was telling me, but the market started the day on a strong upward trend, which wiped my positions out just before the market continued on the downward trend.

I've realised that a big problem has been a lack of capital to ensure that the stop losses allow enough room for normal volatility. I lost 1500 pounds today when the low dipped 1 point below my stop loss before recovering, - unlucky.

So I feel that with CFD's, if you want to bet (yes, bet) on a period of about a week, and you don't have a huge amount of capital, it's best to forget about stop losses and go with your convictions, backed up by charts/research.

I'm looking at seven thousand pounds loss in just a few weeks. It's serious. But I know I have learned a lot.

Forget about very short term swings. Wait for the market conditions to be right. Focus on buying long while learning.

I've taken a loan from my online bank account, and have put the last 1500 pounds I have on Kazarkhyms, buying long at 595 without a stop loss.

It should hit 900 at best (or thereabouts) within the week. Else I may be getting a divorce.

After this comes off, I will play it safe.

I've taken a loan from my online bank account, and have put the last 1500 pounds I have on Kazarkhyms, buying long at 595 without a stop loss.

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A bank loan to fund trading???

You're kidding right?

Start again

I wasn't kidding. I think I lost my head. I lost my savings of 7000 and am in debt 2000 now. A bad start.

I've made a tonne of mistakes, but I have learned something from each of them. I just wish I hadn't started with such big amounts, but had just done a few small time deals instead.

One positive thing is that I know the charts I am using have some foundation to them. I also know that the simple way is bound to be much more effective for me.

Mistakes I made:

I would buy when the sp was near its low point, but then as the sp moved up and the profits grew, my margin would increase beyond the funds I had in my account. So then I would need to move my stop loss to reduce the margin. Sometimes the stop would get hit as a result. Basically, I was using too big a percentage of my available capital and not setting my stop loss far enough away.

Also, I was dealing in amounts bigger than I was comfortable with when the market turned against me and losses started accumulating. For instance, I would buy at 595. When the sp moved up to 620, I would sell, then buy in again for the full amount at 620. But when the market turned, the losses got big, so I would panic and sell at a loss. If I had just left the original deal alone, I would have been far better off.

I realise that I was gambling too much, trying to predict which way the market would turn ahead of the fact, rather than just going with the market's movements after the fact and the charts. There are no extra points for making the right call ahead of the fact.

So the simple way is to buy just a small number of shares at the lowest point I can, set a stop loss a reasonable distance away, make sure I have extra capital to cover increasing margin (which might be difficult now), and leave the deal untouched until I sell at a higher sp. That way I can absorb corrections with much less stress, and not sell and take losses to boot.

I have about 200 pounds to start with now. It's back to the drawing board. The excitement is over and the hangover is just wearing off.

The good news is that I have identified at least three instances where the distribution charts I have been working with have given me advance warning of a stock price's movement, so I am confident that in the long run, I will make money. It's going to be a long road back from here, but I have confidence and determination.

I am keeping this account for my own benefit, in that I'm trying to remember my mistakes. Reading my past entries, I can already see how I conveniently forget other lessons I have learned when a particular trade appeals to me. I have no choice but to play the safest game I can now.

Oh yeh, any advice would again be much appreciated.

Klasse said:

A bank loan to fund trading???

You're kidding right?

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Borrowing in order to trade may be acceptable in certain circumstances: where you have a known edge and a proven track record, but not quite enough capital, for example. However, I think I would prefer to borrow from a trusted friend or family member (who can afford to lose it and not care), than a bank.

If you were in the UK I think I would recommend learning your trade with spread betting, especially one of the firms that allows you to trade for pennies per pip for a limited period. I have no idea what other options are available to you where you are, but while you are still learning, you have to find a way of trading in very small amounts at a time. A demo account might be one way to go, but real money is better. However, it has to be money you can afford to lose.

When I started, there weren't many women contractors, so no one paid a lot of attention to me. But I learned the value of networking and talking to people, learning as much as I could."

It's also a lot easier for women to do business with the federal government now than it was 10 years ago. Sure, there were the set- asides and point differential for small, disadvantaged and minority- owned businesses, but not many people paid attention to that, other than for minority men.

Now the government is actively seeking women contracts. "In fact there are a lot of women who are in government procurement," Carver said. "This makes it a lot easier, for it's easier for a woman to talk face-to-face with another woman."

Would-be government bidders also have another lifeline that she didn't have -- the bid assistance centers at most of the area technology centers and regional universities around the state.

"They will help you find out what contracts are going out to bid, how you can bid on them and how you can make your first bid," she said. "I've relied upon them a lot. I still do, because they have a lot of information at one place."

RSD,

If you haven't already found it by now, you might have a look at the first post here:

Forex Factory - View Single Post - james16 Chart Thread

or: james16 Chart Thread - Forex Factory

That (enormous) thread is forex-oriented, although the principles apply generally. However, it was the advice in the first posting I am suggesting you read. Then perhaps look here:
http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html#post365767

The author of that thread has taken the general principles of the first one, plus his own extensive experience, and made the method his own. The principles apply to any markets, although what was discussed there tended to be indices, commodities and forex. Don't let that deter you if those were not what you were intending to trade.

The more time you spend learning at this stage, and not trading (except in demo), probably the better.

ENRC is going to move

Thanks Mike, that's a great help.

I would like to impart some good news though. I have still got my 200 pounds with which to make a comeback, and my charts are telling me that certain miners are going to do great things. Lonmin has already started to move big time. AAL is looking strong too. But the biggest call is ENRC. If my accumulation charts are right, this issue in particular is about to move skywards. It went up from 590 to 649 over Thursday and Friday, so you could say it is obviously looking strong, but all I can say is that accumulation went through the roof on Friday, so I expect even stronger upwards movement as the market moves up.

My 200 pounds will be going into ENRC. I'll keep one informed on the issue's progress.

montmorencyt2w said:

RSD,

If you haven't already found it by now, you might have a look at the first post here:

Forex Factory - View Single Post - james16 Chart Thread

or: james16 Chart Thread - Forex Factory

That (enormous) thread is forex-oriented, although the principles apply generally. However, it was the advice in the first posting I am suggesting you read. Then perhaps look here:
http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html#post365767

The author of that thread has taken the general principles of the first one, plus his own extensive experience, and made the method his own. The principles apply to any markets, although what was discussed there tended to be indices, commodities and forex. Don't let that deter you if those were not what you were intending to trade.

The more time you spend learning at this stage, and not trading (except in demo), probably the better.

Click to expand...

You lost 9000 - an expensive lesson!

Thanks for the update RSD.

Well I know almost nothing about shares, etc, as I have stuck almost exclusively to Forex and Commodities, so I cannot comment, but good luck!

If you can get on a good trend not too far from the beginning, you could have a great run.

Then you have to strike a balance between pulling out too early, and leaving it too late to get out. Watch out for the trend getting exhausted.

Also look out for trend continuation signs, but also reversal signs, and try to learn to distinguish between minor retracements, major retracements (which are perfectly normal in a trending market) and full-blown reversals. It's easier said than done, so you need a lot of practice, which is where demo, or real trading for penny stakes comes in useful. Or just eyballing charts and paper trading them. Play the game of covering up the right-hand side of historic charts, and working from left to right, see if you can predict where price is going; "the hard right edge".

No, you can't actually predict it, because no one can, but it should eventually give you an idea of how price patterns work, and give you a feel for the market.

It's a slog, and you have to work at it. It can be a bit more fun if your whole fortune isn't on the line with a single trade though....

Cheers,
Mike

what risk management process do you use rsd?

i've only briefly ran through your thread, but it sounds like you're making repeatedly bad calls (sorry if that's not the case btw)...why don't you hold off opening such large positions until your good calls are in a positive ratio to your bad?

it's not making money that is relevant when you're starting out.

not losing it too quickly is more important...not blowing your account before you've picked up enough knowledge to trade successfully.

dr. blix,

I second that. Money not lost is money gained when starting out. I think my good calls / bad calls ratio will improve if I just stick to the charts and not make impetuous trades based on emotion. Right now, I have no choice. The next trade could be the last for a while if it isn't a good one. I think ENRC is a good call in the medium term. I wish I had bought in on Friday morning though.

Risk manangement process is currently all or bust. I'll be reading up on that first.

rsd886647 said:

Risk manangement process is currently all or bust. I'll be reading up on that first.

Click to expand...

I don't wish to be too downbeat, but so is Russian Roulette.

Fortunately, even losing all your trading capital is not quite as final as RR, provided that you have the right attitude and can come bouncing back.

Risk manangement process is currently all or bust. I'll be reading up on that first.

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You're still making the same mistakes...

You already knew you were trading in too large a size when you had even more capital than you do now. And you say you will read up on risk management first. I do hope you mean before you take your next trade because it sounded like you were going to trade ENRC anyway and are risking your entire 200 on it. It sounds like you will go bust again soon. Maybe not on that trade, maybe not on the next 5 trades, but it seems only a matter of time unless you change your approach.

I honestly think you would be better served by not trading, and studying the markets while you work to take that 200 account up to a level where it is not win or bust.

Understood

Okay I was being flippant. I actually made the transition to stocks and shares from playing poker. So while playing that game, I learnt that one shouldn't risk more than 10% of their bankroll on one table. That way, if they bust out even five times, they can handle the negative swing and still come back. This is the risk management process that I will be using at least intially.

BUT I feel I need to build my capital to at least 600 or 700 pounds before I trade using this process, in terms of being able to make trades that bring decent reward.

I am happy to risk it all on ENRC because of the trust I have in my charts. ENRC is going to do great things. I just have to make one good decision, and that is getting the entry point right.

Calinor said:

You're still making the same mistakes...

You already knew you were trading in too large a size when you had even more capital than you do now. And you say you will read up on risk management first. I do hope you mean before you take your next trade because it sounded like you were going to trade ENRC anyway and are risking your entire 200 on it. It sounds like you will go bust again soon. Maybe not on that trade, maybe not on the next 5 trades, but it seems only a matter of time unless you change your approach.

I honestly think you would be better served by not trading, and studying the markets while you work to take that 200 account up to a level where it is not win or bust.

Click to expand...

10% at one table wouldn't mean 10% on a hand though.

Risk as little as possible, until you know what you're doing. Minimum bets/paper trading.

montmorencyt2w said:

Borrowing in order to trade may be acceptable in certain circumstances: where you have a known edge and a proven track record, but not quite enough capital, for example. However, I think I would prefer to borrow from a trusted friend or family member (who can afford to lose it and not care), than a bank.

If you were in the UK I think I would recommend learning your trade with spread betting, especially one of the firms that allows you to trade for pennies per pip for a limited period. I have no idea what other options are available to you where you are, but while you are still learning, you have to find a way of trading in very small amounts at a time. A demo account might be one way to go, but real money is better. However, it has to be money you can afford to lose.

Click to expand...

My interest in this is which bank lent him the money in May 2009?

I had a flexiloan facility I used once years ago on my internet banking account. It was still active, so I took out until I could take out no more. I'm just glad it had a limit. (HSBC btw)

Hotch, You're right when you say 10% on the table doesn't necessarily mean 10% on one hand (though it sometimes can). The thing is, if I risked twenty pounds, which is 10% of my capital, a 10% movement in price would only cover my costs (CFD's). My charts don't give me such strong signals too often. If I had blown a bankroll of 9000 pounds at the poker table, and I had just 200 left, and I got queens in the hole, I wouldn't think twice about going all in pre-flop to give me a chance of doubling up and making a comeback.

Once you double up, then you play more conservatively. I guess I'm still playing poker.

Splitlink said:

My interest in this is which bank lent him the money in May 2009?

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