Culture shock!

[Bill G]

I hav been investing now for 25 years , I have made a fair profit enough to maintain reasonable life style in my retirement, I have (for my sins) recently took up spread betting.Yesterday I took out a bet on the Dow with controlled risk (works out at 33 points) I thought that was a reasonable stop, the Dow looked ripe for the picking, it went up as I expected, I left the screen , returned and I was rapidly reaching my stop level -too late! The Dow proceeded to rise that 156 points, my confidence was shattered I did not go in again.
My point, I have had major shocks onmy investing long term but this exprience was the worst I have had .
Bill

 

[Skimbleshanks]

Oh, sorry to hear that Bill G, although I hope you are able to learn something from this to make it a one-off!

If it's any consolation, we've probably all been there and got the singe marks to show for it.

It suggests to me as if your stop was shorter than the average pullback swing on the Dow (from memory this is around 45-50 points), so you would either need to increase your stop to allow for pullbacks, trade with a smaller stake size, or stay within sight of your screen.

I'm sure you'll be able to alter your trading style to accommodate the characteristics of the Dow, and please don't let this put you off trading!

 

[Trader333]

Hi Bill,

Did you do any paper trading before taking the plunge for real ?

Are you aware of Average True Range figures (ATR) for the Dow on intra-day and daily timescales ? and in particular for yesterday ?


If you can answer yes to the above there should not have been any unexpected shocks.

If you cannot answer yes to the above I would suggest gaining more knowledge and paper trading being totally honest with yourself before trading again.

Good Luck



Paul

 

[options]

If your new to spreadbetting Bill, it can be a shock to the system.
The way the dow jumps can be heart attack stuff if your the wrong side of it. Trading the e mini future dow with IB is less of a shock. More predictable. Tighter spreads (in market hours. sb size outside of market hours.) The clincher being it's only $5 a point.
Commission is very good too.

Or the e mini s&p for those with deeper pockets.

Maybe even better just to trade usa stocks with the sb's.

I finally succumbed to Naz's suggestion that I trade the Nasdaq open and yesterday ended the day turning £1 into £88 even through the dreaded sb's.

You will tend to lose more using the sb's.That's just how the dice are loaded I'm afraid, and I have always found I have to use wider stops then I would do normally.Some people have said that a stop of around 50 is safer on the dow. (But I would be out long before then.)

Take it slow and small with the sb's Bill. It's a whole new ball game m8.

 

[Miki]

I totally agree with options.

The combination of spread, bias, price manipulation and dealer’s delaying tactics (if you are big player) can be lethal to your wallet.

 

[sidinuk]

Sorry to hear about your experience yesterday Bill, it's an emotional killer when that happens! If it's any consolation the same thing happened to me yesterday with the e-mini S&P. I do set a stop which is based on the ATR (which 9 times out of 10 keeps me in). Unfortunately yesterday was that 1 time out of 10 and it pulled back touched my stop (actually went through by 1 tick!) then reversed. Fortunately I know my system and I know it's always a danger so I was ready to get back in for the rest of the ride.

 

[Bill G]

Thanks for your condolences and valuable suggestions.
Paul- I have paper traded , its the ATR I didn't think on.
You know youse guys I don't really have to day trade, it's reading the BB's thats got me obsessed with it,but is it worth it I ask myself. Spread betting is more of a gamble than I thought.When I look at my investments growing from their miserable low, the Ftsie has been very good to me the last week why should I put myself through these traumas!!
Thanks again.
Bill

 

[Helenqu]

Hi Bill,

If you want to SB try the Eurostoxx, spread is 4 points and it moves much better than the horrid US indices, especially in the mornings (Helen ducks to avoid the flack!)

 

[Uncle]

Bill

If you are to apply a stop on the Dow, make it a minimum 50 points, but better still, dont leave your screen while you have a open position, watch the reversals and and you will get a feel for the swings, and thereby you can decide when to trade during the day. If you hit your profit target, then go to the pub and celebrate!!!

Remember the twin evils FEAR and GREED!!

 

[ChartMan]

a) you entered at the wrong time, maybe,
b) read up on my dow reports..... yesterday SHOULD have been a cake walk.....

 

[Uncle]

I agree with Chartman.........gave me a nice 100 points and thanks very much.......it could have been more but greed is the killer