Give me some constructive criticism

[Arbu]

I've just started out in spread betting and thought I'd post here how I'm getting on, in the hope that someone might have a few helpful comments.

I opened about six accounts in September and took full advantage of the introductory offers, netting about £500.

iii sent me a book by Malcolm Pryor "The Financial Spread Betting Handbook" which I read. I got a few points from it, but a lot of it deals with the mechanics of spreadbetting, which is easy to understand from the platforms anyway.

I really started trading about one month ago. Most of my trades have been in one particular share which is in a company which it's still possible to short, and I think is unlikely to go bust. There's no real trend in its price, so all I've been doing is buying it when the price seems low and selling when its high. I'm alert to the possibility of a trend developing in which case I would have to cut my losses if the trend is against me. I've done 14 trades on this basis and all but one have been profitable, typically netting me £50 to £100. I've traded with ODL, Capital Spreads and iii. I also bought some shares at one point with SelfTrade, thinking that the price was so low that I would like to hold onto them long term. But the price rose so quickly that I decided to sell them! I made a good profit, but clearly buying them instead of spread trading them was a mistake, because I had to pay stamp duty and commission.

I also made one trade buying euro vs GBP on Monday, seeking to profit from the current trend. I bought at 8990. The price quickly plunged to 8890. I held on, thinking that the trend had to continue. The price went up again to 8970 and then started to fall again. At 8930 I closed out, deciding that I had got this wrong and had better cut my losses. I lost £89. The price is now close to 9100, so it was clearly a big mistake to close out when I did. It's as if I'm more comfortable trading where there isn't a trend.

Not counting the promotional benefits, I'm about £1000 up in a month, which I'm pretty happy with as a beginner. And I went on holiday for a week during that month. Should I be looking to do better?

 

[KillPhil08]

Browse the FX markets for rectangular range bound area and you'll surely love them. They are truely a case of "too high, too low". Cable was like this for a while. Check out AUD too, that had a good period of that.

Your doing very well considering you just started, but be careful. If you lose a sizable percentage step back for a day or two and review what you did wrong.

Also, you mention this stock, clearly you know it's movements now so you should try to stick to your market, eventually you'll learn to master it.

 

[minime69]

going away for only 1 week is pretty poor, i personally think you should have done better!

 

[Arbu]

going away for only 1 week is pretty poor, i personally think you should have done better!

OK, I should have worded that last paragraph differently!

 

[new_trader]

Arbu,

My personal opinion is this:
If I make a profitable trade I want to know exactly why it was profitable so I can repeat it in future. If I make a losing trade I want to know exactly why it was a loser so I can avoid doing it again in future. Over time, the Profit/Loss is simply a guide as to how well I've performed at doing these two things. Something is wrong if you have made £1000 profit but you can't really explain why certain trades were profitable and others were not. My impression is you made a few lucky trades based on 'thinks' and they seldom work out well. Otherwise, why would you be asking if you should be looking to do better? This is a question that only you can answer.

 

[minime69]

 

[Arbu]

Arbu,

My personal opinion is this:
If I make a profitable trade I want to know exactly why it was profitable so I can repeat it in future. If I make a losing trade I want to know exactly why it was a loser so I can avoid doing it again in future. Over time, the Profit/Loss is simply a guide as to how well I've performed at doing these two things. Something is wrong if you have made £1000 profit but you can't really explain why certain trades were profitable and others were not. My impression is you made a few lucky trades based on 'thinks' and they seldom work out well. Otherwise, why would you be asking if you should be looking to do better? This is a question that only you can answer.

I have explained why I think the trades were profitable. OK, no-one can tell me if I can do better, but it seems sensible as a beginner to see if there's any guidance that more experienced people can give me. I wonder what your motive for posting your journal on this forum is. Is it not in the hope that some people might have some ideas to offer that you haven't thought of? Also I don't see how trades can be based on more than what you "think".

 

[Arbu]

Browse the FX markets for rectangular range bound area and you'll surely love them. They are truely a case of "too high, too low". Cable was like this for a while. Check out AUD too, that had a good period of that.

Your doing very well considering you just started, but be careful. If you lose a sizable percentage step back for a day or two and review what you did wrong.

Also, you mention this stock, clearly you know it's movements now so you should try to stick to your market, eventually you'll learn to master it.

Thanks. I don't get any results when I do a search for rectangular range bound area though (apart from this post).

 

[KillPhil08]

It's actually harder to find than I thought. I have some old pics which aren't relevant. Basically say cable was at 1.4800 then hits 1.5050. And repeatedly does this testing each level at least twice. It looks like a rectangle. I'll draw a picture or keep searching if you don't understand .

 

[Arbu]

I didn't know about drawing rectangles, but having read this article Chart Patterns XII: Rectangles - Forex Trading, Currency Forecast, FX Trading Signal, Forex Training Course, Education, Tutorial, FX Book, Forex ebook, Learn to Trade Forex, FX Guide, Pivot Points, Currency Rates, Forex Secret, Forex Brokers, Currenc
which I think is about what you're referring to, I think that it seems to tell me that my loss-making decision was correct! The article says that a breakout from the rectangle can signal a reversal. Well, the index broke out at 8950. There was a reversal, but it was very modest. Maybe I should have bought again when it went back across the top of the rectangle.

 

[KillPhil08]

Breakouts = lots of momentum. You could trade it for longer but it's easier to trail a stop so when it does end you have a pay off.

The picture is something like that, it usually happens in the asian session though. Perhaps try to find a longer timeframe to do it off .

Basically range bound areas.

 

[tomorton]

Hi Arbu - its a legitimate tactic to range trade a price that is bouncing between a high and a low. 13 out of 14 wins is a good pilot exercise and shows this is something that is technically possible, and profitable but more importantly that you have the right mentality to win at this system. You could develop a set of rules that strictly identify which markets you would range trade, plus your objective entry, exit and stop points. Good work so far.

On the other hand, buying a share because its low price will give a good long-term return is a 180degrees different philosophy. Most of us are already over-committed to the long-term on the buy side when you think of the value of your home, insurance, pension etc. etc. without adding shares to this list with the delusion that we are diversifying. I have spoken with more than a few people receiving or investing in a pension who nevertheless claim to have no exposure to the stock market.

I would recommend Money management rules must be in place before your next trade. Your next trade can't make you a fortune so that you can retire from this game: but it could blow your account in one go.

 

[raysor]

I've just started out in spread betting and thought I'd post here how I'm getting on, in the hope that someone might have a few helpful comments.

I opened about six accounts in September and took full advantage of the introductory offers, netting about £500.

iii sent me a book by Malcolm Pryor "The Financial Spread Betting Handbook" which I read. I got a few points from it, but a lot of it deals with the mechanics of spreadbetting, which is easy to understand from the platforms anyway.

I really started trading about one month ago. Most of my trades have been in one particular share which is in a company which it's still possible to short, and I think is unlikely to go bust. There's no real trend in its price, so all I've been doing is buying it when the price seems low and selling when its high. I'm alert to the possibility of a trend developing in which case I would have to cut my losses if the trend is against me. I've done 14 trades on this basis and all but one have been profitable, typically netting me £50 to £100. I've traded with ODL, Capital Spreads and iii. I also bought some shares at one point with SelfTrade, thinking that the price was so low that I would like to hold onto them long term. But the price rose so quickly that I decided to sell them! I made a good profit, but clearly buying them instead of spread trading them was a mistake, because I had to pay stamp duty and commission.

I also made one trade buying euro vs GBP on Monday, seeking to profit from the current trend. I bought at 8990. The price quickly plunged to 8890. I held on, thinking that the trend had to continue. The price went up again to 8970 and then started to fall again. At 8930 I closed out, deciding that I had got this wrong and had better cut my losses. I lost £89. The price is now close to 9100, so it was clearly a big mistake to close out when I did. It's as if I'm more comfortable trading where there isn't a trend.

Not counting the promotional benefits, I'm about £1000 up in a month, which I'm pretty happy with as a beginner. And I went on holiday for a week during that month. Should I be looking to do better?

The first thing that springs to mind is "beginners luck?". I suppose the answer here is don't get greedy. Stick to your current size (or even reduce it). There is no easy answer to trading (I think) but something sticks in my mind from long ago: Buy for a reason and hold if that reason still applies, otherwise sell. So often you think up another reason if the initial one fails (or you forget what it was!). But, hey, that might be the right way as well!
I have always found you get on a roll or winning streak when nothing seems to go wrong, so capitalise on that while you can.

 

[Arbu]

I don't believe there is such a thing as beginner's luck. But you and tomorton are right, there is a temptation right now to get greedy, and I should resist it. I have a mental stop loss of about £100 and if a trade goes that far against me I'm having a good think about whether my original thinking was wrong. Unless I'm still confident that it was right, I close out. I've only done that twice so far, but at least I know I've got the discipline to do it. If a trade goes £500 against me then I'm clearly wrong and will close out. I have stop losses in place for that sort of loss. That's about 1% of my capital, so would be bearable. I'm certainly not going to risk getting wiped out on one trade.

 

[PokerBrat]

Arbu, one can always do better.

You might wish to ask a different question.

 

[raysor]

I don't believe there is such a thing as beginner's luck. But you and tomorton are right, there is a temptation right now to get greedy, and I should resist it. I have a mental stop loss of about £100 and if a trade goes that far against me I'm having a good think about whether my original thinking was wrong. Unless I'm still confident that it was right, I close out. I've only done that twice so far, but at least I know I've got the discipline to do it. If a trade goes £500 against me then I'm clearly wrong and will close out. I have stop losses in place for that sort of loss. That's about 1% of my capital, so would be bearable. I'm certainly not going to risk getting wiped out on one trade.

Well I maintain there is a big element of luck in "winning". The other elements are knowledge/skill and inside information.
Admitedly there is truth in saying you make your own luck, and as someone once said; The more I practice the luckier I get.

 

[Rocky1]

exit points

arbu, well done so far. imho allways have your exit point before you enter a trade and stick to it, write it down. in this market go short more than long, for the next few years. identify some weak stocks, use stops. don't get too involved in fx or the indices, they'll blow you out if you're not careful. good luck!

I've just started out in spread betting and thought I'd post here how I'm getting on, in the hope that someone might have a few helpful comments.

I opened about six accounts in September and took full advantage of the introductory offers, netting about £500.

iii sent me a book by Malcolm Pryor "The Financial Spread Betting Handbook" which I read. I got a few points from it, but a lot of it deals with the mechanics of spreadbetting, which is easy to understand from the platforms anyway.

I really started trading about one month ago. Most of my trades have been in one particular share which is in a company which it's still possible to short, and I think is unlikely to go bust. There's no real trend in its price, so all I've been doing is buying it when the price seems low and selling when its high. I'm alert to the possibility of a trend developing in which case I would have to cut my losses if the trend is against me. I've done 14 trades on this basis and all but one have been profitable, typically netting me £50 to £100. I've traded with ODL, Capital Spreads and iii. I also bought some shares at one point with SelfTrade, thinking that the price was so low that I would like to hold onto them long term. But the price rose so quickly that I decided to sell them! I made a good profit, but clearly buying them instead of spread trading them was a mistake, because I had to pay stamp duty and commission.

I also made one trade buying euro vs GBP on Monday, seeking to profit from the current trend. I bought at 8990. The price quickly plunged to 8890. I held on, thinking that the trend had to continue. The price went up again to 8970 and then started to fall again. At 8930 I closed out, deciding that I had got this wrong and had better cut my losses. I lost £89. The price is now close to 9100, so it was clearly a big mistake to close out when I did. It's as if I'm more comfortable trading where there isn't a trend.

Not counting the promotional benefits, I'm about £1000 up in a month, which I'm pretty happy with as a beginner. And I went on holiday for a week during that month. Should I be looking to do better?

 

[Arbu]

arbu, well done so far. imho allways have your exit point before you enter a trade and stick to it, write it down. in this market go short more than long, for the next few years. identify some weak stocks, use stops. don't get too involved in fx or the indices, they'll blow you out if you're not careful. good luck!

Thanks. My last ten stock trades have all been shorts, and they've all been profitable. The stock has risen between my trades, but I haven't had the confidence in a while to go long. And yes, FX scares me a bit, it seems to suddenly break out from nowhere, so If I trade in that I'm going to have to be very cautious. But I did make £120 on EUR/GBP today on a very small stake bet, so I'm feeling a bit cheerier about it!

One thing that might be good is that I'm not too afraid of losing say a couple of thousand pounds. If I did, then I'd conclude that this wasn't for me and I'd be a lot happier going back to my rather boring job full time, in the knowledge that it suited me well (only really doing it part time at the moment). So I use that thought to try to banish the emotional element of making a loss.