The misunderstanding probably comes down to me being new to all this, but cheers for being polite about itchump said:Tun,
I posted too quickly earlier and did not make my point clearly hence no surprise you misunderstood me.
I'm fine with all this
If you have a £1000 to trade and you establish 2% per trade to be your rule for entering a trade then what you are saying is I am willing to lose up to £20 on this trade. Now if you take a trade with most SB's they establish a minimum bet size at £1 a point.
I think I get you, I'll try and use an example to clear it up
From this you can see you could only enter a trade if if it allowed you to establish a 20 point initial stop. From this you then have to look for trades that will meet this requirement. The problem you may have is one of timing. You may have to be very good at pinpointing turning points and or you are going to have to take trades intraday where the range of movement anticipated meets your rule.
This is a bit general,because there's at least one SB I think who can take a bet size at 50p a point which will help you and indeed there may also be UK stocks which may have a range of movement that meets your rule.
Say for example a share is trading at 408.5 so the spreadbetting company offers 406.4/410.4(These figures are approx 0.4% to 0.5% but I've massaged them for the sake of this example). So that means if I think the stock is going to go up and I buy at 410.4 with a stop 20 points below (as of my rules) this puts the stop at 408.4. Then all it takes is a 1 point or 0.1p shift in the wrong direction and I'm out.
However if I picked a share around 103.5 the figures the spreadbet company offer would be 103.0/104.0. If I thought they were going to go up my stop would be at 102. Which gives me a lot more room for things to got the wrong way, even though I'd be taking exactly the same loss.
Is this what you're trying to show me ?
This leaves me with a number of options
- Limit myself to certain shares
- Find a company that offers bets of less than £1 a point
- Start with more capital
If I've got this right it looks like I need to find somewhere that offers bets of less than £1 a point.
Working through those examples (if I have them right) it doesn't look like an attractive proposition at all. I've got a heck of a lot more investigating to do before I get into this, but from the above two examples the odds are horribly stacked. I think it's time for a spreadsheet and a dust off of the old VB skills !
I find this even harder to get than the above bit Does it mean, if you start with more money it doesn't necessarily increase the odds of (or the magnitude) of a failure ?Don't equate more capital with more risk in terms of your ability to survive the learning curve.