I really think the upshot of this thread is that some people are (imho) so risk averse that trading is not for them. Any potential money venture has risks. The goal is to identify that risk and minimse it. If the risk is still unacceptable then trading is not for you!
If you are learning, try paper trading and associated risk management.
Disasters will happen that screw the best laid plans but that does not stop an agressive (or cautious) trader from potentially making a healthy living.
Good luck.
If you are learning, try paper trading and associated risk management.
Disasters will happen that screw the best laid plans but that does not stop an agressive (or cautious) trader from potentially making a healthy living.
Good luck.
Split,
as I read this (sorry if I misunderstand) is that you are going to limit your spread bet to ensure you only risk as much as if you were holding the actual shares - you can't do that, as the gap (ergo the loss) is geared then 'the equivalent holding of actual shares' in the event of (say) a $5 gap is different to the number of shares you'd have to get the same effect as a $7 gap - you don't know how big the gap will be, you therefore can't work out the equivalent share holding in advance. All you know is that once the gap has appeared then you are £X down. (Or up, if lucky <g>).
Sorry if I misunderstood the point you made, that's how I read it?
Euro - trading involves a rational assessment of risk:reward, my point is that whilst trading intraday is fine, you have no control over any position held overnight - for a significant period of the day the stocks are trading without you being able to react to what is happening (both out of hours AND ifor a short period in normal market hours when at least some SB companies don't allow you to trade them).
If you hold shares, and have several on the go simultaneously, then the worst that happens is you lose one part of your portfolio (Railtrack event) or more often a profit warning hammers one part of your portfolio for perhaps 50% - if you had say 6 shares on the go at the time that's maybe 8-9% of your funds down the swannee. This would be somewhat annoying, but recoverable. If your spread does the same then even on quite 'cheap' shares you are down a 3 figure sum, perhaps up to £1500 at minimum stakes.
Now that, for most SBers, would be a significant hit - I'd suggest for many it'd wipe them out. (For all the hype on here, how often do you read 'I opened the account with £100 to try it out...' etc?) At the very least those wondering at the original question regarding holding overnight positions can now decide if their accounts could stand dropping a few hundred overnight becuase they held?
It's NOT a case of 'too risk averse' - I've watched a couple of large US companies gap down in the last fortnight, this is from less than 60 shares the SB company actually accept daily bets on, the bigger drop was $7.30 or £730 if you had minimum bet the wrong way at the time. I had been trading that share until exiting prior to the close, and was hoping to make approx £25 from it. Risk:Reward is essentially meaningless in such a case - you can only claim to be taking risk:reward into account if the market is open and you can exit so you have some control over your entry and exit prices - with a market that can close and move against you in a highly leveraged manner it is pure delusion to assume you can calculate risk.
How can you minimise risk when you are losing £1+ per cent of the underlying, and you can't exit until the SB company start time? You don't control risk at all, nor can you forecast it - all you can do is say 'it probably won't happen'. Gaps occur often enough for some TA traders to focus on them as a pattern to trade, they're far from infrequent - whilst a smallish gap will just cause some pain, a larger gap could well result in a margin call.
Guaranteed stops I asked Cap Spreads about on T2W some time ago - their answer was (basically) these cost the punter more, other companies don't allow you to set them close enough to be worth having anyway. It seems to me that the SB companies are simply saying they don't want you to be able to limit losses whilst letting winners run, and sensibly I can't blame them for that. Actually I just can't imagine an incentive for them to come up with a sensible loss limitation option - I suppose you might argue that they'd clean up and steal market share etc but I suspect the impact on the bottom line would be negative.
as I read this (sorry if I misunderstand) is that you are going to limit your spread bet to ensure you only risk as much as if you were holding the actual shares - you can't do that, as the gap (ergo the loss) is geared then 'the equivalent holding of actual shares' in the event of (say) a $5 gap is different to the number of shares you'd have to get the same effect as a $7 gap - you don't know how big the gap will be, you therefore can't work out the equivalent share holding in advance. All you know is that once the gap has appeared then you are £X down. (Or up, if lucky <g>).
Sorry if I misunderstood the point you made, that's how I read it?
Euro - trading involves a rational assessment of risk:reward, my point is that whilst trading intraday is fine, you have no control over any position held overnight - for a significant period of the day the stocks are trading without you being able to react to what is happening (both out of hours AND ifor a short period in normal market hours when at least some SB companies don't allow you to trade them).
If you hold shares, and have several on the go simultaneously, then the worst that happens is you lose one part of your portfolio (Railtrack event) or more often a profit warning hammers one part of your portfolio for perhaps 50% - if you had say 6 shares on the go at the time that's maybe 8-9% of your funds down the swannee. This would be somewhat annoying, but recoverable. If your spread does the same then even on quite 'cheap' shares you are down a 3 figure sum, perhaps up to £1500 at minimum stakes.
Now that, for most SBers, would be a significant hit - I'd suggest for many it'd wipe them out. (For all the hype on here, how often do you read 'I opened the account with £100 to try it out...' etc?) At the very least those wondering at the original question regarding holding overnight positions can now decide if their accounts could stand dropping a few hundred overnight becuase they held?
It's NOT a case of 'too risk averse' - I've watched a couple of large US companies gap down in the last fortnight, this is from less than 60 shares the SB company actually accept daily bets on, the bigger drop was $7.30 or £730 if you had minimum bet the wrong way at the time. I had been trading that share until exiting prior to the close, and was hoping to make approx £25 from it. Risk:Reward is essentially meaningless in such a case - you can only claim to be taking risk:reward into account if the market is open and you can exit so you have some control over your entry and exit prices - with a market that can close and move against you in a highly leveraged manner it is pure delusion to assume you can calculate risk.
How can you minimise risk when you are losing £1+ per cent of the underlying, and you can't exit until the SB company start time? You don't control risk at all, nor can you forecast it - all you can do is say 'it probably won't happen'. Gaps occur often enough for some TA traders to focus on them as a pattern to trade, they're far from infrequent - whilst a smallish gap will just cause some pain, a larger gap could well result in a margin call.
Guaranteed stops I asked Cap Spreads about on T2W some time ago - their answer was (basically) these cost the punter more, other companies don't allow you to set them close enough to be worth having anyway. It seems to me that the SB companies are simply saying they don't want you to be able to limit losses whilst letting winners run, and sensibly I can't blame them for that. Actually I just can't imagine an incentive for them to come up with a sensible loss limitation option - I suppose you might argue that they'd clean up and steal market share etc but I suspect the impact on the bottom line would be negative.
Splitlink said:Hey! Let's be cheerful! Just work out the maximum loss possible and it probably won't happen. Just don't go putting 20 quid on RIO at 18 quid per share and the like, without doing your sums.
Split
I haven't even got 50p on it hehe... I'm still in my "discount" learning period!
Oops,
just checked - make that 3 from the short list of 60 shares... anyone holding a long trade on ELN at the close on Friday had a spread on a share priced at a little over $27. Today they could watch it drop premarket open to $10 or so by 1400 (UK time), $8.35 by the time my SB company would have opened and let anyone holding it close the position.
Now some lucky devil might well have pocketed around £1900 from that fall, but who would have wanted to lose £1900? (This is to a £1/c bet, which is the minimum bet with most SB companies).
Holding the bet for about 6 weeks in October was worth around $9, there have been moves of up to $4 over approx 2-3 week periods as well - now if you traded this stock a lot, and held daily rolling as a matter of course, you might have got enough moves right often enough to remove a lot of the pain, but I'm still awfully glad I decided not to do this myself.
I trade intraday, I look for moves that should complete in the time remaining - if they don't then I exit, barring accidents... a rule I made some time back and recently decided to be more rigorous about enforcing. If the trade hasn't performed as planned by the last 5 minutes of the day then I got it wrong.
just checked - make that 3 from the short list of 60 shares... anyone holding a long trade on ELN at the close on Friday had a spread on a share priced at a little over $27. Today they could watch it drop premarket open to $10 or so by 1400 (UK time), $8.35 by the time my SB company would have opened and let anyone holding it close the position.
Now some lucky devil might well have pocketed around £1900 from that fall, but who would have wanted to lose £1900? (This is to a £1/c bet, which is the minimum bet with most SB companies).
Holding the bet for about 6 weeks in October was worth around $9, there have been moves of up to $4 over approx 2-3 week periods as well - now if you traded this stock a lot, and held daily rolling as a matter of course, you might have got enough moves right often enough to remove a lot of the pain, but I'm still awfully glad I decided not to do this myself.
I trade intraday, I look for moves that should complete in the time remaining - if they don't then I exit, barring accidents... a rule I made some time back and recently decided to be more rigorous about enforcing. If the trade hasn't performed as planned by the last 5 minutes of the day then I got it wrong.
Add BIIB - down from $67.50 to $38.50 or so (can you imagine having held ELN and BIIB? Eek! knocking 5 grand down in one go - they've bad news about a drug they're working together on) ... you know, I'm beginning to think there's a good system in this - put short bets on everything my SB company will accept rolling daily bets on. You gotta figure mostly they'll cancel each other out, and you just take the profits on the big fallers!
Crikey - I know I was suggesting 'the next one is getting closer' but I'm a bit surprised to find that such a relatively small list of shares can throw up 4 big fallers like this in a couple of weeks.
Crikey - I know I was suggesting 'the next one is getting closer' but I'm a bit surprised to find that such a relatively small list of shares can throw up 4 big fallers like this in a couple of weeks.
Dave,
If I take what you're saying to its logical conclusion, then as an EOD trader, all I can do is place an order to buy or sell at price x and the reverse for my exit and set it so the trade is terminated at the end of trading (if indeed the order is filled in the first place!)
I agree with what you say, particularly if you're in a long position, that sudden falls occur with warnings etc.
Now given that prices fall quicker than they rise, then (ok - with the exception of extreme examples such as an oil exploration company striking a massive reserve of oil and the price rockets in the market) the logically, the probability of you being caught out in a short position is less than than if you are in a long position. (BTW I agree the risk is still there!)
Go on, pick holes in that statement lol
If I take what you're saying to its logical conclusion, then as an EOD trader, all I can do is place an order to buy or sell at price x and the reverse for my exit and set it so the trade is terminated at the end of trading (if indeed the order is filled in the first place!)
I agree with what you say, particularly if you're in a long position, that sudden falls occur with warnings etc.
Now given that prices fall quicker than they rise, then (ok - with the exception of extreme examples such as an oil exploration company striking a massive reserve of oil and the price rockets in the market) the logically, the probability of you being caught out in a short position is less than than if you are in a long position. (BTW I agree the risk is still there!)
Go on, pick holes in that statement
lol
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the blades
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Dave,
Sorry if I mist the gist of your point here. As I always view my holdings - if I have a £10 per point holding on a share value at £1 each, I have £1,000 of exposure - exactly the same as holding 1,000 shares. If you hold overnight, you are exposed to the risk of a large gap, but only inthe same way as if you held the share - your draw-down would be the same.
Sorry if I'm missing the point here, I do make a habit of it
I hold shares through SB - usually around 20 shares for periods of one to six months. I have never experienced the levels of gaps in the examples. Obviously, I'm not disputing that they're real examples, just that the frequency of occurrence isn't quite as worrying, all IMHO.
Cheers,
UTB
Sorry if I mist the gist of your point here. As I always view my holdings - if I have a £10 per point holding on a share value at £1 each, I have £1,000 of exposure - exactly the same as holding 1,000 shares. If you hold overnight, you are exposed to the risk of a large gap, but only inthe same way as if you held the share - your draw-down would be the same.
Sorry if I'm missing the point here, I do make a habit of it
I hold shares through SB - usually around 20 shares for periods of one to six months. I have never experienced the levels of gaps in the examples. Obviously, I'm not disputing that they're real examples, just that the frequency of occurrence isn't quite as worrying, all IMHO.
Cheers,
UTB
Hi Blades,
no that's okay - a total loss on a £1 share at the rate/stake you quote I'm not quibbling about, but that's because the share price is so low. You could, reasonably, argue that the risk in holding UK shares would then be small enough to consider overnight holds. Non-UK markets, such as the US, (which a good few trade as they allow people with day jobs to watch the market when they get home), have much bigger prices and each cent moved is a quid... for example that last one I quoted was almost $70.00 before it fell, at £1/1p a UK share valued at a quid or two isn't going to cause a heart attack, but the US market will when the 'total loss' scenario runs to 7 grand at a quid a point minimum bet.
Fair enough, if you stick to UK then the hold overnight is a risk you can calculate out as 'equivalent to x shares' - I tend to wear my US trading head, and the gearing coupled with the share price makes that impossible to do the same for unless you are going to happily have several thousand quid (much of the US market is priced above $20.00 - ie a 2 grand loss if it completely crashed) per £1 of bet staked. I will accept that provided you can stick to very low priced shares then you can survive a gap and just suck your teeth in annoyance - I should therefore amend my stance to 'don't hold the US overnight'.
So - consider it amended, how about 'work out your maximum loss and your 50% loss, only hold if you can survive them without being crippled'?
I don't think you need to figure in 'total' loss type figures, we've discussed this on T2W before, but I think you've got to be able to survive a 50% drop without it crippling you or taking you completely out - the two shares I mentioned earlier are in Capital Spreads list of daily rolling US shares, which isn't so long a list that holding one of them would be a once in a lifetime event - the mimimum loss from them is as stated, around £1900 from ELN, which was at the cheaper end of the price range, and around 3 grand from the rather more expensive Biogen. I appreciate it'd be really silly to say 'look, I've been warning about this and it happened twice in one day' as the rolling spread shares will probably now go for months without so much as a $1 gap between them, but it does tend to reinforce my point about what CAN happen a bit.
no that's okay - a total loss on a £1 share at the rate/stake you quote I'm not quibbling about, but that's because the share price is so low. You could, reasonably, argue that the risk in holding UK shares would then be small enough to consider overnight holds. Non-UK markets, such as the US, (which a good few trade as they allow people with day jobs to watch the market when they get home), have much bigger prices and each cent moved is a quid... for example that last one I quoted was almost $70.00 before it fell, at £1/1p a UK share valued at a quid or two isn't going to cause a heart attack, but the US market will when the 'total loss' scenario runs to 7 grand at a quid a point minimum bet.
Fair enough, if you stick to UK then the hold overnight is a risk you can calculate out as 'equivalent to x shares' - I tend to wear my US trading head, and the gearing coupled with the share price makes that impossible to do the same for unless you are going to happily have several thousand quid (much of the US market is priced above $20.00 - ie a 2 grand loss if it completely crashed) per £1 of bet staked. I will accept that provided you can stick to very low priced shares then you can survive a gap and just suck your teeth in annoyance - I should therefore amend my stance to 'don't hold the US overnight'.
So - consider it amended, how about 'work out your maximum loss and your 50% loss, only hold if you can survive them without being crippled'?
I don't think you need to figure in 'total' loss type figures, we've discussed this on T2W before, but I think you've got to be able to survive a 50% drop without it crippling you or taking you completely out - the two shares I mentioned earlier are in Capital Spreads list of daily rolling US shares, which isn't so long a list that holding one of them would be a once in a lifetime event - the mimimum loss from them is as stated, around £1900 from ELN, which was at the cheaper end of the price range, and around 3 grand from the rather more expensive Biogen. I appreciate it'd be really silly to say 'look, I've been warning about this and it happened twice in one day' as the rolling spread shares will probably now go for months without so much as a $1 gap between them, but it does tend to reinforce my point about what CAN happen a bit.
the blades
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yes - agreed on all the above.
I current;y trade FTSE350 shares and the price of the shares in never an issue - I'd typically have £4,000 exposure to each share at the moment, without problem.
I do also hold US stocks, often with a £2 - £3,000 exposure and I haven't struggled, even with IG's higher £ per pt bet size - but the examples you've stated are good ones, and real. And the volatility on the US stocks I hold is noticeably higher than FTSE 350, so you'd worry more about the topics raised in this thread.
Kind regards,
UTB
I current;y trade FTSE350 shares and the price of the shares in never an issue - I'd typically have £4,000 exposure to each share at the moment, without problem.
I do also hold US stocks, often with a £2 - £3,000 exposure and I haven't struggled, even with IG's higher £ per pt bet size - but the examples you've stated are good ones, and real. And the volatility on the US stocks I hold is noticeably higher than FTSE 350, so you'd worry more about the topics raised in this thread.
Kind regards,
UTB
J1J,
sorry - got sidetracked (and I should have been in bed a while back too...) bearing in mind that I have accepted the argument for the holding of UK bets as less dangerous...
I'm not sure I got this properly, are you saying that as an EoD trader you'd set up a buy order, set limit and stop, and exit when either of them was hit OR the end of day was hit? (That's how I read it). Then 'sort of' because I wouldn't really be EoD trading really, if I pick 'go long tomorrow' because my EoD analysis says that's the way to bet that share, then I've got a single bar to make a profit in - if I'm going to try to make a profit in a single day (which is what I try to do in reality) then I use RT charts and I'm looking typically at a 10 minute period per bar/candle. That's another point in favour of US stocks, they move far enough to make it worthwhile to trade swings intraday via spreadbets. I DO have a daily chart onscreen as well when looking at a stock intraday, and I might be running a P&F chart or two on the stock using the same 10 minute bar data to feed at least one of them. I'd generally be looking to trade in the same direction as the daily chart suggests for the stock - if the stock looks bullish on the daily chart then I figure it's more likely that the 'up' moves are going to do better than the down ones <g>
sorry - got sidetracked (and I should have been in bed a while back too...) bearing in mind that I have accepted the argument for the holding of UK bets as less dangerous...
I'm not sure I got this properly, are you saying that as an EoD trader you'd set up a buy order, set limit and stop, and exit when either of them was hit OR the end of day was hit? (That's how I read it). Then 'sort of' because I wouldn't really be EoD trading really, if I pick 'go long tomorrow' because my EoD analysis says that's the way to bet that share, then I've got a single bar to make a profit in - if I'm going to try to make a profit in a single day (which is what I try to do in reality) then I use RT charts and I'm looking typically at a 10 minute period per bar/candle. That's another point in favour of US stocks, they move far enough to make it worthwhile to trade swings intraday via spreadbets. I DO have a daily chart onscreen as well when looking at a stock intraday, and I might be running a P&F chart or two on the stock using the same 10 minute bar data to feed at least one of them. I'd generally be looking to trade in the same direction as the daily chart suggests for the stock - if the stock looks bullish on the daily chart then I figure it's more likely that the 'up' moves are going to do better than the down ones <g>
Hi UTB,
yeah - I always figure that anyone asking this sort of question is newish to the field though, and I'm darn certain there are more small accounts on the go than big ones, so I tend to try to help people avoid nasty shocks, and apart from a wee bit of small print on the bit nobody ever reads anyway there's precious little to tell the unwary what might just happen. NOT an issue for those with decent sized accounts and experience, but they don't tend to be the sort of people posing this type of question.
yeah - I always figure that anyone asking this sort of question is newish to the field though, and I'm darn certain there are more small accounts on the go than big ones, so I tend to try to help people avoid nasty shocks, and apart from a wee bit of small print on the bit nobody ever reads anyway there's precious little to tell the unwary what might just happen. NOT an issue for those with decent sized accounts and experience, but they don't tend to be the sort of people posing this type of question.
I do not agree!
It is much harder (ask anyone who has been trading for a while) to accurately predict shorts than longs even on tech analysis.
Another point, I thought the initiator of this thread was trying to learn, seems to me that most of the posts have been directed toward dissuading the poor chap.
The only way to learn the art of successful trading is to trade live using minimal stakes and effective risk management. If he trades UK stocks the risk of wipe-out is almost negligible.
If this board is designed (among other things) to help and guide people to trade then I think we have all failed on this post.
EuroD
It is much harder (ask anyone who has been trading for a while) to accurately predict shorts than longs even on tech analysis.
Another point, I thought the initiator of this thread was trying to learn, seems to me that most of the posts have been directed toward dissuading the poor chap.
The only way to learn the art of successful trading is to trade live using minimal stakes and effective risk management. If he trades UK stocks the risk of wipe-out is almost negligible.
If this board is designed (among other things) to help and guide people to trade then I think we have all failed on this post.
EuroD
DaveJB said:
You can't do it exactly, but there must be some aproximation. Fortunately, I haven't had anything serious happen to me,yet. If it does, (not being so pessimistic as to say "when") maybe I'll geta different attitude.
I'd like to answer more fully but Monday-Friday for me is pretty busy and I don't get much time for
posting. I see that this thread is already on the 4th page and I've only been away a few hours!
Regards
Split
Euro_d said:
I think he got answered quite well. The trouble is that, as in so many threads, the slightest thing that a poster may mention will bring a series of queries from others and this can change the subject completely. At least, it's a comfort to know that someone, somewhere, is reading what is being written. As you can see, this is also a change of topic! Your fault!
Split