T2W Bot

Staff member
1,459 60
This article is aimed at those who fancy a go at spreadbetting, but haven?t a clue what to do. The hope is that by the end you?ll know enough to get started with a tiny bit of confidence. It goes on a bit, but compare it to books on the subject and you?ll realise it?s admirably brief.
Trading requires deep pockets, right?
Nope.
I?m pretty sure that out of the 20 odd thousand T2W members not every one of them has £500,000 – £1,000,000 to invest ? in fact I?d take a long right now on the probability that thousands and thousands would consider £1000 quite a big lump to invest, especially as so many of us are struggling to learn how to survive, let alone win.
So let?s assume you have a few hundred, or a couple of thousand, to invest. You like trading, you want to make some money – what could be simpler than that? The really good bit is this – if you get good at it then simple old
compound interest and time will make you rich, regardless of where you start. If you are pants at it...
Continue reading...
 
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tcksee

Junior member
40 0
To a beginner it may seem a little drawn out but quite interesting would have helped if a broker who is prepared to trade small accounts had been
quoted
 

neil

Legendary member
5,167 746
tcksee said:
To a beginner it may seem a little drawn out but quite interesting would have helped if a broker who is prepared to trade small accounts had been
quoted
Coul you elaborate please?
 

LJE

Junior member
26 0
I thought this was a useful Article for a beginner however I would have put a serious money management section as from personal experience when you are new it is very easy to get carried away and find you have nothing left to bet with even if you have learnt alot from the experience. The dont risk more than 2.5% rule is good and so is the dont have more than 20% of your capital running as risk at any one time.
 

LOCOPERRO

Newbie
8 0
money management

LJE said:
I thought this was a useful Article for a beginner however I would have put a serious money management section as from personal experience when you are new it is very easy to get carried away and find you have nothing left to bet with even if you have learnt alot from the experience. The dont risk more than 2.5% rule is good and so is the dont have more than 20% of your capital running as risk at any one time.
I dont think this was ment as first step more how to have a go with what little you have even if you lose at this level money management might not work
 

DaveJB

Experienced member
1,159 42
Yup,
it's purely intended to highlight some of the things that a newbie might not spot, and might get caught out by.... 'watch out, a gap down can wipe you out' therefore is worth a mention. I would suggest that money management is worth an article on its own, and applies pretty well across the board - not just SB, equally quoting a value like 2.5% for risk is totally meaningless.... only the other day AMZN gapped down something like $7.30, on the average account anyone holding a long overnight would have lost over £700 while the market was shut, with no way to close the bet... some companies offer guaranteed stops, some do not. You can't 'risk 2.5%' unless you can control the exit, and many SB accounts don't allow this, or charge extra for using it. I have no interest in blandly stating 'don't risk X%' when it's not achievable in practise - that just leads to broke newcomers who thought they had the angles covered and have discovered (rudely) that they didn't.

Wqually SB is a highly leveraged method of trading, a 2.5% risk implies you will only lose 1/40 of the pot tops... I'll bet the majority of smalltime SB traders have £500-1000 in their accounts, that translates to £12.50 - £25 before you exit - some will have even less (they don't set the minimum accounts down at £100 or so for fun) and you'll be £5-6 down on entering a bet on a $20 share.... no way is anyone with a £500 account, on finding themselves £6 down at entry, going to pay a blind bit of notice to someone blithely stating that they should exit at minus £10.... Personally I'd suggest something like a £15 exit (ie your trade is down £15, out you go) and swap to 2.5% when the account is safely into the 4 digit area. If you exit at £10 down you are effectively exiting when the trade has moved against you £4 - many shares will do that in a heartbeat, you have to have SOME room for a little volatility to play out, or you'll just go broke on 50 consecutive losers that with a slightly wider stop would have been a lower number of trades with a higher win rate. NOBODY calls bottoms and tops right, and having stops too close to the price is every bit as bad for your profits as running them too loose.

Dave
 

ale

Active member
108 1
Thanks Dave, As a smalltime stockholder considering SB (ie not even a newbie) I found your article extremely informative with plenty of explanation for the do's and dont's.
What are the advantages/disadvantages of trading in US vs UK stocks / currencies?
Can you explain the statement at the bottom of page 1, "there’s no point trading a share that is rangebound in a 10c wide range if the spread is 15c!", perhaps with a chart? I thought I understood it but I'm not sure of the practicality.
In terms of the timebound bets, am I right in thinking that for a quarterly bet you can exit at any time? If so, and you are still two months away from the due date, it seems that you can use a wider stop (obviously with the risk of greater loss) since there are likely to be, with a volatile stock, several chances for regain. More like actually holding the shares. Has anyone looked at this?
I presume that with quarterly bets there is no roll over charge each day?
 

DaveJB

Experienced member
1,159 42
Hiya,
sorry for the delay - US markets only just closed and as a working chap I normally only get to trade a few hours a day... got about 30 mins in today, tops!
Free data tends to come via Yahoo, except for feeds courtesy of brokers which may be RT and free the average datafeed is 15-20 mins delayed - if EoD trading is okay then Yahoo data can be collected, usually easiest to do that by buying one of the numerous downloaders on the web... if EoD is the aim then say so if you can't find any.
RT is more difficult, you can do it on the cheap, and setups like Sierra Chart plus MyTrack can be worth looking at, but I'd be surprised to get a useable datafeed for RT under $30-40... not fully up to speed on cheap RT as I have eSignal myself and don't need to look around for alternatives.

US stocks - for me there's one significant advantage, I get home in the 4.30pm - 5pm region most nights, and the UK market is shut... price moves on UK shares aren't overly volatile (you can't trade swings if the price don't move <g>) but they move even slower after the close! Secondly is volatility - prices need to move for you to trade them, US stocks tend to move around, some more than others. If you are trading a US stock intraday and slap something like a swing indicator over the top of it to check, you might find prices have swung up and down 5 or 6 times when you chart the stock on a 10 or 15 minute barchart. I've attached a fairly docile one from today for Checkpoint, note two lines I've added shwoing a fairly steady downmove of $1.43 and a subsequent climb back of 99c... at £1 a point that's £242 in one day if you'd noticed it and got it spot on <g> Very unlikely at my competence level, but the point is that smaller swings need to be bigger than the cost of entering the bet - this relates to the question on 10c move and 15c spread..

... Imagine you enter a bet on a share, due to the spread you are perhaps showing £8 down on entry - you'll be down some amount, as you don't break even until the share has advanced by the amount the SB company choose to take from the deal... on a $25 share you could expect to be down this sort of amount to begin with - the SB companies apply different spreads so exactly how much will vary. Now imagine the share you picked is in a consolidation, tracking up and down a few cents at a time - look at the chart I posted, for the bit prior to the first downward move... a long line of narrow bars with very little price difference from the lowest low to the highest high for maybe 30 bars. (Okay, it's not as flat as many, it's still hardly bouncing like a kangaroo). Assume you entered on the first bar, plumb centre... it might take you 5 hours to see the price move far enough to turn your initial £8 down into a break even. You might wait 5 hours and then see the loss increasing!

Therefore I'd suggest one extra decision to make is simply this - is the price moving far enough, or likely to move enough, to make it worth risking my cash? You KNOW that if you enter and the price doesn't move then you'll exit £8 or whatever down, your trade has GOT to move your way by almost 10c to break even (maybe more - the spread quoted for the share is the figure to apply of course).... it makes sense to glance quickly at the chart and figure whether that sort of move is likely - I like to have Bollinger bands in view, they tell me the sort of range I'm most likely to see the price move over (likely, note), and that helps me decide if it's worth trading... it's surprising how often you see a share and are confident it'll go in one direction, only to realise that the distance between peaks and dips is less than 10c....

Quarterly bets expire on the published expiry date, you can exit any time you are happy prior to that - wider stops, yes you can. I would stress however that your stops should be placed logically, I place them based on TA for example, but you might have a fixed percentage stop or anything else in the amazing zoology of stops... they should not be loosened, ever. If the 'story' has changed and you think 'it's bound to go back up soon' then slap yourself <g> IF you are right, and you exited at your stop, then in due course you will observe the bounce you 'knew' was coming, and buy back in for fun and profit. If you widen the stop and you are wrong you go broke quickly, if you widen it and are right you still make less profit than if you exited and bought back in UNLESS you widened the stop exacly on bounce day... and if you catch the falling knife that exactly then the stop didn't need widening anyway.

There is no rational excuse for widening a stop under a loser, it is invariably better to exit, sit back, let the slide end, and buy back in at a lower price. The chances of exiting and buying back at a higher price because you 'failed' to widen the stop and it rebounded are so slim they won 'slimmer of the year' 10 years running.

Dave
 
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ale

Active member
108 1
Thanks for all the analysis, Dave. Much appreciated - some good fundamental points in there that make me realise how much I've learnt in a short time and how very much more I have left to learn and practise!
The chart provides some excellent points. It appears that the candles are every 10 minutes - is this typical? (I thought that candles could only cover a whole day since they represent an open and close position)
Being new to analysis (is it that obvious?) I'm intrigued by the fact that there are two large up (green ) candles. The first doesn't lead to much activity but the second precedes the almost uninterrupted 20 interval fall. With hindsight can anyone see why there is this difference?
 

DaveJB

Experienced member
1,159 42
Hi,
10 min charts - that's a period I like to watch, you have an OHLC and V for any bar over any time period... a 1 hour bar starting at 11 am for example compiles over 11-1200, the Open price will be the price at 1100, and the close will be the price at 11:59, the High and low will be the highest and lowest prices the share reached between the two times.

For the large green candles - I won't swear to it, but I doubt that first one is quite what it seems. Odd single trades go through every so often way off the actual bid:ask then being quoted... for example I'm currently watching Nvidia on my other screen, I saw a trade go through at 25.68 or so a while back although the bid:ask was something in the 25:80 area... these odd 'long way off the bid/ask' trades appear to be legitimate trades, but they don't reflect what the share's really doing - the quote on the SB -platform at the time would have sat immobile at 25:80 or so.... I tend to view long tails up or down with suspicion unless there are solid candle bodies nearby, or the next bar opens in the same sort of area.

That first bar MIGHT have traded through that large range in only 10 mins, but I wouldn't bet on it. Most of the screen is missing - gotta watch advertising etc (<cough> esignal) but I wouldn't be overly surprised at the start of that downward move, as there's a gap just prior to it which I'm not surprised to see closed - other than that after a period of low volatility the share flexed up and down before pretty well trucking on sideways. Not a lot of change from open to close therefore, but two nice big moves to trade intraday... hence the attraction.

Dave
 

will147

Newbie
5 0
Hi i am quite new to trading and currently practicing on paper, i would be very greatfull if you could give me some info on which online brokers offer the function to be able to move your stop loss during the trade in order to lock in profits.

Thanks,

Will147
 

the blades

Experienced member
1,336 275
will147 said:
Hi i am quite new to trading and currently practicing on paper, i would be very greatfull if you could give me some info on which online brokers offer the function to be able to move your stop loss during the trade in order to lock in profits.

Thanks,

Will147
Will, I've posted a reply to this on the D4F thread.

Cheers,
UTB
 

denzel

Newbie
1 0
Saying Hello! to members who are willing to share a thought or two with a newcomer to the forum.

My background : I have been trading live tru a well reputed SB company for the past 6 mths, with a fair degree of success. The failures have been mainly my wekaness in not exiting a trade at the right time. In some cases it has been my oversight of the market changes at a quick instance.

Primarily trading in US Indexes as well as some flutter with FTSE100 which seems to follow DJI most times.

Current status is break even. Perhaps one of you members out there would like to send some advice that will make me go positive.

It will be very helpful if anyone of you would like to make comment on how to recognise that a change in the combined activity of actual traders is about to happen and that a market is about to change its direction.
 

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