The Financial Spread Betting Handbook by Malcom Pryor

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mpat89

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Has anyone read this book and developed a trading system/strategy from it?
I've developed a system and been using it with strict money management rules and have gained just over 26% of my account size in little over a month. I appreciate this may be a 'good' month as the markets are good (I've been trading UK 100 stocks, I am now increasing this to UK 350 stocks) yet it's hard not to get excited over the prospect of trading a system that's profitable but should I see steady positive returns after 12 months that average to anything over 10% per month I will be delighted! I can't help but get excited, if I can keep up my profitability that's over 1500% in a year? The fact that I hate offices and bosses won't matter anymore!

Which brings me onto this: how can I decide if I should include my profits in my trading capital? Does anyone have advice here? I find myself unable to make a decision on this front.

This is the only book I've read on shares/trading and I found it excellent. I would like to know if anyone else has used this book and had success with it! Share your story!
 
Well done. After just 10 years in a career based on this system, starting with only $1,000, you would have accumultated $1,107,810,339,213,203.60.

This far exceeds the current GDP of the planet and I look forward to an update in, say, 2 or3 years time.
 
I can't wait to own you :p No I appreciate I cannot expect ridiculous returns but I was just showing my excitement at the prospect of something that works.
What I would like to know is whether anyone used this book with success?
 
OK. Those of you that have read this book will already know. I believe this is quite a simple system, all you are doing is trading stocks when they are in strong trend. The stocks have to have been pulling back from a new high for 3-7 days and to enter a trade the price must exceed the high of the previous day. SL set at low of previous day. The target price is the newly made high.
 
mpat89 said:
Has anyone read this book and developed a trading system/strategy from it?
I've developed a system and been using it with strict money management rules and have gained just over 26% of my account size in little over a month. I appreciate this may be a 'good' month as the markets are good (I've been trading UK 100 stocks, I am now increasing this to UK 350 stocks) yet it's hard not to get excited over the prospect of trading a system that's profitable but should I see steady positive returns after 12 months that average to anything over 10% per month I will be delighted! I can't help but get excited, if I can keep up my profitability that's over 1500% in a year? The fact that I hate offices and bosses won't matter anymore!

Which brings me onto this: how can I decide if I should include my profits in my trading capital? Does anyone have advice here? I find myself unable to make a decision on this front.

This is the only book I've read on shares/trading and I found it excellent. I would like to know if anyone else has used this book and had success with it! Share your story!
Click to expand...

mpat

You've been lucky enough to start your trading during a strong upward trend, so don't get too excited. Tom's reply was far from useless - he was injecting a dose of reality into things.

So far as your current profits are concerned , I'd hang on to them and base your money management on your starting capital until you have experienced all the different market phases and satisfied yourself that the strategy you have developed is successful over the long run.

good trading

jon
 
Thank you. I know not to get excited until I have seen performance in different market phases, like you say so far I have only been trading during a strong upward trend.

I said the reply was useless because I didn't expect to realistically attain such profits, I was just excited at the prospect of trading a system that potentially generates any profits at all. I was trying to see if anyone else is trading a similar system to see if my excitement is likely to be short lived or not and to be able to discuss different ideas with people who are doing the same thing.

Your advice regarding what to do with profits is helpful. Thank you again.
 
Thanks mpat89. I would endorse the basis of this method, it is very similar to Marc Rivalland's swing trading system, which I hae been usng for some years (maybe not as effectively and strictly as Barjon). It certainly respects the up-up-down-up again general behaviour of large traded markets, it has a visible and quite limited risk, it respects the rule that trends tend to continue.

Well done for the 26%, thanks for the confidence to put this up here, I hope it continues to go well. I would only add that money management is key to staying in the game: think about what how little you ought to lose, rather than how much you could make.

It might be interesting for you to call in and see Barjon's thread on swing trading the FTSE100.
 
Thank you. One thing I learnt from is after making the first £1,000 the first thing I did was increase my risk per trade to reflect my new account balance. Of course on that day my charting software had technical issues and I chose to pick my stocks manually, not following all the rules my charting software would have followed when picking the stocks. I ended up opening 8 losing trades all on the new trade sizes and wiping out enough of my profit to remember it. Of course I then switched back to trading with my old trade size and have since been scared to increase it back. Saying this it would have been beneficial for me to have kept it as it was after increasing it. Anyway I definitely need to gain more confidence in my system before I start tinkering with this aspect of it.

I think what you have said about staying in the game is important - getting excited about how much I could make leads to sloppy trading in my case anyway.

Anyway thank you for your reply, I will take a look at that thread.
I would be interested to hear from anyone that has used this book!
 
What software are using exactly? Perhaps it's time to change to a new platform...
 
I started off using ProScreener on IGIndex's charts (I believe this is supplied by a company called IT-Finance) but comes free from IGIndex as long as you trade at least twice a month or for a monthly fee of £30.
Over the weekend I signed up to ShareScope Plus which has so far allowed me increase the list of stocks I trade from FTSE 100 stocks to FTSE 350 with ease. I'm also able to calculate my reward to risk ratio before I even look at the stock which is extremely helpful as I was previously manually calculating this for each potential trade.
 
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Yeah, i've been using ProScreener myself and i'm currently pocketing money away for ShareScope Pro...just need to save up a bit more first. Is the 'datamining' feature as helpful and easy to use as it's made out to be? Sorry to de-rail the thread, just thought i'd get input from someone else who has just made the transistion.
 
The data mining is brilliant. I believe ShareScope have a 30 day money back guarantee on the first month so definitely worth a try as the demonstration version is slightly limited. ShareScope Plus is fine for me but Pro is something I'd look at getting only if my account size ever made the extra cost negligible as I only use daily sticks for this system.

I think it took about 2 hours while I watched TV to translate my ProScreener settings over to ShareScope but then my screening is not too complex. I've even added more useful filters such as reward to risk, however, this was probably attainable in ProScreener too. The main reason I switched was ProScreener limits each list to 50 instruments and 30 results - a pretty annoying limitation.
 
I am very interested to discuss exit strategies with anyone that follows this sort of system.

Currently I aim to exit at my target rather than wait for the higher high or a series of them. I feel this will improve my hit rate however I fear that when the markets stop being so good to me (FTSE 100 has gone up 8%+ in the little time I've been trading this strategy) then my winning trade to losing trade ratio will decrease as false signals increase, my profit targets may not cut it. Does anyone trading trends and entering once the pullback looks to end (price exceeds previous day high) fancy sharing their thoughts on this?

From what I can tell from the swing thread I am trading aggressively by entering in the manner described. Other people may wait for the bar to close or even for the price to reach the high (my profit target!) before opening. Is there anyone who enters using one of these two triggers reading? How has it worked for you? What do you think of the way I enter and take my profit?
 
mpat89 said:
I am very interested to discuss exit strategies with anyone that follows this sort of system.

Currently I aim to exit at my target rather than wait for the higher high or a series of them. I feel this will improve my hit rate however I fear that when the markets stop being so good to me (FTSE 100 has gone up 8%+ in the little time I've been trading this strategy) then my winning trade to losing trade ratio will decrease as false signals increase, my profit targets may not cut it. Does anyone trading trends and entering once the pullback looks to end (price exceeds previous day high) fancy sharing their thoughts on this?

From what I can tell from the swing thread I am trading aggressively by entering in the manner described. Other people may wait for the bar to close or even for the price to reach the high (my profit target!) before opening. Is there anyone who enters using one of these two triggers reading? How has it worked for you? What do you think of the way I enter and take my profit?
Click to expand...


Seems pretty reasonable to me, in an upwardly trending market. I remember reading that technique in M. Pryor's book in my earlyish days, and not quite getting it at the time. Only later did it make sense, once I'd caught on to the rhythm of the markets (or one of its rhythms). Of course, you have to get your timing right. "Price action" can sometimes help you judge when it's going to turn back up (I'll leave you to search/google on that. There is plenty of information about it around for free).

Meanwhile you might enjoy this article. Someone posted a link to Don Miller's blog the other day, and this article caught my eye:

Don Miller Trading Journal: Friday Notes - Averaging Up

Edit: Exits. There seem to be many approaches, and it all seems to depend on your style of trading etc.
A common approach is to divide your position into, say, 3 lots and take them off at different points.
Some people move the stop on the first third to break even once it gets into profit and close it at 50% of the initial target. They leave the stops on the other two where they are to allow for a possible pull back. If they are stopped out, the stop size is such that the overall trade is a break even. However, if they don't get stopped out then hopefully they reach 100% of the first target, and the 2nd 3rd is taken off, leaving the last one to run, so that if it turns out to be a good long run, you get some benefit from this, but you've already got some profit, and no remaining risk (as you've moved the last stop to BE by now). Or variations on this.

With Don Millers approach, you'd probably always have 3 positions on the go, and aim to close one at the high just before the pullback, and open a new one near the bottom of the pullback. Of course you won't make the exact top or exact bottom, unless you are lucky or extremely skilled :)
 
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Just an update if anyones interested, I ended up giving back my profits as quickly as I took them after a big bad string of losing trades. Back to the drawing board.
I feel the main problem was my method of entering a trade: entering once the high of the previous day was exceeded. I now see this was a poor way to judge the 'end' of a pullback. I should have implemented more tools, i.e. momentum divergence to push me away from a trade, fibonacci retracements to judge if the level I was entering at was reasonable or low risk.
 
mpat89 - I did the same thing over the last month. Looking at November's FTSE100 chart, its easy to see we had two up weeks, then two down weeks, and all my profits went back in Weeks 3 and 4 as I had not adjusted my entry strategy and positions.

Entering at the high of the previous day is a problem - it can mean a long way back to the SL: it can also mean that if you enter too early in the day, price has time to fall back and breach the low of the previous day, cancelling the entry signal. But I see that 8RSI (Simple) gives reasonably good confirmation of entry direction according to my holding timeframe:eek:bviously so does stochasic (8(2)9) and probably other similarly based indicators. But overall, I actually think its as sensible a way as any to judge the end of a pullback. Exit in the money is always going to be a much more tricky problem.
 
With regards to being a long way back to the stop, this is true, I was making sure my trades had reward ratios of at least 2 and felt my hit rate would be adequate. What I was paying less attention to was the fact I was entering over into mostly long positions which was probably not much better than being long on the ftse. Your point with false entry is true and I think this would have cut out a few of my losers, only problem here is you may miss a few trades if the price shoots up but this isn't supposed to be a problem as the trades will come and go. Patience eh? I've given up on spread betting equities using a strategy as I've come to realise I dislike trading correlated instrument. I'll stick to my stocks & shares ISA for now and perhaps try my hand at forex - I like the fact it's so technical, volatile, spreads are small and there are a big range of uncorrelated instruments.
 
Correlation with the FTSE100 was a double-edghed sword for me this month - it was a help in selecting the equities to go long on, but I overlooked the need to adjust what I was doing when the 100 topped out. Now that I realise this and acan apply a discipline to deal with it, I will keep on the same road. Good luck with the forex, I hope to graduate to it some time.
 
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