A beginner's story - One year on

Ftse

I am new to the forum here.I have been trading for the past two months.I only try to trade FTSe.I am not a day trader though becasue i work as well.I have noticed that i have made good money when i am not in front of computer all day.I could havebeen lucky as well.i still haven't got my own system.if you could share some ideas with me i would appreciate them
 
KT, A brilliant post, thank you for taking the time to share....

I too have been confused by the vast array of different systems and now simply watch price action, volume, DMA's and use indicators for confirmation.....

Now i am able to predict market action at a pretty acurate rate which I'm very happy with... However ,as you mentioned, I keep reading very negative views on trading with SB's and have stepped back from trading while I research this, it would be great if you could comment on any difficulties you have faced from the SB's? Or comment on the usual gripes... Bias, orders not being filled, etc...

Any info much appreciated : )

Thanks again, Warm regards
Drumm

Here are my few simple thoughts on the SB matter:

1) I never keep too much money in the account....the likes of CS of Finspreads are not the same as Barclays or even <cough> Northern Rock. Once I make a certain amount I take it out, simple as that. If I want to open a larger position and need more for the margin I put it back in. Sure there are safeguards but best to watch your own back. An SB is by it's very nature leveraged, this means with £10k to invest you can have £500-£1k in the SB for margin and the other £9k off earning you 6% at today's crazy savings rates. What do you think the SBs do with all that money sloshing around? Believe me it's not sitting their idle.

2) If you want to be in and out of a trade in a few minutes trying to scalp, say, 5 pips then steer away from SBs. Sometimes the prices do get slightly skewed, or their systems do not keep up. If your trade depends on you getting execution to the second and to the pip then I personally would advise against it. Have a look at the gripes on this board and, for the most part, it will be people moaning about losing a pip or two or seeing prices skewed. My shortest trades these days last for a few hours and range a bear minimum of 10 pips. If I see an SB with a skewed price, say IG to CS, then I will arbitrage and have done successfully on a few occasions. In my mind it is taking back the pips I've lost being on the other side of a price skew before :cool:

3) If you want to trade the news then it is possible but you need to look to the larger outfits like IG who, whilst not perfect, are pretty good at keeping up with a fast moving market. Others like CS (not trying to bash CS as I'm sure there are others) will just reject trades until the market slows down or execute if it's in their favor to do so. Just the other morning I tried to trade at the open (never a good idea) and the trade with CS took 90 seconds to execute and popped up over 10 pips away from the market price. I gave up arguing about it long ago, if I trade at busy times I have to accept that risk.


In summary if you are going for a few pips and short timeframes then forget it, unless you find a house who specialises in that sort of business. When I hold a trade for a few hours it is extremely rare that I have a problem exiting, but then on those longer positions the odd pip is less important.

Happy trading Drumm and couldn't agree more with the first part of your response, seems you've gone through the first few painful steps already!

Knight_Trader
 
I am new to the forum here.I have been trading for the past two months.I only try to trade FTSe.I am not a day trader though becasue i work as well.I have noticed that i have made good money when i am not in front of computer all day.I could havebeen lucky as well.i still haven't got my own system.if you could share some ideas with me i would appreciate them

Taking a spread bet is legally classed as gambling and the legal standpoint is where the similarity should end. However there is a huge stigma attached to saying you are a trader using an SB rather than a broker, the reason being that a lot of people have "gambled" their money away.

The reason I make this comparison is that your story thus far is like many people who have come to spreadbetting. They look at something like the FTSE and take an educated (or sometimes uneducated) guess on where it's gonna go, stick a few pound a point on and a couple of days later £200 arrives in their SB account. Then comes the gambler's mentality, just like watching someone putting a few quid down at a blackjack table and winning hand after hand. The inevitable ensues and soon they are betting £10 a point, £20 a point, etc. After some big hits people tone down their trades and go back to basics to work out how to really trade or they go broke!

Please don't take the previous comment as any sort of insult on your abilities, you may be extremely good at trading and find you could ratchet up the size of your positions and make a fortune. However my first piece of advice would be to keep the size of your trades the same and start a journal. Make at least 20 trades and for each one write down why you entered, why you exited and any other comments you wanted to make. After this batch of trades you can produce some useful averages, what's your win/loss ratio, what's your average win, what's your average loss, etc. If these figures look good then put the size of your positions up and repeat the process again. Still getting good results? Then do it again! Before long you'll find that either your averages start to get affected or you are just trading beyond your comfort zone. In that case you plateau for a while so that your capital can just increase and you'll fee comfortable taking larger positions.

For actual systems etc. I really cannot give any great advice, this is not because I have some secret to keep to myself but rather I trade now from experience and knowledge of the market. I watch the news, keep abreast of anything affecting my instrument, read the FT everyday, listen to live news broadcasts during the day, etc. When I first started it seemed unsurmountable but now, even though I primarily trade the FTSE, I can tell you what all the other major indices around the world are doing, what the oil/gold prices are, when the big economic releases are coming out, etc. You do really just start to get a feel for the market after a while and unfortunately that is nothing that any system nor amount of reading can teach you.

Knight_Trader
 
great post, i am a novivce trader looking to learn more, and would to exchange messages with you with regrds to tading, feel free to PM me.

Iceman

Hi everyone, I am fast approaching my first year of trading full time and have learnt an awful lot. I have been very quiet on these forums but now felt like I wanted to share my experiences with people in the hopes that it may help some others. I have by no means "made it" but like to think I'm at a point where I've gone through many of the hard lessons.

To begin with my apologies as I expect this will be a long post...

Firstly some background. When I started trading full time, I had been working in the city for approx. 3 years. I was not a trader myself but worked closely with them and various market participants. I had learnt enough (I felt) to go it alone and see where I could get to. I was at a point where I had cash saved up and it was probably going to be the best opportunity I would ever get.

Step 1

Firstly I did what it seems everyone else does, I started looking for a system. I had a number I'd been testing for about 6 months before I went full time as well as a number of others I began working on once I started. The first lesson I learnt was that just because it works on paper and over backtests there is no cast-iron guarantee it will work going forwards. I soon started to lose heart in the systems I had chosen to begin with and started inventing others, looking at more indicators, trying to use free ones from the forum. It seemed there was no holy grail.......an obvious comment to the experienced reading this but the novices will firmly believe it exists and will spend weeks/months searching for it.

Step 2

I got disheartened and to all intents and purposes went on tilt as the poker community call it. I just started trading by the seat of my pants annoyed by technical indicators and complicated systems. And you know what....

...I made as much money in two days as I used to make in a month at my previous job in town. I'd cracked it, who needs a system when you just have a god given ability to trade off your own intuition. So guess what happened next...

I lost all that I'd just made and then some :) Not stupid amounts but enough to make me sit back and think again.

Step 3

I reviewed what I'd been doing and saw that my trades were intuitively being based on very simple principles....support and resistance. Admittedly I was also watching a couple of moving averages to give me a broader view of what was going on but mainly I would go with these lines. All this time I'd been looking for systems that tell me to trade when the MACD does this, the RSI does that, blah blah blah, all the time looking for a perfect entry. However I found I could identify a simple resistance line on a chart, watch an index come back to it two whole trading days later and bounce off it to a 1 pip accuracy. When you start to see this happening time and time again you realise that perhaps the complicated systems aren't needed after all.

I noticed when I first started out reading the forums (and hence why I stopped) that each day I'd find a new system, or a new way to trade and it would end up confusing me more. Then one day I came across a post from a very experienced member (apologies for not having a link) that just said simplicity is the key. It was stuck at the bottom of a post containing a method using about 8 different indicators :eek:

Step 4

Despite being able to pick perfect entry points and winning trades I was still losing money overall. What now could be the problem.......and then I realised...it was me!

Some of my friends are shocked when I tell them I could sit them in front of a chart and tell them when to enter and when to exit but that they would more than likely lose money, even if the trade were destined to be a winner.

Human beings are, by their very nature, greedy, impulsive, impatient etc. When you have a loser you start to think "but why let it stop out, I'm sure it will come good" and when you're on a winner how hard is it to close a trade that's just made you 20 pips in 5 minutes?

I have no pearls of wisdom for this one as it has taken me most of the last year to work this one out, steps 1-3 I probably did in the first few months. One thing I can recommend is a book called "Trading in the Zone" by Mark Douglas. I know NKruger and others have recommended it and I have to say it has revolutionised my trading.

Probably one of the simplest concepts is a method of entry and exit done in 3 parts. You take a trade of quantity 3 (say £3 per pip with an SB), you close £1 out very quickly as the trade moves in your direction. For example if you enter on support you would close just as the trade starts to bounce, maybe just for 2-3 pips. You then close part 2 on your pre-defined exit point, you do not run the trade. Part 3 you then lock the stop at entry and leave it running as a free trade.

The one thing that you will very quickly learn is that part 3 very rarely does better than part 2, i.e. 9 times out of 10 your initial exit was spot on and if you'd let the trade run it may have made a few more pips but then more than likely reversed to your entry. Part 1 is always a nice pick me up for when the trade does go bad in that not only does it mean you got a few pips in (rather than stopping out 10 pips negative say) but also it gives you a little confidence boost that your entry was right...just this time it wasn't meant to be.

Step 5

So here I am now trading the FTSE100 exclusively and using spread betting to do it. When I first started I read so many posts saying the FTSE100 wasn't volatile enough, or that it's impossible to make profit with SB firms yet here I am still cracking away.

I have traded many different instruments in the past but came back to the FTSE100 for my education as being based in the UK it was one I could understand quite easily. It is not the best, the range can be very small and when the US opens all bets are usually off :) Still it works for me for now until I am happy and proficient enough to add on other instruments or move to something else entirely.

As for the spread betting debate, I have had a hell of a time. I've used Capital Spreads and IG Index and out of the two IG is by far the better one but does have a 2 pip spread on the FTSE rather than a 1 pip as with CS. Still I'm not going to get into that here, just to say I trade through an SB and can do so profitably. Eventually, when capital allows, I look forward to trading the futures directly :)



I trust this little insight into my history gives others some help with their own endeavours. If you have any questions feel free to post a reply or contact me directly. Additionally if there is anyone else out there trading the FTSE100 on a support/resistance bases and an intraday timeframe it would be great to hear from you. Trading can be a lonely business and a pen pal to swap ideas with would be most welcome! :cool:
 
Thanks

I keep my trade amount same and very rarely increase my trade size unless i am very sure about something.i am trying to get more knowledge on technical analysis and obviously stay updated on news , events around the world.In my experience and it works for me , if i stay at home then i tend to overtrade.I try not to trade everyday .i also look at the resistance support levels.any comments will be helpful.
 
Waoo good post my friend, I am 23 staring with this, i tried to apply for a trading job but here in Spain can be complicated, so i keep on doing it myself and trying to get some capital from another type of work, currently i am trading an small capital in the US market, mostly equities. I did the CFTe but i think i failed after 6 months of study, for me the exam was very strict and asked things i would have thought about. I am trying to learn as much as possible since i want to work for me and not another person, but i know it will be a long road. From your experience can you answer me two questions

1)is it really necessary to work in a firm to grasp the whole trading experience
2) how much capital would you consider necessary to invest
 
Waoo good post my friend, I am 23 staring with this, i tried to apply for a trading job but here in Spain can be complicated, so i keep on doing it myself and trying to get some capital from another type of work, currently i am trading an small capital in the US market, mostly equities. I did the CFTe but i think i failed after 6 months of study, for me the exam was very strict and asked things i would have thought about. I am trying to learn as much as possible since i want to work for me and not another person, but i know it will be a long road. From your experience can you answer me two questions

1)is it really necessary to work in a firm to grasp the whole trading experience
2) how much capital would you consider necessary to invest

In answer to your questions:

1) I worked within the banking environment but not actually trading myself. I certainly benefited from my experience but learnt much more when I went it alone. In short I think it would be hugely beneficial but not essential.

2) This one is a little more difficult and depends greatly on what you are trading, how much you need to live, etc. When I first started I made it so that for the first year I had practically zero outgoings, this meant there was no pressure on me earning a set amount each month which helped greatly.

When it comes to the point of how much you need to trade an instrument this depends on what you are trading (indices, currencies, etc.) and how you are trading it (direct broker, Spreadbet, etc). As you will probably know you need very little to get started with Spreadbetting but remember if you only have $1k and are taking a position which, if stopped out, will cost $250 then you are trading a quarter of your whole account. This is another reason Spreadbetting get a bad reputation as someone can easily come along with $1k and lose it on 4 trades (or 1). If you wanted to take the same level of exposure with a broker they would ask for $10k or greater in the account.

The best way to answer this question is to say that you will only risk a max of 5% of your account per trade (this is actually quite large with 1%-2% being more normal). With this in mind you should not be opening trades where your stop loss puts you over this 5% limit. Assuming your stop is as tight as you can make it within your strategy you should be adjusting your exposure to keep within this 5% margin. If you are still above 5% on even the smallest level of exposure it is possible to take with your broker/spreadbet firm then you more than likely don't have enough to trade the way you wish to.

I hope this helps :)

Knight_Trader
 
I used forex ( still do) and commodities ( never again) with IG Index. Last year I had a succession of successful trades in oil - daily crude US. Nothing fancy - wait for price to reach s/r and fibonacci`s. Indicators were an extra - they always are. Anyway, after a while I realised that my backtesting was correct - oil is very good for my simple type of trading. But it seems so had IG.

1 week later I started finding it difficult to open the oil charts. When I did, I culd not get the 3 month 4hrlies. It was down to 10min charts for the last 2 weeks. I rang them - apparently I had to get the latest java version. I did, its free. Next week, same thing happened.

My trades lasted anywhere between 1-6 hours. basically waiting for a trend day and just ride it. SB firms hedge all their clients positions in the underlying markets. They are effectively taking a position against you. They keep track of all their clients positions and know who`s doing well and who`s not. Its possible to get this list from SB firms - but not by Jo Public !

The only difference is trades lasting days and weeks. I sometimes do this for small cap shares. IG dont seem to mind me making money on a longer term basis. These trades last for 3-6 weeks.

I now have a futures account with IB. Yes I have to pay some tax. And yes, I still use IG. But with nominal amounts and on longer term trades.

CT
 
who's IB? are they a spreadbetting firm?

Iceman

I used forex ( still do) and commodities ( never again) with IG Index. Last year I had a succession of successful trades in oil - daily crude US. Nothing fancy - wait for price to reach s/r and fibonacci`s. Indicators were an extra - they always are. Anyway, after a while I realised that my backtesting was correct - oil is very good for my simple type of trading. But it seems so had IG.

1 week later I started finding it difficult to open the oil charts. When I did, I culd not get the 3 month 4hrlies. It was down to 10min charts for the last 2 weeks. I rang them - apparently I had to get the latest java version. I did, its free. Next week, same thing happened.

My trades lasted anywhere between 1-6 hours. basically waiting for a trend day and just ride it. SB firms hedge all their clients positions in the underlying markets. They are effectively taking a position against you. They keep track of all their clients positions and know who`s doing well and who`s not. Its possible to get this list from SB firms - but not by Jo Public !

The only difference is trades lasting days and weeks. I sometimes do this for small cap shares. IG dont seem to mind me making money on a longer term basis. These trades last for 3-6 weeks.

I now have a futures account with IB. Yes I have to pay some tax. And yes, I still use IG. But with nominal amounts and on longer term trades.

CT
 
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