Diary of a swing spread better

[hungvir]

I can't see that happening, Hung. What makes a share's price move is the availability, or scarcity, of them, not the amount placed on their movements in bets. That is putting the cart before the horse, surely?

Split

That's right, Split.

What I meant is if the current and would be spreadbetters spend their money buying shares, then the price would go up/down even more.

But the trend is people are moving away from actually buying/selling shares and the demand/supply is more depressed.

 

[hungvir]

Optimizing exit

Of all the trades I made in the last six weeks or so, only a minority were exited in ways that maximized profit. Instead of trailing a stop sell/buy order I tend to close positions outright.

The most recent example was AZN. When I put in a stop buy order I also placed a linked order to sell AZN when it has moved 60 points in my favour. In hind sight, I should not have done that but rather wait for the stock to move then find a good place to place a stop sell order to lock in some profit but still leave room for it to grow.

I am just rereading Marc Rivalland's book on swing trading and will look at using Bollinger band and RSI as additional tools in deciding when to take profit. When I attended Chris Manning's trading seminar, he suggested using 14 day exponential RSI to further aid entry decisions while Marc Rivalland uses it primarily for exiting positions.

 

[hungvir]

Who's watching the SB companies

In one of the books I am reading, I came across Stockwatch, one of the organisation in the States that watch share price movements to make sure that all market participants act in good faith and that there're no malicious activities (ie market makers front runned customers, inside dealing....).

I wonder for the case of SB firms, who's watching them. How can we be sure that they act in the best interest of customers. I have a feeling that my buy/sell orders have not always been filled at the best possible price.

May be I'll set up a new thread to log all seemingly abnormal fills by SB companies.

 

[Splitlink]

That's right, Split.

What I meant is if the current and would be spreadbetters spend their money buying shares, then the price would go up/down even more.

But the trend is people are moving away from actually buying/selling shares and the demand/supply is more depressed.

Perhaps the shares are in the hands of institutional or long term investors who do not care about day to day fluctuations. Apart from trading a small amount on spreadbetting, most of my money is in share ownership. I have seen all my shares move against me at one time or another but the portfolio value, in general, has been going up over the last three years. An owned portfolio of shares, IMO, is a safer way than trading.

Finspreads trading is gambling, just like your wife says, simply because fundamentals do not come into it. That is why the government does not tax it. We are doing it but we must face the facts and call it by its proper name. Nevertheless, it can be "educated gambling" and that is what I like to think that I do i.e. using as many statistics and probabilities I can to make a profit and, although the temptation is great, sometimes, resisting the temptation to risk and hurt my capital.

Split

 

[Splitlink]

How can we be sure that they act in the best interest of customers.

They don't.

Split

 

[hungvir]

I was being naive there

But if they're too greedy, then we have to tell them and their regulator. There should be a limit to everything.

 

[hungvir]

Perhaps the shares are in the hands of institutional or long term investors who do not care about day to day fluctuations. Apart from trading a small amount on spreadbetting, most of my money is in share ownership. I have seen all my shares move against me at one time or another but the portfolio value, in general, has been going up over the last three years. An owned portfolio of shares, IMO, is a safer way than trading.

Finspreads trading is gambling, just like your wife says, simply because fundamentals do not come into it. That is why the government does not tax it. We are doing it but we must face the facts and call it by its proper name. Nevertheless, it can be "educated gambling" and that is what I like to think that I do i.e. using as many statistics and probabilities I can to make a profit and, although the temptation is great, sometimes, resisting the temptation to risk and hurt my capital.

Split

Hi Split,

I have an opposite view here. I think active and smart trading will beat buy and hold strategy. The advantage is you can benefit even if share prices go down.

That's my view at the moment and it's subject to change. May be by the time the Olympics is here in London If I still trade at that time.

 

[barjon]

Hi Split,

............................I have an opposite view here. I think active and smart trading will beat buy and hold strategy...............

I'm with you, hung - but I've spent 30 years trying to prove it

My wife is essentially buy and hold ('til she reckons the price is well over the top) whereas I believe you must be able to do better playing the peaks and troughs. Unfortunately, she's leading the way overall, although I win the annual sweepstake occasionally

good trading

jon

 

[hungvir]

That's a long contest, Jon At least, you did win from time to time.

Of course there've been stocks that jumped from several dollars to hundreds or even thousands over the years. Is it the case that buy and hold investors take more risk and as a result have more rewards?

Later,

Hung

 

[hungvir]

Tips round up

Tips from Digitallook. Will check their charts.

High street retail may be struggling, but Next's management are budgeting for tough times.

Next is a master at cost control and managed to save costs and grow profits last year as well as reduce the average item cost by 5%.

On a price-earnings ratio of 11.5 times through to 2008 and with a decent yield, the shares look cheap. Both the Times and Telegraph say buy.

Premier Oil's prospects look excellent, and the firm continues to buyback shares which appear undervalued. The Independent says buy.

And the Telegraph says There's hidden value in BP'

 

[Splitlink]

That's a long contest, Jon At least, you did win from time to time.

Of course there've been stocks that jumped from several dollars to hundreds or even thousands over the years. Is it the case that buy and hold investors take more risk and as a result have more rewards?

Later,

Hung

Do you believe that buying a few thousand shares which have been researched and have good management is riskier than trading on margin, Hung? If you have a portfolio of six to eight shares it is surprising how, if one share fails, the others hold the portfolio value up. The trader's reactions are far different from those of an investor. He is in and out of a share more often, with the costs that that involves and penny rises and falls mean a lot to him.

Split

 

[hungvir]

I agree there's a case for value investing and it's not always easy to compare it with short term trading as the objectives can be different.

And there's nothing stopping you from holding multiple positions as a trader/spreadbetter.

I am reassessing the frequency of my trades and its effect on the bottom line. It's of course not true that the more I trade, the more money I make.

H

 

[Splitlink]

I agree there's a case for value investing and it's not always easy to compare it with short term trading as the objectives can be different.

And there's nothing stopping you from holding multiple positions as a trader/spreadbetter.

I am reassessing the frequency of my trades and its effect on the bottom line. It's of course not true that the more I trade, the more money I make.

H

There's nothing to stop you except margin and the fact that if the index goes against you most of its constituents do, too. That can mean a terrible toll on capital. As someone with whom I have been posting for several weeks I urge you to keep within the trading limits that you have set yourself. That limit means the amount staked at any one time- not that amount staked on each trade! No cheating!

Regards Split

 

[hungvir]

Thanks, Split.

I hope I can

When I day trade the DOW, I tend to increase stake sizes as the index moves in my favour (I did add to losing positions as well - a big mistake). Normally I can only trade during the last two hours and the volatility is not that big.

And apart from my Worldspreads account in, I only trade with what I have, no leverage, no margin. Many traders 'spend' thousands if not tens of thousands to learn to trade and I think I'll strive to limit it to hundreds with my new venture into spreadbetting.

Good trading,

Hung

 

[hungvir]

Fins has an 11 point spread on LSE Jun. Will have to check CMC's quote. Both Fins and CMC have been very good at filling my stop and limit orders.

CMC's spread on LSE June is only 4 points. I think they beat any other SB firm hands down most of the time when it comes to spread. Well done!

But they don't accept orders based on market price. What a pity!

Will check if they accept it over the phone.

 

[hungvir]

Just talked to CMC. They don't accept orders for LSE June based on market price. And they have no plan to follow Fins. It makes sense as with their tight spreads, they can't afford to let me increase the odds in my favour. But they said the future price is quite close to the market one.

LSE continues to drop anyway. I do hope that the gap is filled so that I can jump in with more confidence.

With regards to my Fins account, I'll only trade with them when the spread is around 5 points. That's 10 pounds round trip for a pound bet and 100 quids for a 10 quid one.

 

[hungvir]

Same story

It's the same story over and over again. The DOW again dropped about 50 points today then headed up. I am in with a pound. If it goes my way, will add more.

 

[hungvir]

Stop loss at 11243. It's going down first...

 

[hungvir]

I should have been taken out by now. But Worldspreads has not done that yet. I wonder how long it'll take.

 

[hungvir]

Accepted 8 point loss. My stop loss is always tight with the DOW but that's what I am willing to risk.