My spreadbetting diary

[prometeo1984]

Hello everyone,

I have been spreadbetting for about 4 years - had some decent results in the beginning, small bets but fairly consistent gains (peak profit of 2-3k). This year i decided to play big..and ended up losing big. My losses were gigantic, more than i could afford; ended up wasting about 40-50k. I have been doing some analysis, and recognized the psychological aspect as the reason to my losses. When my stakes are small i find it easier to manage the risks and I let the positions run as per initial set up. When my stakes are increased, greed/fear come into play and close either too early (gains) or too late (losses). I don't have much left in my account, but i am confident i will make it back and more if i stick to my plans. I am addressing the psychological barrier by reading "the daily trading coach" and "trade your way to financial freedom". On the technical side i will continue using guidelines from Murphy's Technical Analysis bible.

I trade FX and indices, believe my mistake is over trading so intend to reduce the stakes and keep position for longers (1 day+); no more scalping. I will be using this blog to remind myself and others of my mistakes and how to address them to become a better trader.

I would appreciate people's input and perhaps their experiences on how to start this recovering journey.

 

[1961trader]

Hi, prometeo1984

Thank you for posting and I look forward to reading about your progress. I would like to tell you about some of the tools I have found useful and please excuse any assumptions I have made. As Samirs correctly points out, it is a battle with ourselves that causes traders the serious issues. Creating a trading system that works is only a small part of the journey.

1. A full trading plan - needs to be comprehensive to include all aspects of your long and short term goals
2. A performance scorecard which is marked after each trade is completed. This ensures you are working to your system rules and alerts you to major issues. I have found this very useful as it indicates immediately by the score whether I have followed all my rules, entry, exit, targets etc
3. Control of capital: if I lose a portion of my trading account (as identified in my trading plan), I will stop trading for that day and review the losses(can prevent consecutive losses)
4. Reviews each days trading at end of each day and week

I hope that some of these points above may prove useful.

1961

 

[prometeo1984]

Friday 31st Aug:

I blew it. Two mistakes: 1) Position sizing 2) Traded on Bernanke's speech day

I am starting again today, sticking to smaller positions no matter what.

 

[barjon]

..............I am starting again today, sticking to smaller positions no matter what..............

good man

 

[prometeo1984]

Small positions: no stress, easier to follow the rules (entry set up / exit targets), easy to analyze.
Drawback: tiny profit

Today's trades went pretty well. Made 200£. Got a loooong way to go to make back the losses. But I will and make gains too.

 

[101116]

I have some general thoughts about this that might not apply to you.


You can not be chasing your losses. What's done is done. You need to move forward or you won't make it.
It's very hard to be lowering the stakes when in a big downswing. Knowing it will take eternity to get back up.

You need to get rid of the idea of making up your losses, and for me it would mean a break and possibly papertrading. After a couple of months I'd know wether I'm fed up with trading and just trying to make up the losses with stupid risks or if I still feel like trading and am able to make a fresh start.

GL

 

[prometeo1984]

Thanks for the tips 101116 and 1961 trader. Helpful indeed.

Today I have manage to reduce the size of trades but still overtraded for what I would have liked to do. Profit is fairly good: £170. But could have done the same by keeping the original position rather than trying to scalp it.

Overall happy with the improvement and forced discipline.

 

[prometeo1984]

"The greatest traumas can become the greatest learning experiences. But not right away. First you heal: you rebuild a sense of normalcy and security. Then you set about doing things differently--often very differently... You can't undo the past, but you can rework it to make sure it doesn't become your future." Steenbarger

 

[prometeo1984]

1 Let your winners run until you are stopped out with a trailing stop or a candle stick signal of an eminent reversal. You need big winners.
2 Do not exit a winner until it stops moving in your direction.
3 Enter a trade only with the a minimum 2:1 risk to reward ratio, the potential upside has to always be bigger than the downside you are risking.
4 Only trend trade trending equities and markets, swing trade range bound stocks and markets. Remember that they only fit these classifications until they don’t.
5 Do not marry a trade, only date it. When it quits making money get out.
6 Only trade a method or system that is a proven winner over the long term.
7 Do not fight the market go with the directional flow, until the flow changes.
8 Go long the best stocks and the best up trending markets, short junk stocks and down trending markets. Picking tops and bottoms before they reverse is trading suicide. This is Trading 101, play in the direction of the trend, don’t try to be a hero.

 

[prometeo1984]

1 First define your risk, then your position size.
2 Never risk more than 1% of your capital on any one trade. (2% maximum)
3 Never expose more than 6% of your capital to risk at any one time.
4 Always follow your predetermined stop loss.
5 Always follow a predetermined trading plan that was written before the market opened.
6 Account for volatility in your position size.
7 Admit being wrong quickly and exit a trade when it does not act as needed.

 

[dealer911]

"The greatest traumas can become the greatest learning experiences. But not right away. First you heal: you rebuild a sense of normalcy and security. Then you set about doing things differently--often very differently... You can't undo the past, but you can rework it to make sure it doesn't become your future." Steenbarger

I think we've all been there pro84! -- Half the trouble is biology! -- when we are over stressed the blood is diverted from the brain to the arms and legs as we prepare to fight or fly! - This leaves your brain incapacitated when you need it most! got to increase your size incrementaly until you adjust and try to keep your size proportionate to your account.. it is frustrating becuse you think that because you can make money on small stakes then it would make sense that you could make even more with bigger stakes - unfortunatley your body has a deffierent view! good luck and dont beat yourself up too much about the losses.

 

[prometeo1984]

I think we've all been there pro84! -- Half the trouble is biology! -- when we are over stressed the blood is diverted from the brain to the arms and legs as we prepare to fight or fly! - This leaves your brain incapacitated when you need it most! got to increase your size incrementaly until you adjust and try to keep your size proportionate to your account.. it is frustrating becuse you think that because you can make money on small stakes then it would make sense that you could make even more with bigger stakes - unfortunatley your body has a deffierent view! good luck and dont beat yourself up too much about the losses.

Thanks for the tip mate. Totally agree; I haven't been posting too much as I am refining my strategy; back testing and working a clear program. Size is what blew my account quite badly; won't let that happen any longer.

 

[phoenix25140]

How did you rack up losing 50k? Dear lord.

Was that intra day ?