PartyGaming - how NOT to start your trading career !

[kkarank]

Guys,

I am a newbie trader and here is here my free advise to every novice on how NOT to trade


I started out in late august 2006 with a balance of 15000 GBP and opened up a share trading account with Barclays -

I did not know what are CFDs , futures,options gilts - nothing.All i knew was that there are millions of traders out there who make a living out of trading and the thought was that if they can surely i can too !

I had not heard of technical analysis and did not(still dont) know what is a P/E ratio

I did not know what is a STOP order !

I had never heard of a trading system or a risk reward ratio

I had heard though that you will minimise the risk if you had a diversified portfolio.

With this enviable trading knowledge i put in 12000 quid in various stocks.I bought three stocks - PartyGaming,OXUS Gold and JUMPIt - the latter two as they were 27p and 6 p each and i had seen that they were at these stocks were falling on the day i placed the order.

Not surprisingly i heard some bad news soon after i bought the stock - the whole legislation thing about online gaming in US,legal troubles for gold mining in central asia etc...and the stocks plumetted the next day(except for PartyGaming)

Come October 2 and the whole market was abuzz with the slaughtering of online gaming stocks.i switched on bloomberg tv and almost got a heart attack to see PartyGaming stock go down 53 % !!

The other two had gone down as well despite the FTSE 100 being near to its all time highs.

I obviously panicked and decided to sell the stocks at the prevailing market price...

Cost me a total loss of 6700 pounds !!!

Add salt to the wounds,come October 3 and the PartyGaming stock was higher and the other two had jumped up too

If only i had heard of the support/resistance theory ...

My point -

NEVER invest in live market unless you have done your research

NEVER place an order without a stop loss !!

Dont panic when you see a trade going against you even if you dont know technical analysis.For example instead of selling all my stock when they were plumetting i should have placed a stop order - this way JUST in case the price went up i would have been able to reduce my loss

Dont go by charts and technical analysis alone !!! Keep your eyes and ears open about what is happening in the market/industry.For example before putting my money in PartyGaming if i had done some research i would have found out about problems with the online gambling industry..

Research,ReSEARCH,RESEARCH and RESEARCH before investing in live markets !!

And now can someone please point me to a training course...

Cheers
Karan

 

[blackcab]

Karan, a brave post. It sounds very familiar. There's enough good information & discussion on this site for several months of searching, reading, re-reading etc., if you can sort the good from the bad. Good luck.

 

[barjon]

karan

Welcome to T2W

What a baptism of fire . As blackcab says, there's plenty of good reading here which I hope will help you avoid getting the rest of your fingers burnt.

Good fortune

jon

 

[wheezergeezer]

Spend more time reading these boards as recommended by previous posters, get to know the subject,keep in cash and only buy 100 shares at a time, learn to manage these, say 100 x $20 or less per share, it takes time, if you can learn to buy and sell 100 without loss, then you maybe in a position to increase the size, preserve your capital or you wont be able to trade very long, you've had a very bad start, try to turn that negative experience into a positive one by not repeating the same mistakes, .......................good luck

 

[andycan]

could you imagine if you had made a killing where you would be now?
in a false sense of security believing everything you touch turns to gold(pardon the pun) road to destruction.
you have been humbled we all have at one stage or another in various degrees
accept your loss and move on
you have learned what many have taken a long time to learn
you will do well
good luck on you path to knowledge

 

[dc2000]

Welcome to the world of trading

your first mistake was to think that there are millions of traders making a living out of trading, in reality there is only a small percentage that are consistant enough to make money.
Before looking at any courses I would read up on the various ways of trading and which markets to trade in, when you have a better knowledge then you will be able to make an informed descision on the best path to take.
The K.LAB articles section on this website has a wealth of information provided by active traders that is well worth a read

Good luck for the future

As always if in doubt ASK

 

[kkarank]

i know i did a schoolboy error ! and with my meagre earnings i will probably never recover the 6700 i lost - not at least in the next coupld of years

but i found this forum amazing - it is not that i did not look for information before i invested just that most google queries seem to return information that brokers want us to beleive

anyways - having taken the hit has only increased my resolution to take a scientific approach to trading rather than try to jump in a dark well based on guesswork....

 

[damianoakley]

Hi kkarank,

Just read your first post..........holy Jesus!

Very brave of you to share that with everyone.

Take your time before you get back into the markets. Paper trade for a while.

Your situation is a good example of what can happen when you have taken too much risk in companies that are poor quality investments.

Just my opinion of course!

Good Luck

Damian

 

[CityTrader]

Hi kkarank,

Just read your first post..........holy Jesus!

Very brave of you to share that with everyone.

Take your time before you get back into the markets. Paper trade for a while.

Your situation is a good example of what can happen when you have taken too much risk in companies that are poor quality investments.

Just my opinion of course!

Good Luck

Damian

I'm not sure, without the benefit of hindsight, how many people would agree that Partygaming would have made a "poor quality investment" ? We're you short?

 

[damianoakley]

Hi Citytrader,

No I was not short. I only trade in U.S. Stocks.

Maybe "poor quality investment" is too strong a phrase for PartyGaming. I would say that it was certainly an "uncertain investment" because there has been a question-mark over the U.S. gaming industry for a few weeks now.

I would certainly steer clear of any "uncertain investment".


Thanks


Damian

 

[firewalker99]

i know i did a schoolboy error ! and with my meagre earnings i will probably never recover the 6700 i lost - not at least in the next coupld of years

but i found this forum amazing - it is not that i did not look for information before i invested just that most google queries seem to return information that brokers want us to beleive

anyways - having taken the hit has only increased my resolution to take a scientific approach to trading rather than try to jump in a dark well based on guesswork....

Hello kkarank, your loss might seem unrecoverable to you, but I can assure you that some traders have blown out their account and lost much more before becoming a consistently profitable trader. So don't focus on what you've lost in monetary terms, focus on what it taught you. Now that you've made a mistake (and many of us have, me including and in fact on more than one occasion), take some distance from it (do not confront yourself with wanting to get that money back as soon as possible) and get yourself ready for a possibly long and hard but ultimately very rewarding journey (and not only in the financial way).

Good luck!

 

[Phil Mibbutz]

Losing 50% on a risky stock like Partygaming might feel bad, but it could have been worse. You could have lost about 99.9% in a 'safe investment' like Marconi. Don't ask how I know...

 

[Hook Shot]

Kkarank, I share the sentiments of everyone else .......... unpleasant but as they say every cloud....

On the subject of scientific, there are loads and most seem to be another form of punting - traders like to punt....... that's seems to be the nature of the trading personality. Whilst I've been trying to ween myself of punting however calculated ....... I've discovered that large, well established companies with workable business models can usually ride out the mistakes, crises etc and USUALLY nurse themselves back to health.

Recent examples include Intel, Microsoft, Merck, Pfizer and even GM. All hit problems of some sort and the shares slumped............ slowly slowly they're all coming back . Some of them still have work to do but they getting there.... Most traders are aware of this phenomenon but many tend to ignore it...

In the UK -AstraZeneca went from 1850 to 3450 after the crestor crisis around 2yrs ago.
http://finance.yahoo.com/q/bc?s=AZN.L&t=5y&l=off&&z=m&q=b&c=


Shell B after all the controversy about reserves went from 1200 to 2000
There are lots of other examples I'm just choosing big name, solid etc

Britsh Energy is the latest screw up............ but later it will probably rise like a phoenix once again - that thing's got more lives than my neighbour's cat! In case you were wondering..... No, I didn't buy it but I was thinking about it before the news broke ....

This is not scientific......... no indicators required really but you do need PLENTY of patience as most of the time you will be doing NOTHING! Buffett used the same principle to buy Anheuser Busch (bud) near $40 earlier this year and recently it hit $50. At the time they said beer was dead and sprits were the new thing.

Philip Morris (Altria) went from the equivalent of $19 during the class action glut in 2000 to ~ $85 this year!

Just something to think about.

Hook Shot

 

[in2uxs]

Research,ReSEARCH,RESEARCH and RESEARCH before investing in live markets !!

Cheers
Karan

There is a problem with research! research! research! and that is that most people - if not all - only absorb the bits of information that they want to hear.

You didn't need to have contacts in the City to know that the Americans were going to do something pretty nasty regarding online gambling. Yahoo news feeds, the internet, television, were full of the "what could happen" should the Americans decide to act. Despite all these warnings, however, we all chose to ignore them - big business included - and then when the Americans did act ... how we all cried foul!

I'm not too big on research to be fair. I used to subscribe to a reasonably respectable share magazine that studied market reports and gave tips. They understood market reports far better than myself, but this still didn't stop them from losing me a fortune when there brilliant tips turned out to be none so brilliant.

There is one major flaw with market reports, and that is they are written by human beings, and human beings really aren't to be trusted. Personally, I choose companies regarding sector rather than the company itself. In my view the gambling sector may have had its problems of late, but gambling is a vice and people do like their vices. Personally, I've never read a company report from Partygaming nor wish too, but in my years of studying the human race I would still say Partygaming is still a wise investment.

 

[Hoggums]

Guys,

I am a newbie trader and here is here my free advise to every novice on how NOT to trade


I started out in late august 2006 with a balance of 15000 GBP and opened up a share trading account with Barclays -

I did not know what are CFDs , futures,options gilts - nothing.All i knew was that there are millions of traders out there who make a living out of trading and the thought was that if they can surely i can too !

I had not heard of technical analysis and did not(still dont) know what is a P/E ratio

I did not know what is a STOP order !

I had never heard of a trading system or a risk reward ratio

I had heard though that you will minimise the risk if you had a diversified portfolio.

With this enviable trading knowledge i put in 12000 quid in various stocks.I bought three stocks - PartyGaming,OXUS Gold and JUMPIt - the latter two as they were 27p and 6 p each and i had seen that they were at these stocks were falling on the day i placed the order.

Not surprisingly i heard some bad news soon after i bought the stock - the whole legislation thing about online gaming in US,legal troubles for gold mining in central asia etc...and the stocks plumetted the next day(except for PartyGaming)

Come October 2 and the whole market was abuzz with the slaughtering of online gaming stocks.i switched on bloomberg tv and almost got a heart attack to see PartyGaming stock go down 53 % !!

The other two had gone down as well despite the FTSE 100 being near to its all time highs.

I obviously panicked and decided to sell the stocks at the prevailing market price...

Cost me a total loss of 6700 pounds !!!

Add salt to the wounds,come October 3 and the PartyGaming stock was higher and the other two had jumped up too

If only i had heard of the support/resistance theory ...

My point -

NEVER invest in live market unless you have done your research

NEVER place an order without a stop loss !!

Dont panic when you see a trade going against you even if you dont know technical analysis.For example instead of selling all my stock when they were plumetting i should have placed a stop order - this way JUST in case the price went up i would have been able to reduce my loss

Dont go by charts and technical analysis alone !!! Keep your eyes and ears open about what is happening in the market/industry.For example before putting my money in PartyGaming if i had done some research i would have found out about problems with the online gambling industry..

Research,ReSEARCH,RESEARCH and RESEARCH before investing in live markets !!

And now can someone please point me to a training course...

Cheers
Karan

I don't agree with this, most if not all of the current news you have to work with has already been priced into the stock you are buying - unless of course you have insider knowledge. If you think a stock is going to go up then it's mostly conjecture, based on your reasoning with the facts available or you disagree with the current prices using your own assessment of the facts. Either way, you can never be certain enough to gamble over 25% of your portfolio on ONE stock. It's sheer lunacy!

 

[Hook Shot]

I've discovered that large, well established companies with workable business models can usually ride out the mistakes, crises etc and USUALLY nurse themselves back to health.

Britsh Energy is the latest screw up............ but later it will probably rise like a phoenix once again - that thing's got more lives than my neighbour's cat! In case you were wondering..... No, I didn't buy it but I was thinking about it before the news broke ....

http://www.bloomberg.com/apps/quote?ticker=BGY:LN

up 35% off lows in around 2m...... Where to from here - who knows ?

 

[Jack o'Clubs]

BGY - just bought a truckload before Friday's close as it was kicked out of the FTSE. One of my little sub-strategies is to buy FTSE-100 demotees on the day they get knifed and hold for the next quarter. Look how last quarter's pair have done since: RTO and SDR, and you can keep going back, works almost every time. When all the FTSE tracker funds have to offload because of it falling out of the index, you know you're buying in a buyers market, and they always outperform the following quarter, even if it's a dead cat bounce. Incidentally, doesn't seem to work the other way round (ie buying the promoted stocks).

EDIT - just checked my figures and the last time it didn't work was Q2 2004 with GKN. Where it doesn't work so well is in tech and software stocks - but 'old economy' demotions have a tremendous record for the following quarter.

Sorry - rather off-topic, but some might find interesting....

 

[Pippppin]

Nifty

 

[Charlton]

NEVER invest in live market unless you have done your research

First - welcome to the site and thank you for your honest posting and a warning to others. Clearly you have started to go down the right path now. Hang around the site and try to pick up as much as possible on technical analysis, risk management, money management and so on.

NEVER place an order without a stop loss !!

Dont panic when you see a trade going against you even if you dont know technical analysis.For example instead of selling all my stock when they were plumetting i should have placed a stop order - this way JUST in case the price went up i would have been able to reduce my loss

Although I agree with the sentiment "Don't panic", this applies if you have a proper strategy and plan in place. In that situation you know exactly what you will do if the market reacts in a particular way. In this case you did not know what to do and playing around with stops was probably a bit too late. You would have had to put your stop below the price you had already plummeted to and there was every chance it would have hit the stop - you simply didn't know because you did not have an exit strategy. So IMHO you did the correct thing in the circumstances, which was to get out.

Dont go by charts and technical analysis alone !!! Keep your eyes and ears open about what is happening in the market/industry.For example before putting my money in PartyGaming if i had done some research i would have found out about problems with the online gambling industry..

I wouldn't put too much store into this. You will see and hear what the market wants you to see and hear and not necessarily what is actually occurring. Alternatively you will see and hear it when it is too late and price has already taken account of such news.

It's a different type of knowledge that is needed, which you can get by observing the markets.

Research,ReSEARCH,RESEARCH and RESEARCH before investing in live markets !!

And now can someone please point me to a training course...

Cheers
Karan

Research is important in the form of analysis. Most people on this site will use some form of technical analysis. Some use fundamental analysis.

I would not advise you to go on a course yet. Many of them can be expensive and their utility is debateable. You can find many discussions of such courses on this site. A cheaper way to proceed is to continue visiting T2W. Start with http://www.trade2win.com/boards/forumdisplay.php?f=52 and look at the "stickys" which go though the basics of trading.

Later when you have a better idea of what you want to trade, basic terminology and have read some of the course reviews you will be in a better position to evaluate which ones are best for you. Alternatively you may decide that you don't need them after all.

Take it steady, perhaps do some paper-trading to get to know the broker's software without risking realmoney and, hopefully, you will begin to claw it back, but DO NOT think that the market owes it to you. It does not care. You will need to work for it.

Hope this helps

Charlton

 

[Hook Shot]

BGY - just bought a truckload before Friday's close as it was kicked out of the FTSE. One of my little sub-strategies is to buy FTSE-100 demotees on the day they get knifed and hold for the next quarter. Look how last quarter's pair have done since: RTO and SDR, and you can keep going back, works almost every time. When all the FTSE tracker funds have to offload because of it falling out of the index, you know you're buying in a buyers market, and they always outperform the following quarter, even if it's a dead cat bounce. Incidentally, doesn't seem to work the other way round (ie buying the promoted stocks).

EDIT - just checked my figures and the last time it didn't work was Q2 2004 with GKN. Where it doesn't work so well is in tech and software stocks - but 'old economy' demotions have a tremendous record for the following quarter.

Sorry - rather off-topic, but some might find interesting....

Cheers Jack - nice to hear of some other simple strats for getting that elusive edge!
Nice one. As for the promoted stocks I think the fund managers can see those coming and wade in ahead of time ........ so there's little or no value left for everyone else.