Hi all,
New to the forum, fresh meat, so be gentle! I have read a fair amount on the various areas covered by the ‘trading umbrella’, but I still have a lot to learn. I have read most of the stickies’ on here, and practiced paper trading with a demo SB account for some time to get the feel of it, and figure how to actually place a trade. Predictably I did quite well on my demo account, which therefore encouraged me to open a live account with real money which I have subsequently not done so well on! So, I need to improve my strategy and have a re-think on my approach.
To begin with I have some basic questions first that will allow for simple straightforward answers. I haven’t been able to see clear cut answers on these so far, so I do apologise if they have been repeated:
1. Is Spread betting classed as ‘trading’ in the same way dealing with a conventional broker, and buying/selling shares on the open market is?
2. Is using an online SB platform a more risky way to approach trading, or would it be a better option to look at open market via a broker and buy / sell shares in the more traditional way?
3. What fundamental research can one do (if any) to facilitate a successful SB strategy, other than observing technical indicators and candlesticks, or is it not really worth doing (other than being aware of what’s happening in the news etc.)?
4. Leading on from above; Can you combine fundamental analysis with technical analysis to conduct and operate a successful strategy on a SB platform? (i.e. FTSE100)
To elaborate on the above, in a nutshell to save a long post; I wanted to start trading and have explored the various avenues available. I have opened a live SB account following several months successful trading via a demo account (which I might add, can lull you into a false sense of security!). Initially I was doing well, then it started to go bad. I am using a limited loss account in that I cannot lose more than my stake and I don’t want to borrow money or anything like that. I also ALWAYS trade using stop losses in place. The idea is to start small and grow the account gradually. I am under no illusions and have the patience and mind-set to approach it correctly (or so I think). However, I realise I need to improve my money and risk management skills. I explain below:
So, onto my problems! It isn’t the win loss ratio, it’s my profit ratio. I’ve exported the trades to a spreadsheet and examined them. To put it simply, I have had many more winning trades than losing ones, however, the value of my losing trades exceeds the cumulative value of my winning trades, therefore I have effectively screwed myself. I know I am going wrong but I am struggling to understand how to change my process. The issue I find is that I have been trying to keep it small and trade with small amounts, which normally means I have to close out the trade on a small win as soon as I start seeing profit, as normally it tends to reverse and either close me out on my stop, or if I adjust the stop thinking it’s going to pullback (which many times it has) it drops even further and I lose more money on that particular trade. Nobody likes losing let’s be honest, but I accept I need to improve on it, as odd as that may sound! I have tried the ‘ride your wins and close the losses’ strategy, but I normally find that the market reverses which effectively reduces the potential profit I could have achieved on a trade if I had closed it out when I deemed it to be an acceptable win. It’s a tricky process being able to identify how far one should place their stop from the entry point, whilst allowing the market to ‘breathe’ as it were. If I reverse my process meaning my losing trades are my winning ones, I would be sorted! That is despite the fact I have infinitely more winning trades than losing trades. I need to get back to the drawing board and re-establish / firm up my strategy before continuing, but would appreciate any advice or input available. I am enjoying it, but I also can appreciate the extreme stress it can cause when it goes t@ts up! I want to learn more though so please do let me know your thoughts, as well as providing decent advice as to how you think I can correct my strategy.
At the moment I am trying to keep it simple using moving averages to identify trends and directions. This was what was working for me previously. 10, 20, and 60, and then trying to enter a trade when I can see the crossover, or clearly identify when there is a strong up-trend or down-trend. I currently trade the 1min charts as have been using small amounts and taking small profits (but sadly the bigger loses too as described above). I also realise I have been over-trading, another reason why it’s gone wrong. So I can see a few reasons why I haven’t been doing well but I just need some guidance on my strategy.
So far I am thinking:
Improve my risk and money management skills
Trade a longer time frame perhaps (5 or 15min charts?)
Have set stop loses and do not move them even when losing
Trade less!
Accept losses / improve ability to accept and understand when I am wrong!
If you are able to provide advice and direction to facilitate the above, that would be excellent. Any help appreciated!
Thanks gents.
