Spreadbetting the FTSE100 - Made Simple (Not Mentally)

[benji2010]

My plan is to make £6.00 a day but I will let the 'bet' to make me as much as possible in one trade a day.

 

[vchohan]

hey vchohan,

I know my stop loss to winning is a touch stupid, that is why I like what you are doing.

I will tweak my plan!!

I personally, wouldn't have a daily target. The reason I say this is because trading is a game of probabilities. You strategy should be such that over time the probabilities are in your favor. Take, for example, you trade the FTSE100 on a 5min chart. You have a stop loss of 10points. You should, in my opinion, be aiming for at least, something like, 30point wins. So, if you have 3 losses, it will only take you 1 win to break even. This way you can have 3 times as much losing trades than wins to break even. If your trades are 50 % wins and 50% losses, you will be in profit consistently. Do the maths.

This maybe a strategy to consider, if you're having trouble finding your way; 10point trailing stop loss. This way your risk is controlled, you never lose more than 10 points. Your exit strategy could be to get stopped out so this way you're profits are always running. What is your entry strategy at the moment? How much capital do you have?

If you have £1000 and you're playing £1 per point your risk is 10% per trade. 10 wrong trades and you're out of the game. You would need £10000 in your account to have a 1% risk per trade that way it would take you 100 wrong trades in a row until you're out of the game. You need to know your risk and learn to accept it before you enter any trade. I'm still learning to accept my risk but by defining it and knowing it I'm that much closer to accepting it and reducing emotional trading.

I hope that helps.

 

[Pi3141]

First of all let me just state that I'm a beginner aswell.

But like some of the other guys have already said, 5pt stop is just noise especially on a 5min timeframe. I use a 5min chart to see roughly what the FTSE is doing but go to a 1min chart to place my trades. The market will move loads in the space of 5mins. And if you have to wait for the current 5min bar to close before you initiate your trade then i think it will make it even harder. Perhaps try using the 1min chart for such a small stop loss?

Just my 2 pence.

 

[vchohan]

Thanks Pi3141, I think that is something I am going to consider and have thought about.

 

[vchohan]

Just took another trade for another loss of 5points and not feeling good about it.

 

[benji2010]

Thanks that does help, I am still learning at the moment.

I want to start small with £200.00!

But could put more in.

 

[benji2010]

I just need a good plan, could you help me?

Thanks!!

 

[vchohan]

I just need a good plan, could you help me?

Thanks!!

Lol I can do what I can but I'm not doing too well myself. How did you decide to enter the market in your last trade? Was it a feeling to just go in? If it was how would you know when to go in next. Just guess?

You need a specific entry plan.

 

[pboyles]

I dont wish to sound unkind but I must have read 20 or 30 threads like this in the past year. Its always the same thing, spreadbetting on small accounts without really fully understanding what is going on. I think every single thread has quietly disappeared after a week or two of losses.

Regardless of how many people say 'demo trade until you know what youre doing' or 'dont scalp and spreadbet' it seems to be ignored in the face of blind optimism and hope.

Sorry if that is discouraging but that's how it is.

 

[benji2010]

I look at what the market is doing, look at the five minute charts and watch bloomberg tv.

 

[benji2010]

I need to get a real plan together but for now I am just getting a feel of the market!

 

[benji2010]

I want to give myself atleast 6 months of study and using the demo account before I trade with real money!

 

[vchohan]

pboyles, so far you are being proved right, however I do feel I am learning a lot from my trades. The initial emotion is tough to deal with but now I've already looked back at my trade and evaluated it and found that my entry was wrong again. The entry I was meant to take came up three bars later of which I didn't take. That would've given me 20 points at least and covered 4 losses. The error was the execution was not correct. My first two trades of the day were spot on to my strategy and am pleased with them, hence, I can easily let them go and continue to think in probabilities.

What do you mean when you say "without fully understanding what is going on?"

When people actually say things like demo trade until you know what you're doing and don't scalp and spread bet, how do I know how credible a person is to listen and follow through with what other people say. In my view I see my back testing and paper trading to be credible enough for me to believe that the probabilities are in my favor. I'm not saying that people who say these things are wrong, for all I know they may be right, and yes I can check what they've written before and their past threads etc but is it really enough for me, someone newish, to believe in them?

People only learn from their mistakes. It embeds a memory that is recalled when a similar environment comes up again where the mistake happened. The reason as to why people fade away is because people may not be able to handle being wrong and so have left trading altogether or trying another route as they do not want to face the reality that losses happen and people make mistakes. If it's the case where people have left due to losses then it is probably better they didn't trade because the nature of trading, as I understand it, is to accept you will have some losses.

My trading strategy is not based on hope or optimism. It is based on tests I have done and have now come to a stage, in these two weeks that are available to me, that I want to train my self and learn to become a professional trader. It is based on calculated probabilities that are set to be in my favor, as I see it. Whether I am able to execute and control my emotions is the next step for me, personally.

 

[pboyles]

pboyles, so far you are being proved right, however I do feel I am learning a lot from my trades. The initial emotion is tough to deal with but now I've already looked back at my trade and evaluated it and found that my entry was wrong again. The entry I was meant to take came up three bars later of which I didn't take. That would've given me 20 points at least and covered 4 losses. The error was the execution was not correct. My first two trades of the day were spot on to my strategy and am pleased with them, hence, I can easily let them go and continue to think in probabilities.

What do you mean when you say "without fully understanding what is going on?"

When people actually say things like demo trade until you know what you're doing and don't scalp and spread bet, how do I know how credible a person is to listen and follow through with what other people say. In my view I see my back testing and paper trading to be credible enough for me to believe that the probabilities are in my favor. I'm not saying that people who say these things are wrong, for all I know they may be right, and yes I can check what they've written before and their past threads etc but is it really enough for me, someone newish, to believe in them?

People only learn from their mistakes. It embeds a memory that is recalled when a similar environment comes up again where the mistake happened. The reason as to why people fade away is because people may not be able to handle being wrong and so have left trading altogether or trying another route as they do not want to face the reality that losses happen and people make mistakes. If it's the case where people have left due to losses then it is probably better they didn't trade because the nature of trading, as I understand it, is to accept you will have some losses.

My trading strategy is not based on hope or optimism. It is based on tests I have done and have now come to a stage, in these two weeks that are available to me, that I want to train my self and learn to become a professional trader. It is based on calculated probabilities that are set to be in my favor, as I see it. Whether I am able to execute and control my emotions is the next step for me, personally.

You are right in saying you don't know who to believe on here, for every person saying do it there's another one saying don't. Having said that I'm pretty sure that the majority of people with any degree of experience would agree on 3 key points.

1. You cant scalp the FTSE by spreadbetting with a 5 point stop
2. You cant learn to trade professionally in 2 weeks
3. Results from live trading will differ from backtested results especially on a SB platform

 

[pboyles]

What do you mean when you say "without fully understanding what is going on?".

Sorry, I was referring to spreadbetting and how prices can be manipulated by the SB company and how they disapprove of scalping (if you are winning that is).

 

[vchohan]

You may be right on all of those points, but, you have to understand that people, like me, won't believe your 1st point until they actually experience it. You can only make someone aware of it, and that's that. It's down to the individual whether they want to accept the advice and follow through or not.

In regards to your second point, I know you can't learn to be a professional in just 2 weeks. As I've said in previous posts, the 2 weeks I have are there for me to learn to be on my way to become a professional, not become a professional in two weeks. A draw back that I have is time, and I know I need time to learn and develop just like everyone, I think, does. The reality in my life is that I have to work and these are the two weeks I managed to get off from work. It's a long learning curve and I know that. It takes time and hard work.

In regards to your third point, I have mentioned before that I know this and will say it again, anything can happen.

Read some of my previous posts and I say in them that I know anything can happen and I know results will differ and I've never said I will be a professional in two weeks, I just want to learn to be on my way to become a professional.

 

[bevok]

I actually think you're doing the right thing really as you've tested your strategy in the 'backtesting machine' - once you've done that the logical next thing to do is test it 'in reality'. You're finding a few flaws perhaps, and differences from backtested results - the effect of the spread, and its lack of constancy. More important than that you're learning the REALITY of trading, the mental challenges, the effect of mistakes and trading under pressure. If you persist (and really have got risk capital at stake for the sake of learning) then you'll succeed as long as you find solutions to the problems and challenges you're finding.

Adjusting your stop model might be one thing (already gave an idea about that) and also changing your timeframe to something longer could be something else that might ameliorate the effect of pressure and mistakes. Spreadbetting is an expensive proposition (cost of the spread) and to avoid those costs being too bigger part of your average trade (or making it negative) the longer in timeframe you can get the greater your potential return.

 

[vchohan]

Thanks for the response bevok, I think you've got it spot on, on what I'm trying to do here. For the adjustments you've mentioned is something I'll have to look at once this week is over.

 

[vchohan]

So it's the end of day number two for me and two of my trades went exactly how I wanted it, good execution, good trade management. One trade was not so good took a full 5point loss due to bad execution, however, I've reviewed it, after the initial, "damn I can't do this," and self doubt, the trade was a few bars after and my strategy shows it was meant to be taken later and not so soon as I did. I made one last trade at the end of the day which was good execution but I could not manage it fast enough as the market price were being moved too quickly for me. I know not to trade the last 5minutes of the trading day now, I simply can not keep up. What I could've done is taken a quick 5points out of the market on this trade rather than manage the trailing stop loss.

I learnt a lot today from the two bad trades, if they went according to the strategy then I would be about 25points in profit, however I'm down 10points for the day.

Time to be off to the gym now and enjoy some of that sunlight! I'll be back with more of my thoughts later. In the mean time listen to Arrival to earth on You Tube - It's motivation music!

 

[vchohan]

Good Morning all!

Today I'm feeling confident and ready for the next trade! The gym has been keeping my nice and healthy and it feels good! I just need to sleep earlier. How is everyone this morning?

Anyone got any motivation techniques? Or preparation methods they use to help them get "In The Zone"?