Good afternoon.
I've been amazed at the number of page views this blog still receives, considering my last entry was back in September of last year 50 pages a day is staggering. I've also received a few comments so I thought I'd post a quick update.
Plenty of spread betters have an unquenchable thirst for knowledge, of course the rewards if you get this right can be astronomical so it's understandable traders search to learn from others mistakes (and successes!), that's exactly the route I took. That's another reason I'm posting this update, hopefully you can learn a little from my tragic errors and also see that if you have an unswerving belief and are determined to crack it that it's possible.
I did my numbers recently and calculated its cost me a whopping £75000 to learn this game (and of course I will never stop learning). That figure is in the past and not a target for me to chase, if I do I will lose as I'll repeat previous mistakes. In hindsight I would've traded with smaller stakes but over trading, trading too big and controlling your emotions are all part of the learning process.
The 'secret' for me has been to cut my trades to the minimum and to lower my stake per point. Cutting my trades means I trade infrequently and am more considered about my entry points. This year I have made just four trades. Three on DAX and one on DOW.
Here are my trades this year.
A 1 minute short scalp on DAX @ £10 point from 10435 for 7 points: Profit £73
A 30 minute short on DAX @ £2 point from 10650 for 34 points: Profit £67
A 30 minute short on DAX @ £3 point from 10651 for 35 points: Profit £105
A 30 minute long on DOW @ £3 point from 17448 for 63 points: Profit £188
A quick calculation shows 139 points for £436 Profit.
What to make from this?
Firstly in almost all of the previous months I've traded I have lost money. This month I have made money. If I don't trade again this month (and I'm not) I'm guaranteed to MAKE money.
Secondly by vastly reducing my £ per point I take all the pressure off myself, I feel much more comfortable trading at a smaller size.
Thirdly I'm endeavouring to prove to myself that it is possible to make money consistently from this game, that's my target. The figure I'm interested in is the +139 points for the month.
I plan to post again at the end of February. My target is to make positive points. I'm aiming to post on here 6 consecutive months of positive returns, then all I need do to earn more money is raise my £ per point.
So there you have it, simple really.
One instrument at a time
Make far fewer trades.
Trade with a smaller stake.
Stop losses I hear you cry? By trading a low stake means I can trade with comfort and not worry if a position moves against me but by waiting for these entry points I was as confident as I could be that they would move immediately in my desired direction. My DOW trade was yesterday as the index plunged 360 points, I thought it was overdone in the very short term and as I saw it recover a little I then placed my trade. I was looking for 17450 and closed when it touched.
My DAX trades were made after similar moves and that really is my entry criteria; wait for a dramatic move them harvest a few points when it's thoroughly exhausted the move. Overbought/Oversold then pounce.
A big mistake I made was trying to trade full time, spending hours in front of the screen. That's a sign that I'm trying to force the issue and it's really not necessary. Less is more.
If you're looking for some excellent reading material I recommend 'Market Wizards' by Jack Schwager. It's from the late 80's-early 90's but don't let that put you off, it's invaluable reading. He interviews top traders from their day and the common theme amongst almost all of them is that all lost heavily when they started and it took 2 to 3 years before they developed a mastery. I have a single mindedness that meant I was going to be successful at this whatever it took. If someone else can do this so can I. The book is BRILLIANT and a must read.
Catch up with you again next month.
