This little piece of wisdom had been handed down during the
Trading For Beginners Seminar I attended just over a year
ago. It came flooding back to me now, as I stared miserably at the
screen.
But I'm getting ahead of myself... Let's go back to early
May.
I was in a spot of bother. The trend was
no longer my friend. I had believed the £/$ would rise above $1.90,
whereas almost from the moment I hit BUY, it had been sinking like
a stone.
"Stop loss?" I hear you ask er, no.
But then again, I remained confident that what was going down
was certain at some stage to defy gravity, and that the dollar
would continue to weaken. My two June contracts still had weeks to
run, and I refused to panic and accept a loss. That's me: cool
under pressure.
It turned out that I had been right to
keep my nerve. A few days later and my paper losses of £200 per
contract had gradually trickled into a profit of £12. That's
me: smug when I'm proved correct.
My finger hovered over the SELL button. But I
have cashed out too early before. This time, I decided to keep my
nerve and let my profits run. Mistake. A few days later, the losses
were back, this time somewhat higher.
Still, nothing to worry about. Especially as I was about to
embark on a little trip out of town. Let sterling fight back
against the dollar while I was away.
Have you ever been to Bicester Village? It's only an hour up the
M40 from London, and there are tons of bargains to be grabbed. I
combined it with a side visit to Oxford, and returned three days
later, triumphant with a sequined handbag and assorted
gladrags.
It turned out that I was shopping while Rome was burning.
According to the charts, the £/$ had shifted a massive 348 points
and was approaching its 52-Week low. Nothing to worry about if you
happened to be on holiday in America; just a little less spending
power. Here in North London, however, I appeared to be down a grand
total of £1,700.
Should I return the handbag? Tell the shop assistants of
Bicester my blue jeans were the wrong colour and ask for my money
back? There was only one thing for it. I would embark on some £/$
day trading. I could keep my long-term BUY contracts in place, and
cash in on the dollar's unexpected (to me) strength and SELL.
C'est moi: always resourceful and able to come up with an
alternative course of action.
The following day, my first trade won £66. I celebrated with
breakfast out in a sunny cafe near the park. By lunchtime, I had
lost £68. And with gritted teeth, by the end of the day, I was
showing a net profit of £32. Enough, at least to pay for the snazzy
black trainers with the pink laces.
But I was still losing £1,633 on my two stuck-with-them trades.
This was merely rearranging deckchairs on the Titanic. I was locked
deep into the Ostrich Position: head in the sand, not wanting to
know, and starting to experience something very like morning
sickness when I logged on to Finspreads every day.
I had only one card left to play. I went back online and booked
a rail ticket to Penzance.
By now, we were into the final days of May. For the first time,
it occurred to me that maybe just maybe these trades were going to
end up as Giant Losers. Should I sell? And kick myself when I
returned home to discover Sterling had suddenly shot up in
strength?
I decided to hedge my bets. Well, sort of. I placed a stop loss
on one trade take me out if we get to £1,000 and left the other
alone. That's me: not ENTIRELY stupid.
After a delightful few days in Cornwall where I deliberately did
not check the spot prices, even though I had broadband access, I
returned to discover my stop-loss had been activated on the first
trade, and the clock was ticking on the other.
For the next few days, whenever I checked my trade, I felt as if
I was visiting a hospice. I paid my respects once a day, and was
thankful when the visit was over.
And it was on one of these visits, that I remembered the
quote that began this chapter: "When you trade, you find out who
you really are." That's me: a hopeless, hopeless,
optimist.
No matter what's going on, I
always believe things will turn out all right in the end. (My
friend Marianne says this is because I have failed to understand
the plot where life is concerned; she herself is from the school of
Grim Realism,)
When I buy a raffle ticket, I fully expect to win. And often, I
do. I give everyone I meet the benefit of the doubt (until I begin
to doubt them, after which I am ruthless). I am certain the novel I
am currently writing will (a) be published and (b) climb the best
seller chart, even in the face of overwhelming evidence that points
to the contrary. In short, I am one of those annoying people who
think even a bad situation will be OK in the end.
What's more, I reckon the same is true for most of us here
on Finspreads. We expect to win, if not every time, then most of
the time. And it comes as a puzzling surprise when we do
not.
In my case, the contract closed at $1.8250, and I lost £893.
Which leaves my Finspreads balance at £1,478,13.
"I told you this spread betting business would never work out."
Marianne tried hard to keep a triumphant edge from her words. And
failed.
I changed the subject.
The following day, I was sitting again at the cafe near the park
listening to another friend talk about the intricacies of looking
after her three daughters, all of them under the age of five.
"It's the hardest thing I've ever done," said Supermum.
"What did you do before you had them?" I asked.
"Oh, I used to be a trader. Hedge funds. That sort of thing."
Supermum's eyes told me she was connecting with her previous life.
"One thing though," she continued. "Trading used to come to an end.
Looking after kids doesn't."
I made a sympathetic face. "So this trading business. Were you
any good at it?"
"Er, yes."
"Let me buy you another Café Mocca. With extra chocolate," I
volunteered.
See, I told you it would turn out all right in the
end.
Sally Nicoll is a writer and a Finspreads customer
whose career to date has embraced journalism, broadcasting, and
advertising copywriting She lives in London and
is currently writing her second novel. Feel free to contact her
at veryluckymoney@hotmail.com.
Copyright 2004-2008 Finspreads.